Some Very Expensive Dirt In California
The San Francisco Chronicle reports from California. “Foreclosure used to be a last resort, something that hard-pressed homeowners would scrimp and plead to avoid. But some are deliberately choosing foreclosure as an early option. ‘It’s throwing good money away after bad’ to pay an escalating mortgage on a home that’s plunging in value, said Army Sgt. 1st Class Nicklaus Skaggs of Vacaville. He and his wife, Tishara, stopped paying their mortgage in February.”
“They have no regrets about their decision. ‘I feel like the pressure has lifted off my shoulders; before I was trapped,’ said Nicklaus Skaggs. ‘In the long run, I think this is the best financial solution. I have to do what’s right for my family. I don’t care if someone judges me. I certainly wouldn’t put my family in a position to lose $150,000 if I can help it.’”
“A Discovery Bay man who asked not to be identified said he is ‘upside down’ on his house by about $260,000. Instead of bemoaning the situation, he plans to capitalize on it.”
“‘I refinanced a couple of years ago and pulled out $100,000 and put in a fabulous pool,’ he said. ‘Now I’ve got this fabulous pool and fabulous house, but it’s not worth anything. Why shouldn’t I be building equity over the next four to five years instead of playing catch-up?’”
“The man said he has not made a mortgage payment for five months.”
“‘I’m playing the bank game,’ he said. ‘I’m playing chicken with them. I already got them to agree to put (the unpaid) payments on the tail end of the loan. What I’m really pushing them to do is to (adjust my mortgage) for the current market value and write off the rest. I’d love (to have it) lopped down to a $450,000 basis rather than $710,000.’”
“If the bank won’t negotiate, he’ll walk away, the man said.”
The Press Democrat. “More and more borrowers in Sonoma County are discovering that lenders have frozen their home equity loans or reduced their credit limits as property values continue to fall. Increasingly, homeowners in the North Bay must negotiate to keep home equity lines open as lenders guard against deeper losses in real estate, analysts said.”
“‘Basically it’s evidence of declining values. The lender is just interested in protecting their investment. They want to make sure it’s secured by the value of the property,’ said Mike Saenz, manager of seven IndyMac Bank branches in the North Bay.”
“Even as Sonoma County home values began to decline nearly two years ago, homeowners continued tapping home equity for a sizable amount of their income.”
“Sonoma County borrowers pulled $8.3 billion out of their homes over the past five years, taking out more than 162,000 equity lines, according to estimates by Moody’s Economy.com.”
“‘Home equity lines were given away like candy a year or two ago. When values started coming down, all these lenders revisited what they were doing here,’ Saenz said.”
The Fresno Bee. “The number of foreclosed houses that Fresno real estate agent Bill Pfeif is trying to sell has climbed in two years from virtually zero to about 500.”
“Since 2005, almost 1,300 houses have been repossessed by banks in Fresno, according to RealtyTrac. And the numbers could climb this year because a record number of households are expected to see their adjustable-rate mortgages reset to higher rates, analysts say.”
“‘The biggest recast that has ever happened happens this month, and that will just blow it through the roof,’ Pfeif said.”
“Pfeif and other agents in Fresno try to stay ahead of the surge in foreclosures. Pfeif is selling 50 to 60 foreclosures a month, many to first-time home buyers, but said it’s like swimming against the current.”
“‘More are coming in than going out,’ he said.”
The Bakersfield Californian. “On a recent Sunday, about 30 prospective homebuyers climbed on a bus for a trip with HomeBuyer Tours, a company that runs weekly home viewing tours designed to pinpoint the city’s best housing bargains — mostly bank-owned homes priced between $200,000 and $300,000.”
“Many liked what they saw. ‘They’re shocked about what they get for their money now,’ tour operator Ginny Wadsworth said.”
“The buyer has an excess of selection — 2,001 homes are listed for sale at $199,999 or below in Kern County, according to the Bakersfield Association of Realtors. Another 802 are priced between $200,000 and $249,999.”
“Home prices have started to decrease, easing the burden for families such as the Sandles. But the high affordability rates Kern’s residents once enjoyed are nowhere in sight.”
“‘It is true that the affordability factor has improved, but that’s relative,’ said Stephen Pelz, executive director of the Housing Authority of the county of Kern. ‘It’s improved from a year ago, but it’s still dramatically worse than it was six years ago.’”
“During the last three months of 2001, housing was affordable for 70 percent of those in Kern County, according to a housing affordability index by the National Association of Home Builders, a trade group, and Wells Fargo bank. The index weighs incomes against housing stock cost to come up with its estimates.”
“At the end of 2007, Kern’s affordability percentage had fallen to 22 percent. ‘It’s hard to see it getting back to 70 percent,’ Pelz said.”
“If Wadsworth’s bus passengers are any indication, some consumers are intrigued by falling prices, but still cautious. Several said they rode the bus not to shop, but to learn about the real estate market in an atmosphere free of high-pressure sales tactics.”
“Steve Holian has taken the bus tour twice. He thinks current prices are ‘very interesting,’ but plans to wait for prices to fall further before he buys.”
“‘My father wants to buy me a house in Bakersfield, but we’re on a limited budget,’ Holian said.”
“He’s ‘watching out for the creampuff’ home deal — ideally, a discounted foreclosure near Stockdale High School, where his son is a student. Some homes caught his eye on the tour, but nothing fit the bill.”
“‘I’m not in the position to pull the trigger quite yet,’ Holian said.”
The Press Enterprise. “In a well-kept neighborhood with nicely manicured lawns east of Park Hill, a corner home stands out with weeds about 3 feet tall growing in the front yard.”
“Part of a fence has been bashed in, there’s a large hole in the ground where the swimming pool was, and the entire backyard is overrun by weeds. It’s a sign of the times, said Hemet senior code enforcement officer Kathie White.”
“‘Somebody wanted to get in real bad,’ said White. She said the home, with its overgrown weeds and broken fence, was an ‘open invitation’ to transients and people of shady character.”
“Hemet was among the Inland cities that basked in the housing bubble not too long ago, and now it is among those reeling since that bubble burst. Worried about the declining state of many homes now going through foreclosure, the city, by targeting banks and mortgage companies, hopes to prevent any future blight.”
“‘It will actually force the mortgage companies to be more responsive,’ White said. ‘Some of them are not even in the phone book.’”
“Jesse Kim said there are days he’d just as soon find something else to do than show up at his store and sell hardly any furniture.”
“His business, Riverside Furniture on Magnolia Avenue, is well stocked…but customers have been in short supply lately, and Kim and others in his industry are calling this the steepest downturn in recent memory.”
“‘For eight years, business was OK,’ said Kim. ‘Last year it started getting a little bad, but this is the worst it’s ever been, and I’ve been doing this 28 years.’”
“Furniture retailers depend on home turnover to drive sales because purchases are typically made shortly after moving to a new residence. There were 13,164 homes that changed hands in August 2005 in Riverside and San Bernardino counties, the peak for this decade.”
“But in January, the most recent month for which there is data, only 3,050 homes were sold, according to DataQuick.”
“‘It’s pretty bad right now,’ said Ty Pham, who owns Elite Furniture on Base Line in San Bernardino with his brother Mike. Pham said he’s using the store’s parking lot as an outdoor display area to attract some trade.”
“‘In the old days, we didn’t even have to advertise to make money,’ he said.”
“Inland economist John Husing said the severity of the current housing bust took a lot of people by surprise. It goes beyond the simple bursting of a bubble, he said. ‘All of us expected a housing slowdown, but didn’t expect the market to virtually stop,’ Husing said. ‘The thing we all missed was the seizing up of the credit markets all over the world.’”
“The sudden and steep crash sent some retailers who depended on housing activity from prosperity to bankruptcy. For example, Wickes enjoyed double-digit revenue growth every year from 2002 to 2005 and was still expanding.”
“Husing said some firms might have been a little shortsighted. ‘There’s always a tendency to over force the existing position,’ Husing said. ‘But no one has experience in this kind of downturn.’”
The North County Times. “Michael Pattinson’s company has spent $4.3 million for dirt. The land also has everything needed to build a home: a road, permits, level ground. But for now, it looks like some very expensive dirt.”
“In response to a severe local housing recession, developers like Pattinson, president of Carlsbad home-builder Barratt American, are sitting on land plots they have poured millions of dollars into and looking outside of the state to build.”
“Pattinson will wait until the market shows signs of recovery to build. In the meantime, he has started looking at projects in Idaho, Utah and Canada.”
“‘We’re all dressed up with nowhere to go,’ said Pattinson, whose company sold 397 homes in 2006 and 116 in 2007. All homes were in Southern California.”
“Other builders said they are not looking outside of the state but have simply slowed development locally. Several said they are unwilling to slash prices on their products because of the high cost of building homes in California.”
“‘We have lots of lots ready to go,’ said Fred Maas, president of Black Mountain Ranch, a master-planned development west of Rancho Bernardo. ‘But we’re not going to sell at a price below what they’re ultimately worth. We’ve got a special property here in a constrained market.’”
“Pattinson has railed against state building permit fees during interviews and at a recent real estate conference. Fees were raised during the housing boom. Now that the housing market has taken a dive, Pattinson said the fees should be toned down to reflect the recession.”
“‘You guys all had your snouts in the trough when everything was going up and now it’s time to roll them back,’ he said.”
“Joe Russo, head of the building division for Escondido, said the city will not consider decreasing development fees because the funds acquired are used to upgrade services that are affected by more houses.”
“‘We’re trying to play catch-up with our infrastructure. Development is supposed to pay its own way,’ Russo said. ‘Everybody who wants to build something needs to pay for what they’re building.’”
“Pattinson said he is waiting for the rate of time it would take to sell all homes on the market to drop to seven months before starting to build. Inventory in North County stands at 12 months.”
“‘If (the fees) keep getting passed along, we’re going to do what we’re doing here —- sitting on empty lots,’ Pattinson said, overlooking the land Barratt American bought three years ago.”
“Pattinson said he expects to wait a year for the market to show signs of recovery. Then, he plans to build the homes four at a time to gauge interest. Usually, the company would build all 12 homes at once.”
“‘We’re in uncharted territory. We’ve never seen this before,’ he said.”
“Some economists and academics have predicted the housing market will struggle for much longer than Pattinson’s expectation of one year. They say the median price needs to be affordable for the median household income, which could take three or four years.”
“But some builders say it is impossible to build affordable housing in San Diego and turn a profit simply because of the permitting fees, which have been ramped up in recent years.”
“‘You can’t have some of the regulations and priorities that we encumber housing with in California and then lament the lack of affordable housing in any genuine sense,’ said Paul Tryon, chairman of San Diego’s Building Industry Association.”
