Bits Bucket And Craigslist Finds For February 26, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Here’s the troll of the day from the last post:
sky’s not falling Date: February 25, 2008
‘God are you people negative! Talk about sheeple. Once you have all AGAIN missed the boat I will be LMAO wondering how so many people could time and time and refuse to see the resiliency of SoCal real estate.’
I think the moron that wrote that post is the same moron that wrote this article. http://tinyurl.com/27xqem
It still shocks me when this can pass for anything resembling journalism. We are hosed.
The Motley Fool is a joke. Why do you even read it.
It was linked on Yahoo! Finance and my curiosity peaked. Hey, at least I don’t read articles in Playboy.
I only looked at the graphs.
tee hee
Entertainment value.
The bailout talk rallies are getting shorter, surprised the bond market isn’t collapsing on ppi.
Sounds like Dennis Kneale.
I sent a nasty “feedback” message saying that (a) they should’ve editorialized on the author’s lack of connection to the RE and building industries, and (b) if he is ordinarily employed in one of these industries, they should’ve refused to print this garbage.
I think they have a point about bigger houses but….
The fact is the house no matter how big and how much it cost to build must be affordable to the target buyers or there won’t be a buyer. You can build a million mansions but you’re not going to be able to sell them all at mansion price without unsustainable lending standards.
Their table about builder margins is misleading as well. First, they state land price is inclusive but don’t point out that current margins are still affected by what they paid for land several years ago. Everyone knows land prices have plummeted. Second, while some materials costs are still very high, others such as lumber have fallen considerably and will continue to do so.
Not to mention falling labor costs as well.
And falling subcontractor margins as well (which some people also lump into “labor costs”).
Their point about bigger houses is complete BS. Schiller accounts for that in his index by using paired sales, so the change in the index is based on nothing but a massive series of apples to apples comparisons.
This guy is a tool.
1. Schiller’s index matches individual home sales over time–it takes into account differences in the type/quality of homes.
2. There was no housing recession from 1998 to 2007. I wonder what those margins look like in 1990? 1991?
3. Costs are highly variable (just look at lumber prices). Subcontractors in many cases had fat margins of >30%, now at 0%.
4. Land prices have fallen precipitously.
5. When things get tight, homebuilders will build smaller, cheaper homes, so people can afford them.
SoCal real estate has big drops ahead. A lot of RE fraud in that region has yet to be uncovered.
even the prople’s county of fairfax says 2010 -11 for recovery
SoCal has big drops ahead, never mind the RE. The fiscal situation of that entire state is dire, and SD is justifiably called Enron-on-the-Sea.
I really pity the fools who live there who are financing it long-term in the 4% range (tax-free.)
My landlord is financing it.
Let me tell you what’s new Pussycat, our council is looking to boost it’s pay and the mayors.
Of course, they would. It’s a free ride. Who wouldn’t?
I think we would understand things in Socal better, if we had an idea of the debt loading per household. We see a lot of crazy valuations here along with the high rate of forclosures. To get a better idea about how far this will go we should have an understanding of debt loads people are holding.
A lot of people moved up or moved closer to the coast. See what the downpayments looked like.
“SoCal real estate has big drops ahead. A lot of RE fraud in that region has yet to be uncovered”
Heres your LA RE Fraud:
The ghettoization and conversion of LA into a humongous third-world festering gang-infested black hole region is largely ignored by the MSM especially our LA times due Mainly to igorance, naivety or PC correctness. Very few have been out to all these ghetto hoods to actually see the ramsnackle century- old crackshacks in graffitied slums selling for 1/2 million or more in impoverished illegal-alien packed slumzones where average household income is $45,000-50,000 at most(real, not stated liar incomes)
These are just three chosen slumzips to give an example:there are hundreds of slumzone zips like these all over LA county. I looked at data for home prices/ sales in many of these slumzones last 2 years and have been thru many of these hoods.
In Pacoima 91331 i saw homes selling for $500,000+ and a few listed as high as 3/4 of a million. Pacoima is one of the worst slums areas of the east SVF and a hotzone for RE fraudulent activity.
Lennox 90304(Inglewood/lax area) is one of nastiest blighted slumburgs in LA yet i saw ton’s of teardown/refurbished quick fix & flip 2/1,s going for $450,00-500,000 as late as last june.
LA zip 90011 which is directly south of LA dwtn is a real nasty polluted inner LA ghetto zip within earshot of dwtn. Median prices here averaged close to 1/2 mil in mid-2007. There was so much dumping and polluting in this hood, as with most of the ghetto hoods i’ve been thru, that it could have been declared an EPA superfund site.
The amt of RE fraud in the LA ghettos(35% of LA county) is mind-boggling. 10’s of billions of securitized funny money loans were thrown away in LA gangland ghettos during the RE mania period 2005-2007 .
peter_m, I always enjoy your descriptions of inner city life. Any chance you were once a repo-man?
“peter_m, I always enjoy your descriptions of inner city life. Any chance you were once a repo-man”
No but i can see the allure of the business-especially the element of risk- danger- adenaline rush going into a gang infested area and jerking cars out of hood homes. If i had with me a brawny big guy with me named Vinny i am sure i could excell in this work. No fear in the Ghetto is my motto.
have been a career I/C contract driver last 7 years and my work has taken me into every dark corner, nook and S*ithole in LA, including some places U need a gas mask to get around.
RE: have been a career I/C contract driver last 7 years
You truck driver’s don’t get the credit you deserve.
I shake my head when I watch the delivery guys here in Mazzholeland wheel rigs of every size and description around in horrific traffic and with virtually no parkin’ for their stops.
You can bet few of the denizens of this jungle give these guy’s a break. A horn blasting and extended middle finger is what most of them get instead.
I tip of my hat to you all!
He’s right - SoCal real estate has bounced back again and again - why just look at the latest bounce!:
http://www.sddt.com/Finance/EconomicIndicators.cfm
(set the start date to 1982)
Wow, that is some bounce! It makes 1992-94 look like the bush leagues. Or should that be the Bush leagues, since that is when W drove his ball team into BK? We are entering “The Show” now. Major League ball games on the horizon. 2008 World Series of housing bubbles.
Whoah! When I first read I thought he was talking about Social Security - which we all know that can be depended upon for retirement.
‘God are you people negative! Talk about sheeple.
Marko Djuranovic, the author of the article has no clue as to how home prices are set. He does not provide any information reagrding the large disparity of rental costs vs home prices, current inventory of unsold homes and the rapid double digit appreciation in home prices in comparision to wages.
Furthermore, Mr. Djuranovic does not address the affordability aspect of the consumer in his article. This article written by Mr. Djuranovic is just pure bogus BS that is probally drumed up by the special interest groups in their quest to fool the public into believing it’s a good time to buy. Mr. Djuranovic is negative in his comments towards the Shiller report, but has no factual basis to support his theory.
Home prices have greatly exceeded the long term groth rates in housing and are no longer in line with the incomes of the American worker. Mr. Djuranovic, get your act together and provide correct information to the public. Your article follows the sheeple direction and we all know what a failure that has been for the sheeple RE investor!
We may be negative, but we are not sheeple by any means. This blog is full of posters who do not just agree, or even just disagree. We support our opinions with data, with anecdotal evidence, or at least with well-reasoned arguments about how we feel. Fuzzy’s post is a prime example of supporting arguments. Then others are free to agree or disagree, in turn supporting their own arguments.
Sheeple do not support their posts. They either say meee-tooo, or parrot points they heard in the media. They offer no original analysis or support. Their idea of argument is “I heard it on TV.” (some political blogs are imfamous for being sheeple blogs.)
Chance the Gardner: I can’t read.
Rod Steigler: Of course you can’t! No one has the time! We, we glance at things, we watch television…
Chance the Gardner: I like to watch TV.
Rod Steigler: Oh, oh, oh sure you do. No one reads!
‘We may be negative, but we are not sheeple by any means.’
Many of us are not even negative. Speaking for me, I’m sunny and cheery as Pollyanna on meth, most of the time. Until I see a wetland fulled up with gravel because some developer lied, then I get a tad negative. Another thing that makes me a tad negative is how morons characterize a realistic outlook as ‘negative’.
Sing it!
They guy doesn’t seem to be concerned about the high foreclosure rates ,the over supply of homes and the major drops in prices in just 2 years .Also I guess this guy doesn’t see the alarming bail out plans being proposed by the powers, to the point that the housing mess is part of the political campaigns .
The track record of this blog is pretty right on regarding the course this housing meltdown would take once that industry ran out of greater fools to buy into the ponzi-scheme .
As I noted yesterday, he only discusses the supply side of the market. The main problem the market faces (other than burgeoning costs of raw material inputs which are driving up building costs) is on the demand side, which is suddenly a naked swimmer on the beach now that the credit bubble tide has receded.
Are we really negative? Or are we data-oriented, hard-nosed and pragmatic?
Far too many people call me a permabear but that’s far from the truth. I think they just like to live with their delusions.
When your MD reviews your clinical exam findings, lab work, and images and tells you that there’s a problem simply dismiss the Doc for being too negative.
Your comment is flippant but there are actually people who say these things (according to a nurse friend of mine.)
This is true not only according to a few nurse friends, but a dentist that works at a state run clinic. It’s shocking how many people “kill the messenger” and that’s when dealing with the teeth they haven’t taken care of their entire lives. Imagine how they’d react to being kicked out of “their” house?
“Taking these factors into account implies that housing prices should have grown at least 2% above inflation in the past 30 years, putting the current median home price about where it should be.”
I’d love to know how he came up with the 2% figure. Economies of efficiency should reduce housing labor costs or break even for bigger houses. I don’t remember anybody in 1973 using power nail and tack guns.
Once you have all AGAIN missed the boat I will be LMAO>>>
would we be ‘priced out forever’ AGAIN, like the last time?
wow, some HH are really deserve what’s coming…
I may be wrong but I would think Health Care costs will be a bigger issue this election cycle than Home Land Security. I know of a few small companies that are cutting way back on their employee plans, no choice with 20 to 30% increases. No doubt that BHO will roll out a socialized medical plan and J. McLame will trot out a similar version. At some point there has to be a change in this system. Wonder who will get the bill? As to security in the South we are armed to the teeth so we aren’t to worried about an attack.
http://www.reuters.com/article/ousiv/idUSN2523792720080226
Who will get the bill? It will be in the form of higher taxes, masked higher costs of government programs, long lines for critical surgery, and so on. People who feel so strong about supporting socialized health care should move to Canada. After all, those are usually the same people who gullibly accept Al Bore’s global waming. They will escape the intense heat of freer USA.
Ben, why are you letting these clowns like bill in Maryland post about things completely unrelated to housing?
Yeah. Thats my question too.
Your glorification of Jimmy Carter and all things left doesn’t count???
Blano, I didn’t know that stating historical facts such as Carter appointing JFK aide Paul Volker as Federal Reserve Chairman was glorification. But don’t let that fact dissuade you. Please continue.
I find it continually amusing that Volker is the only thing you can point to “good” about Carter’s administration.
Even Satan can be construed as doing something “good” by someone, that doesn’t mean he should win a Nobel Prize.
Again, you dance around the issue. Nice try.
There is nothing to dance around. You accused me of glorifiying Carter. I merely stated the historical record unless you can provide some evidence that he dodn’t.
I just found it amusing that Volker is the only thing that seems to come up re: Carter that’s any good. On that particular point we can both agree at least, that it was a good appointment.
Carter was also attacked by a rabbit. That was quite good too!
I didn’t say Carter was good or bad. I stated the historical fact. You stated your opinion.
Carter brought peace between Egypt and Israel that last to this day.
Carter instituted a program (which Reagan dismantled) that would have us free of foreign oil today. (he set a 25 year goal.)
He wasn’t a great President, but not as bad as some say.
Now that you mention it Ed, I kinda like Carter for his proven record of bringing Egypt and Israel to the table.
I find it funny that Carter gets vilified here.
Isn’t this the blog where the sheeple are chastised for moving into huge McMansions they can’t afford, with wasteful cathedral ceilings that cost an arm and a leg to heat?
And isn’t this the same president who told America to turn down the thermostat and put on a damn sweater?
“History’s Greatest Monster”
Because at the top of the page it reads ‘Bits Bucket’. It is all connected one way or the other. Just skip past something that offends or annoys you!
Sending other people’s kids to a fight unnecessary wars, bankrupting my country and eroding my countries reputation are a list of things that annoy me, and you’re beloved John McCain want to continue all of the above.
“Because at the top of the page it reads ‘Bits Bucket’”
Bits and Buckets about the subject of Real Estate.
I turn to the Main Street Media when I want to be misled about politics, I turn to Ben’s Blog for real estate insight.
McCain is not my pick, I would go with RP, but whatever. You are sure to always be annoyed by something that’s life. Try and get over it, and when and who stared bankrupting our Country. Hint, it started a long,long time ago.
arlingtonva,
Can you clarify the “eroding my countries” reputation line? Is it with Europe? The French elected the pro-American Sarkozy. Or are you referring to non-democratic countries like Venezuela and Iran? I’m always curious about the “ruining our reputation” argument.
“Sending other people’s kids to a fight unnecessary wars, bankrupting my country and eroding my countries reputation are a list of things that annoy me, and you’re beloved John McCain want to continue all of the above.”
Forget the jabs, out comes the tire iron!
Question: Why are the lefties here blaming bill in maryland for going “off topic” when the thread was started by wmbz?
Hey, I’m left handed and find the use of the word “lefties” offensive.
RE: Hey, I’m left handed and find the use of the word “lefties” offensive
Oh geez-another protected minority!
Can I be head of your non-profit?
“Say what you want about the tennats of National Socialsim, but at least it’s an ethos”
The Dude Abides……….
careful, there are folks on this board that use the happy words
universal
and single payor
talk about drinking koolaide
from the folks that brought you housing for all
In Toronto, there is a waiting list tens of thousands of people for primary care doctors. They can wait for months or even years before getting a GP. People needing surgeries like knee replacement can wait 3-5 years for care. My limited experience with Canadian health care is that it’s a lot like Kaiser Permanente, but with longer waits for appointments.
I wanted to link to some stats, but typing “Canada doctor waiting list” into google will give you some idea of the wonders of this socialist utopia.
Complaints aside, it is a travesty the US has no safety net. I’ve been broke and without health insurance in the US and had a few scares. It’s awful to have to ponder “I can see the bone, but do I really need to get stitches? Do I have superglue?”
What did you end up doing?
My friend, a life-long diabetic who injects himself daily with insulin, considers himself a “country doctor” meaning he does haircuts, sutures and tattoos. Fortunately I have never had to prevail upon him for any of those.
Also re: the doctor shortage. Right now I don’t have a GP. I do remember waiting for close to a year to get a check up. My sons’ pediatrician has about a 6 month waiting list for checkups. We live in Massachusetts, many doctors have left for cheaper areas or went into some sort of specialty.
No one will probably read this by now, but…
We pay, in Canada, about the same we paid for Kaiser in California (~$200/mo for two healthy people, plus the employer chips in). In Canada, that gets us a GP immediately and faster appointments with specialists. So basically we’re paying Kaiser-like premiums for Kaiser-like care, in a place that supposedly has national health care. I’ve been disappointed with the system so far. However, if I was broke and unemployed, I’d be better of in Canada for sure.
A friend of mine complained today about the recent years when he had a minimum wage job here in Toronto, “without health insurance or dental coverage”. I thought that was revealing.
and Canada has oil
what do we have ?
mcmansions and debt
Fwiw, Canada is a politically correct bureaucratic sh^thole of a very high order and the Canadian health care system is a shining example of how the “Canadian Way” bureaucracy works.
This is from a “Canadian”.
I tease my Canadian co-worker as being “Canuckistani.”
I’m really interested to hear about the Canadian opinion on health care.
If there are some good websites or other news please post some links.
All I hear are drugs are cheap and care is fantastic. Like to know what is actually happening vs what people tell us Yanks.
I think all you may find for info on Canadian Healthcare System is through the MSM up here and thus they neither deal with the issues nor even acknowledge them except from time to time on a sad event type basis. Then everybody goes away.
For the most part, Canadians are quite a sorry lot in that the whole MSM is owned and “managed” by a few so nothing ever comes up for discussion nor are there any real blogs (like HBB) in Canada that take up issues.
Suffice to say though that just in Calgary alone, last year almost 100 private practitioner doctors folded their practices because of high overheads (which they pay personally), high bureaucracy for billing Healthcare for services and compliance, and quite low relative billing rates.
I used to be a practicing CPA (CA in Canada) and had quite a few doctors as clients and saw this evolving (in retrospect), so all of this is no surprise to me.
Total bullsh^t!
You can get an appt anytime at a walk in clinic in Toronto if you are willing to pay about $ 50.00. In Canada you can get any procedure performed privately for a fraction of what your thieving US surgeons charge. I know, I have family in Canada for which I recently paid for medical procedures and found them dirt cheap and comparable to care at the Cleveland Clinic where I have spent a whole hell of a lot more for a lot less care.
Don’t expound on things you know nothing about - it doesn’t help you or the readers of this blog.
I was talking about a regular GP - not a walk-in clinic.
Here’s an article on the wait times for doctors in Canada:
http://www.cbc.ca/health/story/2007/10/15/fraser-report.html?ref=rss
I was comparing my experience with Kaiser Permanente (fees and quality of care) with the Ontario health care system. So far, my out-of-pocket expenses and paycheck deductions have been similar for both. The quality of care has been about the same.
When I had no employer-sponsored health coverage in the US, I was in deep trouble. No doubt the costs for an uninsured person in the US are astronomical compared to Canada - I never claimed otherwise.
I’m just trying to make the point that Canada’s health care isn’t some utopian dream.
“after all, those are usually the same people who gullibly accept Al Bore’s global waming”
I’m sure that you mean “not the same people who deny climate change in the face of overwhelming scientific data”. Please read the literature before commenting on this issue or at least get the terminology right. Or were you agin’ Darrow in ‘25 too?
MrBubble
Do we know, do we even have a clue, as to what caused the many episodes of global warming before we became the dominant species?
“It’s different this time” sounds a lot like local realtors’ famous “It’s different here” that we all mock.
Yes. We do. Here are two:
http://en.wikipedia.org/wiki/Milankovitch_cycles
http://en.wikipedia.org/wiki/Insolation
These factors cannot account for the climate change that we are experiencing now (cosmogenic isotope levels discount the second). The “extra” CO2 that is going into the atmosphere is anthropogenic in nature as shown by C14 and C12/13 ratios (i.e. we are doing it).
