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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.
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Is there anyone that seriously believes that sending out $600.00 dollar rebate checks can have any real effect on our economy? Other than very short term.
Or WORSE that businesses will rush out and buy equipment so they can depreciate it faster…
Of course out-of-the box thinking is dead in amerika, why not give $1000-2000 tax credit, to businesses to help pay for health insurance for non covered workers…hmmm……Lots of Wal Mart employees would be much happier with that then a $600 check
Or my most Radical idea:
Give businesses tax breaks based on the number of 2nd 3rd shift Night holiday workers with health insurance you have employed.
I was in Manhattan on a video shoot last night its always amazing how many huge skyscrapers are dark at 9pm…..Time shifting of work and works would cause LESS congestion, Less traffic jams and gridlock, and lets face it some of us do not want to get into packed subway cars or be driving in bumper to bumper traffic…
Allmost all city and county governments give big tax breaks to business and forget about how are they going to get to their job. Then you have 10-15 mile backups on !95 in jersey and CT and the Long Island NON expressway.
Interesting idea, but I for one would not want to try to sleep during the day and work at night - humans are just not meant to do that long-term, IMHO.
I DO agree with the idea of some time shifting - an hour here, an hour there, can add up. Of course, the BIGGEST problem for all the congestion is having lots of people driving SUV’s with 1 person in them from their far-from-work house, which they had to buy since it was the closest thing to “affordable” they could find. The housing Bubble causes road congestion, in addition to everything else!
PTM,
You’d be surprised how many people actually like working the night shift.
For those who sleep all night, you aren’t seeing all the activity that goes on at night. Think of all the stores stocked at night, deliveries being made, night back-ups on servers & computer maintenance, customer service 24/7, entertainment industry, factory workers, etc.
I’ve always volunteered to work night shifts (still do most of my “work” at night), because you get more done (sooo much more productive), and some of us don’t like early mornings.
Economically - no
Politically - yes
Not me. Mine will pay for fuel to either heat my home or run my car.
No, but any tax rebate is good, and even this amount will have a ripple effect through the economy.
Question. How long does it take for a Fed intereste rate deduction to have an effect on the economy?
My financial advisors at Northern Trust say it takes from 12 to 18 months before it has the desired effect. Does this sound right?
Along the same lines; will we see the effect of the Fed reduction of interest rates at all? Or are they pissing into the wind.
Problem is that it isn’t a tax rebate because we, as a government, don’t have the money! We’re just effectively shifting taxes $300-$600 downward per person and sticking the bill onto future generations, completely ignoring the much-celebrated “Paygo” rules enacted a little over a year ago.
The economic stimulus package, at $170,000,000,000 (look at all those zeros!) is nothing more than Enron-style, “mark-to-whatever-market-we-want” and stopping by the Payday loan center pulling wool over the eyes of the huddled masses while patting ourselves on the back. Completely bogus, and I’m already writing letters to future generations apologizing for the fleecing of their generation in order to make it so we can buy Cheetos and watch American Idol instead of having to work.
So my topic suggestion is: which charity or organization should I send this loan from myself (as a citizen)?
BC,
I totally understand the fact that we’re saddling our kids with Trilllions of $ of debt and it ticks me off as well.
But if you’re a normal tax paying citizen, it is a rebate.
The problem is that government keeps spending more and more no matter which side is in control. I think the Dems will spend more than the Rep, but neither has shown the ability to control their spending.
I think we need to start working toward (1) Term Limits and (2) Governmental Retirement Benefits that are tied to balancing the budget.
How about a dog rescue organization in South Florida or Arizona? They need it badly dealing with all the foreclosure pets.
I just heard on the radio here in San Diego that there’s going to be a massive dog adoption program in a strip mall on Sunday morning. These are dogs who got lost during our fires or had to be given up because of foreclosure. I’m going to have a look-see.
How about a “pet rescue”? For dogs **and** cats. I hear a lot about rescue dogs, but not much about cats. We have a terrible problem here in Vegas with people leaving “pets” (both dogs and cats) when they move away. I put “pets” in quotes because no one could treat a pet the way that these people do…tossing it out into the street to survive…or not.
We have a rescue cat…left when someone moved. She was skin and bones. Now she is the cutest, sweetest, cat you ever met.
Who are these ***** who can toss away a pet like an old sofa? ?????
“I hear a lot about rescue dogs, but not much about cats.”
That’s because cats suck.
Cats are cool.
Dropped my savings interest - instantly - gives me less money - affected right away - less money earned - less money to spend - great job FED
I feel your pain
Yep ,I’m getting a major reduction in income because of the interest rate decrease on interest bearing accounts . I’m to old to take any risks on higher paying accounts because of retirement . Do the Feds really think I’m going to spend as much as I usually do ?
This “rebate” is strictly an advance from 2008 taxes. It isn’t a gift.
And no it won’t get anything started. I wish people could just save this tiny bit, and pay their bills out of the $ they have.
For at least 2 months after it comes to the mailbox.
And did you see that WHEN you file your taxes this year, the
IRS is behind, and unless you do it electronically AND have it Direct Deposited into your acct, it will be DELAYED.
The PTB has warned that it is too late to send in your taxes in order to get them back in a timely manner.
So, everything is working out fine today.
No but the extension of unemployment benefits would have had a direct impact. I can’t believe they couldn’t get that through.
“No but the extension of unemployment benefits would have had a direct impact”.
Right, but those of us who are self-employed have never been eligible for unemployment. Not sure the percentage but there are lots of us out there.
If you are self employed, you should be wise enough to be self insured.
Naah….. They want a handout they accuse everyone else of expecting.
Naah….. They want a handout they accuse everyone else of expecting.
Handout? So a return of tax dollars is a handout? ROLTFLAYDA!!!
You know, that’s kind of how I feel. In one pocket and out the other. It’s not like we don’t pay in. I talked with a CPA about this years taxes. $150/hour. I really don’t want to hear how I am burdening ‘future generations.’
No kidding. Most “future generations” would be better off remaining a twinkle in their daddy’s eye.
It’s only a refund if you will actually receive a f—ing check. Class warfare bulls–t is what it is.
Stop your belly aching NYCB. Wait until we pull out the guillotine for your upper-class.
txchick, the real problem is that they are a twinkle in daddy’s winkle.
Maybe Monica Lewinsky should give lessons?
The Foley/Craig/Haggard method would work too.
Did you read that Haggard QUIT .
guess it didn’t work out, that hetero thingy.
Well…. you know how hypocrisy reveals itself for those with (r) after their name.
well, who would know better than those who have been there done that?
Is there an opt out?
Seriously! I want to opt out! (Note to self: send check back).
Leigh
Send it to Ben. Or your local library, animal rescue… Lots of excellent groups can put $600 to good use.
(I’d offer to take the $600 burden off your hands, but my wine budget probably does not qualify as “good use” for anyone but me.)
LOL…thanks for the smile!
I want to opt out, too, Leigh.
Since sending the check back would probably confuse the heck out of the IRS, I’ll just use it to pay our taxes on our 2007 return.
The goal is to give you $600 so you buy $1,200 worth of junk you can’t afford and must finance at absurd rates. Then, next year they tax you on the $600 while you’re still making payments on the $1,200 worth of junk you bought.
How this helps anyone aside from the money-lenders and vote-buyers I do not know!
Since you don’t get to deduct federal taxes from your taxable income, you don’t get taxed when that tax money is returned. The check will not be taxable income.
It would be different if it were a return of state taxes and you got a benefit from deducting state taxes paid by itemizing deductions.
RE: Is there anyone that seriously believes that sending out $600.00 dollar rebate checks can have any real effect on our economy?
Hillary’s gonna use her’s to pay the rent to stay out of small claims court.
http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20080208/NEWS/802080448
How ’bout, Assuming the pld adage that all real estate is local, When does the so called spring selling season begin in your area and predictions on how it will play out?
“All Real Estate is Local”
Or is it?
Check out these cool national maps for the good ole U.S. of A. and decide for yourself…
http://online.wsj.com/public/resources/documents/retro-MORTGAGE0807.html
Very interesting.
