Bits Bucket And Craigslist Finds For February 5, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
February 5, 2008
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The article yesterday said median in the Inland Empire was down from 450k to 350k. But I’ve seen areas in Riverside–not depressed areas, either–that have listing prices of 50% off the peak. And they’re still not sold. People at work think I’m nuts for saying it, but I still believe people have been conditioned to think real estate has to be expensive, and that in the IE many places are going to go for 75% - 80% off peak.
‘People at work think I’m nuts for saying it’
It’s pretty clear that the expectations of people that went along with this bubble in the first place don’t mean very much. It was a financial mania, and anything is possible now.
I know, but I don’t understand how people couldn’t have at least suspected something was out of whack. But, in the end, I guess even Issac Newton got caught up in the south seas bubble. So many people are in for a lot of pain.
I’m pretty freaked out that there isn’t another asset that so many people have access to that can be inflated to expand credit…it means this bubble really is different.
I semi-watch the Colorado Springs market because my MIL has several investment houses there (all bought during the boom.)
I think that some day it might be possible to buy houses there using a credit card. (They might not be the nicest or in the nicest part of town, but still.) My husband doesn’t think so, but during the bubble houses never got crazy high - and the only resource the Co. Springs has in abundance is strip development houses.
To look into the future and think some of these thoughts is a bit freaky. I can see why people tend to gloss over it or not think about it at all.
Shouldn’t the investment really be stated as an “investment”?
What was your MIL thinking? As you mentioned, there was never high appreciation there. The Tech job base has been decimated by offshoring. Were it not for the Air Force Academy the town would probably be in free fall by now.
“but I don’t understand how people couldn’t have at least suspected something was out of whack.”
I’ll let you in on a little secret. People are dumb!
My neighborhood this morning was already filling up with people waiting for the Giants parade. It’s funny how people that can’t get to work on time can arrive to a parade 4 hours early. And what a crowd of morons. I never wanted to get in a subway car so badly. It was like being on the set of Cramer’s show.
Have you ever been on the set of Cramer’s show?
Inquiring minds want to know.
lol- the receptionist in my office said the staten island ferry was filled with kids in giants jerseys
should be pretty interesting at the parade
“It’s funny how people that can’t get to work on time can arrive to a parade 4 hours early.”
…and then promptly run crying to politicians at the first hint of trouble with their jobs/finances/dwellings.
I’ll let you in on a little secret. People are dumb!
That, and the firm belief that you can get something for nothing.
They’re not only dumb, but uncomfortably numb.
“They’re not only dumb, but uncomfortably numb.”
And too trusting of what our politicians and talking heads say.
No there just dumb, hence the proliferation of “Reality TV”, celeberty news shows….Small minds talk about poeple, averge minds talk about events, and large minds talk about ideas…
All that may be true, but it needs to be said:
“GO GIANT!!!”
Greatest Superbowl Victory, Ever!
I’m crying in my beer right about now.
*sniff*
And I hope you’re happy!
“…in the end, I guess even Issac Newton got caught up in the south seas bubble…”
By my recollection, it was more interesting than that: Newton managed to accumulate a tidy fortune in the South Sea Bubble, but later caught a falling knife when he believed the bubble was reflating and it instead deflated. This inspired him to make a bubble quote for all posterity:
“I can calculate the movement of the stars, but not the madness of men.”
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one!”
Charles Mackay
“Insanity is the exception in individuals. In groups, parties, people, and times, it is the rule.”
Friedrich Wilhelm Nietzsche
The Bubble to end all Bubbles…
“It was a financial mania, and anything is possible now.”
Such as one-dollar houses in Cleveland.
Real Estate Dollar value menu?
yeah…ummmm… I will have # 9 to go please… with granite counter tops and ss appliances on the side
Would you liked condo-mints with that?
Please pull forward and pay at the 1st window.
It’s also clear that many folks (even our beloved David Lereah, judging from comments posted here yesterday) have not yet left the denial stage of the housing bubble stages of grief.
Beware the anger stage which lies in wait.
There’s a fright train called uncertainty rolling down the tracks, gathering speed…
ah…that explains all the new tracks…BSH
A friend if mine worked in the FHA office in 1992 and he said they auctioned off hundreds and hundreds of 1200 sf homes for $10,000 a piece. They had to dump them. Squatters were tearing them up and they could not afford to keep them on their books.
In 1997 I was looking to rent a place, but had a dog. My friend had an RE license, so she took me out to look at condos. She had a list of houses and condos on a HUD list a mile long. I put in a bid and got a condo for 68k. Sold in 2004 for 249,000. I check the hud website, and they don’t have any listings for so cal. What is the difference between a hud and a repo? I never understood that.
This is an interesting data point for me. I live in central Arkansas, and have been trying to quantify for some time the degree of bubble. Currently, I can see in the county I live in a ~15% yoy decline in the rate of sales (I keep a spreadsheet with the monthly NAR numbers for this county). However, I am having a hard time projecting what that means in terms of price declines.
I bought a house in 1998 (one year after yor) for 71k (close to the same price as your condo). Last night we signed a contract to sell for 101k. Clearly this area didn’t experience as much bubble as whereever your condo is, but how much of that increase is legitimate (e.g. inflatio)?
We are planning to rent for a while until we find something we like and feel comfortable paying for.
I didn’t sell at the peak, they continued to sell for up to 300k, but I was getting nervous, I could see where this was headed. Now some are in foreclosure and they are back down to 175-200. So while I was early, I made some money, and am waiting patiently like the rest of ya.
Patricia,
Try this:
http://www.homesales.gov/homesales/mainAction.do?FormAction=GetCounties&state=CA&stateName=California
thanks for the info
This is one of those US gov’t -owned homes . They are as F*ked & crooked as realtors. This is a POS outhouse located in one of slummiest illegal- alien overrun ratholes in LA County. What a crock!! Fraud runs rampant in that hood, which is within earshot of Compton, so it stands to reason that a US Agency must be selling off properties at fraudulent prices as well. Posted the link with the picture, have a laugh!!
http://www.fnams.com/PropSearch/Details.aspx?id=96885List Price: $399,900
217 E. 158th Street
Gardena, CA 90248
ID#: USM191399
Added: 10/22/2007
Asset Type: Forfeited
Map It
Property Search Results Detail
Property Type: Residential
County: Los Angeles
Year Built: 1955
Sq.Ft.: 878
Bedrooms: 2
Bathrooms: 1.00
Basement: None
Garage Size: 2
Garage Type: Detached
Lot Size: 5565
Pool: No
Heating: Forced Air
HOA: No
this si one of the US gov’t -owned homes . They are as F*ked & crooked as realtors. This is a POS outhouse located in one of slummiest illegal alien infested ratholes in LA County. Ehta a crock!! Fruad runs ramopant in that hood within earshot of compton so it stand to reasonnnt at the uS gov’t must be selling off properties asfraudulent prices as well.
Sorry could not link directly to that house. Leighsong’s original link will get that picture quick.
BTW, I Have check out LA- area home prices on that Gov’t site -looks like they’re dealing thru local realtors and the prices they’re asking for those dumps in inner LA s*itholes are close to peak fraudulent LA bubble prices.
Luv,
I did not say it was good information, merely a link.
Breath
HUD houses are repos. HUD guaranteed the loan, the borrower defaulted, and the lender foreclosed. The lender then turned the property over to HUD who paid off the lender in full. HUD loans are in GNMA pools (GNMA is a bureau of HUD).
HUDs When mkt was at its low -90s in the desert, after my house burned down, used some money to buy two condos for 20k each. to rent out. Penciled out, except for renters were difficult to come by=no jobs in economy, One renter was good. DJ, just like the NYCDJ they are the good ones to have. DJs are out all night making parties elsewhere- not at your condo/rental!!
Rent was low, but couldn’t continue to hold on while paying mtg on house that burned down while rebuilding.
Too bad, those condos went from 20k to 279 at highest. Kaching. Darnit.
“Squatters were tearing them up and they could not afford to keep them on their books.”
This is one reason why I hope the govt does not intervene and take the REO off the banks’ hands: It could be really bad for the real value of the U.S. housing stock for squatters to move in and impair the condition of many homes.
The other reason is that banks need to learn a lesson about the cost to society of bad financial decisions: If the lesson they learn is that Uncle Sam always stands ready to bandage up their boo boos, then we can look forward to another housing bubble within the next few years.
If an illegal claims a property “squats” is he then granted some form of legal status?
Google “adverse possession”. Kind of cool, and funny at the same time.
Shifty deadbeat can steal your property if you are blind for the greater good of society.
It’s worse than the media is saying in the IE. I have learned to see the ‘tells’ when a house is vacant. I am looking to hunker down with cheaper rent/utilities and ‘gads’ a roomate. The situation is really bleak. 1 out of 43 foreclosed is probaly an underestimate, even here in geezer land. And I sadly see more young roaming at night, being a shift worker, than even three months ago. It is huge.
Not to mention the animals dumped in my apartment complex and in the neighbourhoods I walk in. I rescued one, but can’t do more yet. TY to my vet and others that will try to give discount rates to people adopting and rescuing.
An anecdotal story about the power of the cult of real estate. I had a conversation a couple of days ago with a college friend who has been an appraiser for about 15 years. He tells me that business is terrible, that he is broke and living on debt. After going through all of his financial woes he says to me without any irony, “So, when are you going to buy something?” I tell him I’m on a lease for the year and change the subject.
Wow, just wow! They still can’t connect the dots, can they?
Sometimes people on the verge of financial suicide, want to take out an innocent, along with them.
i.e. buying a house, anytime soon.
What the?! Wow… That’s almost like saying “Real estate only goes down - buy now!” Insane!
But misery loves company - it’s like the guys at work who grumble about being married and then ask the younger folks, “So, when are you going to quit being single?”
Aside from the nonsense that is part of the conventional wisdom that “real estate only goes up” and “they’re not making any more land” homeownership for many signifies that you are now a grown up. I never realized how ingrained this was in people until the past few years when ever any discussions turned to real estate. I have never had a desire to be a homeowner. When prices at some point get more in line with rents there will be considerations for me other than finances, like dealing with the maintenance that goes along with owning a home, that will come into play. Even people who tend to agree me on this bubble look at me like I have two heads when I tell them I may rent for another few years, simply because at this point in my life it is easier for me. Ben has called this frenzy a financial mania and I think that is correct. But the myth of homeownership is more than financial it is ingrained in the American psyche as part of what you do in this country even if it may be financial suicide.
I lost a decent amount of money when the dot-com bubble burst. Nothing earth shattering, but enough to teach me a valuable lesson, that there is no sure thing and that when someone tells you, “there is no way you can lose” you need to run the other way. I do have sympathy for people who have made bad decisions regarding housing, however I don’t want to be forced to subsidize those decisions any more than they should have subsidized my losses in the stock market. Hopefully, when this mania dies people will take a realistic look at how they view housing. But, I doubt it.
The government is subsidizing my stock losses to the tune of $3000 x my tax rate this year. Yippee! I’m so lucky!
“And they’re still not sold.” => market value is more than 50 pct off peak
I live in the IE (Riverside County but right on the border with San Bernardino County) and although I know what’s going on, I don’t actually see it. I mean, when I drive through neighborhoods I don’t see one For Sale sign after another. But when I go on Redfin it looks like everything in these neighborhoods is for sale. Do banks not put For Sale signs in front of every house they have for sale? There should be a sea of signs in some of these neighborhoods and there isn’t.
I also don’t really see the big reductions across the board. It’s possible to find them, of course, but I’m amazed at the list prices of some tiny, 20- or 30-year-old condos that have been listed for a year. Does it never occur to the sellers that maybe if they lowered the price they might actually find someone who prefers to live beneath their means and might buy?
I also don’t see the market being reflected in rents here. I knew California would be expensive, but compared to where I moved here from (West Texas), it’s absolutely scandalous. And the dust storms here are way worse. I would happily rent a modest house or townhouse for a reasonable rent, but the rents I see advertised are way out of line for what’s being offered.
biar, the cheap stuff is usually tiny and crap, and the $$$$ stuff is usually overpriced. TX is different in terms of rent costs.
Palm desert and Indio would be cheaper, but would it be close enough for your purposes? Heck what am I saying, you lived in WEST TX.. 2 hr drive for you is nothing. !!
The neighborhood I drive through everyday has the same 3 houses for sale for approx. 5 months. The area I monitor in North Fontana has seen huge decreases. About 1.5 years ago, a 1803 sq. ft house was going for $495k. Now, prices range in the mid $300 for houses up to 2300 sq ft.. I even saw a REO listed for $279K, but it disappeared from realtor.com within a week.
Fontucky’s like Kentucky, albeit w/o moonshine, horses & blue grass.
Today’s NYTImes online edition has an article about Americans living beyond their means, so far largely financed by the rising home values, now trying to cut back. Exerpts:
———
“The longer someone has lived on a high income, the harder it is for someone to cut back,” said Manuel Navarro of Money Management International in San Diego. “I ask them, ‘Do you really need to have a 60-inch flat-screen TV hanging on your wall?’ ”
Fran Barbaro has an M.B.A. and a résumé of computer industry jobs with salaries reaching $150,000 a year. She used to have a stock portfolio worth about $1 million. She hung original art on the walls of her three-bedroom house in Boston.
But divorce, illness and motherhood drained her savings. Her home is worth less than she owes, and she owes another $200,000 to credit card companies, banks and tax collectors.
Ms. Barbaro, 50, said she knew she was living beyond her means. But her house demanded work. Her two boys needed after-school programs running $25,000 a year. Medical bills multiplied.
“These were simple day-to-day expenses,” she said. “The money was always there.”
Until it wasn’t. Her take-home pay is $5,200 a month, but her debt payments reach $4,400.
Ms. Barbaro has rented out her house while negotiating to lower her mortgage. She has moved to an apartment, where her sons sleep in the lone bedroom while she sleeps on a pull-out sofa.
“It’s the worst,” Ms. Barbaro said. “How do you salvage what you have and hopefully go back?”
“Needed” after school programs costing 25K a year? Where? On Mars?
I just thank the heavens every day I am not involved in that insanity.
Funny..reminds me of a situation several years ago with my son(of course during the housing boom). My soon was playing ice hockey on the house league(meaning he didn’t travel). He was at the time 7 and very good. Another parent suggested travel hockey. I asked how much that was and he said ohh..about 25K a year! I said no way..His response..”Hey you can do what I did and take out a second mortgage. Alot of the parents do it. I got a great guy you can use!”
No Thanks I said..I will just pay the $350 for the 4 months of play..FYI..That guy and his son are no longer at the rink…Hmmmm…my son is still there..and I pay my $350 happily…
Even if I had the 25K a year, I think I’d not spend it on principal. It’s just too much for something that will most likely result in an adult hobby at best. If the kid is that good all he really needs is ice time to practice his skills and maybe a good coach. (Travel leagues are huge time waste as well..)
Kids haven’t changed. Parents have. They are so much dumber than they were 50 years ago. Oh, I know they are much more aware of their children’s feelings. Bravo!
“…I think I’d not spend it on principal.”
I might INVEST it on PRINCIPLE…..
Oh, I know they are much more aware of their children’s feelings. Bravo!
