Bits Bucket And Craigslist Finds For February 22, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Okay, while I have been a huge believer in the housing bubble, which appears to be happening everywhere, yesterday I realized exactly how much real estate factors into the psyche of everyone.
While looking up news of the different places I have lived over the years, this article jumped out at me. The news that real estate sales dropped like a rock (Since February 1st) in Toronto is front page news?!? While I believe it might be news…why the front page?!? I understand Toronto has a new land transfer tax, but come on…something else must have higher priority then a 18% drop in sales in February.(elections, Maple Leafs, Healthcare, Economy).
http://www.thestar.com/article/305513
Sorry, rant off!
Nope. Real estate is everything to the people who think they have valuable real estate.
Just ask any Floridian.
This is absolutely true! And it’s funny, I’ve noticed that people just like to pretend they’re rich! They like talking about big numbers!
For many Floridians I speak to (I’m in Florida about 1 week out of 5), they’re just as eager to say “I lost $500,000″ than “I made $500,000″. Being able to discuss sums of money like a half-million dollars makes them feel like players.
(In many cases, they’re happy to discuss theoretical Zillow gains and losses, and they’re really just babbling.)
You haven’t been to Toronto lately? It is like Miami North. The amount of condo construction is just unbelievable. A crash must scare the heck out of everybody in that city.
but it’s different in toronto!
5 inches of snow in nyc today
6 down here in Philly. I’m so excited! I took the day off so I can finally take my son sledding. You know, before it turns to ice as predicted.
I told my wife that she should expect 6 - 9 inches today and….oh never mind.
I was there a couple of years ago and it was condo crane city.
lol
hubby told me to expect 6-9 inches today, too!
can’t wait!
Comment by NYCityBoy
2008-02-22 06:22:17
‘I told my wife that she should expect 6 - 9 inches today and….oh never mind.’
What? She got out her sled?
No, she got out her “sling”. LOL
No, no, no she started singing “Sweet Mysteries of Life”
She figured NYCB had found some real value in one of those male enhancement ads!
I’m trying to figure out the 6-9″ dynamic range mechanism. Maybe an extender attachment? Or is this like when I answered a girl in college, “As big as you can make it”?
Pensacola, FL
Several feet of white stuff down here in Pensacola, FL. Of course, I’m referring to beach sand. Planning on taking the boat out this weekend.
Please don,t hate me. Lots of white stuff here on Maui too. But it ain’t snow. It’s foam. A big off season south swell is here. Should reach warning levels today. At least 8 foot faces. Just called boss and said I’m taking today off. So is he. Todays high will reach 80. I will think of all you poor freezing people as I paddle out.
Awesome! Have fun!
By the way, 8 foot waves here in Pensacola, FL usually happen only during hurricanes.
Same in Texas, except hurricane waves in the gulf are strong and irregular. Better for body boards and body surfing.
Oly, WA.
A very pretty light mist is out and swirling in a leisurely fashion through fir trees. Buncha moss all over the place. I think about 45-50 degrees here at 8:12 a.m.
Just a joke: is it true that if you don’t move fast enough in the Pacific Northwest during the soggy months, the moss will grow on you or even eat you? Maybe that was just a rumor I heard… hehehe…
Here in Maryland, the hot air generator in DC has kept the air warm enough for us to get a nice dose of ice and freezing rain/sleet/slush today. At least we got an inch or so of snow earlier in the week.
Heading there in 2 weeks. Spent 5 years of my life there (91-96). I’ll try and get some pictures of all of the towers there.
I was in Toronto in July. Miami North? Exactly! I was like, what’s the sudden allure of Toronto????
It’s Chicago North with less to do and more miserable weather.
What’s not to like, eh?
still the article points out important differences with the US. minimum 5% down payment, most buyers have fixed 25 year mortgages. Not in the article is the fact that mortgage payments are not deductible from income tax. I’m guessing that defaults are near zero?
News from South Africa: RE agent says prices could drop 20-30%
Of course some of his pals are still parroting the “60% price appreciation in four years” line.
Sorry here’s the link http://capetownbubble.blogspot.com/2008/02/stop-presses-sa-agents-say-property-can.html
I expect prices to drop 20 to 30% in many cities around the world. The only realistic drop I see is at this percentage before I buy anything.
Have some faith, CT! You have the World Cup coming in 2010, a guarantee of rising prices…
Does it make up for the intermittent power cuts, high unemployment and political uncertainty?
Hardly… I was being sarcastic. I have some friends with ties to FIFA and SA has been walking a fine line; FIFA has been very close to pulling the Cup from SA.
Beautiful place, SA, but many problems yet to conquer.
And it wouldn’t be the first time. Colombia was supposed to host the Cup in 86, and it had to be switched to Mexico with about a year to spare IIRC.
When I drove home last night, I started counting the houses that were vacant in my Sacramento subdivision of 140 homes. These houses were built and complete by May 2006. 27 houses have been foreclosed and are vacant and for sale. 6 are in contract with buyers. Another 22 houses are just vacant. No signs, no utilities, no life. They are just waiting for the next event, lonely and foregotten. So 35% of the properties built in this neighborhood have remained “unused” for nearly 2 years. It is a huge waste of resources and money.
It seems the market has been taking a turn for the worse lately. Flippers who actually made 10% down payments are now listing their properties for short sale ($625,000 purchase in May 2006, now listed at $315,000 today). The banks are not even bothering to foreclose anymore.
I track Craig’s List inventory for this sub market. Last year, the rental listings in this area (approximately 2000 units) would run anywhere from 40 to 60 properties available. Last week we hit 118 properties for rent. Last night it was 135 properties. The rental inventory is growing and the rental demand must be dropping.
There seems to be no signs that the bubble bursting trend is moderating. All these prognostications of a late 2008 recovery do not seem possible. In fact, given it has taken 2 years to get to this stage, with worsening trends accelerating, it seems a 2009 bottom is an optomistic call.
`So 35% of the properties built in this neighborhood have remained “unused” for nearly 2 years. It is a huge waste of resources and money.’
I keep wondering whether the Fed has caught on to this, especially when hints are dropped about recovery in the home construction sector. The only way I can foresee recovery is if builders move past the McMansion craze and start building homes which fit local household budgets again. But a massive glut of unaffordably-priced white elephants stands as a testament to bubble-inspired malinvestment of resources and effort.
But a massive glut of unaffordably-priced white elephants stands as a testament to bubble-inspired malinvestment of resources and effort. Well I would say that it is a testament of people’s persistance in the belief that in spite of a huge oversupply of housing, the market price has anything to do with the construction cost. Those houses won’t stay empty forever. When the dust finally settles, there will be a large number of people living in houses that somebody (them or a vulture landlord) paid far less than the price of construction for. And I’m not trying to use “vulture,” here as a perogative. If the credit crunch worsens people with actual CASH will be able to buy property at prices where rental rates give reasonable returns. It is unreasonable to assume that these houses will stay vacent for the 5-10 years that the housing bust will take to resolve.
Pottery barn rules apply: Buy a McMansion, own the maintenance and upkeep costs.
Of course, other than the roof, alot of maintenance can be deferred for a long long time.
I just never understood what a couple with no kids let alone a single guy would buy a 4 bedroom 5 bath McMansion
oops greed, and how come none of these people have any roommates to actually help pay for the mortgage?
“I just never understood what a couple with no kids let alone a single guy would buy a 4 bedroom 5 bath McMansion. oops greed, and how come none of these people have any roommates to actually help pay for the mortgage? ”
Yep, greed. Nobody will room with them because nobody would want to. When these jerks go belly up, they’d probably have no proplem eating all your food, calling BFE on your telephone and of course–not paying their portion of the hurrendous utility bills.
They bought the beheamoth for the same reason they bought the Hummer…Stupidity. Mc Mansions will be turned into multi-family housing units and these neighborhoods will turn into section eight gang infested slums.
Older, established neighborhoods with 12 to 15 hundred sq. feet homes will be much desired IMO. That’s where I’m buying when the bottom’s in.
Christ, Who in the hell needs more than a 3/2 1,200 sq. ft house anyway–unless you’ve got 5+ kids, I don’t get it!
DOC
“start building homes which fit local household budgets again”
How many “families” can live in a 550 sq ft “cottage” on a 25′ x 40′ lot…because that would cost roughly $180,000 these days
Which, ironically, is still unaffordable since the median household income in the US is somewhere between $40K and $50K a year.
Gotta love the Bubble - keep pumping up prices until NOTHING is affordable! Mission Accomplished!
Imagine if they actually did this. Millions of 2 BR houses on half lots. Luckily, the illegal aliens will save us from the inventory.
The overcrowding from the illegals have put pressure on cities to relax their over crowding ordinances. For instance, when I called our city about 8-10 people living in 2 bedroom apts, they said as long as they didn’t sleep in the bathroom or kitchen, the city would not do anything.
Just think of the natural resources being used up from this invasion. Water alone, a resource we are short on, is going down the drain. Doesn’t anyone think long term anymore?
Doesn’t anyone think long term anymore?
I have always been dismayed that the Sierra Club has pretty much been in favor of Open Borders.
But, you see, 8-10 people in a two bedroom flat is a far more “efficient” way to live than 8-10 people scattered over four large houses each on a half acre!
I pity their neighbours. Friend of mine just sold a house two months ago where the neighbours in the back were immigrants who had up to perhaps a dozen people in one house. All summer long, the yard over the fence was a cacophony of noise and people. Funny that they only found a buyer in the dead of Northern Virginia winter. Just wait till spring’s warm weather; there’ll be more than daffodils popping out to greet the lucky new homeowners.
PB that was beautiful. sniff sniff.
“So 35% of the properties built in this neighborhood have remained “unused” for nearly 2 years. It is a huge waste of resources and money.”
Yet some ppl here believe that we should build new housing for ppl of lower income and then subsidize the cost thereof to take care of the affordibility issue and make developers some cash, and to even suggest there may be other ways means to make housing affordable for all must mean you are a vile, disgusting monster that hates firemen and police officers that constantly save lives and thus are better than you.
I’m in Sacramento as well and I agree / confirm everything that jingle observed.
There’s this development in Orangevale, CA that boasts “solar power” and “green” construction materials, while their houses sit empty with all the lights on, all night long. Christmas lights too. They put those up for a “midnight” sale in October and never took them down.
jingle, where is your development? I live in Sacramento and am looking around, including Anatolia in Rancho Cordova.Thanks.
Not much of a Bible reader, but I was reminded of that bit about something that “passeth all understanding…”
For the first time in almost a decade, office rents in downtown Boston have moved above the eye-popping $100-a-square-foot mark.
So far just a few well-heeled companies have agreed to pay three-digit rates for their offices, involving relatively small amounts of space on the upper floors of some of Boston’s trophy towers. Executives in the real estate industry predict that, with demand for high-quality space exceeding the available supply, more companies will pay up for such offices.
Continued…
Office rents reach dizzying heights - Boston
It’s in Phillipians….. “And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus.”
My original post, with incisive commentary (LOL), seems to have been eaten. Probably just as well…Anyway, this caught my eye b/c I see absolutely no reason why it should be so.
http://www.boston.com/business/articles/2008/02/22/office_rents_reach_dizzying_heights/
http://www.bloomberg.com/apps/news?pid=20601087&sid=am4jS98c6wwQ&refer=worldwide
Zwirn Shuts Hedge Funds After Clients Pull $2 Billion
“The funds have about $4 billion in assets, 80 percent of the firm’s total.”
“D.B. Zwirn drew attention in 2006 after it fired a trader previously terminated by Citigroup Inc. for inflating profits by $20 million to boost his bonus. The trader, David Becker, pleaded guilty in September 2006 to one count of conspiracy to falsify bank records and to commit wire fraud while he oversaw commodities trading at the New York-based bank, which ended his employment in March 2004.”
Bet we ain’t seen nothing yet in the arena of falsifying “profits” and “mark to fantasy” for bonus purposes.
What personal qualities lead to success in the United States? It’s time to ask that question.
As second question, of course, is “what is success.”
Depends on who you ask. My definition of success is being in a position where you don’t have to answer to anyone. Of course that could mean you’re a homeless bum too
I totally hear you on not answering to idiots.
BTW, can you spare some change?
Our ideas of “success” have been programmed into our brains since birth. “Success” for most people means acquiring material possessions. However, at death, we realize that we have been conned. The bank account and houses and cars don’t mean squat. At that moment, it’s all about where you are at spiritually, and above all, being able to take an honest assessment of your life and ask yourself if you are ashamed or not of how you have spent your time on earth.
Unless you were really bad or really, really, really good, your deeds will be completely forgotten in three generations. That’s just the way it is, so don’t lose sleep over it.
Bubble Viewer-
Well said. Don’t call the schmaltz police, but death is a lesson in love. You’re right, we measure our success at the end on what we’ve left behind, people who know how to love and be loved, a sense of leaving the world a better place, etc…
In an age of plunder or be plundered it seems like those who are most able to plunder are the most “successful”. I have been tempted by the following…
Step 1) Hide all of my assets
Step 2) Build up a survival stash (medical, clothing, etc) by maxing out my credit cards
Step 3) Make min. payments for a year
Step 4) Go bankrupt and get debts forgiven
Step 5) Live off of my survival stash for a few years
Taking money with no intent of paying it back is theft/fraud, but considering the banks stole my money with no intention of paying it back am I really stealing? Consider further that the money they “lend” me comes from thin air…
If you never plan on having debt again then having a bad credit score for a few years won’t hurt you will it?
My only problem is a conscience that tells me that plan is wrong. I guess having a conscience is not a personal quality that leads to “success” in the United States.
I will just have to wait for God to bring justice and rewards.
Oh, stop with that accountability mantra.Its too moral and sensible. Someone here once said something to the effect of:
Rob a bank with a gun, get 20 years.
Rob a bank with a pen, get 1 1/2 years.
That pretty much sums up Wall St. In reality, they get a bonus.
To expand slightly on awaiting wipeout’s post..
