Bits Bucket And Craigslist Finds For February 16, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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October 2005, Bernanke: There’s No Housing Bubble to Go Bust
“U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president’s Council of Economic Advisers, in testimony to Congress’s Joint Economic Committee. But these increases, he said, “largely reflect strong economic fundamentals,” such as strong growth in jobs, incomes and the number of new households.”
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html
So much has changed in 3 years
He really just needs to be taken out back and put down!
On the job training in action…
How many of these jerks would have a job if they were in the real world and were held up to real standards? Bernanke’s a$$ would have been fired for some of these unbelievably stupid comments. I can’t think of one politician that would make it through a full term. They live in a world of make believe. Is there any wonder that they don’t have a frigging clue about the real world?
“How many of these jerks would have a job if they were in the real world and were held up to real standards?”
Well…we all know he’s getting paid to talk us down slowly. I love listening to Greenspan: 30% chance of recession, 40%, 50%…next it’ll be 73.2%…although we did get that jump to “we’re on the edge of recession”….Ha! Ha! After a few bank runs and plunging employment numbers surface: ok…yes, the US is officially in a recession. But things are looking up. ;9
To sell his soul at such an old age speaks volume to his lack of ethics and moral principles. He must have already deemed it worthless, and he is probably right.
Yes, it’s true. They live in a world of make-believe.
But how much of that can be attributed to being “educated”?
As Will Smith (not the black one) once said, “I only know what I read in the papers.”
I took a course in propagana when in college, as part of my language electives. I tend to read the ideas and opinions as just that…………slanted views. Pick up any paper and try to sort out the facts in the story from the view and you will find few facts, and a lot of opinions.
Look at all the stories on Housing. Almost ALL the papers print failing prices as “a blood-bath”, “bad news”, Misfortune, etc. etc. Why don’t they simply say “House prices are falling along the gulf coast. They dropped 10% from last year.”
Instead they give us little stories about how Mary Brown is suffering under the burden of huge payments while her “investment” shrinks in value. Boo-hoo.
Sometimes you get a story about how Johnny Swifty got a great deal on a discounted property.
But what’s really newsworthy about real estate transactions??
The reality, is the press cheerleads INFLATION and cries over DEFLATION. I guess that’s because most people own homes. So they take the side of the homeowner.
The sad state of government is they actually believe their own lies……Inflation is contained. The markets are stable. Free Money is good for the markets……………blah, blah. blah. Very few facts.
Nice post, Diogenes.
Will Rogers (Rodgers?), not Will Smith.
PUFFING
“Puffing is generally an expression or exaggeration made by a salesperson or found in an advertisement that concerns the quality of goods offered for sale. It presents opinions rather than facts and is usually not considered a legally binding promise. Such statements as “this car is in good shape” and “your wife will love this watch” constitute puffing.”
http://legal-dictionary.thefreedictionary.com/puffing
Q&A: How could things go so bad and so quickly?
By Dean Calbreath
STAFF WRITER
February 16, 2008
(File photo / Union-Tribune
Signage at this San Diego home last September told prospective buyers it was a foreclosure.)
Just three years ago, the housing boom seemed like such a good thing. Property values were skyrocketing. Home equity loans were helping homeowners live in luxury. Mortgage rates were low enough to attract low-income buyers who never thought they’d be able to afford a home.
The market was so hot that crowds of speculators found they could make good money by buying property, holding it a month or two, and then reselling it at a much higher price.
And then it all came crashing down.
By late 2005, the housing market stalled, and over the past two years, it has been on a downhill slide, dragging the economy to the verge of recession – if it isn’t already in one.
How did things get this bad? Here are answers to some common questions.
QUESTION: How did the housing bubble happen?
ANSWER: First came the easy-money policies of the Federal Reserve.
http://www.signonsandiego.com/uniontrib/20080216/news_1n16faq.html
The article fails to mention how securitization itself is the root cause of this disaster. Sure, the investment and lending environments were competitive, but they’ve always been that way. IMO if banks had not been able to off their risk to a third party they would not have been so aggressive in their lending and we would have never gotten to where we are today.
See the article from the current edition of The Economist which I linked below…
Thanks Prof. I get the print edition and need to catch up my reading this weekend!
I agree with the idea that securitization itself is not inherently a bad thing, just very poorly executed in the case of mortgages. It will be interesting to see how all this plays out with the rating agencies. I suspect that 5 years from now they will end up being the most changed from all this assuming of course they even survive it.
“securitization itself is not inherently a bad thing”
True, but with zip concern about the unlying values, things go badly. Credit card and student loan defaults are on the upswing as well, doing damage to those securitizations as well.
“I agree with the idea that securitization itself is not inherently a bad thing, just very poorly executed in the
case of mortgages.”
I am sure the pig men who are enjoying their golden parachutes out on the golf course would heartily agree with you. But in my opinion, the jury is out on whether securitisation can be fixed, and meanwhile, to paraphrase a certain govt official, the worst is yet to come in the near term.
BINGO and toss in a Federal government that shirked it’s roll as regulator and fought states attempts to reign in the fraud.
It wasn’t securitization itself that created the problem. The GSE’s have been securitizing debt for decades, using good transparent underwriting standards. It was a wall street confidence scam convincing us that their fancy new risk models had sucessfully accounted for the risk, and it was safe to invest. Analogous to the S&L crisis in the 80s. Take a system that works and has built a reputation for competence based transparency and ethical behavior, then a shyster (like Millikan, or Mozillo) sees a ripe opportunity for a “new risk model”. It’s a con game and it’s what our gov’t regulatory mechanisms are supposed to protect us from.
Big Ol Ponzi scheme.
I recall a very well respected Economics Professor from MIT publishing a paper contemporaneously with Helo Ben’s testimony concluding the basis for ramped housing inflation was due to sub-prime lending and a loosening of lending standards.
Helo Ben’s testimony obviously was purely conjecture based upon a motive to tell everyone what they wanted to hear. Nothing has changed in three years except for the amassing of a mountain of facts and evidence to support the MIT prof’s conclusion and to reveal the Fed and the gov’t’s lies regarding the issue. They knew why, they knew it would come to light but felt compelled to talk it down as much as possible.
They should all be arrested and made to pay for this mess that could have been avoided, nipped in the bud or curtailed by enforcement of the laws on the books, letting state pass and enforce there anti-predatory lending laws and letting federal agencies pass regulations to assist/augment the states. Instead they talked it down and had the OCC in the dept of treasury serve as the industry lapdog going after the states and letting the toxic lenders reap their profits at the expense of the future of our nation’s economy.
There is no need to discuss whether Ben and Greenspan were ignorant or liars. They had no data to support a good faith belief in their positions. Enough said.
“They had no data to support a good faith belief in their positions”
What a cop out position to take.
Really? …I see then…the Chairman of the FED & supporting staff can only make decisions based on the “data at hand”… he can not base anything on the “possible outcome” of actions that the FED might pursue…such as lowering interest rates to 1%…over a very short period of time? Thus they take an action without regard to consequences…then wait for the data to guide then further? I say Bullsh@t…I say they had a “Game Plan” that did not require the verification of “data” to support a “good faith belief”
Huh? Of course you can use historical data to guage consequences of actions. I do it every day. Im not talking about assuming past trends will continue. Im talking about using past data to forecast the impact of various variables. Modeling and econometrics is what ppl economists should be doing to draw conclusions. Am I the only one that just doesnt make the chit up?!? Maybe thats why my forecasts are more accurate than those that you cited. Its always in the numbers and always has been.
I say they had a “Game Plan” that did not require the verification of “data” to support a “good faith belief”
That’s exactly how all this mess got started. Taking actions such as tinkering with the market in the form of interest rates changes, complex securitization structures, etc. without understanding the numbers and using valid assumptions based on real economic analsyis. Hwy I assume your comment was satire.
“Its always in the numbers and always has been.”
Thanks, Tim. It’s tough to argue with facts, but about 1/3 of the population try their best. Everything’s a grand conspiracy don’t you know. A politician’s best friends these conspiracy folks.
Ill say this again……They Don’t HIRE people like me to be anywhere near these high status executives.
Just once i would love to see Greenspan’s assistant come out on 60 minutes and say: I warned that old fart about the potential damages from a housing bubble, I even tried to get him to read the HBB blog in 2005, but he refused to listen to me.
“…that could have been avoided, nipped in the bud or curtailed by enforcement of the laws on the books…”
I am not sure at what point you believe the situation ‘could have been avoided,’ but I am quite sure that by the time BB took over, it was much too late.
“I am not sure at what point you believe the situation ‘could have been avoided,’ but I am quite sure that by the time BB took over, it was much too late.”
Nah! It couldn’t be that Ben is over his head in this job. Didn’t Bush promote him for Fed Chair? Another kiss ass
job seeker, with the same mind set as the president.
I am sure President Hitlary can find the ideal Fed chair to fix all the world’s financial problems.
I agree. Bernanke couldn’t possibly succeed given the situation, and accepting that job was a fool’s errand. If he defends the currency and hikes interest rates, we really will have a depression in spite of our fiat currency. If he does as he is doing, we will get stagflation followed by a roaring inflation as the government gets creative once 0% interest rates stop working.
did anyone else notice that the jan y/o/y median in Joshua Tree was up 126%?
you can’t make this stuff up.
How about some accountability for these outlandish statements? Where is the Wall Street Journal reporter putting a mic in front of Blathering Ben and asking him about his reckless statement and outlook?
We can sit here for the next 10 years saying, “see that? We were right and they were wrong!”. We all got the vindication we knew was coming but what about a little accountability from our leadership? Hasn’t our leadership harped on the idea of personal responsibility and accountability? What about if folks? Or was all that talk of accountability just more worthless platitudes from the book of an insane ideology?
Actions count for more than words. The first thing Bernanke did as head of the Fed was crank up interest rates until the bubble began to burst. Many here are arguing that Bernanke is clueless and wrong, but it is hard to dispute that he acted as the most important “bubble prick” of them all. Would it have helped for him to be saying at his confirmation hearings that there was a huge bubble that indicates we need to get rid of the Fed once and for all?
Excellent point. You can’t expect to get confirmed as FedHead if you go before Congress and tell them that the Fed shouldn’t exist, or that you will pop a huge financial bubble and do your best to deal with the undoubtedly painful consequences, which will include millions of foreclosures that the congresscritter’s constituents will scream to high heaven about.
That is, unless you want to assure that you will never hold any public (or quasi-public) office above the level of dogcatcher.
In troubled times, is your job/source of income secure? If not, what plans have you made short of hording?
Nice topic start off a Saturday!
I’ve been working out a little bit more, in case I have to moonlight as an exotic dancer.
lol
read a craigslist ad for Pole dance instructor and applied.
Did you put out an ad looking for “generous” or for “200 roses”?
Get with the lingo!
What makes you think that sex will pay if “you can simply take it, because you can?”
I seem to recall this attitude, with no evaluation as to your comment, in Vietnam in 19969-70.
Looking at rambling old homes I can turn into a “flop house”.
How much an night, and can I have a standing reservation?
Roidy
HBBer’s served at a deep discount. I’ll unlock the bar cabinet (
) and we’ll tell tall tales about the precrash days over a meal of local fare.
If you live on one salary and save/give away the second, a couple is more secure than a comparable couple in the 1950s, not less. We’ve also got plenty of savings from past years of frugality, and having been reading here and thinking about the possible broader implications of the housing bubble (having found others who agreed it existed), a lot of it is in cash.
Our way of life can be pretty low cost — paid off house, subway or biking to work, one old car just used on weekends, no cable, no AC, homemade food most nights, not a lot of meat. It doesn’t quite work financially, but if the solar panel busts this summer I might put up enough that we are only using fossil fuels for heat, and thanks to our rowhouse we don’t need a lot of that.
Plus, there are so many free and cheap things to do in NYC that we can’t get to more than a fraction of them.
Our recession plan? Spend more money on things we have put off for years. A job loss would help us do it — we are hurting for time, not money.
no ac in nyc in the summer?
i like to be frugal but that is just sadistic
we can survive on one income but could not save
which would be bad
i feel comfortable that i have enough to deal with a loss of some income but it would suck
hey nycboy where will you be performing?
“no ac in nyc in the summer? i like to be frugal but that is just sadistic”
LMAO…. bullseye. Bootsy Collins, bass player for James Brown correctly referred to no a/c with 5 kids in the same tenement bedroom as “FUNK”.