The Earth’s atmospheric volume is really quite small and we are befouling it. It’s only 50 miles up, which is just like the skin of an onion w.r.t. the size of the globe. Just look around you for the common sense answer. Put all those tailpipes and smokestacks that you see everyday together, realize that it’s far worse in China and India with 10X our population and imagine the size of the resulting mega-tailpipe and think about it. Forget politics. I am not a tree-hugger, nor am I a liberal. Just a scientist and the data suggest that we are heading for disaster. Again, please read the scientific literature, not right-wing talking points, and you will learn some cool (but scary) sh1t.
MrBubble
There is no free market in medicine in the US. You can’t have a free market when the customer doesn’t understand the product. To understand the product you must have a degree in all fields of medicine, and insurance law, and repeatedly read all the competing plans, and understand how prices are set. You must realize that many areas are served by a single hospital. Many medications or devices have no competition. Medicare sets the prices. Insurance companies then use Medicare as a guideline. How can there be a free market here. All we are doing is paying high priced insurance CEO’s and the huge corporate structure that supports them.
You state socialized medicine will cause higher taxes.
Guess what skippy you already pay for the poor’s health care via higher insurance premiums and fees at hospitals and yes taxes. You pay for them to go to the ER and get expensive salvage therapy rather than cheap preventative therapy. You pay for an army of papershufflers that take care of processing insurance claims.
You are worried about long lines for critical care. I’ll just say you pump enough $ into any system and it will work. Those governments have chosen to cut down on expensive care. They spend up to 2/3 less per capita than we do. When the US goes broke you will see the same type of rationing . The US may have high tech care but they rank near the bottom in preventing preventable deaths.
The best system is socialized medicine for basic care and if you want the bells and whistles you buy a supplemental policy. That’s just my opinion after 17 years practicing medicine.
Sorry Bill, I won’t be moving to Canada, I’ll just be voting your sorry party out of office.
You can’t have a free market when the customer doesn’t understand the product. To understand the product you must have a degree in all fields of medicine
Not true. People don’t need to know every detail, that’s why we hire experts. And people learn things all the time irrespective of how much smarter than everyone else you think you are.
you already pay for the poor’s health care via higher insurance premiums and fees at hospitals and yes taxes. You pay for them to go to the ER and get expensive salvage therapy rather than cheap preventative therapy. You pay for an army of papershufflers that take care of processing insurance claims
All thanks to gov’t intervention. Yeah, we should get more of that.
That’s just my opinion after 17 years practicing medicine.
And what’s your opinion about the AMA (in collusion with the gov’t of course) artificially inflating wages for doctors? Any thoughts on that?
People don’t need to know every detail, that’s why we hire experts???
And what experts do you hire to tell you what the best insurance plan is?? Do you visit said expert on a monthly basis as insurance plans and treatments change?? Are these experts like the experts in the financial community that sold all of the toxic waste loans we have floating around? How much are you willing to pay for said expert? Will they all have degree’s in medicine and insurance law and keep up with all the competing plans ect??
So you prefer that the poor get no healthcare. WOW
The health care plan I support would likely cut my income but I support it because it is the right thing to do for the country. The current system is going to go broke, other countries have shown that they can operate an effective health care system for a fraction of the cost.
So you prefer that the poor get no healthcare.
Nice strawman. I thought doctors were so smart they didn’t have to use such tactics. Guess I was wrong.
The health care plan I support would likely cut my income but I support it because it is the right thing to do for the country.
That almost brought a tear to my eye. Almost.
After 17 years of practicing medicine, it occurs to me that you have had within your control the power to cut your income all along. You expect me to believe NOW that you want to cut your income because it’s “the right thing to do for the country”? Something stinks doc.
Continuing the OT theme, isn’t the “doctor shortage” in the US at least partly due to the fact that doctor-dominated accreditation institutions have greatly limited the number of medical schools and student slots at med schools?
I don’t think you understand what a straw man arguement is, but you sarcastically suggested we shouldn’t have any government intervention. You tell me then, who will pay for the care of poor and uninsured middle class patients that show up in the Emergency room??? ER’s are closing around the country because the gov mandates that they take care of the uninsured. If the gov doesn’t pay and doesn’t mandate care then what happens to these people?
Where is your plan? Stick your head in the sand and complain doesn’t count.
I, on the other hand, applaud your statement, MEaston.
Also want to thank you MEaston for your input.
My mother was Austrian and, according to her and my relatives, they are very satisfied with their socialized healthcare.
Taking the above-poster’s experience — that Kaiser and Canada’s system are fairly similar in expense and treatment — I think the easy winner is Canada because you get the added benefit of having healthcare available when you don’t have a job or are unable to pay Kaiser-like premiums.
I would always support a private system to augment the public system, but wholly support socialized medicine and would be very happy to pay more in taxes to get it.
Well spoken, MEaston!
By what rights or training the insurance industry thinks it has the slightest business dictating the practice of medicine eludes me. Public health service clinics functioned very nicely until Johnson decided that “two-tier” medicine was “undemocratic.”
It WAS, however, affordable and effective. Now you have scenarios where my mother’s cosmetic surgery was actually paid for by Medicare. (I kid you not.) We will return to “socialized” medicine with supplemental insurance, but the insurers are only going to go kicking and screaming.
MEaston:
Nice post. As far as the canadian health care system goes, I think the tales a long waiting lists are greatly exaggerated or out of context.
Sorry, I just don’t buy that people have to wait for months to see a doctor in Toronto. Maybe if it’s a particualr doctor that everyone want’s to have as their doctor.
I donated a kidney to my Dad in Vancouver in December. From the time our tests came back showing us to be an excellent match, we only had to wait three weeks for the surgery, and they offered us multiple dates to choose from.
The care was better than any I have ever received here in the US, and I had a private room for all but the last day I was in the hospital.
I did notice one cost cutting measure that was interesting: You had to pay like $10 or $15 a day if you wanted TV in your room.
As far as I’m concerned, you can take your gloom and doom about single payer health care and stick it where the proctologist shines.
MEaston: That last line wasn’t directed at you - it was for the fearmongers that want me to think I’m better off having people who gain more money by denying me care making decisions about what medical care they will or will not cover.
Seattle Renter: “Sorry, I just don’t buy that people have to wait for months to see a doctor in Toronto. Maybe if it’s a particualr doctor that everyone want’s to have as their doctor.”
It’s unfortunate that you don’t buy it, but for many people it’s true. Some of the many recent articles on wait times:
http://www.thestar.com/comment/article/304134
“I cannot continue to ignore the warning signs of what is happening to our health-care system without expecting serious and crippling consequences.”
And:
http://www.cbc.ca/health/story/2007/10/15/fraser-report.html?ref=rss
http://www.macleans.ca/canada/features/article.jsp?content=20080213_105637_5804
I’ll repeat myself:
Canada’s system is not perfect, nor is it awful. I’ve found fees and quality of care to be similar between Canada (with employer-provided supplemental insurance) and employer-provided health insurance in the U.S.
And clearly uninsured folks in the U.S. are in a MUCH worse health and financial situation than poor folks in Canada. This is a serious and fundamental problem in U.S. society, and I won’t argue that Canada handles this far more humanely.
I know we’ve got a sorry system but I’ll take the U.S.
http://news.bbc.co.uk/1/hi/health/272078.stm
“In the US, the [cancer] survival rate is as high as 60%, and death rate in the US was lower than for any of the European countries in all cancers except skin cancer [darn socal sun].”
Screw the “survival” rates, check the “incidence” rates, i.e. what % of the population contracts cancer in the first place. Then talk to me about the US health system. What nationalistic claptrap you spout.
Under Carter, America had no war. Concern for the human ecosystem became a civic issue…particularly energy issues. Carter at least TRIED to address the corporate hold on public resources, most specifically water rights, (although he was ultimately thwarted by the combined efforts of the Army Corp of Engineers and the Ag-puppets running the Bureau of Reclaimation.) The inflationary mess he inherited from Vietnam’s aftermath (remember Ford’s “WIN” buttons?) was tackled under his appointee, Paul Volker.
Most importantly, under Carter non-WASPS were specifically brought into the administrative process of federal government. “Roots” became a social phenomenon, along the lines of today’s Barack Obama candidacy. People were actually nice for awhile. Oh yeah, Disco died. Awful, awful.
Some interesting commentary by Jimmy Carter himself here.
OMG!
I need towels, quick.
Hysterical! Thanks so much for that laff, Bub!
People who feel so strong about supporting socialized health care should move to Canada
The US already spends more tax money on health care per capita (that’s per all citizens, not just citizens on Medicare, etc) than Canada does, and all but a few other countries in the world.
In other words, the US has by far the most costly and inefficient socialized and private sector medicine at the same time.
So people who move from the US to Canada are actually reducing their support of socialized medicine, not increasing it.
Here are the numbers
“The report pegged U.S. health-care spending in 2007 at $2.2 trillion, and forecast that this spending would grow annually by about 6.7 percent through 2017.”
Which would bring the total cost of healthcare to around $4.2 Trillion in 2017. We’re headed toward nationalizing a major portion of this cost because that will mean “free healthcare” for the masses. Free my a$$.
IMO by November neither health care nor homeland security will be as big an issue as the economy.
Yeah, well, if they’d just cut the subsidies to farmers for this bogus “biofuels” energy scam, maybe it would make bread and milk a little more affordable. Talk about adding insult to injury. Not only are gasoline prices rising faster than a politician’s pecker on a lobbyist’s sex junket (er, uh “fact finding mission”) to Southeast Asia, but the conversion of corn and other crops to fuel (which nobody can use at this time) is jacking prices at the grocery store. What a double whammy.
LOL! I always thought that Senator Bob Packwood had quite the appropos last name.
When the whole biofuel debacle began I wanted to start my own Frito’s index to track the price of unecessary but oh so greasily delicious foodstufs. Never got around to it though, but I’m sure that our corn based snackies are much more expensive now.
Ethanol from corn; barely a net energy gain. But it may make Americans thinner!
saw an interesting article this past weekend pointing out that the desert countries of the middle east are going to desalinate water so they can grow crops in the desert, while our farmers are growing crops to turn into fuel….
hmmmm….
Are you implying that we will be importing food stuffs from the M.E. to be used as energy in America? If you are, that’s damn funny! I can just imagine supertankers filled with corn making their way across the oceans to ethanol plants in America. HA! Should be a Monty Python skit.
Maybe someday economists might get a grasp of thermodynamics and the laws of energy.
The true value of plentiful energy is not known by its price, but by its absence.
And pigs will fly too!
You’re expecting people who can’t do a simple price/rent or price/income calculation who come up with more and more bizarre rationalizations of the obvious to understand some of the most subtle physics ever?
Pull the other one, dude, pull the other one.
You may be correct, but they are intermingled. The Health care issue is coming on like gang busters. Our boomers are heading toward the finish line and will scream bloody murder if they don’t get taken care of.
Try explaining that to someone who doesn’t understand that a NINJA loan with a -1% interest rate will reset to a higher amount after the 12 month teaser period.
Ah, what’s a day without some boomer bashing? It’s not our fault our parents were f_cking like rabbits.
RE: Our boomers are heading toward the finish line and will scream bloody murder if they don’t get taken care of.
Aptly phrased!
I wasn’t aware any of the candidates were considering socialized healthcare. Where will they get the money to buy all the hospitals? How big will the govt. payroll be will all the doctors, nurses and support staff shifting from private payroll to govt payroll?
My guess would be… Just keep piling it on, who cares? Our children and their children etc. can deal with it.
You rarely hear your Congressman or even the President of the U.S. mention how fast the national debt is climbing. F’rinstance - on February 20th it was a chilling $9.294 trillion, then leaped $22 billion the following day to $9.316 trillion. It’s still a half-trillion dollars below the official debt limit, but Congress will merely raise the ceiling above $10 trillion when its credit card is tapped out.
We think being in hock for nearly $10 trillion is scary, but most people hear the ghost of Franklin Roosevelt saying, “We only owe it to ourselves.” Which is not true, of course. We owe a huge amount of it to overseas creditors.
So let me understand this…. The Fed’s are going to buy all the hospitals and facilities and put everyone on the Federal payroll?
Is that what you’re saying?
Whatever. The one who pays the piper gets to call the tunes.
I have no idea what the plan is, the gas bags that are running have not layed out a clear plan yet. All they say is the system is broken and needs to be fixed. Who do you think ‘they’ have in mind to fix it? Congress can do just about anything it wants. If they can lay out plans to get into the middle of private contracts nothing should come as a surprise. P.S. Why would they have to buy hospitals? It would be for the greater good.
“Why would they have to buy hospitals?”
It would be necessary in order to meet the definition of what you characterize as “socialized healthcare”. As does all employees shifting to public payroll.
So you have no idea what the plan is but you characterize it as socialized healthcare. How can it be considered socialized healthcare if the payment system, currently administered by insurance companies and HMO’s gets shifted to a non-profit entity? So if the administration of the system were shifted to a church organization would you still call that socialized healthcare? And what would you call a system where one entity owns and administers the entire system, facilities included and all personnel are employed by that entity? Doesn’t socialized healthcare own all the facilities and employ all the personnel?
exeter, you are soooooo boring when the rest of us use the word “socialism” to describe systems involving massive transfer payments but no literal govt ownership. We can agree (with you) that “socialism” is an inappropriate abbreviation for “welfare statism”…what else do you want us to do? Agree with you on the desirability of the welfare state? No thanks.
Uncovering hypocrisy and mischaracterized points rooted in ideology is anything but boring for me. But you chose to mischaracterize non-profit administration of health care payments first as socialism and now “welfare statism”? Using that mischaracterization, the Dept. of Defense procurement system is welfare statism/socialism too. It is factually incorrect and you know it.
A system where the ownership nominally remains in private hands but is actually controlled by the government is fascism, i.e. National Socialism, as opposed to the socialist model of outright government ownership of businesses
Correction: A system that appears to be held the hands of the people(government) but is actually controlled by corporations is fascism. Mussolinis Italy and Hitlers Germany are the obvious examples.
National health care IS socialized health care. Buying hospitals has nothing to do with it. How silly. Once govmint controls health care, they effectively own anything related to it.
Anybody who whines about the nanny state right is gonna be real unhappy once someone tries to force the national health care BS and global warming BS on us.
Do you actually believe that the government effectively “owns” all the military contractors? Because those are pretty darn profitable private companies right now.
Do you actually believe that the government effectively “owns” all the military contractors?
Um, yeah. Right down to the loyalty oaths and suspension of all rights to personal privacy. Interviews with your neighbors, anyone? Examination of ALL your medical records– including drug prescriptions? NDA’s for cafeteria briefings?
You bet they do.
Heck, even the Wall Street Journal says that the mortgage industry in the US is now “effectively nationalized.”
http://tinyurl.com/yu625r
The mortgage market is now so reliant on funds from government-related entities that it has been “effectively nationalized,” says Richard Iley, an economist at BNP Paribas. These institutions have kept the credit spigots open for home mortgages, but “potentially there are very large liabilities for the taxpayer,” Mr. Iley says.
The democratic candidates are sniping over who’s plan is more “Universal”. MIne is more! You forgot 50,000!
As in public education, the expense is in the administration of health care, not the actual delivery. Eliminating the insurance industries’ hand in the process and policies (and the obscene profits they reap in doing so,) will be a huge step in bringing health care costs back in line with those of other developed societies.
I know of a few small companies that are cutting way back on their employee plans, no choice with 20 to 30% increases.
Be prepared for company-covered health care to go the same way as pension plans. When it didn’t cost the companies much, it was a nice perk. But now that number can reach into the 10s of percent of salary, then the only way to remain competitive is to let the individuals fend for themselves.
My personal view is that health care is more FUBAR than housing, because the competitive mechanisms to restore pricing do not exist in an emergency room or a hospital.
“I’m sorry doc, but your pricing is just too high, so leave my artery where it is and I’ll go to your competition.”
At the firm I work for we have good, but expensive, benefits. We have full dental and healthcare via BCBS; our deductible is self insured for any cost over three hundred dollars (to the $1500 deductible). We have a 401K that automatically gives us 3% of our salary (vested imediatly) and the firm matches 50% of our contributions to 4% (vested over 5 years). All in all the benefits are great.
No one, support staff or associate, has gotten a raise in 6 years.
From the point of view of the company, you’ve all received nice raises. I’m sure the CFO would agree that his compensation line item has gone up substantially. Unfortunately, your raises went directly to other folks.
On the plus side, you didn’t have to pay taxes on your raises, and the company still got a deduction for your increased compensation.
I guess you are lucky to have a job with stagnant wages. Some of us have none as independent contractors. An let me tell you, not every independent contractor pulls down $150/hr (or whatever). I suspect that first wages stagnate, pensions dropped, medical insurance and finally everyone will be an independent contractor fending for themselves. Welcome to either the 3rd world!
Again, it just appears that this is the trend for the American workforce (those who’s income is based on wages and not dividends/interest).
PS: where does public health end and private health begin?
Or, on the supply end: “I’m sorry ma’am, but you can’t afford our pricing. Go have your baby out on the sidewalk.”
Health care has limited supply and unlimited demand, which throws out the entire pricing model. And even if you can establish a price, who can pay it?
In addition, there’s no quality range of services. I can live in a $60K shack or a $600K McMansion. But in practical terms, stent surgury costs the same no matter who receives the stent.
Yep, health care is hosed.
Bullspit.
Healthcare is FUBAR for one reason: government and lobbyists.
There’s a lobbying group called the AMA whose sole purpose is to get Congress to reduce licensed doctor counts. This creates an artificial undersupply.
This same lobbying group made it illegal for nurses and medical assistants to perform basic medical functions at a kiosk clinic.
The FDA/USDA tells you to eat high carbs and low fat, the most unhealthy combinations, creating heart disease and diabetes and massive profits for useless pills many of you fat bastards take.
Also, your Congress allowed a business tax deduct for healthcare but not an individual one. This creates third party healthcare where you pay more for a copay versus paying cash on the barrel.
Limiting doctors has no bearing on cost. Costs are set by medicare and insurance companies. If anything limiting the supply of doctors decreases the costs to the system as they have less free time to fill. Doctors Nurses ect can create work for themselves, if you have more doctors than you need you will get more care than you need. The biggest driver in costs is medications. There are many more things we can treat and the costs of those medicines are much much higher than they used to be. This is where the lobbying has paid off for big pharma.
You’ve got to be fuckin’ joking!
This is the most ignorant comment on basic economics we’ve ever seen (and we’ve seen a ton on this blog!)