“‘If you go back to 1977, housing in California was exactly as it was nationwide in average price. … It was desirable in 1977. It didn’t get sunnier. The surf didn’t get better,’ he said.”
‘If you go back to 1977, housing in California was exactly as it was nationwide in average price. … It was desirable in 1977. It didn’t get sunnier. The surf didn’t get better’
Even though this guy is using this as a dig at regulations, and maybe rightfully so, it does get at a fundamental question. Why should California be so much higher than most everywhere else?
I drove the length of the state 7 years ago. I can’t tell you how disappointed I was. I guess I was expecting garden-like conditions, but a lot of it looks like west Texas to me. And I think this 1977 quote raises another question; just how long have prices been out of whack, and what does that mean for the size of the fall?
I’ve never understood all the hype about California. Maybe back pre-70s it was nice, but now parts of it are a jungle. The nice places there are not accessible by road for the most part.
Well renting in certain areas of California make it a paradise. $1,000 per month one and a half miles from the ocean and my job was only 2 miles away (no freeway driving). Climate is great 50 weeks out of the year. Can’t say that about my current digs in Maryland. However, yes, California, as a whole, is ruined. It’s one big nanny state.
“If the bank won’t negotiate, he’ll walk away, the man said.”
What a f@cking POS.This is the kind of loser that is ruining this country.I see a big problem with this cr@p.
Oddly enough, this is precisely what is required to get housing back in shape.
This was a credit bubble (= lending bubble) not a housing bubble. Housing was just its most visible form.
Until the lenders get a full-fledged Joshua Tree Enema™, nothing will change. So this is absolutely necessary.
What a f@cking POS.This is the kind of loser that is ruining this country.
True enough, but with idiocracy so far advanced in our society, banks needed to have safeguards against lending money to such irresponsible and detestable human waste. Instead, they fell over themselves to lend money to FBs, then bundle the bad loans into mortgage-backed securities and sell them to even bigger fools. So, while this FB and his ilk should be placed in stocks in public places and given a generous dose of humiliation and scorn, the lenders are getting exactly what they had coming. Faster Pussycat is dead right: Until lenders get a DELIVERANCE-style reaming, they won’t have a compelling reason to cut their losses and deal realistically with the mass of cretins that slouch through their doors looking for easy credit to buy things they can’t afford.
They changed the bakrupcy laws so you can’t skate on some debts. Now, they need to revisit debters prisons and work gangs for the losers who try to ‘walk’ on their mtgs and the lenders, appraisers, realtors who put them there. Until that happens the housing bubble will continue another four (4) years at minimum. All the Fed is doing is bailing out Wall Street. Who would have thought? hehehehehehe
Only thing is, the banks aren’t going to get the DELIVERANCE style lesson because Bernanke and company are intent upon nationalizing the losses. Once again, we the public will take it in the shorts through dollar devaluation. What we’ve already seen from the politcos is that there won’t be a “lesson learned” by the big players, but merely an extraordinary attempt at getting through this and getting the game to resume. The game pays enormous amounts of money in the form of year end bonuses and that my friends is what motivates the players at the top. Heck, it was the whole reason that seemingly innocuous bank transfers which should have gone totally unnoticed got Spitzer in trouble. He took on the players (also known as “the boyz”) and doing a great job at ramming it to them which no doubt pissed them off. Since there isn’t really any privacy at all in banking, Spitzer made the mistake of exposing a vulnerability to them. He really should have known better - he should have been paying cash!
Read my comments below on why this idiots scheme is FB stupidity at its best. These FB’s don’t know what they’re asking for. I mean, I don’t even have to go looking for these guys, they’re impaling themselves on the JT.
IMO, for the most part principle reductions won’t happen. But for the few FB’s is does happen to, it’ll feel like getting screwed all over again. Again, read comments below.
Lets go back to the originators.. ppl wouldn’t have bought the homes if the gov/lenders/banks/credit cc co’s/hedge fund super elite,congress/senate weren’t all in the same bathtub holding hands and changing the laws to ALLOW all this super hyped scenario that is all playing out. IF they weren’t emcpiraged by Kstreet lobbyists/senate/congress/hedgefunds/Wallst to do this nastiness of financing to earn their hugely bloated bonuses etc then the borrowers would NOT have been able to buy anything without the law changing. Bankruptcy laws only work in the corp best interest allowing them to BK but not the populace.
I don’t like what is going on either, but surely no one could’ve gotten a mortgage unless the standards were still in place that we are all so familiar with in the past.
And the Helocs wouldn’t be available unless the cc/banks etc knew they would have these ‘vehicles’ in place to make huge loans nonstop.
FasterPussycat is right. It has to unravel now. And the JT’s must be placed Hard hard hard now. Otherwise, no one will learn.
Woman in NYT had a great observation re:infidelity(spitzer type)and said that of course you could stay with that someone, but they would have learned nothing but that they can get away with it. And the kids would see that as an example. So, in the credit/mortgage/housing/wallstreet arena, it isn’t to dissimilar.
The headlines are telling of an imminent takeover of Bear Stearns by JP Morgan.
How many of my Wall Street neighbors will be forced to give back those big, ill-gotten bonuses?
None. That’s the beauty.
OK, no selloff in Japanese market tonight. Will just wait until Mother Merrill hits the cr@pper then.
$2 A FREAKING SHARE
http://biz.yahoo.com/ap/080316/jpmorgan_bear_stearns.html
Holy Sh ! t!
That is a HUGE one weekend haircut. Couldn’t happen to nicer guys!
JP Morgan is getting ripped off. Just kidding. The futures are up huge on news that the Fed is, once again, going to save us. These Fed rallies are silly. The Fed will destroy us.
So short the rally. Channel your anger. Don’t get mad; get even.
I plan to. But making money off the destruction won’t do me much good if they destroy it all. I made a few bucks off of Bear on Friday. I have that on the sidelines for this week, hoping to jump in after the Fed makes a$$es out of themselves once again.
Bear Stearns was the scum at the center of the mortgage mess and they are getting their just desserts. I still remember them upgrading New Century two days before the collapse
“The arrangement, the first of its kind since the 1930s, resulted in Bear getting a 28-day loan from JPMorgan with the government’s guarantee that JPMorgan would not suffer any losses on the deal.”
Am I reading this correctly? JPM buys Bear for the bargain basement (yet possibly still way too expensive) price of $2/share, but the US government is guaranteeing JPM with taxpayer money that it won’t suffer any losses as a result of the deal? WTF?!?!
BSC 2 hedge funds loss marked the start of this mortgage blow up. Still remember the letter BSC sent to the 2 funds investors, don’t remember the exact wording, but something like this:
Dear customers,
… there is nothing left in one fund, and about 50% left on
the other
…
I grew up in So. Cal. in the 1970s and it was a great place back then. We lived about 20 minutes from the beach and went there all the time. I remember driving to San Diego as a kid and seeing nothing but orange groves from the freeway.
Unfortunately, its ruined now by too much over-development, too many people, too many illegals, too many busy bodies who want to tell you how to live and not enough freeways. I worked in downtown LA in the 80s and, while traffic was heavy at times, it was fairly easy to miss the rush hour by adjusting your commute time by an hour, now traffic is bad most of the time.
I had the good fortune to work in Portugal for 2 1/2 years from 2000-2003 and when I got back, I finally realized how bad the quality of life in CA had become. My b/f and I immediately started planning our escape.
We are much happier here in Arizona.
I worked in both PHX and Long Beach. Nothing personal, but I’ll take the beach any day. Especially during the summer months where it’s a breezy 80F out here.
On second thought, CA really sucks, Earthquakes, gangs, smog, etc. Please don’t move out here.
California has very little to recommend it. I wouldn’t consider living there unless I lived on the coast. Otherwise, it’s an overcrowded smog pit-desert.
I’ve been to CA only a couple of times, back in the 1990s. I was in Santa Monica and in the stretch from Oceanside to Sandyago. I liked much of what I saw, although I could have done without the homeless person who almost puked on my shoes as he was getting tossed out of an Army/Navy surplus store in Santa Monica. At the time, much of Sandyago was a sparkling, vibrant city. I enjoyed swimming in the ocean, the bracing water was a welcome change from the tepid waters of Florida’s Atlantic. But while the strip along the Pacific ocean was very livable, just going inland like 10 miles was like entering a blast furnace in the summer. I am so sorry to hear about what has become of much of CA. Ever since I wuz a pup, it has loomed large in my thoughts as an ideal of sorts, a place of great innovation and creativity and beauty.
I too have lost interest in considering a relocation to CA. It has much of the problems that plague FL. Pennsylvania(at least the western part) is nice however and not overcrowded or expensive. The summers for the most part are much milder than the southeast and midwest. Only the coastal pacific has milder summers, but im not considering that location till when/if prices become reasonable.
All I want for Christmas is for you to finally move to NW Pennsylvania and nycdj to find a job. That would be perfect.
And assuming they do, they would just shut the f*ck up about it already!
I should add that if that b*tch AnnSc*tt gets Sod*mized by Seventeen Puppies Six Ways From Sunday, and the results are marketed by Disney on one of those IMAX thingamees, and the “helper dog” plugs the rest, I promise you, sweet baby Jeebus, I’ll never ask for anything ever again (*).
(*) except for a pony (**)
(**) a white pony (***)
(***) a white pony that flies.
That post won’t last.
Yeah, it’ll get deleted but I’m learning anger from you, O Great One, teach me to control it!
For X-mas? How about for St. Patrick’s Day?
“Six Ways From Sunday”
I must say I never thought of doing exactly that to her but now that you mention it !! LOL
“Yeah, it’ll get deleted but I’m learning anger from you, O Great One, teach me to control it!”
Two words for you, my young apprentice. “Jack” and “Daniels”. A passed out man is a happy man.
What if I’m a woman, or a trannie?
A passed out woman (or trannie) is a…………….never mind.
Thought so.
Kids = Id*ots!
They never think of the consequences.
Have to say, I enjoy the posts from Ann S, as much as I enjoy the posts from you NYCityBoy and Faster Pussycat. Each of you have your own distinct way of giving people the bird.
haha, you just made my night nycityboy.
Probably not one to complain about offensive posts - whole “beam-in-the-eye” thing - but some of the blasts directed at Ann Scott really do cross the line. Yes, Ann shoots from the hip quite a lot and can come off as sanctimonious, but in her defense she also presents a lot of helpful or at least interesting information and perspectives. Some of the scathing personal attacks in here are amusing, but some are also excessive and uncalled for (and yeah, before anyone points out the obvious, I’ve been guilty a time or two in that department as well). Ann, if you’re reading this, I hope you don’t take some of these insults too personally, and I hope you stick around - you add a unique if not always appreciated viewpoint to this board.