Considering how bad it’s supposed to be in AZ (and it is), our areas are relatively low on the list.
Merced, Stockton, and parts of SoCal are already getting hammered and we have 4-5 more years before we reach the last wave ARM resets?
This has ramifications for all the bubble areas surrounding CA because people will invariably leave the state and large move to AZ, NV, OR, etal giving us a ready supply of new renters.
“Equity locusts” will be coming, but how many will have equity to spend?
Nice post Stucco…
Spring selling season is already underway. Yesterday the ol’ nesting instinct kicked in, so I looked up realtor.com. Found a very cute little house for $118K on 0.2 acre in working class neighborhood in central OH. Even though I don’t feel ready to leap yet, I was rather tempted. The listing said
“fresh neural paint throughout”
“new oak cabinets” in the kitchen
“realtor was related to seller”
Zillow said last sale was 11/06 for $112K (~78K in 1999).
Thank goodness for Ben’s blog! Years ago, I would have said, Cool, not a bad price. But now, the house screams to me “Realtor Flip! Home Despot Special! Falling Knife!”
If it’s still for sale in October, I’ll give it a serious look, and lowball around $85K.
“fresh neural paint throughout”
A subliminal message to please buy this house?
My wife and I put our house up for sale (by owner) right after the new year (I think it was actually the 3rd or so). We put a sign in the yard with flyers and a I posted an ad in the internal classifieds at work. That is all the marketing we did.
It was cold the first week or two (central Arkansas) and we didn’t see much activity. About the middle of the month we started to get a couple visitors. By the end of the month, we had a couple and a single mom looking. The single mom made a verbal offer last weekend, and we signed a contract on Monday.
Personally, I think the warmer than usual weather the last couple weeks of January (which also spawned the tornados many of you likely heard about) helped with the traffic. So maybe if the groundhog stays out (or is it the other way around?) the spring season is here in the south.
Predictions: I’ve been keeping a spreadsheet of the monthly numbers since last Jan. as released by the central Ark. reelters. There is a clear trend of decreasing sales numbers on a yoy basis. On the other hand, the avg sales prices is less clear, it seems the yoy increases in avg price has been slowing, but the overall trend isn’t obvious (I haven’t done any statistical analysis, just eyeballing). I expect the yoy decreases in sales numbers to level off with adjustments coming now in price. I think we will see some decrease in avg price (or at least, 0% increase). For most houses, probably price decreases in the neighborhood of 5% maybe 10% tops in the next few years. I don’t expect to see any of the predicted 20+% drops in price, barring some dramatic deflationary economy.
Congrats on the sale. Hope you have a smooth & short escrow.
A reader sent this one in:
‘One potential topic I recommend is; “real estate agents that contributed to the housing bubble by hoarding”
‘I don’t have any investments in real estate but, I and my wife both have friends and relatives in the real estate-related jobs. They tell us much about the agents that bought multiple units of condos and single family residents during the boom, creating fake demand. One agent boasted about having bought 10 condos and houses in northern California in 2005. Another bought 6 houses in northern Virginia. It would be interesting to hear about how agents bought into the market on its way up and how they are doing now.’
Excellent topic. To expound on it, how the rapidly declining value of the RE mobsters infestments is seizing up the very market they depend on. Losses need to be taken but they refuse yet builders are slashing prices.
RE scumbags are one sale away from bankruptcy.
like hiring an alcoholic to tend the bar.
What about the home builders who drove up the price of land by optioning exurban farmland?
EXACTLY…..Without the inventory and free money there are no specuvestors…..I put 100% of the blame on A.G….
real estate agents that contributed to the housing bubble by hoarding”
Can poetic justice possibly get any better than a real estate agent whose multiple investment properties are tanking in value at exactly the time when no buyers can be found?
I am puzzled about how little knowledge there is about economic cycles and what role they play. Recessions rearrange an economy into more productive areas, yet some pretend that these cycles can be wished away. It’s sort of like the old Soviet Union. And then there is the blame game:
‘Recent cover stories of Newsweek and Business Week illustrate the incredibly negative nature of national media reports,” Vectra Bank Colorado economist Jeff Thredgold wrote in his newsletter. “Newsweek (Feb. 4) … features a cover story entitled ‘Road to Recession.’ The February 11, 2008 … Business Week is entitled ‘Meltdown. For Housing, the Worst is Yet to Come.’
“These cover stories, along with constant negative reporting by The New York Times, The Washington Post, and many other publications, clearly illustrates the adage that ‘bad news sells,’ ” he continued. “Why consider buying a home now when the national media says it will be cheaper in six or 12 months?”
Thredgold, whom I respect and frequently quote, is hardly alone in championing the theory of a media-induced recession.
In January, I watched Tom Hoenig, president of the Federal Reserve Bank of Kansas City, blame the media in a speech for Colorado legislators. I asked him to explain his position afterward.
“If everyone becomes scared … if they read the paper and say, ‘Oh, my God. I can’t do it.’ And they pull back. It has that effect upon the consumer . . . causing inventories to build, manufacturing to pull back and business to pull back,” he said. “It becomes a self- fulfilling prophecy.”
Lawrence Yun, economist for the National Association of Realtors, recently passed through Denver with similar talk.
The national media keep trotting out national statistics that don’t necessarily portend anything for Denver, he said. “It’s nonsensical to concentrate on the national figure,” Yun said. “Local information is far more relevant.’
Ben,
Some refer to this as “group think” or “jump on the bandwagon”.
One can view this process from afar, as in riots.
The media affects many.
The housing mania can be viewed as “group think”, positive or negative.
Realtors are/were in the heat of the moment of “group think”.
I believe they drank the crimson, buy now or be priced out!
It’s almost sad.
Most unfortunate, many participated in the riots - WS, MSM, MB, Fed, Sheep, Reators, JP6, just to name a few of the usual suspects. National mania, save for a few.
Best,
Leigh
They’ve been a sheep at the wheel.
I wonder if those “bad news make things worse” folks would advocate blacking out Hurricane Watch broadcasts, so that people don’t take action to protect themselves.
Interesting point you raise, but so far as I know, boarding up the windows of one’s coastal home along the Gulf of Mexico and heading for higher ground does not make the hurricane intensify.
No, and I don’t think reporting a downturn changes the balance sheets either.
There was that time Jonny Carson announced there was a toilet paper shortage (as a joke) and it happened.
“Recessions rearrange an economy into more productive areas, yet some pretend that these cycles can be wished away.”
Others seem to believe that by with sufficient monetary or fiscal stimulus, the business cycle can be smoothed to the point where it is effectively nonexistent. An alternative hypothesis is that excessive smoothing results in a buildup of systemic risk, as economic actors who perceive no downside to their bets take increasingly foolish and unproductive gambles. Consequently the shorter wave lengths in the business cycle are smoothed and dampened at the cost of amplifying the longer wave lengths in the cycle.
I guess we will have to wait for the future path of economic history to resolve the question of which hypothesis gets closer to the truth.
I think what they are most afraid of is the idea of loss of control, of their powers over the public.
Advertisers create the desire for consumer goods, and the media charges them quite handsomely, to allow them to use their vehicles for a ride.
Sales of non-necessary items have obviously fallen towards the floor, and it’s a knee-jerk reaction by them, to get Humpty Dumpty back together again.
For you see, once advertising dies, so does the old media.
Coup de grâce
One could only hope..
If stupid actions don’t have negative consequences, people will do stupid things. Amazing how many “smart” people running this con game have managed to avoid this simple truth!
“If everyone becomes scared … if they read the paper and say, ‘Oh, my God. I can’t do it.’ And they pull back. It has that effect upon the consumer . . . causing inventories to build, manufacturing to pull back and business to pull back,” he said. “It becomes a self- fulfilling prophecy.”
Some people just simply don’t grasp the budget constraint concept.