Did the basic laws of demand and supply get eliminated for doctors? Double the supply of doctors and watch those salaries crumble.
No - yours is the ignorant comment. I have personally watched this as an internist in a regional hospital in the DFW area over the past two years. A couple years ago, our hospital allowed to come in another group of cardiologists - under the guise that the existing group was overwhelmed - which they were. I thought for sure it would be a competitive nightmare - each group fighting for each patient etc. However, what happened is the hospital’s cardiac floors are now packed to overflowing - and ALL the cardiologists in both groups are overwhelmed. This, according to many healthcare consultants I have talked with, is the norm. When you add doctors - because of the insanity of our reimbursement - you add patients - and doctors find business. So - the laws of supply and demand do not work in this “market” - you should do a little research before you tell people their comments are ignorant.
I don’t think you read my post.
Doctors can create work for themselves. If you have underemployed doctors they will tend to operate, order tests and administer drugs when it’s not needed. Instead of a colonoscope every 5years they will say they need to see you in 3 because there was a small polyp that needs to be rechecked. When you have gas they will call it appendicitis and remove your appendix. When you come in with a virus they will call it pneumonia. Some of this will be deliberate and fraudulant, and some of it will be subconcious. Medicare and insurance set the price that each doctor gets for a given procedure. Most people are not private pay. You post and angry post, but apparently have no knowledge of medicine, which makes my prior point. How can you have a free market when the consumer doesn’t understand the product.
Where do I start with dagan88’s ignorance?
This is that ol’ bugaboo in economics. Favoring what can be observed in favor of the global unobserved.
Poor Frederic Bastiat! Nobody understands him to this day.
Yes, that cardiac unit doubled and they were overworked. However, did anyone check if all the other neighboring units within, say, a 50 mile radius had a reduction? Alternately, given that the unit was already inundated to start with maybe the demand was already there.
Tell you what. Hire 20 more cardiac surgeons and see if the laws of demand and supply don’t reassert themselves. And reassert themselves with a vengeance to boot!
Any health care plan put forth by the candidates will fail. In order to have universal health care, you have to fix the system first. 1. Stop prescription drug advertising on tv. 2. reduc the redundancy in hospitals..IE Where I live, we have 4 major hospitals and 15 major clinics within 40 miles…3. Stop the ” lawsuits..theres a risk, in just getting up in the morning..accept personal responsibility, stop blaming the doctors for your health problems. 4. To pay fo a national health system, tax the fast foods and charge for services, based upon weight. 5. A national campaign to educate people
about not having to see a doctor everytime you sneeze.
70% of the population is on some type of anti depressant…think about that!
“70% of the population is on some kind of anti depressant”
Do wine, beer, or heavy doses of caffeine count?
I’m in the proud 30%. If antidepressants are so necessary, how did we manage to make it out of the caveman days and beyond without them?
Working for soul crushing, office-space companies, eating crap food filled/covered with godonlyknowswhat, being unwilling or unable to get any joyful excercise. I would think the normal human reaction to this would be depression, and that would actually be healthy - it’s your body and brain trying to tell you something is wrong. Chemical imbalance indeed.
Oh but here - take these pills and all will be right as rain again.
We’re fooked.
To pay fo a national health system, tax the fast foods and charge for services, based upon weight.
—————————–
Don’t forget charging more for peolpe who smoke, do drugs (legal or otherwise), participate in sports (more injuries), drink alcohol, ride motorcycles, have “high risk” occupations, live in dangerous neighborhoods, have unprotected sex (STDs and certain cancers), are gay (higher chance of contracting HIV), etc.
Seriously, the list can go on and on and on. I love how each group wants to tax everyone else’s vice/lifestyle but their own.
Be prepared for company-covered health care to go the same way as pension plans.
It is my understanding that this is indeed Corporate America’s next cost cutting target. From what I have heard from insiders this may happen in as little as 5 years. Only young people in perfect help will be able to qualify for and afford individual health plans, so at that point there will be a national clamor for a national health system.
I used to donate time to go and hand out gifts to needy kids every year, but it just depressed me. We would pull up to a house that was nicer than ours, with two cars nicer than ours, and walk into the house and there would be a big ass 60 inch HDTV against the wall, yet these were people who couldn’t get their kids something for christmas? These are the jackasses that won’t spend money for healthcare, and want me to pay for it instead!
Want health care? Don’t eat out, cook from as much scratch as you can, don’t buy stupid electronics, in fact cut the cable service that’s unnecessary spending, and drive reliable old paid for cars. Get an HSA and start socking away emergency money, and get a good relationship with a MD or nurse practitioner with a cash on the barrel rate of service, and make sure to get long term disability insurance with like 6 month payout wait to reduce cost on it.
Unfortunately the vultures are circling and if we get a Dem for the next pres then health care is going to socialize for sure, and we’ll all get to see the joy of the U.S. healthcare system, from the same people that brought us a medicare system that I see notes on the outside of dr’s offices all the time that they won’t take, a social security system that is already spent and is headed towards bankruptcy, FEMA, etc. What the hell makes people think they will do a better job on socialized medicine than any other federal program that has ever been implemented.
Well said. Our individual premium with Kaiser Permanente is $800/mo (2 adults). We are living on fumes, fugal, take responsibility for our health, but that nut is killing us. We are paying for the illegals, a $50M “Thrive” bs PR Campaign, and so forth. Healthcare premiums will be for the elite soon. Something has to give.
My husband and I have participated in some church related rehab work, where we organize a group of teens to do needed repairs on homes. The clients are prescreened for true need- and even so, there have been cases where the house has been falling down around the really nice satellite entertainment system, and there have been great late-model cars out in the driveways. Things like that really turned my husband off to the work of that particular group… although he says he’s ready to do Habitat for Humanity now. It’s hard not to look around and become a cynical senior- but I’ve never wanted to end up like that in my dotage.
Some good friends here in Houston went to work at the Astrodome a few years ago during the Katrina evacuation, and were told by the evacuees, in no uncertain terms, how they did not care for the offered cuisine… (really good Tex-Mex from our local restaurants- not institutional shlurp). These are some of the most good-hearted people you would ever want to meet, and they came back a little disheartened at their first up-close exposure to the entitlement mentality.
“We would pull up to a house that was nicer than ours, with two cars nicer than ours, and walk into the house and there would be a big ass 60 inch HDTV against the wall, yet these were people who couldn’t get their kids something for christmas?”
“Some good friends here in Houston went to work at the Astrodome a few years ago during the Katrina evacuation, and were told by the evacuees, in no uncertain terms, how they did not care for the offered cuisine… .”
These illustrate why I only donate to no-kill animal shelters.
You know, It wasn’t every house that was like that, but it was depressingly often.
I work in a grocery store, in a good area, so we don’t get too many welfare people. But let me tell you, when someone whips out their EBT card (used to be food stamps, now a card) it shows their balance. It varies but the average is 600 in food credit, 400 cash. And the woman is usually carrying a coach bag, and walking out to her new car. The other culprits come in with 4 kids in tow, and the BOYFRIEND, and I always wonder why the hell isn’t he working in the middle of the day?
Patricia, you hit the nail on the head with the boyfriend in tow observation. We rented in one of the Avalon communities, a large corporation with apartment complexes in many states. There were many really well-heeled welfare queens running around. Their housing costs are capped at 25% of their single income. They often get free childcare and health insurance. Then they have their boyfriend move in and whatever cash he comes home with can be used for fun stuff like handbags, cars….
The section 8 abuse was really disheartening to us. We thought we had found a nice place to live - our apartment was beautiful - but we felt more and more uncomfortable the longer we stayed. One of these women was moving to a different model apartment in another building and offered us most of her old furniture. It was nicer than some of the stuff we owned. Needless to say I declined.
There were also at least two families that were really trying hard to live decently on section 8, also scrambling to better themselves.
Avalon’s business model is pretty obvious. They have a certain fraction be Section 8 to get the tax breaks while trying to project an upscale image.
If you notice, they will never show you the actual physical apartment. They will show you a “model” instead.
When I first learned this (sister), a huge bell went off. I asked her to check the Section 8 status, and sure enough 25% was.
Upscale, my @ss!
If you want to move into one of these “communities”, ask flat out what fraction is Section 8. If they refuse to answer, move on.
I used to donate time to go and hand out gifts to needy kids every year, but it just depressed me. We would pull up to a house that was nicer than ours, with two cars nicer than ours, and walk into the house and there would be a big ass 60 inch HDTV against the wall, yet these were people who couldn’t get their kids something for christmas?
FWIW, when we participated in programs like this we only saw people living in trailers being the recipients.
The fools you mentioned above obviously have income, so they will be taxed to support a national health system. Considering that they are probably not insured now that probably means that they are currently freeloaders. I know people like this. Upper middle class lifestyle, no insurance. They get sick, go to the emergency room and throw the bill away when it arrives in the mail. Let them pay their share I say.
I don’t do the giving tree anymore because I used to give rollerblades and books and a music CD or two, and now all they want is video games and movies. I refuse to support a sedentary lifestyle in kids that should be out riding bikes and playing baseball, not being lard-ass, Coke drinking, chip eating, tv watching kids.
I don’t want to expand on a an off-topic post, but FYI adding up direct health care spending (Medicare, Medicaid, the VA system, unreimbursed care at public hospitals and clinics) and indirect spending (private insurance purchased for government employees and retirees, the subsidy via the exclusion of employer-provided health insurance from taxable income) the federal, state and local governments are already funding 75 percent of all third party health care expenditues in the U.S. right now.
In fact, GOVERNMENT spending on health care in the U.S. is more than TOTAL spending on health care in many countries. But the way that money is distributed now, some pay little or nothing and get everything, and some pay heavily and get nothing.
Opposed to “socialized medicine?” Fine, repeal Medicare and Medicaid for senior citizens, and cut my taxes. You get sick, you go broke and then die. By the time my generation, and those after, reach 65, it won’t be around for us anyway.
Wow! What a thread! You all realize don’t you - that no matter what your stand on this health care issue - you are all confirming my belief that we may need to at least consider that it may not be a good time to buy a dwelling again for a long, long, long time.
It would not be wise to think that taxation will not be increasing markedly and that property owners will be deemed “rich” after this shakes itself out.
I, for one, am convinced. There are going to be far more important things playing out, and this is going to be the least of the “interesting” problems.
Once again, a certain leeway, flexibility, whatever you want to call it is going to be key.
The business community, concerned that its medical costs are rising out of control, has requested that the government reorganize how care is delivered. The current system of using emergency rooms as providers of last resort is beginning to fail, and that is also a government scheme even though it has been in place for long enough for many of us to forget that. The current system of forcing providers to use the vast majority of what they spend on individuals in an effort to prolong the last days of life is also a government scheme. None of this really has anything to do with the left versus right politics that so many here are fond of.
I was hired by a doctor to edit/layout/publish a book about 10 years ago. If you’re a doctor, you may recognize it, since we printed about 200,000 copies (I did a dentist’s version, too, and we later went to books for each specialty). It was a very thick and detailed and complicated book, full of hundreds of codes that a doctor had to use for billing insurance or Medicare. If the doc screwed up, no money unless you refile, appeal, etc.
CPT codes. A doctor’s nightmare. My nightmare at that time. Docs have to hire specialists to do their coding, it’s so complicated. One more layer in an out of control system, IMO.
Along these lines, I recently had to pay a “nurse/insurance specialist” $100USD to bill my (private pay) insurance company for a physician-prescribed surgery. (No guarantee of recovery.)
Those people so against some form of universal health care usually have most of their insurance premium paid by others (their employer generally). That is true for me I am on medicare but my former employer (where I retired) still pays for my supplemental insurance. I don’t expect any employer to continue this beyond the next 2-4 years. After that all will have to pay COBRA sized premiums if they want any health insurance at all.
As far as say Canada is concerned I wonder how many of them would want to trade their health system for the US style. Very, very few I’d bet. You never really realize the problems with US health care until you spend some time in another country. Once you do you realize just how much the citizens of this country are getting hosed.
U.S. Home Foreclosures Jump 90% as Mortgages
“Nevada, California and Florida recorded the highest foreclosure rates. . . Arizona, Colorado, Massachusetts, Georgia, Connecticut, Ohio and Michigan rounded out the top 10″
“Banks may be forced to resell as many as 1 million foreclosed properties this year”.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azx0LzcT19ao&refer=home
On the positive side, a Realty Trac shill on Bloomberg TV said that the “rate of foreclosures is beginning to slow down”. . . aka the bottom is almost near. Thank God for that.
“aka the bottom is almost near”
2012 is only a short four years away. Of course, once the bottom is reached, it may take several years for people to unlearn the fact that ‘real estate is the worst investment’ for price appreciation to climb back up to long term trend.
I’ve definitely notice a slowing of defaults here in Colorado. Eighteen pages of defaults in the local paper has dropped to about three. I’ve also noticed that inventory has decreased dramatically. My spouse and I have been looking on and off for a year, and I constantly hear the comment, “Oh, you’re looking? It’s a great time to be a buyer!” Not from where I’m sitting.
It appears that homeowners in our target area are choosing to stay put rather than test the market. The few houses that are available are bank-owned or desperation sales. It’s a good area, but the homes we’ve toured are generally in bad condition and not worth the trouble. I’ve come to believe that anyone with stable finances and a good house has decided to batten down the hatches and make do.
Egads! I meant “make due.”
You were correct the first time
I think that its regional in Colorado. Larimer county resembles your descriptions, but Adams county does not.
My target town is still going up in sales and prices. Rents going up too as SFHs only become available at 1-3/month and often not at all. I don’t think it’ll be our target town for much longer.
OTOH, my present town (where I once owned and currently rent) is showing signs of the slowdown. I think that’s pretty interesting as its my present town that has the rep of deep pockets while the target town was historically more blue collar. The difference is that in my current town you have to drive to at least 1/2 an hour to everything. Beautiful scenery apparently doesn’t take care of the gas tank, the stomach or even the wallet.
Large Dallas law firm laying off lawyers and support staff. This is the first of probably a whole bunch of these. Same thing happened in 1989 - 1992. By the time it was over at the firm I was at, the real estate section was cut in half. And of course, these people are the consumers of overpriced McMansions.
(from “Above the Law” - a legal blog)
It is a complete fabrication to say that only staff were laid off… in fact it was wide reaching in Litigation and Real Estate and involved everyone from SHAREHOLDERS (”asked” to leave) to associates (WHAT?!?! “routinely let go each year” BS) to support staff with tenure at Winstead of over 20+years.
Any associate or lateral hire that even considers winstead should be concerned.
Guess you shouldn’t be raising overall compensation to associates without being more financially stable.
PS: they way they handled the layoffs was totally unprofessional and the “see ya” package was a JOKE!
Posted by: Classless Winstead | February 15, 2008 12:19 PM
I’m shocked, I tell you, SHOCKED! Of all the business categories, I would think that the legal area would be going gangbusters, what with all the lawsuits and potential lawsuits available out there. Heck, we even have one firm here in Florida advertising to find clients who worked for construction firms and got shorted on overtime during the bubble. Kinda small beer, though, when you consider all the other issues crying out for legal action.
Those are plaintiff firms. The ones who are laying people off are the “big” firms who hire large groups of law school graduates every year and over pay them. When it’s time to cut, the litigation section and real estate sections are always the first to go. My firm which was a very big one, laid many off in 1991. Not me, I was in bankruptcy
We worked our asses off on FDIC/RTC stuff and large cases like Southland and General Homes.
These people being laid off I would suspect are up to their cans in debt and living in houses that require every penny of their income to support. This sort of thing will start the avalanche of price drops in the inner city Dallas bubble.
I would think real estate sections of law firms would need more rather than fewer lawyers.
No. Projects can’t get funding, developers bust, deals don’t get done. No need for those people.
Some of the clients become clients of the bankruptcy section
But wouldn’t it be cost effective to retrain some of ‘em?
How can anyone make a profit retraining bankrupt clients?
Jim, you would think so and that argument gets made all the time but they are irrational. Once they decide to can them, they’re gone. Then they go into the market and hire new people in the areas where they need more help.
Txchick,
If you don’t mind dispensing some career advice, I’m in my 2nd year of a 4 year night program for my JD (my second career). I’m torn between Bankruptcy law and Trust and Estates law. The opportunist/survivalist in me sees BK law as the wave of the near future, but my heart lies in Trusts and Estates/Wealth Planning. Do you see another busy time for BK litigation? How long did the last surge in BK activity last?
Any wisdom you can offer is very much appreciated.
Thanks,
Bankruptcy is cyclical and by the time you graduate, it will be well underway. I don’t recall ever seeing any bankruptcy section layoffs but I was gone (on my own, not laid off) before the last bust ended.
Trusts and estates should be steady as the baby boom generation does its thing. If you like that and tax work, I’d stick with it. That’s never going away. Plus, the hours are much more humane.
BTW, try to get a clerkship with a bankruptcy judge if you’re leaning that way. Or you might look at the U.S. Trustee’s Office.
mjhlaw -
Ex-2nd-career-lawyer, here. Not that you asked, but my advice is to drop out of law school; in my mere 2 years of practice and my wife’s 12 years of practice, I’d say about 90% of the lawyers we knew were unhappy in the profession. If you’re in it for the money, get out. Many hope that the money overcomes the negatives of the profession; it doesn’t, not to mention that these days it’s a struggle to make the big money.
That said, given the choice of bankruptcy or T/E, the latter would seem the the safer choice as the clients will have the money to pay, whereas on the former side, the cash flow would be tougher. T/E, is all tax law, and you might need to get the LLM in tax to do well. But a change in the tax laws -always a big topic in the country -could be a boon to the field.
Good luck.
TxXChick,
Thanks so much! I think I will probably stick with Trusts/Estates and Tax. I need the humane hours since I’ve already done the 80 hour week thing, and am not looking for a big-law job. Of course, if I do have to put in 80 hour weeks, I’ll be ready since I’m doing that now with full time work and a pretty heavy class load.
I love this blog…so many smart people.
mikey2,
You’ve definitely hit a nerve with your post. I’m considering dropping out, but I’m having difficulty with treating tuition paid and time spent as “sunk costs”. I must admit that part of the reason I am interested is to learn the various corporate structures, tax laws, etc. related to wealth planning for my own (and my family’s) benefit, and not necessarily to practice on behalf of clients. I’m at a fairly low-cost, but first-tier state school, so my debt-load will be moderate (about $70k), but my pedigree somewhat impressive (I hope). I’m hoping to broaden my appeal and gain some portable skills. If I may ask, did you progress to a 3rd career, and, if so, did your legal education help you in that?