Just adding my support for Ann. I must have missed some of her more egregious posts, but not sure why we have all this anger here.
From what I’ve read, Ann makes some very good points and backs up her claims with data.
Let’s not let this gem of a blog disintegrate into one of those “other” blogs with all the personal attacks and name-calling.
We can save the name-calling for the FBs and the lenders, regulators & powers-that-be who got us here. We HBBers need to stick together through all of this since many of the different perspectives here exist precisely because most of us are strong-minded, opinionated, intelligent and we’re not afraid to be contrarian. The more intelligent perspectives we have access to, the better — and that includes Ann’s.
[group hug!!!!!]
My secret favorite place is not too far off the beaten path on that drive from the Twin Cities to Madison. The unglaciated southwestern corner of Wisconsin is IMO the most beatiful area of the midwest; hundreds of square miles of georgeous forested hills run through with valleys and streams. Frank Lloyd Wright build his Taliesin home just on the the area’s eastern fringes. Not the best part, if you ask me, but close.
And as of yet, undiscovered, undeveloped, and reasonably priced. I heard the Amish who were fleeing the encroaching exurbs of Pennsylvania were moving there in substantial numbers. Hopefully there will be a hillside and a tiny farmhouse for me there when I’m ready to retire.
Bye Florida, you may want to take a peek at it before you go to NW Pennsylvania but remember…it’s secret. Shhhhh.
I love that ((((group hug))))!!
Ann has a dog…a loyal one!
Great catch!
Leigh
Just completed a whirl-wind tour from WI to PA and back, along the northern toll roads.
I couldn’t believe my eyes. Why on God’s green earth do so many fools…er developers…build McCrapboxes for miles on end near major highways?!
Northwestern PA is beautiful - good luck with your move.
Leigh
94 East from the Twin Cities through to Madison is also a beautiful drive. I will be in Milwaukee in May. I don’t think I will feel an urge to stay permanently.
“Just completed a whirl-wind tour from WI to PA and back, along the northern toll roads.
I couldn’t believe my eyes. Why on God’s green earth do so many fools…er developers…build McCrapboxes for miles on end near major highways?!
Northwestern PA is beautiful - good luck with your move.
Leigh”
What cities did you visit? I should check them out too. Last time I checked out Oil City, Franklin and briefly Titusville. There were some smaller towns 20-40 miles away
Two words for you, my young apprentice. “Jack” and “Daniels”. A passed out man is a happy man.
NYC,
Baaaaaaaaaaaaaaby, I Divorced Jack — he slapped me to hard - onto the ground!
Jack slapped, ya don’t go back.
I am guilty of a beer. (Not to be confused with the animal). grrrrrr……
‘
Milwakee? Bring the Mrs?
barbluvsong @ yahoo dot com.
A welcomed addition to ‘da’ family!
Best Always,
Leigh
P.S. Nice house and your own bed w/bath (and closet).
Bye,
What cities did you visit? I should check them out too. Last time I checked out Oil City, Franklin and briefly Titusville. There were some smaller towns 20-40 miles away
barbluvsong at yahoo dot com.
Born and raised in PA!!!!!
Leigh
“a place of great innovation and creativity and beauty”
Most innovation in California happens during periods of affordability. The dotcom thing sparked in the mid 90s. The PC thing happened in the early 80s. The aircraft industry’s heyday was in the period before the mid 80s.
“Most innovation in California happens during periods of affordability.”
IIRC, the aviation industry got a huge boost in SoCal during the Depression - Ryan Aircraft, McDonell Douglas, right?
Well, it makes sense, right?
They had the space, and the right climate for a lot of stuff!
Yeah CA sucks…overated, etc…..don’t move here
“Yeah CA sucks…overated, etc…..don’t move here.”
Totally agree. Spread the word among your friends.
I don’t know if anybody on this blog has noticed but once in a while I can be a little critical of things. No, really, it’s true. I still love Northern California. Sonoma and Marin are really nice. They might be overpriced but they are always on our possible vacation sites. Maybe I can talk my wife into a Napa trip this year instead of Europe. We can help the local economy.
NYCityBoy
It is pretty nice here in SLO. Come down and see H. Castle. Life is easy.
There are three cities that I have visited to some degree of which I have the same opinion.
Los Angeles
Phoenix
Miami
Unless a person had been born there, had close family there that they would sorely miss, or someone would pay them $1,000,000 per year, I can not fathom why anyone would live there. OK I was kidding; $1m per year is not enough!
Yeah CA sucks…overated, etc…..don’t move here
You need to translate that into Spanish. It’s definitely not the English speaking people who are moving there en masse
California no es bueno. Se ausenta
The Anglos are departing LA for Colorado in droves. Can’t say I blame them. Of course, California equity locusts are another kettle of fish altogether.
Please spread the word that California is overrated, a hell hole, sucks etc… Share this with your friends. Please, please tell your friends and family how bad it is in California.
It never seemed that bad to me. Not the greatest place on earth, but not the worst either. What’s so bad about it?
A bit of sarcasm.
Those of us who were born here (or very long-time residents) don’t like the overcrowding brought on by everyone and his/her mother moving here.
So, you see…California sucks!!! Don’t bother coming here.
Born and raised in CA at a time where it really was paradise. Went away for many years and returned. Some of it was the same (westwood) but so much more crowded. I’m liking the desert for the most part - yeah, yeah the heat for 3 months of the year is bad but you live it the same as winter other places. Just can’t do LA anymore - it’s too sad to see what it’s become. People talk about all there is to do there, but it’s so frustrating and time consuming to get anywhere that I found we didn’t hardly do anything anymore.
Toooooooo funny!!!
Stay where you are - one nation under…er…gawd.
Ya just can’t make this stuff up! NIMBY!
WOW.
Leigh
Leigh,
I was responding to Adam’s confusion about the OP’s post.
That being said, I must admit to being a bit of a NIMBY myself.
Before you put us (NIMBYs) down, try walking in our shoes for a while. We’ve watched our once beautiful, clean, safe neighborhoods turned into filthy ghettos with multiple families living in SFHs (I’ve known a few 3/2 houses with at least 10+ adults living in them — not including kids), high crime, graffiti, etc.
These ‘hoods were our homes, and now, even though they have deteriorated so much, those of us who grew up in CA are often not able to buy in the areas we were raised. NOT talking Beverly Hills, here, BTW.
Not trying to get nit-picky, but those who haven’t experienced it, really don’t understand.
oh i see. guess i’m a little slow. i think california has a net outmigration though, so it wouldn’t appear that everyone and their mother is moving there.
I grew up in Santa Monica (the peoples republic of
in the 70’s and 80’s and And it was paradise but I visit now and I know that the California I remember is totally dead and gone. It’s a terrible shame because it really was a great place to grow up but you couldn’t pay me ANYTHING to live there now. For all of you SoCal expats, read Kim Stanley Robinsons ‘The Gold Coast’ to get a sense of how I feel. Its like having a beloved family member raped, tortured and then gruesomely slaughtered.
California (aka “Mexifornia”) isn’t the same since 1992ish. Criminal Invaders, gang members, way too many McMansions, the freeways are parking lots, way too many strip/grocery anchored shopping centers, and developed ruined open spaces. Add the totalitarian p.o.s. govt, and it is a sh*tbox.
I’ve lived here since 1963, and it sucks now. Oh, and besides the beach by the Hotel Del Coronado (San Diego area) the beaches aren’t pretty. Now, Pensacola FL, or Italy, now those are pretty beaches!
Beaches from Malibu south are not the same thing as beaches from Gaviota north for the most part. I’ll never forget the first time I saw all of the side by side, packed in, development right on the bluff tops and sand when I first saw it back in the early seventies. This goes on for MILES & MILES of Southern California coastline (except at Camp Pendlton & Torrey Pines). Of course in the summer it’s wall to wall to people and no place to park. Yeah I’ll take that cold water and summer fog up north any day…but hey it’s CA and it sucks so don’t move here.
Right on SuzyK!
Move away, and don’t move here in the first place.
‘Thats the ticket’
(rolling da tounge)
BBBBBBBBBBBBBBBBBBlllllllllllllllllllllllllllllllllllllumba!
Oh baby, I can so roll - Rhhumba!
Fun!
Leigh
RE California in the words of Yogi Berra, “[California] is so crowded, no one goes there anymore”
I’ve lived in San Diego county for 20 years… first came here in 1986 and was here during the last falling market. One of the things that struck me as strange when I first got here was the huge disparity between the haves and the have-nots, which has only gotten worse over time. Drive through LaJolla or Cardiff or Leucadia, then through “Paradise Hills” (East San Diego) and it was like you were in two different countries and not two halves of one county in the same state.
Prices have got to come down AND all the fees cities and towns here need to be reduced to match what people can actually afford. The days of “wishing Prices” are gone forever… or at least until the next round of real estate madness…
as long as developers are running the city and county, it’s not going to happen.
In San Diego back in the late 60’s I remember driving by the Dairy that occupied large acreage in Mission Valley. Then the cow’s and land disappeared. In the 70’s you could still drive by the Miller dairy out in Spring Valley when there still used to be a spring! Now all there are is homes.
Those times are long gone not just for SD but for just about every city in the U.S.
I’ll be heading out to Vegas again for Easter. Looking forward to seeing how far out the building is continuing, it was almost up to redrock the last time I was there.
The cities themselves I can do without (esp the San Joaquin Valley, yuck), but California has so many wonderful places to visit–the coast is still beautiful, the sierras, the nat’l parks.
Still, would I move from Chicago? Not a chance.
to each his own, or something like that….
i would rather do time, than live in chicago.
newbie -> enjoying in california
I moved from Chicago to California. But then that was 1974. I can definitely see the big changes that have taken place over the years, and it ain’t pretty. On the other hand, once you drive away from the city and get past (waayyy past) the miles of McCrapboxes built up along the freeways, you can again see the beauty. Of course, the traffic has multiplied exponentially over the years, but you just deal with it. I’ve noticed that people are not so forgiving on the road anymore, too, NOR courteous to their fellow driver, so becoming a good defensive driver is required.
What I don’t appreciate is far bigger than California. I don’t appreciate having to “press 1 for English” when I thought this was the United States; I don’t appreciate having to explain 4 times to a customer service rep (language barrier…..off-shore support) and still not have my problem resolved; and I don’t appreciate that a person who is in MY country illegally would be so arrogant as to demand rights when they are clearly criminals. We would not be so lucky in other countries, in their countries, so why are we being so accommodating?