This explanation is noteworthy in what it omits: The role of a CB-created credit tsunami that encouraged households to throw away their home equity wealth gains on consumption goods. Rather than pulling back in the face of a collapse of said home equity wealth gains, consumers now are scaring each other into a consumption-led slowdown that is driven by autonomous household-level decisions.
Hummmm…
Just watch a rebroadcast of the Millionaire Inside that aired last night. Out of the four cases exposed, three were just beyond belief for those financially responsible. Two had a total debt load of close to $700K (couples) and the third ( young single gal) $70K. Most are in debt due to CC limits are set high and easily available. What I really hated was the attitude exhibited where one couple was reported to have been making $500K a year talking about traveling the world taking limo’s, drinking $300-$400 bottles of wine, gambling, buying fancy things and now wanting to have a $20K wedding. Best of all was their RE connections comeuppance should be akin to being slapped by the 20 lb trout and Joshua tree
spa treatment.
Isn’t some psychological impact of media reports inevitable in an economy that is so dependent on consumers over consuming because of “consumer confidence”?
I agree we are long overdue for the economic realocation that comes with a recession, but fear of job loss should impact consumer spending and job loss happens in a recession. The fact that this one is starting off with a huge contraction of credit (which may overwhelm consumer fear in terms of dollar impact) just increases the problem.
An export oriented economy would have a lot less trouble with US consumer spending and more troubles with foreign consumer/business spending.
If the press had done its job two or three years ago, and “scared” everyone by revealing the shaky foundation of the boom, we might not be in the mess we are now — and that would have been good for the press, the public and the industry.
The press had to cheerlead the boom till the last possible moment to make its advertisters happy, but now that the data are so overwhelming they have to tell the truth, otherwise they risk looking like idiots to their readers.
It’s no wonder the short-term obsessed industry is so mad at them though - -they are used to having the press in their pocket, and can’t understand why they won’t keep misleading the public just so the party can go on a few minutes more — even if the party kills the economy in the long run. Pure foolishness.
I should add, one reason I think the press is more pressured to be accurate is the presence of watchdog blogs like this one - which many see as more reliable than MSM..
We had a great example of what’s what, in the eyes of observant people with no agenda, vs. statistical flat-out lies, last week…
2 of our crew were in Las Vegas for the Superbowl, and to me, the most dreaded time to be there, as it’s a zoo. I went once years ago, and that was enough for me.
Besides, I generally fear and loath Las Vegas, on a good day.
Both related how dead things were, and then someone who possibly adores the old guard, and posts here, hit us with a 2×4 made of hoax wood, about how things were still going great, according to UNLV studies.
We are the reporters, now.
It’s funny they complain about the media, because I didn’t think there was much notice of the recession in the national media until fairly recently. Yet from reading this blog it seemed clear that all the underlying conditions were in place, and the hourse of cards began to fall last August. So no sooner than the national outlets began to cover it, the PTB started complaining about them causing it.
In the same way, they denied the recession then flipped and said oh yeah we’re in one but it’ll be short..
The
““If everyone becomes scared … if they read the paper and say, ‘Oh, my God. I can’t do it.’ And they pull back. It has that effect upon the consumer .”
It just goes to show: they don’t understand the concept that a vast proportion of our population has been spending beyond their means and is now tapped.
Or is this statement of people with money to spend standing on the sidelines referencing the top 40% that was supposedly holding up our whole economy last year?
I guess that “damage contained” theory doesn’t work out so well when it includes writing off 60% of the consumers as insignificant to the economy.
I blame Mr. Milton Friedman, not really, just the people that follow him as law. His hypotheses have been accepted as fact and despite numerous experiments showing invalidity, the Federal Reserve and many economists base current actions on his game modeling. However, people do not bell curve around the optimum choice.
Builder: “the target market was buyers who spent a lot of their income on a house and had no credit”
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-townhomes_08bus.ART.State.Edition1.3924b50.html
Good article Tx,
“Marketing director Kevin Jones said the builder is close to completing its District A development in Addison, where units are listed between $250,000 and $360,000.”
Um…oversupply and affordability?
This will end well.
Leigh
I’m interested in what impact the various presidential candidates’s policies may have on the housing market in 2009.
Are we just comparing the 2 Dems and McCain?
I was wondering how this “fair tax” concept would change housing. But it looks like that candidate hasn’t got a prayer….ok, I am a dork!
If its McCain…Go long on military hardware….
If its one of the other two….Short the Brokerage houses….
“Short the Brokerage houses….”
Ha! You remind me of folks I worked with back in the early 1990s, who claimed the stock market would tank if Clinton got into office.
Guess what actually happened when he did?
:-) 
Greenspan pretty consistently lowered rates throughout the 90’s.
“Guess what actually happened when he did?”
What is the future for securitization? Will we see more government regulation of some of these complex financial instruments?
http://tinyurl.com/2xl5uh
Probably the biggest financial question mark of the decade, IMO.
A decade ago, we’d allow basket-case 3rd world country’s debts to go away, on occasion. So hopeless was the idea of collecting anything.
We’ve gone 3rd world, as far as our vaunted financial wizardry is concerned.
Well dressed crooks in $6k tailored Italian suits, don’t look so good when you figure out they were just running a tailored numbers game, nothing more.
Who’d let us welsh on our debts, though?
Who could stop us? Aren’t we talking about the equivalent of trying to find a way to force an FB to stay in his overpriced house and keep paying?
Thanks for the post.
This will end well - we need new masters/mistress of the universe.
Ones that can perform math with a pencil.
Leigh
$600 x 2 + $300 for each of the sprogs. Do I multiply first or add?
Math is hard!
LOL
Nice. The idiots probably think they’ll be getting over 180 grand.
Well Duh… Multiplying is the only way you get to add the $300..
hehe
The Wages of HillaryCare
“At a recent debate, the Illinois Senator drove the point home, asking Mrs. Clinton, “You can mandate it but there will still be people who can’t afford it. And if they can’t afford it, what are you going to do, fine them?”
Mrs. Clinton conceded that “we will have an enforcement mechanism” that might include “you know, going after people’s wages.” (garnishing wages)
“The political lesson that Mrs. Clinton learned in 1994 wasn’t about compromise or market forces. It was that a government health-care takeover can only be achieved gradually and by stealth. Her individual mandate is an attempt to force everyone to buy into a highly regulated and price-controlled system where government redistributes income and dictates coverage. We assume the McCain campaign is paying attention.”
http://online.wsj.com/article/SB120234937353949449.html?mod=opinion_main_review_and_outlooks
My question is “How much will free government healthcare cost?”
OMG!
The comments are pro-mandates!
Speechless!
Leigh
My question is, “How much more of the same will the populace tolerate”. My answer: Not much.
we pay for congressman health care now at a much higher quality than we are talking of giving to the oridinary person - we pay for health care for our local governments to all their employees - those are my tax dollars giving them health care - so why can’t I have affordable health care - take my percentage taxes that is being wasted on war and bombs and bullets and paid mercenaries and instead funnel that to a healthy solution - same as wages - the congress critters give themselves a cost of living wage every year - no one complains - they make way above the average and work a hell of a lot less - take that money and funnel it back to the people through health care - it is not free - we pay taxes now - just the government waste it on themselves and cut services to the people - they wasted it on imperialism and killing people - it is time it is put to better use for the people
In an interview on ABC, the enforcement of said mandates will be the IRS, said Hillary. However, her campaign folks now have quieted that talk, and she declines to discuss the “enforcement mechanism”. How nice, IRS supervising your paycheck on a weekly or biweekly basis.
Maybe it should be treated as two separate issues? How to ensure universal health coverage, and how to ensure the medical profession doesn’t rip us all off even more as a result.
Because it’s not like healthcare in this country under the current system is some incredible bargain, notoriously cheaper than everywhere else. Just a thought.
The only blame the medical pros have in the current but 30 year long health care mess is the fact that they refuse to sacrifice their own, irrespective of how incompetent they are. Granted they are a minority in terms of percentage, they need to be tossed. The entire health care debacle lies squarely at the feet of the insurance companies. Insurance reviewers rejecting required and necessary medical procedures is hardly considered practicing medicine. (Not to mention the last retiring HMO CEO robbed insurance rate payers blind by absconding with a $1.4 BILLION retirement “bonus”.)