I don’t know about that. To me all this expenditure on frills seems like over compensation for what the parents think they lacked when they were just whippets.
A little whipping for the whippets might just be what the doctor ordered.
Those who have teenage kids can perhaps relate to this. My daughter would say that so many of her friends have this or that, so why couldn’t she. I just tell her to be grateful for what she already has and just refuse to argue with her. She can’t win because I have developed a reputation for being stubborn. I think many of the parents are too soft or gulit-ridden.
“I think many of the parents are too soft or gulit-ridden.”
And probably consistent with their own (suspect) values. If mommy and daddy are getting new cars and toys, why shouldn’t the kids demand the same? Kids aren’t stupid. If parents are being hypocrites, they know instantly.
The Guilted Age
“To me all this expenditure on frills seems like over compensation for what the parents think they lacked when they were just whippets.”
Or guilt of not actually spending time with the kids…”we have to spend so much time at work and away from you kids so that you can have nice things. Now leave daddy alone, he’s busy with important work”.
As a stay-at-home dad (among countless other things), I’m a bit biased…
Good for you for being a SAHD!
$25k for a 7 year old to play a game!. Man, my bros were in high school sports and I doubt my parents spent more than $500 each between baseball, football, and neighborhood hockey combined. Even adjusted for inflation since the 70s that’s not even close. People are soft.
(shakes head)
Maybe it’s a hockey thing. In the 90s my little sister played travel softball. She was quite good - as a freshman and sophomore in high school, lots of Division 1 scouts were following her around and telling my parents to send her to all these tournaments all over the place. Maybe it’s a midwest thing, but all these travel leagues and tournaments put the girls up with host families. The chaperones were parents that volunteered, and each family payed a couple hundred bucks for the gas, van rental, and food costs.
$25,000 a year sounds like a money making operation, not a sports league for the benefit of the kid.
I played in little league in the late 60’s-early 70’s, and we had to go door to door selling chocolate bars, to pay for our uniforms.
I never developed into a major league prospect, but I learned a trick or 2, how to hit financial curveballs…
Right along with ya, Aladin.
All side trips were fundraisers that WE went out and hustled for.
“Needed” after school programs costing 25K a year? Where? On Mars?
Heh. This is the “I have kids and don’t actually want to deal with them” approach to parenthood. Easier to spend ridiculous sums of money to ease the guilt than give them what they actually need, which is some attention after school.
Yep - these days, the gotta-have-it-all parents drop the brats off with their own parents (the kids grandparents) and then spend all day calling them to check up on every little detail. Such progress! It’ll be more fun when they all have to move back into the same house once the gotta-have-it-all generation can no longer support the McMansion, the rented luxury car (a new one every 2 or 3 years), and the designer kids!
Schools are being ordered to drop the term “mum and dad” in case it offends pupils from a single-parent, homosexual or turkey-baster “family.”
Ed Balls, who runs the department of social engineering, also wants four-year-olds to be taught about same-sex relationships.
Teachers should avoid telling boys to “be a man” or stop behaving like a “bunch of old women.” And gay teachers are to be encouraged to discuss their private lives in class.
Presumably, pupils should stop saying “Please, Sir” when they put their hands up because it may upset the sensibilities of any maths master going through gender reassignment therapy.
And “Please, Miss” might cause a feminist headmistress to have a fit of the screaming ab-dabs and sue for com-pen-say-shun.
Children who use the playground taunt “gay” - as in “those trainers are so gay” - will be treated the same as racists.
http://www.dailymail.co.uk/pages/live/articles/columnists/dailymail.html?in_article_id=512315&in_page_id=1790
Holy smokes, what bullsh*t! I’d pull my kid out of that school as fast as possible.
I think your leg has just been pulled, successfully.
$25k a year for after school programs? Hmm, I wonder how late this lady was working?
On the other hand her kids might have a fairly common problem which the public schools in my area totally clueless about, that being dyslexia.
One of my kids was having problems reading and the public school didn’t have the answer. We hired a specialist to test her and found out she was in fact dyslexic. Tutors for this cost about $50 per hour and we figured we might as well enroll her in a private school that specializes in it. Total cost per year = $17,000, but it’s the best money we’ve ever spent.
So yes, kids can drive you to do insane things, there is no doubt about that, that friggin school is 40 miles away!
You are enrolling your kid into a private school that specializes in vital skill that causing problems for your daughter and the local public school isn’t (obviously) cutting the mustard. A world of difference between that and an after school program. And your tution is still cheaper than the “after school” program. Yikes!
Yes, which makes me wonder how many hours a day that lady was leaving her kids in after school programs.
You’re exactly right when you said that her kids needed her attention after school. That’s all they really need is your attention (plus about a million other things).
I had a father who was text book dyslexic. This was years and years ago. Nobody knew what it was then.
They, the teachers and people in power in a childs age, told him he was stupid. I believe he never graduated from grade or middle school, as it is called now. He had wanted to be an architect, but wound up being a truck driver.
But he built rooms for our house etc. He had an incredible mind when he could apply himself. My mother had an IQ of 165, in those days. An odd relationship, to say the best.
So while I am only a litte slydexic, I have seen the horror of the wasted talent of a good mind and a good person. My goodness, has nothing progresssed in 30 or more years? Believe in yourself and your son.
jtie,
If you address this comment to me, I don’t mean to imply this has anything to do with intelligence, instead in many cases it’s exactly opposite. Many CEOs, Charles Scwab to name one, have this problem, but it allows them to think in an abstract ways.
Thinking backwards and forwards is a gift, of sorts.
palindromic minds.
The actual Greek phrase to describe the phenomenon is karkinikê epigrafê (καρκινική επιγραφή; crab inscription), or simply karkiniêoi (καρκινιήοι; crabs), alluding to the backward movement of crabs, like an inscription which can be read backwards.
sounds like my bil and sil they are constantly traveling for hockey and lacrosse tourneys
and their son was recently accepted into an exclusive conn private school for 40k a year
btw they send their other child to a local private school for 25k a year even though they live in a town with ecellent schools for which they pay 20k plus a year in taxes for
oh and they cry poverty
my son shoots video of hockey tournaments and sells the DVDs to the parents, lots of customers from the USA. So far business has been good.
Whatever happened to the after school program called “homework”? And the relatively cheap after school programs like Girl or Boy Scouts, intramurals, interscholastic sports, the public library, and so forth? I managed to get by with those and they didn’t cost $25,000 for my entire childhood.
“Needed” after school programs costing 25K a year? Where? On Mars?
I’m sure that if her darlings don’t graduate from Harvard she will consider herself, and the boys as well, to be utter failures. Hence the expense programs.
My kids have an after school program that costs me $30 a week: doing their household chores and then their homework at the kitchen table. The $30/week is $10/head allowance.
One doesn’t need a $1M portfolio to hang original art on walls. There are up-and-comers to find for a couple hundred a painting. Original oils look so good! Heck, check out the local high schools for student work.
Notice the author is Michael Barbaro. Wonder if that’s the ex husband.
Hey..I get some great buys on Art from Ebay..starving artists have some great paintings..
There are great artists on this very blog. The poster “edhopper” is one of them.
and I seem to remember that arroyo’s photos are stunning.
“arroyo’s photos are stunning”
They are grande indeed.
Exclusivity is no longer really viable, in terms of being a photographer…
All one has to do, is right click and save, and it’s yours.
I think it’s a good thing.
Thanks NYCB. My Gallery paintings ain’t that cheap. But artists friends and I often go out and do smaller, on sight “plein air” paintings that we sell for prices under $1000.
I also remember getting together with friends afterschool to play pick-up games of baseball, football etc…
Cost us nothing, and much more fun than league play.
And thanks JP and PB…and Aladinsane, you are right to a point, and it’s really up to those of us who want to make a little money off of our photographic interests to come up with ways to “add value” above and beyond what can be right-clicked for free (much higher resolution versions, for example).
Anyways, my kids make some STUNNING pieces of art (my oldest daughter does some beautiful stuff with pastels) that we have framed and up on the walls, along with framed pictures of friends and families.
I guess the bad part is that no one becomes envious of us when they see what we have on our walls. Isn’t that one of the reasons you get expensive art? To have your friends and neighbors become envious of your style, obvious good tastes, and money?
don’t feel bad re:
I guess the bad part is that no one becomes envious of us when they see what we have on our walls.
I think you’re saying that TIC, but here goes anyway:
I learned the hard way that the American consumer is art-uneducated. I don’t know if it’s cause we’re so sports oriented. But my travels in Europe exposed me to another culture that was very appreciative of art.
So true but art. I went to my daughter’s 3rd grade art show where the kids hang their painting on the walls and joked to my wife that if they had a famous artist’s name on it they would sell for a few thousand dollars. They looked as abstract to me.LoL
I know a few people that have over $70 Mil. I didn’t know it at first because they live so modestly. Only one has a BMW but the rest own american cars (sedans). Their houses are not over 2000SQFT but all are located in a very nice location.
I guess the mentality is if you have REAL money you can buy anything but why!? when the simple ways of life already makes you happy. AND
people that thinks they have money will buy everything they believe what makes rich people happy. hmmm my head huts…
Also,
Very wealthy people often DON’T want to draw attention to themselves. Showy displays also draw the attention of thieves, etc.
Yep, and NY Magazine says well be better off when cheap is in.
http://nymag.com/news/features/43575/
There certainly was a change in the late 1990s, be we didn’t change with it much, and I didn’t change at all.
Were it not for the price per square foot of real estate, NY is a great place to live cheap — no car, free entertainment, public parks and libraries in walking distance, no zoning rules to force you to consume more space than you need. But it is also a great place to blow lots of money, and that way of thinking has crossed the river into Brooklyn.
“Were it not for the price per square foot of real estate, NY is a great place to live cheap…”
I am guessing the same could have been said about Tokyo around 1989…
And the people who rented in Tokyo circa 1989 did very well for themselves. I know a few.
Whether one can argue a causal relationship from that is open to debate.
Whether one can ever argue a causal relationship from time series data is open to debate.
Whether one can ever argue, is open to debate.
So let’s start shouting right away.
It is no accident that the quality of life (and of course availability of high-paying jobs) increases rents. It is what makes me a Georgist.
The LL did not create that library, park, public transit system, yet he is charging his renter for access to it.
“It’s the worst,” Ms. Barbaro said. “How do you salvage what you have and hopefully go back?”
Let go or be dragged.
Poor Fran. Today I sit in my small mortgageless home, dealing with housing costs that are limited to fire insurance and property taxes. I pay about $3,500/month for the caregiver costs associated with keeping my wife’s quality of life better here at home than it would be in a rest home (where incidentally here in California that cost would be in excess of $5,000/month). I have absolutely zero sympathy for you Fran. You put yourself in the position you are in because you are selfish and unwilling to plan for potential future needs. I hope you learn a valuable lesson that provides you with the opportunity to permanently modify your behavior.
Fran says…”the money was always there”. But with 200k in credit card debt, apparently, it wasn’t.
Those are huge numbers to have on a credit card, at who knows what interest. That 200k in savings would have been a cushion against the unexpected. How could you possibly look at 200k on a bill every month, and think you have “money”. Or that 25k for a 7 year old’s hockey play is an “ordinary expense”.
If this person weren’t American, she could be diagnosed as mentally ill–purely delusional.
Our whole society is mentally ill these days . All the marketing is designed to get people to buy now and pay later . You can get you entire house carpeted and not make a payment for twelve months ,or buy a house you can’t afford on a teaser rate .
Back when I was younger the financial planners had a concept of a balanced family budget in which no more than 25% of income would go to housing and they would suggest 10 to 20% a month toward savings (and that was back in the days of income tax rates that were a lot higher ).Also, back in those days you could write off installment or credit card debt ,yet people didn’t exceed reasonable levels of debt .
One of the sales pitches for housing debt (during the boom )is that the mortgage was a write off while credit cards are not.In addition ,the tax free gain every 2 years was used to get many a sucker to buy inflated real estate .
My point is all these sales pitches have nothing to do with a balanced family budget and prudent management of income .
Our society is now out of whack financially . Every bit of stimulus is designed to get people to spent money and pay later.
While spending money does create jobs ,spending cannot be at the expense of the future or spending cannot exceed a reasonable budget for a family . How many people these days don’t even have excess funds for a emergency ?
Right now this economy needs people to spend and the people already spent into the future in the form of debt .
“Our whole society is mentally ill these days. All the marketing is designed to get people to buy now and pay later .”
Preach it, brother HW…
This mindset needs an enema…and I think I see it coming.
I’ll try this again:
Monkey see, monkey do!
http://tinyurl.com/2wsg8l
I guess ALL our economies are going to hell in a handbasket.
All together now…
Hmmm… I wonder if the Spanish gobmit is sending out checks to the masses too.
Shiller - Historic Housing Bust video. If you can stand the screechy reincarnation of the secretary on the Beverly Hillbillies
http://bigpicture.typepad.com/comments/2008/02/shiller-histori.html
Historic quotes by famous Yale professors of economics:
(Fisher circa 1929): “It appears the stock market has reached a permanently high plateau.”
(Shiller 2008): “I don’t think we’re going into a Great Depression but I think in terms of housing busts, we’re in the same scenario.”
“Real estate owned by households is on the order of $20 t, so we have already seen an 8 pct decline, which is getting close to the order of $2 t lost already…”
During times of universal deceit, telling the truth becomes a revolutionary act.
– George Orwell –
“Live not by lies” - Alexander Solzhenitsyn
Beautiful and dear thought, purchased by time spent in the gulag…
“…he won’t make the same mistakes…”
This is very optimistic, IMO, because it presumes the mistakes made in the past (e.g. by the Fed circa 1930 or by BOJ circa 1990) were avoidable if only the CB in question had not made a series of missteps. The fact that mistakes are clearly visible through the rear view mirror does not tell the viewer what alternative history would have occurred had said mistakes been avoided. It is possible the available alternative courses of action would not have helped much, either.
Shiller and like-minded folks seem altogether too focused on the potential for negative psychology to dampen consumer confidence, and slightly oblivious (at least according to that interview) to the tsunami wave of debt which was the impulse behind that huge runup in housing prices seen in his charts. The unraveling of a debt bubble eventually extracts its pound of flesh, and it is not at all clear to me why it is different this time, or that today’s policy makers, no matter how brilliant, have a readily available antidote.
Well said, Bear. Mistakes have already been made. Housing was overstimulated by the PTB including the Fed. No one paid attention to the quality/viability of new entrants/homeowners just the quantity of them. Moreover, the additional consumer spending generated from the equity of existing owners was too hard to resist.
In other words, they used the house to print money/equity. The bursting housing bubble is the mother of all paper jams. It’s just not printing anymore. Apart from desperate rate cutting shrieks, everyone is mulling around looking dazed and confused wondering wtf just happened.
Another mistake:
Hubristic assumption that there are always readily available policy remedies to provide a quick-fix solution for yesterday’s monumental policy errors.
Biggest mistake…
Not taking into account how unaccountable people have become.
You know, I don’t believe I’ve ever seen the word ‘hubristic’ used before. I approve of it, however. It even sounds like some sort of rice cake snack, which adds to its appeal.
Sounds more like a condition that might be helped by taking a laxative. Or maybe an emetic.
“Jim was a little hubristic last night…”
“Sounds more like a condition that might be helped by taking a laxative.”
