Bits Bucket And Craigslist Finds For February 28, 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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City aims to tax owners of abandoned homes
http://tinyurl.com/yujhme
“We shouldn’t be footing the bill for that. It should be Deutsche Bank or World Bank, not the taxpayers of the city,” said Consalvo, who routinely fields complaints about unsecured swimming pools, unshoveled sidewalks and debris at foreclosed properties.
For example, Dillon estimated it would cost $200,000 to repair 17 Hendry St., which was bought for $623,500 in 2006 before changing hands for $1 in April 2007, according to land records.
Only a value difference of $623,499 in a year.
yes yes. Please tax the owners of abandoned homes, and enforce the heck out of it. I can’t think of a better way to make sure that prices plummet.
right on!!!! stop the free ride
RE: I can’t think of a better way to make sure that prices plummet.
How about HUD/FHA peddlin’ off their garbage back to the cities for a $1.00.
Anybody got a link to this?
“The regulation would require all vacant and foreclosed residential properties to be registered with city inspectors and be maintained by a local management company, Consalvo said. Owners who didn’t comply would be fined $300.”
It’d be far cheaper to pay the fine than comply with the regulation.
Yeah, that’s like the delivery guys getting parking tickets in NYC. They just build it into their cost structure.
plus they get a discount from the city as well
i used to work for fedex years ago
How do they get a discount? Curious now.
they pool all the tickets they get and bulk pay them at like 40% of actual cost or less. i used to get several tickets a day around 399 park 153 e53 in the early 90’s
the brownies (i am dating myself) love fedex, ups, just keep writing the drivers could care less. all the company cared about was on-time deliveries which with fedex if done after 10:30 am were free if you complained
it was a cost of doing business in nyc. my station was the busiest station fedex had in the usa so what was a few hundred discounted parking tickets a month
the divide between manhattan and the other boroughs
http://www.nysun.com/article/72033
In addition to fines, owners of foreclosed/vacant homes should be charged for any costs incurred by government for maintenance, administration, etc., and the government entities should get first lien position on the homes to secure their claims.
That way, taxpayers might even get a little boost (payment for fines), as opposed to losing money to irresponsible lenders.
If the banks can’t prove they own the properties in court for foreclosure, how are local government employees supposed to be able to prove it?
Seriously, this might work for the ones that are already foreclosed (proof already taken care of) but for the merely vacant ones? Very difficult unless they can find a way to shift the burden of proof.
Does the city really need to prove anything?
The property records will show a new title reflecting the foreclosure, so they have their list of properties. If nobody is paying for maintenance, they just file a lien on the property for the amount they want.
Somewhere in Ohio the cities are putting liens on the properties - thus locking them up in a minor way ref resale. So far, it’s been effective. Sorry - don’t remember where I saw the links, but it’s been during the past few weeks.
Oh no. If the local management company pays a “failure to comply” fine as a “cost of doing business” and does not take action to rectify the situation, then the people in charge of the management co. are “scoflaws”. This is serious and will lead to jail time or other penalties. Judges do not take this attitude very kindly. I’ve seen whole apartment buildings torn down because the builder told a judge to go ahead and fine him, he is not going to fix a set back requirement that he knowingly violated. It was a cost of doing business to the builder. The judge then ruled that the apt. house had to be torn down. This happened in Jenna, Fl about 8 years ago. No, not going to happen.
Roidy
The solution is for the government to demolish the home
Good luck trying to get your money. My code guy can’t even figure out who owns some of the abandoned houses in my town.
The title has to be somewhere and have somebody’s name on it.
lListed owner…….Joe’s investment holding company. PO Box 26749, Peoria, Illinois.
Box closed. Mail returned to sender. NO forwarding addresses.
Free houses are even better than crashing prices.
Indeed, Max!
The city should give the lender (whoever that is) a maximum of 6 months from Trustee Sale to open market/auction sale. If the lender can’t do it (or can’t be found), the city does its “public notice” thing and takes over the properties to sell at a public auction.
Best way to take care of the foreclosure “crisis” and not a penny of taxpayers’ money shall be spent!
Plan to Save… It is hard to believe that anyone would think that this ’stimulus’ package would have any real lasting effect even if everyone went out and spent it. At some point in time all debts must be paid one way or the other. No such thing as a free lunch, no matter what they do.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aLzL2JgIERvc&refer=news
As I said before, mine is going into a forex account >; )
So would mine, Jane, if I were eligible to get any. I find it interesting that the outcome described in the Bloomberg article matches the predictions of Gary Shilling, who has been saying since 2004 that the housing bust would turn the US into a Nation of Savers.
Like they have any other realistic choice. ::snort::
Not getting one either. Now I have to lower my lowball offers by $600.
Ah yes, capital flight comes to the U.S.
It’s already underway, dude, massively so!
Brazil, India, China are already having problems with massive inflows.
IMHO by the time the moneys reach Americans hands the hopes of saving will be long gone. This bill benefits WalMart.
Sounds about right. The money is about survival for many (most?) people, and pushing off the problem to the next administration. It changes nothing.
It would actually be a good time to buy up staples - at WalMart - for the coming deluge. We could lay up some pretty good supplies for 600. Then save the other 600.
Everyone I have talked to is planning to put their stimulus check straight into either saving or paying down debt…
ie it helps the banks
yes..$160B in reserves will help a $1.5T problem. Its time to acquire more properties now that the problem is contained !
I am skeptical - people just say that because they want to be seen as responsible, but come the check time, they’ll be running to the store to get the latest gadgets. The economy is not THAT bad for people to be this paranoid. At least not yet.
This is old line I like to use: Debt must be repaid.
Debt is NOT Wealth, despite the Newspeak that tries to convince everyone that it is wealth. Yeesh… Debt is Wealth… it’s like Freedom is Slavery, Ignorance is Strength, and War is Peace!
Well, you happen to be wrong. Most debt will be defaulted upon.
C’mon man! America didn’t pay off its debts in WWII. It effectively defaulted upon them. What the hell are you talking about?
Debt will be paid eventually, if not by the debtor, then by the creditor.
Wow, that’s deep, man! Pass the J. Don’t bogart it.
A little unintentional comedy from Yahoo finance:
The Bright Side of Lower Home Prices: Lower Taxes
http://biz.yahoo.com/ts/080227/10404706.html
snicker snicker. Yeah, like taxes are every going to plummet.
Oh, yeah, I think that’s one of the reasons we’re not seeing faster drops in some areas. It’s not just FBs that are stubborn, but gov’t officials. They’re hanging on for dear life to the inflated values, in the hope they can keep the goose laying golden eggs. Gotta protect those budgets.
You should see how well it’s playing out here in Sacramento. Even my tiny county outside of Sac is millions in the hole.
http://tinyurl.com/2ylc3x
The San Diego County assessor adjusts the values upward if the property sells for too little. I’m guessing that values weren’t adjusted downward if a property sold for too much due to fraud.
The policy fits county assessors’ mandate to assess properties at their market value, not just at sales price.
WTF? They think sellers wouldn’t take a higher number if they could find it?
That is such horses**t.. And SO easy to fix.
Mike’s “Ultimate” Solution to inflated apprasials (for tax purposes).
If your unhappy with your tax assesment, go through the appeals process (same as today).
At the exhaustion of the appeals process (after they have given you your “final” number), you have an immediate choice. You can sell the home (for the APPRASIED value) to the town, or you can accept the tax assesment as fair.
That would be the END of inflated apprasials forever (again, for tax purposes). It’s amazing a system like this is not already in place!
“You think it’s worth 500K, I think it’s worth 250K. I’m not going to argue with you all day, here’s the keys; where’s my 500K?”
When I made the mistake of paying $4000 for a piece of junk desert in SE Calif back in 1992, I didn’t really suffer by paying the property tax on this inflated amount for a couple of years, but when I realized the property would probably never be worth what I paid for it, I donated the property to the Calif Assocn for the Blind, and used the property tax bill to justify to the IRS why I should be allowed to deduct the $4000. No argument from the IRS. It was still an expensive mistake, but it did cheer me to use the govt’s figures against the govt.
Michael Fink, that’ll never come to pass, of course.
You may be amused to know that in countries where there is a thriving black market (e.g. India), the opposite is used by the govt. to get people to declare the true transaction value. Most sales have two values, the true value Y, and the declared value X. (The difference Y-X is paid in “off-the-books money”.)
If you register the sale for X, the govt. has the option to just give you X, and take it. Their justification is that a seller should be indifferent to who gives them the X if X indeed is the true value.
Needless to say, after that, the registered values jumped up much closer to the true transactional value.
The governments made mad money initially buying properties worth millions for pennies on the dollar.
A response to az_lender’s post:
An idea: If one could buy a one-dollar house in Cleveland and have it assessed for thousands, then he would have a nifty tax deduction if he were donate the house to the blind.
I’m not sure even blind people would want to live in Cleveland. They’d donate it right back!
az_lender,
yeah, why do you hate blind people?
Do the assessors REALLY believe that the bank is selling for 100k below market? At a time when bank and short sales are becomming an ever larger percentage of all sales?
Tax assessments simply allocate the tax burden. If all properties drop 10% in value then the jurisdiction has to raise the rate 10% to obtain the same amount of tax revenue. In order to have your tax obligation lowered the jurisdiction must not increase spending, and your property has to decline in value more than the average decline.
Has to raise the tax 11.11% to get the same amount.
0.9 * 1.1111 = 1
I should be more careful about simple algebra early in the a.m. Still, no excuse to forget the rule about adding 1 to the denominator.
Yes, at some theoretical level. But in most areas changes in the millage (the tax per $1,000 of assesed value) has to be at least voted on by legislators. Tax assesments OTOH are done by “faceless” bureaucrats.
In Ohio, changes in the millage must be approved by the general public, not just legislatures. This applies to all property taxes - local gov as well as schools.
We get these millage changes on the ballots every so often.
Fascinating…. Here’s a surreal situation:
Amerika, 2010: The streets are full of homeless people, and renters are jammed together in apartments since it’s the only way people can afford to live since we’re now 3rd world status. All around are empty, foreclosed homes, still “selling” by the banks for near-Bubble prices. Why? Because if they lower the prices, they lower their tax base for property taxes. And they can’t do that because if property taxes go down, they won’t be able to pay for fireman to stop empty houses from burning down and housing subsidies to the homeless or Section 8 people?! Of course, if they lowered the price to let people live IN the houses, a lot of the problems created by the empty houses would vanish, but we just can’t do that…
Argh… I look at this madness and I sometimes feel like one of those computers in Star Trek that short-circuits after an overdose of illogic. Does… not… compute! BOOM!
“look at this madness and I sometimes feel like one of those computers in Star Trek that short-circuits after an overdose of illogic.”
LOL, you can say that again. But regardless, the houses for sale in your scenario will be of course rented out.
The Bright Side of the JT: Cleans Out Your Lower Colon.
http://bigpicture.typepad.com/comments/2007/08/constant-obliga.html
Now circulating in Asia!
Nice find there chick -
“Investment Dealers are excited to announce the newest structured finance product - Constant Obligation Leveraged Originated Structured Oscillating Money Bridged Asset Guarantees, or COLOSTOMY BAGS.”
Yes, I got a good laugh also. Friend of mine wants to refi out of her toxic loan and says the area she lives in is very desirable and that condo sales in her building have held up. Nice place, but a one bed one bath unit with no parking in a dense urban area. She put 20% down but for some reason has a 5/1 IO ARM @7% w/ PITI payments kicking in at year 10. I said well rates are low, banks are working w/ people, your bank my have a no fee refi, and if your value held up it would just be a few k in transaction costs, otherwise she’d have to take on the added cost of PMI or toss in more cash to get to 20% equity again. She asked how she could confirm that her value had held up before she initiated the process. I told her to look at her property bills the last few years. She could not find them so I went on line.
The county assessor IN ONE YEAR dropped the assessment of her condo by 45k!!! (~12% drop!!!) But you better believe that did not translate into a nickel of savings on her property taxes. They are only down by 100 USD because the property tax rate was upped by ~15% almost completely offsetting the savings she would have realized by the new dramatically lower assessment!!!
I predicted this sometime back. Florida posters were saying when property values come down so will the taxes. Yeah, right.
IMHO,
If I were going to live in a house for 10 more years, I’d welcome lower taxes today. Go ahead, drop that appraisal, the whole thing is cyclical.
Lower assessed values does not mean lower taxes. If they lower the assessment they just up the mill rate and up goes your taxes. You’ll NEVER see your real estate taxes go down without a major revamping of the system. Homeowners are now in a major dilemna in many areas due to a decreasing values and increasing taxes. Ouch!!!
Go luck with that tax appeal. The Board of Tax Appeal very rarely makes any major adjustments to your assessment. They know if they lower your assessment significantly they’ll have to do that to all of them. So, they won’t and don’t make any huge adjustments downward.
