Bits Bucket And Craigslist Finds For February 18, 2008
Please post off-topic ideas, links and Craigslist finds here.
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It looks like there’s “a little froth” in Dubai:
http://www.dubai-architecture.info/DUB-GAL1.htm
“There are more construction workers in Dubai than there are actual citizens.”
Sounds like Florida several years back…
No froth. They’re just making more land.
In the shape of palm trees…
Hilarious. You can not use the running out of land arguement in Dubai, because they are making more land. I was watching 60 Minute’s piece on Dubai and they were standing in the middle of the road and the correspondant asks the developer why there was not traffic in this subdivision of 1000 million dollar homes (which were all built and had been standing for a year). “Oh, they are still moving in”, he says. I heard the very same line in a Sacramento subdivision in 2005. All those Sacramento homes are now bank owned and for sale again.
You know, it’s their money and they can do what they want with it. Including throwing it all away.
Dubai is built to attract wealthy people. Notice that there are no low-end or middle-of-the-road hotels. Everything has to be the most luxurious, the biggest, and the most expensive. So, when the Dubailand amusement park opens up and its expected 200,000 visitors per day never materialize, realize that it might be because there aren’t enough millionaires in the world to get 200,000 of them running through the place every day.
OK dumb question, since I don’t really know much about this -
Given Dubai’s location - isn’t this recent development geared mostly towards oil money? If so - then given oil’s recent price surge, and subsequent huge profits by companies like XOM etc., and by middle-eastern countries in general - isn’t it feasible that these developments will succeed, until such time (if ever) that oil prices come back down?
Dubai is what it is due to the lack of oil in the city-state: back in the 70’s the emerate saw the end of oil profits on the horizon and steered development to free-trade ports, now extending on to anything and everything.
Including building massive developments and selling them to non-nationals that don’t realize it wasn’t until two years ago non-citizens could even own property, and even then, IIRC, a non-citizen can only sell that property back to the state, not a third party.
Beckham was brought in to “buy” one. If he did: Worst. Investement. Ever.
I’m in the Theme Park business. No theme park gets anywhere near 200,000/day. Even on a holiday.
steered development to free-trade ports
Non-nationals are not allowed to own businesses in Dubai either, so I am not too sure how free the free-trade is going to be.
From what I’ve heard, Beckham was *given* a property for the publicity value.
Dubai is sucking in the massive oil wealth from the entire Gulf area, since it is the only economy in the region that is reasonably open to investment. The predictable result is overinvestment, overbuilding, overspeculation and eventually massive losses.
Constructing the “world’s tallest building” seems to be a fairly reliable indicator of economic overreach and a subsequent decline cycle. The Empire State Building coincided with the Depression, the Sears Tower preceded the stagnation of Chicago in the 70s, and the Petronas Towers topped out just as Malaysia was sucked into the Asian Crisis of ‘97.
Don’t know who, other than the indiginous types, would even want to inhabit that oppressively hot desert wasteland.
Their oil is set to run out (supposedly) in 2016. So, this whole rapid building thing is their attempt to brand themselves as the resort destination of the world. 8 more years. We’ll see what happens.
how about having 1T in the bank? interest of that alone should be enough to run that nation.
Never underestimate the ability of people who have never worked a day in their lives to piss a fortune away.
On the backs of slave laborers.
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1052&Itemid=32
Go to any dreamy resort hotel in Thailand or Bali and see how the hotel employees live, and they are supposed to be all smiles, the whole day, every day.
Run For The Hills…
http://www.marketwatch.com/news/story/harry-schultz-running-hills/story.aspx?guid=%7BAD492AD9%2DDA65%2D4944%2DA514%2D03C7FBACCFA2%7D&dist=MostReadHome
“It’s a derivatives crisis, stupid.”
That is the key line in the Schultz article, and one that I’m afraid many people on this blog do not grasp. This is not a housing bust. It is a derivatives crisis sparked by a housing bust.
This is what old-timers such as Schultz and Jim Sinclair have been saying all along. As Sinclair has said repeatedly over the past few months: “This is it!”
“Buy a few local non-rare gold coins of whatever country you are in for emergency/barter use, smallest denominations
This advice never makes sense to me. Gold is gold, Krugerrands should work as well as local coins.
Carrying Krugerrands implies to others that one may have additional Krugerrands stashed at home - not the impression one wants to give should these guys prove right. A tarnished old coin that looks like grandpa brought it through Ellis Island might attract less attention.
Is there any reason not to keep gold coins in a safety box at the bank? Does the bank know what is being kept in one of those boxes?
The bank doesn’t know, but the Feds can find out - pretty much anytime they want. Still, in a time of crisis I’d rather have a few cartons of fresh cigarettes than a handful of Krugerrands, JMO.
Edgewater, I think the renters of the safe deposit boxes will know pretty much beforehand the warning signs to empty the safe deposit boxes and put the gold elsewhere. For example, a good rule of thumb is to wait until the “official”
unemployment rate is up to 10%, or until gold exceeds 90% of the the spot price in 1980 (adjusted for inflation).
How do you make change at $900-1000 oz?
He was saying buy some 1/10 oz 1/4 oz and 1/2 ounce American gold coins, for smaller items, and 90% silver coins too……..
The smallest denomination part didn’t seem hard to understand.
Although in serious times, gold coin isn’t that had to cut into parts
US “Nickels”, even current ones, are now worth more than 5 cents in melt. And pennies up to 1982 are worth over 2 cents in “melt value”
http://www.coinflation.com/
Because of this, I no longer cash in nickels! I save them in a giant water-cooler jug.
Yes, it’s small change, but they’re easy to collect and if we ever worthless money like they had recently in Argentina, you may still be able to get a meal for a handful of nickels.
Of course, it’s a good idea to have some junk silver, too, but the nickels are easy to accumulate.
Mad Max XVII: A Fistful of Nickels
“This is what old-timers such as Schultz and Jim Sinclair have been saying all along. As Sinclair has said repeatedly over the past few months: “This is it!” ”
I didn’t know these guys were still alive. Let’s see. They were wrong in the 1970’s, wrong in the 1980’s, wrong in the 1990’s, and finally in 2008, we should all jump on board their sage advice. The gold bugs on this real estate website remind me that every 20 years, they might be right. So why not stay in real estate and wait for the cycle to repeat itself.
This is not a housing bust. It is a derivatives crisis sparked by a housing bust.
I think ppl are running in circles. It’s a simple concept. Debt leverage implodes once debt service is no longer being paid on time. The amount of leverage structured finance allowed is beyond most ppl comprehension, and will threaten to bring Wall Street to its knees.
“It’s a derivatives crisis, stupid.”
Totally agree with this statement. Derivatives is where most of the thin-air money eminated from and is where most of it will disappear.
Yes, much more than a subprime housing bust. Last week the muni bond auction failed. This will probably lead to the split up of the bond insurers and the bankruptcy of the non-muni parts. The 45 trillion!! CDS derivatives market is in danger of collapse. Though folks here can grasp this, this is not even getting a mention in the MSM (except the business pages). Our citizenry doesn’t know the shitstorm that is coming.
NYT is covering it
Yes, in the Business pages. This has the potential of bringing down the Global economy. The MSM, especially the television news, still treats it all as if it’s contained to a subprime housing problem, mainly for low income home owners. It’s much much bigger.
Why are you guys even worried about it?
The solution is very simple: The central banks of the world will simply print more money to create more “wealth”, and then everyone will be rich.
It’s really simple, you see.
diogenes,
Peter Schiff thinks there will be more stimuli in the line you suggest. But it will only raise consumer prices, prices of commodities, and interest rates…
http://tinyurl.com/yowcmx
I asked a friend in DC about the last house on his street that is still boarded up. All of the rest of the houses have been renovated except this one. “For Sale” is painted on one of the boards along with a phone #. Evidently, when you call the # you reach a person who claims the building is in probate and that the speaker is an heir. For a fee the speaker offers to contact you FIRST when the estate is settled and the house goes on the market.
A steady stream of suckers has been signing up for this “fee extraction service” over the last 7 or 8 years.
Has anyone heard of this scam?
gold up;
Feb. 18 (Bloomberg) — Gold rose in London as the prospect of worse returns from global equities increased demand for the precious metal. Platinum climbed over $2,100 for the first time.
Gold has advanced 8.4 percent this year as the U.S.’s Standard & Poor’s 500 Index, Japan’s Nikkei 225 Stock Average and the DJ Euro Stoxx 600 all declined.
http://www.bloomberg.com/apps/news?pid=20601012&sid=aqSt_XvkCWG0&refer=commodities
oil up:
LONDON (Reuters) - Oil climbed towards $96 a barrel on Monday, as investors weighed the effects of a slowing U.S. economy against an escalating row between OPEC member Venezuela and oil major Exxon Mobil (NYSE:XOM - News).
http://biz.yahoo.com/rb/080218/markets_oil.html?.v=2
Txchic-What do you think about the short & long term outlook for GLD?
