April 13, 2008

Bits Bucket And Craigslist Finds For April 13, 2008

Please post off-topic ideas, links and Craigslist finds here.




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315 Comments »

Comment by LehighValleyGuy
2008-04-13 04:55:28

How come everyone else has time to blog on weekday and Saturday mornings but not on Sunday mornings? For me it’s the reverse.

This is unfair. I demand government action.

Comment by Michael Fink
2008-04-13 05:07:16

I will work on engineering a bailout package for you; just sit tight. So, let me just get this straight, instead of getting up later on Sun, you would like everyone else to get up earlier so that you have someone to talk to?

If so, I think we can just tack this on another bill that is trying to get everyone else to pay someone’s overextended bills. Seems to fit nicely with this “I’m a victim” bent of the bill that is already passing. Of course, it COULDN’T be your fault for getting up to stinking early on a Sunday, could it?

:)

Comment by LehighValleyGuy
2008-04-13 05:34:56

Well, I think maybe peoples’ W-2s and tax returns need to reflect the day of the week and the time of day that the income was earned as well as the year, quarter, etc. (This should be pretty straightforward to do with payroll software upgrades.)

This way we could tax income earned at different times of the day/week at different rates, thereby evening out the flow of economic activity, and consequently also the flow of blog posts.

 
Comment by Kirisdad
2008-04-13 06:10:01

Heres an idea for those opposed to bailouts. Have the FBer’s pay back the gov’t through future mortgage interest deductions. If a BO is inevitable , at least, make them pay the monies back. Wanna bet they’d rather walk.

Comment by But_Im_Not_Dead_Yet
2008-04-13 07:26:06

Yes, I agree. If we’re going to socialize the losses, then socialize any potential (future) gains as well.

This same general principle needs to be applied to any Wall Street bailouts that are being contemplated…

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Comment by combotechie
2008-04-13 05:15:49

There are too many time zones in this country!

Those on the East Coast get to sleep in while we West Coasters have to rise early in order to get in on the blog action.

This is just plain WRONG!

I’m for Time Zone Equalization legislation to be implemented by congress ASAP.

Comment by Beer and Cigar Guy
2008-04-13 05:45:05

I’m a victim of ALL of these unfair circumstances! Where is my check! I demand compensation! Wrongs must be righted!

 
Comment by mgnyc99
2008-04-13 05:58:01

ben is not going to make an east and west coast bucket can’t we all just get along?

i have to read the nightly west coast thread over coffee at my office but i am always careful as not to spit coffee on my keyboard

Comment by NYCityBoy
2008-04-13 06:27:49

The West Coasters get a California thread 5 times a week. They have the number one poster in Professor Bear and still they complain. Geez.

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Comment by mgnyc99
2008-04-13 06:30:12

lol
where is the nw pa oil city thread?

 
Comment by Muggy
2008-04-13 06:45:49

Does Oil City know it’s getting rep from one crazy kid in South Florida who has hyped it endlessly on multiple message boards?

The Mayor of Oil City should be all over this…

 
Comment by Faster Pussycat, Sell Sell
2008-04-13 06:50:24

Some day there will be a mass influx into Oil City because of this and they will have no clue why it occurred.

Of course, if he ever moves there, I’m buying some serious puts of NYCityBoy’s liver. :-D

 
Comment by ric
2008-04-13 07:10:45

New Oil City Motto: “Bye FL”

 
Comment by LehighValleyGuy
2008-04-13 07:24:07

OK, I’ll make it two on the cheerleading team. I was in NW PA once and loved it.

Seriously, what the heck do you guys want? There’s beautiful scenery, a relaxed lifestyle, beautiful women (granted, not as beautiful as around Philly ;) (wink to phillygal) ), very affordable RE prices, and you never know, maybe oil prices will make it economical to drill there again!

I own some property in North Central PA, and there is a fair amount of natural gas exploration going on there which I’m hoping will help the local economy. So in a few years you guys might not be laughing!

 
Comment by But_Im_Not_Dead_Yet
2008-04-13 07:28:28

I, too, am planning to move to Oil City. I read on a blog somewhere it is a really nice place to live…

 
Comment by Muggy
2008-04-13 07:29:14

“There’s beautiful scenery, a relaxed lifestyle, beautiful women”

Are you saying it’s different there?

 
Comment by tresho
2008-04-13 07:29:46

There was a news article on one of the major networks a few weeks back datelined Oil City. Old oil wells in the area are starting to make money for their owners again with the current prices of crude. That may give a slight boost to the economy. There is a large pocket of natural gas in the area that has yet to be explored fully, estimated to be several years worth of the US national consumption.

 
Comment by KenWPA
2008-04-13 07:32:22

One of these weekends, I am going to take a drive up to Oil City, PA and take some pictures. If Ben will post them on the site here, you will all see what you are missing out on.:)

 
Comment by David Cee
2008-04-13 07:32:38

I hope you are not bitter with the small town living of PA.
Your only options will be to attend church and own a gun.

 
Comment by Muggy
2008-04-13 07:38:01

“you will all see what you are missing out on”

http://en.wikipedia.org/wiki/Image:Allegheny_River_Ice_Jam.jpg

 
Comment by KenWPA
2008-04-13 08:02:33

I better give Spring a few more weeks to truly take hold before heading up to take those pictures.

 
Comment by KenWPA
2008-04-13 13:02:13

“hope you are not bitter with the small town living of PA.
Your only options will be to attend church and own a gun.”

Funny you should mention that. I had a message on my answering machine yesterday from some Mayor from Eastern PA telling me just how frustrated we are in PA and that Obama was just ….I don’t know what the rest of the ass had to say. I deleted the message before listening to it all.

I might be a bit bitter, but I don’t turn to guns or church. I turn to booze and big boned chicks to soothe my bitterness and release my frustrations.

 
Comment by AbsoluteBeginner
2008-04-13 14:33:25

Probably overpriced, but nice looking just the same:

http://www.gatesandburnsrealestate.com/cl-res136815.htm

 
 
 
 
Comment by mgnyc99
2008-04-13 05:55:46

give it a few hours the bits bucket is always very entertaining and educational on sundays

or maybe everyone is getting ready to go to open houses and begin the bidding wars

Comment by Michael Fink
2008-04-13 06:34:44

Yup, that must be it!

:)

Nothing like the smell of looming BK in the morning to go with your coffee!

 
 
Comment by Olympiagal
2008-04-13 08:46:15

On Sunday I’m usually recovering from the excesses of Saturday, and have de-evolved back to amoeba stage, and amoebas can’t type good or sit up to reach the computer. You will recall this from your biology classes.
It takes a while to become chordate once again, then longer still to grow back some brain cells and some digits…you know.
Here in the primordial soup of Chez Olympiagal’s Sunday Mornings it all starts with a gallon of coffee and a giant breakfast of hashbrowns and eggs and bacon, which I’m going to go make now, using my pseudopods. I’ll be back in an hour, with thumbs.
Let the evolving begin!

Comment by Jwhite
2008-04-13 10:59:51

Lemon pancakes, glazed bacon, and fresh ground Kona for the Jwhite household. Then off to church followed by reclining with this blog… :)

 
 
 
Comment by aNYCdj
2008-04-13 05:11:25

I just Love waking up to Starving Rioting people all over the world because We Amercians want to Burn Corn for Ethanol rather then eating it.
———————————————
Focus on World Food Prices, Market Woes
Sunday April 13, 7:50 am ET
By Harry Dunphy, Associated Press Writer
Global Financial Crisis, Food Prices Dominate International Financial Talks

WASHINGTON (AP) — Finance ministers and central bankers are focusing their spring meetings on ways to deal with the unfolding financial crisis that has roiled economies around the world and led to higher food and energy prices.

Sessions of the International Monetary Fund and World Bank end Sunday with a look by the bank’s policy-setting committee at the effect on developing countries, especially poor ones where the bank is trying to reduce poverty.

“We must respond to the immediate emergency situation,” Robert Zoellick, the bank president, said before the meeting, but in a way that helps developing countries achieve objectives such as improved health care and reduced malnutrition and infant mortality.

The officials are also talking about climate change, investment in Africa and rising food prices.

“In the U.S and Europe over the last year we’ve been focused on the prices of gasoline at the pump,” Zoellick said. “While many worry about filling their gas tanks, many others around the world are struggling to fill their stomachs. And it’s getting more and more difficult every day.” The poor already spend up to 75 percent of their income on food in many developing countries, he said.

Zoellick has said that to deal with the immediate crisis, the international community must fill a food shortage valued at a minimum of $500 million by the U.N. World Food Program.

A similar warning was sounded Saturday by the head of the International Monetary Fund, Dominique Strauss-Kahn. He said there would be dire consequences if food prices remain high in developing countries, especially in Africa.

He added that the problem could also create trade imbalances that would hurt advanced economies, “so it is not only a humanitarian question.”

Governments in Haiti, Egypt and the Philippines are among those already facing social unrest because of food prices and shortages. If the price increases continue, Strauss-Kahn said, “Thousands, hundreds of thousands of people will be starving. Children will be suffering from malnutrition, with consequences for all their lives.”

The development group Oxfam, a frequent IMF critic, said rich countries are largely responsible for the food crisis because they have been cutting aid to developing countries and encouraging biofuel production, which the IMF says is responsible for almost half the increase in the demand for food crops.

“Rich countries demand for biofuel is driving up food prices and is a big part of the problem,” said Elizabeth Stuart, an Oxfam policy adviser. “Meanwhile, by cutting aid levels, they are doing precious little to be part of the solution.”

Germany’s development minister urged greater regulation of the global biofuels market to prevent its expansion from driving up food prices. “It is unacceptable for the export of agrofuels to pose a threat to the supply situation of the very people already living in poverty,” Heidemarie Wieczorek-Zeul said in a statement.
Associated Press writer Desmond Butler contributed to this report.

Comment by ozajh
2008-04-13 05:45:08

I can tell you global food prices are big news in my country at the moment, mainly because for the first time in several years there’s enough soil moisture from summer rains to more or less guarantee grain crops. With current prices the farmers are planting every available paddock.

There is talk that gross receipts from the 2008 (Southern hemisphere) winter wheat crop could be as much as 4 times the 2007 amount.

Comment by combotechie
2008-04-13 06:51:10

“With current prices the farmers are planting every available paddock.”

You can bet every farmer on the planet is doing the same.

This year’s shortage becomes next year’s surplus.

Comment by Faster Pussycat, Sell Sell
2008-04-13 07:23:25

This boom-bust cycle in agriculture is precisely for this reason. This is a key driver in 19th century economic cycles.

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Comment by KenWPA
2008-04-13 08:08:10

In two years you will see all of the farmers that went out and bought millions of dollars of new equipment pleading for help. After all who could have ever seen crop prices coming back down?

They were duped into deals from the tractor store. When they overpaid for their neighbors farmland it all made sense. Someone should have told them that the push for ethanol could be overruled by the new administration.

Oh dear.

 
Comment by jim a
2008-04-13 09:34:09

That’s the nature of a market where there is a duration mismatch between supply and demand. It takes a year for new crops to come in, so any adjustment to change in price tends to overshoot. It’s even worse in coffee, because they need several years to mature.

 
Comment by Faster Pussycat, Sell Sell
2008-04-13 10:34:42

This is not just a problem of duration mismatch. That can be handled via the hedging-speculator nexus.

This is the problem of f*cking with the price mechanism so badly that growers cannot distinguish between “increased demand” and “devalued currency”.

 
 
 
 
Comment by watcher
2008-04-13 05:48:55

Zoellick is a Bush neo-con; these guys not only screwed up our country they are damaging the whole world.

Comment by taxmeupthebooty
2008-04-13 06:03:20

whoops- ethanol is a solution from the left
green weenies
to bad we didn’t drill ANWR and build nukes
“some folks didn’t want to drill in ANWR”

Comment by WAman
2008-04-13 06:19:31

Burning more fossil fuels will only make Global Warming worse. Drilling in ANWR would also not bring down oil prices. However if the President announced a major push into solar energy (with billions of $$$) oil would drop to $90 or less on the announcement and $70 or less by the time the first solar panels started to generate electricity.

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Comment by Bill in Carolina
2008-04-13 06:27:06

I thought there were lots of solar panels generating electricity already.

Oh, you mean govt subsidized solar panels. Sorry.