Rob a bank with a gun, get 20 years
Rob a bank with a pen, get 1 1/2 years
Rob the people, get a bonus (or “get elected” for the policitally inclined)
I have always thought that people that know how to enjoy life are wise . Doesn’t matter if your rich or lower class ,if you know how to enjoy life (whatever comes your way ),than you are rich in spirit . That being said ,I think as long as the basic needs are fulfilled ,life could be much more rewarding to people if they learned to love themselves more and it would follow that they would than love their neighbor as themselves .
“That being said ,I think as long as the basic needs are fulfilled life could be much more rewarding to people ”
That part of the “happiness equation” may be more and more difficult to “fullfill” in the future IMO. Living expenses; health care, gas, food, utilities are really ramping up.
I just watched “The end of Suburbia” and it scared the crap out of me. Anyone else?
DOC
http://www.bloomberg.com/apps/news?pid=20601014&sid=axUtTw12Vg5I&refer=funds
AQR’s Biggest Hedge Fund Fell Almost 15% Through Mid-February
“The assets of AQR’s Absolute Return fund dropped to $2.9 billion last month from $4 billion in the fourth quarter”
It’s early in the a.m. to me, so I’m a bit bleary eyed, but 1.1B loss doesn’t look like 15% to me.
Sound’s like it was the computer’s fault.
BTW, when is Microsoft coming out with a desktop hedgefund program? It that going to be in the next release?
AQR is a quant fund run by Cliff Asness and a bunch of former Goldman guys.
Couldn’t have happened to a nicer bunch. None of these quant funds could take into account a credit crunch or the fact that another one of these behemoths might be liquidating.
Why?
Well, most of their models are the future will look like the past, and we all know how well that worked out.
I wonder how much profit the fund managers will walk away with.
Mucho mucho mucho! Don’t tell me you are surprised.
I wonder - if the financial company executives (or other executives) make major profits regardless of what happens to their organization, isn’t that a warp in the market? Won’t that lead to bad allocations of resources?
There are currently proposals to minimize the effect of bad resource allocation by borrowers and lenders with BOFA proposing massive government payments to holders of those with underwater mortgages.
The system should be allowed to run its course. Continued bad resource allocation, backed by government fund transfers, will eventually seriously erode the value of the dollar, because the dollar will cease to represent wealth.
Hey, anyone can do this with Excel: Just set up a program that starts with housing values of X and each year afterwards just multiply X by 1.2. Then, take some percentage as your bonus - and you’re a hedgefund manager!
You’re joking but people who played the “carry” effectively did a version of that. I wish it weren’t so but it’s true.
25*1.1 = 27.5% loss
(Check: (4-2.9)/4*100 = 26.5%)
Sorry for the typo - s/b 27.5% (= 25% + 2.5%)…
“…Biggest Hedge Fund Fell”
While trying to listen to the quiet whispers of “withdrawls”…I’m hearing a loud clanging sound in the background…sorta like “gates” being slammed shut.
Turns Sour…
http://www.ft.com/cms/s/0/1dee62e8-e0bc-11dc-b0d7-0000779fd2ac.html
Apparently the new version of “leaning into the wind” is to create just enough inflation to offset the deflationary effects of an asset bubble collapse, but not enough to lead individuals to infer that inflation has increased. Expectations for higher future inflation would show up in the prices of speculative commodities such as gold, oil and grains. So far I see no sign of that happening, do you?
I guess. I wonder why they care about the “inflation expectation” among the masses. For my mass, its the lack of expectation that the Fed really cares about fighting inflation that stokes my “inflation expectation.”
Lenders fighting… No Kidding!
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/21/AR2008022102687.html
They want/need every penny back and do not want to be the party that absorbs the loss due to their own loose and wreckless lending. Yet, in th elong term if they take these cram downs they should likely have a better performing portfolio with a positive ROI. They do not care about the long term, only the here and now and in the here and now these cram downs will cause a devaluation of their portfolios and that will put them in the red for the next few years, albeit only on paper.
That is why the OTS plan wants to issue these negative issue certificates, they serve as a pacifier to give the banks the false hope they will be able to collect later when the home is sold. If they really want to give this option some teeth they will have the certifcate convert into a personal liability if upon future sale the certificate is not paid in full.
I for one see only poetic justice for the banks being stuck with the losses from these loans. They influenced and paid off the mortgage brokers and appraisers to get the loan through for the higher amount and more toxic product to get more fee income from investors so now they just have to pony up that past fee income/profit. PERIOD!!
“If banks were unable to pass on the entire cost, they could be forced to trim their profits.”
I’m shocked, I tell you, shocked!
That proposal is a guaranteed prescription for mortgage rates to go through the roof (and/or LTV to go through the floor.)
I’m all for it.
“The legislation would allow bankruptcy judges for the first time to alter the terms of mortgages for primary residences. Under the proposal, borrowers could declare bankruptcy, and a judge would be able to reduce the amount they owe as part of resolving their debts. ”
So let me see, if the terms of the contract can be changed by a bankruptcy judge (to help the poor family that can’t afford their part of the contract), will future investors be willing to use their capital to invest in these areas?
Sure. But at higher interest rates with much stricter qualification controls. Wouldn’t that have prevented all this in the first place?
Strip em down to FMV and you’ll find out what properties are really worth.
I’m wondering how many “echo bankruptcies” we’re going to end up with - where someone’s mortgage gets reduced, but the market drops even further, and then at some point down the road the person still can’t afford their mortgage, and can’t sell or refi due to the further value drop, and end up having to declare bankruptcy again.
If this legislation passes - I’ll bet in about 18 months you’ll start hearing of this kind of thing in the media.
You can only file every 8 years now, unless you mean doing a Chapter 20 (13 and a 7)
The whole concept is ludicrous from the standpoint of the borrower.
As a FB, would I want some judge to look at my income and decide how much I can afford to pay for my rapidly depreciationg abode so that I can scrape by on the rest of my bills, thus ensuring indentured servitude for the next 30 years? Oh, and don’t forget that there is some written off debt still lingering out there with my name on it, the terms of which are murky and undefined (hint: bankers don’t like to lose).
Compare that to the scenario where I walk on a non-recourse loan, take a credit hit for a few years but otherwise have disposable income. Probably can eventually rent a nicer place than what they walked away from and are in the position to enjoy some disposable income.
From a pure business decision standpoint this is a no-brainer. Of course the PTB will try like hell to get J6P to go for the bait and having witnessed the financial acuity of the masses to date, will probably be successful.
Let’s talk about moral hazard.
Um, I understand the second word, Hazard, but what’s that first word again?
Never mind.
Cramdowns used to be legal up until late 80’s early 90’s. Kept the fear of dog in bankers and lenders minds as they underwrote loans. Yep, they still made loans back then, only they were conservatively and sanely underwritten to avoid the possibilty of a cramdown. hmmm, strict verification of income and debt, sizable down payment for skin the game, what’s not to cheer for?
Banks fighting because the market is “struggling in part because of difficulties in valuing the mortgages that underlay securities”
I don’t think politicians care about “valuing mortgages that underlay securities”. They want to “stop people from losing their homes”. That’s a much better sound clip and really hits the fear factor.
IMO this is a disconnect between the financial world and J6P.
“But the banks argue that any help the proposal might provide to troubled homeowners in the short run would be offset by the higher costs that borrowers would have to pay to get mortgages in the future. The reason, banks say, is that they would pass along the added risk to borrowers in the form of higher interest rates, larger down payments or increased closing costs.”
These banks are so full of cr@p! They are the ones CURRENTLY who offer loan programs to borrowers only 1,2,3 years out of BK!!! Already they are charging higher interest, asking for larger down payments and high closing costs on those programs!
You haven’t seen higher rates until you imagine the premium compensating for the risk that the government will nationalize your loan.
Right - It’s a win win for banks. Either way they raise the costs. If the BK rules change the banks have an immediate excuse for raising costs versus having to try and create one later. It’s all crap just like health care costs. Each year health care costs go up by large percentages, but what are the reasons for this year after year. Banks are following suit. Look at what the banks are doing with rates on credit cards and the reasons provided. All crap.
Yes, but home prices will come down to compensate for the increased costs.
Win-win deal, IMHO, for everyone but the banks. They caused the problems, they should have to pay the price.
I’ve been suggesting this to all the pols I’ve written to. Love it!!!
Look at it this way, maybe the banks can go to a judge and get the terms of a mortgage changed. If the poor banks are losing money, perhaps they can get the judge to raise the interest rate, so those rich families can pay more.
“Lenders fighting… No Kidding!”
I guess it’s time to pay John McCain another visit.
Any 40 year old Blondes working for lobbyist will get this dismissed.
nhz said on yesterday’s NZ threadlette. (in bb)
“Just wonder what will happen to this tiny economy when the global credit bubble goes poof.”
My answer? This ex patriot ugly American will buy a nice farm in the NZ countryside for pennies on the (NZ) dollar.
there are probably many people (in the anglosaxon world) with the same thought and because of that it is unlikely to happen …
it is extremely difficult to get permanent residence in NZ now (except if you have relatives there or are a construction worker) but that could change too if the economy tanks. In addition I have my doubts how attractive farming on those big NZ farms will be when energy prices continue their current ballistic trajectory
Sheep eating grass is energy intensive?
it does not have to be, but current farming practices in NZ (big lots, heavy machinery, fertilizer etc) are energy intensive and NZ does not have a lot of energy resources, so they will have to pay market price.
Hanging out in Auckland, heading off to Christchurch in a few hours…
Haven’t been here in 3 years and it’s turned into an even bigger uglier city, than I remember it being~
A couple of things happened the past week here:
A low cost real estate company called “Joneses” that would sell your house for $8k commission, and a ponzi scheme called “Blue Chip Holdings” that was involved in housing, both went out of business.
Today’s NZ Herald’s real estate section, was 112 pages of desperation.
It’s been raining cats and dogs (there goes a Pug and a Cheshire Cat!) and we can’t wait to escape to the South Island…
hope that you have more luck than I had three years ago, because it rained even more on the South Island than in the North. People told me it was the wettest summer in many years, but you never know …
You can’t get in as a rocket scientist (no rockets). But if you have a useful skill, like sheep shearing, you are in!
(Don’t accuse me of stereotyping without checking the immigration requirements first
Last time I checked cold hard cash got you in as well.
if you have at least $ 5 million to spare; and even then the conditions are very unfavourable. I don’t think many people with that amount of money are interested in lending their money to the NZ government for 3 (5?) years without any compensation.
yes, that’s why I mentioned the highly skilled construction workers (everyone who can handle a hammer or a paint brush will quality apparently). I have a university degree in a field where NZ wants to get ahead and enough cash to support myself for a long time, but I don’t qualify. puzzling …
Why is it that every other country in the world carefully controls who can become a permanent resident and jealously protects its employment base, but we fling our borders wide open, looking the other way as millions of illiterate, unskilled people invade our country (without the proper permission of course), and we do our darndest to export the few good jobs we have left?
Of course, I know the answer: ours is a government of the corporation, for the corporation and by the corporation.
I agree 100%. We’ve let in third world trash, illegal or legal. When I was at the Social Security Administration (Father just passed, helping my Mother out), I saw Indians (dad, mom, kids), illegals (of course), Middle Easterns, etc… all looking for handouts. Medi-Cal (California’s Medicaid) even has a Orthodontist handout. What chutzpah, to have this sense of entitlement! Meanwhile, our military has to beg for healthcare.
Well, how else can the enemies within destroy us? No better way than to create a new Amerika, where towns are Balkanized block by block, full of illegal trash, crime, enemy gangs, drugs, etc. One legal citizens fear leaving their homes, the enemies within will have accomplished their goals.
Why is it that every other country in the world carefully controls who can become a permanent resident and jealously protects its employment base, but we fling our borders wide open
Balderdash. If you try to get into the US legally, the borders are far from wide open, and it is a LOT harder to get in here than into many other countries. Permanent residence here (i.e. Green Card) is not a piece of cake. If you think so, then you really know someone well who has done it.
I’ve lived in four countries, have innumerable friends who have lived in many more countries and tell me their experiences on this in all those places, and the US has one of the most onerous, drawn-out processes of any developed country (save perhaps Italy). Well, it’s hard if you are a SKILLED AND LEGAL immigrant, that is.
Why the US tolerates incredible numbers of people who speak little English but bars the door against well-educated, English-speaking people with needed skills (and yes, I work with a few, and I love having ‘em here), I cannot fathom.
Anyway, it is NOT the immigration laws. Tightening them even more against skilled immigrants is a stupid solution. It’s the enforcement of the existing laws which is the problem.
My understanding is that we absorb about 1 million LEGAL immigrants every year. Its only hard to get in legally because demand outstrips supply.
Why the US tolerates incredible numbers of people who speak little English but bars the door against well-educated, English-speaking people with needed skills (and yes, I work with a few, and I love having ‘em here), I cannot fathom.
Its quite simple, actually. By looking the other way while the hordes of illegals enter the gov’t depresses wages for low skilled workers. Higher skilled work can be easily offshored, so no need to bring them here.
We also let in dirt illegal immigrants like my wife (now American), who is smarter, more hardworking, more frugal, and more down to earth than 99% of the Americans I have met. Advanced engineering degrees, good job etc.
Also I take exception to the statements made by “Pondering the Mess” and others like him/her. The only place I know where people are afraid to leave their houses is the lily white suburbs — apparently anything scares these people: look it’s the osama/facist/terrorist/immigrant/non white boogeyman! Quick, sign away your civil liberties!!! I used to live in a extraordinarily dangerous neighborhood in Chicago. And when I say extraordinarily dangerous, I don’t mean one day I saw a black guy and felt nervous and I crossed the street — I mean gunfire all the time especially on summer weekends, probably 7 murders within a 1/4 mile of my house in the three years I lived there, including one the back entrance of my apartment building. And funny thing is, that area had a stronger sense of community than any other community I have ever lived in. People out on the streets, barbecues in the parks, people would say hi to you, shopkeepers knew your name, community meetings, marches for an end to the killing etc. People there were alive. Out in the safe suburbs? Not so much, hiding in their mcmansions and churches, with their overbuilt suburban police departments making sure no one walks on the grass, much less picnics there.