In 1980 Dow/Gold ratio was approx. 1-1 (800-800). In early 2000s, it was approx. 40-1. Today it is approx. 13-1. Note that the average between the amazing extremes of 40-1 and 1-1 is not 20-1 but approx. 6-1, which represents the logarithmic or exponential average of the extremes. Thus, the DOW/Gold ratio is probably still too high today - $1600 gold and 10,000 DOW would be near the midpoint of the extremes we have seen in this relationship over the last 30 years.
Gold will be the last bubble to burst, and when it does. . . it will be an indication of economic and political stability.
Gold will be the last bubble to burst, and when it does. . . it will be an indication of economic and political stability.
The HBB has been a great place to learn about bubbles in general.
Metals bubble is hard to ignore. 1) Harder to fraud, I’ve not seen a lot of reports of bad coins out there - and easier to verify. 2) Even if the price drops 80% you can still sell it easily [unlike say a house, much more complex transaction]. 3) Minimal to no holding cost, especially if they drop in value - less demand for theft. Even in a fire, gold coins or jewelry can likely be recovered (in a melted blob).
Of course governments don’t like this aspect of gold.
I’ve decided for now to buy a few decent quality handguns just for the trading sake. I’m not a gun user. Just to clean and store. They don’t take much space, prices are NOT inflated, and prices don’t seem to do any worse than gold or silver on the downside.
That sounds like an interesting idea, with one consideration: Almost every country in the world has been “confiscating” hand-guns and making them illegal to possess. That includes most western nations, including Canada, Austrailia, the UK, New Zealand, etc., etc.
What if that Neo-Socialist Obama gets elected?
He wants to steal everything he can from businesses, print money and pass it around to “poor people” and thinks along the lines of Che Guavera. Don’t you think he will be big on creating a more “civil society” in cooperation with the UN to remove all handguns from the public??
I think this issue will raise its head again next year.
So can we all buy uzis? submachine guns, marshall art stars, semiautomatic guns?
But not hand guns? interesting.
Like the ‘german’ said on LaughIn..”verrry interesting”
basket case Britain?
Britons cling to a comforting notion that overpopulated islands with a shortage of land can never suffer a sharp fall in house prices. Such illusions are often at the root of the most extreme asset bubbles.
Some of the most spectacular property crashes over the last 60 years occurred in the Pacific rim islands during the 1990s. Tokyo land prices fell 80pc in Japan’s deflation. Property prices fell 63pc in Hong Kong, and 56pc in Taiwan. Each is a more crowded island than Britain.
http://tinyurl.com/2xzb2q
“58% of loans in Britain in 2006 were some form of specialist lending”. The market leader for this funny money was Northern
Rock, and the taxpayer now owns it’s mortgage book.
Price falls and default have hardly started yet, imagine the
uproar when the Gov’t starts foreclosing on the FB’s.
8/11 on the Tories to win the next election is a lock.
Even if running out of land was true, the fact people can’t afford those ripoff prices holds true. Also why were prices much lower just a few years ago? Why didn’t people realize they were running out of land from day 1?
Last time I checked, the earth was the same size it has always been. Besides, land is frequently re-developed.
Anyone noticing small acreage coming down in price in their respective areas? I’m in WA so that doesn’t happen here. It’s special.
I can tell you about land I’ve been watching for 5 years near Ocala, FL.
2004- $3,500
2005 -$15,000
2006 -$25,000
2007 -$15,000
2008 - $7500
2009 - $2000
So any opinions out there on shorting financials at this time? I have an itch on SKF (ultra short financials). I just can’t tell if the itch is to sell or buy more.
No long term trades here - not while the market gyrates heavily. I’ve been buying and selling skf everyday - sometimes twice a day. The profits have been good.
Ditto the twice-a-days on SKF. Most fun I’ve had since the IPO craze, ‘98-’99.
Yeah, despite the risks, it’s made this winter just a little bit brighter. Can’t knock that.
Get short banks and stay short.
“People think the Federal Reserve can stop a bear market because they can throw money at it and lower interest rates. It is even more certain we can collectively stop a bear market if some fiscal stimulus is thrown in. To which I say, ‘Oh, you mean like 2000 and 2002?’ — when they threw what I call the greatest stimulus in American history, an unparalleled series of interest-rate cuts, cumulating in two, almost three, years of negative real returns, real interest rates coupled with a really substantial tax cut, which would never have happened without 9/11.
“The combination would have gotten the dead to walk, and it stopped the bear market eventually. But the Standard & Poor’s 500 ($INX) was down 50%, and the Nasdaq ($COMPX) — which was all anyone talked about back then — went down 78%. And a puny five to six years later, people are saying there is not going to be a bear market because the Fed is going to lower rates and because the government is going to have a stimulus package. But we have just been there, done that, and we had a nice bear market.”
“To which I would just add a point that I have made regularly regarding the difference between the two bubbles: We now have bad debts. The lender has a debt he can’t quite collect on. The borrower has a debt he can’t service. That is a much different proposition than what we dealt with in the wake of the stock bubble.”
Mr. Jeremy Grantham (courtesy of Mr. Wm. Fleckstein)
Feb 18, 2008
http://tinyurl.com/2tyyyp
I confess my bias is that a whole lot more bad stuff is out there than the market currently believes.
Watching the financial mess unravel is like watching a train wreck in slow motion. My SKF quick “in and outs” suite the current the market.
However, I also agree with Hoz’s “short the banks” strategy if you’re looking for something slightly longer term. Not knowing anyone’s skill level here, my suggestions at a minimum would include:
1. Understand what it is you’re investing in. What is SKF really made of?
2. Use mechanisms like stop losses and trailing stop losses to protect your capital.
3. Apply a level of risk tolerance that allows you to sleep each night.
And the list goes on.
And my spelling sucks sometimes.
…….because the government is going to have a stimulus package.
I thought you got the “stimulus package” at a strip club??
Stopped to grab lunch yesterday. Sunday Boston Herald available as a courtesy. Naturally I go right to the RE section. 6 pages of auctions just for next week. I’m guessing here but I would say about 40 per page.
It sure seems like the banks waited till after the holidays/4 qtr financials to pick up the pace. If this is any indication the numbers could be real ugly in the coming months.
Oh yeah, and just with a quick glance I picked up 2 which were 1 Mil+. One in (not Manchester) but “Manchester by the Sea”. So much for it being contained to Haverhill, Lynn etc.
I think it is possible that we may have houses available at real market prices by summer. Not certain, just possible.
that would be nice wt econ
i feel another year may do the trick but who knows for sure
is your area still hot? i saw some new 2 bed condo’s in wt for 600k on curbed or brownstoner
lots of dough for a vanilla mccondo
I don’t follow it too closely, but I think we may still be in the prices stable or slightly up, volume way down phase. As in 2006 elsewhere. Which is amazing because the bust has hit in 90 percent of the metro area, and 90 percent of the U.S.
BTW you can go to the NYC Department of Finance at http://www.nyc.gov and download all sales from NYC now. That’s real data.
There was a series of sales on my block, beginning in 2003, for $999,999 — a ridiculous price for this nabe. But for several months there have been no sales. No senior citizens left to sell, or none willing to sell at less than the “going rate?” We’ll find out in a year or two.
Mentioned over wknd, small subdiv of Moderne condos were being Auctioned by DL Freeman? and originally they were in October 695k now min start is 405k. Wonder if anything sold. And lots of ready to dev properties with condos coming soon are Vacant. Vacant for ,….. ever. If there is 1 property condo on it as “model” then that is it. And remember Lennar canceled all bldg so the 500 unit homes property near airport is deadsville, nothing at all going on.
Anne Curry interview with George Bush.
AC:”But don’t you think that American’s, being worried about the economy, might be feeling some sacrifice for the war?”
GWB: “Anne, the economy really is sound at the fundamentals. In fact, the real problem is we have too many houses. But the war might even be good. It keeps people employed.”
Worse President Ever
I voted for him 2X and I would have to agree. When the history books are re-written to include W I think it will be a foregone conclusion.
The first time, okay. But twice? I mean, fool me once….
There’s an old saying in Tennessee. I know it’s in Texas, probably in Tennessee, that says: “Fool me once… shame on…Shame on you…If fooled, you can’t get fooled again.” - GWB
2nd time was far easier than the first time. Cmon John Kerry? This country is in bad shape now but with Kerry who knows. The guys name still makes me cringe.
LostAngels, don’t worry. I voted for GWB twice. Of course, now I’m ashamed of it, but John Kerry would have been worse. If 2004 happened again, I would hold my nose and vote for GWB.
And I am thriving on the 2001 and 2003 tax cuts. Hope they become permanent. I’m back to being a Libertarian non-interventionist. I say let’s pull out of the middle east now. Bush has flubbed. We have overstayed our welcome. Let Israel fend for itself or take on new partners.
Today is moneybomb day at http://www.ronpaul2008.com. There is a link to donate. Just do it. Or re-elect him to Congress. http://www.ronpaulforcongress.com
‘Worse President Ever’ worst?
I would nominate Woodrow Wilson, followed closely by FDR!