Anyway…I digress. But to respond to Ben’s opening post, I first noticed the crazy California prices in the late 1980s when I sold my Berkeley house, (circa 1907, purchased in ‘79 for $39,000)to one of my tenants for $208,000, in 1988. Over the last few years I’ve noticed that the zillow price has been hovering in the mid-$600k range, but the assessment for the land and building is only $281k. Go figure.
It makes no sense, but there you have it. 20 years and the prices are still stupid. How do you fix that?
BayQT~
Bayqt,
“Courteous” isn’t in this generations vocabulary or mindset, I think. Not traveling this month,planned it due to Easter break travelers, but they surely are on the road and visiting places. Tried to allow ppl to pass in the parking lots etc and either they walk slower or push their cart right in your path etc, but nary a nod or thank you to be had. In their own little worlds. I remember dad, telling me to say hello and be courteous to all.
I think most of us are from the ‘lost generation’.
Enjoy you all and continually thank Ben. !
It’s funny how even with the bubble, real estate can’t touch index funds.
208,000 20 years ago in 10% index funds would be over 3 million today.
Granted, the earlier flip from 39k to 208k far outperforms a 10% fund.
The down fall of California can all be traced back to one singular event: California Proposition 13 (1978)
There is a pre and post California, what we need is someone with the courage to roll back Prop 13 and save our state.
Totally been debunked on this blog many times.
The problem in California is illegal immigration (and legal immigration that isn’t well thought-out and planned.
Eliminate illegal immigrations and all of our funding problems would be cut in half, if not better. Check out where your tax money goes.
It’s not a problem with revenues, but with expenses.
Prop 13 is one of the best things that ever happened to California!
truer words were never spoken.
I admire Warren Buffet, he said the exact same thing to the Governator when he met with him to find out how to fix the state’s economy. Until that day comes, and it will, we get to live in this decaying state.
And Arnold replied “I told Warren that if he mentions Proposition 13 again he has to do 500 sit-ups.”
Prop 13 and Caltrans. The freewayification of California has led to its destruction
I have lived in Torry Hills just south of Del Mar the past 4 years, and it is pretty nice here. We have the Torry Pines park beach nearby and nice hiking trails. I’m able to take to Coaster to work when I want to avoid the freeway, which can be bad in the summer when races and the fair are on, but overall, except from the high cost of living it is not bad here at all.
I was out in LA last Spring, and was shocked by the visible deterioration since my last visit four years ago. The infrastructure is crumbling - roads, power plants, utility lines, bridges, all look delapidated and long overdue for some trillion-dollar capital expenditures. The off-ramps used to be planted in flowers and iceplants; now they’ve been stripped bare - it cost too much to maintain such cosmetic touches. Every single one of the white, middle class friends and relatives I know who grew up there want to relocate, although those that are employed by the State of California - an incredibly generous employer - will try to stick it out at all costs until retirement. Nobody is optimistic about the future or the demographic trends or the increasingly corrupt, incompetent Democratic and Republicrat state and local governments.
Sammy-
Thank you for your observations. I agree 100%.
Add, illegal out of work day workers hanging out on corners in droves, and the bill for the anchor brats, along with import 3rd world look, and it gets mighty depressing.
As we say about California’s economy right now “you can’t eat sunshine.”
No, but it can be blown up people’s arses.
Fireman friend from Heme/which was always a beautiful valley, had moved to SW Oregon and worked forestry, he would come SanBerdo Co to train and would always comment
how ugly, crowded,icky(myword) the southern part of CA had gotten.
I drove the length of the state 7 years ago. I can’t tell you how disappointed I was.
Turn your lights on and stay off Inter. 5. Califorinia has its problems but not lack of spectacular scenery. Did you go to Yosemite, Sequoia, or anywhere in the Sierra Nevada’s? Anywhere along the Coast (1000 or so miles)? Sure the housing sucks but visit San Francisco, San Diego, Santa Barbara, even LA. Wine? Napa, Santa Ynez, SLO. Even Death Valley is worth a trip. I live close to the Angeles Nat. Forest, hidden from the masses, but everyday I visit I am amazed. I am a big fan of Texas, but don’t compare the Sierra Nevada’s to the Hill Country? The State is awesome, just too many people. Native Californian.
Many of those cities you mention have too much traffic, etc, for me to enjoy. And scenery? I live in N Arizona! There’s plenty of scenery all over the west that’s just as good as California. I have lived on an island, and I like the beach too, but there are oceans everywhere. Anyway, I hear the waters cold.
What determines house prices are incomes, etc. And many of the towns/cities with half-million dollar houses in CA looked like they were in the desert to me. Sure, there is a mountain here and there, but I ain’t buyin’ this California premium like some folks.
Two words; Palm Desert.
As another native Californian, I’d agree that the state is much prettier once you get off the interstates.
I don’t think it justifies the premium, but it’s still a pretty place. Then again, I’m not a coastie; I prefer the northern and eastern parts of the state (the “less desireable” areas.)
F from here moved to Flagstaff for college, came back an alcoholic. Too much snow in the winter? Or is his case just a bad example? Sedona, to crowded with touristas. Lost its loving feeling in the 80s. Phoenix is a crowded mess. Payson. Don’t own a horse or a cowboy hat or truck or gunrack(as in TX) well, now Jerome could be interestin’
But where else, mormon small towns in AZ or UT or ?
What happened to beautiful areas are massive inmigration by population explosions. ZPG- 1960’s/70’s. All talked about but no one stopped short..so to speak.
Yea, I hike in the mountains above LA every day, 5 minutes walk from my rented house. I see bobcats, deer all the time. Not telling you where.
Sierra Madre…
I’d need to see some stats for that 1977 comment. I graduated college in ‘77 and started working at an aero company in the South Bay area of LA. The stuff was already running up in most LA areas, as I recall.
I drove the length of the state 7 years ago. I can’t tell you how disappointed I was. I guess I was expecting garden-like conditions, but a lot of it looks like west Texas to me.
You must have driven up the 5 freeway, which perhaps uniquely among all the long distance freeways in California is devoid of scenery until you get up near Mt. Shasta.
Drive up Highway 1 (coast highway) next time and you’ll get a little better idea why people pay a premium to live here.
Of course, this does bring up an excellent point: why should it cost any more to live in *inland* California than in West Texas? Beats the heck out of me.
I have to agree about I-5, once you get past Red Bluff heading north, I-5 is gorgeous. Highway 1 and 395 are great routes also. Love driving 49, 88, 89, and 4. Some great backroads throughout the SF Bay Area also. Get off the freeways and highways in any part of the country and you will be amazed at what you see.
395 yes its awesome, mt whitney, june lake, tahoe. And not crowded !!
I grew up in SoCal and it was always kind of a sad thing because it’s obvious that it was a fabulous place 60-80 years ago. Oh to have been there then. I read that when people stepped of the train in Pasadena or Hollywood, the air smelled like oranges and olives from the all the groves.
My dad’s people came out around the turn of the century and played cowboy and later they all went to work for PacBell. They used to go deer hunting in the SF valley.
I got out in 1975 after being in the road a few years in the west and realizing there were smaller simpler places to live.
I grew up in Santa Monica (the Peoples Republic of
in the 70’s and 80’s and it was paradise but I visit now and I know that the California I remember is totally dead and gone. It’s a terrible shame because it really was a great place to grow up but you couldn’t pay me ANYTHING to live there now. For all of you SoCal expats, read Kim Stanley Robinsons ‘The Gold Coast’ to get a sense of how I feel. Its like having a beloved family member raped, tortured and then gruesomely slaughtered.
The reason it costs so much inland now is from all the specuvestors coming in and buying up all cheap houses and flipping them for 300% profit. I moved here in 2001(military) prices were ok but not rediculas. In 2002 everything around here started going up 20k a month in price 90k homes are now on the market for 270k. Patiently setting here waiting for the prices to come back down.
I think that Prop 13 played a significant role. Prop 13 capped prop tax increases, tying them to the value of your home when you bought it, rather than allowing prop taxes to rise with the market. That created a powerful disincentive for people to move within the state, because you’d lose your Prop 13 benefit. Better to stay where you are, and make improvements. That did two things: lower the supply of resale homes within the state, and improve the quality of many of those resale homes that eventually did end up on the market (due to people moving out of state, etc.). Both factors helped drive up prices. Throw in massive migration into the state, first from other states and then from out of the country, and you’ve got rising home prices relative to the rest of the country.
I’ve long thought California would be better off, and its real estate market healthier, if we dumped Prop 13 and instead replaced it with a program that capped prop taxes on a CA resident’s primary residence at a percentage of their income. That would keep people from being priced out of their homes by property taxes, but allow tax bills to rise for out-of-state homeowners, speculators and people who own vacation homes.
> That did two things:
No, it did three. It raised the NIMBY factor to exponential levels. Look behind every “open space” proposal, and you’ll find that it’s backed by people who have houses that are surrounded by the “open space”.
The last bastion of freedom on the beach was taken away in San Diego just recently, you can no longer drink a beer on the sands and enjoy the sand between your toes. So much for California being such a great, free, place, it seems the local NIMBY folks have sucked every little freedom from the area, however, those that live in multimillion dollar mansions on the beach can still sip that martini and look down on the underpriveledged, the beach doesn’t belong to everyone, its now controlled by the wealthy, “we know better than you” folks.
The act of selling someone’s house does NOT put more supply on the market.
If they are simply moving within California, there is zero net gain or loss of housing inventory.
And why should someone — especially a native — have to move so that a newcomer can move in??????
If people don’t like the prices, they shouldn’t come here in the first place.
BTW, like the name suggests, I’m a renter and would like to buy a house someday (maybe), but do not think that someone else should be displaced so that I can move into their home.
And one of the most important points is that people should factor full PITI payments into their calculations.
If housing prices drop, so does the property tax!!!
The answer (just like everything else in the housing market) is LOWER PRICES, not new-fangled mortgages or property tax calculations.
[quote]Why should California be so much higher than most everywhere else?[/quote]
My sister lives in Chicago. The temp there today was 30 daytime, much colder at night, with a forecast of snow and freezing rain.
Here in the bay area the temps were 60+, and the wife & I took a nice hike near Coyote Lake (Morgan Hill), in the sunshine with sweeping green vistas everywhere we looked.
Yes, it’s worth it. those days putting up with crap weather are days you’ll never get back.
Eggman,
I was out at Fisherman’s Wharf. Walked out on the municpal pier. What a day. Golden Gate bridge on one side the Bay Bridge off in the distance, Alcatraz, Angel Island, out in front of me, the city skyline behind me. Coit Tower, the Pyramid, Ghirardelli Square. Drove home through the Presidio, along Ocean Beach, up along highway 35. Talk about a gorgeous day and views, views, views.