I’m sick of scared whiny people like you in my country. Get out.
My brother-in-law asked my wife to check on the status of his father’s 1994 petition for his immigration. I figured the paperwork was likely lost and gone, on some 8.25″ Star disk or something.
Luckily for him, the processes are still grinding on. They are currently processing petitions from 1991, so he is “almost” in.
In case I’ve been too subtle: thanks for jumping the queue! It gives me a warm and fuzzy feeling inside that US society’s respect for law and order will triumph over the influx of third world lawlessness. Oh well, maybe in the second or third generation.
I think the US system is still better far than that in Europe. At least most of your immigrants work, although many of them probably on an illegal job.
In Netherlands 80% of the immigrants that we let in never take on a job; I think for the most recent immigrants it is even more than 95%. Of course, why work? they get free everything for life and are economically better off than Dutch people with a normal job at the lower end of the wage scale. Our immigrants come for one reason only, the Dutch social wellfare paradise. And because there are loads of Dutchies that profit from this (politicians, lawyers, wellfare workers, the housing mob and all the other businesses that provide them with the free goodies etc.) this will continue.
The experience in Europe is that immigrants who have good skills and are willing to work don’t apply in the EU mainland area but go to the UK or the US. Probably you are getting the best part of the bunch.
nhz-
Regarding the USA, the problem with the illegals, is that then they do work, most don’t pay any taxes, and the still qualify for entitlements when they have an anchor baby. Even if the man and woman work, they can get food stamps, free medical, welfare cash, and discounted rental housing. So, the cost of all this cheap labor is transfered to the taxpayer. Companies, both small and large, are making out like bandits. Then, you have all this darn insourcing going on. I see Indians (India) working a decent salary jobs, meanwhile the braces on their kids teeth is a taxpayer expense. They just fudge to double dip our system. We have a two tier system in America now. One for the newly arrived (illegal or legal), socialism, and then the rest of us live in failing capitalism. It sucks. From your post, I see we are not alone.
The Dutch do have a problem regarding their welfare state, but it does contribute to signifigantly lower violent crime, fewer inner-city hellhole areas, etc.
As one of the posters from Canada stated here earlier (I forget who, and I paraphrase) “We may pay more taxes in Canada, but we have fewer ghettos.”
Good tradeoff, IMHO.
awaiting wipeout, you are right on regarding business taking advantage of both the illegal and the taxpayer. I watched a documentary the other night where one of the talking heads basically stated that the powers that be have decided that having basically a slave labor class is good for the country, so damn the actual citizens who have to pay for it, and suffer the consequences.
I also find it interesting that it is the Republican party who pays lip service to fighting illegal immigration in order to drum up support with the masses, while it is their big-business backers who gain the most from illegal workers. It would be very easy to end illegal immigration in the country by actual active enforcement of laws already on the books regarding the hiring of illegals by businesses. With no jobs, they’d stop coming. It will never happen, though.
This housing bubble never could have happened if construction labor had to be paid fairly, builders were made to pay taxes for all employees, and if businesses had to pay workman’s comp for injuries, health insurance, etc.
“Big Business Republicans” is a stereotype. “Big Business” will whore themselves out to whoever is in power. They have to whore themselves, in order to get regulations passed that favor them and that squashes their competitors as much as possible.
L A Times a few days ago printed an editorial bemoaning the vigorous enforcement (in AZ and elsewhere) of laws prohibiting the hiring of undocumented foreigners. “Mean” was the word they used to describe the enforcement. Guess a lot of illegals read LA Times.
“We may pay more taxes in Canada, but we have fewer ghettos.”
But the ghettos are equally nasty. I spent a couple of days in East Vancouver, the heroin capital of North America. Very scuzzy.
Agreed, but I think its more like this: a government of the corporations, by the lobbyists, for the politicians. This REALLY needs to change, violently if necessary.
If you had ever lived through a violent revolution, you would not likely be of the same opinion.
You need to be asian or indian to get into nz
We looked into moving to NZ last year (from So Ca), but the financial requirements for people over 50 were quite high. Although we have $, no debt, educated,we didn’t qualify.
Of course, they see you as a potential liability, especially regarding healthcare. Funny how we don’t seem to have a problem with illegals who overtax our healthcare , education, public assistance and penal systems. Of course, its because the middle class pays for all these handouts. If corporations were forced to pay then we would be hearing them demanding that the borders be sealed.
You also needed a clean bill of health to move to NZ (over 50 yo), which we can produce. But it wasn’t our immediate need for healthcare, part of the denial was our future consumption of their healthcare. Have to admit, the NZ government is looking long term. God Bless them.
Corporations in the USA have it darn good. They privatize the profits, and socialize the cost. You’re absolutely on target In Colorado. Let the taxpayer soak up the cost. What else is new. Meanwhile, the middle class is getting crushed. Illegals have nice SUV’s in So Ca.
Illegals have nice SUV’s in So Ca.
That is perhaps their #1 status symbol: “La Troka”
Expatriate, not ex patriot.
Not according to spell check.
http://en.wikipedia.org/wiki/Expatriate
No, maybe he meant it the way he wrote it. :-O
We have been thinking of moving to the South Island in NZ. It is the most beautiful place I have ever seen. I was wondering how easy is it for American to move there legally. We had Queenstown in mind.
Queenstown is owned by americans there should be no problems moving there legally
just start or buy a business easy ha
A way to get away, w/o citizenship, is to come to NZ for 3 month stretches and pop over to Aussie, and come back for another 3 month stay.
It’s only like $350 r/t to any big Aussie city from here.
yes, I have been thinking about that option too but still wondering about all the consequences (not allowed to work, pay all healthcare etc. out of your own pocket, potential tax problems?). And I don’t really like Oz ;-(
Returns for a average farmer in nz is 23k a year not bad for a investment of about 4 million dont you think but dairy farmers are milking gold at the moment about the only people making money in nz
Can anyone please give me some info on the best place to buy silver bulllion? It seems Bullion Direct has the best prices and was wondering if anyone has ever used them before.
“Can anyone please give me some info on the best place to buy silver bulllion?”
Aladinsane’s basement! Oh wait, that’s gold. Sorry!
I bought 400 one ounce silver maple leafs from Monex some years back. I had no problem with the service.
For big buys, look at Tulving. For small ones, APMEX.
kitco is one of the best for coins, bullion, etc. It has great prices but it has a $30 handling fee so it is best to be buying several hundred dollars worth…
try comparing the prices at http://www.apmex.com
I can vouch for legitimacy but haven’t compared pricing lately.
A local coin store that is reputable should sell it to you for .50-.75 above spot. That’s often better than the rates offered by the big traders.
I would suggest that until you find a local dealer where you can walk in with $$ and walk out with Ag, or have some strong recommendations for a mail-order type shop, if that’s what Bullion Direct is, consider the SLV ETF. If been using that silver Exchange Traded Fund for over six months and found it to be convenient, and 100% reliable.
I’ve been involved with silver, silver mining stocks, COMEX silver futures, and silver ETF. I also have physical silver in a gun safe. I don’t have any experience with Bullion Direct. I do know people who were swindled by phony bullion dealers.
Hope this helps; good luck to you.
I’ve bought some from nwtmintbullion dot com with good success, though it can be a fairly lengthy transaction. Local coin dealers are sometimes good (sometimes not).
I have used bullion direct for the last 3 years. Never had a problem. They can be a bit slow with communication, which can be scary the first couple times you use them. Read their forums. I have found the postings there regarding BD themselves to be spot on.
I like Bullion Direct. Done business with them many times and always have been satisfied. Used to go through APMEX, but their prices have trended higher and they refuse to give tracking info for orders. Tulving is good for large orders.
try queenstown NZ
It is snowing in New York City this morning. I can’t tell you how many men (I use the term loosely) could be seen carrying umbrellas. What a disgusting display. It is easy to understand why we are in such bad shape when we have created a society where men (I use the term loosely again) use umbrellas to shelter themselves from a little snow. Pathetic!
Welcome to NYC and downstate NY. The number of wilting violets here is mind numbing.
Oh, don’t get me started. They do the same thing here in Boston. Then, they walk three abreast on the sidewalk at half the speed of everybody else.
Hi NYCityBoy, I wonder if the Manhattan market will finally cool off along with the snow. I’m still looking for difinitive indications. What did you think of the JonathonMiller report: http://www.millersamuel.com/reports/pdf-reports/MMO4Q07.pdf ??
Happily renting in the face of overpriced luxury condo land.
Martin
Guidos don’t wanna mess their ‘doo up.
lol nycboy what a bucnh of wimps
i actually changed my normal route to work and made it in faster
most local schools are closed and i imagine many people took a long weekend. this is our first real accumulation this winter
Those would maybe be those “metrosexuals” perhaps?? I’ve laughed incessantly at that word ever since I heard what it meant.
Aka “wimps.”
And when it’s time to jump out of the window like in 1929 they have golden parachutes!!!
I once suggested to my husband when there was torrential rain a week or so ago that maybe he should take an unbrella with him.
He grinned and said he would be laughed off the work site.
I think umbrellas in snow - for men or women - are ridiculous. Put a hat on and enjoy the winter wonderland!
eastcoaster: wool tuques are good in the cold
Hats mess up your hair.
Well, I have to add my two bits’ worth - here in E. Utah, it’s raining (I’m at 4000 ft, snowing up higher) and no umbrellas. I doubt if anyone here even owns one. They all just wear hats (cowboy or baseball, take your pick- if it’s baseball, it should say something like “Hard Hat Excavation” or “LaVar’s Backhoes,” or “Bermuda Triangle Skydiving”).
As you say, losty, I grew up in Utah and I didn’t use an umbrella. Them was wussy. I used a cowboy hat or else I used bad language.
I sure as heckfire use an umbrella now I’m in Washington state. I have about 20, sprinkled all over the place. My favorite is a ladybug one, red with big black spots, or else my adorable bumblebee umbrella, striped, AND it has little wings that stick up when you expand it! Precious!
Say, wouldn’t it be fun to mail that one to NYCityboy? And only jerks hate bees.
Just think how apepoop he’d go!
And I admire your theory on baseball hat logos. You are so right all over the place.
Howscome I can picture you having an umbrella with magenta rhinestones?? LOL
I’m from Spokane. We menfolk from the Inland Empire would’a never yoose wonadem bumbershooty things.
They have to use umbrellas. Otherwise, their make-up might run.
Hey, NYCBoy, I know that you folks from Mine-snow-ta take your winters in stride. But I always use an umbrella in the snow. First, without one snow gets on my glasses and I can’t see. Second, it gets in my collar and is cold and wet.
I also always wear a hat and scarf.
There are plenty of things going on for your inner-curmudgeon, you’re really a bit over the top with this one.
So, NYCityboy, after grubbing around wildly in your coat closet you finally realized that you’ve lost your umbrella and you had to walk to work without it, is what I’m hearing here.
Zinggggg!!!!
LOL!!
If snow flakes falls into your hair, and then you walk into your office building, it starts to melt & drip and you have a freezing iced water head.
mrincomestream (and others) what kind of cap rates/GRMs are you seeing for 6-20 unit apts? Lots of residential income stuff for sale where I am, but the numbers aren’t there. Been out of it for a couple of years.
I was asking myself this very question in the shower this a.m.
As investment capital dries up, what is the commercial rent/value some of you are targeting? On apartment buildings I would think 1/50 would be adequate?
Anyone?… Bueller?… Bueller? Bueller?
Asking for a bunch of the smaller ones is a yearly GRM of 10, 120x mo rents.
Implosion, here in Cali I am still seeing cap rates in the 5-6 range. Prices are still too high. I have seen some decent 8-9 caps outside of Cali though. Smart money is still looking for the higher cap rate deals outside of Cali. Still there is dumb money here trying to get financing - for the most part these cap rates require 40-50% down. Dumb money does not to like to hear that.
Reality definitely hasn’t set in yet in CA. I still hear of 5% cap deals, in an environment when your debt constant is easily 7-8% when factoring in amortization and a pretty damn good rate.
You’re better off waiting for some of the deals to crater (after the loans come due and refinancing cannot occur), and you can buy them back from the bank at less than the loan amount.
This is in Albq, NM. Looks like there is a lot of residential income for sale just sitting. Anecdotally, there were apparently many out of state investors. I sold a few of my rentals to them; the rest to locals. I don’t own any RE now, even sold my house on the way out when I bailed in May 06.
Looks like the SFR REOs are starting to increase as well. Westside (west of I-25) of Albq looks like a shotgun blast when Realty Trac plots up preforeclosures, REO, etc. No point in even looking at SFRs as rentals though, prices way too effin’ high. Not nearly enough pain yet.
I agree with you guys, I’m in no hurry to get back dealing with being a LL for minimal return. I’ll sit with the good credit score, varied investments and cash. No hurry to even buy another house for myself unless it’s a really good deal in a good area. Happy to live with someone and pay a $500/mo rent.
Checked with local bank I do all my bidness with and they want me to be sure and deal with them when I’m ready. Told them it might be awhile.
More from your friend and mine……..funny Yun.
http://www.rrstar.com/homepage/x1300266072
“All the news that’s fit to print.” This New York Times slogan was written by publisher Adolph Ochs. He also wrote the Times’s CREDO in August, 1896: “To give the news impartially, without fear or favor, regardless of any party, sect or interests involved.” Even the casual observer must notice the Times no longer operates under its credo.
The NYT isn’t on the ballot. Knock off the pandering.
Now that you bring it up, exeter, Limbaugh, Coulter, Fox News, etc. aren’t on the ballot either.
So why are you interjecting them on the blog?
Pandering?
I certainly agree with that when it comes to their Real Estate pages. They’re loathe to write much which is negative about the RE market and upset the last few consistent advertisers in their paper edition.
As to the McCain hit job, seems like the facts are pretty thin to warrant publication - spoken like a true NYC liberal.
Martin
“the Times no longer operates under its credo.”