Our recession plan? Spend more money on things we have put off for years
Live it up, turn on the A/C and buy a Steak.
Did the numbers and with inflation, my income is $600. more per year than in 1986.
I have no words to express how I feel right now.$%^&*@!&#^!_#$&
“I have no words to express how I feel right now.$%^&*@!&#^!_#$& ”
LOL Desertdweller, LOL
What’s the matter with hoarding?
I need to pay more attention. I thought that said, “whoring”. I need a Monster.
Secure? Nope. My plan? Survive the destruction of my marriage. Stay mobile so I can afford the burden of providing for three other people. Don’t buy stuff I can’t afford. Try to avoid debt. Try to stay healthy.
I say try because I learned a few months ago that a visit to an emergency room that turns into an overnight stay for observation (of abdominal pains - gall bladder it turns out) when you don’t have insurance runs $13,000+. I’m sure the average family can take that in stride.
DeepInTheHeartOf,
Here’s some advice. Don’t be in any hurry to pay any portion of the bill. For example, cousin had a baby at age 40+. It was complicated. I don’t remember the exact numbers, but the bills totaled well into six digits. They had no insurance. Of course, they couldn’t even begin to afford this. When the hospital call to set up payments, they offered to reduce the bill to the low-mid 5 digits if they would pay in full. He paid in full, about 25% of the original amount. I believe the numbers were something like $200K down to $50K.
I honestly believe that they jack the price way up hoping that you will pay some of the bills not paid by others. For example, when my neighbor had a baby, they were told there were 12 others in the hospital. Then they were told that they were the only one paying…
Opps, hit the button too fast. Bottom line, I’ll bet you can get the bill down to $2500 if you offer to pay in full.
Started preparations five years ago.
2003 - downsized dwelling to one that costs about 55% - 60% of comparable rents
2004 - paid off all remaining loans
2005 - enrolled in grad school - only thesis remains
2007 - sold the car
2008 - stay out of the stores, and play it as it comes
Like several of you I grew up with my parents’ stories of the depression and WWII. My dad’s high school graduation present? a streetcar ride the very next morning to the induction center and a troop train ride to Louisville.
Worst case scenario - I might muddle through. Best case scenario - I’ll be ready to pounce and profit on the poor allocation of others’ labor.
I grew up in an 1,100 square foot house with 9 people. We were poor as hell even though we didn’t know it. I enjoy reading. I play a musical instrument. I like to daydream. I love my wife. We save money. I still love eating bologna sandwiches and hot dogs. There isn’t much this world can throw at me that I haven’t been through before. It is the silver-spoon crowd that has the most to worry about. They go broke, too.
With mixed emotions, I do have to say that after feeling like a fish out of water for the past three hyper-consuming decades, it feels a little bit like my time has come.
Of course I say this with much humility, as no one really knows what is coming. Still in 2008, I would rather have my set of past experiences and memories than those of someone who grew up in a household where the sixteen year olds knew they were getting cars - and whose only worry was whether or not it would be a convertible.
“With mixed emotions, I do have to say that after feeling like a fish out of water for the past three hyper-consuming decades, it feels a little bit like my time has come.”
I was thinking the same thing! Though my life experience as a child was more like NYCityBoy (13 people living in a 1400 sq ft house and one income) Consumerism and the life that it breeds always seemed foreign to me.
My friends have often laughed and say I was born in the wrong decade just because I insist on using things until they absolutely cannot be used anymore, appreciate when we are able to save up the money to buy a luxury and never take it for granted.
I don’t see the “change” yet in my neck of the woods but in the past 2 to 3 decades Long Islanders have aquired an unfortunate habit of believing they are different and special. And they are freakin stubborn about it too.
wow 9 people in a small house
i grew up in a single parent home- my mom took care of my sister and myself by herself-no help from anyone
i have a real soft spot for my mom and do what i can to help her out now.
scary stuff being 23 with 2 young kids but she put herself through school and raised us well
Catholic in the 70s.
NycBoy are we ever going to have another NYC HBB after work meetup?
I remember you said you came from a large family, but most of the big families i met in the Carolinas also had added “rooms” to the back of the original house.
ditto here ..
“Started preparations five years ago.”…
I’m kind of in the same boat, though I started more like three years ago. I could see the writing on the wall at my job and started looking for an exit two years ago. Took a higher paying job that I HATED with a crazy boss and lasted six months. Escaped with my sanity to my current position which is low-payed but more recession-proof and with shorter hours. Used the extra time to study for and take the GRE last year. I applied for this coming fall, but if I’m not accepted my job pays partial tuition and I will take some classes to enhance my application and hopefully cultivate some professors for a reference. Worst case scenario is I have to stay in the current low-payed job and take classes for the next several years. I’ve also thought about applying to schools in Canada or Australia - you can get tuition paid with your status as an “international student.”
As vindication of sorts, from what I hear my old employer is looking to downsize and will probably close a portion of the company and lay off a few people. No raises for anybody since I left. Glad I got out when I did.
Talked to one of my friends who is a college grad and works a crappy service industry job. We talked about a recession and he said basically that he’s already so poor, a recession wouldn’t make any difference to him. I think a lot of people may think that, but the service industry is a house of cards dependent on continued consumer spending. If that retracts, you may see a lot of people with no safety net let out of the service sector, with no other jobs available.
Personally, I’d rather be entering grad school right now than completing it!
Friend running RE office in desert is applying to TSA. Got her an intro to ‘head of’ locally. 3 yrs during heyday and friend confided, no pay raise, no vacation, no sick time.
Fed up, so looking for other work now.
I also noticed that the USPS is looking for employees.
be careful–USPS hires a lot of contractors (bid system) and seasonals. However, if you can get a full-time job there, that’s about as safe employment as you can get.
After driving transit bus, mail carrying doesn’t look that bad, except that I still have bad memories of dogs from my newspaper delivery days…
On second thought… ~_^
LostControl,
My job since 2000 has been extremely unstable, simply because I’m a contract engineer and my income has tripled since that year. I quickly realized that I can invest far more money than I used to. So I could reduce my risk and smooth out the ups and downs.
Alliance Bernstein’s Arizona municipal bond fund has been where I put over $1,000 per month since 2002 (my permanent residence is in Phoenix). Okay, there is a lot of talk that municipal bonds are very risky. My fund is not entirely in Arizona. It invests in municipalities in other states and it’s mostly AAA and AA. Its gains are tax free.
I’ve been investing equal amounts for several years in US Series I savings bonds and Series EE bonds.
Thirdly, I’ve been buying (hording) dozens of ounces of gold bullion over the years. In fact, I’m buying more gold today. I have bought a few ounces of platinum over the years too.
I invest fully to my 401k and IRA every year. I get a matching $3500 to $4000 per year for my 401k. I think it is important to be in stock funds for the long haul. My “chicken little” investing since 2000 will allow me to stomach the big stock downturn I foresee the next ten years. I won’t dip into my retirement funds for 20 years.
I think I can withstand severe inflation and severe deflation for at least the next five years without a job if that’s the case. I wish it could be 8 years, but it’s the best I could do without losing my indulgences.
I’m gainfully employed and had only 6 weeks of downtime in 23 years of working since college. But I am not Pollyannish. I could foresee an employment crisis where my income will have to drop 67% or more for a few years. But I’m cool with that.
I think I can withstand severe inflation and severe deflation for at least the next five years without a job if that’s the case.
I’m gainfully employed and had only 6 weeks of downtime in 23 years of working since college.
I think that if you were out of work for 6 weeks straight you would not know what to do with yourself!
Thanks. Actually it was a total of 6 weeks: three weeks in 2002 and three weeks in 2003.
I’ve actually tried not working, on two separate occasions.
The first was between grad school and my first job. I set up the gap to be 2 months, since I had not taken any vacation in several years. After 6 weeks, I called my future boss and asked to start early.
The second time was after my first startup. It was during the tech wreck, and managed to land funding for 50 people in the middle of that maelstrom. After leaving, I lasted 3 months before starting another company.
I am a failure at not working. I have learned to live with it.
” I am a failure at not working.”
This was the message I got from hanging around retired folks. Despite their words to the contrary I sense many of them are just running out the clock every day.
Ten years ago I visited my uncle in an over 55 community in Arizona. I would have killed to have his life.
The happiest people I know are those who wake up each morning with a fire in their belly and are eagar to take on the day.
The unhappiest people I know are the trust fund types, the ones who have too much leisure time on their hands.
BTW:
Today’s WSJ has a link that discusses the benifits of working longer:
http://www.urban.org/url.cfm?ID=411584
My wife and I are so busy in retirement we maintain an appointment calendar. I felt bored one day so far in the first three years of retirement. It was a rainy, cold Saturday. I hate the cold.
First, let me say that I’m extremely ticked off that while I have a difficult time getting out of bed at 5:45 a.m. on the weekdays (I am in San Diego), I ALWAYS wake up bright and bushy tailed on the weekends BEFORE that. Grrr… It is only 6 here.
Yes, I am worried about the security of my job. But I am heartened by the fact that I’ve been semi-seriously starting to look for another job and that there are some good jobs out there. Guess what? The two best job ads I’ve seen are related to health care.
More seeds = more charity & more barter
I like this topic.
As long as I’m healthy I’ve got a nice gubmint/union healthcare job working for the great 50th state of overpriced everything. I’m locked in for life!
Yay?
I’m high enough in the seniority list that even if we have layoffs, which is a possibility (although it doesn’t look like it will happen this year), I won’t get laid off.
However, I have been saving money like crazy.
My wife is in sales. She is the star at her office. We just invested in some nice basics from J. Jill and Talbots so she looks more professional and less like a hippy college student. She is on salary, not on commission. Gainesville could potentially get hit hard (last summer was murder) so that may turn out to be important.
She is one of those compulsive people who always has a job, so I’m not too worried.
ps–I’ve been working out too. if this bus driving thing doesn’t work out, I can always model for comic books
all those years of soccer have given my a nice amazonian build (a lot of the industry is here in florida so I wouldn’t have to go far… sad thing is, I have thought about this seriously, but only as a gig)
Another loser, I mean “victim” story:
http://www.sptimes.com/2008/02/16/Business/Economic_changes_push.shtml
Why this woman isn’t renting a 1br. is beyond me.
Muggy, these are the folks I truly have sympathy for. She is not an FB, but got screwed by the outrageous rise in taxes and insurance. Prior to the bubble, folks like her could make it OK in Florida. Not great, but OK. If I were her, I’d talk to the mortgage company and ask to drop insurance. It’s a risk, for sure, but if I were a mortgage company and knew I was going to at least get the mortgage payment, I’d let her slide on the insurance and hope there aren’t any damaging storms in her area.
A decent one bedroom is going to cost her at least $600.00 in St. Pete. You can get one cheaper, but if you saw the buildings where they are located, you wouldn’t want to live there.
The article says her 21 year old son is “helping”. I wonder just how much, though.
Too many details left out to draw too many conclusions. If she was a teacher, where is her pension or medical benefits? I don’t think that union just tosses you to the wind if you become sick. Where was her savings? She has two masters degrees. She must have been able to make good money before she got sick. Where did it go? What kind of character did they imbue in the son? Was the husband a loser?
I want more details, damn it.
Depends on where she was a teacher. From state to state, their circumstances vary widely.
My parents were public school teachers in Michigan. Strong union, stable career, a good deal. When I was a kid, you would see at least 50% of the teachers in grades 6+ were men, because a man could make a good enough living to head up a family on. Decent pension system.
I moved to Texas, and met the girl I would later marry. Her mother was a public school teacher. Union? what union? year to year instability, weak pay, weak retirement system (and they didn’t pay into SS I think). The difference was such that the only men who taught in the system were name “coach”. It was a striking difference.
That’s why I want more details.
No the details are ALL THERE.
She is NOT retired because of age - she is DISABLED and under 65.
(1) She may not have had enough years vested in a employer sponsored plan to have much in the way of disability benefits and
(2) Social Security Disability offsets against any private plans. Most private disability plans are written so that if the person also qualifies for SSD, then the payment of the private plan is reduced (and can end up being cancelled out to zero.)
(3) Medical benefits? She has Medicare. Again most private plans transfer the person to Medicare as soon as they qualify for SSD. She may or may not have Medicaid as secondary. If the household income is over $21,000 (both her AND her son), then she does not. They can not have more than 150% Federal Poverty Level to quaify.