“I was out at Fisherman’s Wharf. Walked out on the municpal pier. What a day. Golden Gate bridge on one side the Bay Bridge off in the distance, Alcatraz, Angel Island, out in front of me, the city skyline behind me. Coit Tower, the Pyramid, Ghirardelli Square. Drove home through the Presidio, along Ocean Beach, up along highway 35. Talk about a gorgeous day and views, views, views.”
Stop, you’re killing me!
Yeah, but except for the coast it’s a brown dried out color for most of the year. For me, the sunshine just wore on me - and I used to be a lifeguard.
I live in Silicon Valley. Been here for about 40 years so I’ve seen some changes. We truly have some of the best weather in the world. We also have some of the highest wages (along with a high cost of living).
California, In my opinion, is the most beautiful state of any state I’ve seen. And I’ve been to quite a few states. But the real problem with this state and one that I wont miss when I’m gone is that it’s overrun with people, many having recently migrated north if you know what I mean.
In my area (Los Altos) we have had a rash of recent break-ins. We had a neighborhood watch meeting with the police department. Now everybody is getting locking mailboxes, etc. I say we just start shooting these misguided souls.
This problem will only get worse as the economy tanks. The downtrodden will go to the wealthy areas for economic ‘enrichment’.
I’ve realized that I have become an angry white male, having watched what has happened to our once great country.
All that being said, I have no mortgage, and have been sitting on a pile of cash from a home sale in 2003. I’ve seen this meltdown coming for a long time. I would tell people that the housing numbers ‘don’t add up’. Most people would parrot the ‘it’s different’ BS. It was as if I was the only one without rose colored glasses.
Ben, Thank you for this blog. It’s been an oasis for me.
“‘I’m playing the bank game,’ he said. ‘I’m playing chicken with them. I already got them to agree to put (the unpaid) payments on the tail end of the loan. What I’m really pushing them to do is to (adjust my mortgage) for the current market value and write off the rest. I’d love (to have it) lopped down to a $450,000 basis rather than $710,000.’”
This reminds me of what Alan Greenspan called the subprime explosion — “the democratization of credit.” Wasn’t it great that the poor had the same access to credit as the rich?
Well, looks like we have the democratization of leeching off society without having it be called welfare, too. What the FBs are doing, rich people have always done. That’s how Donald Trump keeps going bankrupt yet keeps living in luxury with one new tart after another.
“A Discovery Bay man who asked not to be identified said he is ‘upside down’ on his house by about $260,000. Instead of bemoaning the situation, he plans to capitalize on it. ‘I refinanced a couple of years ago and pulled out $100,000 and put in a fabulous pool,’ he said. ‘Now I’ve got this fabulous pool and fabulous house, but it’s not worth anything. Why shouldn’t I be building equity over the next four to five years instead of playing catch-up?’ The man said he has not made a mortgage payment for five months…If the bank won’t negotiate, he’ll walk away, the man said.”
Good luck ‘walking away’ on a refi - that loan is now recourse.
This is the same type of person who would be bitching about how “shameless buyers are” for lowballing his wishing price.
I am embarrassed how values have changed in this country. It used to be that most people got rich from their hard work and savings. Now most people get rich by taking advantage of other people.
I feel like I’m losing my country.
Your concern is understandable, and it is why it has never been more important for one to realize that their dollar is their real vote. Scrutinize every purchase, don’t buy their garbage…becuase it is all about to get a whole lot cheaper!
We started losing this country about 15 years ago NSO. It’s just that now the depth and severity of the cancer is starting to show.
No matter the inevitable short-term pain, the quicker it’s cut out of the system, the faster we can get to the healing process.
I think we started losing this country in 1971, when Nixon took us off the gold standard. The governments since then have done nothing but relentlessly debase our currency ever since - now the chickens are finally coming home to roost.
1913 - Federal Reserve Act, Income Tax. That’s when it all started to go very, very wrong.
“1913 - Federal Reserve Act, Income Tax. That’s when it all started to go very, very wrong. ”
Nah! It was that damned apple!
The only reason the US became such a great place was we bombed the rest of the world’s manufacturing base in WWII, everyone after the war HAD to buy what the US was selling, because they were the only seller. Add to that when the US was the global oil producer.
Forget it, the boomers got to live it up easy, future generations now have globalization and an oil addiction fed by the middle east, debased currency, exponentional health care costs. Welcome to your new lowered standard of living America!
Most people get rich in this country either by taking advantage of others (or the system) or from inheritance. Just like the story, the guy is in high school and is expecting his daddy to buy him a house in Bakersfield. I’m not sure where all this money is coming from; I read somewhere that only 2% of households can ever expect bequests of $100,000 or more in their life, but from what I’ve seen in California, it is more like 95%.
It makes you realize that even if you are smart and responsible, you will never be able to compete financially with those who have trusts and screw the system.
People who have trusts are not “screwing the system”.
Their parents worked for **their** money, and it was not removed from anyone (no loss to you) in order to pass it on to their heirs. The money was already in their family’s possession — there is no real exchange or transfer, just the first name on the account changes.
OTOH, there are real thieves out there (and many have trusts), but look at the executives and those who are looking for taxpayers to bail them out of all their bad ideas. They are the ones we need to bring to justice.
If a relative or friend decides to give me money, how is the system being screwed? Taxes were already paid on that money.
>>It makes you realize that even if you are smart and responsible, you will never be able to compete financially with those who have trusts and screw the system.
True, but that will always be the case as long as some people have more than others. Now I consider myself a bit of a socialist, economically-speaking (very libertarian socially), but even I know that we cannot all be exactly equal at all times.
OTOH, if you said that capital gains and other taxes on wealth should be taxed at rates that are at least as high as earned income (from wages/working), I’d agree 100%.
The danger isn’t in trusts or inheritance, but in how much and how fast that wealth/inheritance can grow without really producing anything.
And…most “trust fund babies” run through their money pretty quickly, as they tend to have “lotery winner” mentalities. That send the money back into the economy, and if you’re smart enough, you can use that same money to do something good/productive with it.
wow, sad but true and perfectly said.
“people got rich from their hard work and savings”
you must be smoking something i need to try.
While it’s no doubt true that banks don’t have anywhere near the resources to go after every defaulting borrower, recourse or not, it would sure be great to see them make examples of a few of these idiots who had the chutzpah to brag to newspapers about how they scammed the bank.
First I want to see examples made of the wealthy Wallstreeters/hedgefunders etc then…
We will never see that, oops, once during the Enron situation, but that was rare, and the one guy got off via “dying” too soon. We see these examples of wealthy getting off scott free all the time, and yet we want to see the plebians roasted alive and tar/feathered. Honestly, why are you not calling for the heads of those who started this thing, anyway. IMHO.
On a related note, Wall Street traders stopped their trading last week and cheered the downfall of Elliot Spitzer; essentially, the only cop-on-the-beat looking for and prosecuting corporate crime. With their hatred of being held legally accountable openly on display - I wondered what those living in the country’s ghettos must be thinking.
If the banks are smart, they will foreclose on him. If they refinance his principle, word will get out and everyone will stop paying the mortgage and insist on a lower principle too.
You know what these clowns don’t realize, is that they would be far better off walking and rebuying in a couple of years. Reason is they will be trapped forever in their homes with no potential for equity gains. How? If lenders were to do a principle reduction no doubt they would write in a recapture clause. This is the way the subsidized HUD deals have always worked. What that would enable is that if the housing market turned and there was any future equity gain in the property and the homeowner decided to sell or refinance, the so-called forgiven principle would be recaptured at that time. If you were listening closely to Bernanke’s speech, that was what he was suggesting. So, the borrower might (but I doubt) have the principle reduction on paper, thus lowering his payment. But somewhere in the note that forgiven money would be still hangingover their heads. Far better to walk and start from scratch in a couple of years. That way any gains would be yours and not the banks. I’ve lost many a HUD deal in the process because what looked to be a 150K payoff on the statement ended being a 250K payoff when the recapture was calculated in.
Once again, a FB trying to clever is still a FB.
If they refinance down the principle, they can always walk away in a few years. House prices won’t rebound for a long, long time. The bank will never see the principle again cause the equity isn’t there.
And walk away is exactly what they’ll do once they realize they’ve imprisoned themselves. And yes, if it was to happen, housing will probably never rebound enough for banks to recapture their “temporarily forgiven” principle. But one thing is for sure, there would never be any prospect for future equity gain for the enslaved “homeowner”.
If lenders were to do a principle reduction no doubt they would write in a recapture clause. This is the way the subsidized HUD deals have always worked.
That’s huge. I missed it in the original release.
I wonder whether anyone else caught it, because it sure changes what the meaning “principle reduction”.
I wonder whether anyone else caught it, because it sure changes what the meaning “principle reduction”.
Should have read: I wonder whether anyone else caught it, because it sure changes the meaning of “principle reduction”.
I was looking for it and didn’t see it.
Been writing to all my representatives (again) and Paulson and Bernanke requesting exactly this — and the LENDERS should take the write-down, not the taxpayers (through refianced/repurchased loans).
If that’s what he said, I’m all for it!!!
ex-nnv,
Brilliant, brilliant, brilliant!!!
I geeve you beeg kiss weeth, ‘ow you zay it, tongue?
Guys… not to be a pedant, but you do realize that the word is “principal,” not “principle,” right?
I think they should be one and the same. You say to-ma-to…
“Guys… not to be a pedant, but you do realize that the word is “principal,” not “principle,” right? ”
Pendant. Hmmm. Can O’Reilly use that one?
I was a pedant; sometimes I am a pendant.
O’Reilly only uses loofahs.
While I’m not sorry to see lenders getting badly burned by the walkaways - they’re long overdue a lesson in responsible lending - I would like to see lenders have a common database where FBs like Mr. Clever are blacklisted for at least seven years from getting ANY credit. That would effectively remove them from bidding against more responsible and creditworthy prospective homebuyers like yours truly.
Actually, I’m rooting for trash like this. I want lenders scarred for life by how easily they’re getting taken to the cleaners. The worse the abuses, the more credit will contract for the next buyer in line, the more assets that depend on credit availability will fall, the better off those of us who don’t depend on credit will be.
He already has no principles, so what are they going to lower?
I have no problem with that as long as it’s not the govt forcing the lenders to cut the principle. There’s nothing wrong with playing hardball. The banks did this to themselves.
“‘The biggest recast that has ever happened happens this month, and that will just blow it through the roof,’ Pfeif said.”