There are so many houses that have been foreclosed in Sacramento, the lenders don’t even know they own them. I visited a house yesterday where a fraudster did a cash out refi for $650,000 and walked with a $100,000. It was a first payment mortgage default. The lender foreclosed in June, 2007. The house has been sitting there vacant, unlocked, and trashed ever since. The only thing we can figure is the lender must have imploded and all the paperwork is lost or misplaced. So a 3500 SF 5bd/3ba/3car house just sits there, like a man without a country. It is very goofy, but it is more common than you might think. This securitizaton business is creating a lot of homeless houses!
unbelievable- walk away with 100k for signing some documents
and the funny thing is with all the securitaztion of these loans
no one really knows who is left holding the bag on some of them
And no one will ever know. The big financials will just subtract the payments they got from the payments they expected and write down the loss as a whole. The time spent on forensic accounting to match each little pot of lost money to a specific house would be more expensive than any money gained by finding and auctioning the house.
Wouldn’t it be ironic if some of those same waterfront luxury condos that local government allowed to be built by eminant-domaining real housing [b/c of that Supreme Court case]…fell into blight and had to be torn down by eminant domain?
HA! Good call: of course that’s exactly what’ll happen. And then the cycle will repeat again and again and pretty soon we can start saying that certain parts of town/sections of coastline/states of the union etc. “suffer from chronic E.D.” “Hep me doc, it goes up but it don’t stay up.”
The heartbreak of E.D.
‘Lucy, you have some ’splaining to do’… really why would anyone move out, if you didn’t have to, such as the guy who was “foreclosed on”? IF no one knows who owns the note, then who foreclosed on him, and do you get my drift? Wouldn’t you just stay for free in that house until the sheriff came? save your$
“I visited a house yesterday where a fraudster did a cash out refi for $650,000 and walked with a $100,000. It was a first payment mortgage default.”
With some phony ID(s), pull this trick several times a year, and before ‘ya know it we’re talking about real money.
My old home town, Kansas City.
“KC area’s housing market was ‘ugly’ in 2007″:
http://www.kansascity.com/105/story/493088.html
Interactive price map:
http://www.kansascity.com/static/media/KCHomePrices_Flash/
“The number of existing home sales was down across area ZIP codes, and some homes remained for sale for the entire year. For those sellers who did find a deal, prices were sometimes down to 2003 or 2004 levels.”
The pattern of price declines is similar to the bubble areas. However, from the interactive map, the increases during the bubble period were only about 20 percent. It doesn’t appear prices have all that far to fall to revert to the mean. However, will tightened national lending standards and an economy entering ressession push prices lower than they might otherwise go?
real estate scarier than stocks and the war on savers
http://www.nydailynews.com/money/2008/02/18/2008-02-18_real_estate_real_scary.html
http://www.nydailynews.com/money/2008/02/18/2008-02-18_federal_reserves_rate_cuts_may_boost_eco.html
The war on savers. It is getting frustrating. I’ve mentioned it before, but I’m thinking we need a savers strike. Take savings out of CDs, savings accounts, GICs, etc and put it in your mattress. After all, I don’t consider most of the banks out there a very good credit risk to be lending them my money at 2-3%. The banks need our money enough that maybe they’ll start paying some decent rates.
you know al i am very unsure what i should do
i was getting 3.5-4.0 tax exempt from my fidelity mm ny muni and now it is like 1.3 and shrinking.
my options lock in a 4.0 cd from my bank (north fork) or go to the mattress.
since i am probably signing a new lease may 1st i will probably lock in a cd for 6-12 months at the best rate i can get
of course not with countrywide et al
very frustrating- should i just go into debt?
it was nice getting that $$ everymonth to offset my rent
but with 1.3 or less it just sucks
maybe i can invest like ven from yesterday in the homebuilders
haha
I’m facing the same dilemma come August. I’m getting 5.5% on a CD with a large block of $$$. Wife is insistent we keep the CD locally so we can go to a person when we draw it out or have problems with it. I’m with her on that too. The idea of handing over big $$$ to an internet bank I cannot walk into and talk to the manager gives me the ghoulies.
In the deflationary market the return on your dollars should be good. If prices are collapsing and you dollar earns a couple of percent its all good.
I think the inflationary period might be drawing to a close no matter how hard the fed pushes on the string.
“Japanese and Korean steelmakers agreed to a steep 65% increase in the price of iron ore with Brazilian mining power Companhia Vale do Rio Doce, boosting the fortunes of big mining firms at the expense of steel producers and their customers world-wide.
The price increase, which analysts expect to be matched or even topped in deals with steelmakers in China and elsewhere in the weeks ahead, suggests that demand for raw materials like steel and iron ore is holding up well, despite fears of a U.S.-led global economic slowdown….”
WSJ
http://tinyurl.com/2z6ptb
Inflation has just started. Why would an American Iron Ore producer sell in the US when world prices are 65% higher today. When the pass through hits, then scream. That is what makes the US a third world country, we manufacture little and export raw materials.
Buy what China buys.
call everbank.com in St. Louis and put your CD’s into Euros or yen. They don’t pay squat but if you think the dollar is going to crash like most of us do, then you’ll get your return.
Dude, invest that money in funds. My dad gets 10% capital gains long term.
I agree that the war on savers has got to stop. I have seen a couple of sorties by banks in the last 18 months, though. I used to get about 5.1% at my HSBC online savings account - but that dropped to about 3.5% this year. Now Wachovia has the Way 2 Save program; I get 5% for monies put in via regular withdrawls, and an additional 5% for any money put in at the end of one year. I think of it as a decent CD with a nice little kick at the end of the year.
These amounts are small, and certainly barely keeping pace with real inflation, but they are better than nothing…
I think of the war on savings as a very crafty way for the higher risk investment folks to get their greasy hands on our money. They know that we need to put it somewhere, so they are making conservative options less and less attractive. Again, they appeal to the darker sides of our natures, encouraging us to be as greedy as they are. Resist, Paduans!
Due to the recent financial insanity I keep a large cash balance but was concerned about the financial stability of those banks offering highest rates for money mkts (on Bankrate.com). I approached my current bank and asked for their best rate or I would move my cash. They gave me 5.25%
In most counties of the world, currency diversification has always been neccesary. The US$ has had a poor track record on a lot of fronts for decades, yet how many hold foriegn CDs? I ran a blog dedicated to that and precious metals for years.
I have substantial money in New Zealand, paying 7.75% on demand, 8.80% on term deposit. There is substantial volatility with exchange rates, but I have been betting (successfully) against the US dollar.
How did you go about moving your money to a New Zealand on demand account? What bank, brokerage firm did you use? I have been interested in looking to other countries to park my money and to date nothing about it. I was thinking about Norwary given they have no debt and tremendous natural resources. Any information you can provide would be greatly appreciated.
Ditto scooter, Ben, missed that blog you mentioned.
Plz offer a few ideas, sources. Thx
If you are new to foreign accounts, please be aware of Treasury Form TD F 90-22.1.
http://taxes.about.com/od/preparingyourtaxes/a/TDF90221_2.htm
The penalty for not reporting foreign bank accounts greater than $10,000 in the aggregate can be extremely large.
“The war on savers. It is getting frustrating.”
‘Saving’ is unpatriotic, and should be discouraged. Spending is what you want to be doing, in order to keep the economy humming. That’s why the government is sending out “free” cash-money checks in the form of a “stimulus package”. The Goldilocks Economy ™ must be fed.
I realize that you are mocking the prevailing wisdom, but I want to shed some light on the fact that consumption hurts the economy. We need to shout down the myth that consumption drives our economy.
When you go to spend your money you deplete your savings and the inventory of who ever you bought a product from. If that individual then spends all of their profit on consumption then he will have no money “savings” left to invest in producing new products.
The heart of capitalism is capital and capital == savings! Without capital, the economy will shrink!
A good read is: Is saving bad for the economy?
Those who save are also more likely to be free: free to not be dependent upon handouts. Free to change jobs to escape wage-slavery. Free to control their own future. No wonder saving is discouraged!
What is with the entitlement attitude with regard to savings? The interest on saved capital comes from returns on investments. If you want really good interest then you have to put your money directly into the next big thing yourself, possibly by giving a lot of money to some starry eyed young people or some other crazy thing. That is capitalism. The Fed has numerous educational outreach programs promoting savings and the current rates are based on the reality of the economy being all messed up such that great returns have become scarce. There was a bubble that involved toxic lending. There isn’t evidence for a war on savers.
Off Topic: arrogrande, in your photos, Page 3, “Morro 1 A019″ looks like what I’d see driving toward Morro Bay from Questa College, looking west out the driver’s window. Biscuit?
“what I’d see driving toward Morro Bay from Questa College”
Bingo…I think it’s Bishop’s Peak, one of the Seven Sisters (what those Morro formations are called?)
Why not a Gold Cd? It’s FDIC insured principle with a lot more potential upside. At worst you break even.
http://tinyurl.com/ysrneu
They also have one for silver.
“If the Spot Price of Gold has increased in value over the term, you earn a Market Upside Payment equal to 100% of the percentage change in the average Spot Price of Gold, calculated as an average of ten semiannual pricing dates.”