If she does NOT have Medicaid as secondary then she either (a) has to buy a Medigap policy to cover the copays and deductibles IF an insurerer will sell to someone under 65 - such plans are not always available in all states or (b) pay the 20% Medicare copays out of pocket.
(3) Savings? Gone on copays and deductibles as that illness developed. After she was declared disabled by Social Security she had to wait 2 years to be eligible for Medicare. That destroys most people financially.
(4) Son is helping- READ the article - but is only 21 and probably just out of school. Suspect that his income is what is keeping the utilites on and paying for all the other food.
(5) Husband is an ‘ex’ as in divorced.
Want to get poor fast? Become disabled. 70% of people who are disabled have an income at or near Federal Poverty Level.
Ann. Thank you.
I think this is getting a little too heated. Ann makes valid points but this is a housing blog, not an illness blog. The posters on here see these stories through the prism of housing and all of the stupidity that has come with it the past 10 years. Ann, and others, see this far differently because they may have dealt with serious illness.
I don’t think the HBBers are being cold-hearted to this woman’s very real plight of her illness. I believe that if the HBBers met each other they would find that this is a highly compassionate group that helps a lot of god’s creatures. So, try not to be too hard on the rest of us. Our instincts are geared towards every story about housing being a swindle. A woman suffering with lupus appeared to be just a pawn in the MSM game.
I think Ann’s post is perfect. We all are here to get info on housing, and investments of housing or such. So, with Ann’s details, it makes sense to Plan ahead as much as possible, prepare for the inevitable, and not be surprised if it hits you. Such as housing.
Housing is what helped many Heloc to pay for health care in sudden illnesses. Not all were for Jetskis and such.
Some folks with traumatic accidents/illnesses used Helocs and perhaps might have to walk from undersea homes.
Thanks Ann, watched mom go through this thing, and other seniors around town. You made it very clear to understand.
Palmetto, I hope you don’t think less of me, but I don’t see her as a victim. Her mtg was 8 and change, it goes to 9 and change and she’s in the dumps? That’s not a tax crisis, really. If my relatives sold their St. Pete home the tax burden would increase by $9k to the next owner. That’s a tax crisis.
She’s a perfect example of why SOH portability is pointless, too.
I see 1br’s in Largo for $450 in o.k. neighborhoods. I lived in SPB 2 blocks from the beach for $650. She’s only a victim of her own delusions.
This, in my opinion, is exactly the problem of the bubble: it’s a mindset - the home is worth risking everything for.
“Palmetto, I hope you don’t think less of me,”
Never, Muggy. But I do know folks who have seen an increase in their monthly payment even when they have a fixed rate mortgage, mostly due to insurance, somewhat due to taxes, although SOH has that capped at 3%. I agree, SOH portability is pointless. And stupid.
For sure the tax/insurance crisis is real and a huge problem. We’ll leave it at, “we need more information.”
I just wouldn’t have purchased a home with a monthly nut at 86% of my take home. This is where she started.
She’s been in the house for 12 years and I’m willing to bet the initial mortgage wasn’t 86% of her take home. I think some of you are being a little harsh - she’s not trying to flip a house here. I read this as someone with a disability who’s trying to hang on to the American dream. Suffice to say she will need to make some difficult decisions shortly.
“…it’s a mindset - the home is worth risking everything for”
You guys…look at the picture…literally…she has three dogs…who would rent to her? She’s stuck…like most of the poor people (who were) living in their humble shacks in New Orleans.
“She doesn’t own a car and can’t drive.” How does this help her position?
Dogs cost money.
Palmetto, the story says that she bought the house 12 years ago and now, when rates are the lowest in their history, hers is jumping up. The only conclusion that can be drawn is that she was using her house as a credit card. I do feel sorry for ppl too sick to work, but she was not a victim of the housing bubble, she was a victim of disease. Also she benefited from the housing bubble because she was able to pull money out that she would not have otherwise had to get by. The story had really nothing do with the housing bubble, but how disease can ruin ones financial plans.
I know the article mentions rising taxes and insurance, but that is a red herring. I challenge anyone to show me data that would suggest that anyone that brought 12 years ago cannot sell for a profit without pulling any money out.
absolutely Tim
they always fail to divulge that detail in their tear jerker articles. they are entitled to their lotto ticket of bubble equity and then sell the dump for another lump of cash
I maintain that it’s a popping of the Demographic Lottery that has many people born from 1938-1954 distressed.
Something isn’t right about this story. It mentions “rising taxes” as one of the reasons for this woman’s high monthly housing costs. But if she was homesteaded (and I would assume she is if she truly has lived there for 12 years), her annual tax increase would be capped at 3%.
I should also mention that it is possible that most of the increase in her payments are due to rising insurance. That definitely is a problem in Florida. But the article appears to lay equal blame on insurance and taxes, and taxes shouldn’t be a big problem for her. My guess is that the paper is trying to entice readers who are affected by rising taxes (i.e., 2nd home owners and flippers).
Why didn’t she sell when she could? She was already commiting 2/3 if her income to the payment- she never could afford this house.
Because she could NOT afford to go anywhere else either.
What? She should have sold and then bought what? Something smaller or somewhere else?
And go WHERE? So what if she sold, she has a mortgage and her net would probably not get her somewhere else to live.
She has to live some place.
Muggy - I suggest you try READING the article and thinking before you engage keyboard. HOW DARE YOU! How DARE you be so vicious and nasty as to make snide cracks about someone who has become disabled and is unable to keep up with the increasing bills so as to stay in her home where she has lived for 12 years!!
“She has to pay an $813 mortgage while living on a $911 a month Social Security and food stamps. Rus Cooper-Dowda, 52, didn’t buy a house she couldn’t afford and didn’t get some exotic adjustable-rate mortgage that balloons to double digits. She didn’t throw her money away on jewelry, clothing or trips.
Cooper-Dowda’s sin was getting sick and divorced. Two things that could happen to anyone. Add in rising taxes and insurance, plus a severe housing slump, and the storm is perfected.
Now she’s poised to lose the house she’s lived in for 12 years.
Even with a cap on property taxes, and a switch to a cheaper Citizens Property Insurance policy from an out-of-state homeowner’s insurer, her mortgage went to $918 a month from $781 last year.
She’ll be lucky, she said, to make it to May. And she’s called everywhere. The wait for subsidized housing is three years.
Cooper-Dowda has lupus, an autoimmune disease that essentially turns the body’s defense mechanisms against itself. The disorder, which strikes mostly women, affects various parts of the body. In Cooper-Dowda’s case, her joints and fatigue plague her the most.
She has to stay out of the sun, and has to use a machine to help her breath at night.
She receives $911 a month in Social Security disability benefits, and $58 in food stamps.
She doesn’t own a car and can’t drive. Taxis are too expensive, so she takes the bus. A trip to Tampa to see a doctor at the University of South Florida takes six hours and eight different buses.
There are things she won’t do anymore, like looking out her front window. “Because I can imagine seeing my furniture on the front lawn,” she said. And she won’t buy produce at the grocery store. “If it isn’t canned or frozen, I can’t afford it,” she said. “Although I did take a stroll past the fresh fruits the other day. Out of habit, I guess.”
She makes sure not to let a bill go unanswered, which usually means writing back that she can’t pay it. When the end gets close, the mortgage will be the last bill she’ll try to keep paying.
“I feel real bad I can’t return the favor,” she said. “She (her home) has been real good to us.”
So she skips meals and buys her clothing at a thrift store or makes it herself. It’s been a year since she’s had her hair done. It was at a local barber shop.
Last night, she had a tofu and lettuce sandwich for dinner.
Same as the night before. ”
AND FOR ANOTHER STUPID QUESTION…..”Why this woman isn’t renting a 1br. is beyond me.”
She has an income of $913 (NINE HUNDRED THIRTEEN DOLLARS) a month.
Who in the hell is going to rent anything to her if the rent is over $300 - 450 a month?????
She has no car s she has to be near a bus stop as that illness makes walking and moving difficult.
Sometimes the deliberate obtuseness and viciousness of the people on this board is astounding.
This woman seems to have had a mortgage she could still try to manage after becoming DISABLED. The taxes and insurance have kept going up.
She has lived there 12 years.
Where do you think she can afford to live when her ENTIRE income is $913?????
Thanks AnnScott. You had the exact same thoughts that I did so I’m thrilled you have spelled it out.
I do feel sorry for this lady, and no she wasn’t a flipper or a serial refi-er (yes I checked). The increase in insurance alone is enough to put anyone in Florida in financial straits; it’s not like she’s getting cost-of-living increases that keep up with rising costs of goods and services. You can easily see how this happens. This women is a victim of the flippers and specuvestors, as well as the insurance companies.
As for all of you snide people who are practically gleeful at her problems, you better watch out for karma. I too want house prices to drop so that I can purchase something in Florida; however I sure don’t want to lose my job because of a recession. And lots of people will, for sure.
Be careful what you wish for - you might just get it.
“HOW DARE YOU! How DARE you be so vicious and nasty”
Lower the volume and learn a little restraint. This was a civil discussion until you piped up.
AnnScott, your often intelligent and valid points are diminished by your yelling and self-righteousness.
Oh please. You are wasting time complaining about someone who is genuinely poor, while the people responsible for this clusterfr&*ck are cashing out with billions of dollars. Literally billions of dollars, in some cases for the private hedge fund and trading firms.
Save your anger for those who deserve it. And learn to listen when wise women tell you the truth about your fellow man.
Actually, I have found that people who fulminate and rage and are all full of outrage for the “poor” and “disabled” are generally heavily dependent on the state exchequer themselves.
They don’t want anyone looking too closely because it might just hit a little too close to home.
This self-righteous _____ is from MI. Draw your own conclusions.
I often find words of wisdom in Ann’s posts, but sometimes it’s hard to find them between the words of disrespect for other posters on this blog. My post had nothing to do with what she said, but rather how she said it.
ANN:
THERE ARE THINGS CALLED MOBILE HOMES, FOR PEOPLE LIKE HER
AND WHY DOES SHE HAVE 3 DAWGS??
mobile home isn’t as cheep as you think … unfortunately
mobile home is like an old car …
and what happens when the landowner decides to sell?
So everyone is entitled to own a house?
We’ve all missed the best line of the whole article:
“We’re the group who can’t move to North Carolina because we sank it all to move here.”
True colors.
This isn’t an article about entitlement; it’s about a poor women who could be thrown out on the street because she can’t pay her housing bills.
She is ENTITLED to some dignity and compassion.
You have a black heart.
“You have a black heart.”
And I rent!
Seriously though, if her 21 year old son was worth his weight he could take home $800/mo. working at McDonald’s and they’d be fine. I’m not buying one bit of the sob story. I’ll apologize for calling her a loser and that’s it.
I have to admit this thread has taken a turn I didn’t expect. I’m not evil, I simply ask that others be responsible for their own actions - which is a recurring theme on this blog.
Her ailments are horrible, but the Muggy-haters here have to admit there is something wrong with this picture and there are plenty of ways to avoid foreclosure. One of which is to jettison financial burdens. For example, if I was in her situation I would give up the 3 dogs and tell my son to get to work.
She’s down, but she’s not out.
I did not get the sense that anyone is happy about her situation. What got ppl mad, including myself, is that this should not have been a story about the housing bubble, but a story about disability. She is clearly being used as a pawn to promote someone else’s own agenda on the housing issues in Florida. The attacks are on the link between her story as it relates to the housing bubble, not against those that are disabled. Even those of with a heart can see the real purpose for which this article was written, and its incomplete facts and attempt to get support for unconnected agendas is hard to swallow.
I agree totally. I don’t think anybody here doesn’t feel sympathy for this woman for her illness. Most of us probably have a hard time understanding why she doesn’t have some extended family that can lend her a helping hand.
I think people here are just sick of the whole victim mentality so prevalent in society. This story is not a housing bubble story. It is more a reminder that the most important asset any of us has is our health. This woman is just caught in the HBB crossfire. I don’t think any of today’s posts are really aimed at her.
“I did not get the sense that anyone is happy about her situation. What got ppl mad, including myself, is that this should not have been a story about the housing bubble, but a story about disability.”
Good point.
Disability sucks, and generally necessitates downsizing, especially if you’re faced with living on $900.00 due to economic catastrophies.
I lost everything in the 80’s due to disability and lived on less than $900 (rented a converted garage/studio) while rehabbing (going to school).