If you are really interested in Trust/Estate work, definitely stick with that vs. bankruptcy. The work day is *very* long when you hate your job (I worked for 4 years at BigLaw in litigation so trust me on this!). Almost everyone I know hates the law (i hated it myself for awhile but i actually transitioned into a great legal job that I sadly had to quit for family reasons). Now I’m a stay at home mom since we paid off my student loans when we sold our house :).
Anyway, good luck.
The last time I remember hearing a lawyer commenting on his life was a couple of years ago. I happened to get on an elevator with an attorney when we were joined by another in the same firm. They greeted each other and the reply from one, when asked how things were going was “still living the dream” as he slumped against the wall and rolled his eyes. Very funny moment.
And I have a good friend who did the big firm thing, then was GC for awhile at a public co. then moved into her house and makes 700K a year working for herself. She can underbid work on an hourly basis and gets a lot of the bigger firm’s clients that way. I guess I don’t need to tell you it’s been in commercial RE. LOL
Let me second the advice to drop out. Unless you’re absolutely in love with the law, it’s a brutal, brutal grind. (I’m going into my sixth year of it now.) Take stock of the reasons you want to go into the field. Then measure those reasons against 12-14 hours a day, 7 days a week, because you will be doing those hours. (I haven’t had a Sunday off in six years). And don’t fool yourself about only having to do those hours for a few years. Every partner in every firm in every field I’ve been in works those hours until they die, and so will I, and so will you. Get out while you’re still sane.
Got news for you. Working for any firm organized on the partner concept can be brutal. The 12-14 hours a day, 7 days a week sound normal to me. I worked for a well known actuary consulting firm for more than 20 years (and made partner after 7 years, the pressure and attrition rate was horrendous getting to that point). I finally retired (translation - ENOUGH WAS ENOUGH) with actually a pretty good retirement income.
I remember one year I had one (yes, ONE) day off. I worked EVERY holiday including NEW YEARS, Thanksgiving, Christmas (and I wasn’t the only one). The travel? - I’ve been all over this country living out of a suit- case for months on end.
Working at partnership firms suck and then it gets bad.
Well, I do appreciate all the thoughts and comments. My first child will be born in September, and I am weighing the benefits of completing the program with the costs, which at this point is missing the first two years of his/her life.
All of the above said, I hold out faith that there will be opportunities for unique niche-holders. What that niche is, I haven’t yet decided…but I am considering several.
Flazi, I’m now even more hopeless than before.
Hazard, good point about the business structure…rather than field of practice.
Thanks everyone.
Would now be a good time to offer my resume?
it is about time! are we there yet?
The effectiveness of tort reform plays a role also.
True. But you’d think that would be offset by the wave of things like construction defect, securities malfeasance, general business bad behavior, etc. Guess not Some really good trial lawyers (plaintiff med mal types) are really hurting apparently.
This is why all the doctors are moving to Texas.
This does not bode well for my job search. I need a plan “B,” because I simply cannot compete with first or second year associates laid off from big firms.
Anyone have any suggestions as to non-attorney jobs for a person who hasn’t had such a position since 2006? Thanks.
Start a web site like justwalkaway.com
To mjhlaw:
I do have a 3rd (more like my 5th, actually) career and it is law-related, but somewhat coincidentally. What I learned from a business perspective from working in a small law practice firm was far more important than the legal education. I am now a business owner (note Txchick’s happy lawyer friend was also a business owner).
Forget pedigree, there are a lot of lawyers out there; the career does not have the same cache that it once did. And it is incredibly competitive out there with many 2nd-career folks out there. For example, there are many CPAs who have their LLMs and are looking for a good T/E job. Lots of people with business degrees go for their law degrees, as well. It’s tough out there. And firms are looking to hire on the cheap, be it low salary or incredibly long hours. ANd it sounds like you could use a good salary with a kid on the way….
What was your first career, and what opportunities are there for tuition reimbursement? I worked in the pharmaceutical industry, and they paid for 90% of my law degree at a good private school. That took the pressure off of my legal career. Even so, I wiped out 3 years of my life in working full time while going to school. Spend time with your kid(s), they grow up fast. Get back into your previous career and look for ways to advance there, be it educational opportunities, job-hopping up the ladder, switching departments within the company. I remember a bunch of lawyers telling me not to got to law school and I didn’t listen. Talk to some lawyers in the T/E field; you might find out differently.
Foreclosure Aid Rising Locally, as Is Dissent
http://tinyurl.com/2kosdg
“People struggle to buy homes in this city, for sure,” Mr. Ellerbrook said. “And then you have what looks, on the face of it, like the city giving money to people who made bad decisions.”
The opposition may be rooted in “this ancient notion of deserving versus undeserving, and you’re undeserving if you made a bad decision,” said Nicolas P. Retsinas, the director of the Joint Center for Housing Studies at Harvard University.
Government has a history of getting involved in foreclosure crises. During the Great Depression, the federal government created the Home Owners’ Loan Corporation, which helped refinance about a million loans — and made a profit in the process. In December, Alan Greenspan, the former Federal Reserve chairman, suggested that government provide assistance to homeowners facing foreclosure.
“You can call it community reinvestment, neighborhood protection, whatever you want,” Mr. Ellis said, “but if you’re taking away the downside risk of a loan, you’re bailing them out.”
“There are good people out there who are in bad loans that put them in tough situations,” Mr. Snuggs said. “We need to find ways to help them to help us all.”
Mr. Ellis seems to have a clearer picture of how the bailouts are interpreted.
I think this article lines up with what I’ve seen when perusing the comments sections in articles about real estate. Most people in this country understand that efforts like this are a waste. For whatever reason our political class has to “do something”. The sad part is that they are not helping these people, helping them would be assisting in finding an affordable rental and with getting through foreclosure process with as little credit damage as possible.
http://online.wsj.com/article/SB120398607404892133.html
FDIC prepares for the inevitable follow-on wave of bank failures after the foreclosure tsunami!!!
Bringing the veteran workers out of retirement to do the jobs they did in the 1980’s. I wonder if there are any CCC vets around to restart that program.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
FDIC spokesman Andrew Gray said the agency was looking to bulk up “for preparedness purposes.” The division now has 223 employees, mostly based in Dallas.
Yep. Dallas was ground zero for the RTC operations. Maybe I should go back to work. I really did enjoy that stuff.
You should if you like the people involved. That’s one of the reasons to go to work. You meet interesting people.
Thanks. Good reality check. I didn’t.
In that case, life’s too short to hang out with people you don’t like.
I’d still do it if it was intellectually stimulating, etc. Otherwise, sorry, life’s too short.
First the Liquidation Division cranks up. As the receiverships begin to increase the Legal Division gets overworked and it starts hiring temps and contracting with more local firms. Look for full and part-time FDIC opportunities in 2009.
By-the-way, there will be opportunities for more than lawyers. Paralegals, accountants, appraisers, civil investigators, document processors/managers, experts of all sorts to testify in court, and others will be hired on a temporary basis, both full and part time. The last time around the temporary employment lasted about 10 years.
http://www2.fdic.gov/qbp/2007dec/all1a.html
states want a handout:
Feb. 26 (Bloomberg) — U.S. governors including New Jersey’s Jon Corzine and New York’s Eliot Spitzer may ask Congress to help reverse rising municipal debt costs stemming from the subprime mortgage market’s collapse, Washington Governor Christine Gregoire said.
http://tinyurl.com/2etaqm
Hmm. Feds can package municipal & state debt into FDIC-guaranteed CD’s, sell them at APY 5%, make the yields federal tax free & I might be interested. Bank deposits would probably suffer a great deal, though. Otherwise let the smaller governmental units pay as they go.
VEry good idea to get American’s back to a positive savings rate and blut Helo Ben’s war on savers to save the self destructive spendthrifts of America.
I’m down to my last online savings bank that gives a decent APY (4.5%) for my cash. I locked in a 4 year CD w/ a 5.1 APY w/10k of my savings but I need to keep some liquid. I am looking at state muni bond funds to capture optimal tax efficiency and liquidity but I am holding off until the smoke clears with the monolines as I am not too keen on the lack of capital preservation that exists over a deposit account.
It just pisses me off that the banks are getting it both way, they cut savings rates because Helo Ben is cutting rates, but they are also jacking up loan rates not just in light of revised risk management procedures but also to capture earnings to offset the losses due to a complete lack of risk procedures and abandonment of underwriting standards the last few years and now prudent savers and prime borrowers are not paying for all of this and the FBs get bailed out.
Total BS!!!
This really outrages me. We’ve spoken here about the idiocy of going into floating rate debt at a time when interest rates were at all-time lows. Well guess what. My state and local goverments put my future in floating rate debt at the same time.
Where is the outrage directed at those who made those decisions? Why did they do so? What campaign contributions and other consideration did they receive?
Federal, state or local — whichever level of government picks up the tab, we’re screwed. Who is responsible?
limit up:
Feb. 26 (Bloomberg) — Chicago wheat prices rose by the most in more than five years, breaching $12 a bushel for the first time as investors poured money into agricultural commodities on signs that global crop production isn’t keeping pace with demand.
Global wheat stockpiles will probably fall to a 30-year low this year, while corn inventories are headed for the lowest since 1984, the U.S. Department of Agriculture said Feb. 8.
http://tinyurl.com/2azknu
What is the best way to buy ag commodities, besides hoading bread and oatmeal?
Are there ETFs or such? Thanks.
Futures. You can always take delivery if you have a grain silo in the back yard.
ETFs are cheaper than rolling over futures contracts.
But you don’t get the big bang from these moves.
And it gives new meaning to “eating your losses”
Thanks for your insight. I’ll look into JJG and DBA and futures. I hope to push myself away from the table before eating too many losses, but sometimes I am a glutton!
Maybe McMansions can be converted to grain silos & serve some useful purpose that way.
Actually, that’s not a bad idea. People can rent out rooms of their McMansions as self-storage. And in a pinch, the houses can always house livestock, especially in the outer exurbs. Water and electricity and heat and everything, and it’s okay if there’s mold or holes in the wall.
Mormons are already on to this concept.
Many Garage Mahals are already in use as herb silos.
I hold JJG and DBA.
Food shortages loom as wheat crop shrinks and prices rise
THE world is only ten weeks away from running out of wheat supplies after stocks fell to their lowest levels for 50 years.
The crisis has pushed prices to an all-time high and could lead to further hikes in the price of bread, beer, biscuits and other basic foods.
It could also exacerbate serious food shortages in developing countries especially in Africa.
The crisis comes after two successive years of disastrous wheat harvests, which saw production fall from 624m to 600m tonnes, according to the United Nations’ Food and Agriculture Organisation (FAO).
http://tinyurl.com/2k4xdx
Time to go long North Dakota. Has wheat and oil.
The world will not run out of wheat. Wheat is grown in virtually every region of the world and we are never more than a couple of months from a harvest somewhere in the world. Supplies of certain types (hard red spring wheat) may grow small for a time, but the overall supply is not in danger. Besides, with prices at current levels every farmer with a plot of land and a handful of seed will plant wheat. With normal weather, and especially a good year, there will be so much wheat around you won’t be able to give it away. I think most of the current run in prices is pure speculation based on money from the hedge funds, etc. looking for somewhere to go now that housing has collapsed.
That’s what they were saying about oil 2-3 years ago.
Oil is a finite commodity produced slowly over millions of years. Wheat and other grains may be produced in only a few months. I won’t deny that in the long run we will have to carefully allocate and manage our resources and prodcution practices to continue to meet world demand. However, I think the current high price levels are not based on underlying fundamentals of supply and demand, but more on speculation much like what happened with the housing bubble.
I hope that I’m not derailing the discussion, but don’t we need oil to produce wheat? Fert, herbicides, fungicides, insecticides, harvest, transport, etc. all take oil and that commodity is getting more expensive.
I mean, we are digging up sand in Canada for its oil content. There’s tons of it, but the days of easy oil are coming to an end and many things, including agriculture, will be affected.
Joseph Stiglitz, a Nobel-prize winning economist, said the U.S. economy is “probably” in a recession with a housing-market collapse sapping consumer spending…[calling Alan Greenspan] largely to blame,” [he] added. “It’s not just that he was asleep at the wheel, he actively looked the other way” by dismissing the housing bubble as “froth.”
For those watching town and state infrastructure, NPR had a story about Maine’s woes.
If you want to listen, just over 5 minutes. You can read the text too.
http://www.npr.org/templates/story/story.php?storyId=19347507
Didnt listen to it, but I think you can categorize most NPR stories as somebody whining for more tax money, with no critical questioning by the NPR reporter.
I thought the story was well-balanced:
“The cost of construction for highways and bridges in Maine has increased by 50 percent over the last three years,” Damon says. “And so the alligator’s mouth is opening wider and wider.”
The trouble is that there are bad roads and angry drivers all over the state.
“They want better roads. Nobody wants to pay more taxes.” They must think E Pluribus Unum means ‘Something for nothing.’
“We found that we have a transportation crisis in this country that threatens our international competitiveness, our economic prosperity and our way of life.” Just one of many financial crises at the moment
In Texas, roads and railroads don’t become more expensive because they were stupid. They become more expensive because the “interest rates went way up (from historical lows)- gee!”
“The trouble is that there are bad roads and angry drivers all over the state.
“They want better roads. Nobody wants to pay more taxes.” They must think E Pluribus Unum means ‘Something for nothing.’ ”
Can’t say I know much about ME but in the states of MA and NY (re: US Route 90), I’d say the constituents are p*ssed because of the previous taxes that were supposed to have taken care of the roads and bridges——-but didn’t.
Now where did that money actually go?
The piece was balanced, but light on investigation. There are many technologies being developed to make building and patching roadways more economical by using various types of epoxies, plastic resins, and latex based materials. Such new road building technologies could have a huge impact in places like Maine where frost heaves can ruin roads many times faster than other locations. Instead we only fund research on things like missile defense systems that are only useful against our own falling satellites. The story behind this story, if you actually look for it, is one of colossally inept and wasteful behavior.
Oh, to have a truly national rail system, not just for cargo (esp. in the west). I dream…
Obama’s Economic Remarks in Lorain, Ohio, Feb 24th
“We cannot build our future on a credit card issued by the bank of China. And that is why I’ll pay for every part of this job-creation agenda - by ending this war in Iraq that’s costing us billions, closing tax loopholes for corporations (TAXES), putting a price on carbon pollution(TAXES), and ending George Bush’s tax cuts for the wealthiest Americans (TAXES).
http://www.realclearpolitics.com/articles/2008/02/obamas_economic_remarks_in_lor.html
Look out folks, here come higher taxes for most of us.
A great many people get wealthy in this country because of the infrastructure the U.S. creates and maintains for all of us. I for one am willing to pay higher taxes to keep this country moving forward. While I don’t like paying more, I abhor spending wrecklessly on a war, on letting industries produce pollution now which will cost us mre in the long run, and letting the wealthy build net worth using lower tax rates than the average wage earning American. It all seems responsible to me, something most people on this blog are intelligent enough to realize.
I agree, Jingle.
“I for one am willing to pay higher taxes to keep this country moving forward.”
So am I. But I’m afraid we’ll just get robbed. That’s the problem. The theives are in charge.
I’ll agree to pay more the day they get rid of pork spending.
pork barrel
I for one am willing to pay higher taxes
And higher and higher and higher? Is there not a point at which you think enough taxes have been paid to fund infrastructure? Personally, I think we have long since reached that point and our govt has been wasting money for decades.
As of the last I heard (in a talk by David Walker in I think it was late ‘06) the U.S. gov’t is $46T in debt (including unfunded liabilities). According to him that works out to 90% of the net worth of every single citizen at that time. What happens after we spend the remaining 10%? Are you still willing to pay more taxes?
our infrastructure is pretty sad. the amount of potholes and shoddy workmanship and repair on major interstates would launch major national investigations in many, many countries. not here. we blindly trust our overpaid contractors who intentionally design infrastructure that will fall into disrepair after only a few years.
I have been calling local road maintenance officials in the Rochester, NY area because of shoddy workmanship on one of the busiest highways (Route 104) in the area. They did a quick resurfacing and painted road markings in October, but by December the snowplows had removed most of the road markings and the resurface. Since then, the state has repainted the markings twice, but with the resurfacing still being scraped away by the plows, the paint only lasts a couple weeks. Try driving in snow and rain on a 3-5 lane highway without markings. I wrote the local rag and called state officials about having an investigation into what is likely $100s of thousands worth of shoddy work. And this is just one 15 mile stretch of highway.
And how does a few million to a butterly study help our infrastructure? I seriously doubt that even people like me who advocate the lowest possible taxes are going to complain on money spent on roads, bridges, pipelines, etc. The issue is that congress keeps spending money on projects like studying the salmon spawning habbits and claims that it is in a vital interest of the US!
“Million for a butterfly study”
HA! That’s nothin! Just look at how much money the military wastes on research. For example, did you know that the military spends 3x (or was it 5x?) more money than all of the other government agencies combined (e.g. NSF, NIH/NIMH) on behavioral research?
And, unlike NSF and NIH, which have notoriously difficult peer-review processes, the military money is handed out with little oversight or review. Some of it is old-boy network stuff, some of it naive generals getting the wool pulled over their eyes, and some of it is actually good research. But, compared to the NSF and NIH funded research, the average research supported by the military is crap. Expensive, wasteful crap.
So, yeah, I do think that a million dollars spent on a butterfly study (assuming it’s NSF funded) does have a pretty good chance of changing our lives for the better somewhere down the road. The military funded stuff…well, even a blind squirrel finds a nut once in a while.
For example, did you know that the military spends 3x (or was it 5x?) more money than all of the other government agencies combined (e.g. NSF, NIH/NIMH) on behavioral research?
I would have to say its working very well. It will soon be the 5th anniversary of the “Mission Accomplished” speech by Bush. Most Americans and politicians are still in favor of the war. I never hear anyone ask why this is taking longer than WWII.
This is turning out just like the Vietnam war, but the population has not turned against the war.
I think at this point, we could be convinced to invade any country, no questions asked.
Explain to me how as a software guy this infrastructure helps? The FCC is a joke, it is a source of income (spectrum licensing), it isn’t helping me send data faster for cheaper.
The government of the USA keeps investing in roads, buildings, sport centers, monuments. Neglects state parks, fuel savings, etc.
China may never HAVE the roads and such of the USA - and probably will never need them!