Not sure how they calculate this, but in any event, it’s clear that the average of 10 price changes will produce a much different result than the actual price change.
Yes, while Helo Ben is doing everything he can to save debtors & wall street in the here and now it is actually making it very difficult for the people who are the bedrock of the financial system, savers!!!
I have opted to go purely w/ my credit union. 5% APR/5.1% APY 48 month CDs; Online banks http://www.provident-direct.com 4.5% APY and Muni Bond funds that are both State/Fed Tax free make a 4% yield in the 5% range due to tax efficiency. As long as inflation runs at 4% I guess I’ll be treading water and not losing spending power.
My concern is the next round of cuts which will drop rates even lower, I might just cave and spend it all now on toilet paper before hyperinflation hits, because TP would be more valuable and much less abrasive!!!
If you really expect a financial collapse, buy cases of bar soap. It’s easy to store, lasts forever, and will alway be in demand.
I was being facetious, but I do have plenty of personal care items and other products that keep as an additional hedge against inflation.
Save all those little hotel soaps/shampoos and shower caps. Maybe they will come in handy..haha
Or, alternatively, if you’re the industrious type, you could learn to make your own soap. I imagine you could start up some kind of business to support yourself in the event of complete societal collapse/apocolyptic meltdown, etc. (Ok, that’s my crazy thought for the day).
First rule about Fight Club…..
Total consumption items like TP, paper towels… and wine are the best things to buy at places like Sam’s;-)
Nothing wasted-
“As long as inflation runs at 4% I guess I’ll be treading water and not losing spending power.”
As long as you don’t go grocery shoppong, or buy gas for your car, or heat your home, inflation at 4% sounds about right
I have an HE HVAC recently installed by my LL & I invested in CFL light bulbs when I moved in and I live in a temperate area that needs less heating than most so Yes I am good on my heating bill.
I am a reservist and I’ve shifted my grocery shopping to the Military Commissary & I coupon heavily to offset the rising costs of food.
Finally I bike to work and drive only when pressed, my car is above average for fuel efficiency and I get 5% back on my gas w/ my charge.
So basically yes, I think I am well positioned to blunt the lion’s share of inflation and if I can preserve my capital’s spending power at outlined above I should be able to take advantage of the flexibility this position gives me over those who are less flexible and are unable to withstand the coming financial storm.
and the band played on:
The mortgage market may be in a historic upheaval, but mortgage companies continue to pump out upbeat advertisements.
Countrywide Financial brags in its ads that “No one can do what Countrywide can” and that “Countrywide can show you the way home.” Wachovia ads feature an “Approved” stamp prominently at the top, and Bank of America says, “Homeownership is the best medicine.”
Also, the National Association of Realtors is running national television ads saying there has never been a better time to buy a home. Home values nearly double every 10 years, the commercial claims, showing a young couple walk up to their white colonial-style home.
http://tinyurl.com/2tj64v
“…the commercial claims, showing a young couple walk up to their white colonial-style home.”
Too bad most of the inventory out there today isn’t idealized white colonials - but instead oversized stucco boxes and whole mess of condos that no one wants anymore. Who wants to take on any risk to buy most of that garbage?
Don’t worry - in 10 years or so, after the “value of these homes double” they’ll all have fallen down anyway - most of them are built like crud.
Even my friend who is Comm RE guffawed at that commercial. Said it should be yanked immediately.
showing a young couple walk up to their white colonial-style home.”
…which would cost $2 million or more in a decent part of Pasadena or West LA. Just your typical lotto-winning or massive-inheritance-beneficiary young couple with massive wealth and/or a $600k income.
“No one can do what Countrywide can”…
… and stay solvent.
I have been browsing through the websites of several big box builders for the Tampa vicinity( Riverview/Valrico/Wesley Chapel). Some of the bigger houses(3000+ sqft) are being quoted at less than 100/sq ft (~85/sq ft). I didnt realize that prices had fallen this far in Tampa. Couple of questions for fellow HBBers (esp those in the Tampa vicinity):
1.) Are these real, on ground prices for these areas, or are they just being quoted to get you in the sales office?
2.) If I did go ahead and visit one of these sales offices and lowball a 30% lower price, what are the chances of my offer being accepted?
What will the taxes be? How about insurance? Are private insurers writing policies or will you be dependent on Citizens? How much is the HOA fee? $85/sq ft may sound like a bargain, but when you add the other costs to your mortgage P & I, how does it compare to renting?
Oh, and how stable is the builder? Might they go BK before completing the community?
The builders are trying to clear inventory big time in those areas since A) not too many people really want to live there, it was just where the cheaper housing was during the boom and B) it’s a bad commute to Tampa from there. In Riverview, Valrico, and Wesley Chapel there is such a glut of homes and no buyers they need to get rid of them ASAP. A 3000 sq ft house should cost $250k in those areas IMHO.
$250K? You’re kidding, right? More like $175k….need to have a discount for the premium prices one will pay for everything else, including utilities, insurance, taxes, and commuting costs to Tampa. Kiss 2 hours of your life each day goodbye if you like there.
You’re prob. right, I didn’t really do the math.
Thouse are pretty awful areas, and the junk built there is the past few years is beyond ugly: thousands of identical particle board boxes coated with cheap stucco, built by slave labor from Mexico. 50 dollars a square foot is too much for that crap, all of which will fall down if a big wind comes along.
During the last year or two of the boom, the State of Florida allowed builders to hire their own building inspectors, because the State didn’t have enough of them. The results speak for themselves. After about 2002, every zoning code was ignored or suspended (with “variances”) by Hillsborough County and the City of Tampa so developers and flippers could build anything they wanted anywhere they wanted; all that mattered was the sales taxes and property taxes raining like mana from heaven.
Property taxes vary by location (there are 28 or so different property tax rates in Hillsborough County), the highest being 3% of the sales price, minus the new 50k exemption. But, keep in mind the kind of “services” available in places like Riverview and Valrico, where the firemen and police who show up are more likely to pull out a bible and pray to stop a crime or fire than to actually do anything. My Catholic neice went to public school in Valrico, and was told by her Baptist teacher that she and her brother were going to hell because “Catholics worship statues.” My niece was six years old. This is standard operating procedure in East and North Hillsborough County.
I would not buy a brand-new home in Florida! I remember during the last hurricane, hearing people tell me of their tile roofs that blew off (nails weren’t long enough), water that went right through the walls (because the “synthetic stucco” wasn’t applied right), etc.
Buy a home that’s been through a couple of major hurricanes and inspect it carefully for signs of patches on the roof (which means that the entire roof has probably been installed wrong, even though only parts failed), patches on the stucco (same reason), and traces of painted-over water damage.
That’s exactly the truth.
There is a reason that the newer homes in FL are built different than the old homes. Drive through any small town (Dade City, Bushnell, etc) and you will see 100 year old homes that have been through 10-15 hurricanes. Then go to the suburbs in Wesley Chapel and you will see homes that will barely survive a chili-bean fart.
Clark, you would have to pay me to live in that area. Not only for the quality of life and construction (both poor), but it’s far from everything good that greater Tampa has to offer (including beaches, sporting events, festivals). If you want to live in the middle of middle suburbia, you might as well live in greater Atlanta, where at least it’s more temperate and prices are more reasonable. WC is hot as hell in the summer; it’s central FL and there is no breezes. I’ve often questioned the wisdom of those living in east Hillsborough, but it’s no worse than Pinellas.
This area has not had a direct hit from an actual hurricane in nearly a hundred years, so what you say about Dade city isn’t necessarily true. Even the former-hurricanes that hit a few years ago had diminised to tropical storms. Donna missed in the ’60s. Who knows what would remain standing if a major hurricane hit. Building standards couldn’t possibly get any lower than they are right now, and with the substitution of cheap Chinese steel, concrete, wiring, and plumbing for what used to be the norm, most new houses are probably toxic on top of being junk.
“Some of the bigger houses(3000+ sqft) are being quoted at less than 100/sq ft (~85/sq ft).”
Ever read that children’s parable about the snail that couldn’t move on to the next cabbage plant with his friends because his home (shell) was too big?
well i survived-i had my in-laws staying with me for a few days and they are pretty old fashioned and it bothers them that we rent
they feel we should buy (ha ha) and basically after all is said and done (20% down,closing cost etc etc) it is ok for me to have little
money (5k or less) in my savings
i tried to explain to them that job security is not what it was
when they bought their first home (he is a retired nyc fireman)
(she worked for a university)
i said i need to have a year or 2 or mortgage payments and other emergency funds at the ready before i take the plunge, oh and when prices come down from their high levels
they think i am crazy- but i will not succumb to this pressure
i am very happy renting for the immediate future and beyond
I wouldn’t buy either if I lived where you live. NYC has its charm, but I like acreage and stars at night. Each to their own though.
i have a love hate affair with nyc
born here and lived here all my life and in a way would love to live somewhere else
on the other hand many other lower cost options are lacking in my opinion in culture,food, and other stimulation
and family as well
That’s why I live in New Jersey! Plenty of acreage, affordable home (bought in 91) and it’s only a one hour drive to where the action is.