Downsizing, and giving up what you had sucks hard, But it’s NOT the end of the world.
She could file bankruptcy or take a roommate and charge rent to offset her expenses, then go to her state dept. of Voc. rehab and see if there’s a new career she might retrain for for free (if her lupus is not too severe).
Or, just Get rid of the dogs and (I know, that’s a tough one) and rent a room or studio apt.
Lupus really sucks…some say the meds are just as bad as the disease, but it (lupus) sometimes waxes and wanes, some people go into remission. Hopefully that’ll be the case w/ this woman.
DOC
IF or when you are ever in that position, illness/ accident, it can and does take a day to day toll on what you can do and what you can’t. I too believe in pulling oneself up by the bootstraps, but sometimes, those on the outside are to far out to see clearly the day to day life of someone in her position. And the dogs were/are probably companion. Yes they cost, but they also add.
Even airlines are now letting people on with “companion animals”. Saw a flyer once with a pig, he didnt’ get on, but the lady with the big Companion dog did.
walk a mile in someone elses mocassins.
I have to say, from my POV, it’s hard to understand why people pay so much for animals, but I have seen people put themselves out big time for their animals. Sometimes a dog is your only friend. They won’t look down on you because your clothes are shabby or you’re hard up for cash.
A lot of the homeless around here keep dogs as pets. What can I say? At least they aren’t like those sorority girls who get a cat for their dorm because it’s “cute” and then turn it out into the street when they move.
While this woman’s position is certainly not good, why is it associated with the housing bubble/slump problem? These stories have been written for ages and through many administrations. The effects of slightly increasing taxes (SOH limits) and insurance increase is not the root cause of ther problem, however the plight of people in these positions is being used to push populist governmental solutions to the housing problem in such a way as to be simply the path to increased Socialism where the FED solves all problems with money dropping helicopters..
Everyday now, I see more indications of acceptance of the FED interceding in many areas previously offlimits; such as directly buying student loans securitizations, bad mortages, propping up bankrupt bond insurers, and even buying equities on the open market. All of these things are now openly discussed as being necessary to prevent a “meltdown”. The “meltdown” may achieve what 50 years of liberal pushing as failed to do; complete socialization in the US.
Stories like this one evoke sympathy in most people and divert attention from the actual direction the country is going.
whoa, take of the ideology glasses… I think I’m getting dizzy…
Thank you Ann for pointing out what is definitely an occasional lack of empathy on this board for those who just plain old have had it tougher than others.
Blano, that would be called grace.
“Blano, that would be called grace.”
Agreed. It’s something that Ann absolutely lacks.
“Where do you think she can afford to live when her ENTIRE income is $913?????”
What were her savings? Oops — I forgot — we have had an ongoing War on Savings since Roosevelt instituted Social Security back in 1935 or so, and it has been recently escalated by a Fed which actively encouraged households to risk most of their long term financial security on asset price speculation in stocks and housing.
It would be hard to keep up with the costs of living when you have a disability. It does not matter how the economy is doing. This poor woman needs to look at ALL her options. Can she not share her home with others who are in the same situation? Rent out different parts of her home? She still has the luxury of privacy.
To keep everything in perspective no matter anyone’s circumstances, if you are not living like a third world person than you still have it pretty good. It’s unfortunate that she’s sick, but there are those who are ill that are in even more dire situations.
House sales flat; indicators predict trouble (Rochester, NY)
http://tinyurl.com/2wq84j
The median sale price fell 4.5 percent to $105,000.
The number of purchase offers accepted dropped to 640 from 781 a year earlier.
“In January, people started to call,” said Jeff Scofield, a Realtor associate at ReMax Plus in Brighton. “In February, I am harvesting the crops that were planted in January.”
Why do newsrags quote these morons? These clowns have absolutely no credibility, yet they are deemed the master gurus of housing. This azzhat’s customers/clients are his crops???? He is farming profits and that’s about all these salesslobs do.
Time to calm down and have a cup of coffee…..
Bizzaro, thanks for the Rochester news. When I lived in the Roc Scofield had all of these ridiculous ads of hisself superimposed onto the downtown skyline posing like a Manhattan superstar realtor.
Scofield, at some point, might actually harvest crops.
Triumphant!!
http://www.jeffscofield.com/
If he was based in Manhattan, he would likely be taller than the Empire State Building. Muggy, I glad to be able to bring the upstate news your way.
Is there anything sweeter than having co-workers that used to laugh at you send you emails, trying to prove that they now “get it”? I received about a half dozen such emails this week. My, how the tide has changed.
Although he agreed w/many points I’d get excited about repeating, my husband was increasingly unhappy w/my blog obsession. Kids making remarks too. (After all its been years of long hours)
H is now singing my praises with the huge relief of the properly positioned. Kids are getting an education in the markets their Dad and I never knew.
I keep thinking of my friend who answered my blog reports w/how well her TGI Creff (commercial RE) account was doing. I wonder if she ever thinks of the dismissive comments she had for what has after all come to be, just as predicted.
Thank you Ben! Thank you everyone!
“my husband was increasingly unhappy w/my blog obsession. Kids making remarks too. (After all its been years of long hours)”
Carrie, your family ought to be worshipping you. Seems like, from some of your posts, they are a tad too critical of you and your endeavors. I’m glad they are finally coming around to realizing what a treasure they have in their midst. You’re one of the good ones.
Same experience here; my GF used to blast me all the time for spending too much time here, but now, as she watches the housing market crumble around her (we are in Palm Beach), the is SO happy that we are not like many of our friends.
I told her; if all of this stuff was SO easy, and just required one nights worth of work, then nobody would have gotten sucked into the bubble. That’s my rationale for staying here, and continuing to read; even though it has become obvious that we were all right the entire time.
Nothing worth having isn’t worth working for. And I consider this the most important part of my hunt for a home; I really do.
Thanks to Ben, and all the other contributers!
My wife used to nag me about not buying a house at the peak and it got so that I would shut Ben’s blog down when I could hear her coming into the room. She said the blog was ridiculous. With housing problems in the newspaper now, she says nothing.
I would also like to thank Ben and the blog posters for all the practical, timely, insightful and entertaining financial and housing information. Back in 2006, I was wondering how home prices could continue to go up, but incomes remained stagnant. I looked in desperation to find an answer and I fortunately came across this excellent site. There are many wise and talented contributors to this blog, which I look forward to reading each day. Keep up the great work!
i try to keep quiet about my feelings, one of co-workers bought a home in commack long island last august so i keep my mouth shut
but it must hurt knowing if tey would have waited say anoher 6 months they could have saved 30-50k easy
he is a nice guy they put 15% down and plan to raise their kids
but i hear you nycboy redemtion is sweet
Ditto the thanks to Ben. A couple of years ago, I felt like I was one of very few people who looked upon the massive appreciation of my house with vague unease, rather than a large degree of self satisfaction. It was great to have a place where those of us who were skeptical of the sustainability of those prices were a majority. Of course “I told you so,” is satisfying, but when we see just how pervasive the stupidity was and look to its probable outcome, it is scary as hell.
“I told you so” is one hell of a trap. If people here were to continue to be wise and stay ahead of the game, they’d drop this mindset pronto.
Pride (and smuggery) goeth before a fall.
Where do you start with this one?
“There are people who flipped houses and who got bad mortgages,” she said. “I’m the third group. The forgotten group. The folks who are not wealthy, who moved here for the quality of life and because it was cheap, and who thought a fixed income protected them from the pendulum of economics.”
How does a fixed income save you from the “pendulum of economics”? This woman has 2 Masters Degrees. My god. She is educated beyond her intelligence.
Why didn’t the reporter ask her why she never SAVED any money in all of that time while she was married and teaching? I would love a full accounting of how her and her husband lived and what kind of loser she chose to marry. Here is another story where they give you a small fragment and act like it’s the entire thing. I feel bad for her for the lupus. The rest is her own damn fault.
“How does a fixed income save you from the “pendulum of economics”
She’s not the only one. How many times have we heard pols say they plan to “stabilize the economy”?? How about a “moritorium” on interest payments’ and all such hokum.
This is the new, compassionette America…downside risk has been eliminated from a market-based economy. See how well that works.
I made it an obsession since 2000 to minimize the taxes I give to federal and state governments. Congress is merely a reflection of irresponsible Americans, so I cannot blame 535 people for all our woes.
Since I am a believer that Congress is a mere reflection of J6P, I am confident that in the coming bad years, as J6P becomes frugal and fiscally conservative with his finances, Congress will become likewise. All this will be out of necessity, not out of choice. America cannot afford to be irresponsible anymore. The party is over. Also this big war on terror will have to end, like it or not. Ron Paul made an erudite point in one of his videos that economics, not desire, will force the U.S. to pull out of foreign nations and entanglements. America cannot afford entitlements, big corporate subsidies, and wars. It’s all gonna end for awhile until the coffers fill up.
RON PAUL DONATION BOMB FEBRUARY 18 (MONDAY) PRESIDENT’S DAY.
http://www.ronpaul2008.com
“…as J6P becomes frugal and fiscally conservative with his finances, Congress will become likewise.”
Great insight.
Congress is merely a reflection of irresponsible Americans, so I cannot blame 535 people for all our woes.
THIS is what alot of politican bashers don’t realize.
jim a, agreed that most j6pks are basically responsible for alot of what “We” allow to go on with congress/WH etc, by not voting, not knowing what is being voted on, who is lying,stealing, mishandling young boys etc, and so it goes. If J6pk and others would be active, then the bad apples would be thrown out immediately and thrown into jails, not given golden parachutes, lobbying jobs etc.
I gripe at pols because I pay attention/vote and try to inform my friends/coworkers. No one wants to hear.
Just like the housing prices rising, “oh goody I am rich now”…poof it is gone.
The poor lady has lupus, for God’s sake, one of the most horrible of diseases, that probably costs a fortune, regardless of insurance and the rest. I had a friend who died from it, and it ate up every cent she had.
Till recently, St. Petersburg was promoted by the city council as a low-cost haven for people on fixed incomes. And before the bubble inflated, it actually was just that. Suddenly, it costs as much as anywhere else to live, as wealthy NEW YORKERS (mostly after 9/11) have moved in, and taken it over. And nobody is a rude, pretentious, or obnoxious as these loud-mouthed show-offs.
Endless judgements of people we don’t know, in circumstances we only guess at, are becoming disturbing. I make judgements as rashly as anyone else, but I think it’s time to stop (maybe this blog is the catalyst). Too many real people, NICE people, are being hurt by the real estate mess, and lumping them with Wall Street raptors, hedge fund leverage phonies, or greedy flippers is not fair. You’ve already branded her husband (about whom you know nothing) a loser, said she’s educated beyond her intelligence, slammed her for not saving (saving what?), and in general written her off as scum. If what goes around comes around, practicing for pole dancing might not be such a bad idea.
That’s why we need more details. The point is that all of these stories are bogus because they give so few details and even the details they give are skewed. They tell you only what they believe will make her look like a sympathetic victim.
My experience in life would indicate to me that she probably did not marry well. I didn’t mean to definitively state the man is a loser. But if I had to guess….
Hey, maybe he was a loser and maybe he was the prince of St. Petersburg. It’s NOT relevant to the story. It is the story of a sick women who is on her own who can barely make ends meet and will likely lose her home.
Have a little compassion, will ya?
some ‘beautiful’ women are married to ‘ugly’ men.
“what kind of loser she chose to marry. ”
There is a flip side to that as well,
don’t shoot.
Have a barf bag handy for reading this one. Good night!
http://minneapolis.craigslist.org/rfs/575721006.html
Perhaps the ‘Big Guy’ will take it off their hands.
Let’s just say that the cheapest accomodation of the automobile by the rowhouse, the entire facade of the building consisting of a garage, is not one I prefer. It’s actually banned in NYC, although developers built it anyway, make some campaign contributions, and get legalized after the fact.
The rule requires parking to be down a common driveway or ramp, and in the rear or a common basement.
In my town (Canberra, Australia), those townhouses would list for at least twice the Minneapolis price and the whole row would sell over a weekend.
“Have a barf bag handy for reading this one.”
Make it a large or have two.
“$224900 God blessed us with this home - it could be yours!”
I don’t consider a house a blessing and certainly not that house.
“Each unit is unique inside just like we all are.”