Or they will and then just up the mill rate, its a heads I win, tails you lose situation. However, if you do not fight your upwardly revised assessment then you get a double whammy!!
Homeowners are now in a major dilemna in many areas due to a decreasing values and increasing taxes.
Doesn’t seem like a dilemma to me. More like a punch in the face, followed by a friendly kick in the nads, karate-style.
Government spends taxes at least as fast, if not faster, than they come in.
It’s a fabulous racket - buying votes with the voters own money!
Sears Fourth-Quarter Profit Declines on Lower Holiday Sales
http://tinyurl.com/2a4w9e
“We do not expect any change to the downward trajectory in the near term” as consumers curtail spending on clothes and appliances, Bill Dreher, an analyst at Deutsche Bank AG in New York, wrote in a Jan. 23 report.
That phrase could be canned and used as an answer for most economic questions.
Tying into a thread from earlier in the week, apparently some houses do generate income, at least briefly:
http://tinyurl.com/2tjsru
“Police learned that illegal poker games and sports betting were being held at the house. According to police, on some occasions, the gambling featured topless dealers and barmaids serving players alcohol.”
I used to know two guys in New Orleans that ran a poker game like that. I never could really afford to play, but I did scrape together enough to sit in a few hands.
Roidy
Boy, that sounds pretty serious compared to the fraud that no doubt occurred.
In trying to sort out all the different potential options before us (deflation, inflation, stagflation, hyperinflation, etc.), I am wondering what kind of advice you would have for a small business owner. My DH and I own a home-based graphic design and writing business. Extremely low overhead expect for the ridiculously high cost of buying our own health insurance. We have a diversified client base. We also have income from other sources such as a pretty secure parttime job teaching at a college and various online moneymaking ventures.
How should we approach the present/coming mess? Any red flags we should watch for? How will small business owners have to adapt their business practices depending on the various types of outcomes? Any insight would be appreciated.
Thank you!
There are always opportunities…
For example, we know a family that had a business in luxury home improvements. Naturally, that took a major hit, so now they are rehabbing foreclosures. They say the phone is ringing off the hook and they are too busy.
Look for ways to adapt in a recessionary environment. Is there a need for your services in any of the “recession” industries? Bet you can do quite well if you really think it out.
Good luck!
Adapt, improvise, overcome.
Hi, Bill. I guess what I’m asking is more about how a small business will adapt to say something like hyperinflation. How does a business contract out to do projects in a situation like that? (If I remember correctly you work by contract as well) Maybe it isn’t a question that can be answered until we would be in the middle of it, but I have wondered about things like this with all I’ve read here in recent months especially.
The is no way to prepare for hyper inflation other than having non-US currency or barter for services.
When inflation gets too high then real economic activity plummets, as their is no medium of exchange.
So, you’d have to take payments in silver, gold, or Yaun. Peg it to a hard money currency.
Not many people have gold/silver around though.
My advice would be keep on fighting but predict, expect and plan for a likely failure during the long slump, despite your best efforts to avoid such.
Focus on the end of this downturn, where bigger and better opportunities await those few entrepreneurs who’s spirit and enthusiasm survives, and who will be prepared to take full advantage of the fertile conditions at the end of this cycle.
As a small business, I assume that you already do some bartering for goods and services.
Would you be willing to increase bartering for clients who might be seeing some slowdown in their business?
The Chamber of Commerce here has a group insurance policy for members. Might offer some cost advantage to having a single entity policy.
Yes, we already purchase through a group, but it is still expensive.
Lean on the broker/agent. He is making anywhere from 5-15% commissions plus any additional broker’s fees. Talk, get quotes from other agents/brokers who will cut your costs for your business.
sallie there are plenty of precautions you might want to consider.
1) Raise your prices.
Look for business outside your geography
2) Diversify your business
3) Cut down your overhead as much as you can.
4) Advertise and market creatively and heavily. Fight for a bigger market share.
5) Offer free seminars and creative news letters.
6) Sell sell sell sell all day long
7) Establish more relationships in the industry
9) Bid on govt jobs
10) Treat your employees with respect and give them bonuses. They will be suffering the down turn more severely.
I have a question. Most of you say your primary home isn’t an investment because it costs you money every month while an investment makes you money every month. Okay, but what is the term for an asset that does neither? Silver bars tucked away in a safe deposit box or vacant land, for example.
Speculation? Or perhaps hedging?
Speculation becuase you are counting on the fact that someone will pay you more tomorrow then you bought said item for today.
Hedging because you mentioned a metal, which is often used to mitigate the risk of currecy devluation.
So a speculative investment, right? That’s what I thought but it still uses the “I” word. I’m just trying to figure it out. So many throw the word around, like my inlaws who just “invested” in dining room furniture. (Not antiques, either.)
It is my rather unhumble opinion that whenever the average sheeple uses the word “invested”, it means “we wanted it so we call it an `investment’ to justify it to ourself”.
An accurate observation and opinion no doubt…
Totally true. It took me about three years to break my wife of that habit. She wanted to “invest” in a new dining room table or “invest” in a dvd player. I have no problem buying goodies, but I refuse to even participate in a conversation where we call that investing. She finally quit doing that and frankly I think psychologically it has lead to a healthier perspective of money management in general.
It seems like a small thing, but words are important and if you say something enough times it becomes part of who you are.
I invested in two 20oz beers from the Stone Brewery last night. And it paid a dividend this morning.
‘It seems like a small thing, but words are important and if you say something enough times it becomes part of who you are.’
Oh, I agree, bluey. Words are very important. Words are the tools with which we think, after all, so sloppy words = sloppy thinking. I like to keep my brain tool-box packed full of as many clean, sharp, nicely sorted words as can rattle around in there. With a separate group sorted carefully away in the ever-so-important profanities section. Sadly, I’ve been noticing that those are getting mixed in with the other words lots more than they used to.
That is, if you are not a musician. A musician thinks in musical expressions, compare to which, all words pale….
IMHO an investment generates a return on invested capital. This return is tied to fundamentals, such as P/E, yield, interest, rent, etc.
If the expected return is tied to a prospective increase in price then it is a speculation; The return is not tied to a fundamental but instead is dependent on the desire of some future buyer.
A house bought at a price that makes sense due to fundamentals (income and/or comparable rents) is an investment. A house bought because the feeling is that houses always go up and there will always be someone else to buy it from you at a higher price is a speculation.
Again, IMHO.
I’m so strongly in agreement with you on this that I don’t consider non-dividend-paying stocks to be investments at all.
I tend to fall in the other camp I guess. I consider an “investment” any time you put capital into something in anticipation of some return later. If that return come from cash flow (rents, dividends, etc) fine. If that return come from price appreciation (art work, antiques, PM’s, houses, etc) that qualifies too. Of course, in the latter case gains aren’t realized until the item is sold.
It seems to me that too many people exchange what might objectively be considered an “investment” with what they personally would consider a “good investment”, which may be two different things.
Profit = capital gains + dividends
Capital gains are nice when they happen. Feeling lucky?
I call it tax evasion, lol.
You should call it an “investment” when you want to warn others not to suggest there is any risk of loss in your trade.
So did the French, Blue Skye!
When the estate tax there was 90% (is it still?) it was very common for the French to convert their wealth into gold, put it in safes in neighboring Switzerland or England, and just drop off the key to their heirs.
This is common practice worldwide, incidentally. Only Americans p*ss and moan about the legislation of the estate tax. The rest of the world is proactive on the subject. LOL.
“Silver bars tucked away in a safe deposit box or vacant land, for example.”
The terms for such an asset is no different than it would be for stocks and bonds - investment, speculation, whatever you wish it. Each has a monthly, quarterly, yearly return, even if it may be difficult to calculate on the land. Lots of stocks don’t pay dividends, but that certainly doesn’t effect their ability to generate returns. As far as any vairable costs associated with holding assets (taxes, safety deposit box cost, etc.) simply net them out, just like stock commissions.
correction: effect=affect (note to self: “effect” a noun except when used to mean “cause,” as in “effect a change.” All other verb meanings use “affect.”)
I think there is some disconnect that has happened here. Lots of people talk about the home-place being an investment. Lots of other people say the home isn’t or shouldn’t be an investment.
Strictly speaking, I don’t see any reason why a person can’t live in an investment. So in that sense, sure your home can be an investment. However, I think most of the “home is not an investment people” will agree (if they don’t agree on the previous point) that at least your home should not be an investment. That’s my position.
Why? Well, for one thing if your home is an investment it tends to lead to the idea that you should buy a bigger home than you need. If you want more gains you have to invest more so it makes sense right? Also it tends to be too easy to justify “stuff you want” and call it investment. You want granite counter tops? Great, its an investment, let’s do it. (See my response to faster pussycat above).
Finally, what happens if your investment fails? Most people in the “your home is your best/biggest investment” camp seem to generally assume the investment is a gauranteed return. That is counter to almost any reasonable school of thought of any type of investing. Investments sometimes lose. So if this investment turns out rotten, now you have lost not just your investment but one of the basic needs of humans, shelter.
So I think most could/would agree that while it is totally possible for a person to live in his investment, it is more prudent to seperate those parts of your life. A portion of your income should go toward basic needs; food, clothing, shelter, education, etc. Some portion should be saved. Some should go toward the church/god if you believe in that sort of thing or charity or some such. And some should be invested for some return. But don’t mix all these things up and draw hard lines between them. That will help you to maintain perspective for each of the aspects of your finances.
One could call it an asset for capital preservation or an inflation hedge. Ideally, you’d never need it and pass it down to your heirs. But it’s there in case of an emergency.
One other thing, an interesting aspect to the “silver bars” thing is that precious metals seem to have two components. The investment/speculative component and the hedge/savings component. Some people buy gold because they are anticipating price gains (in terms of dollars). Other’s buy metals because they expect the dollar to be devalued (in terms of everything else, e.g. food, energy, property, etc) and metal is one method of storing wealth (i.e. “hedging” against a more normal method of storing wealth, the dollar or other fiat currency).
So the reason I think this is interesting is when you look at the current gold price, what portion is driven by savings (the falling dollar) and what portion is driven by wild speculation?
If you save money vs. renting, then I’d call it an investment. If you expect to make big bucks through appreciation, then I’d call that speculating.
“Housing impacts so many sectors of the economy,” Kurt Bauer, chief executive of the Wisconsin Bankers Association, said Wednesday.
Twenty-one Wisconsin banks didn’t turn a profit last year, as the housing slump lingered and a slowdown in the economy deepened, a new report by regulators shows.
http://www.jsonline.com/story/index.aspx?id=722925
another one of those nyc feel good stories on a frigid morning
http://www.nydailynews.com/ny_local/queens/2008/02/28/2008-02-28_realtor_okd_by_city_signed_mom_up_for_fo.html
Yeah, and she popped out another kid in the meantime. Good for her!
I know I live here but denizens of this city badly need some trout-slappin’.
of course she did, the more kids the bigger the welfare check
this city is only great if you are really wealthy or really poor
anywhere in the middle and it blows
Ditto on the *tax* rebates. Want the feds to redistribute wealth in your favor if you’re part of the middle class? Have kids!
Two incomes and two kids means that the childless get reamed. Gee, thanks. Millions should send thank-you notes to their childless neighbors for funding their lifestyles.
Sorry, didn’t see this when I posted.
Wonder how much time she’s spent job hunting vs. the amount of time screwing around.
ah, the ol’ arms-crossed “defiant” look! The photographers tell ‘em to do that..
Like it matters! I shudder to think what kinda life those kids are gonna have.
“Who now has four kids.”
Nice.
LOL Perfect Comment:
OK, wait-I want someone to clarify the part where she started this mess with 3 children and now has 4. I’m confused-if you already have 3 homeless children and you are living in a shelter for the love of God what makes you think another child will make things better? I can’t afford this woman’s fertility or her promiscuity.
You all are being judgmental. That’s no longer allowed. The PC police will be soon knocking on your door.
take that tw*t to the SPCA for a low cost spaying.
Buck v. Bell
LOLOL!!!!
It would be nice if Bob Barker encouraged spaying/neutering of some humans.
Oh, no - it is very simple.
See, each child is a potential future homeowner. And, as we all know, “housing only goes up!” and “your home is your biggest investment!” So, more kids = more houses = more investments. It all makes sense!
Hahahaha… ugh… The gene pool really needs some cleaning based on this woman… yeesh.
I think you meant ‘potiential future home robber.’
Gotta keep the consumer based economy going, and if we can’t cajole people into replacing their stuff every year, we’ll make sure it gets stolen.
The biggest problem in this country…hard earned wealth (confiscated via government taxes) dissipated to social losers who have no intent to change their lives…goin’ 3rd World.