Similar to how the US no longer operates under its Constitution.
The Constitution is a living document that has somehow evolved into an anaconda.
You’re a few years late to that party. It’s nothing more than a left wing tabloid.
“All the news that causes fits.” Canyon Country Zephyr (www.canyoncountryzephyr.com)
Well, the Santa Monica Daily Press printed the following on its masthead:
“A Newspaper with Issues”. The NY Times should be so honest and perhaps take itself a bit less seriously.
This is a bit OT, but if anyone is curious about what passes for news an opinion in the “Home of the Homeless”, here is typical issue. (Warning: PDF)
“Yun believes activity will pick up because the U.S. Federal Housing Authority, which once accounted for 20 percent of the mortgage lending market and had declined to about three percent, will step somewhat into the void. Yun estimated about half of the buyers who were getting subprime loans will qualify for FHA loans, which have the backing of the federal government.”
“The half that won’t qualify shouldn’t be buying a home yet anyway,” Yun said. “Really, I wished the subprime era had never happened.”
WTF do I start? This little bastard is one that should never be trusted but this statement that half of subprime borrowers could have qualified for FHA financing and suggest they should have never bought in the first place? What is this puke up to now?
Its the OTHER half that shouldn’t have bought (non qualified for FHA). However, if you could qualify FHA but took subprime, perhaps BOTH halves shouldn’t have bought.
Those that in the past qualified for a $400k conventional loan would qualify only for a $200k (or less) FHA loan. Plus they will have to come up with a 3% down payment. Buyers will be bidding a whole lot less than they did in 2003-2006.
hedonically adjust yourselves:
BOCA RATON, Fla. - Sara Lee Corp., stung by record-high wheat prices, plans to raise prices on its namesake bread this spring, the fourth such increase in just 11/2 years.
The problem for the Downers Grove-based company and America’s other food purveyors is consumers may be close to done eating higher prices fed them by manufacturers and retailers.
While Sara Lee hasn’t seen it, already there is evidence that people are adjusting their shopping habits, in some cases trading down after years of splurging on everything from premium coffee to organic pasta.
http://tinyurl.com/2dx7zv
food prices to keep rising:
WASHINGTON — Americans who dug deeper into their pockets for groceries last year will face sticker shock again this year when shopping for food, experts said Thursday.
http://www.usatoday.com/money/industries/food/2008-02-21-food-inflation_N.htm
sorry, tinyurl is down.
I’ve already started doing things I did years ago to save money on groceries. One thing I do is buy day old bread and other bread products from the Swebel’s bakery and fill a shelf in the freezer with it. I like bread fresh off the shelf however $2+ a loaf vs. $.79 is a lot of savings, especially with 4 in the house.
I noticed toilet paper has gone up over $2 for a twelve pack just in the last year and a half.
Think housing is slow now, just wait. People won’t be able to save for down payments with the price of food, gas and prescriptions. Plus they’ll have less of their take home pay to use for payments, so they’ll be looking downward pricewise.
I can definitely tell you we lived better in ‘99 than now and we make a lot more money now.
I saw a $4 loaf of sliced bread today. At Ralph’s (Orange County, CA). And I don’t mean specialty bread with gold-plated poppy seeds.
I love that..please food costs have been going up since the beginning of time! The problem they should be talking about is salaries..why have salaries compared to our fathers BOUGHT less? The great American lifestyle is slowing becoming extinct…
“why have salaries compared to our fathers BOUGHT less?…”
I strongly disagree with this statement. Many of us have all sorts us goodies our parents could only dream about much less afford.
I don’t think it’s an issue of affordability but putting the cart before the horse, i.e., buying all sorts of crap on credit before actually earning the money to pay for it.
If you don’t use credit to access, you’d be surprised how much you can buy.
The irony of it all.
Bingo.
People who pay cash (or pay off their card each month, same thing IMHO) always think twice before forking out $300 for that trendy white music thingameebob. And they are forced to think in terms of “total cost” not “how much a month” so they think seven times before they sign up for $29.99 a month contract for two years.
We are one hellasiously finicky bunch. No wonder businesses don’t like us much. They prefer people who don’t “think”.
I strongly disagree with this statement. Many of us have all sorts us goodies our parents could only dream about much less afford.
Well, the available data strongly disagrees with you.
Consumer electronics and useless geegaws: Who cares about that crap?
In terms of buying power for actual, you know, important stuff — food, clothing, housing, education, transportation — our wages have most certainly not kept up with the rate of inflation.
End of story.
Sorry ET in Chicago. I still strongly disagree.
If people didn’t blow wads of money on cell phones, cable TV, TiVo, make-up, trips to Disneyland, Starbucks, manicures, pedicures, trips to psychotherapists, all sorts of needless prescription drugs, BoTox, $40 dollar haircuts, 5-15 meals out every week, big screen televisions and $10,000 month at the local retirement facility, then maybe they might have some money left over at the end of the month.
I have no sympathy for such people when they whine about how expensive everything is. They’re no different than the FBs that we talk about here.
Most people are in debt/dirt poor on their own volition.
End of story.
4% food inflation last year? Where do they shop? I need to go there. It seems to me that prices rose at least 10% last year.
We have been coping by cutting out luxuries, especially junk food (cookies, ice cream, etc.) and by eating more chicken and less beef.
Most “processed food” is shee-yat, and that’s putting it really mildly.
Cook from scratch, and you’ll see that prices haven’t gone up that much. Cook slightly less meat, and you’ll even come out ahead (not just financially but also healthwise.)
The American diet is totally weird. Designed and brought to you by spin-doctors corporations. (Look up Ed Bernays if you don’t believe me!)
I’ll agree that processed food is best avoided, but I’m also seeing sky high price increases in fruits, veggies and fresh meat.
What we are also doing is avoiding restaurants and cooking nice meals at home (as you suggest, from scratch). This weekend I will be making chicken marsala (first time).
Well, this is getting way off topic but I suggest you reexamine the way you buy vegetables with respect to the seasons.
If your fruits are flown in from Chile and your tomatoes from Israel, the dominant cost is going to be that of transportation (= oil) not that of production.
Eating local actually works. See if you can get one of those “delivery baskets” from local farms. I’m sure they have them out there. You’ll even learn to appreciate all kinds of new vegetables (and you’ll actually look forward to stuff because you can’t eat everything all the time.)
Other than that, I suggest you hit your local “ethnic” markets for stuff. Dried beans, flours, spices. You’ll see that the groceries are a total and complete rip-off.
This is what I do for a living, so I must respectfully disagree with you FPSS, if only on the finer point. Although your assertion is generally true, it turns out that the production of some foods (apples and lamb from New Zealand, for example) contribute less GHGs than would otherwise be emitted if foods were grown locally, even taking transportation and seasonality into account. Soil type, fertilizers, plowing techniques, pesticides, fungicides, herbicides, transportation, land intensity, energy type (e.g. geotherm v. coal), etc. really make a difference. Also, they way you cook something can really affect the amount of “cradle-to-grave” GHGs emitted.
That’s one of the reasons the whole Tesco “food miles” thing got so much push back. Unfortunately, you need to do a product-level LCA for CO2e to really know the answers.
Hope that wasn’t too know-it-all-y.
That said, I just started getting an organic veggie/fruit box from a local farm a few weeks ago. Excellent and it forces me to figure out what to do with stuff like mustard greens. They actually came out great.
MrBubble
See if you can get one of those “delivery baskets” from local farms.
Our “local farms” tend to grow mostly wheat and corn. You can get local produce here, but the season does seem short.
“Although your assertion is generally true, it turns out that the production of some foods (apples and lamb from New Zealand, for example) contribute less GHGs than would otherwise be emitted if foods were grown locally, even taking transportation and seasonality into account.” — you’ve changed the subject. I don’t give a %$^*&#@!! about GHG’s if by GHG you meant greenhouse gases. The cost of oil to transport food raises the price of nearly all the food I buy. Here in the middle of winter, there is no local produce.
I love Passion Fruit and have been doing my best to support the local economy here, by buying about a dozen a day… ha
“You’ve changed the subject.”
Not really, if you think about it. GHGs can be used as a proxy for the amount of hydrocarbon energy used. You have no local produce in the winter. Fine. So you’ve got to import. I’m just saying that closer does not always equal better, in terms of GHGs or energy or cost (because of economies of scale of the container ships). NZ apples might be better (cost less, emit less GHG, use less energy, etc.) than apples from somewhere else. No need to cuss at folks on the blog or get all excited.
MrBubble
Here’s the problem. Americans will pay more for food. But Africans and Bangladeshis won’t have food. I’m not sure too many people are worried about the latter problem, but I am.
Which Americans will pay higher food prices? The ones that can’t pay their mortgages, the ones without health insurance, the seniors on fixed incomes, the newly unemployed?
This problem is stable, and may even reduce in size…
It bothers me, WT, if we’re going to have globalization, why isn’t starvation global?
Whoops, you know what I mean (coffee, need coffee, what, it’s not legal here in Utah anymore???)
Mexico came very close to mass riots last year over skyrocketing tortilla prices.
This has more to do with a completely dumb ethanol policy than monetary debasement (= inflation.)
I don’t think that Mexico’s hungry masses really care why Tortillas tripled in price.
They might not care but in the interest of putting reason over emotions, we should.
Isn’t that what this blog is all about? Reason over emotion?
Emotion? All I stated was that they almost had riots in Mexico. We can pontificate all we want on the cause of the price hikes, but that doesn’t change the fact that our next door neighbor came close to having a crisis.
“I don’t think that Mexico’s hungry masses really care why Tortillas tripled in price” News a couple of months ago mentioned that Mexican farmers were carrying posters protesting NAFTA.
watcher: thanks for the link
Anyone smell a rat here…………….
Markit launches multi-dealer valuations platform
http://www.hedgefundsreview.com/public/showPage.html?page=702569
dude, where’s my bailout?
WASHINGTON — Prodded in part by some of the nation’s biggest banks, the Bush administration and Congress are considering costly new proposals for the government to rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses.
http://tinyurl.com/2fjfwk
Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater.
“Administration officials say they still oppose any taxpayer bailout for either people who borrowed more than they could afford or banks that made foolish loans during the height of the speculative bubble in housing.”
Doesn’t sound like many of those in trouble would qualify for a Bush bailout.
“Bank of America, which is in the process of acquiring Countrywide Financial and has potentially huge exposure, has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans.”
Lenders get the guarantee and taxpayers get the unfunded insurance liability. That sounds fair to me (not!)…
Plus, lenders get to hold onto Negative Equity Certificates in case prices rebound.
Son of Resolution Trust Corporation. Is anyone surprised?
Yep , this plan was exactly what i thought would happen ,so no I’m not surprised Bill.
OK, I’m going to go postal now. I really am. Ben, I’m truly sorry if I become inappropriate here. Just read this NYT article:
http://www.nytimes.com/2008/02/22/business/22homes.html?pagewanted=1&hp
Read his comment right at the end:
“Now the Breakstones are saddled with $4,000 a month in house payments, and $14,000 more in fixed outlays, including child support, car leases, taxes, consumer debt and utilities, using up the bulk of their income.
“I used to think,” Mr. Breakstone said, “that I would pay the piper later and enjoy life now. I’ve totally reversed that view.”
That, ladies and gentlemen, is what we, as a nation, have become. Forget those boring old days of scrimping and saving up for a house, family, nice car, vacations, retirement, etc. No, have it all NOW!!
Breakstone is a pathetic, worhless little twat who deserves the biggest JT treatment ever. I’m going to stop now because if I go on I know Ben will have to ban me.
What we are witnessing is one of the biggest financial events of our lifetimes. Keep cool, or blow your top; which will serve you better?
I know, I know. But sometimes one has to just let off a little steam.
You have no idea how many times I’ve lost it. After hours of discussion about how to get out of the crumbling housing market, a FB asked how soon could she buy again.
“…one of the biggest financial events of our lifetimes.”
You are also witnessing ongoing efforts by top economic policymakers to distort public perceptions of the actual underlying situation. I don’t believe this is much different than in similar past episodes.
I was thinking about this yesterday. Someday, when little Billy comes up to you and asks, ‘what did you do during the great real estate bust grandpa?’ You might be able to say, ‘times were tough, but I stayed educated, kept my head and picked up that four-plex that’s gonna put you and your sister through college.’
Or you may say, ‘I was staying current with what top policy makers were doing.’
Those two are not mutually exclusive now, are they, Ben?
If ones attention is on all the possibilities that ‘they’ are going to toss some bit of debt on top of the unpayable mountain, I doubt very much if that person will have the energy, focus and courage to act when the time is right.
Fair enough.
I’d argue that it would be similar to jumping into the credit markets (same thing IMHO.) There’s a time and place for all assets including the junkiest of junk bonds.
We’re not quite there yet.
Is it bad that I had to google “four-plex”?
I don’t much want to be a landlord, though. And paying someone else to landlord my properties for me doesn’t exactly seem like a winning proposition. So I’ll continue to watch the policy makers. Eventually I’ll spot my ticket to ride.
Don’t feel bad. I had to google it too.
Thankfully, my guess was the same as the definition.
“…witnessing is one of the biggest financial events of our lifetimes”
When I was a “lad” (age 15) I loved ice cream sandwich’s, they were like 25 cents, but they were a rare treat… Later, I got a summer job at a gas station…brought home my first “paycheck” for around $50.00 … I thought about how many ice cream sandwich’s I could get my hands on…the “future” … suddenly seemed so bright…getting a car, having a “place of my own”, resigning myself to “managed sex” ;-), rearing little kids and enjoying single malt scotch…near even entered the small corners of my mind back then…
“The housing slumps of the mid-1970s and late 1980s were confined to the coasts. The current bust, while leaving some cities relatively unscathed, has cut a far wider path and it comes just when home debt is at its highest level since World War II.”
That is why it’s deja-vu all over again in New York, but a whole new ballgame nationally.
Anyway, what we have is the “mother of all cramdowns” plus “socialized losses” to offset private gains. The plan is to determine the value of the house, have the government guarnatee a mortgage on its current value, and the bank get a certificate to recover its loss if the value rises.