The USA spends entirely TOO MUCH on cars and roads and cities to meet in. We refuse to use our own software/data/computer tech to cool video conferences and virtual worlds. For REAL WORK, not for game play. We ignore this opportunity and keep investing in more roads, not public transportation or other community things.
Eliminate the “location location location” of real estate prices, fuel consumption, waste, waste waste.
Anti tax religion is so shallow and greedy! We knew the taxes were coming when we voted for guns and butter budgets with no real cuts in them. Corporate tax rates have been going sharply down for a while while personal tax rates have been increasing. Taxing polluters rather than consumers could rebalance the tax system while taking a load away from most citizens.
Bullseye MoleMan. The wealthiest of income earners have never paid less historically. It’s time to make up for 27 years of irresponsible tax policy.
The productive capital (both human and monetary) will just leave the country. I do not think America has this luxury any more.
Economics is an “open” system not a “closed” one. You have to take into account that changes in incentive change the behavior too. There is a feedback loop. Far too many economists neglect this to their own detriment.
How do proponents of increasing tax rates b/c corporate taxes are too low reconcile the fact that one corporation (Exxon) paid as much in 2007 as the entire bottom 50% of taxpayers?
http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion
Common sense would say the entire bottom 50% don’t have it to pay.
The entire bottom 50% paid their taxes by buying petroleum products from Exxon.
You might be right, but the “progressive” tax code takes this into account for individuals by taxing those in the lower 50% at a lower rate than those in the top 50% or corporations. Hence, the result that you (and I) noted.
That still doesn’t answer the question of how corporate tax rates are too low, you’ve only given a rationale for what is already enacted in the tax code (e.g. a greatly reduced rate for low-earners, a high rate for higher earners).
I would argue that the spending is what has been irresponsible, not the tax policy.
Underlying your response, I think, is the idea that the government has every right to spend its citizens’ money, but but only so long as it impoverishes everyone equally in doing so. Of course, I would argue that fostering a culture of dependency on the government is, itself, the greatest poverty because it deprives a society of its high achievers and reduces the incentive to work.
“You might be right, but the “progressive” tax code takes this into account for individuals by taxing those in the lower 50% at a lower rate than those in the top 50% or corporations. Hence, the result that you (and I) noted.”
I like how you snuck in “or corporations”. The truth is corporations are taxed at 15%. The rest of us get hammered at 27.5% minimum.
Novawatcher,
You’re right, but so did the top 50%, and probably in greater quantities because the petroleum tax is only imposed on those who buy the products (and the better off probably do so in greater quantities).
However, that does not answer the issue of income taxes.
FWIW, I’m ecstatic of the prospect of a tax system that imposed according to the burden one places on society by polluting/consumption, etc. As far as I’m concerned, jack up the consumption taxes. However, the current tax system seems to place a higher burden based on what one produces or saves. That seems to turn sound principles of stewardship on its head, in my eyes.
I suppose it depends on what ones goals are. If we want income redistribution via government-inspired class warfare backed up by threat of force, then the current system works great.
That is the tragedy, the government seems to convince us to be so envious of our fellow citizens’ successes that we militate for greater government confiscation of their wealth. The rhetoric implies that the economy is a zero sum game, where if one wins, another loses. That is true only when the government enters as an actor. Why should I begrudge another person the fruits of their labor, unless through the tool of government I can take it from them? I just don’t see enriching a bunch of bureaucrats as a noble purpose, and I say this as a person who has interacted professionally w. plenty of government staff.
Exeter,
I didn’t “sneak in” and corporations, that was the original topic of this comment string introduced by Moleman. It was also the topic of the article I linked above which, if you were to read it, you would learn that Exxon paid a 41% tax rate on its profits, not 15%. I’m interested where the 15% corporate tax rate you provided comes from. The only source I could find went through 2002, and you are correct, but only for the first $50k of profits. After tht it escalates: http://www.irs.gov/pub/irs-soi/02corate.pdf
hot time in the Citi:
Citigroup Inc. disclosed that traders in its investment bank piled up daily losses of more than $100 million on 15 separate occasions last year.
Those 15 financially disastrous days, which Citigroup disclosed in its annual report filed late Friday but declined yesterday to describe in detail, added to worries the New York bank’s problems are deeper than those that led to about $20 billion in mortgage-related write-downs last year, the ouster of its chief executive and a sinking stock price.
http://tinyurl.com/2ga3au
“Citigroup Inc. disclosed that traders in its investment bank piled up daily losses of more than $100 million on 15 separate occasions last year.”
If Txchick is going back to work, maybe she could take over trading at Citibank. They seem to be confused. Or if that doesn’t appeal, she could just take on their their bankruptcy proceedings.
“There’s nothing troubling about a gradual correction of home prices. If we keep our incomes at the current level and home prices go down we are richer, we can buy more housing,” Shiller said.
While price drops in some areas cannot be described as gradual, why can’t people get it through their heads that lower prices are good.
Because the hangover is going to hurt like hell.
very simple. they can’t get it through their heads because they owe 250K on a property that ain’t worth half that as the bubble deflates more and more. no more home eq refi, no more home eq as ATM machine. you’re just losing money straight up.
“If we keep our incomes at the current level ”
Key word: if
one word: gobalization. Wage inflation is a dream.
Thank you!
one word: gobalization. Wage inflation is a dream.
Maybe, maybe not… considering I just took a new position for a 15% increase in salary and a 35% increase in total comp. My salary for the previous two years has gone up an average of 11% a year and with no increase in the cost of healthcare. That was as a full-time salaried employee in IT.
Foreign companies operating in the US aren’t afraid to pay for skilled “labor”. The problem for our economy is that not every sector is going to participate in this expansion of wages… forget traditional retail, real estate, construction, and finance. My bet is on Hi-tech, IT, Healthcare, and select Manufacturing, primarily driven by foreign companies taking advantage of the cheap dollar, especially Euro and Japanese firms.
Also, productivity improvements mean fewer workers are needed to fullfill the same amount of work. More competition for well-paying positions… again, not everyone will benefit, and that is the way it should be. A rebalancing is in order.
aid sought:
WASHINGTON — Over the opposition of the nation’s lenders, Senate Democrats are seeking a change in the bankruptcy law that they say could keep hundreds of thousands of hard-pressed borrowers in their homes.
The proposal, part of the Foreclosure Prevention Act embraced by leading Democratic lawmakers, would allow judges to ease the terms of mortgage loans during bankruptcy proceedings
http://tinyurl.com/2oasng
Foreclosure Prevention Act =
Freemarket Prevention Act =
Free-mortgage Payment Act
Fidel has left office to become available for any posts that might open up in Washington.
I think this would be a good thing for mortgage holder, bad for the debtor, in a declining market. The “cram down” the bank would suffer would be less cost than foreclosure and resale at market, and it would lock the debtor in for the five year “plan”. At the end of the five years the debt slave might be more underwater than at the start, having eaten beans the whole time.
It would stink for banks holding ccd debt if the house got priority in bankruptcy. That would take the shine off of the last “reform”.
Why would the judge be obliged to keep the debtor in his house if the new payments were more than the debtor could afford?
I will probably vote R-can this fall, even though I am not a huge fan of McCain. I just cannot stand the thought of a country controlled by the “free stuff for everyone” party.
” a country controlled by the “free stuff for everyone” party.”
Good thinking. The “deficits don’t matter” crowd is always happy to share their koolaid while explaining how a hundred year presence in Iraq will make us economically competitive. Their history of fiscal responsibility can only be rivaled by Haiti or Nigeria.
LOL ! :>
which party was in power when all the “no money down” lending started ?
LA Times yesterday said Mitt might reenter
There currently seem to be two “free stuff for everyone” parties, one of which has occupied the highest office in the land for seven years now. Or perhaps that party is better described at present as the “free everything for a select few” party.
I just cannot stand the thought of a country controlled by the “free stuff for everyone” party.
Oh, I thought they were both “free stuff” parties, the only difference is the recipients.
Free stuff for the bottom 50% or the top 1%, your pick. Probably most here are in the other 49%
NO FREE STUFF FOR YOU
Maybe I should take out a high LTV second on my house so that my debt can be forgiven too.
Economists at the Fed are pathetic. Oct 2007 forecast revised
The Fed last week said it lowered its growth forecast and now expects the economy to expand 1.3 percent to 2 percent in the fourth quarter from the same period of 2007, compared with the 1.8 percent to 2.5 percent it projected in October.
The Commerce Department is scheduled to release the January report on new home sales on Feb. 27.
“We’re seeing prices now that are basically back to ‘02, ‘03 levels,” Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., said in a Bloomberg Television interview on Feb. 21. “That begins to get compelling for customers.”
Once we get back to mid 90s levels then things will get more compelling. The debt replacing income started a lot sooner than than just 5 years ago.
In a mirror image of real estate, forecast revisions always go down.
“That begins to get compelling for customers.’’
Hmmm. Think that might be more for the customers to say, eh?
–
Headline…
Case-Shiller down 8.9%, YoY, and down 5.4% for the 2007Q4.
Jas
Since Ben Bernanke refuses to do anything but float Wall Street and the Banks for their wrecklessness, everyone who has a loan should just stop paying, mortgage, car, student loan, credit card. Offers the Saudi’s five bucks a barrel for oil and and everyone stay home. The world economy will colapse in a week and we can start over.
You might want to withdraw any deposits before you try that.
;
alternative energy
how you likin those grain prices , yo
inflation up big as we ethanol ourselves up the bunghol
I know some folks in the grain biz. With food inflation… you ain’t seen nothin’ yet. Producers have barely begun passing these costs on to customers, but it’s coming.
This does not bode well for the 3rd world.
You mean like the US?
LOL. No I mean where people make $3 a day.
lol
Ethanol from corn is decidedly not what environmentalists refer to when speaking of alternative energy. Ethanol was written into the alt e policy to garner “heartland” votes. It’s been know for a long time that corn ethanol is a loser’s game. Try again, eco-ostrich.
Why do so many here tout logos and reason with real estate and then flout them with climate change and the fact that we have externalized the environments costs of our lifestyles for too long? We have increased the amount of something in the atmosphere by 36% since the Industrial Revolution started. That’s fairly significant, I’d say. [And yes, we know that it's human activity! Please read IPCC rpt before stupid comments about solar isolation or other such poppycock.]
What we could do is to develop solutions to the problem and sell them to the rest of the world while creating jobs, decreasing our dependence on Middle East oil (thereby improving our foreign policy) and building a stronger America. But why be that far-sighted?
MrBubble
These “soultions to the problem” are figments of environmentalists imaginations.
If we want to stop global warming, then tech won’t be the answer. The only “real” solution would be a drastic drop in the earth’s human population and de-industrialization.
Sorry mr bubble. Might as well get some popcorn and rent “Idiocracy”, there’s no saving this ship.
Mr.Bubble doesn’t post often often enough. Glad to see you jump in today.
Go Away! ‘Batin’!
You guys are interrupting “Oww! My Balls!”
I hear ya, Mr. B (Eudemon, where are you?)
Probably mean “insolation”
Yep, “insolation”. Thanks, MiT.
And thanks for the vote of confidence, spike66. I don’t post much about RE, because I know my limitations and there are others on here who are way more in the know than I could be. The occasional RE anecdote, SF observations, questions about stuff with which I am not familiar (e.g. PMs, SRS, SKF, DBA and JJG) and potential overlooked links is about all I bring to the RE table.
I don’t even understand the healthcare issue. Too busy trying to learn Spanish, the ukulele and the pedal steel guitar! But start going off about climate change denial, the illogical “war on drugs”, the “war on terror” and a few other hot topics that defy data and/or logic and that I know a bit about and I can’t hold back!
MrBubble
I have a Noble steel guitar from the 40s. Can’t play a single note but love steel guitar.
Got me a Dekley 10 string single neck. I am quite bad, but I am passable on the Dobro!
“Feb. 26 (Bloomberg) — Prices paid to U.S. producers rose more than twice as much as forecast in January, pushed up by higher fuel, food and drug costs, signaling inflation may keep accelerating even as growth slows. ”
So if Bernakes’ printing money doesn’t seem to be supporting home prices were can it be going ?
Falling home prices together with rising consumer prices is disastrous. Consumers will get squeezed. Without credit they’ll spend less. As a result, profit margins will get hammered.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAQtmKIWuUl0&refer=home
This is the worst possible outcome for the US economy thanks to cocky FRB engineering. Home prices are falling, consumers are losing access to credit, incomes are flat, and consumer prices are increasing. Oh, the humanity!
The S&P/Case-Shiller home-price index dropped 9.1 percent from a year earlier, after a 7.7 percent decrease in November. Nationwide, home prices fell 8.9 percent in the fourth quarter from a year earlier, the biggest decline in 20 years of record keeping.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ap5TcAZRl9kE&refer=home
Take home message: You can manipulate some of the prices some of the time, but you can’t control all of the prices all of the time.
An 8.9% drop feels like a catastrophic number.
And still the markets were bouyed by yesterday’s NAR numbers? Pathetic.
Nah - just hysterical about a proposed SIV to back AMBAC.
What’s more, the Fed has failed or is failing to lower long term interest rates. Get ready for a world of hurt. If we continue along this path, the outcome will be worse than Japan. I repeat, worse than Japan!
The average fixed rate for a 30-year home loan rose more than half a percentage point during the past four weeks to 6.04 percent, according to Freddie Mac, the world’s second-largest mortgage buyer after Fannie Mae. The increase occurred after the Fed lowered its benchmark rate by 0.75 percent on Jan. 22 and cut the rate by a further half-point eight days later.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aH.LU2m93S88&refer=home
According to CNBC inflation is soaring…where they been the last 2-3 years.
Less than two months ago some folks here were predicting DEflation in the near future. They have been rather quiet recently. I would love to know if anyone still feels that way.
I think its stagflation, salaries stay flat, home prices go down and most commodities go up on speculation.
I was one of those people predicting deflation. This is worse! Falling home prices and contracting credit (deflationary) together with flat incomes and increasing consumer prices (inflationary) is the worst possible outcome. It’s a nightmare scenario. Consumer confidence will suffer and the recession will deepen.
Feb. 26 (Bloomberg) — U.S. consumer confidence fell to the lowest level in five years and wholesale inflation picked up, limiting the Federal Reserve’s room to maneuver as it tries to avert a recession.
The Conference Board’s index of confidence dropped to 75.0 in February, lower than forecast, from 87.3 in January….
http://www.bloomberg.com/apps/news?pid=20601087&sid=atcy3pz4Wfns&refer=home
MM, Although I am invested as an inflationista, there are not enough data points to confirm either way. There are 2 items pointing to a deflationary scenario, there are more than 20 pointing to inflation. One item points to hyper inflation (I define as 100% inflation over 5 years). It is in the governments best interest to have inflation, screw the residents. Bet on inflation.
The problem is that the 2 items pointing out to the deflationary scenario are MEGA-MONSTERS.
Newsday Editorial
http://tinyurl.com/33na4s
Once again, corruption on Long Island gets the spotlight. What I love about this editorial is once again the comments like this:
As someone who worked for 31 years for NYS, I can tell you the typical state worker has no regard for the public he/she serves. Quite the opposite actually. We routinely derided, denigrated or ignored the public as we racked up the years till an enriched retirement. Then we sell our absurdly appreciated suburban (Clifton Park) homes, and take our NYS-tax-free pensions and paid-up-for-life FAMILY health care to a safer, saner, lower-tax place — in my case, South Carolina. I am 55; you’ll all be paying for my carefree retirement for several decades and my tennis elbow’s treatment is on your dime as well. Thank you New York!
or this:
have complained. I have written letters. I have made phone calls. I have signed petitions. I have served on my local civic. Lately I write a letter of complaint a day–everyday. I have gone to BOE meetings. And guess what I have gotten by trying to get involved. The teachers have targeted my kids. I was attacked by a teacher in the supermaket because I stood up for something that was very wrong happening in the Connetquot school district. The politicians have ignored me or been down right rude to me. I have been wasting my time now for ten years.
The corrupt systems wins as far as I an concerned!!
No Newsday there is NO hope for Long Island. I say get off and out of here before no one can afford the taxes on our homes. My accountant told me yesterday while he did my taxes that he was selling his home and moving because he is afraid no one will buy his home if he stays much longer. Taxes on his home in Massapeua Park $15,000. This is someone how earns a good living.
Ahhhhh, paradise!
“Nothin’ could be finer than to be in Carolina in the morrrning…”
We’ve been looking to move back to LI. My husband was offered a programming job for about 20K less than he currently makes! The work was similar in nature too. The market for high tech is anemic.
The real heartbreak about LI though is the high taxes. I bet the tax accountant’s home is a modest split-level or cape.
(Repost from Hoz’s Bits Buckets post late yesterday)
Transcript: George Magnus of UBS
Financial Times
Published: February 25 2008 14:18 | Last updated: February 25 2008 14:18
FT: Do you have a back-of-an-envelope calculation as to how big the total hit could be in the credit world?
GM: Well, looking at the losses in subprime and collateralised debt obligations and related instruments, including the spillover into leveraged loans, for example, certainly colleagues and I think that it’s something of the order of about $500 or $600 billion, which would make it on a scale of the banking crisis of Japan between 1990 and 1994. But I’m afraid we’re still counting, because on top of all of these problems that we’ve had, of course, the US economy is in or close to being in a recession and the European economy is clearly slowing down very significantly. And, of course, we have all the vanilla credit-cycle problems of credit cards, consumer loans, corporate debt, corporate loans, and these things will, obviously, have to be built on to the estimate, so I don’t know. If you want to take a sort of a round number, something close to $1,000 billion at the end of the day is not an impossible number.
http://tinyurl.com/2ml2qu
Treasury meets Abu Dhabi, Singapore funds
“…executives from two of the world’s largest sovereign wealth funds to discuss embracing a set of promises not to use their wealth for political advantage”
Maybe “they” are going to buy Warner Bros. after all…
Bugs: “eh, Daffy…do you know where I can find Yosemite Sam…I think we are going to need some backup at lot 13″
Daffy: “Well Bugsy the last time I saw him, he & FogHorn Leghorn where pushing a wheel barrel full of dynamite & laughing”
http://www.reuters.com/article/ousiv/idUSN2629129320080226
$60bn Qatar fund to shun US banks
by John Irish on Monday, 25 February 2008
US WOES: Qatar’s prime minister Sheikh Hamad bin Jassim Al-Thani thinks US bank stocks are likely to fall further on subprime mortgage writedowns.
Qatar’s prime minister, who heads the country’s $60 billion sovereign wealth fund, said he favours investing in European over US lenders because US bank stocks are likely to fall further on subprime-mortgage writedowns….