…She is a genius–each illegitimate child she has (and there will be more, the financial incentive to have more is too great for her to resist) will not only cost her nothing, but will increase her monthly disposible income and make her eligible for a much larger apartment that any working person could afford in this city. Her cchildren are nothing but a meal ticket to her. You and I are her suckers. When will this end? Guaranteed, each of her four children will also go on welfare, statistically, they would be a quark-like anonomly if they don’t, and their children as well–do you get the proper picture? This individual will spawn approximately 36 new welfare cases in the next decade or so. She is a liability to society for upwards of 7-13 million dollars, conservatively. (food stamps, emergency-room baby deliveries, housing vouchers, cost of incarceration for her children, etc.) She belongs in an internment camp, sterilized, like, yesterday. That’s where she should be housed.
the real smartest guy in the room:
Feb. 28 (Bloomberg) — Jim Rogers, who predicted the start of the commodities rally in 1999, comments on the outlook for sugar, cotton and other commodities.
He spoke today at the CLSA Japan Forum in Tokyo.
On the outlook for agricultural:
“If I told you how bullish I am about agriculture, you’d ask me to leave the room. Prices of agricultural commodities are going to explode. Inventories of food are the lowest they’ve been in over 40 years. The number of hectares devoted to wheat farming has been declining for over 30 years.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqa5ay.X5RTY
Not to get into a p*ssing match with Jim Rogers who’s far smarter than I am, but this is irrelevant. What happened to the net yield?
There are far less farms now than in the 19th century. So what? The higher productivity (yield) compensated for much of it.
I doubt net yield has increased as much as population in the last 30 years.
More important than the net yield vrs population question is the net yield vrs monied population question. It is the growing share of Asians who can afford to buy grain (and gold and oil) on the global market coupled with an apparent coordinated effort by developed country CBs (one or more of whose currencies in which ag commodities are denominated) which leads me to suspect Rogers may be on to something.
Not just Asian individuals, but Asian corporations and governments as well. China doesn’t want to kill its development agenda while waiting around for fuel or basic foodstuffs.
you’re getting ‘very close’ to what i think is one of the the real big triggers.
check out how much grain it takes to raise meat for consumption, rather than just consume the grains….you can see some of these arguments on vegan/vegetarian websites.
now, look at what is happening in regards to increased meat protein consumption in developing econs of china, india, elsewhere.
The increased yield came about as a result of increased use of fossil fuel-based fertilizers and pesticides, to say nothing of the inputs on transportation and distribution (”the 3,000 mile caesar salad” as Jim Kunstler calls it).
Peak oil = game over for industrial agriculture. The good news is that an estimated 20-50 million Americans will have a future performing manual farm labor in coming years.
DBA had big volume and was down slightly yesterday. I will be buying on pullbacks. Between climate change, peak oil, and 2 billion Chinese/Indians industrializing, food is going higher.
You’ll see nuke power plants dotting the landscape before you see subsistance farming, sir.
When the choice is glowing grandkids or an honest days work, you know we’ll chose glowing grandkids.
Rather than manual farm labor toiling in the ethanol-corn fields, wouldn’t it be more efficient to strap a dozen of them in front of each SUV or Hummer?
Ah, a new “service industry” that is both good for the environment AND can serve our moneyed masters - a return of the rickshaw, or if you are really wealthy, the sedan chair!
Instead of the size of your SUV it’ll be the number of people you have to carry your ass around that will conspicuously display your level of wealth.
i’m adding on pullbacks as well….
i don’t have the time/energy/smarts to figure out directly playing the commodities markets (unfortunately) and have finally learned my lesson (i hope) trying to play this commodity boom through the stocks of incompetent companies and greedy managements/boards involved in their production.
fuBarrio
Based on what he has been saying I put money into DBA last summer; boy am I happy. I expect recession fears will soon cause a significant, but temporary, correction in base metal prices (similar to Spring 2006). When that happens I’ll put money into DBB. I find these exchange-traded funds relatively safe (no leverage) and cheap (they’re index funds plus interest on collateral covers most of the contango) ways to invest directly in commodities. Any adverse comments about these commodity ETFs?
I use ETFs, and with margin I get enough leverage without being wiped out by big down days, like yesterday morning with wheat (which recovered nicely in the afternoon). They are easier to trade and cheaper than futures. I like JJG for wheat. Good luck.
Tux : I very much like the DBx funds. I just sold out of DBA myself for profit taking but this was temporarily on hunch of a pullback.
I also have DBS which I believe it better that SLV.
The recent ETFs - x2 indexes /sectors and commodities - are one of the best vehicle that I have seen.
Glad to hear that agricultural commodities are at a permanently high plateau.
are you predicting an end to their bull market?
i’ve found as long as their are large groups of people “top calling” your usually still pretty safe in these major moves….copper in 2005 is a classic example @ 1.20/lb.
Feb. 28 (Bloomberg) — The California Public Employees’ Retirement System, the largest U.S. pension fund, may increase its commodities investments 16-fold to $7.2 billion through 2010 as raw materials prices surge to records.
I always find that “buy high - sell low” is a sound trading policy as well.
Not that commodities are a bad investment right now - but it’s generally not a good idea to buy something *because* its price has increased recently (see housing).
See gold
The Trend is your Friend.
…until it’s not
If CALPERS is investing in commodities, then that’s a signal that now is not a good time to get in. The other clear signal is when Time Magazine has it on the cover.
Nice article in yesterday’s WSJ about how Ethiopia wants to open a grain exchange similar to the Chicago Board of Trade to handle their expanding wheat, corn and other agricultural products.
The article talks of thousands of acres of wheat and corn under cultivation. This is the same country that suffered from famine not too many years ago.
FWIW.
cutting Fannie:
Feb. 28 (Bloomberg) — Fannie Mae, the largest source of money for U.S. home loans, may have its bank financial strength rating cut by Moody’s Investors Service because of a record $3.55 billion fourth-quarter loss.
The loss “represents a significant deterioration of surplus regulatory capital” from $3.9 billion in December, Moody’s said in a statement today. Fannie Mae is likely to have “sizable losses” in the first half of 2008 and may have a net loss for the year.
http://www.bloomberg.com/apps/news?pid=20601009&sid=arAc2gJfrpwI&refer=bond
the whole rating thing is another scam, and one of the biggest on Wall Street.. Moody’s & S&P are like a broken record mom warning their children for the upteenth time to stop playing with matches or they’ll get in trouble… what we need a mom who doesn’t warn and just acts… quick, hide all the losses, I’ll be looking at your books next week.. wink, wink..
The war caused it!
http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html
bush to hold 10am press conference on housing, probably to refute the aussie news. (No link yet.)
I am shocked at how little news we get everyday about Iraq. But you are right, the sheeple are so clueless about how much we are spending
And I’ll bet ya, very few people really know more Americans have been killed in Iraq then died in 9/11.
And more Americans died in the other Pacific islands in WWII than were killed at Pearl Harbor. What’s your point?
“And I’ll bet ya, very few people really know more Americans have been killed in Iraq then died in 9/11.”
Anybody with a triple-digit IQ who pays even the most cursory attention to the news knows this, as these numbers are quoted often, especially when deaths approached and went past 3000.
For those who don’t fit into that category, this is hardly the most egregious shortcoming. Many, if not most, people aren’t even aware that they are alive, in any meaningful sense.
You’re cracking me up today.
“The money being spent on the war each week would be enough to wipe out illiteracy around the world, he said.”
Right, and if everybody just ate less, nobody would go hungry.
Are you suggesting that I eat some illiterates?!
Well…okay. But they better be all fat and juicy.
Depending on what your definition of “literacy” is……
And if my grandma had testicles, she would be my grandpa!
(Kudos to some poster from whom I stole that.)
Amazing what the give Nobel prizes out for, nowadays.
To bad for all of you who seem to like this war so much that you can’t vote for President Bush again.
The article makes a valid point, if you don’t think the huge deficits run up by this administration, caused by the Iraq War and the ridiculous tax cuts were a major reason why the Feds kept credit so easy, you have a very poor understanding of economics.
Now it’s time to tell me some silly thing Clinton or Carter did.
Interesting talk radio interview with Karl Denninger on Phoenix talk radio.
http://tickervideo.org/27Feb08.mp3
He will be on for a full hour on Saturday talking about housing, the banks and stocks.
He’s gettin really worked up about the sheeple. Posted that he will restrict MarketTicker.
I hope I can still following his posts. It is a good counterpoint to the Peter Schiff side of the argument.
I respect both opinions but both suffer the human flaw of expecting people/society to do the right thing before its too late.
I think it is too hard to call which way this will break. Hyper inflation or massive deflation. What to do????
Decoupling question….
So, the brilliant economists say that “decoupling” of the word economy means that US business can withstand lower spending by US consumers because other parts of the world are booming and demand from those places will replace and perhaps even exceed the lost US demand.
There seems to be some of that going on, but I don’t know if we are far enough along the curve to know if it is going to hold up. Other parts of the world have also been drinking the real estate koolaid, so their demand for our goods (construction equipment for building and video games/movies/other entertainment, etc.) may come down later, but what about food and energy.
Food and energy have to be the first two things that people who are moving from extreme poverty to less extreme poverty demand. So if decoupling is really happening, it would happen in food and energy first, right? So if the economists think that the other stuff has “decoupled” why are they so sanguine that food and energy prices will come down as US demand comes down? We can’t control that portion of inflation anymore, under the theory.
Are they merely justifying anything they happen to want as policy? The more I think about it, decoupling sounds scarey. I know that BB isn’t doing it, but I at least hold out hope that eventually some fed chair could raise rates and put a very painful lid on the inflation of essential goods. But maybe there is no way to do it. At all.
I expect the currency experts have something to say about this. I welcome their input.
One frequent past time of brilliant economists is to see how far they can push an implausible-sounding theory in the face of contradictory evidence. For instance, do you remember the one about how it was Asian savers rather than U.S. profligants who were forcing us to collectively spend more monies than we collectively earn?
“…Japanese retails sales rose 1.5% in January, for a sixth month, on higher automobile sales. The majority of the gain was inflated by near record fuel costs, which is eroding consumer purchasing power. Inflation and a deteriorating labor market is weighing on the Japanese economy, and leaves only Asian demand to drive the economy….”
Decoupling has occurred in Asia. Europe is entwined with the US.
Reuven will like and understand this (and it is not meant as a religious comment), but the Japanese regard investments like my Jewish friends do. If our officials look at the bright side, the Japanese look only at the negative side. It is the “Oi, it is so bad the banks are collapsing, our economy is going into the tank.” (except in Japanese). The Japanese economy grew at 6% last quarter, Korea grew at 7.5%, India is on pace for 10%, China may drop to 9.5%, Vietnam is growing at 13% and Australia, a prime beneficiary of this growth, is booming.
As a result of the Japanese penchant for worry until proven wrong, Japanese investments are the cheapest in decades.
Reuven, to paraphrase Ms. Albright, ‘I was raised Catholic, married a baptist and realized I was Jewish.’ :>)
“…European retail sales rose according to the PMI gauge which printed at 52.4 above the 50 boom/bust level for the first time in five months, signaling growth. A closer look at the components showed that there were gains in sales, value of goods and employment, all signs that the region is weathering a U.S. slowdown. Meanwhile, the German labor market showed signs of continued strength as their unemployment ranks decreased by 75,000 pulling down the employment rate to 8%-the lowest level in 15 years…”
(If we calculated unemployment the way the EU calculates unemployment, the US unemployment is way over 8%.)
Over 10% actually. You have to add 2% for the difference in the prison population.
“As a result of the Japanese penchant for worry until proven wrong, Japanese investments are the cheapest in decades.”
Such is the economic value of handwringing.
BTW, can you access CRSP data?
“…Japanese retails sales rose 1.5% in January, for a sixth month, on higher automobile sales. The majority of the gain was inflated by near record fuel costs, which is eroding consumer purchasing power. Inflation and a deteriorating labor market is weighing on the Japanese economy, and leaves only Asian demand to drive the economy….”
= white noise
Recoupling theory…
Japan’s Bonds Rise Most in Three Weeks as Factory Output Falls
By Theresa Barraclough and Yumi Teso
Feb. 28 (Bloomberg) — Japan’s 10-year bonds gained the most in three weeks after a larger-than-expected decline in industrial production added to speculation economic growth will slow this year.
http://www.bloomberg.com/apps/news?pid=20601101&sid=aESRXtONpgs0&refer=japan
“…leaves only Asian demand to drive the economy…” not white noise. lol
So you are predicting Asian demand will carry the water when the U.S. well has run dry? (I personally think the well is a commons, but time will tell…)
Prof G.S. Bear
Asia is the market. The US has little that Asia wants. Australia is booming because of its raw materials and proximity to Asia. Brazil is Asia’s back yard.
I doubt that Asia can carry the US. Asia does not need the US, they need the EU. To this simple country boy, it appears as if Asia is treating the US as a very wealthy terminal cancer patient.