The $trillion dollar question is “what is the current value?” That determination will be made by readily bribable appraisers and politicians getting $millions in campaign contributions.
Permiting the price discovery process to works its way through the market is critical. Every single gov’t plan/proposal is designed around making sure no one takes a loss, which will only mean that everyone will take a loss, i.e. the tax payer.
The only solution is to let market forces run their course, PERIOD!
How do you see that? All of the government proposals so far are specifically targeted and address only a tiny fraction of the correction. Market forces will run their course anyway. The idea that one or two hundred billion here or there or anywhere will change the course of this multi-trillion dollar correction seems a bit tenuous.
What a bunch of BS. Try telling that to the brokedicks here in Dallas and Houston. Last time I looked, didn’t see no ocean here.
From the NYTimes link above:
“Bank of America…has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans.”
Ok, so can someone explain what this would mean to the taxpayer…? If I understand this idea proposed by BoA, then the newly created agency will buy these mortgages from the banks at deep discounts (let’s say 30% or so) and so the banks no longer will have these loans on their balance sheets….is that what this is saying…?
This is a great idea and a perfect business opportunity. All Bank of Aliens has to do to start it is find some sovereign wealth fund to finance such a great investment.
I will be the first to admit that our country has gotten a bit off the right track. But is it just me or does it really infuriate other people that Bank Of America’s name seems to suggest their greed and disregard for anyone or anything but themselves is shared by all of us Americans.
I think they should be forced to change their name and stop smearing all of us with their slime as they go about their business.
Wasn’t Bank of America the one that if you were an illegal you didn’t have to furnish a SS# in order to get a loan. Yesterday I pulled a Credit Report and found out that I had an open CC account with them since the early nineties with a limit of $18K. I took immediate steps to close it out.
Bank of America was also the one that made people train their replacements in India as a condition for getting their severance checks.
That’s them alright, and I am sure that they will do their best to make sure that everyone except their shareholders will pay the price for their Countrywide debacle.
It seems that everytime you read anything about them they are the furthest out on the ruthless villian limb of the crooked banking tree.
Anything for a buck, even if it means legitimizing illegal aliens in order to make a few extra bucks. Lure people into credit card debt then rate jack them as soon as they are in hock so bad they have no choice but to pay the outrageous interest.
I hope that we haven’t gotten to the Point that Bank of America actually is a pretty good representation of America to the country and the rest of the World.
I saw some rumor recently that BofA never really closes an account anyway
I actually never started an account with them. I feel so superior. I just dealt with long gone enterprises like SeaFirst and Nations Bank.
I read this article last night. The real problem here is that people stopped treating their houses as places to live. They are investments. Now that their investments have gone down in value, they want the government to bail them out. Totally ridiculous.
Now before we all blow our tops – this is just one article – there has been nothing official said or proposed. However, if this actually happens (it probably won’t) then I need to dig up my Pets.com stock certificates and write my local congressman.
A few days ago I complained that reporters always used examples of people who deserved everything they were getting (people making $250K looking for a bailout). Now I’m wondering, since most reporters and editors are not that well paid and probably hate the idea of a bailout as much as we do - do they purposefully use these examples, to advance their own feelings?
“barely enough to cover the $192,000 in mortgage debt and an additional $22,000 in closing costs and broker’s fees.”
Do those closing costs seem high to anyone?
Cash back aty closing possibly - or - maybe some exotic mortgage with all the fees and charges.
I wonder why we responsible savers (especially in tax avoidance strategies) should go nuts with irresponsible borrowers. The only nutty response we need to do is laugh hysterically at those grasshoppers! I have a lot of stuff squirreled away to last through the next 8 years of the intense socialism that will take hold in the U.S. After that, economics will force us to heed Ron Paul’s words. Economics is about to force reckless spending individuals to stop their pitiful ways. Also, if you don’t sell your asset, you won’t incur a capital gain tax, which means you are witholding money from the socialists. Given time, we savers will win in the end. I repeat: 8 years. I will laugh at those knuckleheads who say they will take from the wealthy (read “responsible producers”) and give to the common good (read “lazy voters for more socialism”). I’m laughing now! Got gold?
It will take longer than 8 years for this mess to sort itself out. Allowing for political interference, it will take 20. Unfortunately I turn 61 next month.
Maybe this will help, Englishman in NJ:
Remember that your frugal lifestyle has led to a crucial advantage for you going forward in our rapidly globalizing economy: Nimbleness.
http://www.nytimes.com/2008/02/22/business/22homes.html?_r=1&oref=slogin
What a crock of cr@p this article is all these sellers caught by the bubble have no one to blam but themselves.
Lets review them one at a time:
The Breakstones: Owns two homes, sold one at a 65k lose, and covered it w/ a loan against the new home that was purchased before the old one sold. They have 18k in monthly expenses (4k mortgage & 14k in other expenses that supposedly cannot be pared down, yeah right) They make 250k/year, well your income still exceeds your expenses, your going to get huge tax reductions for the mortgage, taxes and kids you have and I can not imagine that all that 14k is as fixed as you believe.
Ms. Tuttle: Purchases a new home in her late 50’s that has 4 beds and three baths and is a divorcee with grown children and she is in an industry that is directly linked to the housing market, retail furniture sales. So she basically purchases too much house in a time frame when most people are downsizing. It is unclear if she was divorced at the time of purchase but the article indicates that she bought it on her own and not as a couple. She says she is stuck, but yet she had an offer on the table and all she had to do was cough up 6k and she would be free of 2400/month payment. So why not take it and then recover in about 6 months by renting at 1400/month? 6k is not even 3 months of mortgage payments?
The Nauses: Husband relocates for a new job leaving the wife behind to sell. They first list the home to get a healthy profit despite being in a down market and w/ foreclosures all around them. They chase the bottom until they go to their minimum sale price which exceeds the price the market price. They do this because they do not want to write a check at closing. Yet, they have 100k in savings. If they had just slashed and burned up front and wrote the check then they would not be hung up b/t 2 cities and writing monthly wasted money checks of 1400/month to Memphis + costs of caring for a home long distance.
Sorry no sympathy here. I took a job in another city before I sold my place and I cut my price to be over 10% under the prevailing FMV at the time. I caught my knife catcher and while painful because it took over have of the 20% down payment I had put into the place, I learned a lot and now rent until all this toxicity is purged!!!
They all just take the cake and exemplify the financial stupidity that exists in America today, and our gov’t is apparently on the verge of catering to it, and I am going to have to pay twice apparently, once for doing the right thing in my old place to the tune of 60k and now again as I watch my taxes go toward the bailout of banks and people the likes of those in this article. I am upping my retirement savings to the max to avoid as much tax as possible and because I am seeing my SS retirement benefits evaporating before my very eyes being wasted on these fools because of their fiscal stupidity!!
Sorry I just had to vent!!
Joe, you were much more restrained than me. Well done!!
I really feel like paying this Breakstone guy a visit and administering the JT treatment myself!
Brokeback Breakstones?
It boggles my mind that just about every “solution” is to do precisely what got us in this mess to begin with.
Nothing sums things up better than this. This from a household with a quarter million dollar income.
“I used to think,” Mr. Breakstone said, “that I would pay the piper later and enjoy life now. I’ve totally reversed that view.”
Anyone who can go broke on 250k a year would be broke on 5 million a year. You can’t save these people.
i agree watcher. the trick is if you sudeenly start making alot more $$ try and live like you never got the raise and you can bank major $$
but i guess the 14k a month in necessities can’t be trimmed
people that make 2 or 3x what i make and have not even half of what i have been able to put away
Please.
I know people who have made more than 10x my worth for the last 10 years, and their net worth is less than mine.
If we get into this kinda p*ssing contest, there would be no winners (unless you like “golden showers”)
“Anyone who can go broke on 250k a year would be broke on 5 million a year.” — that’s solid gold. The HBB should have a section titled “Pearls of Wisdom.”
‘It boggles my mind that just about every “solution” is to do precisely what got us in this mess to begin with.’
http://en.wikipedia.org/wiki/Hair_of_the_dog
“Hair of the dog is a colloquial English expression predominantly used to refer to ingestion of alcohol as treatment for a hangover.”
Good one, Prof.
Did you ever gamble to get money with which to pay debts or otherwise solve financial difficulties?
After losing did you feel you must return as soon as possible and win back your losses?
After a win did you have a strong urge to return and win more?
Did you often gamble until your last dollar was gone?
Did you ever borrow to finance your gambling?
Did gambling make you careless of the welfare of yourself or your family (or everybody in your state or on your continent/globe)?
Did you ever gamble longer than you had planned?
Have you ever gambled to escape worry, trouble, boredom or loneliness?
Have you ever committed, or considered committing, an illegal act to finance gambling?
Do arguments, disappointments or frustrations create within you an urge to gamble?
Did you ever have an urge to celebrate any good fortune by a few hours (or decades) of gambling?
Have you ever considered self destruction or suicide (by gambling!) as a result of your gambling?
(parentheticals mine)
No, but take out the word “gambling” and put in “bloggin’ on the HBB” and you’ll have it!!
“…and his wife, Lori, chief of customs agents at Memphis International Airport — who together earn more than $250,000 a year — managed to extricate themselves by paying off the mortgage.”
She saved her job; bad credit or BK…see ‘ya!
Excellent analysis. While reading it last night I just kept shaking my head - took forever to get through it.
Now which bank are you with…….Citi?
Better watch this little video called “Find Waldo”
http://www.cnbc.com/id/15840232?video=659529306&play=1
Great video, rare honesty on the MSM!
45% in six months (but remember it pays no yield):
Feb. 22 (Bloomberg) — Gold, little changed in London, headed for its biggest weekly advance in 19 months as lower U.S. interest rates may revive investor demand for the metal as an alternative to the dollar. Platinum dropped from a record.
The dollar traded near a three-week low against the euro on speculation U.S. economic growth will slow, forcing the Federal Reserve to lower interest rates. Gold has climbed 45 percent since the Fed in August announced a policy shift to contain the subprime mortgage collapse.
http://www.bloomberg.com/apps/news?pid=20601012&sid=aYvMCnmp4t4s&refer=commodities
“Gold has climbed 45 percent since the Fed in August announced a policy shift to contain the subprime mortgage collapse.”
What a weird coincidence.
And dollar is unchanged in the same time frame, rounded to the nearest 10%. The big spike up in gold occurred at the same time the double began to stabilize. In fact, right now it’s the pound that’s getting hammered.
Stable dollar, 4% bonds, and gold soaring. There’s no way to rationalize it on the demand side alone - it’s at least as much of a supply story right now. Miners can’t/won’t deliver product, and revenue growth and earnings of some (not all) miners are still disappointing. And central banks are no longer sellers.
The dollar has not been stable the last 6 months; it has fallen sharply.
http://quotes.ino.com/chart/?s=NYBOT_DX&v=d6
40.7 down from 47 in Philippine pesos in the last 6 months. I wouldn’t call a 15% drop “sharp”, I’d characterize it as … OK, can’t do that with a straight face.
OK, I’ll use your chart. It’s essentially unchanged over the past three months but is down closer to 10% than 0% over the past six months, a small (and rapidly declining) explanation for the move in gold.
The lower productivity from the aging Ghawar field and its 4 other sister fields in Saudi Arabia will be hard to hide very soon. And it will be soon enough to keep precious metals on a jagged upward trend. At the close of 2007 I predicted oil will average $100 per barrel in 2008. I still stand by that. In 2009 it will average above $120 per barrel.
We get McCain in office and we’ll then see a bloody war in Iran (like it or not). And that will make commodity price inflation more intense.
I think Aladinsane will get his wish to be able to buy an incredible house with gold bullion, and it will probably only cost him 10% of his holdings. LOL.
Me, I’m keeping my allocation in PM’s at 10%. We will see a replay of 1980, but not for another 10 years, IMO.
Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater. That is more than double the percentage just a year ago, according to a new estimate of the damage by Moody’s Economy.
“Not since the Depression has a larger share of Americans owed more on their homes than they are worth.”
Economic Depresssion::Household Equity Gone
When it’s raining::the streets are wet.
It’s raining now:: “W” word?
The household equity is now gone:: “D” word?
The fact is a depression, not a recession has already begun; the PTB, MSM, and probably most US citizens will scream bloody murder that it is not so. But, facts are so stubborn - even with Goldilocks spin, blatant government lies, distortions, and propaganda, the People KNOW the collapse is happening, and happening fast.
They blamed Hoover, they’ll blame Bush.
The enormous deficit spending of fiat currency for generations was the problem; the housing collapse was the catalyst.
So, you don’t buy the argument that the recession we are in, will turn into a depression? You are skipping right to the “d” word? Refreshing, actually! You are the “no spin zone”, not that spinmeister.
All I know, is this coming presidency will be one term, and the more the govt. pees in the ocean (stimulus packages), the worse it will get imho. And with no WWII, how the heck will we recover?
WWII did not cause the recovery, that is a myth that is propagated by even the most intelligent people. If war spending could get us out of a depression, then why isn’t the economy booming with the war on terror and Iraq?
WWII delayed the recovery as economic resources were diverted to the war effort. This is the broken window fallacy all over again.
The only way I think one could say that WWII “fixed” the problems in the US is that nearly every other major economy in the world was bombed out or otherwise seriously damaged from the war (England, Germany, Russia, Japan, etc.) So, the US ended up on top thanks to existing a LONG way from the front lines and the technological advancements that came out of the war.
So, the only real way a war can let you “win” in an economic sense is if your nation doens’t get bombed, invaded, etc. during the war. But even that isn’t a path to a better economy, as the war in Iraq is proving.
If war spending could get us out of a depression, then why isn’t the economy booming with the war on terror and Iraq?
Different time, different war. During WWII, the entire economy and population of the US was invloved in the war effort. Today, only defense contractors are invloved, and that is a small cross-section of our economy.