Is this whole thing unfolding incredibly fast?? I’ve never been through a housing downturn, so I have no perspective….but it seems from what I’ve read that we’ve corrected as much (percentage wise) as the downturn of the ’90’s at this point - but what took six years then has occurred in only seven months?? Now the biggest “recast” ever? Also…what is the effect of so much negative ammortization recasting the loans early?
I wish this was the case for 90% of America. I am only seeing drastic price drops for 10% of America. Half of Florida, most of Georgia, TN, Carolinas, etc have experienced very little price drops.
The parts of Florida that are dropping the most in price are starting to get cheaper than the other states. Crazy.
Have patience, Grasshopper. The Carolinas will catch up shortly!
This is what im hoping. The equity locuses relocated to the Carolinas and inflated prices there. How much of a correction is due, how cheap will houses be per square foot?
Good point…I’m very geocentric!
Southern California counties’ prices are each down double digits on a year over year basis according to the DQ numbers; a couple are more than 20% off. And if I’ve learned anything at all from this blog, it’s that this is only the beginning. Unless someone wants to surprise me and call a bottom by buying right now… Hold on to your mf-ing hats, this is gonna be quite a ride for the next 18mos to 3 yrs.
“‘The biggest recast that has ever happened happens this month, and that will just blow it through the roof,’ Pfeif said.”
Pfeif must have missed S&P’s assurance last week that this thing has hit bottom.
OT - just wondering how much sleep bernanke is getting this weekend.
Beranke is probably sleeping just fine. He seems to have a complete lack of comprehension of the magnitude of the financial meltdown that he has helped set in motion.
Actually, most likely he is not.
If Bear goes into bankruptcy instead of getting bought out, we’re gonna have some real problems on our hands.
Ol’ Mother Merrill and Lehman are looking more than a little shaky. The Swiss better be looking at UBS a little more carefully, and Shittibank is going to have a full-fledged cow sooner rather than later.
A few insurance companies are also looking very very shoddy indeed.
Courtesy of the Simpsons:
“Mr. Wolfcastle, how do you sleep at night?…On a giant pile of money with lots of beautiful women.”
MENDOZA!!!!!!!
Bernanke is probably sleeping like a baby: He wakes up screaming every two hours.
Very funny…
LOL!
Evidently he’s not sleeping - just cut rates another 3/4 percent.
Correction, that should be 1/4%. Ben still may cut more on Tuesday .
That was the discount rate. The FFR will be cut 75bps or more on Tuesday
““But some builders say it is impossible to build affordable housing in San Diego and turn a profit simply because of the permitting fees, which have been ramped up in recent years.””
The city will have no choice but lower those fees. If no houses are built, they don’t make any money on property and other taxes. People will just keep leaving CA for other states.
Lost in Utah:
“I’ve never understood all the hype about California. Maybe back pre-70s it was nice, but now parts of it are a jungle. The nice places there are not accessible by road for the most part.”
I could be a very happy man if I had a piece of Ojai/Big Sur/Carmel Valley (to name but a few) to lay my head. There is great beauty all over CA, and I’m in AZ so I know that Utah has some beautiful areas too. You can find large swaths of ugliness in every state, and CA is one big place.
40 acres of Santa Ynez Valley horse ranch and orchard would suit me just fine. Especially in the spring.
Unfortunately, I don’t have $5 mill lying around.
Thomas:
93518
Comment by Thomas:
“40 acres of Santa Ynez Valley horse ranch and orchard would suit me just fine. Especially in the spring.”
Yeah, beautiful area. I’ve been to two wedding/wedding reception in the Santa Ynez Valley. Got a sister-in-law in Arroyo Grande, so every so often I try to get back out west and see em (another sister-in-law in Hollywood Hills - LA ugh!). I kinda liked Larkspur as a small town even if colder weather, moss, and snails aren’t my thing. Bradley Ogden used to have a great restaurant there where I attended a wedding. I still remember the malted milk ball bread pudding, truffle scalloped potatoes, and hanger steak with green peppercorns. Damn my life sucks these days.
Sea to shining Sea and now it looks mostly like just dirt inbetween - used to be a pretty drive with farms and towns - most towns died - and other places they built these huge unusable houses that just suck up the space - California looks good except all the over building - get to the beach or San diego where the temperature seems to always be in the 70’s - the hard part are all of these huge personal trucks on the highway ready to push you off the road for doing the speed limit - it is like taking your life in driving from Oceanside to San Diego - Huge gas guzzling cars/trucks usually with aggressive drivers
But when you are sitting in the park near the beach on the grass feeling the breeze - and so many people go to the shore to watch the sunset - it is almost, well it seems spiritual
“‘You guys all had your snouts in the trough when everything was going up and now it’s time to roll them back,’ he said.”
Is this Mr. Pattinson talking about home prices? If so, touche’ my friend. Touche’…
Bye,
It’s not the fees so much as it’s the price the developers paid for the land. They’re stuck and fee reductions won’t help at all.
A lot of these guys that think they will “just sit on it for a few years” will eventually go under as raw land prices go down. Developed land prices will also come down, material and labor prices will come down, and then it will be affordable to build again, even with the fees.
So they will walk away soon as they overpaid so much for the land, all prospects of profit are lost. As for the high permit fees, this might mean houses are a little too expensive for local wages so people and jobs will be forced to relocate like they have been doing.
‘It’s throwing good money away after bad’ to pay an escalating mortgage on a home that’s plunging in value, said Army Sgt. 1st Class Nicklaus Skaggs of Vacaville. He and his wife, Tishara, stopped paying their mortgage in February.”
Even though the military frowns on financial irresponsibility, and will work with lenders to garnish paychecks of uniformed FBs, military personnel - and their wives, especially - seem to have far more problems with financial irresponsibility than the general public. When you know you’re getting a paycheck on the 1st and 15th, regardless of whether you’re a hard charger or a total slug, there seems to be fewer reservations about getting deep in the hole. Also, in my experience, many of the NCOs in particular try to compensate for their rootless lifestyle by spending extravagantly on high-end cars, SUVs, pickups, stereos, etc. They also tend not to keep up their houses very well, thanks to frequent deployments and long workdays. And yet the “it’s different here” Kool-Aid imbibers of Colorado Springs are still banking on the influx of some 15,000 Army personnel and their families over the next couple of years to keep our real estate market stable while it collapses everywhere else. Yeah, we’ll see about that.
When I read Ben’s post on Skaggs, I almost fell out of my chair!
I retired from the AF in 01. We would have been flogged - or worse!
Financial responsibility was up there with God and Country.
This is sad.
Leigh
Don’t a lot of these military clowns have access to free (taxpayer-funded) housing? What possible excuse could they have for being FB’s?
The Army’s housing is said to be the worst of all the services.
“The Army’s housing is said to be the worst of all the services.”
The Air Force housing is about as bad. That was why my dad always insisted that we live off-base!
Yes Leighsong,
I was in the Army from 75-78 and the housing at that time was bad. Don’t think it has gotten any better.
and they get subsidize housing allowance for any area which props up the rents to much higher rates for the locals
Kool-Aid imbibers of Colorado Springs are still banking on the influx of some 15,000 Army personnel and their families over the next couple of years to keep our real estate market stable while it collapses everywhere else.
My MIL is quite literally banking on it. *sigh*
“I certainly wouldn’t put my family in a position to lose $150,000 if I can help it.’”
Who is he putting in a position to lose $150,000 instead?
Yeah, whenever someone uses a phrase that includes “my family …” he’s really saying “I don’t give a d–n about anyone but myself”.
This Bear Stearns news is surreal. Bankruptcy if the deal doesn’t happen? Three days after mgmt said everything was okay?
My god, the lawyers are going to pick this carcass clean.
They are just the first domino in the major financials chain to fall…
http://www.cnbc.com/id/23658905
Who do you guys think is next?
My money is on Washington Mutual…
Although Lehman may give them a run for their money…
No pun intended!
IT IS LEHMAN. Look for it tomorrow….
The class action complaint that will be (or perhaps already has been) filed against Carlyle can be readily adapted to BSC by changing the caption and a few of the paragraphs that ID the defendant and its subsidiaries. Those plaintiff class action firms have been hurting for the past ~10 years and now is their chance to get back in the game.
Ain’t that the truth.
I spent most of the weekend working on rescuing dogs from a puppy mill. It was good, reminds me that all this BS is just that. BS
Awesome. Thanks for the perspective!! Dogs are so awesome and people who abuse them for a profit are despicable.
We named one of them Cooper. LOL
Don’t tell me you have a chicken named “Kenneler”?
“I spent most of the weekend working on rescuing dogs from a puppy mill.”
TX you rock. Personally, I’d like to spend more time volunteering walking the dogs at the shelter, where we got our dog.
There’s a damn pet store in Costa Mesa (Pet City) that advertises “Puppies 30.00!” and in small print “(per month)”. Gee, my heart would really break if that place burned down. Without the mill puppies in it, of course. Just sayin’s all.
We owe it to everyone/everything we care about to remember this episode - if only to break once and for all the cult of personality that the PTB has built around “capital”.
WSJ suggests that their biggest asset may be their Manhattan office building, but alas, the credit crunch means that there may not be many in a position to buy it.
“Most executives inside Bear believe the Federal Reserve and Treasury will play some role in making sure there is a backstop if the shareholder approval isnt reached.”
Get ready, fellow taxpayers, to be the backstop!
$US getting killed………….
http://www.dailyfx.com/charts/Chart.html?symbol=USD/JPY
What will the impact on home prices be if the dollar continues to slide like this?
Get ready to start making your rent checks out to Mrs Tanaka.
Or make that rent check out to Mr. Chris,
I get paid in Yen here in Japan and I’m an American citizen.:-D
Greenspan says crisis worst since WW2.
http://krugman.blogs.nytimes.com/2008/03/16/greenspan-lectures-us-again/
Greenspan should be taken out and ‘deliveranced’ along with all the others who made this thing into a pile-o-shite, all the while lying through their expensive ill gotten teeth jobs.
“deliverenced”
Excellent term. I hope it finds its way into our lexicon.
It’s kinda getting there.
http://www.urbandictionary.com/define.php?term=deliverance
BayQT~
The man has had his face buried in Andrea Mitchell’s beaver. How much more punishment can one man take?
His ill gotten $ has gotten her a might fine face lift. Not a crack anywhere..wellll, I mean in her face that we can see.
Sorry, being ornery.
Couldn’t have said it better myself….she is one brittle b!tch.
Surprised there’s no front-page thread dedicated to the Wall Street meltdown.
That’s a far bigger story, and is the culmination of what has been talked abut here for years.
This coming week could get quite ugly.