This is an overly simplistic evaluation. If I had to choose one single problem with our health care system, it would be people who think one single thing like this is the absolute problem. It is easier to find a scape goat than to critically evaluate the system as a whole.
I certainly don’t claim to understand all the intricacies of our health care system, but I do have some insights I have acquired over the years. There is some strong argument that the AMA (enforced by gov policy) has created an artificial shortage of doctors by limiting the number of medical schools that can exist.
Here is an article on the subject: http://www.mises.org/article.aspx?Id=1547
If this is true, then simple economics tells us an artificial shortage would lead to artificially high prices. Has that occured? It seems evident to me that doctors are likely overpaid. My wife was a paramedic for a number of years. Her training was 2 years and her pay was very working class. When she went to work for a flight crew (higher pay, more intense/stressful, more dangerous) she was making in the mid-forties with overtime. Her duties as a medic were different than, say, an ER doc (medics try to make you not die, then hospitals try to put you back together), but it wouldn’t be much of a stretch for her to be trained in, say, reading an xray to identify a broken bone and set a cast. The same could be said about a whole range of medical topics. I can’t see any reason, given an open economy, that doctors make so much more than anyone else.
Since the AMA is an organization whose intent is to benefit their members (doctors), they certainly have an interest in keeping salaries high.
There are certainly a wide variety of factors influencing the cost of medical care. My personal opinion is that the discussion around insurance is intended to distract us from the real problems. If medical care were more appropriately priced, we would only need insurance for what insurance was meant to be, a hedge against unlikely and expensive events. Your car insurance doesn’t pay for oil changes or transmission rebuilds, why should medical insurance pay for routine sicknesses that are part of being human?
“why should medical insurance pay for routine sicknesses that are part of being human?”
Cancer, broken bones, strokes, migraine headhaches are “routine” illnesses so they shouldn’t be covered either?
I don’t know. I would think probably not broken bones, especially for kids, but that’s just my estimate. I can’t really speculate about what specifically would be covered if medical insurance were really just insurance, nor do I have the inclination. We are so far from that its really a futile effort.
In any case, it sounds like you don’t really want insurance, you want prepaid medical care. Either that or just to have your medicine at someone else’s expense. Now that I think about it, I suppose given that your main cause is to get someone else to pay for your medicine, you shouldn’t have a drive to understand why medicine is so expensive in ints current state.
That’s like a light bulb going off for me…I guess that’s why people don’t REALLY care about the details, they don’t want to have to actually pay anything. Everything else is just rhetoric to defend why someone else should be paying.
I can’t see any reason, given an open economy, that doctors make so much more than anyone else.
The doctors that make a lot of money are the ones who are playing the insurance scheme. They’ll do the procedure that gets paid without many questions from the insurer and avoid what will give them trouble. That leads to lower quality health care, because a physician’s thought process is not considered valuable. Many, though not all, of those “rich” doctors are getting handsomely paid for not thinking, for seeing as many patients as possible in as little time as humanly possible and doing whatever will get them fees. The real doctors who try to avoid unnecessary procedures in order to save the patient and save money, are paid quite poorly for a consultation, regardless of the thousands of dollars and lives that they save by just looking carefully at a set of blood tests. Don’t get me wrong, though, much as I despise insurance companies and what they’ve done to health care, I think a big part of the blame lies squarely with doctors themselves, who allowed themselves to be pushed out of what should be their territory. They did it at their own peril, and now we are all paying the price.
“Everything else is just rhetoric to defend why someone else should be paying.”
That is exactly what insurance is. Pooled risk.
Get a grip.
So when did ‘universal” health care get the public ok? Until the real costs to each wage-earner are clearly spelled out, those in favor seem to feel it will be cheaper for them and their families than private insurance, or self-insurance?
Really?
I do not want to be “mandated” into any health insurance plan.
I buy catatrophic coverage and otherwise self-insure. I have no interest in paying the freight for some obese kid with diabetes, or someone’s alcoholic Uncle Fred with kidney disease. The most feckless and those earning the least are the most eager to grab from the rest of us working for a living. The words independent and self-sufficient should be stricken from the American vocabulary as we lapse into quasi-police state socialism.
those in favor seem to feel it will be cheaper for them and their families than private insurance, or self-insurance?
——————-
I’m very much in favor of universal healthcare, but don’t think it will necessarily be cheaper. Though we have good health insurance, we still opt to pay for “extras” like additional screenings, faster appointments, etc. We are actively considering concierge care.
That being said, I like universal healthcare because when the SHTF, people can be rendered unable to work and without income (possibly rendering them unable to pay for insurance) at the very time they most need access to healthcare/insurance.
Having everyone covered protects you and your family as well. Otherwise, you’d have people with contagious diseases roaming the streets because they couldn’t afford vaccines or preventative care. They will be living on the streets, if unable to work due to sickness, and they will spread diseases faster than you could imagine.
Do you think sick people will just “disappear”? What do you propose we do with all the sick people who cannot afford healthcare?
Though I voted for Obama, I like Hillary’s health care plan better. The sooner we can get to universal. single payer health care the better.
We have the most expensive per capita health care in the world. Yet or health and life expectancy is below most of the industrialized world. Private Insurance spends up to 30% on administration while Medicare is under 5%. We pay an enormous amount for our health care, whether in lower wages, insurance premiums or, yes, taxes to pay for the care the 47 million uninsured need. (Oh yes, only industrialized country with “uninsured”. As for mandates. there are many activities, like driving, where insurance mandates exist.
We have “socialized” police, fire departments, education, Health care needs to be too.
We have “socialized” police, fire departments, education, Health care needs to be too.
I agree, seeing as how they have done such a bang-up job with education.
Hillary is going to “mandate’ participation…that means you gotta pay. No options, no freedom of choice. She plans to pay for it by garnishing wages of the W-2 folks…using the IRS as the enforcement mechanism. You want a police state…vote Hillary.
“We have “socialized” police, fire departments, education”
Public Safety and Education are “socialized” as you call it at the state and local level primarily. I am fine with that because it is in line with the 10th amendment to the constitution. Our Federal government was not set up to be the giant welfare provider it has become. This should all be handled on a state by state basis IMHO. The state in which you reside does not have “Free” health care…Move to one that does. Very simple really.
You guys especially will love this. Never let it be said that I don’t find housing bubble stuff in the most unlikely places.
http://www.pricescope.com/idealbb/view.asp?topicID=78255
Nothing exacerbates the ruin of a fool like a high maintenance woman! (speaking from my own perspective)
I met a man once who’s gf was wearing a huge diamond. She bragged about it costing so so many thousands. “He loves me so much” stuff.
When they left, my friend told me she was the third he’d seen with this guy. The diamonds were all fakes.
Yeah, well, my spend o holic best friend who just whined a little and got her $300 marguerita maker, wedding band upgrade, $6000 stove, (3rd vehicle) mini cooper got a little text message about a week ago.
Husband who had been gone on business all week had actually been spending it w/another woman. Didn’t know if he was coming home.
Seems all those “things” didn’t mean a thing.
According to my friend at CitiFinancial, the now investigate all social security numbers used on loans…
That’s sad.
Hope they don’t have any kids.
You’re right, though…the amount of money spent doesn’t guarantee anything. Weddings, in particular. Seems all the expensive weddings end up in divorce, while the simple ones are enjoyed by couples who have long, happy marriages.
Her fiancee is working other jobs while a medical resident? Sorry. Don’t believe it. Someone is lying - might be her, might be him.
When they finish perfecting the fabrication of gem quality diamonds (not around the corner, but soon), prices will plumet. You’ll srtill be able to id the maufactured ones since they will be more “perfect” than found in nature, but except for no inclusions, they will be identical. And no ethical “blood diamond” issues either.
How about refinancing the condo to buy the bimbo the bling? When that goes bad and he tries to sell the ring to pay it off, he’ll find he can get about 50% of what he paid for it.
same with the condo.