The economic expansion after the end of WWII had much to do with the fact that the US was the only industrial nation on earth with intact infrastructure at the end of the war. There was also the housing boom that began as a result of all the veterans coming home and wanting to start families. We have none of that today.
It’s different
herenow.Not Your Father’s Stagflation
http://www.minyanville.com/articles/index.php?a=15995
This is a great article but it fails to answer two questions:
Will the government become the borrower of last resort? In my opinion, all signs point to yes. The Stimulus package is just the first volley of the government borrowing on our behalf because we are unable or unwilling. Rising social programs SS, Medicare, universal healthcare, bank bailouts, etc will keep the supply stable or growing.
Will foreign governments lose faith in the dollar if they expect the United States to walk away from its debt due to the inability to raise enough tax revenues in a deflationary environment? This can force the government to result to inflation. Either way, demand for the dollar will fall which is just as significant (if not more so) than the supply of the dollar.
What we are learning today is that wealth comes from production, but that more and more people think they can gain wealth without producing (by stealing via inflation/taxes). This will result in people fighting over a shrinking pie (as we consume the wealth we do have faster than we produce new wealth). As people fight over the pie, claims on wealth (federal reserve notes, stocks, bonds, taxes, etc) will be the heart of the fight and the place you are most likely to lose your wealth.
Owning a life time supply of the things you will consume is much more wealth than owning a claim on nothing (FRN). Owning real things that required real production will protect your wealth from being stolen except by traditional bruit force / gunpoint.
Free link is now up to Martin Wolf’s recent diatribe in its full glory.
February 20, 2008
by Martin Wolf
America’s economy risks mother of all meltdowns
“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.”
Alan Greenspan, The Age of Turbulence.
That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas.
http://blogs.ft.com/wolfforum/2008/02/americas-economy-risks-mother-of-all-meltdowns/#more-110
Again, quoting Roubini’s 12 possible disasters, I’d say at least 10 are likely, not worst case scenarios. The fall in housing prices he predicts is just what is required to restore affordability. And under what circumstances can the U.S. keep spending 6% more than it earns forever?
Stein was the formulator of “Herbert Stein’s Law,” which he expressed as “If something cannot go on forever, it will stop,” by which he meant that if a trend (balance of payments deficits in his example) cannot go on forever, there is no need for action or a program to make it stop, much less to make it stop immediately; it will stop of its own accord.[2] It is often rephrased as: “Trends that can’t continue, won’t.”
He was married to Mildred Stein, who died in 1997 after 61 years of marriage, and he is the father of lawyer, author and actor Ben Stein (Ferris Bueller’s Day Off, Win Ben Stein’s Money) and writer Rachel Stein.
http://en.wikipedia.org/wiki/Herbert_Stein
Speaking of the Steins, since when was Ben Stein an outspoken advocate for “intelligent design”? …and people take this guy’s advice on the Yahoo financial site, yikes.
A nose specialist once told me, “Nosebleeds always stop.” I am thankful he did not rely on bleeding stopping of its own accord, though.
Government the destroyer part2…
http://www.wrisley.com/bonner2.htm
Fed ready to act if prices psychology turns sour
By Krishna Guha in Washington
Published: February 21 2008 21:06 | Last updated: February 22 2008 01:54
How stable are inflation expectations in the US? This is the key to understanding how far the Federal Reserve will be able to go in cutting interest rates to stave off recession.
As this week’s minutes show, the Fed views the latest inflation data as “disappointing”. Inflation reached an annual rate of 4.3 per cent in January, with the underlying core rate at 2.5 per cent.
The central bank is willing to look past the inflation numbers and focus on fighting recession risk, in part because it believes that economic weakness will ultimately moderate price pressures.
But there is a caveat. The Fed will tolerate higher inflation only as long as it believes this is not seeping into inflation expectations and fostering a 1970s-style inflationary psychology.
That is the real stagflation risk – not a few months of weak growth and relatively rapid price increases.
As Fed governor Frederic Mishkin said in a recent speech: “The flexibility to act pre-emptively against a financial disruption presumes that inflation expectations are firmly anchored.”
The awkward fact is that market-based measures of inflation expectations have been moving up for a while.
http://www.ft.com/cms/s/0/1dee62e8-e0bc-11dc-b0d7-0000779fd2ac.html
Except in the stock market, where PE’s seem to presume low inflation.
The last bastion of the incompetent.
And except in the treasuries as well. I assume “increased inflation expectations” would result in bond selloff, but we ain’t there, definitely.
FB goes Clyde Barker…
While holding up an Atlanta area Regions Bank, the robber said “You took my house, now I’m taking your money.”
(Heard this morning on WSB radio, no link yet, also no word on Bonnie.)
Awesome, maybe we can bring back flappers and tommy guns. Party at Gatsbys’ house every weekend!
I found that darkly humorous.
Here’s the link:
http://wsbradio.com/news/022208athensbank.html
Kid, It was Clyde Barrow. I think.
Back to the good old days of robbin’ with six guns and fountain pens.
in other shocking developments real estate agents are bailing
who could have predicted this? i am sure they saved for a rainy-snowy day!
http://realestate.msn.com/buying/Article_csm.aspx?cp-documentid=6009539>1=10932
From my son in Atlanta area in response to the referenced article… “am sure a lot will try to go into insurance sales. One friend I have here that moved from florida around 6 months ago says that a lot of times when sales jobs would come up in florida the ads would even say things like “realators and mortgage brokers need not apply” as it was viewed as these people didnt really have sales skills, they just were in the right place at the right time.”
This market can’t sit where it is much longer. It’s going to break one way or the other. I don’t know which way. If you put a gun to my head and forced me to guess, I’d say up. But I want to be in the move whatever it is so today I’m going to buy straddles on the indices probably summer expiration.
The market will do what ever it can to cause the greatest pain.
Don’t you ever just sit at your computer and say to yourself, “I don’t need to trade this today, it only makes the clearing corp money” ? LOL
I just think it will happen fast whatever it is and premiums will jump.
I haven’t traded much at all this month.
trouble at goldman?
NEW YORK (AP) - Analysts in recent days have cut their fiscal first-quarter earnings estimates for Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Morgan Stanley because of an expected rise in various portfolio write-downs.
Citi Investment Research analyst Prashant Bhatia wrote in a client note late Tuesday that the three investment banks will take write-downs on the value of their leverage lending, commercial mortgage and private equity portfolios during the first quarter.
JPMorgan Chase & Co. analyst Kenneth Worthington continued weakness in lending markets are likely to continue through the second half of the year and indicate continued problems with risk management.
“We know it’s tough out there, but we believe large write-downs reflect failed risk management and business strategies and should negatively impact valuations,” Worthington wrote in a research note.
Worthington said he still favors Goldman Sachs among investment banks but cut his fiscal 2008 earnings estimate to $18.07 per share from $21.91 per share due to expected further write-downs.
Bhatia estimates Goldman Sachs will take a $2.7 billion write-down, with $1 billion coming from the declining value of leverage loans. Bhatia cut his fiscal first-quarter earnings estimate for Goldman Sachs to $3.70 per share from $6.70 per share.
Shares of Goldman Sachs rose $3.65, or 2.1 percent, to $177.45 in Wednesday afternoon trading.
Morgan Stanley is expected to take a $700 million write-down tied to its portfolios during the quarter, Bhatia wrote. Bhatia cut his earnings estimate for Morgan Stanley to $1.40 per share from $1.69.
Analyst Mark Lane of William Blair & Co. estimates Morgan Stanley will take a $2 billion write-down during the quarter, prior to any hedging for its commercial mortgage-backed securities and leveraged loan holdings.
Shares of Morgan Stanley rose $1.59, or 3.8 percent, to $43.08.
Lehman Brothers is likely to take a $500 million write-down tied to leveraged loan and commercial real estate portfolios, Bhatia wrote. He reduced earnings projection to $1.50 per share from $1.78 per share.
Worthington cut his full-year earnings estimate for Lehman Brothers by a 1 cent to $6.23 per share.
Shares of Lehman Brothers rose $1.95, or 3.6 percent, to $55.52.
Investment banks took billions of dollars in write-downs during the second half of 2007 due to bad bets on bonds backed by mortgages.
Bhatia did say fixed-income operations, aside from mortgages, has been strong so far in the fiscal first quarter.
“We expect the rates, currencies, and commodities-related businesses to be running at or close to record levels driven by robust client engagement,” Bhatia wrote in the note.
Goldman Sachs, Lehman Brothers and Morgan Stanley’s fiscal first quarters all end on Feb. 29.
NEW YORK (MarketWatch) — Oppenheimer banking analyst Meredith Whitney told CNBC last night that Citigroup Inc. is under reserved and may cut its dividend again soon. She also warned that financial stocks could plummet as much as 15-50% this year due to pressure from a weakening economy and fears of a recession. Whitney correctly predicted in November that Citi would be forced to scale back payouts; the bank cut its dividend by 41% in January
“A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.”
John Maynard Keynes, 1931
IMHO, it will be slow and steady. Like putting a frog in cold water on the stove and turning the heat up gradually, the frog will never jump out of the pot. Frog stew.
Once as a tiny, inquisitive science-tot, I tested that very assertion. Believe me, they jump.
Someone after my own heart.
Me too, me too! They jump alright. (The metaphor is nice inspite of being demonstrably false.)
Ahansen! That’s quite super! I believe in testing theories thoroughly, and it makes me mad when I hear pretend science stuff quoted as fact. And now I know about frogs in hot water, thanks to your inquisitive mind.
Although, come to think of it, I’m displeased that you scared that poor frog, and risked its well-being. Next time use realtors.
I had heard that for decades! LOL - another example of my conformational bias, my mother told me and I believed as fact.
I’ll have to find a new analogy for future use.
We are now in the frog-heating phase of the housing bubble.
How about sticking some frog-marched Wall Street perps in a cauldron full of hot water, and do away with the peliminaries?
Treat this as a lob from the peanut gallery - but I think the U.S. market here is a lot less risky than emerging markets. And the worse the U.S. does, the more likely it is to be to the right on a number line. Definitely not a believer in decoupling (of equity markets, that is).
” …I don’t know which way”
up is down… does this help?
I thought the market usually broke in the direction of the trend when it was in a wedge? Why wouldn’t it do this now?
Roidy
Pew Survey
Feb 14
• Nearly half of Americans (46%) who rate the economy as only fair or poor blame President Bush a great deal for the nation’s economic problems. That is greater than the percentage saying Congress (31%), multinational corporations (31%), banks and other financial institutions deserve a great deal of blame for national economic problems.
• A majority (53%) says that jobs in their area are difficult to find, the highest percentage expressing that view since March 2006. Only about a third (34%) says there are plenty of jobs available in their community.
• Just 31% of Americans believe that it is a good time to invest in the stock market, down from 40% in September 2007. The percentage saying it is a “very bad” time to invest has more than doubled since then (from 7% to 18%).”
These aren’t even the meatier ones. Worth scanning.
http://tinyurl.com/3drmt9
• Just 31% of Americans believe that it is a good time to invest in the stock market, down from 40% in September 2007. The percentage saying it is a “very bad” time to invest has more than doubled since then (from 7% to 18%).”
Another potentially bullish datum, although short interest and VIX are still a bit low for a good rally.
I had that same thought. J6P is as clueless as ever. My guess would be the big break will be up.
Wait til the number is under 10%.
I’m mostly out and waiting. 10% bullish and 90% bearish would be a great buy, will it get that bad you think? Sold my APA yesterday will buy back if it sells in the low 90’s. Not to exciting these days but thats OK.
Every time. I know one very successful large trader that makes me look like a raging bull. I only expect a 30% drop from here in the S&P 500.
If the market is down another 30% and the index is still 31%, the market will continue to go down.
BP strike price on the DJIA seems to be holding at 12,200…
http://www.marketwatch.com/tools/marketsummary/
I can’t judge whether it’s a good time to invest or not (but I personally am “accumulating” some stable dividend-paying stocks in companies with a large percentage of foreign business and little exposure to banking and housing).
But I do know that J6P will buy stocks when they’re high, and not buy when they’re low! You can bank on that.
I’m nowhere near ready to do any kind of trading yet IMHO, as I seem to have much to learn yet. Still, a local bank stock I was going to use to just “practice” my studying and research seems to be a good dividend play right now, even given our crappy local situation.
“Homeowners and non-homeowners alike say that the price of homes in their area will go up at least a little over the next few years. A majority of the public (55%) — including identical percentages of homeowners and non-homeowners — say that home prices will increase in coming years. In September 2007, 53% of the public said they expected home prices to rise, but last June somewhat more Americans said they expected home prices to go up in coming years (62%). ”
I still find this amazing.
I’m amazed, too! The NAR did a good job brainwashing people. Or they asked a bunch of retards.
I will stick my neck out and say that home prices in my area will go DOWN over the next few years.
Pity they didn’t include “The gullible people” or “All of the Above” on the questionaire.
No housing bottom until ‘10: CP Morgan
http://tinyurl.com/2pf9h3
“We think the bottom will be a prolonged period, and that the recovery would not be a sharp ‘V,’ but will be a soft recovery,” he added.
Eggleston also expects one-half of the National Association of Home Builders’ 75,000 members to be in financial distress within three years.
“I think survival is a question,” he said, adding that many more builders are too small to be members of the trade group.
“The chief executive of one of the largest privately owned U.S. home builders said on Thursday he doesn’t see the struggling U.S. housing market’s weak demand hitting a bottom until the middle of 2010.
“He also sees U.S. home prices falling another 20 percent, while land prices fall 25 percent. Those prices will fall much less in markets his company operates in Indiana and by only half as much in the Carolinas, he said.”
Now that is the kinda news I am looking for …..Sounds good to me….Thanks for the link……..
When the dust settles on this bubble, one of the interesting historical details will regard the fact that homebuilder CEOs were in the minority of housing market “experts” whose comments most accurately reflected market reality on the way down.