Hoz –
Long-term I agree with you; short term (next 5 years or so), I think the U.S. will drag Asia into the mire. Perhaps this short-term scenario is what you have in mind when you criticize me as being fixated on “white noise”?
10 Years ago you would have been correct, but 10 years ago the US accounted for 34% of the world GDP. Last year the US accounted for 23 -24% of world GDP and this year may account for less than 20%. At less than 20%, there is decoupling. The US is no longer needed.
Am in Asia since five weeks and one definitely does not get the sense that they care much about this former superpower. Also, agree about Asia/Australia, they are natural born friends. Australia needs the vitality, Asia the space.
I personally think the Aisen markets are ripe for a correction so I am not a buyer into them . They have high P/E’s. I see everytime the US has a bad day on Wall street is is followed by the Aisen markets the next day and on a % basis it is usually larger. I am however monitoring them closely to see what opportunities lie ahead in the next year or so. If the US dollar continues to devalue then even a stagnant Aisen market can do OK. My concern is every country has ramped up their supply and production of goods to the point that we may be in a global over supply condition This could lead even the Aisen countries with a short term slowdown that may roil the markets. I agree that a decoupling is going on but I am not sure it has happened just yet and even if it has I don’t think investors will believe it until they see the data to show them so short term negative volitility will occur. Just my 2 Yens!!
“only” Asian demand: every second person is under thirty here, and most under twenty, and everything is hopping. Look at places like Siam Center in Bangkok on a weekend, that’s the face of future demand.
Another HB may bite the dust
Kimball Hill Homes to leave Florida, lay off corporate employees
To avoid bankruptcy and confront industry dilemmas, Kimball Hill Homes will exit the Florida market and lay off corporate employees, the Rolling Meadows-based homes builder announced Wednesday.
All homes under construction in the troubled Florida market will be completed by the end of the year. Also, Kimball Hill will cut 75 corporate jobs here and elsewhere around the country, said the company which recently hired a restructuring officer.
“While winding down our operations in Florida and bringing staff levels in line with current market conditions will allow us to strengthen our company, we recognize and deeply regret the impact this action will have on our associates,” said Kenneth Love, chief executive officer of the company that has acknowledged in SEC filings that it faces a possible bankruptcy .
http://www.chicagotribune.com/business/chi-biz-kimball-hill-homes-florida-layoffs-feb27,0,2683817.story
Why has Sir Paulson (of all people) finally getting sensible?
Paulson Dismisses Mortgage Rescue Plans, Bernanke Keeps Door
Open to Rate Cuts To Boost Economy
WASHINGTON — The Bush administration is hardening its opposition to the chorus of Democrats, bankers, economists and consumer advocates calling for a big-money government rescue program for struggling homeowners.
In an interview yesterday, Treasury Secretary Henry Paulson branded many of the aid proposals circulating in Washington as “bailouts” for reckless lenders, investors and speculators, rather than measures that would provide meaningful relief to deserving, but cash-strapped, mortgage borrowers.
http://online.wsj.com/article/SB120416823532298975.html?mod=hps_us_whats_news
I’m going to be frank here as an independent who’s voted on both sides of the isle in the past… He’s made some huge mistakes no doubt, but the longer President Bush remains in office, the more I’m liking him… Agree or disagree with him, he’s got conviction and is pretty unflappable when you get down to it on a number of things.. if he kabosh’s this Dodd / Democrat bailout BS, I’ll like him even more..
Except that they were all dead quiet, government & media alike, when all this was building up. I call it ruthless.
It is so very refreshing to hear a political appointee take a principled stand on anything!
He’s on TV now telling us all we are NOT in a recession. Will his conviction let him admit his error when it turns out we ARE in a recession? Guess it won’t matter anyway. He’ll have one foot out the door by then. Let the next guy (or gal) worry about it.
Man’s gotta do his job…
Yep. It’s just unfortunate the millions of people listen and believe. I guess it’s easier then doing actual research.
It is great to here someone at the top articulate a conservative
R-can position on these foolish bailout measures.
here hear (can’t spell before coffee…)
Bush just said during news conference he was against helping bankers and investors with a bailout.
what a shock ! you mean he comes down on the side of the bankers ?
A central bank is one of key fundamental tenets of communism.
whats the difference between a bailout and a no-bid contract that gets paid out even though work was never done ?
I do find this suspicious. It does seem like a principled stand, being against using tax dollars to encourage massive malinvestment.
But the big financial companies are among the biggest lobbyists in Washington DC. They’re closely connected to both sides of the aisle.
And these are politicians we’re talking about. What’s the republican’s angle here?
Thornburg Mortgage Faces Margin Calls… say it ain’t so.. I heard Cramer pumping the heck out of this one a while ago..
http://biz.yahoo.com/ap/080228/thornburg_mortgage_mortgages.html?.v=1
she’s a AAA company though, so no worries..
Sooner it goes out of business, the sooner Chris Thornberg can be rid of that confusing ambiguity of sharing an almost identical name with a bogus mortgage outfit.
I watched that show only to see this CEO on. Cramer was almost sucking this guys you know what!
Per the NY Sun, Manhattan is different, but Brooklyn is toast.
http://www.nysun.com/article/72033
By toast, I mean they might have to sell condos for $550 psf. The horrors! What would happen if cops, teachers, small business owners and non-executive office workers could actually afford to live with their families in two-bedroom condos in the outer boroughs, take the subway to work, and vacation at Coney Island? It would be the end of New York as we know it!
not even march 1st yet- wait until the summer. cannot wait to see some firesales on hastily built mccondo’s
This article includes one of the most inappropriate uses of the word “literally” I’ve ever seen…
Ian Reisner, one of the developers of a 108-unit condominium project at West 47th Street and Twelfth Avenue in Hell’s Kitchen, the 505, is bullish on the market. “Our project is literally on fire, selling over 90 of the 108 units in the last 12 weeks.”
Yes, the principle of substitution does not apply to Manhattan. The island is immune from the laws of economics and gravity.
I got so tired of hearing my NYC friends do the Its Different Here song, that I began yessing them and encouraging them to go on thinking so. Will keep my laughter low-keyed as they prove to have been wrong.
You should laugh hard in their faces while waggin’ your freakin’ finger upclose their noses. Right after they’ve picked up the tab, of course.
Totally OT: what is the experience of folks who have dumped their landline in favor of “cell only”? (I make international calls frequently so this is a concern.)
Have used a low cost international calling card for the international calls, which is cheap when you make long calls, and not worth it if you make many short calls.
I recently abandoned my landline. I now pay an extra $4 per month to ATT Mobility for a World Connect calling plan with low rates to Japan, but I noticed the connection was a little weak.
If you make calls to broadband connected family overseas, look into VoIP solutions for them. (A lot of IFs there, but it works well for us. e.g.: $20/yr flat rate + the $25/month cost of the internet and the sunk cost of the computer.)
If the people you call are really connected you can use one of the free VoIP solutions (Google talk, Skype, etc). The bluetooth headset that works with my cell phone also works with my computer, so I don’t need to sit at my computer to chat with anyone.
There are also a growing number of WiFi phones available that can use most of the pay VoIP services as well as most of the free VoIP services. If you can connect to a WiFi network anywhere in the world, you can talk to anyone else that can do the same - for free.
I was cell phone only for one year. The only real problems I had as are follows: I would forget to turn the phone on, or had the ring-tone volume too low, and would miss calls. The repeater closest to where I lived went off line twice in one year and there was no overlapping coverage. You might want to keep a land line for emergency and local calls and use the cell phone for LD and international calls.
I have cell only and occasionally make short calls to Mexico. Verizon has a plan by which you pay a monthly charge of $5 or so for International and get a lower rate, or no monthly charge and a higher rate. Even with no monthly charge, it’s only about 50c a minute to Mexico.
50 cents a minute?! that’s banco…
I did so a couple years ago. Prior to that, I worked at home for about 2 years. I wouldn’t do that without a landline. When I went back to the office, the home phone became redundant. Now the wife and I just use cells and I don’t miss the landline at all.
So, if you work at home a lot I would recommend keeping the landline, otherwise consider dropping it. I don’t make international calls ever so I have no input as to what effect that would have.
Dropped my landline in 2003. Haven’t missed it, or the 15-20 bucks a month of pissy taxes/fees that they tack onto your landline (almost as much as the line itself.
The only problem I have, is that I don’t have a landline to locate my cellphone if I misplace it.
Thanks all! Did some homework. Dumped the landline. (Yeah, I know. I’m quick on the trigger like that.)
They offered a $10 reduction. No thanks! Looks like they know this landline-dumping tsunami is coming.
if you dump the land line, what do you use for computer connectivity? I wanted to do this, but that is one drawback.
I have fast cable service which while not ideal works.
Since I don’t own a tee-vee, I have to pay extra for the “privilege” of having “just” an internet hookup because I don’t have a “cable package”.
What a fuckin’ effed up place this is!
I feel some strange weird nostalgia for my physical land phone. I bought it for $15 or so at Radioshack in 1994. Back then, I used to think that was a HUGE amount of money.
Aah, the good times! You can’t buy those memories.
This little Mortgage HELOC time bomb gem was posted on the Peak Oil Blues blog a while ago but I just ran into it. I KNOW you folks will get a real kick out of it.
http://www.peakoilblues.com/blog/?p=160
The best comment:
“You ought to frame this document. This is like having a piece of the iceberg that sank the Titanic. I wish I had kept some of that junk mail from 2-3 years ago.”
Perhaps I should frame the ad for 3%, ninja mortgages I have stapled to the wall in the back of my cubicle.
For those bloggers who think they have a monopoly position on criticizing easy money policies designed to respike the punch bowl, you don’t…
February 27, 2008, 9:24 am
Fed Critiques: Too Timid or Too Aggressive?
Has the Fed been too timid with rate cuts? Or too aggressive? The Congressmen who will grill Fed Chairman Ben Bernanke today almost certainly are more likely to say the first rather than the second. But a panel of experts who appeared before the same panel Tuesday were surprisingly divided.
John Taylor, a prominent monetary economist at Stanford University (and one time rumored candidate for the job Mr. Bernanke now holds), said the Fed may already have cut interest rates too far. His own Taylor rule, now widely used, including at the Fed, for estimating an appropriate value for the federal funds rate, suggests an appropriate setting would be one percentage point above the current 3%, he said. Even adjusting the calculation for additional insurance against the risks facing growth “would still imply an interest rate target above current levels … These calculations, which endeavor to balance the key risks, are not consistent with further interest rate cuts at the present time…. Of course, if further economic weakness pulls the growth rate down, with declining employment and production, then additional cuts would be appropriate.”
Former Fed Vice Chairman Alice Rivlin didn’t go that far; in fact she said “The monetary policy authorities seem to me to be doing a good job.” But like Mr. Taylor she tackled critics who “think that the Fed is ‘behind the curve.’” In her remarks, Ms. Rivlin, now a Brookings Institution scholar, said, “I suspect these critics have in their heads, for whatever reason, a forecast of deep recession to come, and do not think the Fed is acting on their forecast. However, the consensus forecast — and the Fed’s — does not anticipate recession. Moreover, there are ample reasons for concern about bringing the short-term interest rate as down as low is it was in 2002-3. Fear of aggravating inflation is one. Another is apprehension about making monetary policy so accommodating that it fuels the next bubble — in whatever asset class might catch investor’s fancy.”
http://blogs.wsj.com/economics/2008/02/27/fed-critiques-too-timid-or-too-aggressive/
Now, HERE’s a real estate ad with a different approach (scroll past the text to see the ad):
http://tinyurl.com/33tocw
“Own your own home. Taste freedom.”
Shouldn’t there have been an “or” instead of that period?
This does not sound to me like the description of a lender on the verge of reflating housing-bubble-era home prices…
Freddie Mac’s Loss Widens
By Andrew Edwards
Word Count: 427 | Companies Featured in This Article: Freddie Mac, Fannie Mae
Freddie Mac’s reported a steeper-than-expected fourth-quarter loss, as the company — pummeled by credit woes — recorded $3.1 billion in write-downs and said it expects billions in credit losses in 2008 and 2009.
The government chartered loan clearing house reported a net loss of $2.45 billion, or $3.97 a share, compared with year-earlier net loss $401 million, or $73 cents a share. The company had said it expected fourth-quarter results to be in line with its third-quarter loss of $2.03 billion.
http://online.wsj.com/article/SB120419835360799613.html?mod=hpp_us_whats_news
Post-home-equity-ATM cash source = broken 401(K) piggy bank
Despite Costs, More People Raid 401(k)s for Cash
By ELEANOR LAISE and CRAIG KARMIN
February 28, 2008; Page D1
Financially stretched workers are increasingly breaking into their retirement accounts to get cash.