 
Comment by Bill in Carolina
2008-04-13 06:30:41

Instead of us giving more money to the big, bad oil companies, we give more money to the govt who can then hand it out to politically-connected solar enegy companies. Those companies will then return portions of it as “campaign contributions.” Excellent plan.

 
Comment by LehighValleyGuy
2008-04-13 06:33:52

“Drilling in ANWR would also not bring down oil prices”

How do you know this? Does anyone really know how much oil is in ANWR?

 
Comment by aladinsane
2008-04-13 06:39:36

I personally would much rather use up some other country’s oil, before depleting my sources…

We were the biggest oil producer in the world until the 1970’s, much of which we sold for around $5 a barrel.

 
Comment by tresho
2008-04-13 07:10:45

if the President announced a major push into solar energy (with billions of $$$) oil would drop to $90 or less on the announcement BWAHAHAHAHAHAHAHAHAHAHAH! Tell us another one!

 
Comment by kckid
2008-04-13 08:34:40

Global Warming? There are snow flurries here as I type 33 degrees with freeze warnings for the AM. But the infrastructure is being built by those who plan to make some bucks off this hoax. CCX exchange, UN Clean Development Mechanism, etc. Anybody have some ideas how to make some money off this next inflating bubble?

 
Comment by aladinsane
2008-04-13 09:00:16

Just because you can’t see both ends of the arctic melting, from your vantage point in Kansas City, doesn’t mean it isn’t happening…

 
Comment by VaBeyatch
2008-04-13 09:15:10

One of the big vendors of photovoltaic panels is BP Solar… BP… get it? I see the same logo on gas stations. Yes, I realize Sharp and others make them too. Still not really economical. What’s wrong with 100% nuclear electricity in the USA? I know it’s nice looking at the big windmills and thinking about how it’s power for nothing…. but I believe they operate as huge bird choppers, and what if we put up too many and they make the earth start to spin backwards?

 
Comment by aladinsane
2008-04-13 09:28:23

“I know it’s nice looking at the big windmills and thinking about how it’s power for nothing…. but I believe they operate as huge bird choppers, and what if we put up too many and they make the earth start to spin backwards?”

How in the world did birds ever adjust to us driving our cars 70 miles an hour, right at them?

 
Comment by WAman
2008-04-13 09:39:39

Take away the billions in oil subsidies and give it to solar subsidies. No net change in government give aways. Most of the oil that comes from Alaska is exported to Japan and so would ANWR oil.

A month ago there were inflation numbers out of Europe. Who had one of the smallest levels of inflation? Germany, which also generates the most energy from solar in the world. They are getting off of the fossil fuels. We keep importing inflation with every gallon of gas we buy. When will people in this country back solar in a serious way? Probably when we see $5.00 per gallon or more.

 
Comment by kckid
2008-04-13 11:36:17

Killing Birds: The “Avian Mortality” Problem
The universal rationale for this massive public commitment to wind power is that it is environmentally benign. But wind power has at least one major environmental problem — the massive destruction of bird populations — that has begun to draw serious concern from mainstream environmentalists.

Wind blades have killed thousands of birds in the United States and abroad in the last decade, including endangered species, which is a federal offense subject to criminal prosecution.

http://www.ncpa.org/studies/renew/renew2d.html

 
 
Comment by Jay_Huhman
2008-04-13 08:08:55

Biofuels are extremely popular with otherwise conservative politicians from farm states.

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Comment by James
2008-04-13 16:54:12

I’ve been considering biofuels out here in LA. We have all this fricking kelp that piles up on the beach. I wonder if we could make that into biofuel. The stuff reportedly grows nearly a foot per day so there are massive amounts of it.

Its pretty wet and icky stuff. Just wondering if that could be done… not sure how much of the kelp is just fiberous mass.

 
 
 
 
Comment by mgnyc99
2008-04-13 06:01:16

i just returned from the supermarket and bougth very little
(i am traveling to rhode island this week) and i spent as much as i used to spend for a full weeks supply just last year

and i bought many “sale” items

what used to be specials of 2 for 4 or 2 for 5
are now 2 for 6 or 2 for 7

people with little savings and no credit may starve if this keeps up. i was told the price of diesel in california is $6 a gallon

it is around $4.50 or so in nyc

Comment by libertas
2008-04-13 06:16:13

It is generally less than that here. Although the most expensive station in the area (right next to the freeway) is charging that ($4.50). Mill Valley, CA. 94941.

Comment by mgnyc99
2008-04-13 06:18:57

i truck and rail materials from the midwest and the south and fuel surcharges are up to 45% on some trucks and
25% on the rails (csx,up,nf,bnsf) it is making things a tad expensive

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Comment by DannyHSDad
2008-04-13 06:23:08

I’ve paid US$4.29 per gallon for diesel on Apr 11, zip code 92647 (Huntington Beach, CA).

Most diesel I saw are between $4.29 to $4.59 on my drive from Huntington Beach to Idyllwild, CA on Friday.

 
Comment by NYCityBoy
2008-04-13 06:30:39

“i just returned from the supermarket and bought very little
(i am traveling to rhode island this week) and i spent as much as i used to spend for a full weeks supply just last year”

Are the prices of KY and Spam really getting that high? We better write Congress.

Comment by mgnyc99
2008-04-13 06:35:05

lol -
i may have to resort to chef boyardee

beefareeno- rusty! rusty!

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Comment by tresho
2008-04-13 07:17:56

Anyone who wants to track and/or report gas & diesel prices in various regions of the US can go to the various XXXXXgasprices.com websites. For CA, click here. The sites work like Wikipedia, sign up & post your own observations wherever you happen to be. No $6/gal diesel found on the CA gasprices.com site today.

Comment by ET-Chicago
2008-04-13 11:28:10

Interesting. Chicago isn’t listed on the Illinois version of the site — and we have some of the highest gas prices in the country.

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Comment by tresho
2008-04-13 20:12:56
 
 
 
Comment by speedingpullet
2008-04-13 10:54:20

Didn’t see $6 a gallon for diesel in desert CA, but in both Amboy and Hesperia last week the price of regular gas was over $4.
$4.19 in Amboy and $4.09 in Hesperia IIRC.

Compared to $3.69 in the gas station down my road in Van Nuys. Deisel at $4.29 - so its entirely possible that deisel could get to $6 a gallon by the end of the year in ‘problematic’ transport areas.

 
 
Comment by taxmeupthebooty
2008-04-13 06:01:43

commie farmers are a powerful block
soviet block

Comment by NYCityBoy
2008-04-13 06:32:56

They are the biggest welfare queens there are. There is no group that feels more entitled to be spared from competition. Growing up in the Midwest makes you really just how much they will whine to squeeze the government. I don’t believe in corporate farms but little farmers can really be pathetic.

Comment by Indio-adjacent
2008-04-13 08:43:27

You must not live near a teacher’s union.

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Comment by NYCityBoy
2008-04-13 09:05:47

Good point!

 
 
Comment by ET-Chicago
2008-04-13 11:56:03

The corporate farmers do more than their fair share of the whining, I’m afraid.

Who do you think owns the majority of the acreage and the majority of the Ag Lobbyists? It ain’t the little guys.

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Comment by Otis Wildflower
2008-04-13 06:42:01

How’s this for an idea then.. No more agricultural subsidies or tariffs, so that it makes economic sense for developing nations to actually grow their own food instead of buying it at a subsidised cheap price from the US?

Of course that will never happen, thanks to the US Senate, where the 98% of nonfarmer citizens are held in thrall to Cargill, ADM, etc..

(I have to wonder how much anti-illegal-immigrant feeling is sublimated resentment of the coddled and subsidized farmers gaming the system yet again by hiring illegals at the wage they want to pay instead of certified Americans at a wage that they’d accept for their labor)

Comment by speedingpullet
2008-04-13 11:51:29

Otis Wildflower said:
“How’s this for an idea then.. No more agricultural subsidies or tariffs, so that it makes economic sense for developing nations to actually grow their own food instead of buying it at a subsidised cheap price from the US?”

Its not so much that developing world needs to buy US food, but that they have to raise enough cash to pay for ‘development’, and for many countries the only way they can raise the money is by growing cash-crops for the developed world.

A large proportion of these countries, if given a chance, could - in large part - feed thier populations, but are stuck with huge loans from the IMF and Agri-Businesses (such as Monsanto) to pay for ‘developed’ agriculture.

In Africa, the bulk of local food is grown by women, primarily to feed thier own families - on marginal (and decreasing) land, using basic, non-mechanical methods. Because the bulk of the ‘good’ land, equipment and resources is taken over for growing cash-crops…..

If the IMF would forgive some of the interest on the debt to developing countries, and international Agri-Business could be persuaded to concentrate more on local development rather than creating ‘profitable cash-crops’ - then they wouldn’t be so dependent on the developed world for something as basic as food.

 
 
 
Comment by ozajh
2008-04-13 05:12:20

Looks like my casual 2-liner in yesterday’s Bits Bucket was like tossing a match into a bucket of petrol.

Anyway, after reading the responses (and responses to the responses, vigorous rebuttals, descents into personal abuse etc. etc. :D ) I think I’ve changed my position a little.

Seems to me now that in most of the developed economies, and not a few of the less developed ones come to that, the financial systems are sufficiently agile and profit-seeking to almost inevitably set up a positive feedback loop with the trend-du-jour.

So, with housing in this decade, as with dot coms in the 90’s and resources in the 70’s, once a few people make good money in a sector 2 things happen.
1. Money becomes more freely available for investment in the sector.
2. More and more people want to invest and/or speculate in the sector.

Cycle this loop around a couple of times and you have a bubble, where the really sound investment opportunities are long gone and the only factor still generating wealth for participants (whether they realise it or not) is the greater fool theory.

Comment by combotechie
2008-04-13 05:22:55

But there still needs to be money available to finance the price increases. Without this money there is no bubble.

Comment by FakeHandle
2008-04-13 05:46:28

Ah, but there is money available. Remember that there are is an awful lot of money seeking returns. Just look at the sickly returns for most investments.

Comment by watcher
2008-04-13 06:08:25

China may just buy the planet:

April 11 (Bloomberg) — China’s foreign-exchange reserves, the world’s largest, surged to $1.68 trillion at the end of March, adding pressure on the government to prevent money inflows from fueling inflation already at an 11-year high.

http://tinyurl.com/5fwq2g

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Comment by Timmy Boy
2008-04-13 06:42:30

-
Yeah… but what do they do w/ that $1.68 Trillion in reserves…. they buy good ol’ U.S. Gubmint BONDS…. basically investing all of their paper “wealth” right back into our sick (read “PONZI”) debt.

If they ever try to cash in their bonds… they are screwed.

It’s EZ to buy our debt… not so easy to sell it.

BWAHAHAHAHAHAHAHAHA!!!!

 
 
 
Comment by watcher
2008-04-13 06:02:10

Yeah, they aren’t making any more money…China only has about 1.5 trillion in reserves to spend:

http://www.chinability.com/Reserves.htm

Comment by NYCityBoy
2008-04-13 06:35:54

$1,500,000,000,000 / 1,000,000,000 = $1,500 per citizen

I think the people that are completely sold on the China miracle still overlook a lot of potential disasters for China. They walk a fine line with their political and economic stance. I am not completely sold on their ability to buy the world.

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Comment by Jwhite
2008-04-13 07:25:30

The Chinese basically need to generate 20 million jobs a year or face another revolution from the 80% of the country which hasn’t benefitted from the economic “miracle”. The poverty in inland China is probably almost as bad as when my Father was there in 1948-49.

 
Comment by yensoy
2008-04-13 08:21:05

It’s 30% or thereabouts (the have-nots who haven’t benefitted much from the miracle), not 80%. Poverty is there but nowhere near what it used to be. Even the beggars I see around town appear well fed.

 
Comment by Jwhite
2008-04-13 11:07:36

If you’re there I’ll defer to you however IRT to the economic boom I’m not really including all of the illegal laborers who’ve migrated to the cities to work for nothing and be charged “room and board”, there are also the state industry layoffs, the aging population without a safety net, the farmers without land, the Western provinces with the non Han ethnic majorities, etc. If these groups are deducted I think about 400.000.000 Chinese have really benefitted substantialy - leaving about a billion from my count… The rest are basically on the government dole IMHO.