That is only because they noticed that it causes their stock price to go up
Red Lights Flash in Credit Nooks
By Carrick Mollenkamp and Serena Ng
Word Count: 871 | Companies Featured in This Article: Barclays, Diageo, AT&T, Wal-Mart Stores, McDonald’s
The global financial squeeze is spreading to investments linked to the corporate-debt market, slamming the value of contracts that provide insurance against defaults and marking one of the first times that the debt of major companies has been affected by the turmoil.
http://online.wsj.com/article/SB120363174262884069.html?mod=todays_us_nonsub_money_and_investing
Preaching to the choir? Sorry if this has already been posted.
http://finance.yahoo.com/expert/article/economist/67468
Canada’s real estate boom turns 10 years old
Toronto prices up 78% to average of $376,236
http://www.thestar.com/Business/article/305878
The big unknown is how much of an impact the slowdown in the U.S. economy, which buys 80 per cent of Canadian exports, will have on our domestic economy. House prices in the U.S. have tanked spectacularly.
Economists are now nervously looking south to see what kind of an impact that may have on the Canadian real estate market.
Oh, Cananda, I don’t think you will like what unfolds to your south.
Oh Canada has nothing to worry about. Americans will be flocking North to buy houses and keep the economy churning.
“Economists are now nervously looking south”
When reporters just make stuff up, inserting the word “economist” as a catch-all noun for their musings, it’s no wonder that both reporters and economists get a bad name.
Be sure to separate Canadian oil & food exports to the USA from everything else in your consideration. The US will still consume huge quantities of both, from whatever source, as long as it can.
should have been a bouncer:
Sources have been telling me that doormen at several clubs are clearing $8,000 to $10,000 a night before they share tips. So much cash is pouring in that some doormen are making $400,000 to $500,000 a year, several nightclub executives told me.
“Pure has guys at the door making more than the president,” said one executive with intimate knowledge of the cover-charge system.
http://www.lvrj.com/news/15834017.html
Mr. Paul Krugman
New York Times
“…That said, I don’t believe we’re really facing anything comparable to 1970s stagflation. For one thing, we’re less dependent on oil: America has more than twice the real G.D.P. it had in 1979, but consumes only slightly more oil. For another, there’s no sign of the wage-price spiral that once drove inflation into double digits — in fact, wage growth has been declining even as inflation rises.
What’s much more likely is that we’ll have an economy like that of the early 1990s, only worse.
The first President Bush presided over the 1990-1991 recession. But his real problem came during the alleged recovery, which was hobbled by financial problems at many banks, which had been badly damaged by the collapse of the late-1980s real estate bubble, and by sluggish consumer spending, held down by high levels of household debt.
As a result, the unemployment rate just kept rising, not reaching its peak of 7.8 percent until June 1992….”
http://tinyurl.com/2re8e6
“the alleged recovery”
LOL. Krugman, as a trained economist, knows the precise definitions of recession and recovery, and also knows that unemployment is a lagging indicator, yet is so blinded by party loyalty/party hatred that he uses the word “alleged.” So I feel perfectly justified calling him an alleged economist.
Hilarious. We aren’t dependent on oil? So it doesn’t matter if the price just keeps going up? Has Krugman compared global oil demand today versus the 1970s? Also, Krugman, the fact that prices are rising but wages aren’t is not a good thing. It should tell you that something besides wages is driving prices; external demand.
Our GDP is higher vs oil consumption in the US, but much of our GDP and consumption is also tied to foreign manufacturing which consumes oil. The statement that we are less dependent on oil is laughable.
I think all of these economists are falling into the same trap that the rating agencies fell into, ie they base all future predictions off of the past. When much of current economic theory was developed the US was much more of an isolated system. Now it is just one cog in the machine. The power of the FED is greatly deminished.
Wall Street Journal
“In a move aimed at preventing future freezes in credit markets, U.S. and foreign bank regulators are jointly developing a set of best practices to improve the way banks deal with cash-flow problems.
Banks need short-term funding, also known as liquidity, to finance loans and to pay off debt. One of the consequences of the current credit turmoil is that certain financial markets have nearly seized up, with liquidity disappearing — or becoming much more expensive — for asset-backed securities, other structured financial products …”
Whee more moneys!
I have been short Citi from the 30s. I think they may go under.
Ms. Maria Bartiromo: Who hasn’t seen the worst?
Ms. Meredith Whitney: Citigroup, because there’s nowhere for Citi to hide.
http://tinyurl.com/ypsxhx
Businessweek
Feb 7
I live in Philly and because RE prices haven’t shown much of a drop yet, people here are starting to say that Philly is like San Fran. Here’s their rationale. Because the outlying suburbs of SF are getting crushed RE-wise, then in Philly we should expect the outlying suburbs here to get hit the most. This belief is also supported by a recent article claiming that suburbanites are tired of the woes of suburbia and want to move to the urban cities.
But in Philly, the pace of new construction/rehabs continues briskly. Is that same pace occurring in SF? I’ve heard that in SoMa, there is a lot of new construction — but I always thought that SF was ratehr limited in its new-construction potential.
SF is a small city, the first to be fully gentified. It is as if the City of Philadelphia consisted of Center City, Manayunk, Chestnut Hill, and the most stable area of South Philly. Of all the central cities with extensive rail transit systems and large CBDs, the City of Philadelphia is the weakest, poorest, least vibrant, etc.
One view is that a turnaround is inevitable, given the city’s legacy assets. Another is that becoming another Detroit is inevitable, given its legacy burdens and the likely deterioration of its legacy assets (the collapse of the transit system). Better goverment, and a better deal from the state, might help. We’ll see.
Right now, however, the CBD is out by King of Prussia where all those highways meet, not in Center City where all those rail lines meet.
Yeah, OK. Ever been to the Tenderloin?
Fully gentrified, my a@@. I saw people “shootin’ up” at noon on the sidewalk. Not one, close to 5. All unrelated to each other. The number of homeless was off the charts.
Pull the other one, dude, pull the other one.
But how much do they earn and have to spend on heroin compared with the homeless in Philly?
Last week in the T-loin, I saw this guy looking for something on the ground totally distraught that he couldn’t find it. When he finally did, he held it aloft like Excalibur. It was a rock. “Do say coke or freebase… unless you got some!”
Sorry. Do = Don’t!
Yep, that sounds like the T-loin alright!
SF is a small city, the first to be fully gentified.
I just spent the better part of three weeks in and around SF, and I can tell you it’s not “fully gentrified.” I’ve met quite a few people who’re living marginally but functionally in SF. SF’s rent control laws have enabled many people to stay in neighborhoods they should no longer able to afford.
Overpriced: yes.
Highly gentrified: yes.
Fully gentrified: no.
Yeah, the marginal but functional describes most of Manhattan too. Same reason as well.
tl-
ot, but have you ever been to the Franklin Institute? It is on our list of places of interest. Any feedback would be appreciated. Hype or interesting?
I’m not tl, but I’ll answer your question about the Franklin Institute. IMO it’s worth a visit. Children especially would enjoy it.
to tl: Last night I was talking to one of my city friends. He said he’s hearing about prices dropping dramatically in the fringe city areas - not Center City or Bella Vista - and in Media PA.
When I asked, what do you consider a dramatic drop? He replied a house listed for $220k selling for $170k. That was the Media house. The city places he described had similar haircuts. According to him, these particular properties were not foreclosures and had owners who just wanted to unload. I expressed my surprise because so far I’m only seeing 5-7% reductions in my area. So that’s info on the ground that differs significantly from the REIC hype.
Franklin Institute is definitely worth it!!
BTW, go to the Independence Visitors Center on 6th and Markets. It’s the area’s tourist center and the people there are wonderful. They will help you will find lots of cool things to do and see.
BTW, if you’re planning on eating a Philly cheesesteak, do NOT got to the overrated Pat’s nor Geno’s. Jim’s, on 4th and South, is perfect choice for the real thing. Abner’s on 38th and Chestnut (at Penn’s campus) has great cheesesteaks as well.
Funny story: Several years ago there was a snowstorm here and the Weather Channel’s ubiquitous Jim Cantore was doing live reports from outside the Philly Art Museum. So a few friends and I (we’re all weather buffs) went to visit him. My girlfriend was there, too. Cantore was very friendly, but he and his crew were hungry. He asked about cheesesteaks, and we went to Abner’s and picked up a bunch of cheesesteaks for Cantore and his crew. He liked them so much that during his next live report, he had my girlfriend enter the frame holding a cheesesteak. He introduced her as he talked about Philly cheesesteaks and took a bite out of it. The rest of us were in the background playing with my dog. Good stuff! : )
phillygal-Thank you for the feedback. I appreciate it.
tl- Thank you for your well done post. And I will take your cheesesteak advice too.
What time of year should we go?
How expensive is Philly PA, compared to So Mexifornia? (Please, both chime in.)
Come in April or May, before it gets too hot. I visit SoCal often and never noticed a difference in prices. But I don’t stay at hotels.
I agree with tl’s best time to visit. Late April-May the weather’s nice and all the ornamentals planted around the tourist areas are in bloom. So it’s a pretty sight.
Another good thing about visiting in the spring is hotel prices are lower, and since the kids are still in school, you won’t be dealing with a lot of kiddies in the historic area. (Although mid-May into June there are quite a few school field trips around Independence Mall.)
Brave New Economy
By DAVID HALE
February 22, 2008; Page A14
There is a delicious irony in the fact that U.S. banks have sought equity capital from the sovereign wealth funds of Asian and Middle Eastern countries to repair the balance-sheet damage inflicted by subprime mortgage securities. These same countries helped finance America’s housing bubble and subprime debacle.
Stung by the Asian financial crisis 10 years ago, central banks in developing countries began defensive actions to accumulate foreign-exchange reserves. Economies blessed with significant natural resources accumulated yet more dollars. The problem is their overflowing coffers contributed to a major misallocation of capital in recent years that is likely to continue.
During the past four years, the developing countries have run an aggregate current account surplus of nearly $2.5 trillion. In 2008 alone, the surplus will probably exceed $625 billion. These huge surpluses provided the global financial system with the excess liquidity that funded America’s burgeoning current-account deficit and depressed bond yields four years ago. …”
WSJ
http://tinyurl.com/278ack
Hope springs eternal. The latest rumor in Colorado Springs is that the military will be expanding their bases there and the newcomers will make housing go back up because of a shortage. This is one of the harder hit areas in the country. Anyone heard anything about this?
Can an Air Force Sargent afford a 300K house? And don’t most enlisted types live on base anyway?
Shortage they say? According to realtor.com there are 6000+ houses for sale in Springs.
A sergeant probably couldn’t afford a $300,000 house, but that might not stop them from trying to get one. If they don’t live on base, the get a housing allowance on top of their pay.
I don’t know why anyone in the Army would buy a house anyway. They would have to move 3 years later, most likely, after they had been reassigned.
One of the worst cases of cultural inflation I’ve seen was a Korean War era sergeant wondering where all the married-with-children privates came from.
166 comments at 0644PST?
must be time to buy.
We who like to post early are suffering from a mutual positional externality.
Lenders Fighting Mortgage Rewrite
Measure Targets Bankrupt Homeowners
Sen. Richard J. Durbin’s bill would allow bankruptcy judges to alter the terms of first mortgages for primary residences.
By Jeffrey H. Birnbaum
Washington Post Staff Writer
Friday, February 22, 2008; Page D01
The nation’s largest lending institutions are lobbying hard to block a proposal in Congress that would give bankruptcy judges greater latitude to rewrite mortgages held by financially strapped homeowners.
The proposal, which could come to a vote in the Senate as early as next week, is being pushed by Democratic congressional leaders and a large coalition of groups that includes labor unions, consumer advocates, civil rights organizations and AARP, the powerful senior citizens’ lobby.
The legislation would allow bankruptcy judges for the first time to alter the terms of mortgages for primary residences. Under the proposal, borrowers could declare bankruptcy, and a judge would be able to reduce the amount they owe as part of resolving their debts. …”
Washington Post
http://tinyurl.com/ynl8e4
This whole idea is absolutely insane. Talk about the United Socialist States of America.
Good thing I don’t own property, for if this happens, owning property would place one in a hugely compromising position.
Judges will decide how much your property is worth. Like that idea?! Better add to your stash of cash. You’ll need a rather large chunk of change for a new expense called “payola”.
If anything, it’s called crony capitalism. We’ve seen some of the most obscene modifications to contracts in the last 7 years than I care to imagine.
Were going to have to rename it “Contract Suggestions” instead of “Contract Law”.
Lost note affidavits throwing a wrench in the works for banks attempting to foreclose:
Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish
http://www.bloomberg.com/apps/news?pid=20601109&sid=aejJZdqodTCM&refer=home
“U.S. District Judge David D. Dowd Jr. in Ohio’s northern district chastised Deutsche Bank National Trust Co. and Argent Mortgage Securities Inc. in October for what he called their “cavalier approach” and “take my word for it” attitude toward proving ownership of the mortgage note in a foreclosure case. ”
Karma bites hard. In a greedy blood-sucking rush, the bankers didn’t keep up with their paperwork. Hate that when that happens.
The cheers to Bloomberg for calling them “Deadbeats” instead of describing them as victims who are going to lose their houses! Maybe public sentiment is tipping.
This sounds like a scheme to lock in unaffordable home prices until wage inflation catches up. It also provides an implicit bailout of lenders who made foolish loans at taxpayers’ expense. It would take advantage of a big lie: That current “appraisals” (which are widely known already to have been fraudulently overstated in many cases) represent an accurate measure of current market value for homes that will not sell.
I will be renting for the next twenty years if the OTS succeeds with this measure.
John Dimsdale: The Office of Thrift Supervision, a government regulator of mortgage lenders, is putting together a refinancing option to help avoid foreclosures.
A mortgage in trouble would be split in two, with the government guaranteeing an amount up to the current appraised value of the house. The riskier portion of the loan — that not covered by the home’s equity — would be given to the original lender in the form of a certificate.
http://marketplace.publicradio.org/display/web/2008/02/22/mortgage_loan_help/
This is the equivalent of a year long tooth extraction without novacaine. It wouldn’t lead to fraudulent appraisals would it?