Wow, that ring is tacky.
Polly, my wife has been interviewing for a family medical residency in the past few months. Many programs tout the extra hours (and extra pay) available for second and third year residents. Mostly these hours are weekend/overnight coverage in far suburban ERs which are not so busy.
You can pick up extra hours as the programs are less intense after the first year. Although, maybe you’re just used to the misery.
Author: NewEnglandLady
Okay, okay, I know I’m going to sound like the wicked witch of the west here, but your boyfriend took out a home equity loan to pay for the ring?? And he works moonlighting jobs while also being a resident and working 18 - 24 hour shifts (is it even safe to have an extra job??) to pay the bills. Please don’t get me wrong, your ring is beautiful, but if my boyfriend said ‘I want you to have a 3 carat ring and I’m going to take out a home equity loan to pay for it’ I think I’d punch him, haha
How about a slap in the face with a 20lb trout??
I just vomited…..
How did you find this site? It’s, um, priceless. BTW are you “NewEnglandLady”?
No. It’s actually a good site for diamond information. Populated by mindless bimbi, yes, but I can overlook that.
I wonder if there is a corralation:)
Bush, Congress hit bottom in AP poll
It’s almost as if people can barely stand the thought of President Bush and Congress anymore. Bush reached his lowest approval rating as only 30 percent said they like the job he is doing, including an all-time low in his support by Republicans. Congress’ approval fell to just 22 percent, equaling its poorest grade in the survey.
http://tinyurl.com/3dpbda
Consumer Confidence Sinks Even Lower
According to the RBC Cash Index, confidence dropped to a mark of 48.5 in early February, from 56.3 last month. The new reading was the worst since the index began in 2002 and surpassed the previous low reached in January.
http://tinyurl.com/2jj3s4
I wonder if there is a correlation
Bush, Congress hit bottom in AP poll
It’s almost as if people can barely stand the thought of President Bush and Congress anymore. Bush reached his lowest approval rating as only 30 percent said they like the job he is doing, including an all-time low in his support by Republicans. Congress’ approval fell to just 22 percent, equaling its poorest grade in the survey.
http://tinyurl.com/3dpbda
Consumer Confidence Sinks Even Lower
According to the RBC Cash Index, confidence dropped to a mark of 48.5 in early February, from 56.3 last month. The new reading was the worst since the index began in 2002 and surpassed the previous low reached in January.
http://tinyurl.com/2jj3s4
I’m interested in knowing if you’ still see evidence of flippers in your market. I do and that shocks me that people are still clueless.
Hubby and i we’re looking at a house that came on the market way under price of what is the going wishing prices are around here. The house was in our school attendence boundries so that’s why it was appealing to me but it was being sold as is with no inside photos offered.
We passed but it looks like it’s under contract and already the rehab process has started. Big old dumpster in the drive way now.
I just don’t get who would still want to tackle rehabbing houses in a falling market?
What do ya’ll see in your neck of the woods?
There are three of them on my street. Along with the three houses for sale that have been for sale for nearly a year. I guess the flippers think it’s just different at their house.
Still seeing them here in Tucson.
Still seeing them in San Diego.
I apologies in advance for the multiple links, but you asked the question! Crimson tide.
http://milwaukee.craigslist.org/rts/566360362.html
http://milwaukee.craigslist.org/rts/566298916.html
http://milwaukee.craigslist.org/rts/564401314.html
Leigh
Voz has once again started to notice an increase in the “equity locust” looky-loos here in Oregon..
Im talking about houses that have been on sale for years…no price reductions, old family joints just waiting for some new blood/money…
Here too…
Triple-decker next to my condo in Cambridge, MA is being gutted and rehabbed even as I type.
Retail Squeeze Felt
Far Beyond Malls
Stores’ Poor January Sales
Cast Broader Economic Pall
On Property Owners, Ports
By AMY MERRICK and KEVIN KINGSBURY
February 8, 2008; Page B1
A dismal January at the mall offered the latest sign that the U.S. economy is in or near a recession — and is already sending ripples that reach well beyond the retailers to commercial-property landlords, construction companies and container ports.
Retailers turned in their worst monthly sales results in nearly five years, and big chains appeared to be girding themselves for a prolonged slowdown in consumer spending by announcing plans to close hundreds of stores and cut thousands of jobs.
http://online.wsj.com/article/SB120238618499550605.html
Topic suggestion: The slowdown in consumer spending is accelerating, what will 2008 bring?
Credit-Card Pinch
Leads Consumers
To Rein In Spending
America’s love affair with credit cards may be headed for the rocks.
Credit-card delinquencies are rising across the nation, a sign that some Americans are at the end of their rope financially. And these mounting delinquencies, in turn, have prompted banks to tighten lending standards, keeping people who have maxed out their cards from finding new sources of credit.
The result could be a sharp pullback in consumer spending that would further weaken the slowing U.S. economy.
http://online.wsj.com/article/SB120243324726552445.html?mod=hps_us_whats_news
Now I “get” the recent trajectory of AAPL’s share price chart.
Stingy gift card use seen as a sign
Emphasis on necessities shows consumer strain
By Anne D’Innocenzio
ASSOCIATED PRESS
February 8, 2008
NEW YORK – Here’s a sign of how shaky the economy has become: Wal-Mart Stores says its shoppers are redeeming their holiday gift cards for basic items – pasta sauce, diapers and laundry detergent – instead of iPods or DVDs.
http://www.signonsandiego.com/uniontrib/20080208/news_1b8retail.html
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
Heck, if someone gave me a Wal-Mart gift card, I’d do the same thing. Why? Because Wally World is a great place to shop for staples.
I would give the card away unless it was worth $$$. It would take lots of dough to make me willing to set foot inside of Wal-Mart.
Prof, me, too. A LOT of dough. Hate that place.
Weekend topic suggestion: Lawsuits to bring REIC kingpins to justice.
Case in point:
Lawsuit claims KB Home and Countrywide inflated price of homes
By Alex Veiga
ASSOCIATED PRESS
February 8, 2008
LOS ANGELES – Two California couples are suing KB Home and mortgage lender Countrywide Financial Corp., claiming the companies schemed with real estate appraisers to inflate prices paid for homes as the housing market began to tank.
The complaint, filed Wednesday in Los Angeles Superior Court, also names as defendants KB Home Mortgage Co., Countrywide Home Loans, Countrywide KB Home Loans – a joint venture of Countrywide and the builder – and two real estate appraisers.
In a statement, KB Home said, “We believe that our full and complete investigation will show these allegations to be without merit.”
http://www.signonsandiego.com/uniontrib/20080208/news_1b8lawsuit.html
Prosecutors Widen
Probes Into Subprime
U.S. Attorney’s Office
Seeks Merrill Material;
SEC Upgrades Inquiry
By AMIR EFRATI, SUSAN PULLIAM, KARA SCANNELL and CRAIG KARMIN
February 8, 2008; Page C1
Federal criminal prosecutors are stepping up their interest in Wall Street’s mortgage-securities activities.
The Justice Department’s U.S. attorney’s office in Manhattan, based near Wall Street, has notified the Securities and Exchange Commission that it wants to see information the agency is gathering in its investigation of Merrill Lynch & Co., according to people familiar with the matter. The SEC is examining, among other things, whether the securities firm booked inflated prices of mortgage bonds it held despite knowledge that the valuations had dropped, the people say.
http://online.wsj.com/article/SB120244312394153109.html?mod=hps_us_whats_news
Loan Adviser to Assist Bank Probe
By Carrie Johnson
Washington Post Staff Writer
Monday, January 28, 2008; Page A05
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/27/AR2008012701752.html?hpid=moreheadlines
Is this confidence restoration scheme likely to work?
Ratings agency is retooling services
S&P, others under fire for role in credit crisis
By Stephen Bernard
ASSOCIATED PRESS
February 8, 2008
NEW YORK – Standard & Poor’s Ratings Services, under criticism in recent months for its role in the deterioration of U.S. credit markets, said yesterday it is taking steps to prevent any conflicts of interest and to enhance clients’ understanding of its rating process.