Over the past couple of decades, the 401(k) account and its brethren have become the main retirement savings vehicles for millions of Americans. But as the credit crunch and declining home values limit many types of consumer loans, a growing number of workers are tapping into these accounts as if they were piggy banks.
Eighteen percent of workers had a loan outstanding from their retirement plan in 2007, up from 11% in 2006, according to a survey to be released today by the Transamerica Center for Retirement Studies, a nonprofit corporation funded by Aegon NV’s Transamerica Life Insurance Co.
http://online.wsj.com/article/SB120417048103899149.html?mod=todays_us_nonsub_pj
I just tapped a 401k and rolled it over into my IRA! I don’t plan to do the piggy-bank thing until age 59 1/2, though. That’s what OTHER savings are for, though many Americans would respond, “WHAT other savings?”
I am wondering about the implications of this story for RE-dependent SD?
Dear Crunch, Wish You Weren’t Here
By CRAIG KARMIN
February 28, 2008; Page C1
With interest rates low, stock markets uncertain in the credit crunch and real-estate prices falling, government pension funds are facing a brutal investment climate. As a result, some state and local governments are feeling the heat.
After years of building pressures on pension funds, the current weakness in markets is a new blow.
SHORTFALL
• The Situation: With interest rates low and stock markets falling, some pension funds are feeling the heat.
• Background: Pension plans loaded up on stocks in the 1990s and their coffers swelled. But the bear market has changed that.
• The Fallout: Some plans are struggling to find new ways to cut funding liabilities and fulfill their retiree-benefit obligations.For some financially strapped cities, pension-fund liabilities — the National Association of State Retirement Administrators estimates that public pension funds have $3 trillion in assets but unfunded liabilities of $440 billion — aren’t even the biggest problem. That is clear in Vallejo, Calif., a town of 120,000 residents located 30 miles north of San Francisco, where the city council is expected to vote today on filing for bankruptcy protection from municipal creditors under Chapter 9.
The city relies heavily on property taxes and counted on a strong real-estate market when it negotiated contracts with its police and fire departments. Those departments’ salaries and benefits account for 80% of budget costs. By comparison, most cities spend about 35% to 50% on those departments, Standard & Poor’s said.
Vallejo ran into problems as the area’s housing and economic slump caused some taxes to fall — some by as much as 70% from 2005 levels. Solano County, where Vallejo is located, had the seventh-highest foreclosure rate in January of 229 metropolitan areas, according to RealtyTrac Inc., which compiles foreclosure data nationwide.
http://online.wsj.com/article/SB120416591554198755.html?mod=googlenews_wsj
This is a fascinating case. For the legal folks, if the city files for bankruptcy, does that negate their contracts with public employees, like cops and firemen, or give the city the chance to renegotiate those contracts? Even more, how about the retired cops and firemen promised pensions and health care…are those promises up for grabs if the city goes bk?
The dependence of pension funds on the U.S. stock markets creates a very strong political justification for ensuring the stock market always goes up…
I want a white pony that flies. Can I have that too?
That depends on how many of your fellow Americans want a white pony that flies.
I’m not going to play with them. I’m going away into another corner with my gold pony.
Yes. Yes you can dear. If you only believe….
In many cases, public pensions are safe; even if the agency declares bankruptcy. This is one reason why overgenorous pension promises are so dangerous financially. In many agencies someone can retire with full pay after 25 years service. If they start at 25 and retire at 50; they could be receiving full benefits for 40 years but only have worked 25 years. Not to mention that many qualified people retire at the peak of their careers and take a new job with a consultant, while collecting full pension.
Friend of a friend started working one of those city jobs right out of high school, retired with full pension in their mid-30’s. Made me have one of those “path not taken” moments, ‘cuz if I’d blown off college and done the same I could be retired already!
But I can only imagine what a boring sap I would have turned out to be the only life experience I’d had since high school was working in the same mind-numbing job for the city for 20 years.
*shudders*
“In many cases, public pensions are safe; even if the agency declares bankruptcy. ”
David,
please define “safe”? If the city has no funds to pay said pensions and health care, where does the money come from?
If they can’t pay the union wages in the contracts for cops and firemen, what recourse do said cops and firemen have, except to quit, in which can the bk city has the option of hiring cheaper labor, if they can find it.
This public pension and healthcare underfunding is going to play out across the country…lots of people respond that said promises are “safe”, but I would like to see someone identify where the funds to keep these promises are going to come from.
“
Pension Benefit Guranty Corporation (PBGC).
Plan on hearing more about it (along with the FDIC and SIPC) in the coming months & years.
I’ve been warning about the government entities for a while. This, IMHO, is where the S*** will hit the fan.
Oh, would like to add that **raising interest rates** would be of great help.
Quite frankly, I can only think of good things with interest rate increases. They’ve been artificially supressed for far too long.
The tech stock bubble collapse dealt a devastating blow to many public retirement plans. Now the housing bubble collapse threatens to do more of the same. Good thing so many WS investment banking execs were able to get out their record bonuses and $100m+ retirement packages before there was any blood in the streets.
The trouble for many funds is rooted in the late 1990s. As the powerful bull market advanced, pension plans loaded up on stocks and their coffers swelled. That helped a number of pension plans wipe out funding deficits. “That was the first time in history that public plans in aggregate were fully funded,” said Keith Brainard, research director of the association.
…
An economic slowdown would only aggravate the situation for many funds by pressuring financial-market returns and making the possibility of raising taxes less tenable, said Mark Ruloff, director of asset allocation at consulting firm Watson Wyatt. “If you get less in asset returns,” he added, “governments have to make up for that shortfall with greater contributions.”
San Diego had a problem along these lines in the early 2000s. Can anyone recall how they resolved it?
http://online.wsj.com/article/SB120416591554198755.html?mod=googlenews_wsj
Public services slashed. Paying taxes with less and less in return. Pensions preserved.
I think I detect a sudden increase in the U.S. savings rate here, though I realize I may be mistaking white noise for a meaningful signal…
http://www.marketwatch.com/tools/marketsummary/
Hoz –
RE: White noise
Since you enjoy crunching numbers, here is an easy econometrics exercise for you.
1) Get the CRSP closing levels of one of the headline U.S. stock price indexes over the past eight-or-so years.
2) Compute daily returns (which are supposedly white noise).
3) Create a binary (”dummy”) variable for days when the FOMC was meeting.
4) Run a regression of returns on this dummy variable and a constant, to test the null hypothesis that the stock market does not do better on days when the Fed is in session, which is one version of the theory that daily stock market movements constitute “white noise.”
“Fed is in session”
I suggest you include an additional binary explanatory variable for Capitol Hill testimony days (like yesterday…)
Look in the Federal Reserve papers, it has been done every year for 40 years.
I do enjoy crunching numbers but I hate having to re-learn S-Plus every couple of years. How about you doing it for us? Include graphics with the regression lines on the scatter plot.
Tell ya what, pay me enough whuffie and I’ll do the analysis.
I would do it, but I care little for whuffie…
What about whoopie?
Volatility rocks l-t T-bond yields:
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=18&freq=9&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
I don’t understand what the variable on the vertical axis is. Surely not Tbond yield (varying between 1% and 7% in a week, no) Can you explain? Thx
When you compare yields between the 30-yr and 10-yr T-bonds, the program which does the comparison automatically indexes both yields to their levels at the beginning of the time period over which the comparison is made (e.g. 10 days ago). Hence the graph shows the percentage change over a 10-day period relative to the levels 10 days ago, rather than changes in yield levels. This is useful as a measure of volatility but not as a measure of where yield levels currently stand.
BTW, the explanation above is based on my own attempt to understand these graphs, rather than something I read, so I may be missing something.
Here is a similar graph for today’s intraday l-t T-bond movements. I believe it indicates that the 10-yr yield is off by roughly 2 pct and the 30-yr yield is off by roughly 3 pct from yesterday’s closing levels — meaningful movements if you are trading in bond yield volatility, but not so meaningful if you are interested in changes of the levels of yields (which have implications for future lending rates).
By contrast, here are the changes in levels of T-bond yields thus far today:
Notes/Bonds COUPON MATURITY DATE “CURRENT PRICE/YIELD” “PRICE/YIELD
CHANGE” TIME
2-Year 2.000 02/28/2010 100-06 / 1.90 0-06 / -.096 10:08
5-Year 2.875 01/31/2013 100-14+ / 2.78 0-16+ / -.111 10:09
10-Year 3.500 02/15/2018 97-31 / 3.75 0-27 / -.104 10:09
30-Year 4.375 02/15/2038 97-00 / 4.56 1-13 / -.089 10:09
It is a very good day so far to be “long T-bonds”…
http://www.bloomberg.com/markets/rates/
Forgot link to the graph…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=1&freq=9&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
Corrections arrested in mid-flight:
DJIA = 12,600 level
30-yr T-bond yield = -2 pct change
10-yr T-bond yield = -3 pct change
TA on SKF if anyone’s interested.
http://tinyurl.com/2jutrs
The two indicators at the top…”slow STO” and “on Balance Vol.”, what do they represent?? Thanks, I’m trying to understand.
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators
STO = Stochastics
OBV is a worthless indicator IMO.
Stick with trendlines, moving averages and chart patterns.
Ok.
More evidence that a bottom in financials cannot be far off…
Banks to report billions more in write-downs
Leveraged loans, commercial-mortgage securities the main culprits, Citi says
By Alistair Barr, MarketWatch
Last update: 2:09 p.m. EST Feb. 27, 2008
SAN FRANCISCO (MarketWatch) — Banks are likely to report more write-downs worth billions of dollars from exposure to leveraged loans and commercial-mortgage securities when they report first-quarter results, analysts at Citigroup said Wednesday.
http://tinyurl.com/2uhpn6
beachhunter said in last night’s CA thread: hey guys- I have a friend who is dying to buy something in Austin tx and i need some “san diego style of evidence that now is the worst time.. fire away please
Lengthy reply:
A bit of background: I spent 5 of the last 7 years telecommuting (internet work) from an RV with my wife. I’m in my late 30’s. Prior to this we lived 1995 in Dallas, 1995-2001 in Seattle then started the RV full timing in late 2001 (motivated by desire to find affordable housing). Ultimately, we saw the housing bubble spreading and never bought - we stayed with the RV (4 different RV models in 7 years both big and small) and spent 1 year on the beach in Chile. We traveled/lived in the west and south, going between Seattle and Orlando with a lot of time spent in SoCal, Nevada, Arizona.
August 2006 we settled down to rent in Austin area (our jobs would allow us to settle anywhere we wanted). Partly given we had lived in Texas 10 years earlier (Dallas was better in 1995 than it is now) - and the good business (tax) environment of Texas. We really didn’t KNOW Austin (only spent about 10 days there as ‘tourists’). So we rented a 1300 sf house for 6 months in North Central (45th and Mopac, $1250/month)… with an eye toward finding a place to buy.
After 6 months of living in Austin, I ultimately decided to stay renting. We settled out near Canyon Lake ($900/month with a great garden and yard - I love our street) . I had learned about the Austin tech bust only a few years earlier (2001) and that Austin housing prices were on their own cycle and prices were slowly climbing in 2006 and 2007 (and is just now in early 2008 leveling out, the price climb has stopped).
Anyway, present: after 1 year out in Canyon Lake I’m kind of had my share of doing the domestic in one place living. So this week I’m renting an apartment in South Central Austin (South Lemar). I’m going to hang out there 5 days a week and spend some money going out and enjoying the live musics and micro brews. No car while in Austin, as I got a place right near 3 bus stops and and will do the bike/walk/bus/sweat lifestyle. Austin bus service I really liked (cheap, clean, every 30 minutes). Plus driving in Texas cities suck, car lovers of Texas always building more roads to drive badly on. Driving back and forth (90 miles) between the two house twice a week will be enough car for me.
Ok, all this leading to the punch line of this message: Read this guy’s post on a local tech thread: http://door64.com/node/1118
I’ve been “upside down” on my house since it was new in 2001 (August)…… read more on the link.
My only thing to add is that renting in Austin is very popular - a very high occupancy rate. But if you are nimble you can find a constant stream of choices on Craigslist. I studied the stream for 3 weeks and landed a great place in a fourplex with a very conscientious landlord (whose has owned the fourplex for 10 years and her own mother lives in one of the units, all the renters have been there 4+ years). I’m happy at $950/month for 2Bed/1.5 bath 1000 sf given the 78704 location and the great managing landlord.
As many here on the HBB are concluding, I’m picking renting for the next two years. The market is only going to go down on these newly built McMansions. I’m taking it one step further, I can rent TWO modest houses for much less $ than most people I know are making on a mortgage payment for their place. It helps that I’ve been saving 30% of my income for 8 years - and I could go without work for 2 years. If anything, being a tech worker, getting involved with the Austin tech social scene will be a boost to my midlife career - as traveling around for 7 years (making temporary friendships) has been more a social disconnect than anything. I’m looking to make some social roots.