Luckily monetary and fiscal stimulus are supplying the financial markets with a massive dose of Exlax.
More like a massive dose of Lax.
Perhaps the right moniker is “Exlax underwriting standards”?
“Well said, Bear”
Indeed!
My favorite part was his discussion about consumer confidence and how in the early stages of the GD there was a significant loss in confidence (according to some research) and that in order to avoid another GD we need to keep confidence up.
I suspect (as a thought experiment) that if one were able to do a study on the confidence level of people during the early stages of the sinking of the titanic and compare that to just before hitting the iceberg, there would show a signifanct drop in confidence.
I also suspect that in both cases, just changing confidence levels wouldn’t have much impact on the final outcome, except to possibly catch more people unprepared than if they had lost confidence correctly.
Spot on — folks like Shiller, BB etc mistakenly assume that it is a change in sentiment that will make or break the economy, when the real driving force is coming from the iceberg which the credit market just struck. One problem I have noticed with academic economists is that they live in a theoretical cloud, which makes it hard to discern real world concerns like budget constraints.
This notion that confidence is the key factor underlying success or failures of the economy is a myth which has survived since at least the 1930s… Bad policy sets the stage for economic collapse, and the next generation of policy makers after an era of easy money get to live with the blame for the fallout.
The con is gone…
Leaves us with “fidence”
On some points I agree though - the GD was famous for its pervasive and irrational fear - all because people anticipated worse things to come. There were numerous factories complete with state-of-the-art equipment and cadres - standing still and no producing anything - at the very same time people went about without the goods that they needed, but were too afraid to buy.
Sentiment does play a big role, the question is where is the threshold for rational versus irrational sentiment. If the policymakers pander to the sentiment too often, we will learn how to play and cheat the system, rendering it useless.
“Sentiment does play a big role,…”
Indeed — and innumeracy plays a big supporting role. How else to explain Los Angelenos who thought back in the summer of 2003 that another ten years of annual home price gains in excess of 20 pct annual lay ahead? Real budget constraints are currently dealing a crushing blow to irrational exuberance run amok.
I guess at the time of sale, the budget constraints included the item called “You can always sell at higher price or refinance to a lower rate.”
Gloomster business executives polled in the ISM survey seem to be hell-bent on sinking the U.S. economy with their pessimistic sentiment. Was there an unannounced terr0rist attack on the U.S.?
MARKETWATCH FIRST TAKE
Business confidence stalls
Commentary: Sudden decline in ISM index shows dismal outlook is spreading
By MarketWatch
Last update: 9:57 a.m. EST Feb. 5, 2008
WASHINGTON (MarketWatch) — U.S. business executives became deeply pessimistic about the economy in January, according to a survey of purchasing managers released Tuesday.
The Institute for Supply Management’s survey of nonmanufacturing firms was one of the worst in its 11-year history.
The ISM business activity index fell to 41.9% from 54.4%, the biggest one-month drop ever and the second-lowest reading ever, exceeded only by the month after the Sept. 11 terrorist attacks in 2001.
http://www.marketwatch.com/news/story/pessimism-spreads-widely-january/story.aspx?guid=%7B0F5D29D7%2DD456%2D47CE%2D9FBF%2D4A72D32BDAEF%7D
I’m in agreement with Bear and others above. It is not loss of confidence that will stop people from spending. It is a maxxed out debt load and being cut off from more debt.
He mentions a great desparity… yeah, 7 years of wages rising more slowly than inflation. People
(sorry… delay there while I turned off CNBC… Dennis Kneel came on, so it had to be changed.)
Where was I? Oh yeah. People have been living on debt, not income. Debt goes poof, they have to stop spending whether they want to or not.
And how can we fix the inequity between income and lifestyle? Wage increases? In a recession, in a gloablized economy where Chinese and Indian workers will do our jobs for 1/10th the cost?
The one thing that struck me was his mention of the stimulus, and congress will have to do more.
Seriously…Let’s stop with the game of footsie and just cut to the chase. $2 trillion in cash handouts in proportion to income, that has to be used to pay down debt if you have it, or will compensate you for inflation if you are not in debt. Combine this with return of strong regulation on banks, brokerages and usuary laws.
Nationalize the excess debt and put laws back in place to prevent the debt burden getting this out of control again.
Cobine with tax increases and government spending cuts.
UFB.
Danger: UXB
That’s 33 hours of my life I’ll never get back
Start to pay as they go…
http://www.nytimes.com/2008/02/05/business/05spend.html?pagewanted=1&_r=2&ref=business
tougher standards:
WASHINGTON — U.S. banks are toughening standards for home mortgages and commercial real estate development loans, seeing more sluggish demand and predicting further delinquencies, according to a Federal Reserve survey released Monday that added to concerns about the faltering economy.
http://tinyurl.com/yo3swj
Right and they are pumping money like there is no tomorrow, so who is doing the borrowing?
Perhaps this chart offers some clues?
http://research.stlouisfed.org/fred2/series/BORROW?cid=122
P.S. I don’t know much about the plumbing details of our payments system, but my gut-level impression from the big spike at the right end of that chart is that there may be a fair level of panic at the moment among depository institutions and the policymakers who serve them.
The drastic cuts in Fed funds rate help with the transfusion. Borrowed blood.
I wonder if it would ever even make the news if the Fed “forgave” loans to banks.
Skye, Excellent point.
Yea ,what about the easy money billions of short term loans the Feds have extended lately ? Are the banks even making their interest payments on those loans ? Maybe the Feds have decided to freeze the payments.It’s a mad mad mad world .
DEF FED
aussie inflation:
Canberra on Monday warned that Australia was facing a “very substantial” inflation problem as data from China, Singapore and Indonesia pointed to inflationary pressure from rising food, energy and housing costs.
“The inflation genie is out of the bottle,” said Wayne Swan, Australia’s treasurer, ahead of a Reserve Bank of Australia board meeting on Tuesday that is expected to agree to raise interest rates.
http://tinyurl.com/22rg4o
Australia’s central bank blamed significant inflationary pressures for its decision on Tuesday to raise interest rates to their highest level in close to 12 years.
The 25 basis point rise in the benchmark cash rate to 7 per cent is the third increase in six months and comes despite aggressive cuts in US interest rates in recent weeks.
http://tinyurl.com/yv9vcn
US buys a whole bunch of stuff from China, how come only the Aussies are seeing inflation. I can only conclude that they don’t know how to claculate inflation numbers. The US Fed has been lowering rates as if they are crazy, still there is no sign of inflation! Our Govt is good at calculations.
Maybe the truth is that interest rates have very little to do with inflation.
I guess higher rates encourage savings…. I can see that. But how can lowering reates really encourage spending? Drain your savings… take on more debt. Not sustainable.
My theory: The Guvmint only uses RETAIL prices NOT UNIT pricing.
So as every manufacture downsizes their product the price stays the same..hence NO inflation…..I can’t see how you would downsize a dozen eggs or a quart of milk, but they did manage to get the sheeple to accept a 56 ounce “half gallon” of ice cream….now up to $5.99 ….$5.99 for 56 oz of Breyers..
The US Fed has been lowering rates as if they are crazy, still there is no sign of inflation! Our Govt is good at calculations.
I scream, you scream, we all scream about lightweight ice cream.
It’s a bit more complicated than that. You can get an example of the stuff does the government uses to calculate inflation:
http://www.shadowstats.com/article/56
UK prices stagnate:
Feb. 5 (Bloomberg) — U.K. house prices stagnated in January after credit costs rose and banks granted fewer mortgages, a report by HBOS Plc showed.
The average cost of a home in Britain was unchanged at 197,244 pounds ($389,000) from December.
http://tinyurl.com/yse4xs
The Metropolitan Museum of Art is closing at least 9 of 22 satellite stores in malls…GF said they lost $2 mill….prob 40-50 jobs lost….The Airport stores are doing ok.
One last pitch for tonight Obivia’s 201 Lafayette st. soho, 1 block south of spring on the 6..stop by Fat Tuesday..i will be spinning music from 6 on..nice upscale lounge….
Love the video clips on your Youtube page. I lived in New Orleans for 9 years.
The stores are dull anyway.
An art museum has satellite stores?? Never heard of such a thing.
They are “expanding”. You don’t need to go to the Met any more to buy Met crap. They’re all over.
Yes I thought it was strange too..but people wait for their planes and usually stop in and buy some impulse gift item.
Thanks TxChick…i have more videos of Zydeco bands i will be putting up soon Strange how so few of these bands have any decent live videos..i guess everyone comes to dance
They do have some very nice (and unique) things in those shops. Ours (Galleria area, Houston) was too far away from me to make it a viable outlet for frequent git shopping.
They’re called websites, and they ship to all over the world.
For many companies (perhaps not the Met), it was a side bet on real estate. And they will have their heads handed to them.
I could even see the virtue of one of these shops, say in JFK. What pray is the virtue of opening one of these in SoHo? People are too lazy to go uptown to the Met?
Expanding they’re incredible tax-free business model. Museums are the new Churches.
Woops… grammar spaz …
“Expanding their incredible tax-free business model. Museums are the new churches.”
Let me know the next time you are doing something on a weekend. weekenights are tough for me
should be crowded, all the giants revelers will be ready to party
the airport stores will close down once corporate travel does too. Only a matter of time.
More salad…
http://www.321gold.com/editorials/schiff/schiff020408.html
Good article.
NPR today has a piece on mortgage fraud in Las Vegas.
NPR also did a story on Joshua trees yesterday; something about how they might become extinct.
The elementary school principal’s paddle is now extinct. We are trying to phase out all forms of punishment, correction, and all negativity.
Well, with the plethora of stories of nincompoops requiring a JT treatment, I can see why we might be running short on supply. Hey, anyone want to go in halves with me on a JT nursery? Could be the next bubble.
And after the mortgage fraud story, which was great, they had the WSJ economics editor on to talk about the monoline bond insurers and how 2Trillion in bonds would have to be marked down b/c they are kaput.
schools learn hard lessons:
Feb. 5 (Bloomberg) — Whoever thought it was a good idea to allow all municipalities to engage in interest-rate swaps and derivatives?
The Pennsylvania legislature, for one. In 2003, the state enacted a law giving its municipalities the power to use swaps, as long as they hired an independent financial adviser to help them figure the transactions out.
http://tinyurl.com/23l593
Ah yes, instead of having bureaucrats make decisions, outsource to the brilliant, efficient private sector. Didn’t anyone mention that one of the things the private sector does brilliantly and efficiently is fleece the government?
Why is it so easy to fleece the govt?
Why would anyone smart work for the government? They are rigid and bureaucratic and works by seniority not smarts.
That applies to managing municipal funds and pensions too. I am more surprised that they are fleeced so little.
Exactly. So we have an inherently failed system, which tends to be “fleeceable” and yet we continue to place more and more trust into this system.
It’s like choosing a less secure safe to put more of your money in.
I wonder how “independent” those independent financial advisors are. IB “A” acts as advisor and recommends IB “B”s product. Then IB “B” acts as advisor and recommends IB “A”s product.
I bet the advisors all recommended the opaque, ill-liquid, high credit-risk over-the-counter derivatives instead of exchange-traded options and futures. Fees for OTC derivatives are far greater than commissions on exchange-traded derivatives. Plus, it’s very difficult to determine a fair price for the OTC stuff.
The bubble is alive and well on Long Island!!!
I saw this this morning and nearly did a spit take with my coffee.
http://tinyurl.com/yokolh
Oh and this one screams a half million! Wht not make it a cool million?
http://tinyurl.com/2xzy6g
20×17 lot! lol
It looked a Klennex box turned sideways.
Do you think that house is 750 sqft?
It’s a Waterview Property and there aren’t any pictures of the ‘view’.
According to Google maps, if you look out one of those teeny tiny windows you might be able to catch a ‘view’ of a tiny sliver of river.
http://maps.google.com/maps?f=q&hl=en&geocode=&q=2540+Riverside,+Seaford&sll=38.62418,-75.62092&sspn=0.011852,0.019956&ie=UTF8&ll=40.658127,-73.49382&spn=0.001439,0.002494&t=h&z=19&om=0
It’s probably a teardown…it is located in Seaford. What is the lot size?
The boats in the picture are bigger than the house.
I like all the waterview props for sale in FL. Someone’s yard would get more water after a heavy rain. Mostly it’s a pool of mosquito infested water about the size of a swimming pool. But hey…you can get more money for water properties.
5,200 in taxes for the 1st house.
wow.
But that is without STAR!! (Local tax “reduction”…Danni knows what I am referring to.
Danni - are you noticing more houses selling? I’ve been noticing everything that is in my range disappearing in the past 3 weeks!
Are you serious or a troll?
Uh, I am NOT a troll. I am a DONOR (just ask Ben!) and part time lurker/sometimes poster.
I posted my situation in “weekend topic suggestions” here about 2 weeks ago. In the beginning of January this year my LL gave us 3 months notice b/c his daughter needs the house we rent (just got divorced, cannot qualify for a mortgage, daddy to the rescue). We have 3 options, rent another house somewhere else, move, or buy a house. We are considering all options.
We started to look around at houses because we do know that prices have dropped in our area (long island) but not enough. I am a FIRM bubble believer and we were definitely planning on lowballing where possible. Last weekend 8/10 houses I wanted to look at were already under contract (in one week) and this past weekend 2/4 houses already have accepted offers. Many of these are houses that I have seen listed for 6 months or more already. Some are only listed for 3 weeks and they are under contract. When I drive around, I am seeing all ranges of houses with under contract signs from McMansions to tear downs.
I WISH I was kidding. We got totally burned through family greed with respect to housing during the bubble, In 2001, my husband’s grandmother originally offered to sell us her house for $200K, then in 2002 it was for $300K, then in 2004 it was $400K, then “Oh, there is an offer for $425k, can you beat that?” (She was back and forth deciding if she wanted assisted living the whole time and her sons kept whispering $$$ in her ear.) We passed on it and we’re glad we did but we saw everything else go totally NUTS in our area (Long Island) and gave up and continued renting and saving money.
Now, we are in an even better financial position to buy, have bigger downpayment, etc. We see what houses are renting for now and we have looked at decent houses where the price to rent gap has narrowed significantly. (We won’t be able to rent for what we paid over the past 8 years unfortunately…we were somewhat rent stabilized with only one increase during that time.) We thought we would have plenty of time to mull over houses and lowball and we are INCREDULOUS and SHOCKED that these houses are disappearing.
If someone else I know (family, co-workers, friends) tells me “IT’S A GREAT TIME TO BUY!!” I will scream! I am hoping this is just a dead cat bounce because prices HAVE definitely gone down - YES, you and I know they were ‘wishing prices’ but I guess J6P (or whatever the East Coast equivalent would be…Biff6Pack? MuffyHowMuchAMonth?) doesn’t know that.
So…long sob story short, I am looking for some feedback from a local poster. I see Danni post alot about houses on LI so I assume she is looking around. I thought that is what this blog was for…for sharing local observations
well, it is, imo actually good that some places are selling for 20% or so off peak. it will lower comps and the next round of sales will be 20% off of those prices. point is: it starts to set the trend and two FBs can deal with a 20% loss easier than one with a 40% loss.