Qatar, which has a population of about one million and is the richest Arab country per capita, may consider adding to its 15% stake in the London Stock Exchange, Sheikh Hamad said.
“We have a policy which we are studying in stock exchanges … one of them is the LSE,” Sheikh Hamad said. “The main thing for us is what sort of benefit we will get from it … we are looking at it for the capital markets here.”
Asked if he was interested in buying more shares in the LSE, Sheikh Hamad said: “We might look at it, possibly.”
Arabian Business
25 February 2008 04:00 UAE time
http://tinyurl.com/345poa
So China won’t invest and we have now pissed off the Arab wealth. Anybody with money want to buy our crap?
I thought stocks were an inflation hedge, as they represent the value of real (corporate) assets instead of just paper, like the money in your savings account?
Interesting footnote: L-t T-bond yields are not going up today; was the bad inflation number some how already priced in, as normally higher-than-expected inflation would result in a steep jump in l-t T-bond yields?
February 26, 2008 9:49 A.M.EST
BULLETIN
PPI data are a reason to sell
Stocks trip over data confirming higher U.S. inflation rate. Home Depot and Macy’s results underscore retailers’ difficulties.
http://www.marketwatch.com/tools/marketsummary/
I know it is different this time, but for historical reference, didn’t the headline U.S. stock market indexes lose about 50 pct of their value during the stagflationary episode in the early 1970s?
I heard an excellent talk by a SD geologist last night. Afterwards I went up to introduce myself, and engage him in conversation about the parallels between the human impact of
volcanic eruptions and secular bear markets. It seems that in both cases, a number of people get burned because they underestimate the duration of the event and the ultimate scale of the damage. He concurred.
RED ALERT: Stock market crash imminent.
This is NOT a drill. This is NOT a drill.
People who live on the flanks of volcanoes often fail to heed analagous warnings and are consequently engulfed in pyroclastic floes. Luckily, stock market corrections are typically not fatal.
The ground is shaking and sulfur is filling the air.
floesflowsActually, the Dow lost almost 50% of its value in just two years - 1973 and 1974:
http://www.djindexes.com/mdsidx/index.cfm?event=showavgDecades&decade=1970
Thx –
In 3 weeks, if the S&P500 does not rally 100 points, it will be another decade were being long US treasuries outperformed being long the S&P500.
So far, so good…
http://www.marketwatch.com/tools/marketsummary/
From Cnn Money (headline should read Sky falling, not sales falling, IMO):
“Sales falling at Home Depot
The outlook keeps getting dimmer at Home Depot (HD). The Atlanta-based home improvement retailer posted a softer-than-expected fourth quarter profit Tuesday and said it expects per-share earnings to fall as much as 24 percent in the coming year.”
As one who sits on the sidelines and watches.
I see housing down.Consumer confidence down.Target and Home Depot,2 of the nations largest retailers down.Oil prices over $100 a barrel.WSJ writes story about FDIC bringing back workers.
Yet the market rallies???? On news from IBM.
As stated yesterday by another…… “its all smoke and mirrors”
What wasnt mentioned is how those mirrors are about to be shattered.
Stocks may go up in nominal terms, but they will always lose in real terms.
Today we know that 1oz of Gold will buy two months worth of food, but if TSHTF and food became scarce, I would expect that the relative price of all goods and services will change dramatically in *real* terms.
I expect that shares of companies would fall near zero in real terms if they are unable to do business because of a break down in the medium of exchange.
Can you imagine the capital gains and income taxes that people would be paying as a result of a real loss in value!
With inflation running at 12-15%, the average individual who purchased stock over the last year is really down 25%. The market has to go up by 12-15% just to break even in real terms!
Every category of lending that I’ve seen mentioned here is reported as constricting (except Federal borrowing), stock market retreating and there have been serial writedowns by financial institutions for months. Shadow Stats shows M1 flat, M2 still at 6% YOY growth, and the mysterious M3 still up around 16% YOY growth. What is holding up this credit expansion?
Any thoughts on this?
The U.S. stock market has barely corrected today in the face of a very ugly inflation number. “Something” is holding it up, and it is hard to imagine this “something” to be the collective weight of individual investor decisions in the face of news that screams “CORRECTION IMMINENT.”
FDIC to Add Staff as Bank Failures Loom
http://online.wsj.com/article/SB120398607404892133.html?mod=hpp_us_whats_news&apl=y&r=887335
As long as the stock market does not go down by much, I foresee no problems for the U.S. economy.
Job Worries Sink Consumer Confidence
S&P: US Home Prices Down Sharply
Wholesale Prices Jump in JanuaryUS Home Foreclosures Soar in January
but,
IBM to Buy Back $15 Billion of Stock
so; Dow up 85?
I’m confused again.
The federal reserve is monetizing bad debt. Foreigners are losing faith in the dollar. Government spending is going through the roof with bail out plans.
PAUL B. FARRELL
11 reasons Bernanke’s recession lasts till 2011
Timing the next bull: Kick-start it in 2008? Or is it a long secular bear?
By Paul B. Farrell, MarketWatch
Last update: 7:32 p.m. EST Feb. 25, 2008
ARROYO GRANDE, Calif. (MarketWatch) — Remember that hot 1973 Stealer’s Wheel song marking the end of the Nixon era? “‘Cause I don’t think that I can take anymore. Clowns to the left of me, jokers to the right, here I am stuck in the middle with you!”
It’s still a perfect metaphor. Testifying before Congress: Fed Chairman Ben Bernanke on the left. Treasury Secretary Henry Paulson on the right. The American public stuck in the middle.
http://www.marketwatch.com/news/story/bernankes-recession-here-11-reasons/story.aspx?guid=%7B39D13A23%2D5028%2D4976%2D9883%2DBB1975099038%7D
Your criticism of Bernanke seems completely empty. What exactly do you object to? What would you have him do? It seems to me that as soon as he got power he cranked up rates until the bubble popped, then when the meltdown started to look very bad he lowered them. Some liquidity has been offered, but those are just loans. You seem to be saying he should crank up rates, but with growth stalled and expected to return at the 2-3% level, what would support those rates? Possibly that could be done by rolling out some very large new taxes? Are you seriously advocating for a big tax hike in order to pay the interest on bonds that are detatched from growth predictions? Go ahead and rail against Bernanke if you want to, but I have to let you know that you come across as completely misguided and contradictory in all of this that you say.
Still a Fed shill, Troll man?
It seems to me that as soon as he got power he cranked up rates until the bubble popped”
The bubble popped on its’ own, much to his chagrin. Do you really think raising rates to 5.25% was a huge move? Those are historically low rates.
when the meltdown started to look very bad he lowered them.”
He sure did, and a lot faster and farther than he raised them. He’s still doing it too.
Are you seriously advocating for a big tax hike in order to pay the interest on bonds that are detatched from growth predictions”
Are you seriously advocating ZIRP policy, driving money supply to Zimbabwae levels, bailing out speculators and banks? The same easy money policy that got us in this mess?
Consider the source and ignore the remarks.
“The same easy money policy that got us in this mess?”
http://en.wikipedia.org/wiki/Hair_of_the_dog
Absolutely nothing. Rate cuts are morophine shots to someone who needs operation.
Bad Numbers
As the scale of the mortgage crisis grows, the relief so far looks inadequate.
“…As with all scary figures from the economic front, the Moody’s number has to be considered in context. The estimate includes not only primary but secondary residences such as country cottages and beach houses. It does not distinguish between houses whose loan-to-value ratio is only modestly negative and those that are deeply in the red. Most people who can afford their monthly payments and don’t need to sell soon will be able to keep a roof over their heads….
Voluntary loan modification remains the best solution for the subprime crisis: It provides the most benefit to consumers who need and deserve it most, at the least cost in federal dollars and ruptured contracts. But the modest results of this approach so far may indicate that it is simply not practical; far-flung borrowers, lenders, servicers and investors may be too difficult to organize fast enough to deal with preventable foreclosures. The burden is now on the various industries and the Bush administration to show that the current policies can, indeed, work. Otherwise, there may be no choice but to adopt one of the legislative remedies under discussion in Congress — and which we will assess in a subsequent editorial.”
Washington Post
editorial
http://tinyurl.com/28xvge
So, there isn’t a problem: “people who can afford their monthly payments and don’t need to sell soon will be able to keep a roof over their heads…”
But there still needs to be intervention: “there may be no choice but to adopt one of the legislative remedies under discussion in Congress”
Lousy MSM elites want to thread the needle.
Foreclosure Aid Rising Locally, as Is Dissent
By WILLIAM YARDLEY
Published: February 26, 2008
“…In Massachusetts, MassHousing, a quasi-state agency, began a loan refinance program last summer that relies on bond revenue. After its initial public relations effort, the agency had to make clear “that this is not taxpayer-funded,” said Tom Farmer, an agency spokesman.
“The talk radio was all up in arms: ‘Why should we be helping these people out?’ ” Mr. Farmer said. “ ‘They should have known what they were doing.’ ”…”
NYT
http://tinyurl.com/2mar28
REVIEW & OUTLOOK
Bankruptcy Act
February 26, 2008; Page A18
“Has Harry Reid realized that the just-enacted $168 billion stimulus plan will do nothing to encourage economic growth? On the same day that President Bush signed the bill, February 13, the Senate Majority Leader introduced Son of Stimulus, with plans for a floor vote today.
For this bill Mr. Reid decided to ignore the normal vetting of committee hearings and markups, and it shows. Democrats laud the $200 million in the bill for credit counseling, but the actual language of the bill directs $200 billion to something called the Neighborhood Reinvestment Corporation. We trust this error will be eliminated before Mr. Reid achieves Guinness fame for creating the world’s most expensive typo….
Allowing judges to rewrite the terms of mortgages is a tough sale even within Mr. Reid’s own party. The Congressional Budget Office, whose leadership is appointed by Democrats, warned in January that such a change could result in higher interest rates for homeowners and bigger caseloads in bankruptcy courts….”
WSJ
http://tinyurl.com/2eeyau
Welcome to monoline DeathWatch- the new reality show!
If you missed last months episodes, the worry was about the collapsed CDO/CLO market. Welcome to March
Fairfax Budgets for Lean Years Ahead
First Revenue Declines Since 1992 Projected
By Amy Gardner
Washington Post Staff Writer
Tuesday, February 26, 2008; Page A0
“…The budget would raise a series of smaller taxes and fees, including charges for refuse collection, parking violations and county parking garage use. It also would add a 12-cent surcharge to the commercial property tax rate to help pay for transportation improvements, an increase permitted by landmark General Assembly legislation last year.
Because of declining home assessments, supervisors could choose to raise the property tax rate by 3 cents, to 92 cents for each $100, and still keep average property tax bills flat, Griffin noted. Such a rate increase would generate an additional $68 million. The supervisors will approve a final budget this spring after public hearings.
Griffin’s budget is notable for what it leaves out. In addition to halving scheduled pay raises for public safety workers, the proposal wants to do the same for merit increases for other government workers. He has also proposed delaying approximately $40 million in transportation and storm water management projects to pay for other government obligations. …”
Washington Post
http://tinyurl.com/2gvn2t
Does Paladin still post here? Did he have a website? If so does anyone have a link?
I’ve seen him post once or twice in the last month.
http://www.paladinreports.com
Mr. Bill Gross on why he is investing in Australian Securities
Bloomberg
“… “The corporate debt we’ve been attracted to in the U.S. is primarily banks,” Gross said. “Despite the fact that we have a shattered banking system, the original banking system is a requisite for economic growth and stability going forward.” He said Pimco has been buying debt of banks rated AA or A in the U.S. and Australia.
Australia’s economy is expanding while the U.S. may be in a recession, Gross said. Australia’s annual core inflation accelerated to 3.8 percent in the fourth quarter, the fastest pace since 1991. The central bank aims to keep annual price gains between 2 percent and 3 percent.
`Umbilical Cord’
“Australia is tied with an umbilical cord to Asia, to China,” Gross said. “That’s a plus. As the emerging economies exert their strength it’s Australia which commands the high ground and the United States which occupies the low ground.”
The Labor Department’s measure of consumer prices rose 4.3 percent in January from a year ago, up from a 4.1 percent rate in December.
At the same time, asset prices are tumbling, Gross said.
“For the first time since the 1930s, the totality of finance-based assets in the United States — home prices, stock prices and bonds prices — are going down in price, are deflating,” he said. ”
http://tinyurl.com/ywvuoh
No worries in the U.S. stock market — U.S. stocks (almost) always go up…
http://www.marketwatch.com/
Pimpco is still using the rating system to make purchases?
Annualized Q4 rate of home price decline in the U.S. national housing market, as measured by the Case-Shiller index:
((1-5.4/100)^4-1)*100 = 19.9 pct
latest news U.S. 2007 OFHEO home price index falls 0.3%
ECONOMIC REPORT
Home prices fall 8.9% in 2007, Case-Shiller says
By Rex Nutting, MarketWatch
Last update: 9:40 a.m. EST Feb. 26, 2008
WASHINGTON (MarketWatch) — Home values in the U.S. fell 8.9% in 2007, the largest decline in at least 20 years, Standard & Poor’s reported Tuesday.
The Case-Shiller National Home Price Index fell 5.4% in the fourth quarter alone, S&P said.
“Wherever you look, things look bleak,” said Robert Shiller, chief economist for MacroMarkets LLC and co-inventor of the index.
http://www.marketwatch.com/news/story/home-prices-fall-89-2007/story.aspx?guid=%7B2AE7B561%2D1FE4%2D4BE8%2DB202%2D332A04AECAEC%7D
We have a long way to go in absolute numbers, but we are currently living through the near maximum in percentage declines. (20% annualized in 4th q, as PB correctly calculates, cannot be increased much or sustained long - numbers down have floors unlike numbers up.)
I agree with you about the rate of decline. However, the duration of decline can continue for several years after the peak rate is hit, as demonstrated by the early 1990s real estate bust (correct me if I am wrong, but I believe the peak rate was hit during the 1991 recession, but the price downtrend continued through 1996 or so).
One more point: I don’t believe the denial phase of the bubble has ended yet for many, in part due to efforts by MSM-quoted ‘experts’ to hide the facts. A collective realization that real estate prices are in a steep decline could add weight to the force of the avalanche.
Why the huge divergence between OFHEO and Case-Shiller index numbers? Both are repeat sales indexes…
House prices to fall in 2008, 2009: Freddie Mac
Tue Feb 26, 2008 10:04am
(Reuters) - House prices will fall throughout 2008 and 2009, while foreclosures will continue to climb, Frank Nothaft, chief economist at U.S. mortgage finance company Freddie Mac, said on Tuesday.
He forecast that the price index compiled by the Office of Federal Housing Enterprise Oversight (OFHEO), the regulator for Freddie Mac, would fall 10 percent peak-to-trough over two and a half years, which would translate into a 17-18 percent decline in the S&P/Case Schiller index.
The two indexes are differently weighted, with the S&P/Case Schiller index including a wider variety of mortgages.
http://www.reuters.com/article/domesticNews/idUSL2645517720080226
OFHEO is conforming only. Case Shiller is jumbo too.
…and subprime.
You are implicitly suggesting that Jumbo is falling faster than the low end. This is my suspicion as well. Too many buyers pre-August 2007 were enabled to buy homes they could not afford in the $417,000+ price range.
Plus OFHEO includes new houses I think - Case/Shiller only includes resales.
I thought OFHEO was a repeat sales index, which by definition excludes new home sales. But please correct me if I am wrong.
About the HPI
The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975.
http://www.ofheo.gov/hpi.aspx?Nav=269
Thanks for the correction - I think I had read that some time ago but forgot.
Real Estate
Mortgage Meltdown Archive
Home price plunge accelerates
2007 year-end results are in and the news is bad: Major housing markets were down even more than anticipated.
February 26 2008: 10:19 AM EST
NEW YORK (CNNMoney.com) — The decline in residential real estate accelerated though the end of 2007, and home prices in 20 key markets plunged 9.1% for the year, according to a survey released Tuesday.
http://money.cnn.com/2008/02/26/real_estate/Case_Shiller_year_end/index.htm
To be honest - the numbers seem quite incredible to me - and I mean that to some extent “unbelievable”. I’ve been keeping a more fine-grained excel graph of Shiller’s data - and up until this last quarter it’s been quite a smooth curve down - all of the sudden there’s a sharp corner between Q3 and Q4. I wouldn’t be surprised if the Q4 numbers end up being adjusted upward a bit.
Still though - Q4 decline was quite large even if it’s adjusted. It makes sense since the mortgage lending tightening really started en masse in August, and one would expect a lag between lending tightening and price decreases. So maybe there really was such a sharp downturn.
To be honest I was shocked by the numbers - and I’ve been a big bear all along (e.g. I’m still shorting homebuilders).
In a related note - I think it’s *hilarious* that homebuilders’ stock prices are up today - supposedly on the fact that new home prices are dropping faster than expected - the presumption being that we’ll get to a bottom faster now. However Shiller’s same-home-sales data should completely offset that - now the homebuilders have an enough tougher time competing with existing home sales on prices - this will cut into their margins even further. So IMO this is horrible news for the homebuilders. Thus I’m expanding my short positions.
I can’t believe they put this byline in print
:-) 
Campaign 2008 | Full election coverage
Should Clinton get nasty?
marketwatch.com
“Get” nasty? That is one nasty ho already!
Watch her lose it here in TX. Dallas early voting is huge already. Off the charts.
Get” nasty? That is one nasty ho already!
I hope that “yes we can” will fix the economy, the war in Iraq, the housing bubble, the deficit. I hope, I hope, I hope.,
and we all have a kumbaya moment, just like we all get along right here on the housing bublle blog. I hope!
its possible. Its just a matter of shifting priorities. America has had too many priorities since 2002 and too many holes to plug.
I would love to be a fly on the wall when she meets with her senior campaign staff. The staff probably removes all the lamps and other throwable stuff before the meeting starts. And they all have a supply of flesh-colored foam earplugs in their desks. Higher-pitched noise (e.g. screeches) are more damaging to your hearing than the same dB level of lower-pitched noise.
She is doing that on camera, stick a fork in her…
txchick -
Went to the polls yesterday to take my grandma to early vote. I have NEVER seen anything like it. My previous early vote experiences can best be characterized as “crickets chirping”. Not so yesterday. Grandma had to sit down as we waited and waited and waited. Some of my Republican friends were there voting for OBAMA. I will be too - voting for a Democrat for the first time in my life. I talked with two of them at length yesterday - blue blood Republicans - they are absolutely voting for Obama - and will be doing so in November. Hillary is clearly dead if she is counting on Texas. I feel, however, that America just may not realize how big the Obama tsunami is. By the way - Grandma voted - got back in the car and announced - I have not felt that good about voting for anyone ( she voted for Obama) since I voted for FDR in 1944.