Appraised value would skyrocket. Every house would sell for exactly the appraised value. The private mortgage sector would be vaporized. This is nothing short of nationalized mortgages.
Sounds like a taxpayer-funded handout to the REIC (lenders and builders), and an affirmation of fraudulently high appraisals. Other than those minor drawbacks, it sounds like a good plan.
I am not clear on who would benefit from this “guarantee.” For instance, suppose a homeowner discovered he cannot afford his mortgage, and stopped paying it. Would he be made whole by the govt for the difference between “appraised value” and sale proceeds? In this case, it might make sense for homeowners to walk away from their homes in droves, in order to capture the value of the guarantee, then use the proceeds to buy another home from a bank trying to unload an REO glut.
I am curious how the new insurance liability created by this proposed govt mortgage guarantee would be funded. Would a premium be added to the mortgage payment? Or would the liability simply remain unfunded until “claims” arise?
That’s how you turn a loss into an asset.
More like turning a loss into a bailout.
More like the only bag-holder left. As far as the insurance goes PB ,usually the insurance is paid for the loss on a foreclosure ,but with the government changing the rules all the time God knows what the insurance would cover these days .
“…usually the insurance is paid for the loss on a foreclosure,…”
1) Foreclosure is a nonrandom event, and hence not insurable.
2) Not clear whether the claims payment goes to the lender or the former homeowner?
wage inflation catches up??? Not going to happen.
The New York Times has an article about more bailout plans being discussed
(registration-free link here)
http://www.nytimes.com/2008/02/22/business/22homes.html?ex=1204347600&en=19b585b57f24e19f&ei=5070&emc=eta1
One interesting quote:
Administration officials say they still oppose any taxpayer bailout for either people who borrowed more than they could afford or banks that made foolish loans during the height of the speculative bubble in housing.
At least they have the right basic idea. Though, eventually, it’s a zero sum gain and the people who are either good savers or good taxpayers will end up paying for all of this.
that’s good, the situation in Germany is already far worse than this. Seems a sure bet that many German statebanks are going to be bailed out at the expense of the taxpayer over the next monts, just like what happened at Northern Rock. And this sets a sure precedent for other EU governments who will also be very willing to rescue their bankster friends with taxpayer money.
They are running out of fingers to plug the holes in the dike.
More on the alternative to a taxpayer bailout — the mother of all cramdowns via allowing bankruptcy judges to write down mortgages.
“The mortgage bankers have set up a Web site, http://www.mortgagebankers.org/StopTheCramDown, that can calculate how much mortgage costs might increase by state and by county if the Durbin measure were to become law. “Cram down” is the industry term for a forced easing of mortgage terms.”
Funny how no one set up a site to object to Donald Trump’s commercial real estate cram downs. Looks like the FBs can learn something from The Donald after all.
Hey, Stucco. Now we know where David Cee’s money went. $1,200 to Dunkin Donuts and snow shovels.
http://www.nytimes.com/2008/02/22/us/politics/22clinton.html?ei=5090&en=111901f16e57d179&ex=1361336400&adxnnl=1&partner=rssuserland&emc=rss&pagewanted=all&adxnnlx=1203688946-LtGt6kx78aD/udOkuj4Ajw
Donuts are at the top of the food pyramid.
Tx what is your email address?
gymnastgal32 at yahoo dot com
Some good stuff in today’s Banc Investment Daily:
No Loan: BankUnited’s internal “no loan list” was leaked to the
press that shows how the bank is staying away from mortgage
loans on 191 condo projects due to declining market values,
delinquent association dues, litigation or concentration issues.
While embarrassing for the bank to have this public; having a
list this is a proactive idea to get all lenders on the same page.
Pressure Point: Freedom Bank’s ($291mm, FL) former CCO
has filed a lawsuit against his former employer and said he quit
the bank because he was pressured not to take $11mm in
downgrades and additional reserves related to problem assets.
The bank reported a $5.8mm loss last year, but would have
dipped below the “well capitalized” threshold if it had done so.
• Online or Struggling: In another sign the consumer is getting
more sophisticated online and perhaps struggling, Intuit (the
largest maker of tax-preparation software), said 2Q profit was
off 21%. The company receives revenue from its TurboTax
software sold in stores almost immediately, but doesn’t get
payment for online sales until customers submit their filings
(which many have delayed).
• Municipal Changes: The nation’s largest muni borrower, CA,
will shift $1.25B in auction rate bonds to more traditional debt
issuance, after the auction rate market ground to a halt
recently. Meanwhile, in an effort to ease the impact of failed
auctions on municipalities, the IRS said it is working on new
rules that will help cities, states and towns convert auction
Flew out of Baltimore to Phoenix last night. The older gentleman next to me in my row on the plane lives in Washington and was going to visit his sister and daughter in Phoenix. Came across as well-to do or just reckless with money (has a small airplane and is considering buying another). He admitted he’s having two high end houses built in the D.C. area for himself. I did not question it. But I’m thinking (why two? How many houses does one really have to have?). Young man on the other side of him lives in Flagstaff and commutes to Washington D.C. mostly every week. Takes the connecting turboprop between Flagstaff and Phoenix. He’s an accountant. I don’t know if he’s a FB in Flagstaff, but figure as much. Actually I do like Flagstaff myself.
It’s interesting to hear the stories. I think long distance commuting is very lucrative. People are freeing themselves from “the box” and finding out that the tax savings and income gains are worth the travel stress.
“Young man on the other side of him lives in Flagstaff and commutes to Washington D.C. mostly every week. Takes the connecting turboprop between Flagstaff and Phoenix. He’s an accountant.”
Ben, that you? What the heck you got going in DC???
I get flack for driving an Expedition and some people think it is cool to commute across the country! WTF!
I’ll make no moral judgement on your 8MPG Expedition you drive daily and my round trip between BWI and Phoenix every 14 days on a 150 passenger aircraft. I’m but one individual. The money is good. If I was made myself a slave to a geographical location, like 99.99% of the people (including you), I would be earning 1/3 of the income I’m making now. Nothing wrong with downsizing though. I will do that in the future. The socialists are going to tax the hell out of people like me who make high incomes. I will do like John Galt and go on strike. That is what the commies want to do and it will take us to the dark ages for the next 8 years before people realize that government is the problem.
http://www.theatlantic.com/doc/200803/subprime
“The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.”
“Arthur C. Nelson, director of the Metropolitan Institute at Virginia Tech, has looked carefully at trends in American demographics, construction, house prices, and consumer preferences. In 2006, using recent consumer research, housing supply data, and population growth rates, he modeled future demand for various types of housing. The results were bracing: Nelson forecasts a likely surplus of 22 million large-lot homes (houses built on a sixth of an acre or more) by 2025—that’s roughly 40 percent of the large-lot homes in existence today.”
Looks like a way to solve the urban homelessness problem on the cheap.
The trouble is, unlike the inner-city mansions turned tenements of yesteryear, like Boyle Heights in East LA, most McMansions are far-flung away from jobs in the outer exurbs. People who live in tenements usually take public transport or work close to where they live since menial jobs pay similar everywhere.
A better point of comparison may be abandoned farmhouses in North Dakota.
“Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.”
‘Fundamental change’ = sudden realization that a vanishingly small share of U.S. households can afford to pay off the mortgage on a $500,000+ home
Jubak’s Journal
2/22/2008 12:01 AM ET
A painful fix for the credit crisis
Splitting the debt insurers in two — an idea the banks hate — would be drastic medicine. But for the financial markets, it’s the only relatively fast-acting antidote available.
By Jim Jubak
http://articles.moneycentral.msn.com/Investing/JubaksJournal/FinallyAFixForTheCreditCrisis.aspx?page=all
(courtesy Wachovia Bank) today 1 yr ago
Hot- Rolled Steel ($/S.Ton) 700.00 500.00
Why the iron ore producers are able to get the 65% increase in ore.
New conforming loan limits as signed by the President
Each area is different.
San Diego and environs
CA San Diego-Carlsbad-San Marcos, CA $729,750
CA Redding, CA $$423,625
Interesting footnote: My impression is that a relatively small share of San Diegans have sufficient permanent income to pay off a $729,750 loan.
Downgrade!
February 22, 2008, 10:03 am
More Pain for Fannie and Freddie?
Posted by David Gaffen
Fannie Mae and Freddie Mac seemingly hit bottom long ago, but they’re still digging. Shares of the government-sponsored mortgage guarantors have declined by more than 50% since the beginning of 2007, but Merrill Lynch downgraded shares of both to “sell” on Friday, saying the worst is yet to come.
http://blogs.wsj.com/marketbeat/2008/02/22/more-pain-for-fannie-and-freddie/?mod=googlenews_wsj
“Fannie Mae and Freddie Mac seemingly hit bottom long ago, but they’re still digging.”
One take home message: Just because something has been dropping for a long time does not mean a bottom is at hand. A bubble which took nine long years to build to a lofty peak (1996-2005) should not be expected to deflate overnight.
bad news comin after the bell, hit the sell buttons
FDIC default page is gettin warmed up for a fresh new look to be released this afternoon.
Voz,
What is the bad news. Haven’t seen anything yet.
the deafening silence.
Idiom:
deafening silence
A silence or lack of response that reveals something significant, such as disapproval or a lack of enthusiasm.
——————————————————————–
everybody knows that news was supposed to be made today, but bad news is now “off the table”, we only get bad conjecture. The economics that are changing are the fundemental beliefs and attitudes of citizens that are changing in ways that add to the obfuscation as the once delightful negative news has turned into a dangerous animal capable of consequences that are uncomfortable.
Crash not averted, only postponed.
Caveat emptor. Even w/ a tax credit, a buyer of an overpriced white elephant will presumably still be expected to repay the loan in the current credit environment. And BTW, isn’t housing already highly subsidized through the mortgage interest deduction and $500K capital gains exclusion? May as well add a tax credit to the list of wealth transfers to the home builder industry.
REAL ESTATE
Housing stimulus
Lawmakers eye home-buyer tax credit as way to move inventory
By Lew Sichelman
Last update: 11:29 a.m. EST Feb. 22, 2008
WASHINGTON (MarketWatch) — A substantial tax credit for home buyers is likely to be part of any second economic stimulus package enacted by Congress.
Senate Democrats reportedly already have crafted a measure that includes a credit for taxpayers who help take down the record inventory of unsold homes. And when the Senate Finance Committee meets in a few weeks, Republicans are likely to join them in pressing for a version of a plan that worked in the mid-1970s to help clear off a then-record glut of completed but unsold houses.
Whether the renewed interest in a tax credit is a result of some hard-nosed lobbying on the part home builders is anybody’s guess.
http://www.marketwatch.com/news/story/lawmakers-eye-home-buyer-tax-credit/story.aspx?guid=%7B50221AB7%2D3317%2D4A71%2DB9DF%2D7A6540D63D30%7D
Told ya. The next move is going to be up. I don’t like it but it is what it is.
You called it again, girl. Thanks for saving me a chtload!
Comment by Hoz
2008-02-21 13:53:22
“Avant que Je parte:…”
Greatest.bull.bear.market.evah!
Gasparino is a tool:
To be sure the entire deal could fall apart; bankers have gotten close in the past. Nevertheless sources close to the negotiations between the banks and the New York State insurance department say significant progress is being made on a potential deal.
http://www.cnbc.com/id/23291851
and like Toddo says, who’s left to cover if the deal isn’t up to snuff.
That’s why I have a straddle tho I think the shorts are going to get burned short term.
The group of banks looking at supporting Ambac includes Citigroup, Wachovia, Barclays, Royal Bank of Scotland, Société Générale, BNP Paribas, UBS and Dresdner.
These are the ones with the most exposure to guarantees supplied by Ambac on structured bonds and derivatives, the value of which could fall sharply and result in billions of dollars of write-downs if the insurer’s credit ratings fall far below the triple-A level.
http://www.ft.com/cms/s/73450cf8-e187-11dc-a302-0000779fd2ac.html
Come on, txchick, you didn’t really call this one. You wrote: “This market can’t sit where it is much longer. It’s going to break one way or the other. I don’t know which way. If you put a gun to my head and forced me to guess, I’d say up.”
With a gun to your head, you’d guess “up”? That’s not a “call”!
I don’t take credit for “calls” and don’t make them. That was someone else’s take on what I said. I staddled the thing and will lose 50-100% on one side or the other but I expect the move on the other side will more than compensate.
“…It is brutally apparent that the concept of “Triple A” has been fatally discredited by the incestuous circular arrangements concocted by investment banks, credit-rating agencies and bond issuers in the self-interested world of structured finance. The Fed and the ECB still seem to have a hard time understanding this basic point as they focus on saving their friends in finance by accepting garbage collateral at what Greed & Fear presumes are unrealistic prices.
But Greed & Fear has more faith in the investigatory skills of US government prosecutors. For it will not take them long to focus on the above-mentioned circular dynamic. In the meantime, the feared regulatory scourges of “insider traders”, such as the SEC and Britain’s FSA, remain remarkably silent about the grotesque practices they have tolerated for so long in the world of structured finance. The reason why, of course, is that they simply did not understand what was going on. “Insider trading” is much easier….”
Greed and Fear
courtesy of the Financial Times
The Fed seems to be the natural enemy of transparency and accuracy in credit ratings at this stage of the game.
“…You know, I’ve heard from an Army captain who was the head of a rifle platoon—supposed to have 39 men in a rifle platoon. Ended up being sent to Afghanistan with 24 because 15 of those soldiers had been sent to Iraq.
And as a consequence, they didn’t have enough ammunition, they didn’t have enough Humvees. They were actually capturing Taliban weapons, because it was easier to get Taliban weapons than it was for them to get properly equipped by our current commander in chief….”
Barack Obama
Feb 21, 2008
Has anybody ever heard of a captain leading a platoon? or a platoon being split into different war zones? just curious
Ever seen someone who voted for Bush in 2000 and 2004 admit they screwed America bigtime? just curious
ME! Sorry |;>(
David is kicking Goliath’s behind, with a wee bit of help from Goliath…