I can’t answer locally - but my guess is you’re seeing the effects of last year’s wall street bonuses hitting the street. Most of the bonuses there were paid out on the earlier results, rather than later. (Remember Wall Street made so much money off this fiasco that most of the writedowns late last year still left them with a profit for the year.) The lag on actual layoffs is also a few months, but i can’t imagine it’ll be too much longer.
If you do buy, make sure you’re well above sea level.
Hey Majisto,
Yes, I’ve been tracking the houses but I find the “lower end” houses in the Seaford, Massapequa, Wantagh area just sitting OR going to contract but everything falls thru.
Also, in the past three weeks I found a ton of houses that either don’t have their for sale sign anymore but are still on multiple listing or pulled off all together. I thought they were sold at first but realizes that no Realtor would sell a house and not put a giant SOLD sign on there for six friggin months. Upon furthur investigations and craigslist, I found many of them are trying to rent.
Right now, we are in an apt that is leaking water everywhere and we want to find a house to rent. DO NOT BUY. Go to the long island bubble forum:
http://tinyurl.com/2d9ngc
Also, when looking to rent one of these houses, know that most are wishing prices (yes, just like the sales prices) and you can talk them down. You might even want to go to the nassau county website to look up info on the property.
Hope it helps…hang in there!!
Danni
I would like to believe that I’m not competing with Wall St. bonus money in my price bracket (maximum loan will be 417K conforming) but I guess you never know!!
Majisto,
I wrote a lengthy reply but it’s somehow got lost.
I feel your pain and anger at this market but I don’t see many sales around here on the south shore. I do see houses coming off the MLS but were ultimately not sold. I have also heard more than a few personal accounts of people going to contract multiple times but each time they fell thru either due to financing or cold feet.
If you want some more local news on the LI bubble go to:
http://tinyurl.com/2d9ngc
I noticed also that the wishing prices for rents are unusally high but I noticed they are either not being rented or listing lower. If I can give you one piece of advise it would be DO NOT BUY.
Good Luck to ya. I hope this helps,
danni
I have also heard more than a few personal accounts of people going to contract multiple times but each time they fell thru either due to financing or cold feet.
I think we’re going to see this more and more because people still have the mindset that they can get a 100% loan. Probably the realtors are telling them…let’s try it. App rejected and house back on market.
Thanks, Danni for the encouraging reply. The ‘bubblemap’ on that forum is great - I have been actually already using that site to see sales info/reduced asking prices, etc, and I can look at specific neighborhoods too.
We know we can negotiate rents - that hasn’t been much of problem for us…but we a) don’t want to sign a long term lease and b) have specific needs like doesn’t mind pets and has a garage. The houses we have seen for rent don’t meet all the criteria OR are bigger dumps than what we live in now!
We actually have a place to stay for a while, as a co-worker is leaving the country for job reasons but they are keeping the house (just in case it doesn’t work out?). We just expected a totally different mentality out there like few buyers, desperate sellers, and in our experience currently, it hasn’t quite been that way. (FYI -We are looking North Shore Suffolk County - Huntington to Smithtown… (I am a north shore snob…lol))
LOL My hubbie is from Jericho…after 13 years of marriage he has only recently let go of his North Shore =ehem= sensibilities.
We have a double whammy in my house, I’m North Shore Nassau (Oyster Bay) and my Husband is North Shore Suffolk (Northport)…two towns that were middle class when we grew up but are now ultra-yuppie and overpriced. We are looking for a return to simpler days for the middle class on LI. Is that even possible anymore???
as if
House prices are entirely dependent on the credit markets.
A house buying negotiation, at the core, goes like this: “How much is it?” “How much you got?”
Well, in the past several years, “How much you got?” got bigger and bigger with the toxic loans, with people being able to borrow more and more. The FB’s appetite for debt is insatiable. Prices will only go down if credit tightens and ancillary requirements (downpayments) become more stringent.
I’d like to see what the mix of loans (15 yr, 30 yr, Option-ARM,etc) and downpayments are today, versus during the past 7 years. That is what will determine house prices and the state of the market.
What a charmer. Nothing screams “BUY ME” like a photo of an open toilet seat.
Hehehehe!
auger- - I posted a long followup but it hasn’t showed up yet…long story short I am NOT a troll!
Hey, I didn’t recognize the posting name but I wasn’t being accusatory, just asking, hence the question mark. I found your answer and dialoge with Danni interesting so I guess I’m glad my question was mildly upsetting. Sorry
No problem - you and your joshua tree references have me on my toes!
lmao
the 1st one looks an 19th century outhouse
renting and damn glad to be doing it
long island is pathetic-these people must be breathing to much fumes
While living 2 times in NYC, I looked on LI but the Prop Taxes were prohibitive to say the least,kept a 30′ in Oyster Bay instead of a house.
Another day, another round of CDO downgrades :-O
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZi7Npy7h_gc&refer=home
“Fitch is acknowledging that it was OVERLY OPTIMISTIC in its default rate and other assumptions…”
They have returned to a normal, appropriate level of optimism.
From Spiegel Online:
Deutsche Bank now (un?)happy owner of seven office towers in NYC, because Macklowe is defaulting on 5.8 billion US $.
These loans were made for walking…
http://www.truthout.org/docs_2006/020408B.shtml
http://tinyurl.com/2drkfu
The insolvency of condo/HOA associations will be another aspect of the bursting bubble & credit/mortgage crunch. These associations just got a little help in being at the forefront of this from an embezzler at the property management firm.
http://tinyurl.com/yt6t28
The embezzler then of course had a break from reality when the story broke in the papers and went on a shooting rampage!!! Lets hope that aspect of the deflating bubble will not be repeated too often!!!
Another layer of nanny government people add to their life. And of course it has fraud overhead.
RE: The insolvency of condo/HOA associations will be another aspect of the bursting bubble & credit/mortgage crunch.
Good point
My sister owns a unit in a converted Mazzland tri-decker.
The top floor unit was bought by a flipper and superadequately renovated.
When the market collapsed last year the owner couldn’t sell she bolted to CALI and now refuses to pony up her share of the condo’s running fee’s.
Another problem is nobody knows if the unit is appropriately winterized-which could result in bursting heating and plumbing pipes and with subsequent damage to the lower areas.
LMAO…even a simple 3-unit complex can’t be run right. Imagine the mega-projects. Sure glad it isn’t me dealing with the problem.
a triple-decker CONDO???
Back in the day, those things used to be owner-occupied. With some over-the-fire-code number of revolving door tenants on the upper (drafty) floors.
Dang, every one of those I lived in was owner-occupied.
Condo. Yeesh. (Btw, wtf was up with MA voting for Hillary? I’m disappointed.)
Pensacola, FL
Free golf cart with full price offer! Such a deal!
http://pensacola.craigslist.org/rfs/563202027.html
That’s a Garage Mahal if I ever saw one. That is one fugly house that not even a mother could love.
Was flipping channels on the telly yesterday, and there’s a show called “Garage Mahal” on now.
I wonder where they got the name?
***Garage Mahal!*** I love this blog.
I offer to let the owner keep his $344,000 golf cart. I’ll bid $900.
At least they could have shown a picture of the golf cart.
OK, who wants some schadenfreude for breakfast?
http://tinyurl.com/yuwmsq
Key excerpts:
Vivian Snyder has strong credit and is not classified as subprime, but she is one of many consumers who can’t afford the car she leased. Snyder drives a brand new convertible BMW with a MSRP listed at approximately $100,000.
Most consumers can’t afford it, and neither can Vivian. That’s because the monthly lease payment is $1,300. It eats up half her income which is a $2,500 disability check.
Vivian has only a few options. She can plead with the finance company to release her from the lease or have the car repossessed, losing her good credit and a $30,000 down payment which consisted of her entire retirement savings.
Just another in an unlimited amount of idiots. She should lose the car the down payment and that is that. She is only a ‘victim’ of her own stupidity!
Did you notice that the “down payment” consisted of her entire retirement savings?
It is a 30,000down payment on a car. A
Damn tag… Turning off italics here…
What kind of a friggin moron would do this? This herd needs some serious culling.
That dumb ass reminds me of young bucks in the construction biz buying $40,000 pickups to commute from home to job site. Yeah, 60k/yr at 20 years old is pretty good but they ought to be saving that dough.
Soon coming to a used truck lot near you!
Lol, I’m already seeing them on the backs of tow trucks.
The repo man cometh.
Want to see something amazing, go to one of the web sites that has leases people want to get out of, such as leasetrader.com. There are many people there with leases way more than what it would cost to BUY the car. Or a house for that matter. $1,300/month leases for Escalades. $2,000+/month for a BMW M5. $1,000/month for a BMW 335 convertible!? Many of the more ridiculous ones are in South Florida. Big surprise there.
Took a look at that leasetrader site, but am a bit confused. Why would I want to pick up someone else’s lease? Do you get a discount on the payments? What’s my motivation?
Agreed. Prices are not competitive. Yet.
Why the same as a FB bailout, to help your fellow man of course!
Theoretically it might allow you to get a lower lease price, if someone had paid a large downpayment. It might also allow you to get a shorter term. In reality many of them look like people who must have signed the lease while on cocaine, and now want to get out.
Why is it all the children in ethiopia and other african nations that get Culled. And we keep Vivian’s using their entire retirement savings for a convertible???
“She admits she signed the lease credit application with her income inflated.”
Well there ya go. Sux to be Vivian.
$2500 check for mental disability? Used her retirement saving as downpayment for a $100K car!?
Wait … now … reread that …
non compos mentis?
omg 30k dp on a leased car?
put her out of her misery please
she can live in it at least until the lease is up
Yea tell her to give up the house/apt and live in her luxury vehicle. Was she thinking?
Too bad there isn’t such thing as a Financial Darwin Award. This lady would have a pretty decent shot for making the top 10. Well, at least for today.
Real Financial Hero
Why would somebody with a $2,500 disability check each month lease a $100k BMW for $1,300 a month, putting $30k down no less? Didn’t we deal with ANOTHER poverty-stricken “disabled” dumbass yesterday who blew a $400k “equity” loan he’d gotten supposedly under the demonic influence of prescribed medications? I’d be interested to know exactly what these fools’ disabilities are, other than the most obvious contenders: (1) brain damage and (2) terminal stupidity.
The only public assistance these people should recieve is a razor blade and an instructional manual.
‘OK, who wants some schadenfreude for breakfast?’
Some for me, please. I find it so delicious with orange juice.
I had it with a delicious omelette and a side of greens. Mmmm, mmmm.
Ah, another senior moment.
No really: What *is* wrong with people? Is there a clinical definition (other than “abject stupidity”) for this type of behavior? I’ve become so accustomed to laughing at stupid people of late, I’ve begun to think that perhaps garden-variety stupidity doesn’t actually explain everything we’re seeing here. This is stupidity that cries out for some sort of clinical definition. Normal people don’t spend every penny they have (and a hefty amount they *don’t* have) on a luxury car. What’s the word for this type of brain damage? This woman not only shouldn’t be allowed to make purchases larger than a box of crackers, but she shouldn’t be allowed to *drive* a car.
It’s really extraordinary, isn’t it?
Simple decision making. Cashing retirement for bling car = bad.
There is something really really really wrong with people, and the bubble has merely revealed what was always rotten underneath.
Not to excuse it, but it does sound like extreme manic behavior. They do tend to go on spending sprees. Maybe bipolar with a little cocaine thrown in to intensify the effect…
I would want serious proof for your “excuses”.
There is a systematic pattern here. People doing absurd things. This can hardly be accidental.
yeah, bipolar with some serious drugs MIGHT explain it…
though with bipolar people, there’s always some sex act involved … won’t believe this theory until the part about the 16 yo hooker comes out … *g*
NOW on PBS heads to America’s heartland — Illinois — to investigate rampant anxiety among America’s middle class. How did families on the edge of financial collapse get to this point, and which presidential candidate do they think can restore economic hope and stability?
http://www.pbs.org/now/shows/405/index.html
NOW is a decent program, but it can get a little overdramatic at times, but not in this case. If you have about 25 minutes (podcast or video), it reaffirms what this site has been saying for quite a while, but it also gives a view of how some of these people think and their political bent.
When the poor, minorities, and those living in older central cities had problems, it was their own fault and the response was a demand for personal responsibility.
But when people in the suburbs have problems, society is to blame.
nice one! trying to get white america to sympathize with the urban poor was like trying to get the US to care about the Rwanda genocide. it is just totally outside of people’s frame of reference and likely conflicts with their world view.
“white america”
Oh that’s right there are no poor white Americans. Prejudice showing? Take your white hating guilt and shove it.
i said that middle-class suburban america has very little sympathy for the plight of the urban poor. with which part of this statement do you disagree?
Didn’t see anything about “middle-class suburban america” in your original post. Did see the phrase “white america” used with no geographic or economic qualifiers, though. Way to paint with a broad brush! Hurray, let’s categorize people by their skin tone!
When the poor, minorities, and those living in older central cities had problems, it was their own fault and the response was a demand for personal responsibility.
Huh? I thought m(b?)illions of dollars every year go to help those inner-city folks, poor folks, minorities, etc.
Care to provide some evidence of the mystery m(b?)illions?
I don’t have evidence, that’s why I was asking. I was under the impression there are lots of welfare and other type programs.
Impressions? You don’t say you really believe the PTB and the MSM do ya?
Some get it, most have to struggle. some don’t know it is available, and where to find the “welfare” programs.
We only hear about the ones who scam it. Not the ones who want to make it on their own. Same ol 80/20 rule applies here.
welfare (as in direct cash payments) was greatly reduced under the Clinton administration–except for SSI, of course. Still, those food stamps and checks do make an impact on the community. SSI/SSD are a much bigger deal, though. Giant impact on buying patterns/local economy.
In terms of big bucks going into the inner city, some investors know how to play HUD, but good luck finding the benefit to the people who live there. Disinvestment is the name of the game–has been for years. Money has moved into city centers at the peak of the boom only because there was a rumor that loaded boomers were planning on moving in.
Baltimore is a great case study: lots of money into “center city” projects, all for the benefit of suburbanites and wealthy business leaders, and virtually none of it “trickling down” to the Black man on the street, whose employment situation is precarious at best, whose housing is substandard, and whose children are attending the worst schools in the state.
I’ve never forgotten that Glendining paid millions to steal a football team while failing to adequately fund the Baltimore public schools. One of those times I wished there was a hell, because he so deserves it.
I’m from Illinois and Sauerburg sounds just like the typical Illinois Republican- complaining about law suits in the medical field - not a clue. The house can be burning down and all the Illinois GOP wants to do is stand around and talk about tort reform as some magic bullet to solving health care costs.
Yeah, the GOP in Illinois would like to take away the last lever of power that common people have for getting justice when doctors and nurses and hospitals and insurance companies make serious mistakes that hurt people - the medical malpractice suit.
And such big savings… the Illinois GOP would make you think that medical suits are soooo common… the majority of lawsuits in Dupage are civil suits between corporations - wasting our tax dollars - very few suits in Dupage are by citizens. The number of medical malpractice is so small as to be laughable - because really, healthcare is pretty darn good. But when it goes bad, and there are some seriously bad doctors, nurses, administrators out there, you want to be able to get justice.