All you Texans out there - just remember to vote on Tuesday and then CAUCUS on Tuesday night at 7:15 PM at your polling place — I have a feeling it is going to be crowded.
“Some of my Republican friends were there voting for OBAMA.”
My wife and I did this, though we are not sure how we will vote in the general election…
Same here. I voted for him and got a couple of friends to swing toward Obama. If he gets to the general election, I’m with him, if he doesn’t, I don’t know.
This news should offer contrarian encouragement for bulls to buy stocks. Just remember, the stock market always goes up, in the long run!
ECONOMY:
Recession Watch 2008
Consumer confidence lowest in 14 years
Conference Board’s measure tumbles below expectations amid concern about jobs and slowing business activity.
February 26 2008 10:26 AM EST
A measure of consumer confidence dropped to its lowest level since November 1993, amid concerns about slowing business activity.
NEW YORK (CNNMoney.com) — A key measure of consumer confidence dropped significantly in February, to the lowest level in more than 14 years, amid mounting concerns about jobs and slowing business activity.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index plummeted to 75, the lowest level since November 1993, from a revised 87.3 in January. Analysts had expected a decline to 82, according to Briefing.com.
http://money.cnn.com/2008/02/26/news/economy/consumer_confidence/
OFHEO numbers:
The Big Three: Modesto, Merced, and Stockton.
Biggest Q4 appreciation in the country: North Dakota. The (relative) strength in the economy is moving east out of the Northwest into Montana, Wyoming, and the western plains. Overlay a map of oil reserves on wheat production and you get the epicenter: western North Dakota.
1. Do you believe the U.S. economy is in a recession?
Yes 81%
No 19%
http://money.cnn.com/POLLSERVER/results/38123.html
An excellent reason to buy the market!
The public is always wrong.
Good point. This bull cannot be stopped — buy stocks now or get priced out forever by your pessimism!
Bush: No recession on horizon
By Rex Nutting
Last update: 12:50 p.m. EST Feb. 26, 2008
WASHINGTON (MarketWatch) — The United States will avoid a recession, President Bush said Tuesday in an interview with American Urban Radio Networks. “We’re not in a recession, and I don’t think we will go in a recession,” Bush said. “We’re in a slowdown, and there’s a difference.”
http://www.marketwatch.com/news/story/bush-no-recession-horizon/story.aspx?guid=%7BB842C3D5%2DB707%2D447D%2D8413%2DB74561935CD4%7D&dist=morenews
Perhaps often, but certainly not always.
Handwriting on the wall for subprime mortgage lending kingpins?
Former AIG, General Re execs guilty
Former insurance company executives are found guilty of manipulating the financial statements of world’s largest insurance company.
February 25 2008: 2:48 PM EST
HARTFORD, Conn. (AP) — A federal jury has found five former insurance company executives guilty of a scheme to manipulate the financial statements of the world’s largest insurance company.
http://money.cnn.com/2008/02/25/news/companies/insurance_executives.ap/index.htm
OK, this is about gold, which everyone talks about a lot lately. I had to go to Salt Lake yest. and on the way I crossed Soldier Summit, very snowy pass. I pictured this on my way over (the following is FICTION):
I hear they just closed the pass behind me, maybe for a month, from big snow. I’m the last car over, nobody behind me. I come across a fellow standing by the road, his car is broken down. I stop. He’s hungry, no food, hasn’t eaten, no water (yes, he can eat the snow, but he already has hypothermia), and no coat, he’s freezing. (Remember, this is fiction, in real life I would give him a ride.) I’m feeling very sorry for this guy and me being a generous person, I decide to help. I dig deep in the sack in the back (”Way in the back, you got money in the sack, do-whack-a-do”) and pull out a gold bar and give it to him. He gives me the one-finger salute as I pull away, maybe cause I’m so kind and special.
I know gold is a store of value, but what good would it really do if the SHTF, I mean REALLY hits the fan? I’d prefer commodities like gas, food, and warm clothes. Comments?
Lost in Utah,
I’m not sure your hypothetical addresses the premise underlying the (or at least my) argument for gold. In my mind, the argument is that gold is the best form of money to achieve the purposes of money (1. store of value; 2. medium of exchange; 3. one more I was taught but can’t remember right now). Of course gold’s not a substitute for food or shelter, and it wouldn’t do any good in the situation you propose. However, it is a superior means to exchange for those things because it is of predictable value, non-inflationary, and has intrinsic worth. (Why does it have intrinsic worth? I’m not really sure, but those who argue it is a worthless metal cannot explain why it has served as money since biblical times. So, I would assert the burden of proof is on the detractors of gold, to disprove it is money.)
In the hypothetical you propose, gold would be of no value, but neither would paper dollars, because there is no exchange to be made. But, were the hypothetical changed so that you had all of the food, gas, and warm clothes you needed, desired by the poor sap next to the road, and HE had a big hunk of gold the questtion the gold bugs would ask is what would you rather accept as a means of exchange: government paper scrip, or gold?
As democracy is to governments, I would argue, gold is the worst money except for all the others.
constitutional republic is far better than democracy. Democracy is what gets us into the financial situations. Democracy transfers power to those who can manipulate public opinion (the media).
VTD,
No argument from me. I was paraphrasing Kissinger, I believe. I totally agree and we are, I believe, living out the fears of Jefferson (I think) who left us a “republic, if we can keep it”. It would appear that we cannot.
Personally, I think our slide down the populist slope was accelerated in large part by the 17th amendment and the introduction of the popular vote of senators. The last vestige will likely disappear when the electoral college is abolished…then it will truly be a mobocracy.
Democracy is two wolves and a sheep voting on what’s for lunch.
I believe the “intrinsic value” part is from the effort required to find it, evaluate it, permit it, dig it, mill it, refine it, pour it and eventually sell it to you. At least that is my understanding. A bit tougher than punching a button on a printing press or digital press.
Today one silver dollar will buy about six gallons of gas. How many gallons of gas will one paper dollar buy?
You are going to need a stable medium of exchange in the bad times. One gold coin will buy a years’ worth of food. It’s easy to store, not easily reproduced, and will be in tremendous demand. If you don’t have any you will surely wish you did. There is no comparison between real money and green paper. Remember the golden rule; them that have the gold make the rules.
Agreed.
Well, my point is that what if we really do have a worst case scenario (and I’m skeptical) and we’re to a point of total barter, who would want gold? The psychology of it might be that even those with more than enough food, etc. wouldn’t want to trade any for gold (or anything, for that matter, they’ll hoard it). We’re possibly talking anarchy here.
My landlady has a Dave Ramsey book here that I read. I quote: (p.75 of The Total Money Makeover Workbook):
“Gold is not used when communities fail. History shows that when an economy completely collapses the first thing that appears is a black-market barter system. In primitive cultures, items of utility often become the medium of exchange, and the same is temporarily true of a failed economy. A skill, a pair of blue jeans, or a tank of gas becomes very valuable - not gold coins or nuggets..”
He goes on to say that “Real estate, knowledge, and canned soup are all better hedges against a failed economy.”
So you are going to take clothes to the store to buy food, and food to the gas station to buy gas? Good luck.
I have never heard of a black market economy that didn’t accept gold or silver. You may be able to trade cigarettes or blue jeans for a cab ride, but you will always be able to pay with PMs. Germany, Argentina, Zimbabwae all had or have thriving black markets, but gold was still king.
watcher, who’s to say we’ll have stores and not go to a true barter economy? But then I don’t live in a city, so I look at the world in less complicated terms, maybe. No cabs, no stores, but I don’t prescribe to the whole collapse theory anyway, just wondering.
I suppose I can see the point of the Ramsey excerpt. But, my question to you is, if you have excess goods of one form or another, be it soup, jeans or gas, how do you propose to move enough goods to carry on a series of exchanges, and, should you meet someone who is willing to make an exchange, what will you do if, instead of soup, that person wants bread? Money is essentially the objective clearinghouse of subjective preferences, and it is most useful, I believe, when it is only useful as a monetary medium. A can of soup has dual use to the average consumer in your scenario: it can be eaten or traded. As you note, you can’t eat gold. It’s got one use and one use only, to act as a store of value and medium of exchange. You can’t say that about much else (except maybe silver). The administrative tracking costs of a spontaneously arising barter market based on consumable goods would be extremely high (how are you going to be sure that Joe, who wants soup, will give you enough parkas to pay off sally, who wants to trade you parkas for bread?). Such a system would require prices quoted in every good for every other good, you’re talking abaout n(n-1) prices. In a barter economy w.second or third-order transactions, I just can’t see how a it would last long. My theory is the barter economy would settle on the one thing that has the single use to reduce the administrative overhead of tracking the prices of multiple items. That one thing would be gold or another similarly situated material that holds its value (silver hint hint).
What are the characteristics of “money”
1. Divisible, which is why we don’t use diamonds
2. fungible, an ounce of gold mined in China is identical to an ounce mined in Nevada.
3. Durable, which is why we don’t use wheat or eggs
4. convenient, an ounce is condensed wealth, which is why we don’t use lead or nickel.
5. rarity/scarcity, gold exists at approx .003 parts per million in the earth’s crust (from memory, don’t hold me to it). which is why we don’t use sea shells ,sand, etc.
There are other metals that share these traits and they are also “precious”. But this is a basic outline of why gold was selected by civilizations (not gov’ts) to be their “Money”.
6. Malleability
Have to remember that despite Dave’s best intentions, he is still a sell out to the RE industry at the moment.
I know, I know. I’m not a Ramseyite, just read the book, don’t own a TV so never even seen the guy. BTW, the book has some good advice, but pretty old hat if you’ve followed this blog (save money, get outta debt, etc.).
My landlady has a Dave Ramsey book here that I read. I quote: (p.75 of The Total Money Makeover Workbook):
Uh, she’s quoting from a Bible thumping Dave Ramsey. All bets are off.
February 25 2008: 2:17 PM EST
Here come more financiers’ writedowns
Another day, another prediction of red ink for banks and financial firms. But some analysts caution against taking these numbers at face value.
By Colin Barr, senior writer
NEW YORK (Fortune) — Another winter writedown storm hit Wall Street Monday. Shares in Citi, Fannie Mae and Freddie Mac sank after analysts predicted another round of multibillion-dollar losses at the struggling financial firms.
http://money.cnn.com/2008/02/25/markets/barr_writedowns.fortune/index.htm
How does one know what a home will sell for in a falling price market unless one sells it? And why wouldn’t the passage of this bill constitute a violation of private contract law?
Real Estate
Mortgage Meltdown Archive
Foreclosure bill faces Senate test
A vote Tuesday could indicate whether mortgage bankruptcy reform proposal will proceed.
By Les Christie, CNNMoney.com staff writer
February 25 2008: 5:39 PM EST
(Special Reportfull coverage
Home price plunge accelerates
January foreclosures up 57%
Foreclosure bill faces Senate test
Foreclosure prevention plan under attack)
NEW YORK (CNNMoney.com) — Foreclosure gets Congress’ attention Tuesday when the Senate decides whether to end debate on a bill aimed at helping homeowners avoid losing their homes.
The Foreclosure Prevention Act of 2008’s most important - and most controversial - provision would allow judges to reduce mortgage balances for at-risk borrowers to current market prices.
House prices have fallen sharply during the past year, taking many mortgage borrowers “underwater,” meaning they owe more than their homes are worth.
Under the bill, a mortgage balance of, for example $200,000, could be reduced to what the home would sell for, say $160,000, on the open market. That would save the borrower hundreds of dollars a month in mortgage payments.
http://money.cnn.com/2008/02/25/real_estate/Senate_mortgage_bankruptcy_reform/index.htm?postversion=2008022517
I say - make them sell the house for $160,000 then, and they can rent somewhere nicer for less!
The court reduces the loan balance from $200k to $160k and the lender takes a $40k loss. The alternative is the lender forecloses, sells for $160k and takes a $40k loss plus transaction costs. The lender may be better off with the cram down.
I think what worries the bankers is that the bankruptcy courts may understate the FMV of the underlying property. Also, if there was no cram down the bankers could arrange a workout with equity participation somewhat like the OTS proposal.
What is this going to do to future lending? In solving one problem they are creating a much bigger one. The mbs market will never recover.
Could someone please explain why this foreclosure prevention plan does not constitute a violation of private contract law?
Be sure not to miss the humor in the link below:
/real_estate/cram_downs_coming/index.htm
LMFAO!
Real Estate
Mortgage Meltdown Archive
Foreclosure prevention plan under attack
Lenders trying to derail legislation that would allow bankruptcy judges to reduce mortgage balances for home owners.
By Les Christie, CNNMoney.com staff writer
February 22 2008: 12:29 PM EST
NEW YORK (CNNMoney.com) — Two bills before Congress would give bankruptcy court judges the authority to reduce mortgage debt, which could save thousands of borrowers from foreclosure.
Lenders are furious at the prospect of having judges seize control of their mortgage portfolios.
http://money.cnn.com/2008/02/21/real_estate/cram_downs_coming/index.htm
Well, maybe so, maybe no. In fact, this all sounds rather familiar — perhaps because we’ve been here before. Here’s a little background reading for you, Stucco (pay special attention to the discussion of the Blaisdell case):
http://en.wikipedia.org/wiki/Contract_Clause
This would make me very uneasy if I were a foreign creditor to the U.S.
The Contract Clause After 1934
During the New Deal Era, the Supreme Court made several fundamental changes regarding constitutional interpretation of the Commerce Clause, Due Process, and the Contract Clause. The changes came during a time of great crisis for the United States, and there was large public support for government programs which the Supreme Court had been ruling as unconstitutional. Finally, the Court fundamentally changed its interpretation of the constitution to accommodate the new programs. This “change” has been called The switch in time that saved nine.
In Home Building & Loan Association v. Blaisdell 290 U.S. 398 (1934), the Supreme Court upheld a Minnesota law that temporarily restricted the ability of mortgage holders to foreclose. The law was enacted to prevent mass foreclosures during a time of economic hardship. The kind of contract modification performed by the law in question was exactly the kind that the Framers intended to prohibit. However, Chief Justice Marshall famously said in McCulloch v. Maryland, “It is a constitution we are expounding.” By this, he likely meant that the constitution must adapt to the times. This statement is also interpreted to mean that the “framers’ intent is not controlling.” The Supreme Court held that this law was a valid exercise of the state’s Police Power. It found that the temporary nature of the contract modification and the emergency of the situation justified the law.
…but this would make me feel better…
White House to Veto Foreclosure Bill
By ANDREW TAYLOR – 38 minutes ago
WASHINGTON (AP) — The White House promised on Tuesday to veto a bill seeking to follow up the recent economic stimulus package with several proposals to shore up the struggling housing market and reduce foreclosures.
Senate Democrats had hoped to begin debate on the housing bill on Tuesday but action has been put off until later in the week, if not later, as Republicans kept the subject on Iraq.
The Democratic housing bill would change bankruptcy laws to allow judges to cut interest rates and reduce what’s owed on troubled borrowers’ mortgages, provide $4 billion to communities to purchase and rehabilitate foreclosed homes, and improve disclosure of subprime mortgage loans in hopes that borrowers won’t be surprised by big payment increases.
But the White House said the $4 billion for purchases of foreclosed homes is too expensive and “would constitute a bailout for lenders and speculators, while doing little to help struggling homeowners.”
http://ap.google.com/article/ALeqM5hhsOwOsGhKflopz_JpXK3wHVsCTAD8V28ICG0
Fools rush in!
REAL ESTATE
Foreign buyers eye U.S. homes
Many take advantage of dollar’s weakness, but are they getting skittish too?
By Amy Hoak, MarketWatch
Last update: 7:48 p.m. EST Feb. 25, 2008
CHICAGO (MarketWatch) — Some second-home buyers coming to the United States to scoop up property in the shadow of Walt Disney World are finding that it is, indeed, a small world after all — especially when it comes to getting a bargain.
http://www.marketwatch.com/news/story/weak-dollar-lower-prices-attract/story.aspx?guid=%7B9D58CC62%2D40F0%2D4809%2D96E1%2D400A27CAA99F%7D
Bob Schiller is not looking well. I just saw him in a interview on Wall Street Journal Video. He looks like he is sick. I hope not. Any news?
Roidy
Maybe he has that same flu that got mgnyc.
Debt is a poor substitute for income.
Mugabe begs China for £25bn to fix economy
“A DESPERATE Robert Mugabe has asked China for a £25 billion loan to help repair Zimbabwe’s shattered economy.
The state-controlled Herald newspaper said industry and trade minister Obert Mpofu had confirmed the request by the Zimbabwean government.
Mr Mpofu said the grant would help the Zimbabwe authorities “to take care of our immediate and future long-term requirements”.
It would also help stabilise the economy, he said.
Analysts warn that the crippling economic crisis could prove Mr Mugabe’s downfall in next month’s polls. For the first time, the 84-year-old president faces two tough challengers: Simba Makoni, the former finance minister, and the main opposition leader, Morgan Tsvangirai, who has already indicated he will ask for international help to rebuild the economy if he wins.
Zimbabwe’s annual inflation rate reached 100,580.2 per cent last month.”
The Scotsman
http://tinyurl.com/36tnbv
Inflation, What me worry? Based on past actions by China, they will loan the money to Zimbabwe in exchange for incontestable mineral rights. China does not care about politics, who gets the money or social wellbeing. They care about creating 10MM new jobs every year in China.
A chicken costs $15 million in Zimbabwae. I bet you could buy it cheaper with gold.
A chicken bubble? Buy Tyson cuz we’re out of chickens!
Crisp and Cole realtors turning on each other;
http://bakersfieldbubble.blogspot.com
For those U-toids who think Utah is different, I went to Salt Lake yest. and saw a freeway billboard advertising a Utah foreclosure internet site. Also saw a couple of signs that said the builder would pay the first 3 months of the mortgage. And…also saw subdivisions still building like gangbusters.
Why would Utah be different in a better way than anywhere else? I can’t even imagine how someone could argue that! Utah?!
As improbable as it sounds, there are many people here who think it’s very special. I’m one, but only in a topographical way - LOL.