The opening from the second level looks down on the formal dining room!? That’s certainly “unique”. Unique is not necessarily good, however. The photo of the property is horribly framed with “horizontal” tilted about 20 degrees.
I like the rainbow shot in the photo too, nice touch. Many properties for sale in Coon Rapids. Sorry, ever since college when I had to fry coon in my popcorn maker, I just can not get into a lifestyle of coon anymore.
66,000 %…
http://news.scotsman.com/world/A-loaf-hits–78.3781428.jp
I’m getting an error message with that link, wmbz.
DAVID WALKER… RESIGNS….
http://www.wrisley.com/david_walker.htm
I like the things that he says. There are two ways he can go. He either becomes a great voice of reason in an unreasonable time or he morphs into a corporate shill. I hope he doesn’t sell his soul.
I am optimistic:
“The foundation is also going to end up funding other related efforts,” Walker told the Federal News Network in and interview this morning, “including potentially supporting one or more documentaries designed to get the message to millions of Americas… because they need to know in order to make more informed choices at the ballot box.”
This is what I posted last night in response to his resignation:
“I’m glad he resigned, he’s an a-hole, IMHO. I saw him on 60 Minutes, driving around in his limo, (which is most likely paid for by the taxpayer), bloviating about how we need to scale back entitlement programs. Nowhere did he mention the costs of empire, stupid wars, aid to other countries, the health care and pensions provided to CONgress and members of the administrations, welfare to illegals, etc. Now, if he’d talked about any of that, while driving an old Chevy, I might have listened to him about Social Security and Medicare.”
I like your anger.
Here’s one for TXChick. This has her written all over it. It’s a good thing they didn’t show it in wintertime. I can’t imagine the nightmare it would be living out there during the winter.
http://minneapolis.craigslist.org/rfs/575590519.html
I do like that. Crazy price though for being in the middle of nowhere.
Did you click on it and take the whole tour? That’s pretty nice. As the Twin Cities pushes out further and further those places become less remote. If you buy it, buy some long johns. You’re going to need them. In Roberts, WI the temperature currently feels like 3 degrees. The wind chills in the TC last week were -30. Those are Fahrenheit temperatures.
Why is the outhouse right next to the driveway?
I wondered the same thing. Perhaps it’s a guard house for the barn?
It is a rainy/winter school bus waiting station for kids. When the snow is coming down 2″/hr and the wind is 25mph and it is cold, it is best to be in shelter waiting for the school bus. No responsible parents in the country would let their children wait without shelter.
Wow. I start shivering just thinking about that.
I got shrinkage just thinking about that. We’re talking full turtle shell.
“Why is the outhouse right next to the driveway?”
LMAO! Sorry, Ric, I had to laugh at that one. There’s no reason you’d know what the hell that thing was by the driveway, but your comment was funny nonetheless. You must live in warmer climes.
The little house next to the driveway also provides shelter from wolf packs, don’t ya know.
Texas ranch living in the St. Croix valley.
Does it get to -35 in Texas?
The stupid comments that realtors make about places.
“Home to bald eagles, Canadian geese, deer, wild turkeys and lots of bluebirds.”
I don’t think it gets to -35 in Texas but there is nothing like starting your day with some sunny-side up bald eagle eggs. That is some good eating, especially with a side of blue bird and a few shots of Wild Turkey.
Temps in Tx?
It snowed last year in Corpus Christi.
was that the Outhouse?
Long way to walk in the winter time.
“A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.” - Alexander Tyler
That is precisely why our system of governance is not a democracy. It is a republic, and more specifically, a constitutional republic. Paraphrasing Jefferson, our Constitution is a set of chains to hold down those in power with motives other than supporting the Constitution. Many steps have been taken to loosen those chains.
This economic malady is a critical point for our system of governance. We will certainly have a choice. That choice is either more deference to the omniscience of the state or that of the individual. Which will it be is the question. If it is the former, then folks should realize that individual liberty will be lost. We, the electorate, should choose wisely and carefully. Critically think of each proposal purported and logically determine the end state.
kerk93
I can not write as eloquently as you, but you are dead on IMO.
Bravo.
That is an extreme, reactionary position to take. The nature of American democracy is such that it tends to withstand any given test including civil war. As far as fiat currencies go, we can always start printing some other one. Lots of industries besides housing are doing well, and energy shows signs of already being the next bubble. Corrections are always harsh, that is what they are for.
In line with my earlier comments, “Democracy is two wolves and a sheep voting on what’s for lunch.” We need to look in the mirror. The government is us and we b&*tch and moan about it.
democracy and republic were interchangeably used by the founding fathers to mean the same thing. republicans preferred republic for obvious reason.
Real estate agent boycotts housing lender
By Dick Hogan
Originally posted on February 16, 2008
A Fort Myers-based real estate agent is calling on his colleagues to stop doing business with Countrywide Home Loans, saying the company is cutting off home equity credit to solid residents of Lee County because of falling housing prices.
Countrywide, based in Calabasas, Calif., calls its action “sound risk management” but agent Mike Powell of Cypress Realty GMAC said it’s not ethical behavior.
“I have used Countrywide as a borrower and real estate agent for 15 to 20 years and they have decided that the relationship means nothing,” he said in an e-mail to The News-Press and other agents. He said he’s speaking as an individual, not on behalf of Cypress Realty
.
“I’m asking fellow agents to not use them, or the public for that matter,” Powell said in an interview. “I look at it as I pay my bills all the time, I have excellent credit, I’ve given them business for years. Just because they say Lee County is in a really declining market for values, they’re just going to cut you off.”
He found out the hard way when Countrywide shut down two lines of home equity credit he’d paid off last year with $56,000 in savings, Powell said.—–>
The funny thing is that this move makes me more likely to want to use Countrywide. It is funny how these REALTORS hate anybody acting responsibly. It’s anathema to them. It’s like Kryptonite to Superman.
Actually, I find this rather amusing.
“Please stop using Countywide, because they won’t lend you money.”
If they won’t lend you any money, how can you take advantage of them as a lender??
I must be stupid.
Looks like he’s getting his way…..
http://news.bbc.co.uk/2/hi/business/7246599.stm
Why would a realtor be concerned with HELOCs? I mean I could see him being upset at a company backing out of/not funding PURCHASE money. But what do HELOCs have to to with the business of SELLING or BUYING houses? Unless his business is selling to speculators who are HELOCing their first hous to buy speculative property in FL.
I was gagging on this one: “I have used Countrywide as a borrower and real estate agent…” How was he using them as a RE agent?
Jim…If a Realtor can’t sell the concept of appreciation and the ability to pull out wealth ,or the ability to refinance a bad loan ,than a buyer has to purchase based on more prudent ideas ….like being able to afford the house long term and really wanting a house to live in . The sales people can’t even now sell a fixer-upper house saying to the the buyer that in three months they can take out a fix-up loan using appreciation . No longer can Realtors sell the concept that enough equity will be there in the future to fund dreams and wishes . There was a time in this prior boom market where no doubt property was sold with the concept that so and so could pull out equity in 6 months and buy another property and on and on . Sellers will not buy another house if they think that they can’t sell or refinance to get a new place ,so why bother going under contract if your current home doesn’t have money pulling potential .
Every little angle that made it so easy for the real estate sales people to makes sales is now gone . I’m sure this realtors is also concerned about equity money because he was maybe planning on pulling out equity from his POS property to survive, and I’m sure that realtors have customers that need the equity money to stay in the game until the great housing boom rebound comes, (that commissioned salespeople have been promising for 3 years) .
It must be real hard these days for sales people to sell a house based on the concept of really affording it and actually living in it ,without any expectation of appreciation in the near term .I wonder how Realtors are overcoming the objections by borrowers that the market is still crashing so why should they buy ?
I am a renter with huge amount of cash sitting in CD’s and my situation doesn’t permit me to buy a house for next 1-2 years. My intent of accumulating this cash is so that I can buy a nice house.
Isn’t it a good idea to hedge myself against risk of home price appreciation by going long on home builders? XHB, the S&P Home builder index (http://finance.yahoo.com/q/hl?s=XHB) is a good proxy for the home builders which I intend to buy.
The pros
1. I feel that home builders are discounted enough for further decline in home prices. I think equity markets are very efficient in pricing compared to housing and home owners.
2. It is cheap to own these stocks than a house because I don’t need to pay taxes and mortgages and maintenance
3. If, by any chance house prices go up, home builders are the first one to capture the appreciation since they are beaten down some much and again the markets are efficient to capture this upside potential
4. Since I am planning to invest about 20% of my money in XHB, if the housing market deteriorates, it is even better because the house buying power my rest of the 80% of the money improves significantly.
5.
Cons
1. Most of these home builders can go bankrupt and my investment in then can go down the tubes. But this can happen only in very highly deflationary environment which is even better for me because I am in a profession where I can with stand severe depression.
2. The existing home builders can go bust in XHB ETF and some new ones can emerge as market leaders. In that case I don’t know the portfolio is readjusted.
So I would really appreciate you comments on this. Especially I would love to hear counter arguments to mine.
TROLL ALERT!!!!!!!!!!
NYCityBoy,
No I am not a troll. I am for real and I indent to have serious discussion about this.
I love to here every ones opinion here.
Well, then, let’s take it one point at a time.
Pros:
1. Total bulls–t. Are these the same equity markets that priced pets.com at ridiculous levels? You have been listening to the morons on CNBC. Is your name really Jim Cramer or are you Becky Quick?
2. Cheaper to own these stocks? WTF does that even mean?
3. If house prices go up? You are more likely to be anally probed by aliens over tea and strudel this afternoon than for home prices to suddenly start to rise.
4. You are putting 20% into that? Make it 50%. Then you are really hedged, by your thinking. The homebuilder index rose 33% in the past month due to an insane rally of the homebuilders. It is an index made up of flaming turds such as TOL, BZH, HOV, KBH, CTX, PHM, etc. Yes it offers more diversification. You can have more turds in your flaming bag than just one. Woo hoo. You are diversified.
5. You must have run out of silly ideas.
Cons:
1. I am so confused by this one that I just took a whiz in the bathtub and washed my hands in the toilet.
2. Some new ones emerge as market leaders? Oyyy. The homebuilders today are like the automakers in the 70s and 80s. They are waiting for a market to come back to them that no longer exists. The McMansion Era was fueled only by really really stupid lending which anybody on this blog should know. They will never be able to build those huge homes with huge margins again. Those days are dead, junior. You are investing in an industry that doesn’t really exist. If you want to hedge yourself against price inflation then…no I want say anything. There will be no price inflation in the next year or two. Hedge against the dollar, not home prices. That is your best hedge.
Your plan, in my opinion, makes you either a troll or a fool. But good luck to you. I hope it works out for the best.
nycboy funny stuff lmao
hahahaha go NYCboy
Tea and strudel sounds pretty good, especially in the afternoon on a cold winter’s day. Alien anal probe, let us wait for summer to arrive.
NYCityBoy, what are 1 and 2 bedroom rental prices going for in Chelsea these days? How much more is it in the Village? Having thoughts of moving at the end of the year and need to start lining up my duckies.
I would guess you could budget $3,000 for a 1 bedroom and $3,700 for a 2 bedroom. I think that would be about the same in Chelsea or the Village. We keep considering a move back up that way but the thought of moving just bites.
I don’t know what to say with all the other “ideas” coming down the pike, but here’s my take.
Shorting in this market is a bad idea. The builders are already beat up pretty bad. You are seeing occasional bursts of enthusiasm in the falling market, which has been typical, but each bounce has failed.
Most have learned the “big house” market idea is over. They need to build affordable homes. They are redesigning their plans and starting to market new homes under $150k around 1200 sf. This will work in the coming year. Too much inventory for now. I will be watching for homebuilders who survive to start building a base in the coming year.
For now, I just sit by and watch. Cover the blinds to stay in the game, but don’t play a bad hand.
Builders, like lenders are still in the liquidation stages of unloading bad purchases. Many will big builders will survive this downturn. They were greedy and got bit. They have learned. How do they make money? Building….and selling. Lower price, more sales. Don’t short them in this market.
My last bit of advice. NEVER buy the dips. Repeat: Never buy the dips.
This is not the 1980’s. The world markets have changed. The bull markets of 1980-2000 will probably be more of a dead market from 1930-1950. Buying on the downside may get you all the way to zero.
While there is little opportunity sitting at the side of the table when the cards are being dealt, it is better to fold then feel like you need to place a bet. Never bet if the odds are no in your favor.