The Illinois GOP already damaged justice. This last lever of power available to a wronged patient - the medical malpractice lawsuit - has already quite weakened by the Illinois GOP. Awhile back, the Illinois GOP voted to cap medical malpractice settlements - but only for some people! The Illinois GOP took away any possible way for citizens with no income - the elderly, the stay at home moms, children - yep, those people can’t get real settlements because they don’t have an income. Only people who work - who can show lost income, only those people in Illinois can get any serious settlements that will really help the injured person to help pay the medical care they will need for the rest of their life.
Yep, the Illinois GOP, the rich white man’s party, took care of itself - all those rich white GOP men will get their big settlements to replace their big incomes when they sue - Oh, and big secret, Republicans sue, Republicans sue as much as anybody, when the wrong foot gets operated on.
I don’t have any problem with rich white men, but I do have a problem with rich white men who just take care of themselves - like the Illinois GOP.
Yeah, the GOP in Illinois is real pro-family - real supportive of families, I’m a stay at home mom, and if a hospital does the wrong operation on me, which leads to incapacity or unexpected health expenses for the rest of my life, I get no real money any longer - thanks to the Illinois GOP. Only working moms, with an income, get to collect (if they can win the lawsuit) - and of course, since women make 75 cents on every dollar that a man makes, women get screwed again!
And the GOP wonders why Illinois citizens are throwing them out… oh, and there was the GOP corruption - how can I forget.
When the GOP can figure out how to get things done for ALL the citizens of the state, in a fair and non-criminal manner, they may get re-elected one day in Illinois.
[End of rant]
I don’t know how biased this is (or isn’t), but I opened up my Consumer Reports last week and they broke down the reasons for increases in healthcare costs. Lawsuits? IIRC, less than 5%.
Yet it was the number one reason cited by consumers who were surveyed about their opinion on why costs are increasing.
Tom Kean, a regular on Bloomberg Radio who reports from London characterized the current credit market conditions as extremely tight this morning and more losses to come and “the sentiment of banks is gloomy”.
Bank of America analyst just upgraded many of the homebuilders. His rationale is head-scratching. Enjoy!
http://biz.yahoo.com/ap/080205/home_builders_ahead_of_the_bell.html?.v=1
Pump and dump, baby, pump and dump. That ol’ game got some good legs on it.
Thanks to the Quattrone saga, they can do it with impunity.
I bet $100 these home builders will have no positive earnings in 2008. The marked down basis for their land values still exceeds the declining market value. Even if they build a home and sell it to generate cash flow, their “profit” will be a breakeven, because they are still holding lots valued above the market price, which is some cases is zero now.
The I banks are desperate to keep the Ponzi scheme going. Remember that BofA are now in the mortgage business in a big way.
I heard an analyst this morning postulate that very very low interest rates will stimulate the economy, so the dollar will rise. This is ridiculous as capital flows to higher-yielding currencies, not low-yielding ones.
The disconnect from reality is becoming screamingly apparent.
And dangerous.
I Banks… speaking of I Banks, what is your take on those?
Investing in their stocks, using them as recepticles for your $ etc???
Pump and dump . . . they can’t seriously believe that crap, can they?
Wonder if BOA will downgrade Countrywide.
A repeat of Summer 2006. It will present a good shorting opportunity - check the charts.
Mortgage Fraud Targeted by Task Force
“Last week, investigators nabbed Marlin Sprouts Jr., 52, a middle school teacher and newly elected Uniontown councilman, as part of what U.S. Attorney Mary Beth Buchanan called a four-person mortgage fraud and property-flipping scheme.
Sprouts — whose daughter pleaded guilty in a scam that cheated financial institutions out of $1 million to $2.5 million — was charged with conspiracy for his role in the scheme, documents show. ”
http://www.pittsburghlive.com/x/pittsburghtrib/news/cityregion/s_550828.html
As this bubble popping gets worse, this kind of enforcement is going to happen everywhere. A lot of people think they will get away free from this fraud, but with $200,000 to $300,000 per house getting flushed, even Dog the Bounty Hunter will find this an interesting and profitable source of revenue. The new industry is hiring now: Mortgage fraud investigators for lenders. Just look at IMARC at http://www.mortgagefraud.com/
“IMARC can provide a confidential report on the responsible party’s assets and holdings.”
These investigators are overwhelmed with work….
Is this something I can do on the side like over the weekend to make some extra cash, mortgage fraud is everywhere, it should be pretty eash to look over the loan app and spot it…
How could anyone by the name of Tiffany Lynn Sprouts be guilty of fraud?
“The task force includes officials from Buchanan’s office, the FBI, Internal Revenue Service, state Attorney General’s Office and state Department of Banking.”
“The 24 people charged for scams last week represent $13 million in mortgage fraud, Buchanan said. Authorities are working on at least 50 investigations, she said.”
I wonder how far up the food chain they’ll get.
A few shows trials a la Enron for a few “masters of the Universe” and not much more is my prediction. Just to show the masses that the government is really trying (as the corporations and lobbyists funnel filthy lucre into the fur-lined pockets of the same elected officials crying the loudest). This isn’t purely crackpot conspiracy theories. These banksters are so brazen and assured of our soma induced slumber that they are robbing us out in the open.
“Through this world I’ve rambled
I’ve seen lots of funny men.
Some will rob you with a six-gun
and some with a fountain pen”
Bring back the pillory!
MrBubble
we all love to smack our lips over a good story. so I didn’t want to keep this one to myself.
last year I was talking to my hay guy about some properties next door to him. there are actually two parcels for sale by one owner: one a 5+ acre home and several pastures, lean-to, etc. and the other a 5+ acre hay field (which my hay guy leases.) nice horse property and close to the trail system to boot.
they had been up for sale (listed, delisted, listed again; you know the drill) for about a year prior to my conversation with the hay guy. divorce I guess. note on the MLS said well if you take both separate listings we’ll package the deal for you. but the house and horse property was listed originally for $780K and the 5 acre hay field (with NO improvements) for $500K. haha how much of deal do you think they could offer based on those nutty prices?
anyway after re-listing several times they had gotten the house asking to $525K and the hay field for $450K. still ridiculous. so I asked my hay guy about it and he says and I QUOTE “oh, they’ll sell it ok. this is Hampshire - everyone wants to live here!” never mind that Hampshire is nothing more than a blip of a farm town way beyond the farthest exurbs of Chicago.
to this naturally I respond (nodding my head for emphasis) “I know what you mean, it’s diffferent here” and then proceeded to guffaw into my coffee cup. he looked at me quite quizzically and wanted to know what I meant. now, this is a good old fashioned farmer type guy. makes a good honest living making and selling hay to all the big horse barns around me (very, very nice hay!) and has a knack with farm equipment. builds his own elevators, fixes tractors, manure spreaders, has a huge chaotic pole barn where he keeps all manner of huge-a@@ farm machinery.
so I figure it’s ok to “be real” and tell him what I know about the RE market in general, and where it’s going based on the info from this good blog. he looked at me in complete amazement and disbelief. for a minute there I was convinced maybe even he had been tainted, gone to the dark side, drank the Kool Aid.
finally I end with “you know, if you wait long enough you just might get that hay field for the historical
I bet he also has a disassembled tractor motor on the kitchen table and a 90 year old jar of plums in the pantry, canned by his great grandma. Real farmers are great; no better folks than real farmers. So good on ya for enlightening him.
(I’ve had to spend some time with fake farmers lately, so I’m on a tear, here.)
story, cont’d
—————————————————————–
historical
ok I’m an idiot I have a < sign in there not html-coded. that’s why my post got cut off. sorry.
—————————————————————————-
historical <$15K an acre price” he shook his head “no way” and muttered a bit about not really needing that property anyway, then took his equipment and left.
fast forward to last night. I called him to place my 2008 hay order for 1,000 bales. also to schedule delivery of my final 132 bales from 2007 (which I had sort of forgotten about but he had thoughtfully set aside for me even though we’re in hay shortage city out here right now.) so, casually and carefully I ask about the next door property “did they sell it yet? I noticed they pulled the listing(s) again (4th time)?” he says “no, as a matter of fact they didn’t. you know you were right on target this summer” (aha! vindication!)
and then tells me the story. apparently one of the hay guy’s friends offered $500k+ on the home and horse property early last year. the neighbor rejected it. the guy sweetened the offer slightly and resubmitted. rejected again. that was last fall. the last listed price I saw of the property about two weeks ago on the MLS was $450K. love it!!
then, he goes on (yes there’s more, this is even better.) turns out his daughter is living back at home now. she bought property back two years ago on an ARM in New Mexico and decided in 2006 that she didn’t like it and wanted to come home. figured she’d put the house on the market. so, back she came and the house didn’t sell. and didn’t sell. and didn’t sell. now she is of course trying to rent it out. meanwhile my hay guy says “you know it’s lost value and I keep asking her why she keeps paying money into it every month, taxes, maintenance, HOA. I wonder if it wouldn’t be better for her to just call the bank and tell them to keep it.”
shazam!
The ISM number came out very bad. Markets are dumping everything as money moves into dollars and bonds, like lemmings off a cliff.
Lurker here. At the end of 2005, I bought a waterfront property - mainly for vacation, but also as an investment (yeah, I know) - about a half hour north of Atlantic City. A realtor just told me the place is already worth a little less than I paid, and I see that asking prices are about where they were when I bought in 2005. These places doubled in price, and even more, from 2001. I’m going to list it and hope for the best, but I wonder whether what I might get today will be much higher than what I might get a year from now. It seems that the bad news is out, so how much worse can it get? The realtor tried to console me by telling me that they’re not building anymore waterfront property, but there is a lot of waterfront property in NJ - they make it by carving out lagoons from the mainland.
It’s gonna get worse, sweetie, much, much worse.
The word is out, yes, but that’s not what keeping buyers from buying. Lurk a little longer on the blog and take a look at some of the economic facts and not the psychology that followed. People might suddenly think prices have gone down some so it’s a “good time to buy” but affordability and the capability of getting a loan is ultimately what will stem any buying.
I wish you luck.
danni
Slash the price. This is a business decision. Cut your losses and run.
The bloodbath of Option ARM resets starting roughly May and going on for the next 18 months is gonna be epic.
Slash and dump. No time to waste.
You wait and you’ll be chasing the market down, all the way to the bottom. The price that didn’t look so great now will look wonderful in a year or two.
“A little less” in realtor speak means (bleep bleepy bleep bleep!)
Housing Crisis Casts a Cloud Over Sun Belt
In Once-Booming Areas, Help Could Be Too Little, Too Late
Front page of Washington Post this AM.
Here’s a link:
http://tinyurl.com/25p4mh
Excerpt:
“The state government is staring at a billion-dollar shortfall in its $11 billion budget. Forecasters expect a region that grew 7 percent in 2006 to contract this year. Retail sales, which rose 16 percent in 2006, are dropping. Dennis Hoffman, an economics professor at Arizona State University, said he had never seen such a sharp turnabout in 25 years studying the local economy.”
“It hurts to know that you are on a road that leads to a dead end,” Rebekah Ao said. The Aos are weighing their limited options. Foreclosure? A sale that takes in less than they owe? “But right now,” she said, “we’re just throwing our money away every month.”
What? I thought renters were throwing their money away?
ROFL
Oh, how the tables have turned!!!
FYI
in VA I now a woman that hasn’t made a payment in a year
no foreclosure procedure yet
can we get a did the banks come clean in the 4th qutr thread ???
Hey! Maybe they’ll let me go live for free in that 4000 sq foot foreclosure on the other side of town that’s been empty since last summer. I’d like free rent/housing costs instead of shelling out that chunk o change too. Damn in my case I’d save $18k for the year! I know for some areas you could double that. (P*sses me right off!)
Put up a tent in the front yard. If they don’t kick you off in a few years, You Win!
What that tells you, in part, is that the mortgage holder in question has more defaults than it can keep up with. That is pretty scary.
What that tells you, in part, is that the mortgage holder in question has more defaults than it can keep up with. That is pretty scary.
Either that or no one knows who actually owns the mortgage.
Today is starting out like it may offer a great chance to buy the dip!
February 5, 2008 9:31 A.M.EST
BULLETIN
U.S. SERVICES-SECTOR GAUGE SHOWS SIGNIFICANT JANUARY DECLINE
Data do stocks a disservice
Selling’s likely to be the rule at the Wall Street open following an extremely weak reading reported for the ISM services gauge, lending further credence to recession scenario. Treasurys in safe-haven rally.
• Supply managers’ survey comes in second weakest on record
http://www.marketwatch.com/tools/marketsummary/
Volatility tsunami hits l-t T-bond yields (surely Hoz jested when he suggested they were headed up?)…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=2&freq=9&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
LOL,
Just as long as you are not long anything in the Euro markets (including the Euro). You will be fine.
fear rules today
Here comes some more worse-than-expected news. BTW, a reading below 50 on a diffusion index (like the ISM index) is supposed to indicate the economy is contraction.
U.S. Service Sector Contracts in January
By VINNEE TONG – 26 minutes ago
NEW YORK (AP) — The nation’s service sector contracted in January for the first time in almost five years, a trade group of purchasing executives said Tuesday.
The Institute for Supply Management reported that its index of service sector business activity declined to 44.6 in January from a revised reading of 54.4 in December. Economists surveyed by Thomson Financial/IFR had expected a slight slowdown but had still had expected growth, with a median estimate for the index of 53.
http://ap.google.com/article/ALeqM5iWQ9pfTlwnAbTrsSkkH9PZw0q87wD8UK70281
Me so confused… I thought a service sector eCONomy of minimum wage, no benefit jobs with no job security or hope for advancement was the way of the future! Hahaha - oops, guess not!
Stocks rally on hopes of another rate cut!
Yippee… More crack for the market. You know Kudlow is loving it.
If a 200 pt drop on the DJIA qualifies as a rally in your lexicon, what do you call a selloff?
Good day today for flight-to-quality investors to be long $US (including l-t T-bonds), short gold. The War on Savers is beginning to look more like a gold bug eradication program.
Gold future 890.10 -19.30 -2.12%
30-Year Bond 4.28% -0.09 -2.08%
10-Year Bond 3.54% -0.11 -2.96%
But Stucco….. gold always goes up…. how can this be??(kicking feet)
Looks like some powerful financial entity has applied a tourniquet to stop the bleeding at -200 pts on the DJIA (NYSE trading collars?).
Today we see yet another major flight-to-quality move into Treasurys, across the full duration spectrum of the yield curve:
Bills
MATURITY
DATE DISCOUNT/YIELD DISCOUNT/YIELD
CHANGE TIME
3-Month 05/08/2008 2.15 / 2.20 0.02 / -.057 10:16
6-Month 08/07/2008 2.08 / 2.14 0.03 / -.057 10:01
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 2.125 01/31/2010 100-11+ / 1.94 0-07¾ / -.125 10:23
5-Year 2.875 01/31/2013 101-04+ / 2.63 0-22 / -.148 10:23
10-Year 4.250 11/15/2017 105-28+ / 3.53 0-31½ / -.117 10:23
30-Year 5.000 05/15/2037 111-30+ / 4.28 1-24 / -.098 10:24
http://www.bloomberg.com/markets/rates/
The big downward move on the 5-year note yield is telling — suggests bond market participants are collectively upping their duration estimates for the “growth slowdown.”