 
 
 
 
Comment by mgnyc99
2008-04-13 06:05:24

“Cycle this loop around a couple of times and you have a bubble, where the really sound investment opportunities are long gone and the only factor still generating wealth for participants (whether they realise it or not) is the greater fool theory.”

lets hope the amount of gf’s is low and this spring-summer selling season is awful which i think it will be

everyone you talk to and everything you read is about how people are drowning in debt and struggling

most are trying to get out of bad loans why would anyone esle
want to go in?

it reminds me of my fil a retired nyc firefighter told me

he knew he was crazy going into burning buildings when everyone else is running out

 
Comment by Professor Bear
2008-04-13 09:17:43

REVIEW & OUTLOOK
Volcker’s Demarche
April 9, 2008; Page A14

‘You don’t have to predict it. We’re in it.” Thus did Paul Volcker respond to a question Tuesday about whether he still predicted a “dollar crisis” in the coming years. We hope current Federal Reserve Chairman Ben Bernanke is paying attention.

Mr. Volcker, a former Fed chief, has a well-earned reputation for straight talk, but there is always strong institutional pressure not to second-guess one’s successors at a place like the Federal Reserve. This makes his speech to the Economic Club of New York all the more remarkable for the sharp questions he raised about inflation, Fed independence and moral hazard.

 
 
Comment by cynicalgirl
2008-04-13 05:24:18

Did anyone else see Barbara Corcoran on CNBC’s Millionaire Inside last night? What a hoot! She’s a desperate nutcase, thinking that she can somehow revive the market by saying stupid things. She told everyone to buy an investment home in the next 6 months. “You can retire on it!”

Comment by txchick57
2008-04-13 05:27:11

be sure and buy it from some desperate FB who thought THEY were going to retire on it

Comment by mgnyc99
2008-04-13 05:52:32

speaking of deseperate fb’s welcome to foreclosure street

http://www.nypost.com/seven/04132008/news/regionalnews/foreclosure_st__106326.htm

Comment by NYCityBoy
2008-04-13 06:10:03

“Of the street’s 13 crisis homes, most are newly built two-story town houses, worth $300,000 to $400,000.”

Who says they are worth that? These poor “victims” didn’t realize they were just more landfill for the REIC.

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Comment by mgnyc99
2008-04-13 06:13:39

hey nyc how was gentrified harlem? did you go past the building where the guy was murdered for urinating in the vestibule?

 
Comment by NYCityBoy
2008-04-13 06:25:51

We went around everything. I looked around at Harlem and thought, “no thank you”. I will let you buy all of those luxury lofts and condos in the neighborhood. There was one thing that almost made me stop and check out a few places. They have a White Castle up there. It is hard to say no to gut bombs. That’s a huge selling point.

 
Comment by mgnyc99
2008-04-13 06:33:25

come over to my place white castle is a 7 min drive

i’l buy the 1st 10 for you myself but you will have to go home to use your own faclities

 
Comment by Faster Pussycat, Sell Sell
2008-04-13 06:34:32

Just take a cab when you feel the “urge”.

In New York, you might just have a few “Harold and Kumar” adventures too. LOL.

 
Comment by Faster Pussycat, Sell Sell
2008-04-13 06:53:05

LOL

 
 
Comment by Jwhite
2008-04-13 07:29:46

“I didn’t think they’d let us have it because we have really bad credit”? “Suckered into it”????? What is wrong with this picture…?

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Comment by vmaxer
2008-04-13 05:38:33

She seemed like she was on “something”.

At one point she made a comment about making sure you have an “idiot” renter to pay the mortgage.

Comment by mgnyc99
2008-04-13 06:11:06

babs corcoran is the same idiot who told queens ny homeowners to pave over the postage stamp of a lawn in order to park their oversized gas guzzler there by increasing the value of their property

this is the reason we have had some huge flooding issues in queens as the water is not absorbed and floods these homes as well as the major overdevelopment in sections of queens

she is a slimebag

Comment by NYCityBoy
2008-04-13 06:47:24

She is the most heinous little shill imaginable. I wish somebody would hit her with a brick.

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Comment by Sammy Schadenfreude
2008-04-13 09:31:03

http://help.gawker.com/tag/barbara-corcoran/

Ole Bab’s got skewered big-time when she posted her infamous, bong-shrouded “How to Sell Your House in a Weekend” piece on her blog. Amidst gushing praise and fawning by now-unemployed realtwhores, Yours Truly and some other HBB stalwarts dropped in and rained all over their parade. Our comments, needless to say, got deleted within days. But we are far from alone in detesting this RE harpy and her NAR groupies.

 
 
 
Comment by Michael Fink
2008-04-13 06:46:25

I truly hate that lady, she is one of my least fav people to see on TV. She is just so self-assured (and absolutely wrong) that it crawls up my spine. She’s taking another tact, try and embarrass me into buying a house? Is that a real selling technique? “Let’s see if you’re MAN enough to buy this home”.

To not even mention that there are areas of this country where you would have to be NUTS to buy a house it so wrong; and so deceitful, that I just can’t stand it. An idiot renter to pay the MTG? Barbara, what planet are you living on? In S. FL (and many other places) rent is 1/4 to 1/2 the cost of a MTG. I know that, given your great selling skills, you feel that you can get 4X the market rate for rent in a glutted market, but seriously….

For RE agents to come on TV and say ANYTHING other then “sellers need to accept the reality of the bubble and lower their prices quickly and effectively to get ahead of this downturn” is just lying. No, prices aren’t going up, and won’t be going up in many areas of this country for years..

Comment by cynicalgirl
2008-04-13 12:22:35

You’re right, she wants to embarrass you. She was doing it in front of a cheering audience. It must be the only trick left in her bag. It sorta reminded me of the audience on Colbert. Except Colbert’s audience is in on the joke, these people were just idiots.

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Comment by edhopper
2008-04-13 07:17:56

I just wish that if the TV Stations must have her on they would introduce her as;
“Real Estate Whore, Barbara Corcoran”

Comment by NYCityBoy
2008-04-13 07:33:43

That’s a good one. I got a chuckle out of that.

 
 
Comment by az_lender
2008-04-13 08:54:26

“You can retire on it!” — this statement (Barbara Corcoran’s) is a fine hook upon which to hang my silent meditations of a few minutes ago. I was thinking how the War on Savers is a demographic necessity. Despite all the hand-wringing over the failure of the boomers to have saved “enough,” the fact is, they saved too much! — too much boomer money “saved” in houses, in 401K’s, in mutual funds, in CDs, whatever. The problem is, they will all be trying to cash out some of this — they are already trying — and they hope the rest of the country/world will be providing the goods and services at the earlier prevailing prices. No chance. I have not had a real Job since I was 50. Maybe I will have to have one in the future. Depends mainly on my retail lending biz, since my foreign-exchange experiments have been profitable but scary.

 
 
Comment by watcher
2008-04-13 05:44:45

oops, they did it again:

CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3671568.ece

Comment by combotechie
2008-04-13 05:53:58

Another $15 billion goes poof.

Comment by watcher
2008-04-13 06:04:12

How much is gas on Seal Beach these days? 99 cents?

 
 
Comment by Professor Bear
2008-04-13 06:13:05

Sounds like the stock market will have a good week; at least it normally does when the big IBs announce billions and billions of writedowns…

Comment by mgnyc99
2008-04-13 06:16:31

lol pb

good news bad news it does not make a difference at this point
the game is rigged for the boys

 
Comment by WAman
2008-04-13 06:24:39

Why are they so delusional?

On Friday morning an analyst who has covered GE for 25 years was clueless that appliance sales were down. How could this be?

Comment by NYCityBoy
2008-04-13 06:49:53

Come to New York and see the world in which these people live. You will quickly figure out how they are so out of touch. How can some idiot analyst in Manhattan have any idea what is going on with the average family in Wyoming or Nebraska?

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Comment by edgewaterjohn
2008-04-13 07:20:01

A leadership apparatus (pols, CEOs, analysts, etc.) that becomes detached from the people has often been a harbinger of big changes ahead. Just ask ol’ King Louis or lil’ Nicholas.

 
 
Comment by tuxedo_junction
2008-04-13 07:55:56

Analysts at broker-dealers are simply part of the sales team. They don’t analyze anything; they simply cut and paste the corporations’ press releases. Plus, the only things they know about the companies that they cover are things like the CFO’s favorite restaurant and the names of the CEO’s grandchildren.

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Comment by Gadfly
2008-04-13 09:02:19

Karma bites GE–GOOD!!
We have a fancy side-by-side GE fridge that crapped out on us within the two year warranty period. Called up the customer service center. They tried to give me some cock and bull story about the fridge being out of warranty. I’m telling this stupid lady from some Godforsaken east european country with the heavy accent that I am holding the warranty form in my hand and that it clearly states that the warranty is for two years. She tries to tell me that the warranty “clock” started ticking when our builder took delivery (before the house was even built??) of said fridge. Say what??
Short story long: we paid about $200 out of pocket to fix the damn thing. GE quality sucks, their customer service sucks and I’ll never buy another GE–anything. Another proud American tradition run into the ground by latter day robber baron scumbags (Welch, Nardelli et al).

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Comment by Hip in Zilker
2008-04-13 12:06:02

I thought that GE was a big defense contractor. One would think defense contractors are doing well these days. Or am I mistaken?

As for appliances,a repairman fixed our GE dishwasher, showed us how to fix it in future, said that in future if that fix didn’t work we should get a new dishwasher - but not a GE. Said he wouldn’t buy GE brand of anything larger than a toaster.

 
Comment by orlandosuks
2008-04-13 13:39:37

general dynamics is the defense contrator you’re thinking about.

 
Comment by Moman
2008-04-13 20:26:47

Wrong. GE only sells their name, they don’t make the appliances. They have done this for years and now license their name for everything from small appliances to digital cameras.

But the crap built with GE name is a bunch of junk. I have a GE washer and while it works, it’s only 5 years old and worse than my 20 year old Whirlpool. My suggestion is to buy Whirlpool/Maytag products (they both were good individually, but now owned by Whirlpool).

 
 
 
Comment by Jwhite
2008-04-13 07:18:43

Dow futures are at -261…

Comment by Professor Bear
2008-04-13 07:32:16

Pessimist…

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Comment by NYCityBoy
2008-04-13 07:36:11

“Dow futures are at -261…”

I don’t think they’ve been reset from Friday. Usually you have to wait until Sunday evening to get a real reading on Monday futures. You are just seeing the past.

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Comment by Jwhite
2008-04-13 11:22:15

DOHHH! :)

 
 
 
 
 
Comment by Beer and Cigar Guy
2008-04-13 05:47:15

This one out of the Orlando Sentinel:
Murder-suicide suspected in Four Corners couple’s deaths
Stephen Hudak and Martin E. Comas | Sentinel Staff Writers
April 12, 2008
Article tools
FOUR CORNERS - Deputies found a retired couple shot dead in their rented home Friday, victims of an apparent murder-suicide, a Lake County Sheriff’s Office spokesman said.

Sgt. John Herrell said deputies raced to the single-story home in the Four Corners area after dispatchers took a call from a relative of the victims, identified as Maurice and Natacha Pereira. The relative, a nephew not immediately identified by name, said Maurice, 70, told him Natacha, 71, was dead and he soon would be as well, according to Herrell.

Deputies forced their way into the home on Grand Haven Drive to find the couple dead in a bedroom.

Both had been shot with a .22-caliber rifle found nearby, Herrell said.

Detectives summoned to a second but unrelated double-homicide Friday in Clermont were not immediately available to comment or suggest an explanation for the deaths of the Pereiras, who were beset by financial problems, according to federal and state court records. They filed for bankruptcy in September.

Lake Circuit Judge Mark Hill was scheduled to hear a mortgage company’s request next week to sell property in Tavares that the couple had defaulted on.

Court records show two other lending companies sued the Pereiras last year, one accusing them of failing to keep up with the $838.36 monthly payments on a 2006 Cadillac De Ville and the other accusing them of defaulting on a property they had bought in Leesburg.

Comment by watcher
2008-04-13 05:54:42

In ‘29 they jumped from windows; now they shoot themselves in foreclosing houses.

 
Comment by WAman
2008-04-13 06:26:51

$838 for a car payment? Are you kidding me?

Comment by mgnyc99
2008-04-13 06:39:36

$838 car payment- lmao

i was told by my friend one of his buddies has a benz with a $1400 a month “lease” payment

i asked him if he lived in it

got to keep up with the jones’ you know

 
Comment by Jwhite
2008-04-13 07:16:41

I was going to add that if nobody else did. Holy Cow!!!! $838 !