“We are taking 27 specific steps in hopes of restoring confidence in the ratings process, and to address issues of relevance and transparency,” said Paul Coughlin, an executive managing director at S&P.
http://www.signonsandiego.com/uniontrib/20080208/news_1b8ratings.html
Chapter II: A Commercial Real-Estate Bust
By Scott Patterson
Word Count: 526
Investors are hoping the subprime-mortgage debacle will be a bad memory by the year’s second half. Instead, they might have another mess to sort out in commercial real estate. If it were a movie, it might be called “Subprime II: Monster in Your Mall.”
Work on everything from new malls to office parks helped to carry the construction industry as housing crumbled. While residential construction spending was down 20% in December from a year earlier, nonresidential construction was up 20%, according to the Census Bureau.
http://online.wsj.com/article/SB120243848586452835.html?mod=todays_us_nonsub_money_and_investing
There are strip malls in the DFW area STILL abandoned from tje earlh 90s bust.
‘Fitch Ratings, while telling investors last Friday to expect additional “widespread and significant downgrades” on $139 billion worth of subprime loans, has cited a new factor in their “worsening performance.”
“The apparent willingness of borrowers to ‘walk away’ from mortgage debt,” the analysts noted, “has contributed to extraordinary high levels of early default” on loans issued during the 18 months before the mortgage bubble burst.’
‘Such behavior, where not precipitated by willful fraud, shows that American homebuyers supposedly duped by their lenders aren’t so dumb. They’re perfectly capable of acting rationally without political interference.’
‘A decade ago, most people started off with enough equity in their homes to make foreclosure irrational from a financial standpoint. But over the past few years — until last spring — banks and the mortgage-backed securities investors who bought the loans the banks packaged weren’t demanding substantial down payments; they were happy with 5% or even nothing down.’
‘Now the bloom is off the residential mortgage-backed securities (RMBS) rose. And some borrowers, even those who can theoretically afford to keep their homes, realize they owe much more than what comparable houses in the neighborhood are selling for — and think that prices won’t rebound anytime soon. So they’re walking away, according to anecdotal reports as well as recent statements by top executives of both Wachovia and Bank of America.’
‘Borrowers acted rationally in response to market forces and incentives during the bubble: Buy a house because prices always go up; you can’t lose. Many are acting rationally now: Mail the keys back and un-borrow the money, because prices are sinking fast while the debt isn’t. When the house was purchased not as a first home but as a rental investment, the decision is even easier.
‘Imagine: Politicians keep saying that Americans need protection from their big, bad lenders — but that protection is already there.’
‘Of course, there’s a price. Mortgage “walkers” will take a hit to their personal credit rating. Yet this once-forbidding punishment may be discounted. That’s because, just as when markets change their behavior, people change, when people change their behavior, markets change also.’
‘This rapid transformation shows that the continuing political hand-wringing over what to do about failed mortgages isn’t needed. It’s beginning to dawn on lenders and their agents — who assumed that borrowers who could afford to do so would make payments no matter what — that they could be stuck owning hundreds of thousands of houses at a minimum.’
‘Nobody is going to debtors’ prison. Nobody is going to have to toil for 30 years and sacrifice their kids’ future to pay off burdensome loans that they’re stuck with forever because they overreached. (Even if banks and mortgage administrators pursue judgments for post-foreclosure loan balances, there’s always bankruptcy as a last resort.)’
‘As for Sen. Hillary Clinton and her proposed “moratorium on foreclosures”: She may soon find that borrowers, not just lenders, are screaming to let them act within their contractual rights.’
‘An overwhelming majority of borrowers who were seriously delinquent on their home loans in October weren’t receiving any help to prevent the possibility of foreclosure, according to a report published Thursday. Seven out of 10 seriously delinquent borrowers were not exploring ways to prevent foreclosure.’
‘KEVIN MIMS: My wife and I met while working together at a title and escrow company. Four years ago we bought an 80-year-old home in a nice Sacramento neighborhood. My wife, an escrow officer, and I, a notary public, were earning good money. We had every intention of staying here forever, but the subprime lending crisis has triggered another real estate meltdown. Now my wife’s salary has been cut and her bonuses eliminated. My notary work has dwindled to a trickle. It becomes more difficult to make our house payment each month.’
‘Financially it doesn’t make sense to even try. We owe about $430,000 on the house. It’s currently worth no more than $400,000. Selling isn’t an option. Sooner or later we will probably give up another home to foreclosure. The interest rate is…fixed until August of 2012. A sudden upward adjustment of our loan won’t force us out. It’s the sudden decrease in our incomes.’
‘I suspect foreclosure will be much more difficult at 50-something than it was at 20-something…On the bright side, my stepdaughters are grown up. We won’t have to uproot them. The only downside for them is, they may end up housing us for awhile.’
How can you make a living as a notary public for heaven’s sake? They make about $5 for each document they do.
Preach it, Chick! I’ve never known anyone who did notary work fulltime. It was always done on the side.
Good to see articles like this, too bad the reporter doesn’t go farther and point out that it’s easier than ever to walk away now with congress’s brialliant mortgage forgiveness act and whatever the stupid thing was called.
Crazy - unless he’s a notario for the immigrant community. They apparently do all sorts of things for non-English speaking.
In Europe, and I believe South America, a notary is a legal professional. They have limited-powers to draft documents and also “interpret” legal documents for lay persons. In the US a notary “public” is a clerk that administers oaths and witnesses acknowledgements of signatures or an actual signing.
A lot of immigrants may believe that a US “notary public” is the same as a European notary.
‘Sooner or later we will probably give up another home to foreclosure.’
So they didn’t learn anything from their first experience?
Why would anyone stay in a home with a broken homeowner’s equity-ATM machine? You walk away dot com.
This woman writes on many issues from a conservative perspective, and is actually ideologically consistent. I only agree with her a minority of the time, but in this case, she is absolutely right.
The “bailout” is for the wealthy RMBS holders, not the borrowers. Most so-called conservatives are happy with big government that redistributes income up. Good to see at least one isn’t.
‘“bailout” is for the wealthy RMBS holders, not the borrowers’
Political scam artistry at its worst.
I just returned from a 2 day trip in northern California. I stopped to get gas at a Shell station in Redding. Two women in front of me at the register line new the cashier. One of the women asked the cashier where she was living and she quickly replied “Oh, I sold the house and moved back in with my mom. Homeownership is not all that it is cracked up to be! I won’t do that again.” They all quickly agreed.
“Oh, I sold the house and moved back in with my mom. Homeownership is not all that it is cracked up to be! I won’t do that again.” They all quickly agreed.”
LMAO. BEAUTIFUL!!!!!!! These people remind me of cartoon characters!!! Freekin retards!!!
Watch some trash TV
Ok - I admit I watch some trash TV. The “Millionaire Matchmaker” has male millionaires and tries to find them love (marriage) with hot women. One guy was total geek and lived with two other buddies in the freaking ghetto. The owner asked “Are you sure this guy is a millionaire?” after seeing his lifestyle and the response “yeah - we checked him out - he owns two $500,000 condos.” Nobody made the connection.
In the “Millionaire Next Door” last night a panel was discussing the debt (almost $700,000) of two real estate flipper/agents who were going to get married. They lived the good life for YEARS – travel all over the world, limos, perfect teeth, $400 bottles of wine and now want a wedding (they have $20,000 cash in the bank for that) and really do not want to change their lifestyle. Oh yeah - they are $100,000 under water with their house and considering a “short sale.” They guy said he is starting a great new business and needs cash for that (wonder how he would feel if someone stiffed him for $100,000 in that business). He considers himself an “entrepreneur” and was just an arrogant ass.