This is all so crazy. I’m 30 years away from retirement and I’m seriously thinking of taking 50-80k from one of my mutual funds and going outright into a reverse index or something. Nothing else is making any sense.
DO IT, I am just as far out unless I clean up on this downturn then maybe only 20 years until retirement I am shorting the market. I made several $$$ today, EEV, SCC,SDS, DXD. I think the trend is down, down down but what do I know!!
well, before you go all-in short, think about buying puts against your long positions or maybe some SDS or other inverse etfs. that way you scalp some money on the way down but you don’t risk losing as much.
this bear market is fun, but the down part never lasts as long as the up part. Probably we go down a lot, then up a lot, then down, and down, and sideways, and down for years.
30 years? And you want to get out of equities for that span? Before you do that I suggest you take a community college course in personal finance 101. I have about 20 years to go to age 68 and my 401ks and IRAs are fully into equities. In ten years I probably will make that 70% equities and 30% securities though.
http://www.vanguard.com has its stats on the Vanguard 500 index fund since inception. Average Annual Return? over 12%!!!!! That’s 8% higher per year COMPOUNDED over what you can get on treasuries. You will by far get left in the dust and watch your contemporaries eat filet mignon while you beg on corners.
They called us names when we said this would happen:
The worst housing slump in a quarter-century is spreading throughout the economy, hurting businesses such as builders, retailers, wholesalers and mortgage lenders. The report adds to concern Americans are spending less as job losses mount, raising the risk the economy may tip into a recession, economists said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGaC.HuMjA7w&refer=home
Tinfoil hats are the new black
Silver lining inside the dark clouds:
The DJIA is only down 13.4 pct from last October’s high. We are not even in bear market territory yet.
Who moved my trading curbs???
I decided not to buy the dip today.
http://cbs5.com/local/auto.loan.defaults.2.645976.html
Auto financers starting to get in trouble? I would not buy a $100K car, even used off lease, but i hope that brings down prices over the entire spectrum - Would love to update my 12 year old Accord with the right-priced car.
I am planning to buy a new car with cash in a couple of months, once the full force of the credit crunch has kicked in (included wide spread awareness thereof among J6P and his friends).
SUV? Perhaps something in the 8 MPG range?
HaHaHAA! I am quite sure there are many attractive used SUV choices on eBay, but that is not my cup-o-tea…
you strike as the hummer type of guy or a escalade possibly?
“…escalade possibly?”
Gonna buy one as soon as I get my Realtors(TM) license…
PB you are kidding , right? RE license.. lol
I drive a 2007 Ford Expedition with a 300HP engine. I reset the average MPG display at each oil change interval, i.e. the average displayed at the reset time is over a 3,000 mile interval. My driving miles are approximately 60% Interstate, 40% Town. I consistently see 18.9 to 19.5 MPG indicated. I have verified the display accuracy over a complete 3,000 mile cycle by using the manual calculation method (miles driven/gallons consumed). My previous Expedition (2004 model) showed 16.0 to 17.8 MPG over same driving conditions, etc.
Of course I am a 62 year old driver with conservative driving habits, but it is possible some folks are not aware of the real world performance in these late model large vehicles. I am fairly large (6′-1″, 275 lb) and the small vehicles are very uncomfortable to me as I get older and stiffer.
You must drive downhill both ways
I say this because the Expedition is EPA rated 12 mpg city, 18 mpg on the highway. The folks that I know who have one get closer to 12 than 18 in their day to day driving.
The data is real and is not intended to prove anything. I am relating my experience. Take in the manner you choose.
My reply seems to have gotten lost:
The data I gave in the post above is real data from my personal experience. Obviously, I am a more conservative driver than your friends. My post was not intended to ‘prove” anything, just inform. Take what you will from the information.
Hello,
I also am looking to buy a new vehicle. Certified used is OK too, but I figure what the heck one time in my life I’ll splurge and buy new.
I have a car question: are disc brakes appreciably better than drum brakes?
I have a car question: are disc brakes appreciably better than drum brakes?
Yes, which is why drum brakes are going the way fo the dodo bird. All cars have front disk brakes, and only cheaper cars still have rear drum brakes. Per wikipedia:
“These brakes offer better stopping performance than comparable drum brakes, including resistance to “brake fade” caused by the overheating of brake components, and are able to recover quickly from immersion (wet brakes are less effective). Unlike a drum brake, the disc brake has no self-servo effect and the braking force is always proportional to the pressure placed on the braking pedal or lever.”
Hope this helps
“are disc brakes appreciably better than drum brakes?”
Yes. They don’t fade when they get hot, and they are less vulnerable to failing when wet.
The data is real and is not intended to prove anything. I am relating my experience. Take in the manner you choose.
I believe you. I’m just thinking that there must be something atypical about your Expedition. I have heard about “anti-lemons”, individual vehicles that exceed their
specifications (hp, mpgs. etc.). Perhaps yours is one of those. But like I said, everyone that I know who has one has told me about getting under 15mpg.
I can get the hwy mpg on my car, but only on long, flat trips where the cruise control is engaged all the time. But I too have heard of people with the same car getting 3-4 mpgs more on the highway than the EPA rating.
What I am saying is that just because your truck exceeds EPA numbers it doesn’t follow that all Expeditions will do the same. If they did, the EPA test results would be higher.
Disc brakes are usually much easier to repair.
thanks for the brakes info, guys
I have 18,000miles on my bikes disc brakes, love them, never any trouble
“Auto financers starting to get in trouble?”
They’ve been in trouble for years because their customers rarely have a down payment these days, and the vehicles lose value the moment the loan contract is signed. Thus, the borrower is upside-down before they drive off the lot. Even worse is the fact that most trade-ins today carry a balance that exceeds its blue-book value. Talk about pushing on a rope.
Not to mention that the “negative equity” is rolled into the next loan when they do the “trade in” every few years.
Every time you think you think you know the debt saga, there’s some new twist in the tale.
Vivian’s income had been changed once again - from $6,000 to $8,600 without her knowing.
General Manager Larry Long said a salesperson insists he changed the figure while Vivian was present.
And was the change initialed. It’s not a valid contract unless it was.
You think this walkin’ zombie understands such subtleties? You are definitely an optimist.
Has the Fed declared a cease fire in the War on Savers? Or is the dollar’s temporary rally due to circumstances (temporarily) beyond their control?
CURRENCIES
Dollar gains as euro hit by weak services data
By William L. Watts, MarketWatch
Last update: 6:48 a.m. EST Feb. 5, 2008
LONDON (MarketWatch) — The U.S. dollar rose against most major currencies Tuesday, and extended gains against the European single currency, after a measure of service-sector activity in the euro zone posted a sharper-than-expected decline.
With traders eyeing Thursday’s policy-setting meetings of the European Central Bank, the euro weakened after the survey showed that the euro-zone purchasing managers index for the services sector declined to 50.6 in January. That marked the weakest reading since July 2003, according to news reports.
http://www.marketwatch.com/News/Story/Story.aspx?column=Currencies
Doubtful. Bond scum found an opening and are pushing the trade. The big boys don’t buy and sell on yield y’know! Only the little folk care about the coupon payment and hold to maturity.
Starting to hear from a number of acquaintances that are being let go from their jobs in MA due to a slow down. Different sectors - very unnerving.
yep..its coming…its pretty palpable once you hear of people losing their jobs are in sectors outside of real estate or financials.
test
Yes, we NEED another faculty member badly. We are now under a hiring freeze due to economic conditions. I’m drowning in work, teaching, research, and deadlines. This is called job security I guess. Still, I’d like a break in this action sometime.
Roidy
Went thru recession in the 70’s and companies downsizing. I was one of the ones left and for 2 years it was 70-80 hours a week spread out over 7 days. Sometimes it’s a mixed blessing if you’re not one of the ones laid off. Yes you have a pay check, but you also have no life…zero. You might as well move out of your apartment, and into the office and save rent. The apartment is something you rarely see, and considering the time spent there, it’s almost a waste of money.
Starting to hear from a number of acquaintances that are being let go from their jobs in MA due to a slow down.
This is good news in a dark, twisted sort of way. The only way we’re going to see significantly lower housing prices in Mass is through higher unemployment. The trick is to stay employed and have some savings to take advantage of the lower prices within the next couple of years…
Dumped my puts. It’s my birthday today and want to take the rest of the day off. It’s a logical spot too; if the s&p doesn’t hold here, may see 1320ish though.
Happy Birthday Young Lady!
Yep, happy birthday!! I hope it was a profitable trade.
Happy Birthday! Enjoy!
given the ISM number, I doubt it will hold. This will be a full blown recession for Q1 and Q2.
Tx-Happy B-Day from a former Big D resident for 6 very fun years in the early 80’s.
HB
you’re in good company, some of my fave peeps were born in Feb…
mom -9; good granddad:11
that reminds me I have to get an anniversary card for my friends
happy b-day!!
Remember 50 is the new 40.
I’ll remember that when I am 50.
He meant 35 is the new 25…….
yeah, that trade was profitable. I got those puts at the close on Friday afternoon.
Now bidding for index calls. Damn, can’t even get a day off.
Getting greedy here. Going to wait another half hour before unloading.
I want to go buy my birthday bling. Not that I think this market will rally or anything.
Did very well today. Had a feeling it would trail off fast at the end. Mostly cash at the moment.
Txchick, you share a birthday with my brother. That means I’ll always remember your b-day. Cheers and keep dropping pearls of wisdom on this blog. Some of it may some day rub off on me, although I’m still trying to figure out the meaning of “put”, “short” and “long”.
Happy BIrthday, just had one yesterday also. Many interesting folks in our late Jan/Feb zone.
Happy birthday!
Happy Birthday to you, happy birthday to youuuuuuu, happy birthday to you, dear TXchick, happy birrrrrtttthdaaaaaay to you…
That was me, singing loudly and beautifully.
Have a good day, and remember, don’t eat the little candles, no matter how pretty and pink and frosting coated they are.
Dang, TXchick, you picked a heckofaday to (try to) take off.
I hope you had a happy and profitable birthday!
I dumped my SKFs this afternoon (bought Thurs/Fri), but I think I may have been too hasty.
here’s a gem. those rent for maybe $500/unit, $600 tops.
http://www.crenidx.com/listing.php?mls=580594&site_id=5715
It looks like a quad-trailer.
Ode to Nancy Sinatra…
They keep paying when they’re not winnin’
Something called a bad loan, but confess
They’ve been financially messin’ where they shouldn’t have been a messin’
And now someone’s under much duress
FB’s are gonna be walking, and that’s just what they’ll do
One of these days the booboise are gonna walk out on you
They kept lying on loan aps, when they oughta been truthin’
And they keep losing, when they oughta not bet
They kept saying, adjustable rates oughta not be changin’
And now someone else is in a housing bubble mess
Bad loans were made for walking, and that’s just what they’ll do
One of these days the booboise are gonna walk out on you
They keep paying, why should they keep payin’?
And Wall Street keeps thinking that it’ll never get burnt
Ha!I just found me a brand new vox of revolution
And what they know, you will soon learn
FB’s will soon be walking, and that’s just what they’ll do
One of these days the booboise are gonna walk all over you
Are you ready FB’s? Start walkin’
http://www.youtube.com/watch?v=7OU7Nezg7Ls
“….But the backdrop for new businesses seeking capital stateside has become markedly less attractive, according to the Milken Institute. Their latest Capital Access Index, which monitors the ability of nations globally to support entrepreneurial activity through providing access to funding, places the US outside the top 10 on the back of an ailing macroeconomic outlooks, more volatile interest rates and higher inflation. The US slumped from 5th to 11th.
As capital continues to flow into emerging countries, notably in Asia, it becomes harder for developed markets to remain competitive, with all of the top ten posting decreased scores for international access to capital. Hong Kong retained its top spot, followed by the UK, Canada and Singapore. Worth noting that China rises, but only to 45th in the table, reflecting the constraints on smaller Chinese companies in tapping capital.
The Milken Institute’s determinedly quantitative method aims to capture a broad picture of economies, across macroeconomics, banking and finance, the equity and bond markets, and alternative sources of capital. But with the US down at 11, nestled between Finland and Norway on the one hand and Israel and Malaysia on the other, something looks a tad ridiculous. Even with a recession looming, can the USA really be only the 11th best place to set up and fund a business? We know where we’d rather be.”
http://tinyurl.com/3cdtoz
FT Alphaville.
Feb. 5 (Bloomberg) — U.S. service industries unexpectedly shrank in January at the fastest pace since the last recession as the housing slump deepened and consumer spending cooled.
The Institute for Supply Management’s non-manufacturing index, which reflects almost 90 percent of the economy, fell to 41.9, the lowest since October 2001, from 54.4 the prior month, the Tempe, Arizona-based ISM said. A reading of 50 is the dividing line between growth and contraction.
“This is a stunning fall,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “If accurate, it’s dire news on the economy.”
I wonder how many of those lost “service” jobs where of the kind that produced services of questionable value, and now that people no longer have money to burn they have cut back on their “life coaches”, etc. Not to mention all the now unemployed realtors, appraisers, mortgage brokers, escrow office people, etc.
That is one of the big problems with bubble economies. The bubble du jour creates a huge follow-on employment ripple effect. When the good ship bubble hits an iceberg, follow-on employment sinks with the ship.
Think of the hunchback who rented out his hump as a writing desk during the heyday of the Mississippi Scheme in France. That “job” disapeared once the bubble burst…
My humps, my humps, my little lady lumps…
(little hunchy humps?)
test
I met a traveller from an inland empire
Who said: A slab of granite countertop
stands in the desert.
Near them on the sand,
Half sunk, a shatter’d visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamp’d on these lifeless things,
The hand that mock’d them and the heart that fed.
And on the pedestal these words appear:
“My name is Harry Howmuchamonth, king of kings:
Look on my equity, ye renter, and despair!”
Nothing beside remains: round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away.
Is this an original or a re-write? It’s fabulous either way.
You’ve never read Shelley’s Ozymandias?
My name is Ozymandias, King of Kings,
Look on my Works, ye Mighty, and despair!
On this blog a couple of years ago we use to joke about what they would find in the desert 2 thousand years from now . Granite counter tops will be found and the people will assume that a grand culture lived there and they no doubt had a climate change .When they find newspapers that talk about a housing boom they will assume that the desert was filled with green pastures with gobs of water . The future people will not be able to understand what happened between 1999 and 2010 because the newspapers they find will say that” Real estate always goes up”,and, “The economy is good because of “Global Markets”.
Archaeologists will find the granite tops and opine that it was a bizarre religious ritual.
Archeology Today cover story 4108AD
‘More religious artifacts uncovered in California’s desert’
Nope, but now I will. Thanks. It’s a great re-do.
Reading the bits today and I am hyper-ventilating.
Big breath.
Must organize clutter.
are trading curbs in effect yet?
Ahhhh, the BB 125 bp rate cut rally is dead in the water. Great day to be short the market. Pretty soon, he’ll be out of bullets and the real fun will begin.
yes he’s going to be firing blanks soon. Its possible we could go from recession to hyperinflation overnight. we might wake up one morning and find rates are 0.25% like Japan.
“… real fun will begin.”