Comment by Captain Credit Crunch
2008-04-13 16:41:13

Maybe it’s a 12 month loan.

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Comment by Austrian School
2008-04-13 09:57:55

.22 LR they really were fools. At least they could have gone with 223 and been sure the job was done right. Okay that was sick, I admit.

Comment by bluprint
2008-04-13 10:38:59

My wife (formerly a paramedic) got a call once for a self-inflicted gunshot wound. When they arrived, the “victim” was sitting on the porch smoking a cigarette.

Upon talking with him, they learned the story. Earlier that night he decided to kill himself. He shot himself in the head with a .22. A .22 caliber is well known to be a poor choice for a suicide as it will frequently be unable to pierce the skull. In this case, that’s what happened. So he ended up with a small flesh wound (although even a small cut to the scalp will bleed alot). He took a couple aspirin and went to bed. A few hours later he woke up with a pretty good headache and was unable to sleep, so he decided to call an ambulance.

Another strange suicide story…

There was a man in the county who was allergic to red food dye. However, he LOVED a particular brand of hot dog, the kind that are red dyed (I don’t remember the brand name). So on a fairly regular basis, he would take an ibuprofin, call the ambulance and eat a hot dog while he waited. By the time the ambulance got there he would be having a severe allergic reaction. They would of course do whatever they do (a steriod shot or whatever) to save his life.

On one occasion the ambulance got there too late.

 
 
 
Comment by NYCityBoy
2008-04-13 05:48:43

Yesterday we did our do-gooder duty and headed up to the Bronx to plant some trees. I have the sore muscles and sunburn to prove it. The driver of our shuttle bus had no idea where he was going so we got a scenic tour of Harlem, Bronx and other parts of Manhattan.

I wish everybody in the “Manhattan is so special” crowd would have been with me. The amount of building is incredible. They are building like mad throughout Manhattan, including Harlem. They are building too much in Bronx. The amount of inventory, conceived during the boom, about to come on line is staggering. There is no way the world has enough wealth to buy up all of this stuff at current prices.

There is a more ominous development taking place in New York, especially Manhattan. Its long-term impact will be huge. NYC continues to think that it’s so special, and for rich Americans and foreigners, that they are pricing everything off of the island. Businesses continue to be unable to make it because rents are so high. We are talking about really good business. When John’s Pizzeria on Bleecker is closing because they can’t afford their rent you know their is a problem. Bleecker Pizza is closing because they can’t afford their rent. The entire small business community on Bleecker appears to be unable to afford rents. Everything that closes is replaced with high-end boutiques as landlords have dollar signs in their eyes. But this is not sustainable, unless one can eat high-end handbags for dinner.

The City is quickly becoming unsustainable. The wealth crowd is squeezing the crap out of small businesses and will destroy what makes this city so special if rents don’t come down. I see a huge final blowoff before a rash of destruction. Those people sitting in all of these luxury condos will realize that they have bought so far into the “luxury” idea that life is no longer livable. And then the crash. That is my ground level perspective on Fantasyland.

Please type slowly today. NYCityBoy did a walking tour of the city after planting trees yesterday. The only thing slower than my brain this morning is my liver.

Comment by aladinsane
2008-04-13 05:55:59

What purpose will NYC serve after it’s completely trashed it’s financial reputation?

Comment by combotechie
2008-04-13 06:01:38

Think “Escape From New York”.

Comment by palmetto
2008-04-13 06:38:17

Good one, combo. My sis used to work for a corporate recruiter in NY. Along with executive searches, they had clients who used to ask them to find administrative assistants, etc. Even ten years ago, the support personnel was the most difficult to find, because they had to commute from the Bronx, Brooklyn or Queens or from even further away and the pay being offered wasn’t worth the commute or the hassle. Let all the richie riches have their little island and wonder how to eat, get around, etc. Better yet, let them sell financial instruments to each other while they wonder where the people they piss on, but depend on to serve them, have gone.

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Comment by bangkokobserver
2008-04-14 06:43:23

Part of the problem with finding good support personnel is that wages haven’t gone up in Manhattan to match the price rises in everything else. If you temp, you make what you made per hour 20 years ago. Nobody can afford it.

If John’s is closing there’s no reason to go to New York.

 
 
Comment by Faster Pussycat, Sell Sell
2008-04-13 06:38:35

Bleecker has been totally nuked by the high-end stores. Completely and utterly destroyed.

Even stores like “Porto Rico” and Raffeto’s (on Houston) are only barely hanging on to life.

It’s sad but I no longer think the Village is special. It’s just the same overpriced cr@p that you see in the rest of the country.

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Comment by housegeek
2008-04-13 06:24:26

Did a 2-boro bike tour yesterday and marveled at the same thing - seems every empty lot has been filled with a condo project -the vast majority not completed. Last year we saw a few stories about “net outmigration” from the city - that is, more people are getting out that coming in. It’s going to get a lot worse.

Water bills are going to get hiked, and so are taxes. Not to mention basic staples. We’ve seen stores that offer essential services in our own neighborhood pushed out in the name of yuppie boutiques and cafes (which are looking mighty empty these days). You can only hope the pendulum will swing the other way soon and the businesses will come back, but that’s going to take huge changes.

Comment by edhopper
2008-04-13 11:05:16

Was that with the 5 Boro Bike Club to the Lefertz House?
I was thinking of going but had a brunch engagement.

 
 
Comment by mgnyc99
2008-04-13 06:29:04

i 100% agree nycboy

wow johns is closing?

on my lunch break i usually walk up and down 23rd street and between 5th and 8th ave there must be 25 empty store fronts

if they are replaced it is by starbucks,duane reade (a nyc drug chain) or a bank or jamba juice and nothing else

nyc is so boring now and hopefully all these luxury conde dwellers will have no one to do their dirty work because no one can afford to live here and they can stare at each other for all i care

this is why brooklyn is so popular these days but there is a major price bubble in brooklyn too

the working class (100k-150k) famalies with children are relegated to the suburbs where the fuel prices and taxes are killing them, it is a sad state of affairs

nyc cop starting salary is 25k a year-and crime is on the rise again

this could get ugly fast especially in those gentrified areas

Comment by NYCityBoy
2008-04-13 06:54:53

More and more I am thinking that the entire New York City concept, in its current form, is completely unsustainable. We continue to view savings and mobility as our two biggest assets. I still love this city (hate the people) but I also have to keep options open. I could become DenverBoy or NapaBoy at any time.

Comment by SanFranciscoBayAreaGal
2008-04-13 09:48:08

NYCity Boy,

I would be more than happy to welcome you to the wine country and the greater SF Bay Area. Come take a walk to the wild side. ;)

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Comment by Professor Bear
2008-04-13 14:49:40

He is a married man. (Not that there is anything wrong with that…)

 
Comment by SanFranciscoBayAreaGal
2008-04-13 17:15:35

Let me rephrase,

I would be more than happy to welcome him and his wife.

Thanks PB :)

 
Comment by Faster Pussycat, Sell Sell
2008-04-13 17:19:51

Not that there is anything wrong with threesomes (or foursomes) ……………. :-D

 
Comment by SanFranciscoBayAreaGal
2008-04-13 23:19:39

All right now FPSS,

Has my mom says get the mind out of the gutter and above the belt. :)

What I mean by my phrase take a walk on the wild side is leave NY and come to CA.

 
 
 
 
Comment by WT Economist
2008-04-13 06:38:35

“The amount of inventory, conceived during the boom, about to come on line is staggering. There is no way the world has enough wealth to buy up all of this stuff at current prices.”

The last two words are key. Plenty of suppressed demand here at reasonable prices.

As for what the NYC economy will be after it trashes its financial reputation, the question is will new companies with no ties to the massive hosing Wall Street has dished out over the past decade arise to replace the hosers? If not, why not?

Comment by NYCityBoy
2008-04-13 06:58:39

I have a question for you, WT. You always strike me as a pretty smart and reasonable guy (except for the no air conditioning thing). What is going to become of the rebuilt World Trade site? Will that help rebuild NYC’s financial reputation or be a relic from bygone days? That hole in the ground, just down the block, is a huge wildcard in this city’s future.

Comment by mgnyc99
2008-04-13 07:03:32

hey it is not even 7 years since 9/11
rome was not built in a day

to me that that is one of the biggest shames of nyc
7 years and still a hole in the ground while crappy condos
go up in 12 months

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Comment by Faster Pussycat, Sell Sell
2008-04-13 07:00:19

There is plenty of demand at the right price all over the world. This is hardly an original thought.

However, there is no more demand left at delusional prices which is all there is in NYC.

 
Comment by Professor Bear
2008-04-13 07:26:59

Any economist knows that “demand” refers to a “schedule” relating quantities demanded at different price levels. Price homes at $0 and the “demand” to which you refer will go through the roof.

 
 
Comment by say what
2008-04-13 06:40:22

Thank you for a great post. It describes exactly what is going on in NY and had it not been for your unplanned “tour” it would be difficult to have such a good peek into what really is going on and yes, there will be lot of pain. Another thing that is happening in NY is that many neighborhoods that used to be mixed economically and culturally are becoming more segregated. Mainly because many people moved out to the burbs and what is left are illegals and people on some kind of government programs. Incidentally, all city shelters are packed, people and families with housing vouchers can’t afford the rents even in the rattiest of neighborhoods. Everyone thought that we were on a gravy train to eternity. Lets see what will happen. Your post was great.

 
Comment by Muggy
2008-04-13 07:23:25

When I lived in Hoboken and commuted to midtown I would, on nice days, often walk north up 6th from 33rd. I did this enough to memorize the skyline, all of the business, and all of the buildings.
Even when I visited a few months ago it had all changed. There is no way NYC will be immune from the bust.

I’m going to say this again, and I know it’s not a concern of everyone here, but I really hate that the bust destroyed creative communities - especially now that many boomers want an “art studio” or whatever.

I don’t just blame the bubble though, I know plenty of creative types who “grew up” and went crazy with real estate with the intention of using it to pay for the arts, but then just got stupid like everyone else.

There have been some excellent films, booms, and albums in the past few years, but there are no stable communities that they are coming from. This pisses me off.

At least I caught the tail-end of something special in Hoboken.

Comment by Muggy
2008-04-13 07:31:53

“booms”

That’s funny. I meant books.

 
 
Comment by edhopper
2008-04-13 07:34:58

You said it NYCB. I see so many “luxury condos’ going up here in Queens. $500k for a 1bdrm in a marginal area. Or better, 4 and 6 unit condos on former SFH lots. Imagine the common chargers with only 3 other units, if one of the owners goes BK.
On Friday I wrote a rant about prices in NYC. I am mystified by illogic out there.
I still ask everyone I know who owns a home if they could afford to buy their own home at today’s prices. Even though no one says they could, they still don’t get that these prices are unsustainable.

Comment by spike66
2008-04-13 08:12:53

Just 2 anecdotes on NYC. My doctor pal from Bellevue, who wised up and is trying to unload her 1 be coop on the West Side emailed me today…she’s driving out to Union City, NJ to look for a rental apt…clean and cheap is her criteria. Her place is listed and first open house is next Sat.–no price info yet.
Second is from my friend Robert at the dog run–Newsweek, headquartered on 6th Ave, offered a buyout plan to 180 employees this week–118 took the deal on the first day. print media, whether book publishing, mags or newspapers, was once a major industry here, now in serious retreat on all levels. NYTimes has had layoffs in Feb. and March, book publishing is in really poor shape.

Comment by CA renter
2008-04-14 01:44:51

Think about what will happen to the publishing industry once all the budget shortfalls hit the school districts across the country.

Do you have any idea how much money the publishing industry gets from the schools?

Going to be a lot of “uncontained containment”.

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Comment by Lost in Utah
2008-04-13 07:58:18

“The City is quickly becoming unsustainable.”

Your description reminds me greatly of some of Colorado’s ski towns, esp. Aspen, Vail, and Telluride. Extreme rents/taxes resulting in businesses departing, support people having to commute from elsewhere, overbuilding of expensive condos, etc. This whole uber-capitalist paradigm is coming to a close, we’ll see if it’s replaced by another more workable capitalist one or something else.

Comment by iftheshoefits
2008-04-13 08:39:46

I would think that “commuting to Telluride” would be fun.

Driving up and down the (north facing) side of the cliff to get in and out of Norwood 5-6 days a week in the middle of winter, to go to a minimum wage job that’s 50-60 minutes away?