The world is still in denial.
i saw that show last week and wanted to smack the crap out of the fat bastard
thought the good life would last forever and never saved a dime for a rainy day - that couple was repulsive
I think you are talking about the Millionaire Inside cnbc last evening that featured four couples and a panel of debt coaches (barf). The coaches published books so that makes them experts.
my weekend topic suggestion
has the msm and the j6p public really gotten the fact that housing prices are not going up this year or for the distant future? that we are in a recession and things are not well financially?
i mean with the nar finally admitting this week what we all have known and if anyone saw it, law and order episode this week dealing with a subprime mtg foreclosure scam
law and order ripped from the headlines….
No they haven’t.
It’s been my experience of late that even though people acknowledge that I have been right about virtually everything to do with the housing bubble over the last 3 years. When I tell them prices still need to fall 30% to 50% to come in line with affordability, they still look at me like I’m on the pipe.
“NYC real estate won’t come down cause of the Europeans.”
“$700,000 houses in Flushing, friggin Flushing, won’t come down cause of the Asians.”
They just don’t get it.
It’s the same thing that happened when we’re invaded Iraq. I saw it as a potential disaster. But America is so strong, we can only win and do what we want.
It takes the disaster to unfold before people accept it.
Nobody in their right mind would spend that in Flushing.
Don’t get me wrong. I love Flushing.
Best. Food. Ever.
However, you’d have be totally daft to plonk down 700 big ones out there (or anywhere along the 7 line for that matter.)
Starter homes in any good neighborhood in Queens are still half a mil. I agree it’s crazy. But when I tell others that. They look at me like I’m the one who’s daft.
I remember Flushing before it was Chinatown East. The best pizza I ever had was from a tiny place between the subway station and the LIRR station ticket booth.
It still is Chinatown East, and the food there beats the living daylights out of Chinatown in Manhattan. It’s not even a fair competition.
Weekend topic:
What are you all doing to save money?
Who is cutting back on frills?
I hate this new austerity.
I was austere, when austere wasn’t cool.
Define money. If you are discussing US currency denominated thingies, I have none.
Everything can be denominated in any currency you choose. It’s just a convention.
Even if you have no assets in USD, they can always be denominated in USD or ZAR or INR or gold or Ho-ho’s or …
I think you were trying to make a joke. What was it?
The problem with hanging onto the greenback Dollar, is sooner, rather than later, nobody’s gonna want ‘em…
A race to the exits.
Our home and a few bucks in the bank, is our only Dollar denominated assets. That’s it.
Wake up people, from your slumber…
“The question is what are you doing to save money”?
“Money is any token or other object that functions as a medium of exchange that is socially and legally accepted in payment for goods and services and in settlement of debts.”
I am saving tokens. Because I will not be long American thingies, if a bust of the thingy happens.
“A convention is a set of agreed, stipulated or generally accepted social norms, norms, standards or criteria, often taking the form of a custom.”
For example, I do not know that I will accept any paper currency for milk, I am not agreeing to the generally accepted standards.
Wheat was limit up 5 days in a row this week, $1.50 up- There is no wheat currently available at these low prices (price is only up 300% in last 2 years.)
How much increase will we all see in the Domino’s Pizza, McDonald’s Hamburgers, a loaf of Bread? Be nice to have something that increased with these.
Again, I ask seriously to define money. The US dollar may or may not be money in the future, who knows. I certainly think the Euro is toast.
I agree about the Euro.
There is no way one interest rate can satisfy Ireland, Spain, Germany, Italy and Poland.
The strife is going to be quite awe-inspiring in its destructive capacity.
Who reneges first? Spain or Italy?
However, as I understand it, we were debating between medium of exchange and unit of measure.
Storage of wealth, of course, is an entirely different ballgame.
IMHO France
They love fomenting rebellion.
Hmmm… I thought of that.
However, France has everything to gain and very little to lose. They have free options all the way.
Why would they nuke the system from which they benefit so much? Remember that they forced Brussels to be made in the image of the French political system (very different from the Anglo-Saxon model.)
Could you imagine thousands of cars being torched in NYC, in the course of a week’s time, like what happened in France?
A thought provoking idea “between medium of exchange and unit of measure.” I’ll try to think and write about it over the weekend.
As an idea, we could measure by hours worked and how much you hated what you did for a living. Thus a plumber that hated his job would receive more than a Doctor that loved her job. a flippant idea. Hours contributed to society as a paid vacation. NFP employees from BOD down are required to work 20hrs/wk,mo at the lowest volunteer position.
I suggest a thread on top-down economic policy mantras: Do they “work”?
Consider the policy mantra for 2007: “Subprime is contained.”
Fast forward to the mantra for 2008: “Slowdown, but no recession.”
THE FED
Yellen anticipates slowdown, not recession
S.F. Fed official ‘not confident’ recession can be avoided
By Laura Mandaro, MarketWatch
Last update: 8:57 a.m. EST Feb. 8, 2008
SAN FRANCISCO (MarketWatch) — San Francisco Federal Reserve Bank President Janet Yellen said late Thursday that she anticipated the U.S. economy would slow but avoid an “outright recession” in coming quarters.
http://www.marketwatch.com/news/story/feds-yellen-sees-slow-growth/story.aspx?guid=%7B7FD3AF5C%2DE94B%2D4D8C%2DBCA3%2DBD235413FAE3%7D
At what point does the gubmint become bidder of last resort in the asset markets? (Just having a hard time imagining who is buying now, I guess…)
http://www.marketwatch.com/tools/marketsummary/
FHLB went from lending 150 billion to 750 billion. FNM & FRD went from 38 pct mrkt share to 75 pct mrkt share. What’ more, the fed is making secret discount window loans. Add to that a 150 billion stimulus package and ‘timely plunge protecting’ rate cuts. I’d say the gov’t is already very busy trying to keep markets afloat.
“FHLB went from lending 150 billion to 750 billion.”
What time frame are you talking about? And how much of the $750 bn went through CFC?
From Gillian Tett of the FT:
As I pointed out a few weeks ago, the once-obscure state-backed FHLB system has furtively provided a crucial lifeline for US mortgage lenders in recent months, pumping in some $750bn in loans last year. And Countrywide has been a particularly eager recipient of this public largesse: by September last year, it had received $50bn of loans (and I would guess the current figure is much bigger.)
This is staggering stuff, given that the FHLB never used to lend more than a total of $150bn in any single year….
http://www.ft.com/cms/s/0/a22652a8-bf99-11dc-8052-0000779fd2ac.html
Enough ta-kill-ya, already.
THE FED
Fisher worries about what’s in the punchbowl
Dallas Fed chief explains last week’s FOMC rate-cut dissent
By Greg Robb, MarketWatch
Last update: 1:37 p.m. EST Feb. 7, 2008
WASHINGTON (MarketWatch) — The president of the Federal Reserve Bank of Dallas says he voted against the half-percentage-point cut in U.S. interest rates adopted in late January because he was worried the Federal Reserve was putting too much tequila in the punchbowl.
http://www.marketwatch.com/news/story/dallas-feds-fisher-explains-his/story.aspx?guid=%7B0F19EFCA%2DB518%2D4D3B%2DA15E%2D9B223E208279%7D
lol, he was jawboning the market up last year and the year before
and will next year and the year after.
“All our best men are laughed at in this nightmare land.”
Jack Kerouac
Been reading some Kerouac eh?
Dharma Bums…
Read it when I was young and impressionable (as well as some of his others).
Nothing wrong with old and impressionable, is there?
On the Loose…
What will it take for deflationists to capitualate? Every commodity I can find is up hugely today; grains, metals, oil, sugar, everything. Deflationists have been waterboarded for the last year but they keep saying ‘wait till next week…’ What’s it going to take to change their minds?
I’ve tried torturing them with words, and they’ve countered with not 1, but 2 different Deflationista t-shirts, to inflate their cause.
If this turns into tranche warfare, things could get ugly…
Torpedoes be damned!
CAPITOL REPORT
No obstacles seen to more Fed rate cuts
Economists adjusting their interest rate estimates downward
By Greg Robb, MarketWatch
Last update: 1:34 p.m. EST Feb. 8, 2008
WASHINGTON (MarketWatch) — Nothing is standing in the way of further interest rate cuts by the Federal Reserve Board, Fed watchers said Friday.