I like acreage and trees and plants and my own garden. As far as action goes, I find that it frequently goes to where I am. I don’t have to drive anywhere. Saves gas, as a side-benefit.
Smart move - wish I were there.
I’m watching an online lecture about the subject right now. Elizabeth Warren addresses rising job insecurity and so much more.
The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net
http://www.uctv.tv/search-details.asp?showID=12620
Her blog is creditslips.org and it’s very interesting.
http://www.creditslips.org/creditslips/2008/02/do-the-math-on.html
http://www.creditslips.org/creditslips/2008/02/let-them-eat-cr.html
Lots to read on that website - thanks for the links.
“Nobody needs to be an economic forecaster to understand this. All it takes is a healthy dose of good old fashioned common sense, and a calculator.”
Unfortunately, common sense and a calculator are two things that most Americans do not possess. If it required an unhealthy dose of blind arrogance and a flat screen TV we would be much better off.
Thanks for the link, Mia! I am a fan of Elizabeth Warren. I loved her book (Two Income Trap) and in light of what is happening with housing and the economy, the book is every bit as relevent now as when it came out. Any of the presidential candidates would do well to get her on their cabinet.
“i tried to explain to them that job security is not what it was when they bought their first home”
I’ve had this same conversation with in laws and parents and they just can’t wrap their minds around the fact that a lifetime revenue stream by way of a secure job is just a pipedream. If I recall correctly, the WSJ published data where the average time on the same job is 3.2 years. Now why the fawk would I commit to a 30 or 15 year mortgage when I don’t know I’ll be working after 3 years? At the risk of being called Master of The Obvious, mobility is key to surviving. Not just physical mobility but the means to shift gears, no matter what the circumstances.
Ha my mom will just tell you “but you are throwing money away on rent” no matter how many times I apply simple math to refute that dump statement.
Better than throwing it away on interest.
Well then, no offense, but your mom is stoopid. Yeah, and spelled that way too.
I’m all for respecting parents but when they cross the line into lunacy, I refuse to follow.
One of the nicest things about becoming an adult and living on your own, is being ok with telling your parents from time to time that they’re full of crap (although we don’t actually say, full of crap); especially when it involves them telling you “what’ best” for you and your financial future, without presenting facts to back up their assertions.
DOC
Same here. I also can’t get through to people that it is economically unfeasible for starter homes to cost $500,000, as they do here in Queens.
I try to show how, if you do the math, with an average income ($40,000 to $60,000 here) There just isn’t enough for the monthly payments, even with a down payment.
With all that is finally being reported in the MSM about the housing bust, people still don’t think prices will really fall.
This is very bad news for the witch.
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/021808dnpogdallas.2d36a7b.html
March 4th is going to be a very interesting day here.
In what should be a shoe in election for Democrats they are making a race out of it.
1) They alienate Florida and Michigan voters with the delegate problem… dangerous in Florida and possibly making Mich a state they have to work for
2) Obama might get the nomination but is strong is states they will probably lose in the general election… Texas, the south exc.
3) The candidates are shreding each other and becoming more vicious
4) Each of the candidates has a certain creepy factor… Barack Hussein Obama… Hillary is a wife of a president. I think after the Bush brothers, we’d like someone from a different clan.
5) They don’t seem to have a plan at all. They came up with a timid economic plan… have some classic stuff in there.. expand food stamps and unemployment… nothing useful. Obama’s website has some pdf files you can look at. Lots of plans that have actions that take place well after the administration would be gone… renewable energy in 2020+ aka after we are out of here.
6) No one is talking about illegals anymore… yikes
… Barack Hussein Obama…
I agree, I always prejudge people based on the name their parents gave them as a baby.
In fact, I just hired Jesus to be my lawn guy. If anyone can bring those dead plants back to life, its gotta be him.
LOL.
He just needs to rename himself Barry Osmond. He’d probably win Utah, then.
And McCain has?
Pro-war, now pro-torture, pro-deficits, anti-universal healthcare.
In Florida and Mich, where the votes might not count, more people voted in the Dem primary then the Rep.
There are not many states left after Bush that a Dem is not competitive. And if you think the states he lost in, Cal, NY, Mass will not vote for him, well, let me have a hit of what you’re smoking.
My name sounds Jewish. I work in the entertainment business (management side). It only helps me.
Are you implying favoritism?
6) No one is talking about illegals anymore… yikes
If McCain wins, that is a good thing.
I’m thinking of spending my TX vote on Obama to send a message instead of Ron Paul. Then Hillary can do back room deals to get the nomination despite a popular vote deficit, and Bloomberg can give a $1 Billion campaign contribution to Obama to run as a third party candidate just so we can exercise letting the house of representatives pick president Clinton, while the Senate picks some republican to be vice president.
OK, I admit it: I just want to see some TV anchor’s head explode trying to explain it all.
Maricopa County (Arizona) Assessor valued my house 17% less this year from last year. Seems about right.
Won’t know if this translates into less property tax until Autumn.
Wow! Did they forget to fudge an automated assessment system?
Nice tidbit.
Got popcorn?
Neil
496K in credit card debt? In the comments
http://www.creditslips.org/creditslips/2008/02/17586227-in-cre.html#more
Hey, in for a dime, in for $496K dollars!
Read the comments on runaway interests and fees. Both parties are slime. They deserve each other.
Picking up on yesterday’s bits bucket discussion about platinum and palladium…it appears that it is still a good time to be holding as they are up $55 and $21/oz respectively of this writing. Now we’ll see if it holds.
And in the not related to PM at all category, today’s Denver Post was again reduced from 3 sections to 1 section. That’s the second time in 2 weeks that has happened. Scratch that…that’s the second time in at least 12 years that has happened.
Was listening to talk radio yesterday and heard an infomercial from some “Real Estate Riches” group running seminars on how to make money buying and selling RE. The show was complete with fake callers telling of how much they made in a short period of time. This made me sick on so many levels, but what I think bugs me the most is the fact that decent, trusting people will get suckered into this scam. The second-most is the fact that it emphasizes passive income over earned income. Paraphrasing from the ad: “Why should you go out and get a job when you can make thousands and thousands of dollars by doing virtually nothing?”
Yeah, Dubai has oodles of wealth, but check out Moscow these days. Remember the Cold War images? Time to revise that. The rich there make the Beverly Hills crowd look like paupers - everything from the subway to hotels and restaurants are taking on a DisneyVegasland-on-steroids look. How did they do it? An abundance of natural resources like gas and oil to sell to end users in the west who gotta power all their toys and utilities might be a clue.
Yes, but if you get outside of the richer areas it is a no man’s land. Sad to say, but the average Russian was better off under Communism. Sure, it was a crappy life, but at least the average person was fed (poorly) and had a (crappy) apartment. Now they are selling their daughters into the sex trade, alcoholism and suicide rates are higher than under the commies, etc. Pretty bleak picture. Unrestrained capitalism has not been kind to Russia.
Utter bullshit.
Nuh-UH!
Ah, it’s just this kind of enlightened exchange that makes me a regular reader. So many thoughts to ponder from the erudite posters…
Seriously, though, saying the average Russian was “better off” under Communism was probably going too far, but I stand by the statement that “Unrestrained capitalism has not been kind to Russia.” They would’ve been better off with a Marshall Plan-style reconstruction effort rather than full-scale Friedman shock therapy.
“Seriously, though, saying the average Russian was “better off” under Communism was probably going too far,…”
http://www.helsinki.fi/uh/1-2004/juttu7.shtml
“Six years less life”
“After the dissolution of the Soviet Union in the early 1990s, a second health crisis ensued. Between 1990 and 1994, the health of Russians deteriorated and the life expectancy of Russian men plunged dramatically, by more than six years, while the life expectancy of women decreased by three years. The downfall was not a result of bullets on the battlefields of Chechnya, but an abrupt political and social change combined with the collapse of the economy that increased poverty in most of population.”
“No other industrialised country has witnessed such a fall in the life expectancy rate during peacetime. From the social perspective, the change was not at all peaceful. Homicides, suicides and accidents as causes of death became increasingly commonplace,” Palosuo says.”
“Palosuo’s doctoral thesis Health and Well-Being in Moscow and Helsinki illustrates the situation in 1991 when she collected health data from the residents of these two cities. The survey was conducted just before the collapse of the Soviet Union but Palosuo believes that the results also describe the health situation and life-style of Muscovites after that period as well as today. Although people’s health has deteriorated since 1991, cultural attitudes are slow to change.”
Sad to say, but the average Russian was better off under Communism.
That you Vanya Michaelovich Olgolyov?
White House insists recession unlikely
By James Politi in New York
Published: February 12 2008 02:36 | Last updated: February 12 2008 02:36
The Bush administration on Monday stuck to its prediction that the US would not face a recession in 2008. It claimed the economy had a “solid foundation” to guide it through the housing crisis and would be helped by a $170bn fiscal stimulus package later this year.