When you free yourself from the anchor of owning a house and the anchor of a 9 to 5 work schedule - you really can do what you want. I never would have guessed I’d be renting two houses (one in the city, one at the lake) - but it just worked out. Because of the low USD value, I find the best place to vacation and enjoy your weekends is right here in the USA! Austin really is a special place (not everyone’s taste, but they like that!). So is Flagstaff (where Ben lives).
Sounds like lots of fun. Appreciate having a spouse that will do that stuff with you.
Thanks for the story. I have a question that might be a bit OT. How do you maintain a career working remotely like that? I worked at home for 2 years but the company I worked for at the time (which I still work for now) was 5 minutes down the road from my house. I had to go back into the office because of a job change that required me be onsite. (network security, so I deal with many physical aspects now)
If I had to go find a job where working remotely was a requirement, I wouldn’t know where to begin. I would love to get back to working at home. Are there any “tricks” to maintaining a career like that for long-term?
How do you maintain a career working remotely like that? I worked at home for 2 years but the company I worked for at the time (which I still work for now) was 5 minutes down the road from my house.
You build it up slowly. I’m not going to cover all the specifics of my business and talk in general terms. I’ve met other people who do it - so better to talk general anyway.
I’m more the saver/debt-free type - I never took business loans and stuck to credit cards that I didn’t let get out of hand.
to give you an example of someone who is probably doing what I’m doing: Ben Jones. (Disclaimer: I know nothing about how Ben really runs this blug, using it as an example) This blog is an example of a business you could geographically run from anywhere and have a reasonably flexible schedule. Sure the blog needs attended 24 hours a day 7 days a week - but clearly Ben could go out of the house for 6 hours any time of the day without any problem. He could even take a laptop and go hang out at one of the many great bars in Flagstaff (been there, done that, great city for it).
In my case I had an established IT career going back to 1986 when I was 16 years old (i started as an apprentice). I dropped out of the .com corporate world in 1999 in Seattle as I just felt being at the top of it all was no fun. The insanity of that bubble.
TxChick is a person on this forum that I could also give as an example of someone who works at home and could do it geographically from anywhere on a laptop.
Suggested careers: Independent journalist (or even a Blogger like Ben Jones who makes it big), book writer (you can do that anywhere if you have the mental control) - both technical and whatever. I know a guy I met in Chile who travels in an RV and translates books from German to English - he is a retired german college professor. Software programmer - do work like RentACoder or get established clients. Stock or Forex trading (I do Forex trading as my form of investing).
Key is run your own business. If you have the skills to see the things like the housing bubble and stay out of it or even make money off it - you might have many of the skills to run your own business / be independent of a corporation.
What happened to your wife? She seems to drop out of this. Doing the music-micro scene too?
Trying to answer without turning this into a 5 page life story. short version is that our business is in transition a bit more and I think my wife is due to finally go out and get he own job independent of my software company (she does more customer support than tech side). Without kids, total flexibility of schedule and location - sometimes you have to nail down a few aspects of your life. For her the garden in the country - for me I need to socialize more with geeks in the city. When you have lived and traveled with the same person - both work and home - for 7 years - we are going to mix things up a bit. See where it takes us.
I agree that in Austin, prices have peeked. A lot of our market depended on people from California coming here and dumping huge wads of cash on anything located in central Austin. However, the conveyor belt of people from CA has stopped and now, we are going to have a real estate market based on local incomes and local sensibilities. The days of 15%^ price appreciatiion are over.
From WSJ:
” The Bush administration is hardening its opposition to the chorus of Democrats, bankers, economists and consumer advocates calling for a big-money government rescue program for struggling homeowners.
In an interview yesterday, Treasury Secretary Henry Paulson branded many of the aid proposals circulating in Washington as “bailouts” for reckless lenders, investors and speculators, rather than measures that would provide meaningful relief to deserving, but cash-strapped, mortgage borrowers.
Mr. Paulson’s comments came amid signs that the nation’s housing market is getting worse, not better.”
What’s up with this? Did the Bushies finally figure out they’re not coming back next year and decide to do something right for a change?
Many of the banks have billions of dollars in the bank. They can afford to take a loss.
Most banks are technically insolvent in the US. Few have $1M in reserves let alone Billions. Why do you think the FDIC is gearing up for bank liquidations? The FDIC is reporting 100 or more. By my calculations last December, it was over 2000 that would go under. I’ll stick with my figures.
Off on a total tangent - a side effect of high commodity prices -
http://tinyurl.com/2buxn5
“Witnesses describe how a copper thief caused a major power outage in East Austin Wednesday afternoon. Over 7,000 people were without electricity for more than two hours, and authorities say the thief was air lifted to the hospital with severe electrical burns over his entire body.”
…
“Austin energy officials say they’ve seen an increase in copper thefts at substations like the one on Kingsbury as well as power poles and transmission towers. In South Texas a man died trying to remove copper wiring from similar equipment. It’s still unclear what this man’s condition is or what charges he may face. Austin Energy says it is increasing surveillance around its substations.”
All I can say is - wow. I didn’t realize there were people *that* desperate - and that dumb.
It goes on a lot inside Detroit, and every couple months or so someone gets fried into oblivion.
The guy who survived and the family of the guy who died will find a lawyer that will be able to successfully sue the utilities for not making it totally impossible for them to have been injured/killed.
starts to look a bit like post-crash Argentina, where people were harvesting telephone cables, well lids etc. from the streets to make a living. In Netherlands we had several accidents last year because of theft of copper railway leads and electricity cables; this year the churches are complaining that the metal on their rooftops gets stolen; also problems with all kinds of other metal stuff like bronze statues in public gardens etc. This could spiral out of control quickly with the latest commodity surge …
If the PTB do NOTHING ELSE, they had better get a handle on this problem right now, and start hammering these a-holes (that survive) as hard as the law allows.
If this continues/gets worse, pretty soon we could all find ourselves living in a replica of Somalia.
I’ve been thinking about the ongoing world-wide theft of not so precious metals, in every form imaginable, and it’s implications…
The bottom line is, the thieves receive a tiny amount, compared to replacement costs, of whatever they make off with.
And as far as history goes, Will any statues be left?
Our cultural ancestors in the USA are looking smarter and smarter all the time. They left their monuments inscribed on walls of rock, that have stood the test of time for thousands of years.
What will we be remembered by?
Swift justice served.
Darwin would be proud..
In the 70’s a lot of copper was stolen in NYC. Many subway stops in places like Queens had copper roofing over the platforms. (To those of you who aren’t familiar with NY, the subway is above ground in most of the boroughs). It was replaced with ugly corrugated material.
“It’s still unclear what charges he may face.”
Is it wrong that that made me laugh?
Well, yeah, but we’re all a little sick in the head around here so we sympathize.
Technically, you can’t be charged if you are not awake (or some such, not a lawyer.) So if he dies, he actually has not committed any crime in the eyes of the law.
No - I think he meant charged - as in electrically.
LOL. Missed that.
I just submitted that one to the Darwin Awards site. I doubt I am alone…
Who’s picking up the tab at the hospital - and the lifelong care for the guy if he survives with brain damage?
Exactly how would one be able to tell?
Serious enuf that in our town the power folk set out copper wire on large spindles in a couple of locations with GPS on them. Caught one yo-yo. Didn’t hear if the other plant worked…..and we’re a small area.
Buy gold now or get priced out forever…
February 28, 2008 11:10 A.M.EST
BULLETIN GOLD HITS RECORD HIGH OF $969.30 AN OUNCE ON NYMEX
Uneasy start for U.S. stocks
Stocks move south on a jittery Street, with fresh Bernanke testimony and results from the likes of Viacom, AIG and Dell anticipated.
marketwatch.com
and another alltime high for euro/dollar exchange rate today at 1.52 (to my surprise, I was expecting the ECB to intervene before that).
Go, go, go Benny! Try if you can improve the previous printing records set by the Weimar Republic.
I gave up on my jewelry piece. No way I’m buying platinum in euros now.
LOL - just wait a few months, the EU has worse problems than the US.
it will have serious problems when the EU housing bubble pops, but that is not in the cards yet; the EU bubble just got another life thanks to Bernanke and his clowns. EU mortgage rates are down (!) thanks to the subprime crisis, lending is still as loose as ever and home prices are still climbing - slowly. In a few countries like Spain, rates and lending standards have gone up a little, but not enough to put a dent in the national homeprice statistics. Without any new developments like major bank failures or a turnaround in central bank policy, the EU bubble will keep inflating. And EU governments will fight a downturn of the housing market even more than in the US…
I already feel priced out… I’d like to get more but whose paycheck has kept up with gold the last couple of years?
Where’s Jas? I want to hear how his short Dec. 980 gold is working out.
Jas isn’t worried, where he lives deflation is rampant so the daily decline in everyday prices should more than make up for his badly timed gold shorts
Bad sign: Stock market hits next leg down on unrevision to GDP…Seems no news is bad news!
ECONOMIC REPORT
GDP’s unrevised at 0.6% growth for fourth quarter
In revision, better trade figures offset weaker spending and investment
By Rex Nutting, MarketWatch
Last update: 9:59 a.m. EST Feb. 28, 2008
WASHINGTON (MarketWatch) — The U.S. economy slowed sharply in the fourth quarter, growing at a 0.6% annual rate, unrevised from last month’s estimate, the Commerce Department reported Thursday.
For all of 2007, the economy grew at the weakest pace in five years, rising at an inflation-adjusted 2.2% after a 2.9% gain in 2006. The economy grew 4.9% in the third quarter.
Many — but not all — economists believe a recession has now begun, based on data showing declining employment, incomes and industrial production. For the current quarter, economists are predicting no growth.
http://www.marketwatch.com/news/story/us-gdp-unrevised-06-growth/story.aspx?guid=%7B5458C224%2D651F%2D4897%2DBA11%2D9DC05D947ABA%7D
From the man who brought you the term, “Subprime is contained” makes another great statement that will not come true.
http://biz.yahoo.com/ap/080228/bernanke_congress.html
Federal Reserve Chairman Ben Bernanke told Congress Thursday that the nation is “not anywhere near” the dangerous stagflation situation that prevailed in the 1970s.
With the economy slowing and inflation rising, fears have grown that the country could be headed for the dreaded twin evils of stagnant growth and rising prices known as “stagflation.”
“I don’t anticipate stagflation,” Bernanke told the Senate Banking Committee.
He also said that inflation will moderate.
the party is over even though hope still lingers on.
and then his lips fell off.
good one, gotta love cruel shoes
Bernanke forfeited his chance to make a last stand on the dollar. I really think even a neutral stance on the inflation-recession trade-off would have done it, as the dollar had been treading water (and even gaining on some of the English-language currencies). Now, people have once again given up on dollar-denominated assets again, except the T-bills/notes/bonds.
I’m coming around to the idea that bonds (for the first time I can remember) are behaving as a special case and are not necessarily reflective of inflation expectations. There is some kind of elevated risk concern or else barriers to entry or exit in some markets that is causing “too much” money to flow into longer-dated Treasuries. One day this will stop - supply will increase, demand will decrease and the price of long Treasuries will plummet (yields will soar).
“I’m coming around to the idea that bonds (for the first time I can remember) are behaving as a special case and are not necessarily reflective of inflation expectations.’
About time! The treasuries have been and are screaming insolvency.
It looks like yields are on the way down again today — either white noise at work or else a response to gloomy remarks from the top about the incipient slowdown/non-recession.
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Thursday that some small U.S. banks might go under during the current stress prompted by housing market problems, but the U.S. bank system overall remained solid…
——————–
its all good people, dont panic…..I had my SHTF momment last August…remember, panic early.
yeah, no worries; even bank failures are contained now
My thought exactly…. “It is all contained to small banks”, just like it was “all contained to sub-prime”.
What does the Fed have against poor Uncle Buck?
Heh, our own little craigslist drama. I think I know where it is but he doesn’t say…
“New never lived in 2 bedroom 2 bath house main floor square footage is 1288 very nice quality the basement is unfinished. large 2 car garage A/C 90% efficent furnace This house was appraised for 245,000 I built it as a spec house but due to the slow market I must sell it immeadiately I cant afford two house payments Call 360–0680 Realtors welcome”
The run-on sentences give it that sense of urgency, yes?
$180/sq ft doesn’t sound that urgent. Do these babies rent for 2000 a month? How much does it cost to build a simple house like this in a (relatively) low-regulation environment like Montana, if you know what you’re doing? 100K? I think he might want to drop the price $75,000 or so.
Nope, more like 1200/month. I don’t know what costs are. When I tried to ask, the builder gave me that “well it depends” BS as if they don’t have a ballpark number. Yes, dropping 75k would put it right in the affordability sweet spot, but unfortunately we had our own little bubble here, too. Missoula’s still in denial.