“Though they have done quite a bit, it is virtually for sure we will see another 50-basis point cut by March 18,” said economist Allen Sinai, founder and head of Decision Economics.
Indeed, events over the past week since the last formal Fed meeting have raised the likelihood of even more rate cuts than had been expected, economists said.
http://www.marketwatch.com/news/story/no-obstacles-seen-way-more/story.aspx?guid=%7B389C7B79%2D6921%2D4EE9%2D9504%2DEE635F8B0D30%7D
deflation defined by a contraction in the money supply can and is occuring as I type. This situation is not mutually exclusive of higher prices for inputs.
That is the path of pain, less access to money (credit or currency), higher must have input prices…deflation pain first….then inflationary pain.
Credit is contracting. After the stimulus hits…..get ready for even higher must have costs. The helicopters are fueling up, but the oh-so-desired relief of the stimulus will fail, and its going to create more pain.
critical must have inputs = pricing power. Fancy bullsh*t crap nobody needs is dropping in price.
I’d like to see a “how many realtors did you mess with at open houses this weekend” and what did they say topic. I know.. they ALL say it’s different here. I have found myself purposely stopping at open houses I have no interest in just to mess with the realtor. Poor abused realtors!
No open houses out where I’m at (or any houses, for that matter), so I sent a realtor who had been messing up craigslist with smarmy ad after ad after ad a nice email saying it was for non-commercial stuff (it is, isn’t it?) and he quit posting. Nice guy. Might buy a house from him sometime…(except now I don’t know what he has for sale…)
I continue to wonder about the relative paucity of foreclosures and sales of bank-owned houses. Here is another theory.
No industry has become leaner over the past 25 years than finance. Back office operations were automated out of existance, and those that couldn’t be were outsourced to India. Those still employed, wealthy professionals, gained incredible riches even as costs fell.
Now, however, the finance industry just doesn’t have the U.S. workforce to handle all the foreclosed properties. It is going to get overwhelmed.
That is why I suggest local municipalities should pass laws that grant them the right to take into their possession abandoned properties that create a public menace (magnets for crime, vagrants, meth lab production and marijuana growing facilities, West Nile virus-carrying mosquito breeding ponds, etc) after a reasonable grace period. At that point, the municipalities should be allowed to resell the properties by whatever means they choose, and pocket the proceeds. This approach would restore liquidity to the real estate market much more quickly than any proposal of which I am aware to be currently in effect or under consideration.
At that point, the municipalities should be allowed FORCED to resell the properties by whatever means they choose
————————-
Absolutely!
Has there ever been a period in modern economic history with so many “worse than expected” data releases?
Japan Machine Orders Decline on Anticipated Slowdown (Update4)
By Jason Clenfield
Feb. 8 (Bloomberg) — Japan’s machinery orders fell more than expected in December as manufacturers scaled back investment in anticipation of slowing global economic growth.
Orders, an indicator of business spending in the next three to six months, slid 3.2 percent from November, when they sank 2.8 percent, the Cabinet Office said today in Tokyo. The median forecast of 43 economists surveyed by Bloomberg News was for a 0.9 percent drop.
http://www.bloomberg.com/apps/news?pid=20601080&sid=a7WaJsHUqWn8&refer=asia
Ok, Ben. I do not think you’ll like it but here it goes. I sold in late 04 the condos I had in Miami(Coral Gables) at 300+ sq/ft (made a ton) after reading FORBES article on worldwide bubble and what would happen afterwards. Bought a cheap house in central FL, sold it in Dec 06 and still made money, built a house in 07, will break even (sub-contracted myself) Been reading your blog since early 05. I’ve already seen a 25%-30% correction in my neck of the woods. My weekend topic: “How to benefit from the burst?”
“will break even”
Are you 100% sure about that?
yes
Credit turmoil, housing bubble,
Frozen debt and default trouble.
Debt fears heighten in US and Europe
By Michael Mackenzie and Henny Sender in New York
Published: February 8 2008 20:33 | Last updated: February 8 2008 20:33
Fears about corporate and commercial property debt reached new heights in the US and Europe on Friday as investors liquidated holdings in a sign of spreading credit turmoil.
Investors were responding to worries that economic weakness would hit corporate profits, leveraged buyouts and commercial property developments. This represents an escalation of the crisis that began with concerns about US subprime mortgages.
http://www.ft.com/cms/s/2141fb54-d67a-11dc-b9f4-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F2141fb54-d67a-11dc-b9f4-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
What’s the bond insurer outlook from here?
Overview: US recession fears grip financial markets
By Dave Shellock
Published: February 8 2008 19:14 | Last updated: February 8 2008 21:20
Renewed fears of a US recession gripped financial markets this week, driving down global equities, sending credit spreads to record levels and boosting short-dated government bonds.
Weak service sector data and broadly disappointing corporate earnings in the US and Europe set the tone for the week’s trading, with ongoing worries about the outlook for bond insurers heightening the gloomy mood.
http://www.ft.com/cms/s/564a02ea-d677-11dc-b9f4-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F564a02ea-d677-11dc-b9f4-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Recession fears……hmmm good topic.
I have a pretty good indicator of the recession: My Father in law is the district manager for a group of restaurants in South Orange County, CA. Says business is down 25 percent from last year. Even worse is that HQ is late in making payments to vendors so most food vendors are threatening him that they wont make any more deliveries unless they get paid quicker. He is pretty POd at HQ.
I see it as a sign of the recession already here.
So much for it being different here in OC.
Anyone else see signs of the recession in businesses other than Real Estate?
Here is a topic suggestion I have been meaning to post for a couple weeks now:
How bad will things have to get before any meaningful long-term structural changes are made?
By “changes” I mean new laws & regulations and changes in the practices of the Banks, Wall Street, possibly the Realtors, and in my dreams the American public in general. These changes would be of the type to lessen the likelihood of another bubble.
I am of the belief that unless things get real bad (think *Severe* recession of an extended length or worse) meaningful change won’t happen in the long run. That is, a lot of people need to get burned — badly, so that there is a loud and persistent enough clamor for change. Anything less and it will back to business as usual sooner than you think.
Meaningful change to come to Wall Street would come from one or both of two ways. The first is new government regulation in response to the frightened, angry voters who got burned. The other would be from investors, big and small, who will shun mortgage backed securities, and any other new investment vehicle they dream up that is too opaque for investors to be sure of its contents for a long time.
I think for this to happen to Wall Street, a lot of investors need to be burned badly: from individual to the institutional. From corporate investments to pension plans. Basically it would mean having nobody willing to buy the (MBS) stuff they are peddling at face value for a while.
For change to hit the Banks, I think it will take a combination of a huge hangover of foreclosures, bottom line losses angering shareholders, and new regulation driven by angry masses of former customers attacking their practices and pointing fingers at them (rightly or wrongly/CYA) and politicians looking to appear as if they are doing something.
For Realtors, Appraisers, brokers and the rest of the realtwhore-industrial complex, I think change would come as the result of more personal and individual attacks. Borrowers suing individuals claiming fraud, and investigations by law enforcement would have to occur in numbers larger enough to get the attention of the aforementioned groups and lawmakers, resulting in new laws and practices. Couple that with a massive thinning of the ranks as there isn’t enough income to support everyone for a while, and maybe, just maybe that could possibly lead to changes in how they operate.
Finally, my biggest and most unlikely dream for change is reserved for J6P and American public in general. The Great Depression shocked a generation, leaving them with attitudes that favored security over consumption. Could something happen today to the extent that it would make a meaningful change in a culture that promotes conspicuous consumption, indebtedness, and chasing reward without work? Given the pervasive and intrusive state of our media, the power and amorality of corporations, and the social safety nets paid for by taxing the more industrious, I don’t think we would see meaningful changes in people’s behaviors that would last past an economic recovery. In the short term, people will adopt the new religion of frugality, but I don’t see it making life-long changes in many.
I guess don’t have much faith in change overcoming greed.