I suppose the drive to Dolores is marginally safer, but that’s even a bit longer drive, I think.

Wait, Ridgway’s closer, there’s got to be some affordable housing left over there, isn’t there? Isn’t there?

Comment by Lost In Utah
2008-04-13 09:10:41

Nope, nothing affordable in Ridgway, as I’m sure you kow. Have family there and would like to spend the summer there. Actually, you can rent a house for 1000, but buying is out of the question, much too pricey. I think half of the town of Montrose commutes to Telluride. There are traffic jams in Ridgway during rush hour from all the commuters. Dallas Divide isn’t much fun either, nor is Keystone Hill, esp. in winter. Went through there a couple of times this summer and they were trying to widen Keystone a bit, the workers had to hang off the edge with ropes.

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Comment by iftheshoefits
2008-04-13 12:24:46

I was being sarcastic about Ridgway, it’s out of control like so many of the other areas. Commuting from Montrose to Telluride for a service job is for crazy people, but I’m sure that’s what they do.

We were in Telluride this summer, the drive from Placerville up the hill was loads of fun with all the construction. And I think it’s still only a two lane road after all that mess.

 
Comment by Lost in Utah
2008-04-13 14:06:47

Yeah, I detected the sarcasm. Anyone who knows the area like your post showed has to know it’s overly expensive.

 
 
 
 
Comment by speedingpullet
2008-04-13 12:12:15

Same thing happened in London in the mid 80’s - a property development called Peachy Properties bought up and assumed the rents of large swathes of the West End’s Soho area - and promptly put up the rents by 100%++.

The result was that all the little businesses around Carnaby St and Berwick St could no longer afford to be there - which meant that the very things that made Soho so attractive to the likes of Peachy Property in the first place, disappeared - only to be replaced by crappy high-turnover ‘tourist-trap’ shops selling cheap trinkets from China.

 
Comment by AbsoluteBeginner
2008-04-13 16:33:51

‘They are building too much in Bronx.’

NYCB, the times I saw the Bronx date back to the late 80s. All I remember were cars upside down on the sidewalks. Is this the same Bronx?

 
 
Comment by taxmeupthebooty
2008-04-13 05:54:29

signed !
no bail !

Comment by Professor Bear
2008-04-13 06:17:58

Link please?

 
 
Comment by bizarroworld
2008-04-13 06:02:51

Delayed deaths wreck savings
http://tinyurl.com/57wbw9

“I felt they were a safe investment, yes,” said Nichols, who brokered about 350 viaticals to about 170 local people, in the deposition. “I wouldn’t have sold to anyone if I didn’t believe it was a safe investment.”

But viaticals came with inherent risks, said Neil Doherty, professor and chairman of the insurance and risk management department at the University of Pennsylvania’s Wharton School of Business.

The first thing that can go wrong, Doherty said, is that the life expectancy review by a doctor can be done poorly. Secondly, life expectancies may change, which happened to many people with AIDS when advances in medical care kept them alive longer. Lastly, he said, doctors working for a viatical company could purposely underestimate life expectancies to attract investors, which is exactly what Mutual Benefits Corp. did, according to SEC and court documents.

Another investmant vehicle goes bust. Sounds a bit like real estate sales gone bad; I wouldn’t have sold them the house if I knew it would lose value. Sure….

Comment by Faster Pussycat, Sell Sell
2008-04-13 07:07:25

These viatical scams have been around forever. Doesn’t anyone else remember stuff like this from the 80’s and early 90’s too?

Wow, I thought this stuff had gone away, but everything old is new again!

Comment by tresho
2008-04-13 07:26:42

My favorite life insurance scam is the original one. Take out a policy on a neighbor down the street & have someone do away with him. Not easy to do now since the insurers want the insured to give his permission for the policy to take effect.

Comment by Faster Pussycat, Sell Sell
2008-04-13 08:14:12

Better one was all companies taking out insurance policies on their employees, then using the cash value of the policy as collateral to borrow money cheaper than the going corporate bonds (effectively getting the insurance company’s ratings,) and getting a tax writeoff on the premiums to boot.

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Comment by bluprint
2008-04-13 12:20:02

I thought you have to have an interest in the person on which you take out a policy. What I mean is, an employer could get a policy on the employee b/c the employee’s death could impact the employer. Same thing with spouses, business partners, etc.

However you can’t take one out on the stranger that lives down the road from you since you have no interest/involvement in that person and his death has no measurable impact on you.

Maybe that rule came as a result of the original scam…

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Comment by IllinoisBob
2008-04-13 07:48:00

If the dude needed a “safe” investment, he should of stuck with CDs, mutual funds, stocks, etc. There are so many exotic investment schemes out there. Da boyz continue to separate the poor fools from their $. Another scheme that blew up is the auction rate securities.

CRAIG JOFFE, an investor who owns a laser surgery business in Minneapolis, says that a couple of years ago he was looking for a safe place to put most of his life savings. So he said that on the advice of his broker, he invested 90 percent of his wealth in something he thought was just as conservative, reliable and liquid as cash: three auction-rate securities.

But even though Wall Street heavyweights and major corporations have been stung, many of them also appear to have bailed out of the market well ahead of individuals. At the end of 2006, institutional investors held about 80 percent of all auction-rate securities issues, according to Treasury Strategies, a consulting firm in Chicago. At the end of last year that portion had fallen to just 30 percent.

http://www.nytimes.com/2008/04/13/business/13cash.html

Comment by tresho
2008-04-13 07:51:42

he invested 90 percent of his wealth in something he thought … Say no more. What an idiot.

Comment by mgnyc99
2008-04-13 09:29:08

hey tresho

what 90-10 is not diversified?

schmuck deserved to lose his arse

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Comment by Frank Hague
2008-04-13 06:04:00

http://tinyurl.com/5zjghl

If there ever was a cabinet agency that needs to be eliminated, it’s HUD.

In speeches, he (secretary Jackson) urged loosening some rules to spur more home buying and borrowing. “I’m convinced this spring we will see the market again begin to soar,” Jackson said in a June 2007 speech at the National Press Club to kick off what HUD dubbed “National Homeownership Month.”

“Jackson made a show of having a cook on HUD’s staff, visitors said, a perk normally associated with Cabinet members who have international travel schedules.”

He launched the renovation of a larger HUD auditorium and cafeteria to replace what his spokesperson said was a “deplorable” 40-year-old facility. The oil portraits were commissioned by Jackson’s office in an emergency contract last fall so that they would be ready in time for a scheduled opening, which was later postponed. Nordquist said HUD is updating the portraits of agency secretaries as part of the American tradition of “commemorating the contributions of our public servants.”

An “emergency contract” for oil portraits. Unbelievable.

Comment by aladinsane
2008-04-13 06:19:28

I find it interesting how ’ssshrubery managed to find the load his donkey cart with the most “deplorable” menagerie of minorities imaginable.

Comment by Bill in Carolina
2008-04-13 06:38:17

Some are right up there with Janet Reno.

Comment by exeter
2008-04-13 10:28:31

Alberto Gonalez
John Ashcroft
Heckava Job Brownie
Scooter Libby
Carlisle Rove
Don “Kevorkian” Rumsfeld

Would you like to continue Bill?

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Comment by Frank Hague
2008-04-13 12:39:02

Why is everything with you about the Bush administration? Does the fact Bush appointed multiple incompetent cabinet heads make Janet Reno less of a disaster than she was?

 
Comment by exeter
2008-04-13 17:28:41

It should be obvious that this admin has led us to where we are for 8 painfully long years and unless you’re living on another planet, the damage wrought by their destructive policies is self evident.

 
 
 
Comment by Spook
2008-04-13 07:38:05

well,

it is a donkey cart after all

 
 
Comment by SDGreg
2008-04-13 06:28:10

This isn’t a HUD problem. When you put incompetent and/or corrupt people in charge of anything, you are going to have problems. The Harding administration had nothing on W.

Comment by Frank Hague
2008-04-13 07:04:37

Yes, because government promotion of homeownership has worked out so well that we need an entire cabinet agency dedicated to it.

 
 
 
Comment by DannyHSDad
2008-04-13 06:07:44

Two anecdotes on financial crisis hitting the pocket books: My parents who are retired on both SS and private pension have now seen their pension payment reduced by US$30 per month this year. Their SS checks went up as normal, of course.

I would have thought gov employees would be laid off left & right by now, but I guess gov always moves slowly in crisis. I know of one acquaintance, in Southern California, who got his RIF notice just recently — he is a long time public school employee who just changed the county he works in this school year, so he’s at the bottom in terms of seniority.

Two issues (pensions & gov employees) I was concerned about more than 2 years ago here on this blog has become a reality to people I know….

Comment by Professor Bear
2008-04-13 06:15:23

“…so he’s at the bottom in terms of seniority.”

Thank your education union’s cockamamie rules for that unfortunate situation.

Comment by WAman
2008-04-13 06:32:06

Yes indeed - here in Washington state you have statewide seniority.

 
Comment by Kirisdad
2008-04-13 07:40:12

The rules are negotiated by the municipality. Stupidly, they continue to negotiate contracts that pay off the most senior members at the expense of newbies. They believe this is long term savings. In reality, when TSHTF and layoffs are required, the most affordable employees get laid off first. Before anyone gets on the public unions (only), it’s the politicians who want the accolades for measly starting salaries. Its easy (for both sides) to negotiate away benefits for those who haven’t been hired yet.

 
 
Comment by taxmeupthebooty
2008-04-13 06:18:57

fed gov employees will face 0 layoffs and get raises
the cart before the horse
?how many private sector productive workers does it take to feed a gov worker ?

 
Comment by WT Economist
2008-04-13 06:39:58

Two year lag before state and local government gets nailed. NY State is increasing spending this year. Next year will be ugly.

 
Comment by mgnyc99
2008-04-13 06:49:21

a “fixed income” in this inflatinary time is tough

i did not get a raise this year either

Comment by PontiacMI
2008-04-13 11:16:48

Same here. We were told that there was a wage freeze until fiscal year 2010.

Comment by Faster Pussycat, Sell Sell
2008-04-13 12:20:00

Then, just find another gig.

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Comment by CA renter
2008-04-14 01:53:09

Pay cuts and layoffs for govt workers here in California. It’s been linked here at least a couple of times.

 
 
 
 
 
Comment by Professor Bear
2008-04-13 06:23:26

Weathering the storm
Del Mar DataTrac, which sells software to mortgage lenders,is optimistic that the housing implosion is nearing its end
By Bruce V. Bigelow
UNION-TRIBUNE STAFF WRITER
April 13, 2008

Comment by aladinsane
2008-04-13 06:33:28

San Diego is ground zero for the California housing bubble bust, which looks to have a half-life of many more years…

Comment by Professor Bear
2008-04-13 06:45:24

Half-life is suggestive of (radioactive) decay — a problem that is decreasing by half the size at regular intervals. With a building (real-estate led) recession and a record rate of foreclosures, we are in the growth phase of the bust at the moment.

 
 
 
Comment by Professor Bear
2008-04-13 06:25:51

Hundreds seek help at free clinic for ailing homeowners
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
April 13, 2008

SAN DIEGO – Even before the doors opened, dozens of people had gathered yesterday outside Golden Hall at the downtown Community Concourse to attend a free clinic for financially distressed homeowners.

The large turnout for the Smart Money Summit 2008 reflected just how big the foreclosure problem has become in San Diego County, said Gabe del Rio, president of the nonprofit Housing Opportunities Collaborative.

After taking out adjustable-rate subprime loans during the housing boom, many borrowers are unable to keep up with rising interest rates, del Rio said. They can’t refinance because their homes are worth less than they paid for them.

“You can tell how hungry for information people are from someone they feel they can trust,” del Rio said. “Everyone said, ‘You’ll be able to refinance out of this.’ That is the case only if you have equity.”

 
Comment by Professor Bear
2008-04-13 06:29:26

GEORGE F. WILL
THE WASHINGTON POST
The crisis that isn’t
April 13, 2008

CLICK!

Comment by WAman
2008-04-13 06:37:25

So you folks down there in San Diego sell guns in newspaper ads? Hmm, what do you all hunt down there?

Comment by aladinsane
2008-04-13 08:27:18

The military industrial complex looms large in San Diego, and once we run out of money to waste propping it up, what’s left besides nice weather, in “America’s Finest City”?