Hey Hoz, how are those tight Euro-Speedo’s, no I mean “massive Euro-shorts” feeling these days? A little painful?
LOL. Thanks for the banana sling imagery. Now I need to take a shower. As for the euro, there’s no way it can keep up with the USD racing to the bottom.
Remember I am massively long the Brazilian Real and in Asia the Yen, Won, Renminbi, Ringitt and Dong… I am also long some Middle East Currencies . I have ZERO dollar position. I do not trade for a 1 day gain. I posted my projections back in January. The scary thing is that even though I am up a little over 10% in the Real/EU spread, I only projected a 17% gain for the year. The YenEU is up 3% for the year which is about right.
In March when my Brazilian notes settle, then I will look at new positions. But so far this decade, Brazil has been very, very good to me… So I learn Portuguese.
Hoz I have my broker pitching DBV. What are your thoughts?
It shorts the low 3 interest rate currencies and is long the high 7. To me it will lag as interest rates shift since it rebalances quarterly. It is also too diversified for my liking.
Thanks Shakes
Shakes
I learned in 1966 that interest rate is only as good as the currency. At the time the French Franc and Swiss Franc both were convertible into USD at the same rate ~ 4:1. The Swiss Banks paid 1.25% interest on 1 yr accounts. When I left in 1969 the French Franc was convertible to the USD at 5:1 ,the Swiss Franc was convertible 3.5:1
The Japanese Treasuries currently yield ~2%, but inflation is less than 0.5%. There is a positive rate of return as opposed to US T that yield 2% and inflation is 2.7%
Learn the currencies. I am sorry I do not know the fund DBV’s makeup.
Thanks!! I am sitting on too much cash and too many dollars and am looking at ways to spread my risks out. I wasn’t exited about this.
Oops!
http://www.huffingtonpost.com/2008/02/28/obama-finance-chair-linke_n_88884.html
I’ve said it before and I’ll say it again. Anyone who thinks any of these a$$ clowns can make a difference is delusional. They are all cut from the very same cloth. They are interested in their self-promotion and preservation and nothing else. They are not public servants. They are power-hungry liars.
On Kitco today, Cris Laird wrote an article about failing banks. One way to notice your banks at risk, is, if they are offering 6% on checking accounts. 6% in todays market says the bank is desperate for cash. Sounds like a good word to the wise!
A local bank whose stock I was thinking about buying for a dividend play while I learn other stuff recently advertised 6%.
Now I’m rethinking and doing more digging, because even though their last press release said they intend to maintain the dividend, some banks around here are cutting/eliminating theirs.
With the current dividend at 72 cents annually and ‘08 EPS estimate at 62 cents, I don’t see how they can.
sure, I heard from my brother in Spain that some banks there are offering rates of 6% and sometimes over 10% on savings accounts. That is in the same EEC/euro zone where you normally have to bargain hard to get more than 3.5% on your savings. Some Spanish banks - mostly the smaller/regional ones - are shaky because the Spanish RE bubble has more or less stopped inflating.
What if they’re offering 5%, but only on the first $500, and only for a limited time? Does that still sound desperate, or more of a gimmick?
I’d be really interested in everyone’s feedbac, as I am thinking about switching to a credit union.
Thanks,
SR
Yeah, I’m starting to get worried about my current bank. Their 5% offer is on any amount, but only until Mar. 15. Then it’s supposed to go to some kind of tiered setup or something. They had a big financial center down the street which I’m sure wrote their fair share of crap mortgages in the Seattle area.
They used to be Washington Credit union, but them they changed to “First Security bank.” Anyone know anything about this outfit?
thanks,
SR
Along the lines of Hoz’s comment about the difference between 1966 France and Switzerland…
You can easily get 9% interest on your money here, in New Zealand, and the Kiwi $ has been gaining against the U.S. $ like gangbusters, but you’d be betting on an economy about to go tilt.
A win-lose proposition.
Here it is, the FB quote of the day (overheard in a coffee shop):
“I know the house will sell, because I know I would buy it.” Her and her friend then proceeded to discuss all of the ticky-tacky upgrades done to this house that one of them is selling.
The women were really icky looking too. Hair that was bleached and then straightened, an embarrassing amount of makeup for a Thursday morning at the mall, children that were being consistently ignored as they complained that they were hungry too.
$1800 for this loft in the ghetto. I guess they just built them.
http://tampa.craigslist.org/apa/589899312.html
team gold:
http://www.itulip.com/forums/showthread.php?p=28675#post28675
Are You Missing the Commodities Boom?: The Boom Will Not Bust and Why Commodity Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them
golds only up almost 300% from 2003 to today, no bubble here move along.
remember buy high and sell low.
personally, I wont touch gold at these levels……now silver is another monster all together, I may have to break out the x-ray film desert liquidity from the 80’s…..yeah, I cooked up silver instead of speed.
Gold is way out of my price range, but silver is doable and I’m thinking about it….or am I too late??
Blano,
Silver has been on a tear like I have never seen. You might want to wait and see if it pulls back a couple dollars. I don’t know though, it looks like it might run another $4 without slowing down.
Am I too late??
Will you promise to feed the squirrels?
Sure, I’ll feed the squirrels for a good deal!!!
Thanks watcher.
or was it the 70’s..
I picked the wrong decade to quick sniffing x-ray film residue.
I still love this story:
In 1973, the Hunt family of Texas, possibly the richest family in America at the time, decided to buy precious metals as a hedge against inflation. Gold could not be held by private citizens at that time, so the Hunts began to buy silver in enormous quantity.
In 1979 the sons of patriarch H.L. Hunt, Nelson Bunker and William Herbert, together with some wealthy Arabs, formed a silver pool. In a short period of time they had amassed more than 200 million ounces of silver, equivalent to half the world’s deliverable supply.
When the Hunt’s had begun accumulating silver back in 1973 the price was in the $1.95 / ounce range. Early in ‘79, the price was about $5. Late ‘79 / early ‘80 the price was in the $50’s, peaking at $54.
Once the silver market was cornered, outsiders joined the chase but a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80.
The collapse of the silver market meant countless losses for speculators. The Hunt brothers declared bankruptcy. By 1987 their liabilities had grown to nearly $2.5 billion against assets of $1.5 billion. In August of 1988 the Hunts were convicted of conspiring to manipulate the market.
One other experience in the silver bubble worth noting, according to author Edward Chancellor (”Devil Take the Hindmost”), is the experience of an official at the Peruvian Ministry of Commerce, employed to hedge his country’s silver production, who lost $80 million by illicitly selling silver short. Said Chancellor, “Although a relatively small sum for a sovereign nation, it was an omen: the ‘rogue trader’ had appeared on the modern financial scene.”
The stock market had its own troubles during the rise and fall of silver. The Dow Jones peaked on February 13, 1980 at 903.84. The day of the collapse, March 27th, the Dow closed at 759.98, a decline of 16% in just 6 weeks. [However, intraday, the loss between the 2/13 high of 918.17 and the 3/27 intraday low of 729.95 was actually 20%.]
For many traders the collapse in silver was the final straw for a stock market already under siege from worries as diverse as the Iranian hostage crisis, the Russian invasion of Afghanistan and soaring interest rates. [The consumer price index climbed at a 13% rate for 1979. The prime lending rate hit 22% in early 1980]. But by the year’s end, the whole decline was almost forgotten. The Dow ended the year at 963.99, thanks in large part to the euphoria over the election of Ronald Reagan.
—————————-
Ronald Reagan played by Obama. the curtain call is gonna be amazing.
Dont be a hater.
In my country real estate is up 600-1000% from 1990 levels. With all the money printing that enabled such excess, I don’t see why gold shouldn’t increase at least 1000% from its recent lows, and even more when measured in $$.
It’s not a bubble. The fundamentals are sound. Demographics and government policies favor expansion. You’ve got to EAT then DRIVE somewhere
:)
Earning dollars is like paying rent. Stop throwing away your earnings in dollars. Demand hard currency.
You can gimme your spare dollars. I’m cheap enough to even beg for them.
They’re not making anymore land. Where are we going grow more wheat, corn, and other grain?
“China,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past.”
He is sorta cogent but he goes off the deep end when he starts talking collectibles.
That’s kinda dumb. At that point, you are just as well if not better off betting on a first edition of Jame’s Joyce’s Ulysses. There are fewer of those.
I am willing to listen to a commodities argument. Even a faith in currency argument. Collectibles? C’mon!
I was reading an article from yesterday’s blog about San Diego.I noticed another link from an article on Monday.Since it is very close to where I live I read it as well.
In the article it mentioned ” Foreclosure activity is creeping in, some real estate pros warn, but so far the creep has been slow.”
I took a moment and did a search on realtytrac for the single zip code and the numbers showed no creep whatsoever but a coming spike.
Current bank owned 390,auctions 134.BUT the PREforclosures at 498.
The numbers here are growing by the day.I just wonder how many of those are “walking” due to being upside down.
http://www.voiceofsandiego.org/articles/2008/02/25/news/02carmelvalley022508.txt
Fannie Mae helps provide affordable housing after all…
304 J. AVE #30, National City, CA 91950**
List Price: $99,900 - $99,900
ZipRealty will give you up to $250 cash back.*
Bedrooms: 1
Full Baths: 1
Partial Baths: 0
Square Feet: N/A
Lot Size: N/A
Year Built: 1962
Listing Date: 09/12/07
On Market: 169 days
Type: CONDO/TH
Status: ACTIVE
MLS #: 076073359
Description
Fannie mae (SIC) owned. Granite counters, custom colors, side by side refri, mirrored closets. Parking space right outside door. Info contained herin per assessor and not verified.Buyer to verify all info prior to close of escrow.
I asked you this earlier but the post didn’t make it?
What do you do for a living. I’m curious.
Ah yes.I can just imagine the “hood”. I mean neighborhood.Sounds like one of those old apartments that was stripped.New cabinets,new fixtures and those lovely granite counter tops.Then sold for a few hundred thousand.Dont forget the electrical and plumbing wasnt touched and is very old.Probably has the old wall heaters and no AC.Hoa fees too to take care of the outside as well.Affordable? I wouldnt pay $50,000 for something like that.But im sure they will find someone that will be right at home there…..
I lived in SD for quite some time, and National City was locally known as “Nasty City”. It’s a Mexican/Black ghetto, best known for shipyards, and the National City “Mile of Cars”, where big dealers compete with shady fly-by-night financing ripoff used-car lots that target gullible sailors on leave.
I recieved an email recently from my “neighborhood Real Estate Broker” (guy is in Colorado Springs) with the subject “renting vs. buying”. The guy asks the question if I am tired of paying my landlord’s mortgage payment. Also asked if I was “tired of throwing money out the door every month on rent”. He also reassured me that there are still alot of 100%, zero down progams out there for all buyers. With rates between 4.5% and 5.5% and the forclosure rate at an all-time high, it’s prime time to buy and earn that equity! He also said the Real Estate market will change, don’t miss out on the opportunity.
Advantages of buying:
Build Equity (Wrong)
Free to make changes and personalize your home (Who cares)
You do not have to wait for your landlord to get things done. (My landlord is much quicker than I ever was)
Pride of ownership(Really?)
Your monthly payment is like making a deposit in a savings account (Isn’t savings supposed to increase?)
No house or pet deposit(Never bothered me)
Renting
Throw away your money each month on your landlord’s mortgage(How is that in that my landlord could be losing money?)
No Tax break (big myth - give 1,000 to mortgage company or 300 to taxes)
Your money is tied up in a deposit (really, I don’t miss my deposit)
You are dependent on a landlord (Not so bad)
You do not build equity (really, and the homeowners are??)
You face rent increases(Right, my rent did go up $25)
Fear of having to move every 6-12 months. (I have been in my rental for 15 months with no fear of moving and I am month to month)
I wrote the following response to the ad:
Please take me off of any future email distribution list from you or your associates. I vehemtly disagree with what you are advertising in this email and see that you have your own self-interests in these advertisements. I am no longer in the Colorado Springs area, but when I was there, I was able to rent a 2800 sq. ft. home for $1250 a month in Briargate area. To purchase a similiar home would have cost me in the neighborhood of $300,000.
If I had purchased a home with 0 down for $300,000, my payment for principal and Interest on a 30 yr. fixed at 5.5% would be $1703.37. That is not including taxes, insurance, HOA and maintanence costs. I don’t see where I am paying any landlord’s mortgage. In fact, the landlord is supplementing my housing. With the decline in the housing market, I also protected myself from future losses on the value of the home. How easy it is these days for homes to be supposedly worth 300,000 only get offers for $250,000 or less. I don’t see any brokers or agents showing up and offering to pay the losses on these houses that they collect hefty fees on for selling or help sucker people into buying.
Please get your math and your scruples straight before sending out such nonsense to unsuspecting customers.