This week is set to be a bloodbath, with very ugly earnings reports due from Goldman, Morgan Stanley, Lehman Brothers, and good ol’ Bear Stearns. Judging by recent market behavior, this means that stocks will probably stage a rally.
I agree.
Wall Street is the big story in the “housing bubble”. As many of us have been saying, it’s not so much a housing bubble as it’s a credit bubble. They are one and the same.
Funny how the MSM keeps trying to talk about the “double-whammy of TWO bubbles popping at the same time,” as if they were somehow disconnected.
See Bits Bucket. $2 a share for Bear Stearns finalized. Link above.
$2, holy crap!! Weren’t they just insisting that their book value was $80/share on Friday? I’m speechless.
98+% discount. What does THAT tell you about “mark to market”?
The value of their Manhattan headquarters building alone ($1.5B) is worth over $2 a share - $12 a share according to yesterday’s Barron’s.
Apparently not to JP Morgan.
The reason there is no front-page story about the Wall Street meltdown, is because everybody’s attention is on Mel Gibson having dinner with Britnay Spears!
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/14/AR2008031403318.html
Great read Tx. This is particularly telling:
By the looks of things, America’s surfeited creditors must make room for many billions more. The markets are in “uncharted waters,” Robert Rubin, chairman of the Citigroup Executive Committee, said in a speech Friday. He urged the government to exert itself on behalf of the mortgage market and the American homeowner.
And who are these bankers who went sailing off the end of the Earth and thereby find it necessary to pass the cup to the government? The company of errant, if lavishly compensated, navigators includes none other than Rubin himself. Last fall, the former Treasury secretary confessed to Fortune magazine that until the mortgage storms broke over his head in the summer of 2007, he was unfamiliar with the kinds of complex mortgage structures with which Citi’s own balance sheet was packed. Almost certainly, the gulf between competence and compensation on Wall Street has never been wider.
Ya just can’t make this stuff up!
Leigh
You remember the story about the party in early 2000 in Silly Valley where Rubin supposedly told a bunch of rich people to get out of the stock market?
Didn’t hear that one, but it wouldn’t surprise me.
‘Don’t tell the rest of the pyramid, they have to pay for our lifestyle’…
Interesting.
Yes. He’s a special kind of genius…er…idiot!
Leigh
You’re gonna love this:
http://www.prospect.org/cs/articles?articleId=12573
This is one dangerous person!
Leigh
I think the country started going to Hell after 1945. The end of the Republic and the birth of an Empire.
Empire started before that I’m afraid: Cuba, Philippines, Hawaii, Panama, etc. But it certainly intensified after WWII when the US started feeling her oats.
MSNBC is reporting that JPMorgan Chase says it will acquire rival investment firm Bear Stearns and the deal is finalized
JPMorgan buys Bear for $2 a share. FFed rate cut a quarter point.
News just broke.
Woah what does this mean? Eeeek!
What happened to the $80 book value? Did it evaporate overnight?
It was a comic book.
LOL.
Actually, MorganChase is paying nothing: it’s approximately an 18:1 swap stock. So for every 100 shares of BSC that you hold you get about 5.5 shares of MorganChase.
Just passed the wire, JP Morgan is gonna pay $2 a share for Bear Stearns, oh the pain.
My freaking god. I had a “fun” 500 share short at the close on Friday.
So, I’m getting what, 12.5K in the a.m.?
That will definitely go to charity.
That’s awesome.
Good for you. I’m glad I held onto my SKF over the weekend.
Nikkie down over 500 points at 10:00 p.m. EST. But the Fed will do an emergency cut tomorrow and the Dow will finish in the green. The absurdity will continue.
I’d laugh - but it’s sad.
Thank heavens it’s to BIG!
Leigh
Never been so anxious to see markets open.
And our political leaders are worried about terrorism??? OMG. This is worse than some idiot strapping a bomb to them selves and strolling into Times Square. Yet we will let the a-s-s holes float away on their platinum parachutes. Anyone else just a little peaved? (I had no skin in the game, just the idea of this happening makes me want to puke on our flag)
The CEO of Bear Turds said Friday it was a tough week but we’ll make it (paraphrase). 99% off FIRE sale to JPM backed by the DRED, oops, FED. Monday may just be the day of reckoning my fellow bloggers… notice how the article linked above said the crisis was averted??? They have balls of crystal! My guess is the market gets shut down before summers’ end for some serious soul seaching … that was the kindest way i could explain it.
Screw popcorn! Got beans and rice? (no disrespect Neil!)
None of the investment banks is healthy right now. It will take time to let it sink in that this is beginning of their scares, not the end. Eventually one of the bullets is going hit.
I love bullets!
Darlin, day are already done - it’s to big!
Ya just can’t make this stuff up!
Leigh
From here looks like a suicide bomber couldn’t do as much damage as a crane.
Drudge had it right:
WORTHLESS!
Amazing its worth less then its building.
Plus, the feds are gonna cover Bears level three assets to the tune of $30 Billion. Wow.
http://biz.yahoo.com/ap/080316/jpmorgan_bear_stearns.html
Someone explain to me why this news is driving US index futures way up. I hear sirens!
Wow, I’m very long US indices and short Bear Stearns.
LOL, much better to be lucky than smart.
As the saying goes:
“Luck” is when preparedness meets opportunity.
Tx I’d say you’re both.
If JP Morgan didn’t take over Bear’s order flow and transactions by tomorrow morning, the system would have frozen up big time. It’s still not good news, there’s never just one roach.
True. JPMorgan is guaranteeing Bear Stearns transactions avoiding economic meltdown, at least temporarily.
I know. Trust me, I’m not bullish, just opportunistic.
From Bloomberg:
“JPMorgan Chase stands behind Bear Stearns,” Dimon said in the statement. “Bear Stearns’ clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns’ counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.”
Wow - that sounds so “It’s a Wonderful Life”-ish.
JPMorgan = Mr. Potter of course.
Now that BAC has bailed out CFC, JPM has bailed out BSC, who is left to bail out MER and LEH and C and WM? By the time this is over, half of Wall St will be wiped out.
I’ll bet a great bottle of wine, no way in hecks this deal is done (JP/BS).
Any takers?
Har!
Leigh
it can only go up, right?
nod-nod wink-wink.
“Someone explain to me why this news is driving US index futures way up.”
“Mr. President, why are commodities up and the dollar down?”
“This administration has a strong dollar policy. God bless America!”
Any more questions?
The Fed cut the discount rate this evening, that may have something to do with it:
http://www.cnbc.com/id/23664032
And are now expected to deliver a 75 to 100 (yes, 100) BPS cut at the upcoming meeting. From what I can see, a 100 BPS cut has never happened in one meeting, it would be unprecedented.
Maybe the Administration needs to break the news to the Fed
Help an international noob out. I only see futures here
http://www.bloomberg.com/markets/stocks/futures.html
Currently down 275 on the Dow.
Nikkei is down 4.2% on the morning trade.
Blood everywhere.
WOW - so much for diversity.
Great catch,
Leigh
Quick, SuperB. Back to the moral hazard mobile. You need to drop more liquidity.
The headline says $2 per share, but the article says $15 to $20. Big difference.
It is $2.00
I wonder how many of the 15k Bear employees will be kept on?
“But some builders say it is impossible to build affordable housing in San Diego and turn a profit simply because of the permitting fees, which have been ramped up in recent years.”
——————————-
I disagree. It’s not the cost of the permits, but the cost of the land. The builders have no one to blame but themselves as they, too, overpaid for real estate. The cost of the permits should be factored into the eventual price of the housing, and they should determine what they’re willing to pay for the land based on those calculations. If they can’t make a **reasonable** profit, the land is too expensive.
Part of it is communities not really wanting the development: here in the Northeast many communities enforce 1-3 acre minimum lot sizes in order to prevent dense housing (e.g., not smart growth - pure sprawl). The goal is to prevent increased growth in town services (fire, education, most homes are on private well and septic). But by limiting the supply, prices go up…
The backfire comes when the state then requires affordable housing - there was a post a few weeks ago about Newton, MA affordable housing. And just today the wife and myself looked at a development of eight homes of which “two already sold!” The two that had been sold? To the local housing authority to resell as affordable housing at approximately 50% the asking rate for the other 6 homes in the development.
In basic terms: artifically restrict growth, increasing the cost of the home. Then tax the homeowner to create less expensive homes for others. Pure socialism on the part of the local government, pure short-sighted greed on the part of any existing home owners.
PS: Eff the Fed.
“PS: Eff the Fed.”
Testify, brothah!
ditto
irst, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.
Just posted, Bloomberg.
Re Schwartz making the deal with JPMorgan…
Now Mr. Schwartz, a longtime investment banker whose approach to deal-making is more pragmatic and results-oriented than his predecessor, raced against the clock to seal a deal that salvages some measure of value for shellshocked Bear Stearns employees, who own more than 30 percent of the firm, and its investors.
Confernce CAll on this deal:
http://investor.shareholder.com/jpmorganchase/eventdetail.cfm
test
Bear Stearns conference call. I can’t believe Mr. Pink is still around
JP Morgan Chase is having a conference call at 8 PM to review the acquisition of Bear Stearns. Call (800) 214-0745 (domestic) / (719) 457-0700 (international), with the access code 614424, or listen via live audio webcast. Thanks to Mr. Pink for the details.
I posted web the link above.
JPMorgan Chase Buys Bear Stearns for $240 Million (Update2)
By Yalman Onaran
” March 16 (Bloomberg) — JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for about $240 million, less than a 10th of its value last week, after a run on the company ended 85 years of independence for Wall Street’s fifth-largest securities firm. ”
Fed cuts discount rate just before open of Nikkei:
http://www.bloomberg.com/apps/news?pid=20601087&sid=asg0H5x.VQ4g&refer=home
March 16 (Bloomberg) — The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities.
In an announcement before the start of trading on the Tokyo Stock Exchange, the Fed lowered its so-called discount rate by a quarter of a percentage point to 3.25 percent. The central bank also approved the financing of JPMorgan Chase & Co.’s purchase of Bear Stearns Cos., including support for as much as $30 billion of Bear’s assets. “
Can someone tell me how to search this blog for old posts? I have to find my post from last spring saying to short Bear Stearns because of the mark to market issues. I want it in case I ever want to start a hedge fund
thanks
Hurry up. My CDs expire in 7 months.
may I suggest yer hedge fund symbol be a 20Ib frozen trout ?!?
chick, why not tell us which one to short next? i am leaning towards mother merril. any suggestions?
I liked UBS along with Bear Stearns but really what I’m waiting for is a rally to short technology.