 
Comment by shakes
2008-04-13 14:21:59

well, if things get bad enough we will hunt PEOPLE.
“Meat is meat and a man has to eat”
We can solve world overpopulation and world hunger at the same time
From a little known movie “Motel Hell”

 
 
 
Comment by FB wants a do over
2008-04-13 06:37:25

Housing chief ignored looming crisis

Jackson enjoyed a chef and a full-time security detail. His office launched a new $7 million auditorium and cafeteria at HUD headquarters, money that some within the agency believed should have been directed toward housing for the poor. His office solicited an emergency bid to obtain portraits of Jackson and four other HUD officials at a cost of $100,000.

http://seattletimes.nwsource.com/html/nationworld/2004345549_hud13.html

Comment by exeter
2008-04-13 10:30:27

FB…. Thats the compassionate conservatism GW talked about.

 
 
Comment by Professor Bear
2008-04-13 06:39:36

Businesses who lost money on the housing bust definitely need some corporate welfare now. How could they have possibly foreseen this housing disaster? Never mind that a ragtag band of bloggers managed to foresee it, or that many homebuilder execs managed to make themselves richer than Croesus by cashing out at the peak in August 2005…

Many skeptical of Foreclosure Protection Act
Senate bill includes tax breaks for builders
By Paul M. Krawzak
U-T WASHINGTON BUREAU
April 13, 2008

WASHINGTON – In its latest move to ease the nation’s housing crisis, the U.S. Senate last week passed a wide-ranging bill known as the Foreclosure Protection Act.

Despite its name, most experts say it would do little to help struggling homeowners avoid foreclosure. Instead, the legislation would promote home sales and benefit builders.

Few observers think the legislation will survive in its current form because House Democrats are pushing for more sweeping initiatives and the White House objects to several of its provisions. But some elements of the plan are likely to find their way into any final package that is approved by Congress and sent to President Bush.

The most prominent and costly provision would expand a tax break for home builders and other businesses that lose money in 2008 and 2009.

Comment by tresho
2008-04-13 07:37:29

“Skeptical” is putting it mildlly. Friday evening I was listening to NPR on this POS piece of legislation. The commentator called the tax break for home builders a bribe in response to their extortion (withholding their campaign contributions this year).

Comment by Jas Jain
2008-04-13 08:51:04


Let us not forget who really owns our govt, thru “our” representatives.

Jas

 
 
 
Comment by FB wants a do over
2008-04-13 06:41:10

Excluding the housing market, I think we’re headed for more inflation and then hyperinflation as this is the most politically palatable solution for the masses until it becomes the most destructive.

If you have time, listen to the 2nd hour audio.
http://www.financialsense.com/fsn/main.html

Peter Schiff.
http://www.kitco.com/ind/Schiff/apr112008.html

Comment by Jas Jain
2008-04-13 08:57:57


“Excluding the housing market, I think we’re headed for more inflation and then hyperinflation…”

“Excluding the housing market” we would have already had outright deflation in the US. Pushing Debt is the only option to fight deflation and the housing market provided the vehicle for Pushing Debt on households, which in turn artificially boosted the aggregate demand and thus kept inflation higher than what it otherwise would have been. My forecast is that CPI inflation rate is peaking (it usually does 4-6 months into a recession).

Please tell me where would the households get money to spend, $300/600/1200 checks notwithstanding, and push prices higher?

Jas

 
 
Comment by Bill in Carolina
2008-04-13 06:44:30
Comment by NYCityBoy
2008-04-13 07:29:09

The Empire Strikes Back

 
Comment by bizarroworld
2008-04-13 10:13:54

On March 31, Fannie Mae sent out new guidelines to lenders aimed at walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are “documented extenuating circumstances.” In those cases, the mortgage prohibition is for three years.

Even after five years, borrowers with foreclosures in their files will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680.

These are tougher standards? Seems like merely a soft slap on the wrist for the bad jingle mailers. 10% down and a credit score of 680 doesn’t seem like punishment.

 
Comment by Jwhite
2008-04-13 11:15:50

Imagine that, negative ramifications for not honoring you’re committments. Surely this will not stand in today’s America??? Where’s my BARRISTER???

Comment by Jwhite
2008-04-13 11:20:44

(your) my grammar isn’t what it should be today…

 
 
 
Comment by Professor Bear
2008-04-13 06:48:30

Man in the News: Paul Volcker
By Chrystia Freeland
Published: April 11 2008 19:36 | Last updated: April 11 2008 22:42

Comment by watcher
2008-04-13 07:35:12

He gets a lot of press lately doesn’t he?

 
 
Comment by Professor Bear
2008-04-13 06:51:16

Saving banking from the bankers
Published: April 11 2008 19:59 | Last updated: April 11 2008 19:59

This week the world’s leading banks – represented by the Institute of International Finance – concurred with a conclusion long ago reached by the rest of the world: they screwed up, the credit crisis is largely their fault, and everybody else is suffering for their errors. The admission may not be enough to prevent a dangerous backlash.

Bankers may have realised, too late, the dangers of the banker caricature many people now believe. The popular perception is of an industry populated by clever crooks who manufactured toxic derivatives of subprime loans, repackaged them to look succulent, and sold them to greedy fools.

The truth is that, while there clearly have been fraudulent practices, the banking industry itself retained much of the risk from the subprime debacle. After all, if it had successfully passed on the bad loans, the banking industry would not be reporting titanic losses.

But most people are looking not at the banks’ losses but at the bankers’ gains. They have noticed that when the music stopped – as Chuck Prince might have put it – some of the dance partners left the floor with their pockets stuffed with cash, while others went home to lock up the houses they no longer owned and post the keys back to the bankers. Ordinary citizens, far from any subprime loan, have found themselves asking whether their savings are safe, why it is suddenly so hard to get a mortgage, and why the stock market numbers keep flashing red.

Politicians have noticed too, and invited Mr Prince and other former Wall Street titans to enjoy the privilege of having strips torn off them by a congressional committee.

Comment by Jas Jain
2008-04-13 09:03:36


“The truth is that, while there clearly have been fraudulent practices, the banking industry itself retained much of the risk from the subprime debacle. After all, if it had successfully passed on the bad loans, the banking industry would not be reporting titanic losses.”

They are suffering from the pipeline problem. There is always lot of water in the pipeline that keeps flowing even after the tap is shutoff. It was NOT just-in-time inventory management.

Jas

Comment by Faster Pussycat, Sell Sell
2008-04-13 11:11:33

Not just pipeline problems but also ill-conceived or mismatched hedges on their structured products.

 
 
 
Comment by Muggy
2008-04-13 06:51:38

Yesterday I sewed. Homespun is back!!

Comment by Otis Wildflower
2008-04-13 06:56:48

Heh, a couple days ago I mended a zipper on my tank bag.. I haven’t mended a zipper since Home Ec..

 
 
Comment by mrktMaven FL
2008-04-13 06:57:36

How is food and fuel inflation related to the housing bubble?

Comment by Otis Wildflower
2008-04-13 18:34:29

HELOCs and easy credit enable folks to buy expensive, low-mileage vehicles and pay for fuel for them, which increases demand for fuel, which increases fuel prices, which affect food pricing both in terms of petroleum-derived fertilizers, operation of farm equipment and facilities, as well as transporting agricultural products to market.

 
 
Comment by Professor Bear
2008-04-13 06:57:51

The lazy, crazy middle class
By Christopher Caldwell
Published: April 11 2008 19:36 | Last updated: April 11 2008 19:36

Two years ago, several prominent economists gathered in Italy to debate the wide gap in annual working hours that separates the workaholic US from leisure-obsessed Europe. The conference was called: “Are Europeans Lazy? Or Americans Crazy?” The book that resulted from the conference is published this month by Oxford University Press. But sometime in the intervening years, ordinary Americans – without stinting on craziness, of course – appear to have made their peace with laziness. On Wednesday, the Pew Research Center, based in Washington, DC, published an eye-opening study on the economic attitudes and prospects of middle-class Americans. Inside the Middle Class: Bad Times Hit the Good Life found that Americans’ number-one priority – named by 68 per cent of respondents and topping children, marriage, career, wealth and religion – was “having enough free time to do the things you want”.

The American middle class is not playing to type these days. The go-getting engine of the global economy is less work-obsessed than it looks and less confident. The percentage of middle-class people who say their life is better than it was five years ago is the lowest in almost half a century, according to Pew. Average Americans feel as though they are barely clinging to their position on the social ladder; 78 per cent say it is harder to maintain a middle-class lifestyle than it was five years ago. A middle-class squeeze (rising healthcare costs, rickety pensions, the collapse of housing prices and so on) has been at the heart of debates in both parties this presidential campaign season.

Comment by Bub Diddley
2008-04-13 08:43:47

Of course, if they got enough vacation time to visit Europe and see how the average European lives in comparison to the average American, the American middle class would’ve figured this out a long time ago. But the constant flag waving and “greatest country in the world!” soundbites serve to brainwash the masses.

I was lucky enough to leave my sheltered small-town worldview and spend a couple months in Europe when my first band toured over there. We slept on people’s floors and got to see how the average person lived, which was much more educational than if we had been making enough money to stay in a hotel room every night. The quality of the floors we slept on was MUCH improved. Same sort of folks - bartenders, record nerds, other musicians, etc. but the quality of life they enjoyed seemed so much better. And in the years that have passed since then the gap has only widened. What I took away from the trip was a healthy dose of reality, as opposed to the propaganda you get dosed with here in the US.

Just saw a friend (musician) from Australia perform the other night. He and his wife were amazed how dirty and ramshackle everything appeared. They thought the USA reminded them of South America. “It looks like a third-world country!” they said, and I couldn’t really disagree. They made comments about how the emperor had no clothes, that such a powerful nation was in such a visible state of disrepair. Very enlightening to see my country through the eyes of an outsider, especially a well-traveled one.

This guy brought his wife, their two kids, and a nanny over for the tour. A friend who also played on the bill came with his wife, who is preggers, and they were astonished that anyone, esp. a loser musician, could even afford a nanny, much less take one on tour with them. We were enthralled by tales of government support for the arts, public radio stations that actually played his record rather than Clear Channel corporate stations, etc. I’ve been to Australia so I already knew a lot of it, but the other musicians were taken aback.

My friend who opened up the show had to drive two hours back home afterwards and be up by 6 for work the next day. The Aussies wanted to hang out after the show but of course we all had to rise early to go to our crappy day jobs. I wished him luck on the rest of his US tour. Overall a very illuminating encounter.

Comment by exeter
2008-04-13 10:38:42

Diddly… your posts speaks directly to and calls out the warped elitism and nationalism parading as “patriotism” in this country. If you’re a 40-50hr/week wage earner, you’re considered a leech sucking off the govt tit. A week vacation once a year for you and yours is out of the question and if you bitch about it the moonbats fly out of their cave nipping and biting with worn out platitudes and brainless one word phrases as a means to instill doubt and guilt. I have my doubts as to their effectiveness at keeping the ideology going with those tactics but it has worked to further advance the interests of the wealthy elite and kept us sacrificing our own.

 
 
Comment by Jas Jain
2008-04-13 09:12:11


“having enough free time to do the things you want”.

Looks like I made it – retired at 51. I love speculating!

BTW, Americans, 62 and younger, who have left the job market, either because of not finding jobs that they would like or otherwise, is steadily increasing. What would happen to income to support if the Scam Market and home prices (including rents on investment properties) keep going down?

Jas

 
 
Comment by Muggy
2008-04-13 07:00:43

Hey, where’s the guy that always responded with, “Don’t tase me bro!”

That always cracks me up.

Comment by Lost in Utah
2008-04-13 08:05:43

Wasn’t that Spook - the guy in Iraq?

 
 
Comment by Muggy
2008-04-13 07:02:21

“Sandi Turja is one of 21,000 unemployed people in Pinellas County. She worked in mortgages for 13 years before becoming a victim of the dried-up housing market.”

http://www.baynews9.com/content/36/2008/4/12/339479.html?title=Unemployment+increasing+in+Pinellas+County

Comment by Muggy
2008-04-13 07:07:20

Thank goodness. At least the bust is over in Hillsborough. What a relief!!

http://blogs.tampabay.com/realestate/2008/04/signs-of-stabil.html#comments

 
 
Comment by Professor Bear
2008-04-13 07:03:02

Gloomy Mizuho
Published: April 11 2008 09:30 | Last updated: April 11 2008 22:36

Japan’s subprime losses remain a fraction of those notched up in the US and Europe. But the habit of ’fessing up to ever bigger losses is as commonplace as anywhere else.