Edward Lazear, chairman of the White House Council of Economic Advisers, which released its annual report to Congress on Monday, said: “I don’t think we are in a recession right now, and we are not forecasting a recession. We are forecasting slower growth.”
http://www.ft.com/cms/s/0/3f974bb2-d8fb-11dc-8b22-0000779fd2ac,dwp_uuid=b8efc2ae-d98d-11dc-bd4d-0000779fd2ac.html?nclick_check=1
Great, now we know for sure there will be a recession.
Yup. Now pass the hooch pleesh!
Asia stocks slip as subprime worries linger
By Lindsay Whipp in Tokyo
Published: February 18 2008 03:34 | Last updated: February 18 2008 09:53
Asian stock markets drifted lower on Monday, with investor sentiment still hurt by uncertainty about the fallout from the subprime crisis in the US and Europe, and questions looming over the fate of US bond insurers.
Concerns about the US economy lingered from last week, with investors unsettled by Friday’s pessimistic US consumer data, and the New York Federal Reserve’s general business conditions index, which fell below zero for the first time since May 2005.
“There’s still plenty of fear out there about the subprime problem, such as the calculation of further potential losses, as well credit conditions,” said Satoshi Takeyama, a fund manager at Credit Suisse Asset Management.
Trading in Asia was driven largely by news in the steelmaking and banking sectors.
http://www.ft.com/cms/s/0/6c16e8b6-ddd1-11dc-ad7e-0000779fd2ac.html
Gulf lenders prepare for US subprime hit
By Simeon Kerr in Dubai
Published: February 17 2008 19:43 | Last updated: February 17 2008 19:43
At least two Gulf-based banks have prepared contingency plans to raise extra capital of about $300m each to help cover writedowns of their US subprime exposure, according to Moody’s, the rating agency.
The agency has been monitoring the possible impact of subprime-related writedowns on the balance sheets of up to 10 Gulf-based banks over the past five months, said Mardig Haladjian, general manager of the financial institutions group at Moody’s in Cyprus.
While the writedowns by these two banks, which he declined to name, may not be enough to warrant extra fundraising, the banks may choose to raise more capital through convertible bonds or immediate cash injections to restore confidence.
Their writedowns would equate to one or two years’ net profit. “It’s a hit but not a blow,” said Mr Haladjian.
http://www.ft.com/cms/s/0/7611d3e2-dd83-11dc-ad7e-0000779fd2ac.html
Yha, but those profits were during boom times in banking
So it all relates.
Production costs have toy makers scaling back
By ANNE D’INNOCENZIO
THE ASSOCIATED PRESS
NEW YORK –Next holiday that toy that was supposed to talk for a minute will talk for 40 seconds, and that portable electronic quiz game will ask fewer questions.
http://www.sunherald.com/business/story/369590.html
I saw something yesterday I had never seen before. I was in my local Ralphs supermarket here in Marina del Rey, CA (MDR is just North of LAX for those who are infamiliar). It is the Ralphs off of Lincoln and Maxella next to the condo towers. There is a mini Downey Savings in the store. Sow hat do I see next to the Downey Savings sign inside the store above the tellers? A sign that says:”ASK US ABOUT TO BANK-OWNED PROPERTIES”.
This is one of those small things that tell me things are getting real bad and 2008 is the yr banks begin dumping foreclosures.
So foreclosures are now being sold in grocery stores? What aisle is that?
Next to the law degrees.
Next to the Pampers and Depends.
Next to the lube and the prophylactics.
Next to the Fleet.
The other day someone posted a comment about DrHorton’s Unauction ad at drhortonunauction.com
Just for fun, I stopped by with my son at one of the locations in Temecula selling the Bungalows. We were there at 5 minutes to 9, and it was scheduled to open at 9, first come first serve.
When we walked up to the model home office, there was a desk with some forms to apply and next to the desk was a sign that said “Line Forms Here” with an arrow.
Outside of a couple standing next to a catering truck, we were the only ones in line.
There were about 4 young men, who knew absolutely nothing when we asked them a few simple questions, were running around with bright red shirts all over the neighborhood squawking at each other through radios. (I am still not sure why they were there, other than to hunt for potential buyers looking through the neighborhood and report tot the office). They were actually following us around when we went out to look at the actual homes for sale in the new neighborhood.
Also, it looked to me like there were many other lots that were empty outside of the immediate group of finished homes, and no new building on them that I could see.
The sales associate came out at 9:00 and told us that we were not first in line, as another couple had camped out all night to be first.
I am sure that, even though there were no tents or campers in the vicinity, that this was expected to make us feel that there was tremendous pent up demand for these homes. Boy did we ever feel special to be second in line.
We looked at the models. This community had three , and about 20 homes being “Unauctioned”, about half of them finished with no upgrades, and some with minor upgrades.
For a stuccco box, on a tiny lot, minimum distance from your neighbor, gated, walking paths, block walls, community pool, 1.51% property tax, $80-$100 HOA, close freeway access, no view other than the one you get looking at flat land from the upstairs windows, they were not too bad. For 2000 to 2400 (approx) two story, they actually had a decent floorplan.
On the desk was a information packet. One sheet listed the rules and requirements.
Things like prices are set, no negotiations, first come first serve, re-qualification, no offers with a contingent sale, blah blah blah. My favorite, only one home to a buyer.
I have to give these guys some credit for discounting. For example, a plan 1 home, 1800square foot, 3br 2ba, was 391k lowered to 306k.
My son had visited this developement a few weeks ago, so he knew what the prior pricing was and decided to test the no/negotiation rule and offered 275k on a model listed for 320k. They said no and we left.
If anyone else went to any of the other 23 of these things, I would be interrested to hear about what you observed.
$80-$100 HOA
And don’t forget that the HOA fees are unbounded! If neighbors aren’t paying (because they’re MIA, etc), they’ll need to raise YOUR rates. Or if the HOA gets sued and isn’t covered by insurance, everyone will be slapped with a “special assessment.”
I learned about the second issue when I sued an HOA, settled, and everyone had to pay up! (No, I didn’t live in this HOA community. I was looking for a home in one and I got, on my answering machine, that they didn’t want Jews living there. It’s a long story. I learned my lesson and will NEVER live in a deed-restricted HOA community EVER. I’m glad I learned before it was too late.)
How the hell, nevermind. The depths of human stupidity astounds me. I would love to hear the rest of the story, if you feel like telling it.
The bigger point is, with an HOA, you’re at the mercy of some loud-mouth on the HOA board who can get you all in trouble, or incur some financial liability for you.
This wasn’t even much of a “community.” I had No Idea why there was an HOA. It was a set of 20 5-acre lots. That’s it. No builder, etc.
The only common area was a tiny corner of land that held the sign with the name of the “Development”, and a drainage ditch that ran behind the lots. yet still there was an HOA! Really, the only thing they needed to do was, perhaps, to contract with a landscape company a few times a year to clear out a common drainage area.
While this is yesterday’s thread, I figured I’d post on an amusing auction TV show I saw over the weekend (hey, nothing else was on).
This group was advertising bidding events for 500+ foreclosed homes in the MD and NoVa area. Don’t worry - that’s just the tip of the iceberg and there plenty more foreclosed home out there.
What I got a laugh out of was the price reductions: in general, bidding started at 50% up to 75% OFF the “2005-Bubble” price of the house! Hahahaha! Wait, I thought real estate only goes up - not down 50% to 75%!
Okay, the auction may be full of fake bidders and all that dreck, but still, just tossing the numbers out there like: “used to be priced at $405,000″ to “bidding starts at 100,000″ has got to be brutal to the realtor idiots who drank the Kool-Aid about how “real estate only goes up and prices no longer matter!” Hahaha!
sob story from the Philly Inquirer today:
http://www.philly.com/philly/business/homepage/20080218_A_familys_struggle_against_great_debt.html
Cry me a river……………
Ouch?
http://tinyurl.com/38eh98
01/17/2008 CLOUSE, JAMES S $199,500
09/02/2005 GENTLEMAN, LEO $359,900
http://tinyurl.com/2o8ca3
01/10/2008 BEESLEY, DIANE S $135,000
05/01/2006 ABERNATHY, LESLIE $209,000
10/14/2005 LAZIC, VESO & SADBERA $197,000
03/12/2004 WRIGHT, LYNN E & LINDA S $99,000
http://tinyurl.com/2tx6pt
01/10/2008 MENON, GARY K & ELIZABETH A $270,000
08/12/2005 BRESNER, JAMES E & SUSAN E $343,500
08/06/2004 BOWMAN, SHERRY R $235,000
08/05/2003 CANDELA, LOUIS & THERESA $207,000
http://tinyurl.com/2ua2xf
01/10/2008 HENDRICKS, JASON $340,000
05/19/2005 PRATT, JEREMY $515,000
http://tinyurl.com/2sft2f
01/03/2008 PEREZ, MARIO & MONICA N $224,500
04/25/2006 ADAMS, DEBORAH M $360,000
11/17/2003 KOHLER, JACK D & JILL A $167,000
03/15/2002 EYMANN, CHRISTOPHER $179,000
04/20/2001 ELISERIO, ALFRED & DELORES $154,500
These are all from the same zip code that is judt north of where I live. Call it east Arrowhead for those familiar with Glendale/Peoria AZ.