I recieved the following reply:
“I will delete your information and you will no longer receive any more solicitations. Your are correct and all home owners are wrong. They should never have purchased their homes because in 30 years it will be worth $0. Thanks for making me understand in the mean time I’m going to get all my accounts out of the stock market because that is declining too. I was a fool to think I could buy low and sell high. ”
I think I hit a nerve with this agent. Things still must not be selling so well in the Springs to get this sort of a response from a supposed professional.
I would have been more impressed with a rent vs. buying ad telling me that an agent will show me great places to rent during this downturn. I think that agents make a bit on getting a place rented. Start catering to the renters and they may get through these hard times.
Ha ha.
“I was a fool to think I could buy low and sell high.””
You should really write him back and congratulate him on selling at the height of the market. Not many realtors with no training in economics or finance were able to get out of the market before it declines.
I’d also store this note for 2 years and reply to it when prices have fallen another 25% or more to remind him that you still think he is an unscrupulous, self-serving scumbag.
Crude oil to 103?
http://quotes.ino.com/chart/?s=NYMEX_CL.J08.E&t=f
I am; however, still long oil, but Im out at 105….its gettin a bit uncomfortable. That and a meaningful correction is about to take place, so Sandland can run it back up over a hundred for summertime blues.
Nat gas is going berserk, up 5% today. I’m gonna take profits there.
Makes sense according to latest NOAA 3-month forecast, although these guys have been pretty bad recently, forecasting warmer-than-average all winter:
http://www.cpc.noaa.gov/products/predictions/long_range/seasonal.php?lead=1
“Comment by Hoz
2008-02-28 10:01:35
Most banks are technically insolvent in the US. Few have $1M in reserves let alone Billions. Why do you think the FDIC is gearing up for bank liquidations? The FDIC is reporting 100 or more. By my calculations last December, it was over 2000 that would go under. I’ll stick with my figures. ”
Hoz,
According to my research, FDIC has $50 billion intheir rescue fund to cover $3 trillion in deposits.
What happens when the $50 billion is used up?
Many of the insolvent banks will be taken over by larger regional banks at the Federal Reserve’s insistence and given preferential treatment for solvency sake. There are only about $2.8T at risk dollars not $3T. Remember not all deposits are insured. Some mopes keep more than insured amounts in their accounts.
There are a large number of banks paying more than 4% on CDs. Why pay 4%+ when the banks can borrow from the Fed at 3%?
Wall Street Journal
“…There is plenty of blame to go around for the current situation. The Federal Reserve bears much of the responsibility, because of its failure to provide the appropriate supervisory oversight for the major money center banks. The Fed’s banking examiners have complete access to all of the financial transactions of the banks that they supervise, and should have the technical expertise to evaluate the risks that those banks are taking. Because these banks provide credit to the nonbank financial institutions, the Fed can also indirectly examine what those other institutions are doing.
The Fed’s bank examinations are supposed to assess the adequacy of each bank’s capital and the quality of its assets. The Fed declared that the banks had adequate capital because it gave far too little weight to their massive off balance-sheet positions — the structured investment vehicles (SIVs), conduits and credit line obligations — that the banks have now been forced to bring onto their balance sheets. Examiners also overstated the quality of banks’ assets, failing to allow for the potential bursting of the house price bubble.
The implication of this for Fed supervision policy is clear. The way out of the current crisis of confidence is not. We can only hope that those who predict nothing worse than a temporary slowdown are correct.”
Mr. Feldstein, chairman of the Council of Economic Advisers under President Reagan, is a professor at Harvard and a member of The Wall Street Journal’s board of contributors.
Does anybody else get the idea that FDIC insurance of up to $100k per account, is a muggs game, at this point in time?
The potential for another broken promise, in a big way.
Yes, I’ve recently been thinking that, too. First place to fudge it would be people who own multiple accounts of 100K, after all (the vox populi will scream) they’re rich. Or, your first 50 might be better than your next 50, or perhaps only the angelic “poor people” (with accounts below, say, 10K) would be made whole. In fact, why not just level the playing field by redistributing and giving everybody a 10K balance - that would be fairer. Put it to a vote - it would pass. Countdown to Communism: 10 years or less.
Paul, the angelic poor people thing was great, and I fear you may be right about the 10 years to Communism. You left out that those angelic poor are “struggling”.
Breaking news from Sac Bee:
Dunmore Homes liquidating its assets
Three months after it filed for bankruptcy protection from its thousands of creditors, Granite Bay homebuilder Dunmore Homes says it has begun shutting down its operation and going out of business.
I have been reading this blog fairly often for a couple of years, but I have never posted. However, someone gave me this link and I think that everyone here will appreciate the “subprime” humor.
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1
Treasury Secretary Henry Paulson:
..said Thursday that various proposals being put forward to deal with the U.S. housing crisis would do more harm than good.
..said that while the housing correction remains the biggest downside risk to the economy, the problems should be put in perspective. He said that 93 percent of all mortgages are being paid on time and that fewer than 2 percent are in foreclosure.
“So while some in Washington are proposing big interventions, most of the proposals I’ve seen would do more harm than good.”
“I’m not interested in bailing out investors, lenders and speculators,” he said. “I’m focused on solutions targeted at struggling homeowners who want to keep their homes.”
Lets see how it plays out.
A couple of FBs up close: http://www.ksl.com/?nid=148&sid=2744120#
Didn’t read the contract and looks like 100K and 221K down payments could be gone.
Comment by AZ_saver:
“I have been reading this blog fairly often for a couple of years, but I have never posted. However, someone gave me this link and I think that everyone here will appreciate the “subprime” humor.”
That’s been posted several times here, I provided the link myself a while ago. General opinion was that it was full of inaccuracies.
Here in New Zealand, you can buy rifles and shotguns pretty easily.
Handguns are a different story.
There are several hundred million handguns in the USA…
I’d like to hear your opinions of what happens with them, in the hands of desperate people, financially and morally?
Wanna bet alot of HELOC cash was spent on “recreational” drugs, ladies of the night, and other unsavory activities? Unemployed dealers and pimps won’t be going back to school, they’ll be robbing. It will get ugly.
I just turned on the Orlando news. Some poor woman was bashed in the head with a hammer, for no good reason, in broad daylight, on public street. The crime here is unbelievable. I feel safe in NY. I feel safe in San Jose. I don’t feel safe in Orlando
One guy already robbed a bank claiming they had it coming for foreclosing on him. In normal times, that would make it easier to find the perpetrator. Once foreclosures go over 50%, it makes it harder
’ssshrubery says there is no recession…
I think he’s been hitting the hard de’cider again.
Bottoms gottem’
Ben, any thoughts of firing up the M&M blog? Either that or you’re going to have to post a “Gold” Bits Bucket every day. My sell price is around $2500/oz., maybe. What’s yours?
This is about my father. Retired last year after 20+ years with the State. Also a military retiree. I figured he’s retiring early so he must be set, right? He worked roads so he made plenty of overtime.
They wanted to make some repairs to the POS house that his ex-wife’s sister sold him. I told him, “If you sign that ARM you are making the biggest mistake of your life.”
“Don’t worry,son”, he says. “I’ll be getting my pension and your mother still works. We’ll be fine!” That was ~ a year ago.
Got the call today. “Uh, son, they raised the mortgage payment on us. We need to borrow two hundred to three hundred. We’ll just live on canned food.” He says this as if his mortgage payment going up was a surprise.
I know all the questions I should ask him. “Why don’t you get a job? Why don’t you cut out the satellite TV? How about selling that Harley? Mom’s bike? One of your firearms?”
I shouldn’t give him any money. But I’m going to. $200. Once. But that’s it. I cannot even begin to describe how livid I am right now. And my wife? Way more pissed than I am! Dude watched my younger sister lose her home to an ARM not even two months ago. She didn’t come to me crying for money.
I wonder what he’s gonna do when his payment goes up again in two months?
He’s going to come back for more, and hopefully you’ll make the decision you should have made this time, and say no.
If you don’t decline, you’ll have even bigger problems.
If he has no savings, can’t he walk on the place - start over? Pension can’t be taken away, can it?
I’m to the point of panic after the currency market moves this week and the bond market moves of tomorrow. I just don’t see these as temporary moves, these were adjustments that were building up over time and are now kicking in. They are FUNDAMENTALS, not speculation.
With so little savings by the regular people in the USA - this housing boom is going to blow everything apart.
BULLETIN
AIG SWINGS TO A LOSS, TAKING $11 BILLION DERIVATIVES-RELATED CHARGE
AIG reports $5.29 bln quarterly net loss on derivatives hit
By Alistair Barr
Last update: 5:50 p.m. EST Feb. 28, 2008
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B18DD50F5%2DF9DB%2D49F5%2DBB54%2D6EE2C18EFA97%7D
I’m in Florida one week a month. Each time I come, the crime gets worse and worse.
Don’t forget, most people here were thinking they were R-E millionaires last year! Everyone was buying and selling condos to each other. Now that that fell apart, these FB’ers are resorting to crime.
I’m in the Theme Park business, so I’ve been tracking crime at theme parks. In today’s news alone there:
- A ring of housekeepers at an upscale resort stealing things
- A clerk at Sea World Discovery Cove stealing credit card info
- Thieves calling Disney Guests in their rooms, telling them they’ve won prizes, and collecting credit card information
People who though they could get rich quick lying on mortgage applications and flipping houses are already criminals. You’ll see similar fraud/conterfeit/id theft crimes skyrocket as they turn to stealing credit cards for their new source of income
Thank you for your input, reuven.
As we had imagined, there will be social consequences for the housing bubble — and I think the PTB hasn’t figured it out just yet.
Crime will be a growing problem, and with fewer resources for law enforcement, I wonder how it will all turn out.
Insight: True impact of mark-to-market on the credit crisis
By Paul J Davies
Published: February 28 2008 16:25 | Last updated: February 28 2008 16:25
Back in April 1993 the eyes of the world were on the beseiged Balkan town of Srebrenica, which the UN declared a safe haven for Bosnian muslims, and on Northern Ireland, where secret talks between leaders from rival factions kick-started a tentative peace process.
In the same month, a less-noticed development saw US accountancy regulators approve a rule that paved the way for today’s widespread use of mark-to-market accounting standards. This rule, which forced US banks to carry more securities at market value, emerged from the wreckage of the US savings and loan crisis when losses on loans had been hidden by the use of “historic cost” accounting.
Only now, in the middle of a global credit crisis, is the impact of the broad introduction of mark-to-market accounting becoming clear. The critical concerns are around how much these changes helped to inflate the credit bubble and whether they will increase the speed and destructive power of its collapse.
http://www.ft.com/cms/s/54806678-e619-11dc-8398-0000779fd2ac.html
When the visual bank runs start happening, (the unseen ones via the internet have been going on for some time now) can we expect some good old fashioned panic from our copycat citizenry?
Master B flash of the Fed, has already indicated that banks will fail.
This will probably be the last post of the day, maybe tommorrows buckets can discuss. I saw an ad in our paper on a house for sale. It was marked as a new listing. I know the house, its just down the road from me. It was on the market for 6 months last year at 166k. Didn’t sell .So, a new realtor has it..new listing at 162k. So I sends this realtor an email questioning this being a new listing…he comes back saying yes, this was on the market, but because this is a new listing for him…IE NEW LISTING. I emailed him again, this time I went into a rant about realtors being honest and that days on market were important to any new buyers. I basically called him a liar. Additionally, I stated that I work for buyers, doing research at the county courthouse. IE Property assessed values, tax rates, mortgages, helocs, last sale price and date. I told him, that in order for a buyer to make a good decision in this market, these were pertinant pieces of information. I ended with, ” we don’t want any buyers to catch a falling knife, do we? ” I’m wainting for his reply. This is a well know real estate agency in Eagle River, Wisconsin….
The Haunted Market
News > Editorial / Commentary > Story
Minsky’s ghost
02/17/2008
A dozen years after his death, Hyman Minsky suddenly is famous. With all respect to Mr. Minsky, that’s not something to be happy about.
The late Washington University economist is being lauded in economic circles today for having been right about something really awful. Way back in the 1970s, he described U.S. credit markets as prone to a kind of manic-depressive disorder, and foretold how an irrational spasm of willy-nilly lending could land us in recession.
That sounds a lot like today’s subprime lending fiasco, and the credit crunch that seems to be pulling the nation into a slump.
http://www.stltoday.com/stltoday/news/stories.nsf/editorialcommentary/story/CB5BB2A45FCA5F29862573F10004273E?OpenDocument
Foreclosures in America
Searching for Plan B
Feb 28th 2008 | WASHINGTON, DC
From The Economist print edition
As America’s mortgage mess worsens, radical solutions are gaining appeal
http://www.economist.com/finance/displaystory.cfm?story_id=10766432