The overall market is in a downtrend, although William O’neil called a confirmed rally on the NASD big jump this week, it failed the next day.
It hurts to watch your money being dissolved by INFLATION of the FED, but a few 10%-20% drops are worse. Best to do like Neil……….get some popcorn and watch the show.
Falling house prices are like rising income to those waiting to buy. You have already gained by waiting.
-D.
Put it in the Folgers can and wait for awhile.
I don’t understand why Ven’s post is seen as a troll. He/she’s not suggesting that housing won’t drop, or even that homebuilder stocks will rise. Just that buying the homebuilders may be a hedge against rising home prices while sitting on the sidelines.
While you might think it’s a bad idea, I don’t think it’s a totally ridiculous thing to consider - trying to protect the buying power of the cash you’re holding while things play out. I know most people here would suggest instead buying foreign currencies or precious metals (as housing prices rising would be due to inflation rather than fundamentals, most likely), but why not say that rather than attack the guy/girl?
I agree with the posts a few days ago - I think some people here are getting a little too sensitive about “trolls”. Certainly some are blatant, but I hate to see new posters attacked just because they don’t immediately fall into line being 100% negative on housing.
Anyway, that’s this lurker’s 2 cents…
Your sensitivity is touching. Some guy or girl puts a post on here about investing in the companies run by the likes of Robert Toll, Ara Hovnainian, Bruce Karatz (before he left with his $150 million bag of money) and doesn’t expect to get jumped on? Good lord.
Again, you and I might not agree with where they choose to invest, but that doesn’t make them a troll. That is simply the point I’m trying to make. How is anyone supposed to learn the role these companies played in the current situation if they get immediately attacked when they visit one of the few places where they can get an “honest” education on the current state of the housing and financial markets?
I enjoy reading your posts NYCityBoy. I just think you jumped on Ven a little too early.
ny city boy -
you’re making yourself look like a fool (as well as a junior high student)
ven - your hedge strategy an outstanding idea…..25% a bit much though IMHO….GL
Yes, 25% may be too much. I will have to think about my comfort jone. But, I just want to see if there any blind spots in my strategy
I’m in a similar position as you, having cashed out in 2005
I considered a similar hedge, but could not bring myself to do it, decided on investing 90% in commodities instead, where there is actually money to be made
more price decreases are in the bag for 2008 at least. in SOME markets in CA that were the first to boom in 97, and the first to bust in 2005, I believe the coming hyperinflation MAY put a floor under the market starting in 2009 and limit furhter downside
however, RE is going to be dead money for a number of years IMO
“you’re making yourself look like a fool (as well as a junior high student)”
I would rather look like a junior high student than some dumba$$ that thinks the XHB is investing. And for you, keep praying for that hyperinflation.
Thanks drummin
Thanks all of you for the response. Just to make few things clear I am a long term housing bear and hence the accumulation of cash instead of buying an abode which fleeces you off. At the same time I am pragmatist trying to protect myself from housing inflation if it realizes (I believe the probability of this happening is very low, but still if it happens I don’t want to be screwed).
Most of these home builders can go bankrupt and my investment in then can go down the tubes. But this can happen only in very highly deflationary environment which is even better for me and my wife because my wife is a Pharmacist and I own good assets which performs very well in deflationary environment.
PLEASE, at least wait until August to invest in these turds. Clearly some of them are going to zero. There will be buyouts and mergers, etc. So far no-one has gone under. WE HAVE NOT HIT BOTTOM YET.
When the headline indices have come down 20-25%, we will probably have a clearer picture of who is going to survive the housing downturn, and who is a goner.
Right now they are all flaming turds and bears are shorting the stuffing out of them hoping for a payday. Ditto mortgage lenders.
I’ve been called a troll here before by a handful of individuals who do not agree with my views.
Take it with a grain of salt. If everyone agreed with everyone else on this board, it’d be little more than the tens of thousands of worthless Little Bitch Blogs that exist in cyberspace.
VEN,
something i’ve heard posted here before is that when markets correct, they tend to “overshoot”, which supports the idea that home prices may overshoot on the way down and correct to levels below those supported by the fundamentals. I think you’re trying to bet (i choose that word carefully) on the idea that maybe the homebuilders stocks have already overshot.
Based on my experience, I’m a bad market timer, so i know that trying to time the bottom of any market is beyond my capabilities. It may be easier to time markets in real estate than in stocks, as real estate is a less efficient market, but the slow movement and high leverage can work against you quickly in real estate, and may wipe out any hedging you may have done.
So here’s my take on your situation: don’t try to time the market, whether it’s real estate or stocks. Instead, try to tie your purchase of your house to the market fundamentals (ie buy when your cost of owning is about the same as rent). In the meantime, let your cash earn as much as it can.
if you want to speculate, wait until you’ve bought a house and then bet that either it will increase or decrease in value.
i admire your chutzpah but it strikes me that maybe it’s a bit overambitious - trying to maximize your returns by timing the market and employing leverage all at the same time.
Good God A’mighty. I’m glad Ben lets a few of these through every once in a while.
Ven says: “So I would really appreciate you comments on this. Especially I would love to hear counter arguments to mine.”
I think your investing strategy sounds great….for me to poop on…!
Oh and NYCBoy, your reply was hilarious…!
I suggest you ask your brothers at the SDCIA forum…
Not investment advice, but if you’re looking for a genuine hedge against a rapid price rebound rather than a speculation you might want to check out the CME. I believe they offer both options and futures for House Prices in 20 of the US’s biggest cities, but I don’t know how far out in time they go.
See I am looking for higher beta than futures which have a beta 1 with house price appreciation. Since HBs being leveraged and highly liquid instruments to trade I should realize hilger returns in case of unforeseeable price appreciation.
Have you looked into the possibility of using leverage on the CME futures? You might be able to construct a hedge that is somewhat specific to the area that you eventually want to buy a house in.
Myself, I would be inclined to hedge against inflation using commodities and foreign bonds. But that’s just me. YMMV.
Um … WHAT?
A hedge is to save your ass. Now you want to open yourself up to an anal reaming if you’re wrong?!?!
Your funeral.
You post seems fishy to me. Why would you invest money to be used to buy a house in 1-2 years in a deteriorating market? I can see dollar cost averaging on the dips as part of a long term investment strategy, but your time frame doesnt allow for any timing mistakes. Also why would you be trying to hedge against further prices declines when there is no data or circumstances to suggest that prices may rise? Given your time framem we wont even be done with the resets and resulting foreclosures, and clearly the investors and easy money will be gone. I call BS.
I am no not suggesting that housing market is going to rebound in 1-2 years. Look at my recent comments. I expect and would love to see prices going down. But at the same time I don’t want to see my buying power evaporate in case of enexpected price raise due to the stupid government intervention or any other factor.
It’s dead money and some builders will go bankrupt. There is too much inventory and no pricing power. Investors using your assumptions create temporary trading opportunities, however. Markets are not efficient.
Im a pessimist. I worry about everything. It prevents me from sleeping most nights these days. I was going to get help, but now see that there are even those so far gone they profess to be worried about the risk of home appreciation in the next two years. If you are that paranoid and risk adverse you need to be on meds hun. You are delusional, but thanks for making me feel better about my situation.
I wouldn’t buy home builders they are going to be sued for poor workmanship for years and years probably many will go broke.
Newhall land and farm maybe a better hedge? I forget the ticker symbol. I don’t own any. Jim Jubak wrote something about Newhall check out his articles.
Some ‘fixed income condos’ in Indian Wells are being held off mkt as Builder is being sued by Indian Wells for shoddy workmanship, giant cracks etc. I expect lots of home bldrs will be sued.
‘Round here, nobody believes that there is going to be any REAL appreciation in house prices for the next few years in most markets. Really, the only chance for nominal prices to stabilize at current levels is if we wage/price inflation spiral. (There’s considerable debate between the inflation and deflation camps) But if you’re trying to hedge against nominal price increases, you’re really trying to hedge against high rates of inflation, and there are better ways to do that than buying homebuilder stocks.
I certainly don’t believe that the decline in construction over the next few years has been “priced in” by the market. Many homebuilders are likely to go bankrupt in the next few years, as huge inventories makes new construction un-profitable, and many take big write-offs. Many won’t, and figuring out which ones are best placed to weather the construction downturn might well be a good speculative play, it can’t be considered a hedging of risks IMHO. But I’m chickensh*t, and this advice is worth what you’ve paid for it.
Thanks all of you for the response. Just to make few things clear I am a long term housing bear and hence the accumulation of cash instead of buying an abode which fleeces you off. At the same time I am pragmatist trying to protect myself from housing inflation if it realizes (I believe the probability of this happening is very low, but still if it happens I don’t want to be screwed).
Most of these home builders can go bankrupt and my investment in then can go down the tubes. But this can happen only in very highly deflationary environment which is even better for me and my wife because my wife is a Pharmacist and I own good assets which performs very well in deflationary environment.
Again thanks every one responding to my post. I still love to discuss this further and hence further comment. I will respond to every one here
On any level investing in the XHB makes no sense. If you saw it as a trading vehicle then it might be understandable, especially after the recent runup of the builders. Of all the things you might need to hedge against a return to appreciation in housing seems the least likely.
Hi Bluto,
I was looking for something on an earlier thread and found this comment from you.
“it was state governments who were pushing harder than the feds to increase lending to poorer borrowers. They’re just making hay since the feds overrulled them (and saved them from looking foolish now). ”
I was wondering if you could share any more details. That Spitzer article caused quite a stir among my extended family members. I might want to present the counterargument.
Thanks
The foreclosure tsunami has hit the shore in San Diego
Home loans failing at record rates; foreclosures up 257% over Jan. ‘07
By Emmet Pierce
STAFF WRITER
February 16, 2008
Home loan failures in San Diego County continued their steady climb in January, setting records for both foreclosures and the notices of default that are the first step in reclaiming mortgaged properties.
EDUARDO CONTRERAS / Union-Tribune
Real estate agent Dave Pierce says he misjudged the market and is in default on his Torrey Highlands home. “I know about a dozen people who are losing their houses,” he said.
The number of foreclosures in the county was 1,305, up 32 percent from December and up nearly 257 percent from January 2007. Notices of default totaled 3,109, up 21 percent from December and up 145 percent from the previous year.
The DataQuick Information Systems report yesterday also showed a narrowing gap between foreclosures and home sales. It reported 1,826 sales of new and resale homes in the county last month, compared with the 1,305 foreclosures. In contrast, there were 2,772 home sales and 366 foreclosures in January 2007.
“When sales are this low, foreclosures have a much bigger impact,” DataQuick analyst Andrew LePage said. “I don’t know if we’ve ever been in a position like this.”
http://www.signonsandiego.com/uniontrib/20080216/news_1n16default.html
“I know about a dozen people who are losing their houses,” he said.
Soon many in the bubble areas will be able to say this.
How does a used house salesman think he can afford a million dollar house? Its like the KIA salesman buying a Bentley.As someone here said you don’t finance a Bentley. Same thing for a million dollar house. This guy did way too many Kool-Aid shooters!!
Oh, I don’t know. The truly rich might well finance it for cashflow reasons. But million dollar homes are for people who COULD pay cash. It’s just that they might choose not to.
Splitting of bond insurers studied
Firm wants to separate municipal from mortgage
By Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
February 16, 2008
Regulators and bankers racing to bolster troubled bond insurance companies are considering splitting the firms into two parts – one for safe municipal debt and the other for riskier mortgage-related securities.
Proponents of the idea say such a step could restore confidence in the financial markets broadly, and specifically in the $2.6 trillion municipal bond market, which provides financing for bridges, airports, museums and other civic projects. But the move would be unlikely to allay the worst fears about losses in mortgage-related securities, these officials acknowledge.
http://www.signonsandiego.com/uniontrib/20080216/news_1b16fgic.html
Regulators and bankers racing to bolster troubled bond insurance companies are considering splitting the firms into two parts – one for safe municipal debt and the other can just go broke
Warren Buffet already offered to buy up all the MUNI’s and let the PLAYERZ keep all the mortgage scam loan money. They reject his bid. Why?
They know all the mortgages they insured are crap. Plain and simple.
There is NO crisis in the Muni insurance funds. They could easily liquidate that part. They WANT a crisis so the government will bail out their bad bets.