Comment by watcher
2008-04-13 07:38:59

Mizuho soup

 
 
Comment by Professor Bear
2008-04-13 07:06:04

Fannie warns homeowners who walk away
Kenneth Harney
Sunday, April 13, 2008

(04-13) 04:00 PDT Washington — The country’s two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing “walkaway” trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain.

On March 31, Fannie Mae sent out new guidelines to lenders intended for walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are “documented extenuating circumstances.” In those cases, the mortgage prohibition is for three years.

Comment by edgewaterjohn
2008-04-13 07:37:00

A lot of the walkers won’t have the stomach, or the down payment, to buy again for a decade or more - so Fannie’s posturing is useless.

Comment by tresho
2008-04-13 07:42:37

Fannie’s posturing is useless Yup. When housing sales bottom out, look for this policy to be revoked.

Comment by Professor Bear
2008-04-13 08:04:39

Oh right — they will discover the error of their ways, i.e. that they pulled the rug out from under greater-fool-driven demand, by the time housing sales bottom out.

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Comment by Former FB
2008-04-13 07:41:02

It’s funny that they assume FBs will be deterred by this. Another month or so and it will be 3 years since I sold the house and swan-dived from the social ladder. It’s taken this long just to start to get things in financial order to the point that I could even think about buying again if I even wanted to. My guess is that by the time J6P walks, he won’t care whether anyone ever wants to give him a mortgage again, because he’ll see the game for what it is.

But, I admit I underestimate the pervasiveness of stupidity at times.

Comment by But_Im_Not_Dead_Yet
2008-04-13 08:21:07

I have a nephew, who lives near Minneapolis. He and his newlywed wife moved there after getting married in July 2005 (almost 3 years ago now) and bought a $225k house. Both were 6 months out of college, with limited job history (and no down payment, yes, it was an adjustable rate mortgage according to my Sis’).

Nephew got a job as an electrician’s apprentice, $14/hour. He just got laid off about a month ago. His union has several hundred laid off journeymen and apprentices, so it’s going to be a long wait.

Facing an interest rate reset, and with only one income, they’re contemplating a walk-away, and are thinking about moving back to Wisconsin to be closer to family. What are they doing, on visits back to Wisconsin? Why they’re looking at houses, of course.

I think they’re in for a rude awakening…

Comment by NYCityBoy
2008-04-13 09:12:54

What city did they move to? I am curious since I have a little knowledge on Minnesota.

What the heck ever happened to House Inspector Clousseau? He has never been heard from since he disappeared. He lives in Minneapolis as well.

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Comment by Jwhite
2008-04-13 11:42:31

In my area of Mnpls, the average house price was probably about 300K. We were there for 2.5 years and we NEVER considered buying. We rented a beautiful 3/2 townhouse with all the trimmings and community services for $1800 a month. Our friends had mortgages in the $2500-3000 a month range for the same thing or less. We saw some serious disconnects between income and spending there even with the median income in the $114,000 range for the town.

 
Comment by But_Im_Not_Dead_Yet
2008-04-13 14:09:11

NYCityBoy,
They’re in Rosemount, MN. I just zillowed the address and it still shows a “zestimate” of $228,500. I believe they bought for about $225k nearly three years ago. So, if the zestimate is accurate, maybe they don’t take such a bad hit.

Of course, I don’t really trust those “zestimates”…

 
Comment by NYCityBoy
2008-04-13 16:13:55

Rosemount is not considered the Minneapolis area. It is more like the far suburbs of St. Paul. When I was a kid it was rural and not much else. It began to be built out in the 80s and now, as far as I can tell, is suburban hell. If they bought in ‘05 they are seriously f—ed. Sorry to hear.

 
 
 
 
Comment by aladinsane
2008-04-13 08:19:12

Too funny…

Fannie’s all hot and bothered about people doing walkabouts, folks that put nothing down and were in actuality, glorified renters in sheep’s clothing, with no skin in the game.

I’d walk too, if there was no incentive for me to stay and plenty of reasons to jettison my white elephant…

 
Comment by smudge
2008-04-13 08:43:27

they call THAT a penalty?????? Oh, how horrible! You greedily gambled and HELOC’ed yourself out of your house and DIDN’T have to pay back the money YOU PROMISED to pay? You helped price out buyers who could actually pay for a house if it were reasonably priced…. MOST OF THESE PEOPLE ARE ACTUALLY STEALING! Privatizing the gains, socializing the losses… Absolute B.S.!

So these cheesy-as* sneaks can’t buy another house for a few years? Oh my goodness, the horrors… they might have to put a down payment next time? WOW! thats really harsh. Not too bad for stealing hundreds of thousands of dollars. -geesh

 
Comment by Jas Jain
2008-04-13 09:18:05


“Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are “documented extenuating circumstances.” In those cases, the mortgage prohibition is for three years.”

Thank God, some natural force that would limit how much lending these crooked institutions can do in the future. I think that their Scam would be worthless (I am short via long-term puts) and hapless taxpayers would have to foot the bill.

Jas

 
 
Comment by measton
2008-04-13 07:08:19

Bloomberg
New York Fed President Timothy Geithner indicated that regulators may have relied too much on financial companies and investors to police themselves.

Gee you think

Another way of saying it, regulators may have relied on the fox too much in regards to the hen count.

Comment by vozworth
2008-04-13 07:48:54

The exchange traded instruments is the free-er market. Manipulations, obfuscation, off balance sheet, level III mumbo jumbo is precisely where the problems are located.

Keep dancing around the deriviatives mountain while the snowpack gets really unstable. Illiquid alphabet soup of “liabilities” masquerading as assets.. FED backstop of money churn is not creating “liquidity” its creating more havoc, lack of confidence, dollar erosion, and capital flight.

Comment by Professor Bear
2008-04-13 08:03:09

‘FED backstop of money churn is not creating “liquidity”’

It created quite a bit of liquidity in the BSC sale…

Comment by vozworth
2008-04-13 08:27:29

PB,
Im trying to get at the regulations or capital controls that are necessary for a way out of what looks to be shaping up as a dollar meltdown deflationary debt collapse.

If the IB’s and other assorted “Federally Guarnateed” financial institutions were required to engage only in exchange traded instruments, this so called “lack of liquidity” debt market lock down would not be happening.

Ive made some statements regarding investment principals and sound money, the exchange traded instruments are the “sound” money….you can talk M0 all the way to Mgoogle…but stores of value, liquid instruments, and a broad array of first derivative holdings are the last vestiges of the global fiat.

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Comment by measton
2008-04-13 08:31:35

Business section NYT

Craig Jaffe oned lazer eye surgery business and wanted a safe place to put his money. UBS broker got him to put 90% of his wealth in auction rate securities. Of course he can’t sell them now. The kicker

At the end of 2006 institutional investors held about 80% of these auction rate securities. A year later 30%. My guess is Mr. Joffe’s investment advisor received big commissions for off loading this crap on his clients.

Apparently a lot of companies also parked there money here because they thought it was as good as cash. Palm recorded a 25 million dollar write down.

Comment by vozworth
2008-04-13 09:01:38

ARS-the borrow short and finance the lend long interest rate arbitrage thats now in triage. CDO, ABS,MBS,SIV…Swapped re-swapped - derivative squared bullshit…thats why the FED is providing quasi-permanent smokey mirror set-ups.

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Comment by tuxedo_junction
2008-04-13 14:39:19

Wall Street has a very long history of off-loading crap to retail investors and small banks. The additional commission paid to the reps who sold the stuff was called “push money.”

Highly successful sales people who specialized in selling illiquid and/or high risk bonds to suckers were called “bond daddies” though most of them were located in Little Rock or Memphis.

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Comment by jacko
2008-04-13 23:03:49

nope. commissions are miniscule.

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Comment by But_Im_Not_Dead_Yet
2008-04-13 08:29:35

There’s an old analogy, of burning the furniture to heat the house during desperate times.

To update that, over the last five years Wall Street has been burning both FB’ers and some of their wealthy clientele, in order to keep their house warm. Well, now that they’re running out of new FB’ers to toss on the fire, and their wealthy clientele has developed a healthy “heat aversion”, how is Wall Street going to keep its house all warm and cozy in the cold, cold winters?

I predict we’re going to see heavy sweaters and plastic window coverings for the Wall Street crowd…

Comment by vozworth
2008-04-13 09:11:16

401k’s part of the wall street crowd?

if the markets crash, commodities crash, and hard winter comes a callin on Wall Street….check the Chairmans quote below.

 
 
 
Comment by Professor Bear
2008-04-13 07:11:43

A Pro-Foreclosure Bill: Senate’s Housing Relief Needs Repair
© 2008, The Washington Post
Article Last Updated: 04/11/2008 07:46:45 PM MDT

The following editorial appeared in Monday’s Washington Post:

We’re realists. We know that legislation can involve a certain amount of moral and intellectual corner-cutting. But is it too much to ask that a bill called the “Foreclosure Prevention Act of 2008″ not contain a provision that might, at the margin, encourage home foreclosures? Apparently so, because the bipartisan Senate housing relief package includes just such a measure.

We refer to a $7,000 tax credit (payable over two years) to anyone who purchases a foreclosed home within a year of the proposal’s enactment. Supposedly, this would help clear the nation’s swollen inventory of repossessed properties, thus propping up home prices more generally. Here’s the catch. For lenders as well as borrowers, foreclosure is an expensive hassle. If at all possible, most banks would rather avoid repossessing a house, which they must then try to resell. But, by making it cheaper to buy a foreclosed house than a comparable unforeclosed property, the tax credit makes it more feasible to sell one. The cost and hassle - for the lender - of foreclosure go down, and the benefits go up. Other things being equal, lenders would be that much more likely to foreclose - rather than to help homeowners stay in their houses on modified terms.

Comment by edgewaterjohn
2008-04-13 07:43:13

“…$7,000 tax credit…”

That might cover the replacement of the missing plumbing and electrical.

 
 
Comment by Professor Bear
2008-04-13 07:13:28

Marin foreclosure rate doubles
Jim Staats
Article Launched: 04/12/2008 11:28:49 PM PDT

Marin’s foreclosure rate has more than doubled over the past year, according to an agency that tracks troubled properties statewide.

For the first quarter of 2008, from Jan. 1 to March 31, some 314 properties in Marin faced a notice of default, the first step in the foreclosure process, compared to 129 properties over the same period last year.

 
Comment by hd74man
2008-04-13 07:13:52

Tsk, tsk…more dirt from under the rug. These banking chucks simply refuse to come clean.

Anyone keepin’ tabs on total lender losses to date? Methinks it’s still a long way to go to $5 trillion.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3671568.ece

 
Comment by Professor Bear
2008-04-13 07:15:16

Fannie Working on Mortgage Plan
By MARCY GORDON – 1 day ago

WASHINGTON (AP) — Fannie Mae will allow more struggling homeowners to sell their homes for less than they owe on their mortgages in a gambit that could hit the mortgage finance company with upfront losses but stave off massive hemorrhage from foreclosures.

The program by the largest U.S. financier and guarantor of home mortgages addresses homeowners with “upside-down” loans who owe more than their homes are worth. There are now an estimated 9 million U.S. homeowners in that predicament, according to Moody’s Economy.com.

Comment by Professor Bear
2008-04-13 07:20:59

BTW, there are about 114m hhs in the U.S., of which maybe 70 pct own homes, so the pct of U.S. homeowners who are underwater is roughly

100*9/(.7*114) = 11.2 pct.

Comment by Professor Bear
2008-04-13 07:23:25

… or if you prefer “one out of X” type figures,

X = 1/(9/(.7*114)) = 9 (rounded to zero decimal places)

Comment by NYCityBoy
2008-04-13 07:43:10

Welcome to Atlantis.

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Comment by kckid
2008-04-13 07:40:12

http://www.taxfoundation.org/taxfreedomday/

Tax Freedom Day® to Arrive April 23 in 2008

America Will Work Three Days Less to Pay Taxes in 2008 than in 2007; Stimulus Rebates Push Date of Celebration Up

http://www.taxfoundation.org/taxfreedomday/

As I write out my check for April 15th.