Now, there are still a lot of transactions where the purchase was 2003-2004, even way early 2005 where people are still making some money. But, our peak was not until mid-2006. If you bought in the last year of the boom, you are way underwater.
But, this was a flippers paradise.
Move south one zip code, and it is hard to find properties that were sold at the peak and are now being resold. Either people are holding on, or lenders haven’t decided to start clearing the REO lists.
My house appraised a couple weeks ago at $236K…. down from $270K at the peak. Ironically, there was only one true comp, and that was from November(right at the edge of allowable). They had to go outside my zip and use smaller homes to extrapolate. The market just isn’t moving here.
In my zip, we were moving 50 houses a month at the peak with a median of about $250K as it was a lot of 1800st-2000sqft houses. Now we’re running 1-3 a week with median hitting close to $150K as it is mostly the older 1200-1500 sqft houses and a lot of condos.
In 3 months we have moved 2 houses as large as mine (1800sqft) or larger.
Now here’s a seriously dumb idea. A San Diego reinvestment task force is looking at forming a land bank and purchasing foreclosures to manage and rent.
http://www.cbs8.com/stories/story.118207.html
As if SD didn’t have enough financial problems already, buying foreclosed properties at still overinflated prices coupled with becoming a landlord over hundreds of falling knives sounds like yet another astute financial suicide attempt. Cash flow? What’s that?
http://www.federalreserve.gov/releases/h3/Current/h3.pdf
can someone explain what the above link says in lay terms?
warning PDF only 3 pages long. thanks for any answers to my un educated question.
takingbets,
I think it means that the banks are borrowing all of their required reserves, and then some.
Depository institution balance sheets collapsed since December, they have no reserves at all, and are borrowing like mad to cover.
Note that this is not a good thing.
yes..this means if the masses wanted their cash from their checkign and/or savings accounts, there would likely be a bank run like the 1920s/30s.
Yep- when our Chase CD declined and we cashed it out, the bankers asked to have a little chat with us, ostensibly to convince us to reinvest in another Chase product, but then… we declined. Ah, turnabout is fair play.
Um, not to burst any bubbles or anything, but requiring 3% or less reserves doesn’t give me any faith that a bank run can be averted by the banks maintaining the legal reserve levels.
“We the people” can run any bank whenever “we” want.
Do they have to repay the amounts borrowed? If so, by when? Or can they just get an indefinite series of credit rollovers — effectively, a permanent helicopter drop of liquidity?
comment reuven:
“..I sued an HOA, settled, and everyone had to pay up! (No, I didn’t live in this HOA community. I was looking for a home in one and I got, on my answering machine, that they didn’t want Jews living there.”
Good. I’m glad you sued them. To leave a message like that on a message machine - what a absolute moron. Usually those sobs are more clever with their prejudices. I have a Ronald Reagan story along those lines from my CA days, but I’m afraid it’s best kept to myself and LA friends and definitely not here (~:
He sounded drunk!
“..I sued an HOA, settled, and everyone had to pay up! (No, I didn’t live in this HOA community. I was looking for a home in one and I got, on my answering machine, that they didn’t want Jews living there.”
“Good. I’m glad you sued them.”
Let me get this straight. Someone makes a comment you don’t like. You decide this is “actionable” against a bunch of people you don’t know, have never done you any harm and have never had any dealings with.
You hire a lawyer to go rob them of their money and win in court.
And this is “good”?? Good for you, perhaps, but I doubt they will ever have good feelings about this. Great for race relations. Good move. Sure will help alleviate a lot of “stereotypes”.
It has nothing to do what what anyone said. It had to do with “actions”. These folks told me that they didn’t want to sell to me, and that any plans I submitted wouldn’t be approved by their “Architectural Review Board.” There was no ambiguity; it was so open and shut that their council advised them to settle. And I had actual out-of-pocket losses because I had some travel expenses, legal expenses, survey expenses.
Maybe you should re-examine your own prejudices. In fact, I have a better idea! I’ll give you the address. This way you can move there. You’ll fit right in!
If someone in an HOA pulled this on me… I want us all to get along, but when the world or someone in it says F*** you, I see it as best to respond in kind as a minimum.
I agree, suing for potential (not even real) discrimination is pretty tawdry. Here in “Tampa Bay” (translation, the Tampa Bay area), there is a lawer in a wheel chair who goes from building to building and office to office to see if anything fails to meet the handicapped access standards, even in buildings where no handicapped person would ever need to go, and when he finds a possible violation, he sues. He’s made a career, and lots of money, of it. Some laws are truly idiotic.
Fishing for sympathy as a “victim” or pandering to “victims” to show sympathy are equally cornball. I think the “Cancer Survivors” monument (complete with survivors’ names) on North Dale Mabry and the predictable “Aids Memorial” on Bayshore are beyond tacky, even for Tampa. In the grocery store, I saw a woman wearing a button that said, “Incest Survivor,” and felt someone, preferably her father, needed to slap the crap out of her.
The Americans with Disabilities Act (thank you, GHW Bush)has been a tremendous productivity drain on this country. Wheelchair accesses to country post offices that serve 100 customers, row upon row of unused handicapped parking in the choicest locations, regulations on hotel owners, restaurants - I’m sure it would be cheaper and less onerous to just give out stipends based on the disability and then let people use the money (chauffeurs, handlers, etc.) as they see fit. And people disabled directly through their own actions (morbid obesity, failed suicide attempts, drunken accidents) don’t qualify.
Time for some sympathy for the able-bodied.
Paul in Jax, thanks for saying it all for me. I’m tired of seeing hundreds or thousands of square feet of unused parking spaces marked handicapped in establishments. And no, I don’t illegally park in them. I suspect there are a lot of preventable things that recently became defined “handicapped” - that’s why more unavailable convenient spaces for able bodied. How about the bipedal tanks we call “the obese?” How about people who went nuts on drugs? Not their fault they are that way, they say! But no one wants responsibility for those things they refused to control. Bah!
Paul, I believe The ADA actually states that 3 out of 5 Americans will be disabled at least one point in their lifetime. Unfortunately, I somewhat shared your (able-bodied) attitude before being struck with disability that necessitated using a wheelchair for awhile.
I was a pretty tough guy, 200lb. 6′0”, and I can say without reservation, that being struck with a disability that necessitates getting around everywhere in a wheelchair–will make even the toughest macho assholes cry like little girls (ok, maybe in private), period.
I’m back on my feet and working, and am very happy to see accessible parking, ramps, restaurants, etc…
“The Americans with Disabilities Act (thank you, GHW Bush)has been a tremendous productivity drain on this country.”
Stats please…
“Wheelchair accesses to country post offices that serve 100 customers, row upon row of unused handicapped parking in the choicest locations, regulations on hotel owners, restaurants - I’m sure it would be cheaper and less onerous to just give out stipends based on the disability and then let people use the money (chauffeurs, handlers, etc.) as they see fit. ”
Actually, access benefits able bodied folks too. Delivery persons with hand trucks, women with baby carriages, the elderly, and of course, people who are temporarily disabled who are mobility limited.
“And people disabled directly through their own actions (morbid obesity, failed suicide attempts, drunken accidents) don’t qualify.”
Ok, so your rationale is an obese IRAQ Vet with Post Traumatic Stress Disorder and resultant alcoholism gets drunk, wrecks his car and goes on a downer and tries to commit suicide should be exempt from ADA access and/or help?
That about right?
Hitler would’ve loved such assertions.
DOC
DOC
Another victim of the credit crunch: Standard Chartered’s Whistlejacket SIV May Default.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYtuyaQ4GUrA&refer=home
HGTV… My “Decorating Cents” afternoon fixed has been taken over by the housing crash! The new show is “Secrets that Sell”.. a sign of the times.. I must say, they do a good job of decluttering the FBs.
Remember “Roger and Me,” where Michael Moore filmed, amongst other things, people being evicted from their homes in Flint, MI, after the closing of the GM plant there? Surely someone has that reality series in the works. Here’s a suggested title: “Get Outa the Banks’s House!”
I wonder how many of those houses just sat vacant afterwards? No new folks moving to Flint to snatch up those foreclosure bargains…
A couple of news bits from the FT today. Discussed over the weekend, but getting more and more nervous.
“Credit market participants took a shellshocked pause on Monday, with the spectre of more structured product unwinds hanging heavily over the market.
Trade was thin in Europe, but spreads did not recede far from the record wides reached on Friday, when again the talk was that structured products – synthetic CDOs or CPDOs – were being liquidated.
“If these things do get unwound en masse, the effect on the market will be horrible,” said credit strategist Barnaby Martin at Merrill Lynch. “Between 1 and 2 trillion dollars of synthetic CDOs have been issued over the last four years. Any unwinding will likely be crammed into a much shorter time period.”
A fire-sale is every market participant’s worst nightmare, but even the more orderly process of deleveraging will put pressure on spreads….”