Little Tales to Tell-
I have $300 more to stuff under the mattress since doing some weekend singing work at a retreat. When I work at these functions, I hear all of the things that have happened in people’s lives over the past year… it is like a snapshot in time. Sometimes, I am overloaded with information- and this happened to be one of those times.
A friend’s child has been killed in Iraq. Two spouses have died. A second buyer has backed out of buying the old church property, leaving the congregation in the middle of a road expansion project which limits access to the church. Some of the ladies want to go out for “shopping therapy” to alleviate their sadness. I go.
Don’t know why, but I was appointed the shopping leader, which means I took them into areas where I knew they would not buy anything… past the Dooney and Burke purses,clothing and cosmetics, into the fine china and crystal area where one woman bought some placemats and napkins and satisfied her shopping desire that way. (It’s hard to stuff china and glassware into a suitcase on a weekend retreat).
The last thing these ladies need is to compound their troubles with debt… but I got to see a great example of human nature at work, making the hole bigger- an attempt at alleviating the sadness of the human condition with “stuff”.
Now, all that being said, these women KNOW better than that!
That is what is always so suprising to me about the little tales of HELOC dependent individuals like Urbina. Anyone older than 30 should know by now, that you can’t take anything in life for granted- not even life itself… much less unequivocally trust the money changers.
So true and you saved me from buying a new laptop today (with cash, of course). Maybe tomorrow.
IBM is going to save us here. Getting ready here to lob on some puts / shorts.
Kohn doesn’t realize the fed is the problem.
http://www.marketwatch.com/news/story/feds-kohn-weak-growth-still/story.aspx?guid=%7B8E2D0261%2D1BA1%2D42F1%2D8971%2DB75B8CFAC0B0%7D
I see plenty of not-good news on the WSJ home page, yet lots of green….what’s up with that??
IBM can borrow the money for nothing, net of INFLATION! Why not? More bubbles, Oil now @ $101. Just as I predicted, more bubbles…The FED is the problem!
IBM’s in a strong financial position right now; doesn’t need to borrow to do this buyback (not to say that they didn’t with so much cheap money around). They did some old-school house cleaning over the past decade with slow/steady growth that didn’t get them much attention from the “take-the-money-and-run” crowd. And there’s more room for improvement… ‘nough said.
IBM’s true engineering skills are to be found in it’s annual and quarterly reports. Make no mistake about that.
Those fat little dividend checks I’m getting must be imaginary… too bad.
test
Steady pattern of daily pump and dumps. Reminds of the dot.com era, but on steriods. Picked up some puts.
Euro/dollar to 1.50 soon:
http://quotes.ino.com/chart/?s=FOREX_EURusd
Uncle Buck on the ropes:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=w
Japan is trying valiantly to keep the dollar from collapsing, but the market is large with massive buyers of Yen. The Euro just broke through its long term resistance, if the numbers tomorrow for durable goods are worse than expected the Euro could be at 151 and change. This will put the Yen at 105. The Euro nations get clobbered with the appreciating Euro. Bernanke’s testimony tomorrow has the ability to either set off a dollar rally or kill the dollar. Currency traders are still watching the EuroYen. The EuroUSD hasn’t the play for ‘carry trade’.
I thought you were bearish on the euro.
I am and I am incredibly bullish on the Yen. I believe relative parity on the EuroUSD is 1.17:1 and the YenUSD 85:1 . If you look at the EuroYen chart the Yen has appreciated 3% so far this year against the Euro. The Yen is as undervalued as the Ringitt, the Renminbi, the Real etc. The Euro is in a massive bubble due to the interest rate differential. When the EU starts cutting rates in a month the Euro could lose 30% in a month. It has happened in the carry trade before, it will happen again. Anything that appeals to naive investors is subject to enormous swings.
Don’t forget the Rupee!
Ringitt, Renminbi, Real & Rupee.
Sounds like a law firm!
I think political strain will shatter the euro. Still, I am as bearish on the dollar as on housing. I don’t see a bottom in USD, at all. I agree the yen should make huge upmoves but I have waiting for that for at least two years. I think USD savers are going to wind up on the streets.
“Ringitt, the Renminbi, the Real etc.”
I have a nice chunk of change in those currencies due to my belief they are grossly undervalued. I am moving to Japan this summer so I can better understand and position myself for the coming economic fallout with global production, currencies. I am hoping to provide insight from the Far East as I will be far enough away to see the forerst from the trees!! Once I get there I plan on converting much of my cash to the Yen.
My longer response on why was lost in cyberspace.
I am bearish Euro, but I am long the Yen and Real.
Unfortunately the currency action seems like a dollar meltdown.
So long dollar its been good to know you …
Blood on the screen…
http://www.bloomberg.com/markets/currencies/eurafr_currencies.html
The $US appears to be holding its own against at least a couple of currencies…
KES: Kenyan Shilling
ZWD: Zimbabwe Dollar
Great! We’re not out yet!
Roidy
Now look at silver:
http://quotes.ino.com/chart/?s=NYMEX_SI.K08.E&t=f
What happened? That futures chart shows a huge jump on May 26, right? Can anyone tell me what that means? I am not complaining, since I bought a bunch at 14.85, but I’d like to understand more. Bought a thousand oz. as an inflation hedge (and because I love the way the pyramid looks on the top shelf of my gun safe) and a “SHTF but not as bad as The Road/Mad Max” hedge.
And someone on here claimed that he/she wouldn’t sell PMs until the 10 year bond (I think) went to 6-8%. I was going to do the “if silver goes to 20 then sell half” moron method. Any references that might help me to understand the poster’s logic with the caveat that I have not taken economics since Ms. Starks’ class in high school? Mmmm… Ms. Starks.
MrBubble
Homebuilder stocks up about 7% today!!! WTF???? Can anyone explain??
Irrational exuberance
Here’s the “explanation”!!
http://biz.yahoo.com/ap/080226/homebuilders_sector_snap.html?.v=1
“AP
Sector Snap: Homebuilders Up Sharply
Tuesday February 26, 1:31 pm ET
Housing Stocks Surge As Home Prices Fall at Fastest Pace in 20 Years
NEW YORK (AP) — Housing stocks surged Tuesday after sector data showed prices may have declined enough to lure reticent buyers back into the market.”
Try not to catch yerself a falling knife.
“prices may have declined enough to lure reticent buyers back into the market”
I like that. It has a nice ring to it. I guess that’s it then. The housing bubble / crash is over. Ben, pack up the website - it’s time to close up shop. Maybe we can can have a reunion of some sorts next year. If not, then I’ll see you all at the next housing bubble. Good luck everyone. Bye
I’m still reticent!
They still believe the fed will eventually inflate re instead of the food and energy we are seeing now.
Herbert Stein’s law applies to the U.S. stock market’s ability to rally in the face of a deluge of bad news: Anything which cannot go on forever will stop.
US stocks edge higher despite grim data
By Anuj Gangahar
Published: February 26 2008 14:22 | Last updated: February 26 2008 17:43
US stocks moved slightly higher on Tuesday as investors weighed economic data showing a stronger-than-expected uptick in January producer prices and a sharp fall in consumer confidence and a mixed bag of earnings reports.
A report from research house comScore said that clicks on paid advertising links on Google were down sharply, sending the search engine’s shares down 7.6 per cent to $449.30 and leading the technology-focused Nasdaq Composite Index lower in early trade.
http://www.ft.com/cms/s/0/3723847a-e475-11dc-a495-0000779fd2ac.html
Never mind the stock market. Commodities are screaming; silver up 60 cents, oil at 101.
The Short View: Credit spreads
By John Authers, Investment Editor
Published: February 25 2008 18:10 | Last updated: February 25 2008 18:10
A year ago, there was a historic opportunity to make money out of credit. The market had never paid you less to compensate for the risk that a company would default. To profit, you bought insurance against default.
Things have changed. Defaults have fallen, but the market is now prepared to compensate you generously for bearing the risk of a default. This is true of the market for cash bonds or for credit default swaps, which offer insurance against default; it is true from the most speculative credits to the safest AAA-rated companies; and it is true both in Europe and the US.
But at present nobody wants to take on these risks. The market had it badly wrong a year ago. Has it now gone too far in the opposite direction?
http://www.ft.com/cms/s/0/e8419ffe-e3ca-11dc-8799-0000779fd2ac.html
Hey, would anyone here care to help a fellow bubble blogger beat a couple sports blogs in a blog contest? Seattle Bubble has made it all the way to the semi-finals, and we would love any help we could get from the rest of the bubble-blogging community. Go here to vote.
The Squirrel Bracket Finals??? I have no idea what this is about, but I voted for you anyway as an exercise in how humans will do stuff they don’t know anything about when asked in an appealing way.
Post it on the Cali thread - ya got my vote!
Leigh
You have my vote too. Always happy to feed the squirrels!
Dissenting views are overruled in cut-rate monetary policy decisions…
latest news
Fed’s Kohn: Recent high inflation rates will not persist
Fed minutes show wide range of views before Jan rate cuts
By Greg Robb
Last update: 2:00 p.m. EST Feb. 26, 2008
http://www.marketwatch.com/news/story/fed-minutes-show-wide-range/story.aspx?guid=%7BD9ADB5B5%2D289E%2D4977%2DA0F8%2D94F958D5DC5E%7D&dist=hplatest
He must be counting in a different currency than dollars
February 26, 2008 3:08 P.M.EST
BULLETIN
CRUDE FUTURES AT RECORD CLOSING HIGH OF $100.88 A BARREL
Oil surges to record close
Wintry weather in the Northeast pushes oil futures toward new closing high of $100.88 a barrel. Crude earlier rallied past $101 a barrel.
http://www.marketwatch.com/
Forget global warming: Welcome to the new Ice Age
Lorne Gunter, National Post
Published: Monday, February 25, 2008
Snow cover over North America and much of Siberia, Mongolia and China is greater than at any time since 1966.
The U.S. National Climatic Data Center (NCDC) reported that many American cities and towns suffered record cold temperatures in January and early February. According to the NCDC, the average temperature in January “was -0.3 F cooler than the 1901-2000 (20th century) average.”
http://www.nationalpost.com/story-printer.html?id=332289
Journalists, who have a hard time distinguishing trends from cycles and who like sensationalist topics, are prone to vacillating between articles on global warming versus new ice ages depending upon recent planetary weather conditions.
New Data Show Rising Inflation and Slumping Home Values
By VIKAS BAJAJ
Published: February 26, 2008
Two worrisome trends for the economy — falling house prices and the rising cost of everything else — picked up speed in data reported on Tuesday, putting policy makers in an increasingly tough position.
http://www.nytimes.com/2008/02/26/business/26econ-web.html?em&ex=1204174800&en=7e66315e0aa64b7d&ei=5087%0A
Citigroup’s 10K has some interesting (?) comments
“…There is a risk of a U.S. and/or global downturn in 2008. A U.S-led economic downturn could negatively impact other markets and economies around the world and could restrict the Company’s growth opportunities internationally. Should economic conditions further deteriorate, the Company could see revenue reductions across its businesses and increased costs of credit. In addition, continuing deterioration of the U.S. or global real estate markets could adversely impact the Company’s revenues, including additional write-downs of subprime and other exposures, additional write-downs of leveraged loan commitments and cost of credit, including increased credit losses in mortgage-related and other activities….”
(What it says is “If you buy stock in Citigroup, you stand to lose a lot of money”.)
and
“…Due to the difficulty in estimating daily profit and loss in the ABS CDO market, those trading-related revenues, including recent subprime-related losses, are not included in current VAR calculations and thus are not included in the Histogram of Daily Trading-Related Revenue….”
(Translated: “We don’t include our losses from CDOs and CLOs, because then you would know we were even stupider than we seem to be”.)
Translated: “We don’t include our losses from CDOs and CLOs, because then you would know we were even stupider than we seem to be”.)
or:
“We dont want to value CDO’s and CLO’s because we have so many CDS’ (credit default swaps) that any price discovery would cause multiple banking failures, and we are a bank”
Congress: Are you paying attention? Are you sure you can afford to bail out those who made foolish decisions?
BUSINESS
Borrowers Are Out In the Cold
It’s no longer just people with bad credit who are feeling the squeeze. Americans with good credit at all income levels are now caught in a full-blown credit crunch.
http://www.newsweek.com/id/114713
Maybe I am just confused, but I thought that lower interest rates increased, not decreased, the present value of fixed future debt repayment obligation?
“How bad will it get? The volume of bad debt—consumer, auto, student loan and corporate—is still rising. In theory, the Federal Reserve’s campaign of lowering interest rates aggressively, which began in September, should help. The Federal Funds rate now stands at 3 percent, compared with 5.25 percent in September. But while that can help banks gain access to capital, lower rates alone won’t help people who can’t pay back mortgages, or companies that are unable to pay back loans, even at lower interest rates.”
Bond market raises doubts over Fed tactics
By Krishna Guha in Washington
Published: February 26 2008 21:26 | Last updated: February 26 2008 23:40
Bond market concerns about inflation are threatening to undermine the Federal Reserve’s ability to stimulate the US economy by aggressively cutting interest rates.
Since the Fed cut interest rates by 125 basis points in January long-term interest rates in the bond market have gone up, not down, working to slow the economy rather than to boost it.
The increase reflects investor concern about inflation and the belief that while rates might go very low in the short term, they might not stay there for very long.
This matters because in many respects the US economy is more sensitive to long-term interest rates than it is to the short-term rate the central bank directly controls.
Some economists see echoes of Alan Greenspan’s famous “conundrum” – the dilemma the Fed faced in 2004 and 2005 when it raised interest rates but long-term rates in the bond market did not budge.
They see what is happening today as a “reverse conundrum”.
http://www.ft.com/cms/s/0/d4853a70-e4b0-11dc-a495-0000779fd2ac.html
US hotel real estate sales set for slide
By Daniel Pimlott in New York
Published: February 24 2008 22:40 | Last updated: February 24 2008 22:40
Sales of US hotels are expected to fall as much as 50 per cent this year because the credit squeeze has reshaped investors’ ability to purchase real estate, says a report due for release on Monday.
The value of hotel property sales is expected to fall to $23bn-$26bn, down from a record $45bn in 2007, as deals become more difficult, according to real estate brokers Jones Lang Lasalle. The expected slide in sales would more than undo last year’s 38 per cent rise.
“The credit crunch has halted mega-deals and many portfolio deals,” the report will say.
http://www.ft.com/cms/s/0/a5104956-e2fd-11dc-803f-0000779fd2ac.html
I could use $1m or so in “seed money.” How can I get my fair share?
Democrat urges $20bn subprime plan
By Chris Bryant and Krishna Guha in Washington
Published: February 27 2008 00:04 | Last updated: February 27 2008 00:04
A leading Democratic lawmaker on Tuesday called for $20bn in public funds to be made available to the Federal Housing Administration to purchase and refinance pools of subprime mortgages.
The proposal from Barney Frank, Democratic chairman of the House financial services committee, comes amid indications that Democrats in Congress are becoming increasingly willing to advocate direct taxpayer-funded intervention in the mortgage market – widening the political divide with the Bush administration.
Mr Frank told the Financial Times there was a “lot of support for this proposal in the House”. Democrats in the Senate also appear increasingly sympathetic to taxpayer-funded intervention.
Christopher Dodd, the Democratic chairman of the senate banking committee, last month called for $20bn in seed money to create a “homeownership preservation corporation” that would purchase loans at a discount.
Mr Frank said “we can do it through an existing vehicle rather than a new vehicle”. But the underlying logic of the two proposals is similar.
Mr Frank said that under his plan, the FHA would “buy up packages of mortgages but at a substantial discount”. It would then refinance the loans.
This would require about $20bn up front, but Mr Frank stressed that “the FHA would be repaid” as the loans were refinanced. The ultimate cost of the scheme to US taxpayers, under Congressional scoring practices, would probably be about $3bn to $4bn.
CLICK!
http://www.ft.com/cms/s/0/e30d770a-e4c5-11dc-a495-0000779fd2ac.html
Home / Trading Desk / Market Call
Deep recession feared in U.S.
Falling business sentiment fuels gloomy outlooks
Jacqueline Thorpe, Financial Post
Published: Monday, February 25, 2008
Economists are no longer talking about a U.S. recession but a deep recession after figures yesterday showed business sentiment continued to plummet in early February.
Forecasts for a more severe retreat came as CIBC World Markets forecast U.S. house prices would end up sliding 20% before the dust has settled on the American housing meltdown. CIBC estimated 50% of U.S. homeowners who took out below-prime mortgages in 2006 will end up in a negative-equity position — owing more than their house is worth.
“There seems to be a sense of a very deep-seated collapse in the economy,” said Michael Englund, chief economist at Action Economics.
http://www.financialpost.com/trading_desk/market_call/story.html?id=326071
US lawmaker asks SEC for subprime disclosure info
Tue Feb 26, 2008 6:45pm EST
WASHINGTON, Feb 26 (Reuters) - A senior U.S. lawmaker on Tuesday asked the Securities and Exchange Commission what it is doing to improve disclosures from companies that engage in complex financial transactions, such as the off-balance sheet assets linked to subprime mortgages.
In a letter addressed to SEC Chairman Christopher Cox, Sen. Jack Reed also asked the agency what it is doing to improve the disclosure and description of the transactions themselves.
“I am concerned that, in both retail and institutional markets, the letter and spirit of disclosures mandated by our securities laws may have been violated,” said Reed, a Democrat from Rhode Island, who is chairman of the Senate subcommittee on securities, insurance and investments.
The SEC has an agency-wide subprime task force looking at every aspect of the issue including potential market abuse and application of accounting rules.
Reed said corporate disclosures appear to lack adequate and timely information about off-balance sheet assets such as Structured Investment Vehicles (SIVs) and Special Purpose Entities (SPEs).
http://www.reuters.com/article/bondsNews/idUSN2637255320080226
Bond Marketer Criticizes Firms
Over Auction-Rate Securities
By RANDALL SMITH and LIZ RAPPAPORT
February 27, 2008; Page C2
The head of a New York state agency that markets bonds for about 250 universities, hospitals and other institutions blasted securities firms for pulling back from the auction-rate securities markets.
David Brown, executive director of the New York State Dormitory Authority, said the agency aims to shake up its roster of underwriters for more than $4 billion in annual municipal-bond issues in order to improve auction results.
“As a whole, this is not the finest hour of the investment-banking community,” Mr. Brown said. Auction dealers “are refusing to make a market in the securities, saying publicly this product is dead and everyone has to get out of it,” then recommending debt restructurings “where they will earn yet another investment-banking fee.”
http://online.wsj.com/article/SB120407966878495649.html?mod=googlenews_wsj