If LEH don’t work fur ‘ya, I’ll buy ya’ll a drink.
You could try google. you can add
site:thehousingbubbleblog.com
to the search string, and if Google indexed it while the page was active you can dig it up there. If the site is not showing the page anymore, you can also look at the “cached” version, which is stored in the Googleplex. Comes in handy sometimes when a web site is no longer available.
Best question from the conference call: Does Bear Still Own it’s Building??
Unanswered: how many long-time employees just took a bath on their holding of Bear stock, Enron style? Bear had about 14,000 employees…
figure a minimum of 10,000 just lost their jobs.
I loved the “individual investor” question and then him telling them he is “against the deal” . BAHAHAHAHA - sorry sucker you lose!
Where can you find how much BS was institution owned?? Gotta be a bunch of mutual funds and such taking a bath on this too, it seems.
Wilmington Trust was the major institutional investor, up to Thursday anyways, for about 22%…
a lot of NYC condos are going to hit the market
Nikkei down 322…
Sounds like they realize this is just the beginning, and an act of desperation.
Dow future down 202 points
Imagine if no deal was struck. -10% in a day?
Means nothing. Tomorrow’s going to be one wild sucker. Probably more swings than a hedonism vacation. I can’t remember anything this crazy since Sept. 17, 2001, the day the market reopened after 9/11. All I know is I’m gonna watch until something I see makes sense.
It depends. If this starts a serious run on the banks… At some point retail is going to throw in the towel and panic sell.
Spot gold broke 1030 in East Asia before backing off a bit. Panic Japanese gold buying like in Spring 2006?
Is Mr. Magoo a schizo?! This incredible clown is opening his yap about how this is the worse financial mess since the end of WW2. This guy must be suffering from a split personality. He created this mess! Now he’s going around giving interviews as if it had nothing to do with him. Jeeez.
Today, I listened to that a**hole Bob Brinker pontificating about the current situation. Just a year or so ago, Brinker was singing the praises of Mr. Magoo, telling his listeners that, “Alan Greenspan, rightly annointed The Maestro, has steered the US economy through the greatest expansion in US history.” Really. I think Magoo has steered the US right up to the edge of a financial cliff.
However, have no fear folks. The Financial Gangsters of Wall Street, aided by a corrupt Fed, a corrupt SEC and one of their own Godfather’s calling the tune (Paulson) in Washington will still come out smelling of (financial) roses….even if Joe Sixpack’s pension funds and 401k’s and his dollar savings accounts are decimated.
America - Home of the brave and land of the rip off artists. Most of them housed in 1 square mile of Wall Street. I’m not complaining for myself. I trade short term and this volativity is paying off big time…..but I sure feel sorry for the average (unware) Joe Sixpack who’s getting reamed a new a**hole by these scumbags on Wall Street.
It looks like we are heading into another depression. Most people are up to their eyes in debt, those with savings are losing it to corruption and inflation.
I hope some good can come out of the 2nd great depression and that people start taking their savings seriously and avoid debt!
“Most of them housed in 1 square mile of Wall Street.”
Don’t look at me. I just live in the neighborhood.
Don’t forget the people who allowed this to happen. K Street in Washington District of Criminals
Gold @ $1020 an ounce.
I read the above posts. The feds will drop 1.00 points? The US dollar is finished.
Hilarious. Some J6P shareholder got onto the call.
http://dealbreaker.com/2008/03/liveblogging_the_jp_morgan_cha.php#more
From the comments:
This is just too funny. People who were too lazy to go to work everyday at a car dealership so they decided to work two days a week selling houses and the poor people they sold them to have destroyed the banking industry.
Sums it up to me.
They bought them for $2 per share. Talk about getting burned.
Jim Cramer said they were a buy at $80 per share LOL!
Is anyone, anywhere keeping track of all his disastrous calls??
Does anyone care anymore?
Apparently not CNBC or else they would have fired him long ago
The TSCM yahoo board. That is one of the funniest places on the internet.
You remember that telecom analyst who was based in Austin who used to be on RealMoney? He died a few years ago. Jim somebody, fat guy.
He said that Corvis was a takeover candidate and should be bought at 80 or so right after the IPO.
It did end up being bought as Broadwing at about $1 per share 7 years later. I thought that was the worst call ever but this Bear Stearns one is a close second.
He looks crazy but he has really fallen off his rocker. CNBC should can his a** as he is a liability.
If you think a spitting, ugly man ranting is entertainment, then maybe he should stay on. Myself - I find him repellent in every way possible. Two thumbs down - WAY down. Sh!tcan the ba$tard.
OMG, classic!
8:31. Individual shareholder is disgruntled. You can almost see the thought bubbles: “Who let this guy on the call?” He asks about Bear Stearns and is told, “You’ll have to ask Bear that question.” Shareholder fires back: “I vote not to approve this sale.” Awkward silence. “Next question!”
Police find 600 to 1,000 pounds of marijuana in Phoenix home
near Marysvale (?) and Indian School Road.
Maybe someone trying to make their mortgage payment the creative way.
Was that the one the police checked out because the burglar alarm went off by mistake?? Thought that one was funny.
I watched it once and thought he was a moron.
This ended up in the wrong place. It was a cramer comment.
Nikkei is now down 515 points
Dow futures down 226 points
Gold is now $1,028.60 per ounce
Comment by Desertdweller
2008-03-16 18:38:58
Police find 600 to 1,000 pounds of marijuana in Phoenix home
near Marysvale (?) and Indian School Road.
Maybe someone trying to make their mortgage payment the creative way.
Actually, they “found” 5000 pounds; but it comes out around 600 went you account for “shrinkage”
“Alonzo! not my pension!”
Sorry Roger
Markets are cumbling Nikki down 500+, Hang Seng down 900+, TIMBERRRR
Lehman Brothers is rumored to be next…
yes Crispy. That is the one.
This is dated March 17 (tomorrow) but I guess its up tonight.
Fed Cuts Rates, Extends Loans To Calm Markets
http://online.wsj.com/article/SB120571194513840285.html?mod=googlenews_wsj
Say Good Night, Gracie.
WSJ raises question on Lehman, says Fuld cut short a trip to India and returned to NY after calls from Paulson re fallout from Bear deal.
http://online.wsj.com/article/SB120569598608739825.html
Larry kuntlow’s Goldilocks funeral will be held tomorrow on Wall Street.
weren’t we told by CNBC told to buy globally?
big mistake.
One good thing will come out of this. Bob pissani and dennis small head oneill will tell listeners now is a good time to buy.
So is it safe to say this is what panic looks like?
Bank runs, Sunday rate cuts, what the heck is next?
Rumor is GS shorted their own stock as a hedge against a falling stock price.
If you recall, they were the ones to short mortgages and have largely prevented some writedowns.
Is it really legal to short one’s own stock? I would think allowing this would create severe moral hazard (not that there is anything wrong with that…).
Rumor….Federal Reserve for sale for $2……Bush administration for sale for…..no offers yet
Aaaiieeee!!!!
I’m seeing REOs in Tracy, CA for 60% off peak prices and 1.5x income. Somebody talk me down from the ledge. I’m getting an urge to buy.
Must … not … weaken.
1. Do you *really* want to live in Tracy?
2. Why wouldn’t you wait to see how devastated a place it will become first? You need to wait till the foreclosures stop. Do you still like that neighborhood?
Not really. If it was Livermore I’d do it, just because that’s where I work. But I would probably also keep my apartment in SF for the weekends. (I aspire to a bi-coastal lifestyle.) But I’ll probably have to wait for 2009-10 for Livermore to reach that stage.
I was just in Tracy today for a little get-together. I can’t imagine having to drive through the Altamont Pass every day to get to work. And it was so-o-o-o windy today. The wind was pushing my Honda Accord around like it was nothin’.
Live out there? Nah uh. To most of my friends, I live in the boonies as it is (I’m in Dublin). NO one would visit if I lived out there.
http://en.wikipedia.org/wiki/Image:Kluft-Photo-Aerial-I580-Altamont-Pass-Img_0037.jpg
BayQT~
“The move raises eyebrows because the Fed doesn’t supervise securities dealers, so it can’t be certain the firms it’s lending to are sound.”
Fed opens discount window to broker dealers.
man, I really need some href training…
http://www.nakedcapitalism.com/2008/03/fed-opens-discount-window-to-broker.html
Incredible. But I am grateful to be able to be aound and see how this all shakes out. I was long after 9/11 too and after a few ugly days, that worked out fine as well.
I have this weird California rationalization mechanism. When I think about this place I ignore everything East of me. Compton, Watts, IE… doesn’t really register.
I get to Disney and I’m there and I tune out the 91 drive.
I get to LANF and tune out driving thru South Central.
I normally go west to the beach and never think about it.
Everything looked amazing from the top of Mt Lowe this weekend. Could see Catalina.
If you go sailing there are no crowds and infinite open space.
Sometimes I’m troubled. Prop 13 seems to be really good for the rich people sitting on property in Palos Verdes.
Its got to go.
I’m from Jersey so the ugly here isn’t all that impressive to me.
this could be the makings of a reverse h&s if the previous 1275 lows get knocked out for sure which it seems they might. The “head” would just be getting started which would imply a much lower price
http://stockcharts.com/h-sc/ui?s=spy
Hah hah!
Glad to know I’m not the only one up watching this show.
I wonder if blasting Götterdämmerung early in the morning would classify me as one of the crazies.
You either gotta love Wagner or hate it. There is no middle ground.
You sure changed your tune in a hurry. What happened to the “several months” rally of which you spoke late last week? (I almost bought the dip myself!)
“‘We have lots of lots ready to go,’ said Fred Maas, president of Black Mountain Ranch, a master-planned development west of Rancho Bernardo. ‘But we’re not going to sell at a price below what they’re ultimately worth. We’ve got a special property here in a constrained market.’”
This is in the zip code where we live — 92127. I suppose this ‘our property is special’ notion helps explain the gap between list price (last I checked, the median SFR list price was $1,100,000) and median SFR sale price ($745,000 for February, according to Sandicor (caution: .pdf file) ). Don’t buy into this gap!
Bear sale sparks global equity and dollar sell-off
By Neil Dennis
Published: March 17 2008 08:32 | Last updated: March 17 2008 11:13
Equity markets and the dollar sold off sharply on Monday, driving investors into the safe havens of gold and Treasury bonds, as the rescue of stricken investment bank Bear Stearns sparked fears of further financial sector strife.
JPMorgan Chase agreed to buy Bear Stearns for $2 a share, a 93 per cent discount to Friday’s closing price, and agreed to take on up to €30bn of Bear’s mortgage-backed securities.