Ditto for incipient REO auctions…
why do the banks compete with buyers for their property by bidding what they are owed? If the banks are the only bidder at that price, it tells them they are the ultimate fool.
I guess they want the chance to ride the market all the way down to the bottom — otherwise they would unload their REO at prices the market will currently bear.
This might only pertain to IL, but I was told the banks there have to bid to legally establish the amount of their loss. They’ll usually only bid what they’re owed, since anything over that will pass to the other leinholders.
I agree it would greatly simplify things if the bank was allowed to establish their loss based on the mortgage agreement and the winning bid.
OK all of you loser renters, here’s your big chance:
http://phoenix.craigslist.org/apa/563151654.html
You can’t make this stuff up? Right?
“$1390 / 4br - Does renting make you feel like a loser?
If renting makes you feel like a loser, then STOP! Now is the absolutely the best time to buy a home. There are many programs that will allow you to buy w/$0 or little money down and so-so credit. Even if you can’t qualify to buy now, you can always lease to own it for only $1,500 down. Call now 602-750-1159. This home is offered w/$0 money down and you’ll need appx $5,000/mo income to qualify. (It has a huge back yard, guest quarters & a casita!) Don’t throw your hard-earned money down the rental drain!”
Don’t throw your hard-earned money down the rental drain!
No, throw it down the foreclosure toilet instead!
Be sure to wipe with it first.
Roidy
Wouldn’t want to let good money go to waste…
Trigger leads - the latest annoyance from Tucson:
http://www.azstarnet.com/sn/biz-topheadlines/223608
Happened to me.
I applied for a refi loan from my credit union. 4.75% on 15 year loan with 1 point… Had I waited a week to lock, I could have gotten 4.5% with .5 point… dang it!
Anyway… With a day of the credit union pulling my credit score and ordering the appraisal… poof… phone is ringing off the hook from mortgage brokers saying they can beat my credit union’s costs. I have played that game before. They start with lower fees, but then start adding more and more smaller fees until the total cost is more. I hung up on all of them.
www donotcall gov
and
optoutprescreen com
should help.
“In 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.”
The Oh S**t moment. When forced by market into no feasible deniability. The game is completely up.
Great story, Hoz. It also illustrates another trend, besides the obvious.
That trend is the ascendence of convenience over quality. Assuming that the kids in that focus group liked any of the content on those CDs, they probably went and downloaded MP3s from a pirate site, or maybe even purchased tracks from iTunes. To anyone with good ears, MP3s are of crap sonic quality compared to what you get on a CD. But consumers don’t seem to care, they opt for convenience given the choice of two zero-cost options.
Yep, they are crap. On a blind test, I nailed 10/10 correctly. Of course, I picked music that I knew that MP3 would have trouble compressing.
There are lossless formats (FLAC, etc.) but the technical support is sketchy (for obvious reasons.)
MP3s are of crap sonic quality compared to what you get on a CD. But consumers don’t seem to care, they opt for convenience given the choice of two zero-cost options.
The ironic thing - is that people made that very same argument of the quality of vinyl records over CDs!
Digital music quality varies, but itunes is especially bad because it is encoded at a low bitrate. With storage getting cheaper I rip my music at 320 bitrate, which is CD quality or use other formats (FLAC, Ogg). Unfortunately a lot of the recording today are done for low-quality audio players (like itunes) so they compress the music and pump up the volume. Listen to a classic rock album, then listen to the same album after it has been remastered; the remastered will sound awful. It drives us audiophiles nuts.
Back in the old days, we used to listen to our mixes through the crappiest speakers we could find in order to get perspective. In some cases, we would send the output of the mix board to an AM modulator and go out to our cars to see what it would sound like on a dashboard radio. But we always did final mixes on speakers costing thousands of dollars so that we could “hear through” the mix down to the smallest detail.
Then the darn radio stations started playing records through brick wall compressors and “Aural Enhancers”, so we had to listen that way as well, in order to judge what an FM listener would hear.
Don’t know what the kids are doing these days, but I expect it’s much the same process.
Apologies if this was posted previously.
“WASHINGTON (MarketWatch) - Banks are putting a stranglehold on credit, the Federal Reserve reported Monday.”
“The Fed remains worried that credit is getting too tight after years of loose standards.”
http://tinyurl.com/3druu4
Dang, if the banks just had more confidence. Perhaps if we offer them a toaster with each loan.
“I say there is no darkness but ignorance.”
William Shakespeare
“I say there is no darkness but ignorance.”
…or if you get locked in the gardening shed by accident.’
Ponce De Leon (I believe)
“…Put together, this is a one-way bet. The private sector is being told:
“Borrow at near 1.9% in the US, somehow get the capital into India and get paid near 7.2% in return for bearing no risk at all. There is no risk of currency fluctuations because the rupee is tightly managed. At worst, you’ll only benefit because of a rupee appreciation.”
Suppose a person finds a way to borrow $1 billion in the US, bring it into India, and earn the interest rate differential of 5 percentage points, over a period of one year. He earns a profit of $50 million or Rs.200 crore for bearing no risk and doing no work (other than jumping past the capital controls). This is an attractive free lunch. If $100 billion now come into the country, it is a gift of Rs.20,000 crore to the private sector assuming a one-year holding period.
Every rational CEO in India is getting his financial advisors to find ways to exploit this arbitrage opportunity. It is not an accident that in the graph, we see RBI currency purchases (expressed as percent of reserve money) once again showing large values month after month. One key factor driving this is the enlarged interest rate differential. …”
Business Standard India
http://tinyurl.com/3b6wad
Feb 6
As an aside, it is very easy to borrow moneys at 1.95% in the US - at this time.
So the FED in order to bail out the housing bubble lowers interest rates to banks and the banks wanting to make a profit lend money to India causing another bubble in another place.
Japan did this to the USA exporting inflation “Yen carry trade”.
When will this be pushed on the AM radio packaged and sold like the RE turnkey properties of yesterday?
Mrs. Watanabe is going to turn into Mrs. Smith and Mrs. Hernandez!!!
My bank will only loan me a billion if I use it to buy a house.
Put in a lowball offer on the Taj
The rupee may trade in a band but it is not a firm peg. Currency traders employ leverage and fluctuations could wipe you out. Also there is interest rate risk in the dollars borrowed. If the market believed the Fed would stop cutting the dollar would rally. Sometimes you eat the bear, sometimes the bear eats you.
The biggest question in my mind is who would loan you a billion at less that 2%? The government, I suppose.
If you wish to hedge the funds on the currency market for the round trip, it is easily done. With regard to India - it is not easy to move currency into India. It is easier to borrow a Billion US.
The max leverage should not be any greater than 25% and for my comfort I would not go over 50%. The hedge funds are doing this at 7 - 15%.
party on the giants won the superbowl
http://msn.foxsports.com/nfl/story/7762624?MSNHPHMA
my favorite line from the story
Justice Rodriguez, 11, of Brooklyn, was up at 3 a.m. with his father and half-dozen friends to secure a spot along Broadway, complete with chairs, food and a camcorder.
“I want to see Eli Manning,” said the boy, who wore a Manning No. 10 shirt over a puffy down jacket.
“It’s exciting for him,” said Justice’s father, Juan Rodriguez, who took the day off from his car wash job. “You never know when they’ll win again.”
“the giants won the superbowl”
Yeah! The superbowl is over! That means…
It’s the start of the Spring Selling Season ™! Watch all of the sidelined homebuyers rush back into the market. Woo-hoo!
Oh wait, that was SSS 2006 and SSS 2007. What are they saying now?
The same.
Dow Down 308!
Thanks to y’all txchick, aladinsane, Hoz, Prof Bear and of course Ben I’m not losing a cent! Sold my house in 2005 for 300% of 1999 purchase price!!
Mahalo!!
I sure hope you are not missing out on the rally in home builder stocks on my behalf…
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
LOL
I’ve been lurking here for years, most of what you all discuss goes over my head. I just listen to themes : RE is overpriced (duh). So I sold at an obscene profit and distributed my cash among various ETFs. GLD, QID, SKF, DBA, MOO, USO. Made alot of moola.
Does anyone else just giggle listening to CNBC doofuses stutter like they are today?
I’d be a seller of Gold and commodities even. This is a consumer led recession and people will be consuming less for awhile.
I got that drift last month and am in TBills now. That’s what I meant by “not losing a cent”. I know what I don’t know (and it’s alot).
Everybody seems to have their double bottom in place about 5% below where we are now - kind of ridiculous. Ron Insana has been pretty bearish. Today he said this feels more like a 1970s bear market and he doesn’t think we are halfway through the stockmarket downturn yet.
Today they sold all the foreign stocks. After perhaps a bit of a comeback tomorrow the next downwave is going to crush the commodities (again) including all the recent high-fliers like trains, coal, fertilizer.
There’s a housing depreciation freefall that is destroying asset values worldwide, and Insana’s right - that bottom is not going to hold.
Recession finally arrives in MSM. One suggestion– Take bubble baths…
http://finance.yahoo.com/banking-budgeting/article/104346/Eight-Ways-to-Cut-Back-Without-Sacrificing
Prediction: The 2008 “growth slowdown but no recession” mantra will fold much earlier this year than did the 2007 “subprime is contained” mantra last year.
And BTW, anyone who honestly claims the “last two” recessions were mild did not survive it California.
ECONOMY:
Recession Watch 2008
Recession is here - economists
A weak report about the services sector has caused some experts to declare that the economy has already entered downturn.
By Chris Isidore, CNNMoney.com senior writer
February 5 2008: 12:47 PM EST
NEW YORK (CNNMoney.com) — A growing number of top economists believe that the U.S. economy has now toppled into recession.
Alarm bells were set off Tuesday by a grim report on service businesses, which make up the majority of the U.S. economy.
…
Even Federal Reserve Bank of Richmond President Jeffrey Lacker, who is known primarily for being more concerned about inflation than economic growth, said in a speech Tuesday that “the prominence of downside risks means that further easing ultimately may be warranted.” Lacker does not get to vote on monetary policy decisions this year, however.
Lacker added that “sluggish growth in the near term” — not an actual recession — is the most likely economic scenario. But he did not completely rule out the possibility of a “mild recession, similar to the last two we have experienced.”
http://money.cnn.com/2008/02/05/news/economy/recession/
I guess the prospect of an incipient recession is an encouraging sign for the home construction industry — esp. builders of luxury McMansions?
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
Did someone discover a worm in this fruit?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=AAPL&time=20&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
My Iphone bricked today. I fixed it myself with a hammer and some duct tape
Just for you since it’s your birthday:
http://www.youtube.com/watch?v=C8r59j6Npbs
This turn down can’t be right. Buy on the dip, lol.
I finally got cable TV at home yesterday and tuned in to Cramer last night to see what was up with him. IIRC he said homebuilders are going to go up, and banks too…..isn’t that encouragement enough?? (sarcasm off now)
Also didn’t care for that “Fast Money” show either. I don’t remember CNBC being “all shills all the time” the last time I tuned in regularly.
Fast money is the only show I like on CNBC.
They are all cheerleaders these days .
It was the loud/fast talking that was bugging me…..I’ll give it another whirl, as I’m not really familiar with it.
I like Fast Money too. But with those shows, its more interesting to see how they think. I’ve gotten better stock tips out of (gasp!!!!) Kiplingers.
There has to be a bottom someplace. I have no idea where it is, though, other than the usual technical support points. It sure looks like the banks haven’t finished their confessions yet.
On CNBC, I find that channel mostly unwatchable. On my cable system, they switch to Bass-o-Matic infomercials at night, so you can’t even get international perspective from the overseas partners. Daytime content is only marginally better than the Bass-o-Matic pitches. In fact, I think Cramer has some bass genes along with the weasel, moose, and squirrel genes.
Nah — with gathering storm clouds of recession on the horizon,
there is no bottom in sight. But I am thinking perhaps a bailout announcement is currently under discussion behind the scenes, given the immediate DCB on builder stocks after the market closed today.
Wow, I looked at the DJIA components a few minutes ago. All of them are selling off except for McDonalds. Miccy D’s is flat today. The biggest percentage was 6.8% (Citi) so far.
Dead Cat Has Bounced.
Roidy
“All of them are selling off except for McDonalds.”
Dead Cow Float
Cities Fight Glut of Vacant Houses
Tuesday February 5, 2:51 pm ET
By Joe Milicia, Associated Press Writer
AP Centerpiece: Rust Belt Cities Fight Glut of Abandoned Houses
http://biz.yahoo.com/ap/080205/foreclosure_crisis_abandoned_homes.html?.v=4
“Buffalo Mayor Byron Brown last year announced a plan to demolish 5,000 vacant structures in five years. The city will put up $20 million of the $100 million cost and ask the state and federal government for much of the balance.”
here goes more tax dollars to the rescue!!
5,000 matches or a couple of Bic lighters cost $100 mil.?
Crikey!
Just when i’d saved up $100k to buy them all, they go and do this…
February 05, 2008
Moody’s (MCO) New Ratings System Is A Sham
Moody’s (MCO) wants to replace its old ratings system, which used letter grades, with a new one which will use numbers. It also wants to put “warning labels” on securities like CDOs because they are complex and hard to rate
According to The Wall Street Journal “more broadly, the ratings firm is trying to decide whether to add warning labels that essentially acknowledge the limitations of its ratings.”
Please pardon those who think that the new “system” comes a little late. Tens of billion of dollars of mortgage-related securities have been written off by banks and investment houses. Many of those had an “AAA” rating and none of them were rated “junk”.
The move is window dressing of the worst sort. The entire purpose behind Moody’s, S&P, and Fitch is that they have the skills to assess risk in advance, or, at the very least, will not give strong ratings to debt which is likely to be inherently volatile. Baskets of securities are bound to be more difficult to understand than straight government or corporate debt. Moody’s did not acknowledge that until so much money was lost that they had to.
http://www.247wallst.com/2008/02/moodys-mco-new.html
“Moody’s (MCO) wants to replace its old ratings system, which used letter grades, with a new one which will use numbers.”
They should just throw in the towel, concede that they really don’t know how to rate a lot of this stuff, and use random words for ratings…some examples:
Pickle
Sasquatch
Kimchee
Rottweiler
Tumescent
“Did you see that those bonds were re-graded from Sasquatch to Kimchee today? Are we allowed to hold bonds rated Kimchee?”
“I don’t know…heck, forget it, let’s go fishing…”
countrywide put out a list of citys today that are declining market. 1-5 score rated 5 being the worst markets. #1 on the list of 5s lake havasue and kingman in mohave county az. they will charge 5% more down pmt on the citys in 4 or 5 on there red line list. nw az look out, no one can affoft more down then they now getting by with.
Music to crash by.
http://www.youtube.com/watch?v=cU_9-uuKz0I
HUGE condo project going down in the “bubble-proof” Madison area…
Metropolitan Place II condo project faces foreclosure
http://www.madison.com/tct/news/stories/271032
boy the markets got beat up like the human grass stain Tom Brady did on Sunday night.
Ron Paul Signs ‘Numbers USA’ Pledge to Oppose Amnesty and Secure America’s Borders
“The talk must stop. We must secure our borders now. A nation without secure borders is no nation at all.”