(and for CPDOs it could be better than this)
On Friday afternoon, Moody’s downgraded 16 constant proportion debt obligations (CPDOs) - all linked to corporate names.
“…In fact, all of those downgraded reference a GLOBOXX portfolio - that is iTraxx EUR IG and CDX NA IG in equal measure. Weeks of widening spreads have naturally taken their toll, with net asset values for the CPDOs now hovering around 60 per cent, according to Moody’s (the range quoted being 45 - 75). The NAV is simply a measure of portfolio asset worth to noteholder par.
Now CPDOs don’t “cash out” - liquidate - typically until that NAV drops to around 10 per cent. For now, that is a little way off (not so of course, for all those bespoke second generation CPDOs referencing purely financial names). So at first glance it might seem like there are still grounds to be sanguine.
But the 60 per cent mark is nonetheless a dangerous tipping point: beyond it, CPDO’s go into forced deleveraging….”
http://tinyurl.com/2r2a4e
(essentially massive margin calls)
Let me see if I have a clue…
Put $1K in and leverage to $15K by borrowing $14K short-term. Buy insurance to cover possible default. Buy assets with the $15K that pays long-term interest rates (higher than long-term).
Difference between the interest paid (short-term) and interest received (long-term). Is profit used to pay fees and the people that deposited the initial $1K.
If the assets fall in value, you have to buy more insurance or sell off the assets to pay back the loans. Insurance is getting more expensive so is becoming less of an option. Buying the insurance is cutting into the profit, and it is getting to the point where there is little profit left. When they get to the point of no profit, then they have to start selling assets instead of buying more insurance.
Selling lowers prices, dropping asset worth, making insurance that much more expensive… meaning more sales instead of more insurance.
So, if we don’t stop asset prices from falling (which seems impossible as more and more people walk from homes which are backing the MBS, CDO, ABS, etc.) and insurance keeps getting more expensive (as it is more and more likely there will be mass defaults) then it gets to the point that these DPDOs will be foreced to sell into a dead market and further kill valuations… triggering more forced sales…
When the CDOs liquidate, does the insurance then have to pay? Or, are they based on the life of the asset so they still won’t have to pay for 20-30 years even if the entitiy they owe is long gone by that point?
For all you bubble sitters out there, the Time magazine has published an article making a case against waiting to buy:
http://www.time.com/time/magazine/article/0,9171,1713483,00.html
“…But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.
Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be. …”
A whole lot of assumptions there… So, are you convinced yet?
There argument seems to be 2 fold…..
1) This is the lowest monthly payments will go. If interest rates go up, prices won’t go down enough to compensate.
I think this false. Prices are going to keep falling, even if rates do not go up. If interest rates do go up, prices will fall all the more.
2) Even if rule 1 is wrong and prices do fall to compensate for higher interest rates…
$100K at 10% ($877 PI) is the same as $163K at 5%($875 PI).
May as well buy at $163K at 5% instead of waiting for $100K at 10%…
WRONG! Risk vs. reward.
If I buy at $100K at 10%, Risk of rates going substantially higher are pretty low. However, it is likely rates will go down, and I Am likely to be able to refi and/or sell for a profit.
If I buy at $163K at 5%… I have HUGE risk of rates going up. If I need to sell because I lose my job… out of luck. On the flip side, my reward of being able to refi for lower payments or sell for profit is tiny.
Despite similar payments, $100K at 10% is NOT the same as $163K at 5%.
You’ve saved the $21K the price dropped by. Not to mention the interest garnered on the $42K (20%). Not to mention no risk.
Not to mention that if prices rise when interest rates fall, then they fall when interest rates (it’s not a one-way trapdoor.)
Why are we debating this? This is kindergarten territory. We’ve seen this shee-yat before. NEXT.
Not So Hot
by Patrick J. Michaels
This article appeared in the American spectator on December 27, 2007.
“If a scientific paper appeared in a major journal saying that the planet has warmed twice as much as previously thought, that would be front-page news in every major paper around the planet. But what would happen if a paper was published demonstrating that the planet may have warmed up only half as much as previously thought?
Nothing. Earlier this month, Ross McKitrick from Canada’s University of Guelph and I published a manuscript in the Journal of Geophysical Research-Atmospheres saying precisely that. …
IPCC divides the world into latitude-longitude boxes, and for each of these we supplied information on GDP, literacy, amount of missing data (a measure of quality), population change, economic growth and change in coal consumption (the more there is, the cooler the area).
Guess what. Almost all the socioeconomic variables were important. We found the data were of highest quality in North America and that they were very contaminated in Africa and South America. Overall, we found that the socioeconomic biases “likely add up to a net warming bias at the global level that may explain as much as half the observed land-based warming trend.”…
Where was the press? A Google search reveals that with the exception of a few blog citations, the only major story ran in Canada’s Financial Post.
There are several reasons why the press provides so little coverage to science indicating that global warming isn’t the end of the world. One has to do with bias in the scientific literature itself. Theoretically, assuming unbiased climate research, every new finding should have an equal probability of indicating that things are going to be more or less warm, or worse-than-we-thought vs. not-so-bad.
But, when someone finds that there’s only half as much warming as we thought, and the story is completely ignored, what does this say about the nature of the coverage itself? Somehow, you’d think that would have been newsworthy.
The above was copied from CATO.ORG,
link
http://tinyurl.com/27u5a5
The source paper
agu.org
Quantifying the influence of anthropogenic surface processes and inhomogeneities on gridded global climate data
http://tinyurl.com/2dwp3g
This moving graph of the stock market from Fortune is pretty cool 50 years of stock market gyrations.
http://tinyurl.com/yozuwz
It reflects the minor drop that the market currently has had. It also reflects the ‘bubble economy’ over the last 25 years.
http://www.nouvelleatnatick.com/
I tried to make a post about this place the other day, but I’m pretty sure I did something and it didn’t go through. Anyway, it looks like they’re not getting many takers for their project, does it?
Nouvelle at Natick offering broker incentive … this could help you, too
Or is this sort of thing too common to really get excited about?
I guess I must admit my interest is largely academic, given that the place is down the street from where I grew up. The $1.5 million penthouse is under contract, but I honestly have no idea how many other units have been sold. But though I’ve seen quite a few posts about Boston real estate here, haven’t seen this one mentioned.
Interesting. I used to work for a company based in Natick.
I like the fake ducks. Probably there to replace the ducks that were displaced when they bulldozed the area.
Is the Fed going to end up holding REO = collateral nobody else wants to touch? (Do they already???)
US banks borrow $50bn via new Fed facility
By Gillian Tett in London
Published: February 18 2008 20:34 | Last updated: February 18 2008 20:34
US banks have been quietly borrowing massive amounts of money from the Federal Reserve in recent weeks by using a new measure the Fed introduced two months ago to help ease the credit crunch.
The use of the Fed’s Term Auction Facility, which allows banks to borrow at relatively attractive rates against a wider range of their assets than previously permitted, saw borrowing of nearly $50bn of one-month funds from the Fed by mid-February.
US officials say the trend shows that financial authorities have become far more adept at channelling liquidity into the banking system to alleviate financial stress, after failing to calm money markets last year.
However, the move has sparked unease among some analysts about the stress developing in opaque corners of the US banking system and the banks’ growing reliance on indirect forms of government support.
“The TAF . . . allows the banks to borrow money against all sort of dodgy collateral,” says Christopher Wood, analyst at CLSA. “The banks are increasingly giving the Fed the garbage collateral nobody else wants to take . . . [this] suggests a perilous condition for America’s banking system.”
http://www.ft.com/cms/s/0/66db756a-de5d-11dc-9de3-0000779fd2ac.html
Nerves on edge as lender results beckon
By Peter Thal Larsen
Published: February 17 2008 17:31 | Last updated: February 17 2008 17:31
If the stock market is to be believed, Britain’s biggest banks are severely damaged. After more than six months of market turmoil – which culminated on Sunday in the nationalisation of Northern Rock – investors are braced for the worst when the country’s largest lenders start reporting results this week.
The banks’ depressed share prices are not only discounting a severe economic slowdown and additional losses on complex debt securities. Shareholders are also anticipating that institutions such as Barclays and Royal Bank of Scotland will have to cut their dividends – and possibly launch emergency rights issues – to rebuild depleted capital reserves.
http://www.ft.com/cms/s/341d3884-dd7c-11dc-ad7e-0000779fd2ac,dwp_uuid=d355f29c-d238-11db-a7c0-000b5df10621,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F341d3884-dd7c-11dc-ad7e-0000779fd2ac%2Cdwp_uuid%3Dd355f29c-d238-11db-a7c0-000b5df10621.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Findepth%2Fsubprime
Anybody familiar with Toledo?
In the last three months more than 150 sfh have sold in the LaGrange area. This is very odd, I know the houses are all 100 year old 30,000/ 12bucks a sq foot cheap but is someone buying up all this cheap property for a reason?
I don’t get it at all.
Are there still flippers there, or is this a good area to buy rental property cheaply?