They couldn’t fold their hand and walk away clean. Now,they want Uncle Sam to cover their bad gambling habit.
I say let them separate the two, and let the playerz eat their losses. NO BAILOUT.
But, seldom, in the recent past have I seen any responsible actions by govt. It’s all a Racquet now.
There will be soooooo many lawsuits.
The holders of the CDs will go after the fees on the municipal bonds.
It is like a divorce. Just becasue the divorce decree says one spouse is responsible for the debt does not mean the lenders can’t go after the other.
Right — Buffett may find out the hard way that he bought into a messy divorce if any of his proposals work out…(I am guessing that he might know how to insure against such contingencies, though).
What happens to private label mortgage securitization as a result of the split?
Given the backdrop of gloomy prognostications from the top and a relentless barrage of bad data, the markets did “better than expected this week.”
Data fail to impress investors
ASSOCIATED PRESS
February 16, 2008
NEW YORK – Stocks finished mixed as lackluster economic reports offered Wall Street little incentive to place big bets ahead of a long weekend.
http://www.signonsandiego.com/uniontrib/20080216/news_1b16market.html
Cerberus Institutional Partners
Dear Investors
“…On the one hand, we must have a thick skin, and on the other hand we must keep our humility. We must laugh when something bad is written, and we must ignore any good articles because once you loose your humility you will collapse as a money manager. We must remain humble and hungry….”
wall street journal resources
http://tinyurl.com/yuwny4
(caution 9 pg pdf)
I will give this credit to Cerberus, “humble and hungry” are critical to successful investing. The ego comes when positions are closed.
Love how they refer to “the bears.” Those f***ers were responsible for short selling many a company into the ground in the dotcom days.
They know how to press and like you they trade the market not just buying and holding. Ergo the 40% return. Not my favorite firm by any means, but far more attractive to watch than most mopes.
agreed tx-chick
i have stated many times a close friend of mine has been with them since they were a 3 man outfit
they started with 40 or so upper east side doctors-lawyers
investing a million each and have grown into this company
gobbling bottom feeding monster
like my buddy says-even with the market downturn they will be fine mostly at the expense of many people losing their jobs-homes and god knows what else
with john snow and dick cheney involved they must be privy to some juicy information
Wasn’t Cerberus the three-headed dog that guarded the entrance to Hell?
Yes.
………….you can check out, but you can never leave.
yes it was velo-
there used to be a comic book cerberus back in the 80’s
the boss at cerberus stephen feinberg is supposedly a really
low key guy- hates pulicity, lives in a very modest home and drives an old pick up truck
but this company was born out of the whole Micheal Milken disaster so who knows what could happen
they are very secretive
but my buddy has done very well there
Cerberus was reincarnated as Fluffy the Three-headed Dog in J. K. Rowling’s Harry Potter series.
The ‘Told Ya So’ Analysts
By Susanne Craig
Word Count: 994 | Companies Featured in This Article: Goldman Sachs Group, Oppenheimer, Citigroup, Merrill Lynch, Bank of America, J.P. Morgan Chase, E*Trade Financial, Deutsche Bank
The mortgage upheaval is costing some stock analysts their jobs as Wall Street firms cut expenses. But the doom has vaulted the careers of a handful of analysts who correctly predicted some of the biggest blowups.
Among those most often mentioned as making a name for themselves with smart calls about firms in the vortex of the credit storm are Goldman Sachs Group Inc. brokerage analyst William Tanona and Meredith Whitney, a bank analyst at Oppenheimer & Co.
http://online.wsj.com/article/SB120312131959172953.html?mod=todays_us_nonsub_money_and_investing
Another letter to client sent out this week:\
Dear Client
Global Trader Europe Limited (”GTE”) is the UK based operating entity of the group of the Global Trader spread trade and contract for difference financial service provider. A regulatory capital deficit has arisen in GTE as a result of a single client margin call default. Under these circumstances GTE applied, at the close of business on Wednesday, 13 February 2008, to the Financial Services Authority (”FSA”) in the United Kingdom for a Variation of Permission — the official method by which companies change the terms of their authorisation, limiting principal activities to closing existing trades.
The Board and management of GTE, continues to evaluate alternatives for the re-capitilisation of GTE, including the possible introduction of an international equity partner. However, to ensure that the various alternatives can be evaluated within an orderly operational structure and regulated financial exposure, GTE will today file for Administration. An Administrator has already been tentatively appointed.
As a result no client withdrawals shall be affected until such time as the Administrator has taken effective control.
The management of GTE will make every effort to keep you informed of all progress made and ask for your patience and understanding. If you have any questions, please contact GTE on +44 20 7420 1200.
Kind Regards
The Global Trader Team
I like Cerberus letter better.
Dutch bubble update:
Dutch mortgage rates keep declining, with the US economic slump / flight to safety cited as the major factor for the decline. Loaning money in one of the most overvalued markets in the world does not sound like safety to me, but apparently the companies providing the funds know better. A popular contract like 5-year fixed rate I/O now costs the Dutch homebuyer 2% yearly (officially a little over 4%, but because of the Dutch HMD the tax office pays half of the mortgage) and a 15-year fixed rate loan costs effectively around 2.5%.
I’m seeing more and more (occupied) rental homes offered on the market for sale, with a rental return of 2-3% yearly. You have to be stupid to buy an occupied home at that lousy return, because it doesn’t even cover the fixed costs and you cannot change rental conditions until the renter wants to move (which is not likely soon, with this rent/price ratio). I just wonder what kind of investors buy these homes; probably they are counting on evicting the original renter and jacking up the rent 2-3x, otherwise they are loosing money fast.
“I’m seeing more and more (occupied) rental homes offered on the market for sale, with a rental return of 2-3% yearly. You have to be stupid to buy an occupied home at that lousy return……”
You are trying to use your brain to much. Just like the buy for the “long-term” strategies and the “buy the dip” strategies of markets past………….if you think housing is going to “rebound” in the near future, then any positive return is enough, since your are getting to the “appreciation”.
If, however, you think housing prices are FLAT to down for a very extended period of time, then you are dead right. But most brokers who are used to having prices continue to rise will sell this as a Great Opportunity.
I’m not buying.
yes, in Netherlands home prices have been climbing for about 20 years now, so the yearly appreciation (more than possible rental income) is supposed to be a given and rental income is just the topping on the ice cream. I guess this must be why investors accept such dismal returns
nhz, I like your updates. From my travels I always found Holland to compare very favorably to the U.S. - health care, social spending, clean streets filled with well-dressed people who bike, libertarian in regard to personal freedoms, etc. Seemed to me that the average person in the Netherlands lived much better than the average American. I’ve even thought about moving there. Anyway, it makes me feel better about how screwed up my own country is to know that at least the Dutch are sharing the housing bubble stupidity…
well-dressed people, in Holland? Maybe in certain small towns or villages … There is a joke that if you are at an airport anywhere in the world and want to find a plane to Amsterdam, just follow the worst (most sloppy) dressed passengers
Well, I think it’s just that the bar is much higher in Europe than the states. Here in the US of A it’s fat people in t-shirts with corporate logos on them, sweatpants and flip-flops. Everywhere! Have you seen “Idiocracy”? Like that.
I always wear a tux and a top hat, shiny black shoes just to ride a doggone airplane.
not. How pretentious!
had to happen, the NYTImes on first-time homebuyers getting deals, but problems getting mortgages…let the knife-catching begin.
http://www.nytimes.com/2008/02/17/realestate/17cov.html?_r=1&oref=slogin
“He had until Dec. 10 to find a mortgage with another bank, or he risked losing his $20,000 down payment. “I really thought I lost the deal,” Mr. Kochanov said.”
And this Kochanov fellow is a property agent for a RE company? Do people in NY typically lose their deposit if they cannot secure financing? Why did this guy put down 20% as a deposit?
The world economy
In search of an insurance policy
Feb 14th 2008
From The Economist print edition
Preventing a global downturn is too big a job to be left just to American policymakers
…
In America politicians and central bankers are focusing on policy stimulus. The Federal Reserve has cut short-term interest rates by 1.25 percentage points in recent weeks, to 3%. Financial markets expect another half-point cut at (or before) the Fed’s next meeting on March 18th. This week George Bush signed into law a package of tax rebates and temporary investment incentives worth $152 billion, or just over 1% of GDP.
…both the Fed and the Treasury believe that by giving a stimulus now, they will minimise the odds of a nasty financial crisis and deep recession. This is their insurance policy.
The fund blasts its horn
That logic is now being echoed in another—unlikely—corner of Washington, DC. The International Monetary Fund, long a fierce advocate of budget discipline, has applauded America’s actions and is urging other countries to draw up their own fiscal plans in case the global outlook darkens. In addition to America, countries that make up a quarter of global GDP, the fund reckons, have the scope to cut taxes or boost spending. To reduce the odds of calamity, they should start contingency planning now (see article).
Few outside America, however, accept this logic or share the urgency. Britain and Canada have cut interest rates in recent months, but by much less than the Fed. Canada has cut taxes recently, but is loth to do more. The European Central Bank has stood pat on interest rates, and has roundly criticised the idea of fiscal stimulus. In emerging economies, too, the call for budget loosening seems to be falling on deaf ears, although high commodity prices and better economic management mean that countries such as China, Russia and even Mexico have plenty of room to loosen their budgets.
This scepticism is partly justified by the economic fundamentals. With domestic demand booming, many big emerging economies are, rightly, more worried about overheating and inflation than they are about a dire downturn. The latest evidence suggests China’s domestic demand is accelerating (see article). Slower exports may be just what is needed to bring its growth back to a more sustainable pace. Although Europe’s economies are more vulnerable than the Schadenfreude about America found in Frankfurt or Brussels would indicate (see article), demand—at least so far—has weakened much less than in America, and the inflationary risks are higher. The world economy can and should slow from its recent torrid pace. Global growth of 4% is hardly recessionary.
History adds to the sceptics’ case. The record of Keynesian-style fiscal stimulus is chequered. Too often politicians have failed to counter a downturn and added to the public debt instead. Furthermore, policymakers’ responsibility is to their own citizens: it makes no sense for countries to overheat their economies to “make up” for America’s weakness.
http://www.economist.com/opinion/displaystory.cfm?story_id=10689567
I would like to add that central bank policy seems to be mostly irrelevant these days, or even counterproductive.
While the ECB is officially ’standing pat’, mortgage rates in most Europe are declining, providing at least a firm floor under the EU housing bubble. Money is easy as ever here, qualifying for a mortgage is a non-issue in most cases. Isn’t this exactly what the US FED would like to achieve?
Wages have started to rise even more than in the US. Our Dutch teachers got a +/- 10% income increase over the next two years, and last week police offers refused a 10% increase over two years as ‘too little’. More influential (usually higher paid) groups of workers in Europe are asking and sometimes getting wage increases of 10-30%.
Inflation has increased strongly to multi-decade highs, and is probably very similar in both Europe and the US. Maybe it is slightly higher in US because of the dollar, but never underestimate what new creative EU taxes do to available incomes
even if the ECB would keep rates where they are, monetary policy is extremely loose and all in all maybe even more reckless than in the US.
This article is a volley in the great debate between those who say the securitisation industry can be salvaged and those who believe this form of financial innovation has just earned its rank in the history of terrible ideas that came to bitter fruition.
Briefing
Securitisation
Fear and loathing, and a hint of hope
Feb 14th 2008 | LAS VEGAS
From The Economist print edition
Not all is lost for the structured-finance business. But it faces further discomfort before it can start to recover some of its past sheen
AS GAGS go, it was cheap. But irresistible. As a banker from Citigroup placed his chips on the roulette table, a watching wise-guy sniggered: “There goes another $15 billion.”
Even though it was held (as usual) in Las Vegas, this year’s conference of the American Securitisation Forum (ASF), between February 3rd and 6th, was a subdued affair. First staged only in 2004, the event has become a mecca for those whose job it is to spin mortgages, credit-card debt and other bread-and-butter financial assets into tradable securities. But this time attendance was down—and tension up, as the neck-masseuses in the exhibit hall could attest. Black humour and self-deprecation replaced the self-congratulation of past years. John Devaney, a hedge-fund manager who had to sell his 142-foot yacht, Positive Carry, and his Gulfstream IV after making bad bets on mortgage bonds, told an audience: “I’d like to thank the market for dealing me a direct hit. As a trader if you don’t get sucker-punched every once in a while, you don’t understand what risk is.”
http://www.economist.com/displaystory.cfm?story_id=10689043
My view: The securitisation business can only possibly survive if it undergoes a major restructuring to eliminate moral hazard problems which have brought it down. This is easier said than done in an industry whose top managers seem to have all profited wildly by pursuing “take the money and run” business plans.