February 4, 2008
ARLINGTON, VIRGINIA – Today, Republican presidential candidate and Texas Congressman Ron Paul signed the Numbers USA pledge. The pledge reaffirms Congressman Paul’s longstanding opposition to amnesty and support for securing the borders.
Dr. Paul has introduced a six-point plan to deal with the current illegal immigration problem. On the subject, he has said: “The talk must stop. We must secure our borders now. A nation without secure borders is no nation at all.”
Congressman Paul has received the endorsements of many groups and leaders that oppose illegal immigration. A list of such endorsements can be found at: http://www.ronpaul2008.com/endorsements
Below is the Numbers USA pledge:
I pledge to oppose amnesty or any other special path to citizenship for the millions of foreign nationals unlawfully present in the United States. As President, I will fully implement enforcement measures that, over time, will lead to the attrition of our illegal immigrant population. I also pledge to make security of our borders a top priority of my administration.
Numbers USA includes six points of understanding as to what the pledge means and what it entails:
1. The 12 million illegal aliens now here will have to go home.
2. They will not get any legal status while here that allows them to remain long-term.
3. Once in their home countries, they may apply for re-admittance to the U.S. as immigrants, visitors or temporary workers through normal channels.
4. But they will not receive any special privileges on the basis of their having been in the U.S. illegally, such as being put to the front of a line.
5. There will be no new categories or programs through which they may re-enter.
6. There will not be an expansion of green cards in any existing categories that will speed up their movement to the front of the line.
Check tonight - he could win Montana.
Oh my word. My MIL just informed me she voted for Ron Paul. Too funny. I’d have never thought.
PA Governor Rendell was just on my local station.
He just released his 28 billion dollar budget wish list. He said he wants to give $400 rebate checks to people who make less than 34K/year. He wants to do this because “The recession is going to hit and it is going to hit Pennsylvania.” He feels this $400 check will help to ‘jumpstart PA’s economy’.
Fast Eddy is THE man in Pa. Took back the state from NutJob Santorum.
‘Current recession forecasts indicate that it would be unprecedented not to have a recession in 2008″
Michael Dueker
(Hoz notes, this is preliminary paper)
“…For example, in the current context in forecasting from the fourth quarter of 2007, we can be reasonably certain that the NBER will not classify 2007Q4 as a recessionary one and we can condition out-of-sample forecasts accordingly. For this reason, the Qual VAR business cycle index model is estimated for the most recent 49 vintages of U.S. GDP data, which gives a set of real-time forecasts back to 1995Q3. For each vintage, we know the precise history of GDP data that was available at the time….
The third chart uses the model’s capability to forecast at any horizon to generate out-of-sample recession probabilities, starting with 2008Q1. The first two quarters of 2008 are ones where the model-implied recession probabilities lie above the threshold level of about 35 percent. Thus, the model is calling a two-quarter recession for the first half of 2008. Note that the model-implied recession probabilities dip down near 10 percent in the middle of 2009 and rise gradually toward the unconditional probability of about 17 percent. The dip below the unconditional probability is the result of a snap-back phase the economy experiences after recessions, during which the economy is farther than normal from recessionary conditions.
…”To get a handle on how unprecedented it would be for the economy to avoid recession in 2008, it is useful to look at the business cycle index produced by the Qual VAR model. The fourth chart shows the business cycle index for the entire sample period with forecasts for 2008 through 2011. The chart shows that the business cycle index has never dipped as close to zero as it is projected to do in 2008 without a recession. For this reason, it appears unlikely that the economy will escape the current slowdown without a recession.”
http://tinyurl.com/ywzddu
“Qual VAR”
Very Awful Regression?
Unless I am missing it, his list of explanatory variables does not include current or recent residential construction investment. As I have noted many times on this board, a 25 pct decline in residential investment has been a perfect predictor of recession dating back to 1955, and I don’t think this time will be any different. Perhaps his variables do the trick just as well, though…
It looks at “The observable macro data included in the model are GDP growth, core CPI inflation, the slope of the yield curve and the federal funds rate.” Obviously residential investment is part of GDP, I do not know of anyway that residential investment can be stripped out of GDP, subsequently treated as a separate data set. It is not ignored.
The more intriguing aspect is the quantifiable nature of the results. The model calls for a 2 quarter recession before adjusting to unconditional probability - snapback.
backdated recession to Q407
cant call it till Q208
this is a crash signal. the window is open.
New figures suggest US in recession
By Chris Giles in London, James Politi in Washington and Michael Mackenzie in New York
Published: February 5 2008 15:09 | Last updated: February 5 2008 23:43
Stocks suffered their worst one-day fall in nearly a year on Tuesday as new figures suggested the US might already be in a recession and other leading economies rebuffed US calls for a global economic stimulus package.
…
Investors sold shares in response to data showing the US service sector contracted for the first time in nearly five years. The Institute for Supply Management’s non-manufacturing business activity index fell from a seasonally adjusted level of 54.4 in December to 41.9 in January. Investors had expected a reading of 53.
“At this point, I do not think anyone will be surprised if we see growth for the fourth quarter revised below zero, followed by a negative first quarter,” said Michael Kastner, portfolio manager at SterlingStamos. Economists define a recession as two negative quarters of growth.
http://www.ft.com/cms/s/0/4672cd3a-d3fb-11dc-a8c6-0000779fd2ac.html
cont:
“To get a handle on how unprecedented it would be for the economy to avoid recession in 2008, it is useful to look at the business cycle index produced by the Qual VAR model. The fourth chart shows the business cycle index for the entire sample period with forecasts for 2008 through 2011. The chart shows that the business cycle index has never dipped as close to zero as it is projected to do in 2008 without a recession. For this reason, it appears unlikely that the economy will escape the current slowdown without a recession. ”
Html
http://tinyurl.com/ywzddu
I think 1st qtr. is going to be down at least 1%. The slowdown in the last few weeks has accelerated. It’s not just local, because I travel a lot and see it all over the southeast. But locally, retail in Jacksonville beaches area, even including basics like tires, laundry, bikes, and car repair, has begun to drop fast. Very noticeable, just like the first big shoe dropping in housing in summer ‘06.
What’s interesting is that I am seeing lots of prices reduced at grocery, auto parts store, even Walgreen’s - any kind of packaged goods - but no drops at all in the service area. Service businesses need to get a grip, and start cutting us some slack. These idiots seem to think there’s some law against lowering prices to keep product moving and people employed. $83/hour for generic labor on a car in NE Fla? Cheaper to break down on the road somewhere else, have AAA do the towing, and pay 20% less.
“We are turning into a nation of whimpering slaves to Fear—fear of war, fear of poverty, fear of random terrorism, fear of getting down-sized or fired because of the plunging economy, fear of getting evicted for bad debts or suddenly getting locked up in a military detention camp on vague charges of being a Terrorist sympathizer.”
Hunter S. Thompson
…fear of life.
February 05, 2008
China may yet be the economy to lose sleep over
By Kenneth Rogoff
Given the highly vulnerable state of the US and European economies, what would happen to global growth if the Chinese juggernaut also started sputtering? Few investors or policymakers seem to be seriously contemplating this scenario.
http://blogs.ft.com/wolfforum/
There’s this ridiculous notion that if China slows it only slows from 12% to 8% and so it’s still rapid growth and won’t hurt the market. But of course it’s the change (and, more specifically, the unexpected change) that matters, not the absolute level. Shanghai had an 8% up day and could have an 8% (or greater) down day - although I believe the market is closed until next Monday for the Chinese New Year.
Here is one place I disagree with Rogers, at least for a 12-month time frame. This is the most vulnerable market in the whole world, because Chinese nationals are not allowed to “punt” (as the British say) on foreign markets and so have bid the local market up to unsustainable P/Es, even after a 20% drop from the bubble peak. There is no way this market does anything meaningful on the upside from here for 2008. Chinese stocks trade at huge premiums to HK stocks - why own them?
Hang Seng off 5+% at the open. The Shanghai market is in very real danger of a seminal collapse in the next few trading sessions.
Worst winter in 100 years in south central China:
http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=4
Why it is so hard to keep the financial sector caged
By Martin Wolf
Published: February 6 2008 02:00 | Last updated: February 6 2008 02:00
When will the next financial crisis come? We do not know. Yet of one thing we can be sure: unless we learn from this crisis, another one will put the world economy back on to the rocks in the not too distant future.
The FT has published a number of contributions on the lessons: Charles Goodhart of the London School of Economics and Avinash Persaud of Intelligence Capital offered “a proposal for how to avoid the next crash” (January 31); Francisco González of BBVA discussed “What banks can learn from this credit crisis” (February 4); and Daniel Heller of the Swiss National Bank argued for three ways to reform bank bonuses (February 4). The substance of Mr Heller’s argument was similar to a contribution of my own (”Regulators should intervene in bankers’ pay”, January 15), but without the regulatory coercion.
The big question, indeed, is whether lessons must be embedded in regulation. Optimistic opponents of regulation argue that the banks have learnt their lesson and will behave more responsibly in future. Pessimistic opponents fear that legislators might create a Sarbanes- Oxley squared. The Act passed by the US Congress in 2002, after Enron and other scandals, was bad enough, they say. The banks might now suffer something worse.
“Dream on” is my reply to the optimists. To the pessimists, I respond: yes, the danger of over-regulation is real, but so is that of doing nothing at all.
Two points shine out about the financial system over the past three decades: its ability to generate crises, and the mismatch between public risk and private reward.
It is true, on the first point, that none of the financial crises of this period has gravely damaged the world economy, although some have devastated individual economies. But it is probably just a matter of time. What would be happening now if US inflation were out of control or foreign official support for the US dollar were withdrawn? A deep and prolonged US recession would be probable, with devastating economic and political consequences.
It also true, on the second point, that the banking sector is the recipient of massive explicit and implicit public subsidies: it is largely guaranteed against liquidity risk; many of its liabilities seem to be contingent claims on the state; and central banks create an upward- sloping yield curve whenever banks are decapitalised, thereby offering a direct transfer to any institution able to borrow at the low rate and lend at the higher one.
In addition, banking institutions suffer from massive agency problems - between clients and institutions, shareholders and management and management and other staff. All this is also exacerbated by the difficulty of monitoring the quality of transactions until long after the event.
Consider, for example, the process that brought subprime loans to investors in special investment vehicles (SIVs). In between the ultimate borrowers and the risk-takers were loan-originators, designers and packagers of securitised assets, rating agencies, sales staff, managers of banks and SIVs and managers of pension - and other - funds. Given the number of agents and the wealth of information asymmetries, it is astounding how little went wrong.
Yet big risks have indeed been run. The US itself looks almost like a giant hedge fund. The profits of financial companies jumped from below 5 per cent of total corporate profits, after tax, in 1982 to 41 per cent in 2007, even though their share of corporate value added only rose from 8 to 16 per cent. Banking profit margins have been strong, until recently. Now, at long last, earnings per share and valuations have collapsed.
http://www.ft.com/cms/s/0/24b1b1b4-d457-11dc-a8c6-0000779fd2ac.html
States could unite in subprime lending probe
Tue Feb 5, 2008 11:30am EST
Subprime losses won’t top $500 billion: Bernanke CLICK!
17 Jan 2008
(I note that Robert Shiller tossed out an estimate of 8 pct of $20 t = $1600 bn in losses already, but perhaps BB’s statement depends on what the definition of subprime loss is…)
CHICAGO (Reuters) - State attorneys general are talking to each other and could join their separate investigations over the subprime mortgage meltdown, Iowa Attorney General Tom Miller said.
“There’s been no movement to consolidate any of the cases, but nothing’s been ruled out either,” Miller said in a telephone interview on Monday with Reuters.
Miller, who took a lead role on previous nationwide settlements over questionable lending practices that netted hundreds of millions of dollars from Ameriquest Mortgage Co. and Household Financial, said attorneys general are talking to each other about subprime mortgages.
“We understand the value of that and it’s never far from our minds that we can accomplish things together that we can’t individually,” Miller said, referring to the previous settlements. “But having said that, I think states are looking at different aspects of this whole incredible scenario and mess of subprime and the consequences of it, and we’re keeping in touch with each other. It’s unclear where that’s going to lead.”
http://www.reuters.com/article/reutersEdge/idUSN0561528220080205
Night of the living suprime lender?
Subprime lender Accredited plans comeback
Tue Feb 5, 2008 11:09am
LAS VEGAS (Reuters) - Accredited Home Lenders, a top subprime mortgage loan company in 2007 whose risky practices forced it to stop lending and slash its staff, is again reaching out to borrowers with sketchy credit even as the housing downturn deepens.
Accredited has originated about $86 million in non-prime loans since November, with $50 million of that in January, Accredited founder Jim Konrath said on Monday.
The company, which produced as much as $2 billion a month during the housing boom, is also eyeing a return to the asset-backed securities market that remains frozen in the aftermath of soaring defaults on risky U.S. loans, he said.
http://www.reuters.com/article/businessNews/idUSN0462511220080205
Please pass the lotion.
P.S. How can you lose money you never really had?
Sub Prime Tsunami Costing Blacks, Latinos Billions
Final Call, News Report, Nisa Islam Muhammad, Posted: Feb 06, 2008
WASHINGTON (FinalCall.com) - While the sub prime mortgage crisis has White America wringing its hands, the real and substantial loser of wealth is the Black community, which makes up 56 percent of such loanholders, according to a new report, “State of the Dream 2008: Foreclosed.”
“There’s always been a gap in assets between Whites and people of color,” explained Amaad Rivera, a co-author of the report told The Final Call. “These loans were created under the guise of helping people of color. But the mortgage brokers made a fortune and now we see homes being foreclosed and taken at an alarming rate.”
“This has been going on over a 10-year period. It started in 1993 with $20 billion in mortgages. It has grown to $540 billion in mortgages in 2004. While it started growing bigger, the percentage of people getting this ‘help’ didn’t change.”
According to the report, Blacks and Latinos will lose between $163 billion and $278 billion from sub prime loans taken out over the past eight years. Blacks will lose $71 billion to $122 billion, while Latino borrowers will lose between $76 billion to $129 billion for the same period.
http://news.ncmonline.com/news/view_article.html?article_id=3957bc07057eeb30c4fd106e6df9c347
Countrywide Made Racist Sub-Prime Loans?
Countrywide Home Loans was racist and automatically put African-Americans into exotic and expensive sub-prime loans they didn’t want or need, and couldn’t afford, according to a former employee. This employee worked there for two years up until the sub-prime meltdown.
http://consumerist.com/352587/countrywide-made-racist-sub+prime-loans
Subprime crisis stalls Islamic securitization
Mon Feb 4, 2008 9:44am EST
By Dayan Candappa and John Irish
MANAMA/DUBAI (Reuters) - The global credit crisis has diminished the Arab appetite for securitization, delaying development of a potential $250 billion market that would drive growth in Islamic finance, industry officials said on Monday.
From governments to ratings agencies, officials had been talking of an impending boom in securitization in the Middle East and North Africa, turbo-charged by surging real estate prices, new mortgage laws and rapidly growing populations.
The Islamic finance industry, which favors investments backed by physical assets, was poised to be the main beneficiary, and Gulf mortgage firms and banks were scrambling last year to announce sales of asset-backed bonds.
http://www.reuters.com/article/IslamicBankingandFinance08/idUSL0429548220080204