How can you start up again while NOT making stupid deals? Spend the money required to study each one carefully like Bob at the downtown branch used to do. I guess you could hire someone else to do that and trust their results. (Ignoring how well THAT has worked out recently.)
It seems like securitization only works at low surcharges and high volumes. Unfortunately, it seems now that at low fees, it CAN’T work (sustained).
Post-bubble budget boomerang strikes California squarely in the back of the neck…
Governor to sign $1 billion in cuts
Medi-Cal patients, schools, agencies take biggest hits
By Ed Mendel
STAFF WRITER
February 16, 2008
SACRAMENTO – The Legislature sent Gov. Arnold Schwarzenegger a $1 billion package of midyear budget cuts yesterday – in addition to a 10 percent cut for Medi-Cal providers for next fiscal year that some said will be devastating.
About half the $1 billion would come from schools, but the impact will not be immediate because that money wasn’t expected to be spent this year.
In approving the cuts, on bipartisan votes, the Senate and Assembly took a small step toward closing an estimated $14.5 billion budget shortfall that is expected to grow. Lawmakers also delayed some payments to keep the state from running out of cash next summer.
http://www.signonsandiego.com/uniontrib/20080216/news_1n16budget.html
$1 billion cuts are a good start. $50 billion to go for California.
Homeless: Can you build a life from $25?
In a test of the American Dream, Adam Shepard started life from scratch with the clothes on his back and twenty-five dollars. Ten months later, he had an apartment, a car, and a small savings.
During his first 70 days in Charleston, Shepard lived in a shelter and received food stamps. He also made new friends, finding work as a day laborer, which led to a steady job with a moving company.
“…Ten months into the experiment, he decided to quit after learning of an illness in his family. But by then he had moved into an apartment, bought a pickup truck, and had saved close to $5,000. …”
http://tinyurl.com/ytxsna
Christian Science Monitor
in most of Europe you can start out with nothing (e.g. being an illegal immigrant) and in a year, without any work except maybe some paperwork at a government office, have a very nice own (rental) home, all the nice goodies of the modern world (nice clothes, TV/video, mountain bikes, cellphone, you name it), free education and healthcare and loads of other people that happily take care of all services that you need (including the required paperwork, attorneys etc.). Start your own weed plantation in the attic and within a year you can have 50-100K euro in savings. Or start an internet scam operation like the many Nigerians that work from home in the Netherlands. As long as you don’t boast too much about it, nobody will care about such illegal income.
Yes, and we have millions of people here in the Land of the Yellow Brick Road doing their best to imitate a similar Euro lifestyle.
And support it as well. With our tax dollars.
You see, Hope-full Barack Obama wants to place the equalivalent of a .07 percent tax US GDP on all American citizens to fund welfare programs overseas. That means American tax dollars will be spent shoring up welfare programs in Parisian and Bucharest slums.
I wonder how he plans to add that lovely idea that to his Hope-riddled orations of Change.
However, he took his educated attitudes with him. How to get a job, how to move up, how to save money, how to open a bank account, etc.
All of this is not accessible to the person he is emulating.
I volunteer to teach in Harlem. The kids are routinely clueless about stuff that most of us would find completely and utterly “obvious”. It’s not them, it’s their background. They have no access to the information, and they have no access to people who have that information.
While hardly faulting the kid for writing a great story, it’s not indicative.
yeah, I agree … I’m making a killing compared to my peers at work, and it isn’t because I get paid more. It’s the education. Some of my coworkers get it, and are taking care of their families. Some of them don’t. Some of them don’t even take care of themselves. They’re very obese and on their way to full-blown diabetes, and that WILL put them out of a job.
Oh, how twee!
Thank goodness, they published his picture.
If anything, Mr Shepard underachieved considering his assets.
“…A very interesting story there, actually — you know, Jagdish
Bhagwati, in whose name I chair at Columbia — after whom my chair at
Columbia is named — he in 1961 returned to India and, actually, you know, he also shared these nationalistic sentiments of his generation, which has participated in the national movement. So he wrote to his professor, Harry Johnson — Harry Johnson was also a (inaudible) economist at the time — and so he wrote to Harry that, you know, “I’m very disturbed by the craze for the foreign goods that exists in India.”
And Harry Johnson, who was really a quick wit, kind of wrote
back saying that, “Look, you know, if the quality of the paper on which
your letter is written is any indication of the quality of the products in India, the craze for the foreign goods seems quite rational to me….”
THE BROOKINGS INSTITUTION
INDIA: THE EMERGING GIANT
Washington, D.C.
Thursday, February 14, 2008
Introduction and Moderator:
BARRY BOSWORTH
Senior Fellow, the Brookings Institution
Featured Speaker:
ARVIND PANAGARIYA
Nonresident senior Fellow, The Brookings institution
Professor Economics and the Jagdish Bhagwati Professor of Indian
Political Economy,
Columbia University
Discussant:
SHANTA DEVARAJAN
Chief Economist, South Asia Region, World Bank
http://tinyurl.com/2l52sy
Brookings Institute
To read in entirety 60 pg pdf. click on view full transcript.
Time to watch Ghandi…”is it home-spun?”
What Would Warren Do?
http://www.frontlinethoughts.com/gateway.asp
As a Berkie shareholder, it’s a real kick profiting from all this chaos.
OT, but since it’s been discussed lately, will mention that CNN Money has a big article on an eBay boycott starting Monday.
From the same folks who brought you last year’s “Subprime is contained” message…
Bernanke Expects Housing Recovery by Year End
12 Feb 2008 | 03:59 PM ET
Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday he expects the downtrodden U.S. housing sector to improve by the end of the year, a senator who participated in the closed-door meeting said.
Pablo Martinez Monsivais / ASSOCIATED PRESS
Federal Reserve Bank Chairman Ben Bernanke
——————————————————————————–
“He let us believe that the housing situation should begin to ameliorate by the end of the year,” said Sen. Pete Domenici, a New Mexico Republican, told reporters.
http://www.cnbc.com/id/23131888
For all the serial bottom callers who repeatedly and foolishly forecast the housing market will bottom out by the end of whatever year in which we currently find ourselves, I have a bit of bad news:
Some bubbles take a very long time to bottom out.
http://bp1.blogger.com/_nSTO-vZpSgc/R7UR_6MbZpI/AAAAAAAACJM/xU6Nt4fkx5k/s1600-h/japan-land-prices-update-2008-02-rgb-176-10-10.png
Here is another fantastic chart to look at any time you hear a bottom caller making an implausible duration forecast.
http://bp0.blogger.com/_nSTO-vZpSgc/R7UaGqMbZqI/AAAAAAAACJU/B9AQoEQ_0ss/s1600-h/california-housing+prices.png
nice chart. I like data. Yummy.
Here is a Rent vs Buy calculator that is pretty cool:
Link
Be sure to open the “advanced” tab on the right top corner and set the assumptions to whatever you think is reasonable.
Unbelievable fact from the NAR’s own sales data: Despite the fact that “All real estate is local,” annual real estate sales in the West, South, Northeast and Midwest sections of the U.S. all peaked in 2005, all were lower in 2006 and all were still lower in 2007. Here are the percentage declines from 2005-2007 for these three big local areas (figures are annual sales of SFRs, condos and apartment coops in thousands):
Area / 2005 Sales / 2007 Sales / Pct Decline
Northeast 1169 1006 -13.9%
Midwest 1588 1327 -16.4%
South 2702 2235 -17.3%
West 1617 1084 -33.0%
http://bp1.blogger.com/_nSTO-vZpSgc/R7Uij6MbZrI/AAAAAAAACJc/2n3ZHPbq3_k/s1600-h/NAR-sales.png
May I say, upon reading the BBh responses from esteemed posters, that I would like to suggest a number of observations:
1. If you are over 55, you most likely were frugal and you intend to survive on your savings.
2. You intend to make a killing with your savings on depreciating assets of others (read vulture).
3. Upgrade education (very few, but in what field?)
4. I will worry about it when it comes, since no one knows where this is going! (Called “When you come to a fork in the road, you take it”
If things are projected to be as disastrous, will anyone’s decision as to the path they take adequate?
Look it, I good get a graduate degree in “belly button viewing”, but will it help support me in the New World?
All I am attempting to ask, is has anyone looked at the possible future jobs that will be available to support themselves and their loved ones?
Hey, I am just trying to get your advice/plans to protect yourselves and see if they are reasonable to me!
good=could
Stupid me!
Lost, nobody can predict the future, but you can predict how humans are likely to act in any given scenario. And you can understand how systems work by studying history (the unrevised kind).
Given that, I don’t think anyone here knows a foolproof way to protect yourself in a meltdown situation, other than to be as independent as possible. People will still need the basics, so a job providing that will be as safe as they get.
For example, in the economic crash in W. Colorado in the mid-80s (caused by Exxon pulling out), nothing was safe. Pretty much across the board all jobs were affected. Health care was safer, but people were laid off in that also because of the many people that left the area, reducing demand. Anything to do with real estate, landscaping, etc. was dead. Banks laid off. Schools had layoffs. Even the grocery stores, gas stations, etc. had massive layoffs.
What may be different with this turndown is that people won’t be relocating, since there won’t be anywhere that’s much better. As has been mentioned here before, probably the best thing you could do if you think we’re headed for a depression is leave the city, if you’re in or very near one.
I got a good box of lucky charms as a teen in the 1970s. I listened to my father who told me that information will be the most valuable industry of the future. He was talking about computers. In 1982 I read a newspaper article and clipped it from the newspaper ( I may still have that somewhere). It said that computer science will be the growth industry for the next 20 years. In 1983 I decided to finish up my studies with a degree focused on mathematics and computer science. Here it’s about 26 years later, still going strong.
My own advice for anyone in their late teens and early 20s - study plenty of mathematics and logic. Analytical skills are the best skills you can get out of college. You develop a very strong bull$hit detector. More than ever, that is important for success in life.
I apologize if my question was uncalled for, however at almost the age of 60, with some savings and remaining equity in my condo owned for 20 years and divorced without any children, I have no intention of “waiting out my time”. I will still need an ongoing income and I have no intention of sitting in front of a TV watching the garbage provided by MSM.(read Bread and Circus).
This baby-Boomer/child of the 60’s does not plan to spend the remainder of his life in a “Nursing Home” waiting to die. I will drop “acid and strychnine” before that happens!
Hell, I intend to contribute to the rebuilding of America. In the last 3 months, I have acquired recently published College Algebra, Trig and Calculus text books and have been studying them. Somehow, someway, I have got to believe that the burden is now on the baby boomers to finally do something that is beneficial to future generations. It was a great party! Its now time to get to work and show later generations that we also can be “not the greatest but greater generation”!
You got it right. I’m near the tail end of the baby boomers but have off and on aims of going back to college and studying cognitive science. Retirement is for cows. You are doing the right thing with those text books.
Kind of a different subject. Right now on Fox Business Channel, the gorgeous Tracy Byrnes has a feature about baby boomers retiring later, and about working for younger bosses. I work for a younger boss. She’s 30, has children, and is married. I’m 48. She’s sharp and she is forgiving. Very good qualities in someone of her age. There’s hope for the future generation.
I think it would be a blast to work on a train as an engineer. Toolin’ across America, blowin’ that lonesome whistle…and it’s probably going to be a pretty secure occupation in the future.
There will likely be more openings for gandy dancers than for engineers.
“Pick an’ shovel…huh,
am so heavy…huh,
Heavy as lead…huh,
heavy as lead…huh
Pickin’, shov’lin’…huh
pickin’, shov’lin’…huh
Till I’m dead…huh
till I’m dead… “
In past “declining nations”, the mobs took out the teachers, unionists, and what they took for the “well-to-do”, such as the small shop-owners - the very ones that tried to lift others up in the community (by educating, organizing, and employing/extending credit)!
We learned to wait our turn, pay our dues, and not rape our neighbors. When the Chinese male babies feel their testosterone, the world will witness hostilities that will put the Coliseum & Holocaust in the minor leagues! The Kosovo/janjaweed/Kenyans are just the opening acts - Hide and look poor!