Comment by Matt_in_TX
2008-04-13 11:13:58

I payed 74% less tax this year. Strangely, this is not a good thing…

 
Comment by measton
2008-04-13 11:27:27

you’re assuming that that everyone works.
Yes Taxe revenue is lower - Due to collapsing market, and tax breaks for the elite, but the average worker is not keeping more of his money. In fact more and more of the middle class are paying a larger percentage due to the alternative minimum tax

 
 
Comment by Austrian School
2008-04-13 07:43:47

I was at the San Diego REDC auctions yesterday at Del Mar. Lots pf properties discounted 50% from peak. Several properties auctioned 3 times as each successive winner disqualified in the closing tent. Condos hit the hardest. Properties clustered in Chula, east county and far North country (O’side, Vista). Saw minimum bids reduced from the published catalog to the auction day. Wouldn’t be suprised if reserves reduced, but hard to know. Saw “cash only” properties which I han’d seen at the earlier auction I went to. Apparntly you have 30 days to come up the balance.

Comment by Professor Bear
2008-04-13 08:00:58

“Lots pf properties discounted 50% from peak.”

Do these show up as ‘comps’? Where does one find the data?

Comment by Austrian School
2008-04-13 09:39:42

I’m not sure if a realtor would ever show you these sales as comps. They tend to eliminate any input that hurts their chances of making a sale. They can say that it wasn’t an arms length transaction or call it a distressed sale and that only realty professionals should be able to buy property distressed prices. But watching the auction process yesterday I couldn’t help but think to myself “This is the market happening in front of my very eyes, THIS is the real market.” You end up with a tale of 2 markets, the retail one with high prices and declining numbers of sales, and the distressed sales with real prices, and accelerating sales. In many bubble markets there are more of the later than the former

I’ve never been able to find the data anywhere, which is why I attend them occasionally and log the transactions. I followed up a group of them from a previous auction in the county records and low and behold, they’re in there with the 5% buyer premium. Only a small fraction could nto be found. These could be reserve price not met, or buyer didn’t pay.

Comment by Professor Bear
2008-04-13 11:21:25

“They tend to eliminate any input that hurts their chances of making a sale.”

If they were smart, they would show these ‘comps’ to would-be sellers. Maybe sellers would come down from the delusion that they will somehow be able to sell at 2005 price levels if confronted by evidence of just how severely the market is undercutting their offer prices.

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Comment by CA renter
2008-04-14 02:21:55

PB,

Check Jim’s blog. He put up some of the sales from the auction, including the last purchase price and the prices the lenders were trying to sell them for on the open market.

 
 
 
 
 
 
Comment by aladinsane
2008-04-13 07:49:49

“A government which robs Peter to pay Paul can always depend on the support of Paul.”

George Bernard Shaw

Comment by vozworth
2008-04-13 08:52:23

“Revolutions and revolutionary wars are inevitable in class society, and without them it is impossible to accomplish any leap in social development and to overthrow the reactionary ruling classes and therefore impossible for people to win political power…
The seizure of power by armed forces, the settlement of issues by war, is the central task and the highest form of revolution. This Marxist/Leninist principle of revolution holds good universally, for China and for all other countries…”

-Mao Tse Tung

“The tree of liberty must be refreshed from
time to time, with the blood of patriots and tyrants.
It is its natural manure.”

-Thomas Jefferson

zero-hour approaches, buckle the sheep up…hard sheering leads to angry populus.

Comment by vozworth
2008-04-13 10:31:13

just read and confirmed confirmational bias on Russ Winter. Ya see this is a little excercise I play, try it out first here, then go to get the confirmation, when no response leads to thread killer…

bias confirmed. fascinating stuff.

next up:
irrational governmental responses to cognitive dissonance, and the purchasing power of the taxpayers funding of irrational governments. (bascially, by paying taxes you are purchasing government, but what if you dont like what you’ve been purchasing)

 
Comment by aladinsane
2008-04-13 10:48:55

You can shear a sheep repeatedly, but you can only slaughter it once…

Comment by vozworth
2008-04-13 13:27:25

Peter is the Sheeple
Paul is the peoples republic of Chindia.

be on the lookout for a BRIC though the window.

commodity bears, look out above.

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Comment by tresho
2008-04-13 08:22:14

Ben Stein opinion piece in NYT.
The effect of the [Paulson's] proposals is to allow the inside players on Wall Street to keep playing, and getting the huge paychecks. It is to allow the supersized egos of Wall Street to be fed — maybe not with marble palaces as with my neighbors in Beverly Hills, but with staggering compensation, even as stockholders and taxpayers are slaughtered. “Socializing risk and privatizing gain,” as Nouriel Roubini, a distinguished economics thinker, has eloquently said. A bit surprising, coming from this source.

Comment by aladinsane
2008-04-13 08:31:35

Maybe just maybe, Ben Stein followed his own shoddy advice the past year, and lost the lion’s share of Ben Stein’s money?

Comment by NYCityBoy
2008-04-13 09:35:01

Who will ever forget, “I think the financials are a screaming buy. I especially like Merrill Lynch.”? Within a week Merrill had melted down and ousted its CEO. Nice timing, Ben Stein.

Comment by measton
2008-04-13 11:30:36

Ben Stein

Will write articles for food.

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Comment by kckid
2008-04-13 08:46:14

http://cashill.com/intellig_design/expelled_review.htm

A rousing SRO preview on Tuesday of the new Ben Stein documentary, Expelled: No Intelligence Allowed, brought a Kansas City audience to its feet.

And with good cause. Stein’s often funny, always engaging frontal assault on the oppressive neo-Darwinist establishment is arguably the smartest and most sophisticated documentary ever produced on the right side of the cultural divide, on any subject, ever.

As such, Expelled represents still another blow to the progressive orthodoxy of government-issued science in its winter of discontent.

The winter started early when in November two separate labs, one in Wisconsin, one in Japan, announced the breakthrough discovery that adult skin cells can be reprogrammed to mimic embryonic stem cells.

Just two years earlier, the elfin journalist Chris Mooney had likened adult stem cell research to creationism and assured the readers of his best seller, The Republican War on Science, that this “dogma” had been “resoundingly rejected by researchers actually working in the field.”

As the winter rolled on, and as all four major global temperature tracking outlets showed a precipitous drop in annual global temperature, and as snow fell in Baghdad for the first time in recorded history, only Al Gore remained in meltdown.

Meanwhile, on a seemingly daily basis, the neo-Luddites from the Earth Liberation Front and the Animal Liberation Front have been putting a distinctly left wing face on the “war on science,” in this case a real war on real scientists.

And into this breach, armed with his trademark tennies and bemused grin, marches Ben Stein, America’s only economist/ presidential speechwriter turned comic actor. The producers at Premise Media could not have recruited a better on-screen presence.

Although the role Stein plays has been compared to the one Michael Moore plays in his film, the Stein persona is conspicuously brighter and more benign.

Nor do Stein and his producers resort to the kind of editing that make Moore movies something other than documentaries.

In Bowling For Columbine , for instance, Moore cobbles together five different parts of NRA honcho Charlton Heston’s Denver speech a week after Columbine.

Moore then inserts into the mix a “cold, dead hands” remark from a speech Heston gave a year later. In the process Moore turn Heston’s conciliatory Denver address into a provocative call to arms.

This isn’t film making. This is fraud.

Stein resorts to no such tricks. He gives certain interview subjects all the time and all the rope they need to hang themselves, unedited.

Expelled opens nationwide on April 18th. The neo-Darwinists and their allies in the major media will do their best to kill it.

Put April 18 on your calendars. Bring the kids. You won’t be disappointed.

Comment by aladinsane
2008-04-13 09:11:51

There really isn’t much to do in Kansas City, is there?

Comment by WAman
2008-04-13 10:07:52

Well stated!

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Comment by Jwhite
2008-04-13 11:52:30

RIBS!

 
 
Comment by jrochest
2008-04-13 16:46:34

Exactly what I was thinking: what the hey? is this doing here?

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Comment by jrochest
2008-04-13 16:48:00

I was responding to aladisnane — I agree, someone’s got far too much time on their hands…

 
Comment by waiting_in_la
2008-04-13 21:50:32

Stupid f$%^ing conservative dumbasses.

 
 
 
 
 
Comment by Lost in Utah
2008-04-13 08:37:36

Ben, maybe it’s time for an ebook. They seem to be proliferating - topics on how to survive a depression/recession/foreclosure…etc. There’s money to be made here recycling old information in new ways. A sign of fear and desperation.

Comment by Lost In Utah
2008-04-13 09:13:25

along those lines, from http://onlinejournal.com/artman/publish/article_3105.shtml

The following is the list of fastest growing jobs in US during the period 1929-1933 (Source: Historical Statistics of the United States).

Persons engaged in gasoline service stations 34 percent

State and local government employees: 3 percent

Persons engaged in repair services: 18 percent

Federal employees: 6 percent

College faculty: 32 percent

Persons engaged in legal services: 12 percent

Persons engaged in liquor stores: 335 percent

Public school teachers: 2 percent

Persons engaged in second hand stores: 35 percent

Physicians: 6 percent

Comment by Jas Jain
2008-04-13 09:28:51


“Persons engaged in liquor stores: 335 percent”

Did this have something to do be repeal of the Prohibition Act (date?)?

Jas

Comment by Lost In Utah
2008-04-13 09:37:58

It sounds like the stat is across that period of time. Prohibition was repealed in December 1933 as part of Roosevelt’s New Deal. (He himself observed; “I think this would be a good time for beer.”)

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Comment by aladinsane
2008-04-13 09:45:01

Imagine what economic boom will happen if the most valuable cash crop in our country, is no longer prohibited?

 
 
 
Comment by Paul in Jax
2008-04-13 09:43:04

Who knows how accurate this stuff is, but a few things come to mind:

Gas station attendant - little or no wage paid, thus men can sit around swapping stories, talking about baseball, and chewing tobacco in order to check oil and clean windshields for tips.

Liquor stores - should be infinity; there were no liquor stores from 1920-1933.

Public schools - teachers/student likely down; college faculty - mostly private, people trying to learn something in weak job market.

Comment by Lost In Utah
2008-04-13 10:38:44

“Liquor stores - should be infinity; there were no liquor stores from 1920-1933.”

I dunno, maybe the illegal bootleggers kept stats… :)

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Comment by jrochest
2008-04-13 16:58:20

The rise in gas station attendants must have something to do with the rise in numbers of cars — and highways! Didn’t the New Deal build roads? (I’m not an American, so I don’t know)

College faculty — when things get bad and you lose your job, you go back to school.

Liquor — yes. Plus rising demand. Ditto second hand stores and repairmen.

Buy stocks in booze, for sure. And chocolate and Harlequin Romances, which are the female equivalent of a good stiff drink.

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Comment by Sammy Schadenfreude
2008-04-13 09:34:09

Kind of amusing being greeted by those “Are You an Angry Renter?” ads on the HBB. A renter, yes - angry, no. Amused, patient, entertained, and serene as I watch the “home-moaners” bewail their collapsing values and dreams of achieving Trumpdom, yes.

 
Comment by aladinsane
2008-04-13 10:00:51

’ssshrubery’s hack of a security adviser had no idea that Nepal wasn’t part of Tibet, apparently…

Every day in every way, I feel less secure about the path they leading us down.

http://www.huffingtonpost.com/2008/04/13/bush-security-adviser-ste_n_96420.html

Comment by spike66
2008-04-13 10:36:33

The video is unbelievable.But why didn’t Stephanapoulos correct him?
Did he not know either? Nepal is having it’s first elections post-monarchy, and the Maoists are scheduled to win. Wouldn’t a National Security Advisor know this? Or, shouldn’t he?

Comment by aladinsane
2008-04-13 10:44:22

My nephew from Prague was living in the U.S. for a year and got stopped for speeding, while driving somewhere in the mid-west.

He handed his Czech driver’s license to the cop, and said law enforcement officer started to harangue him about all the horrors of the ethnic cleansing that was going on in his homeland, and how lucky he was to be in the United States.

 
Comment by kckid
2008-04-13 12:01:38

I think that’s where Hiliary took some sniper fire.

 
Comment by measton
2008-04-13 13:49:48

Shouldn’t a National Security Advisor know this??

NO, because there isn’t any money or oil to steal in Nepal.

 
 
Comment by exeter
2008-04-13 10:49:41

Thats speaks directly to the quality of the federal executive branch.

Comment by aladinsane
2008-04-13 14:55:46

But it gets better…

The AP took it upon themselves to change “Nepal” to “Tibet” so that the National Security Adviser wouldn’t seem so dumb, and CNN ran with it…

How nice of them!

http://www.cnn.com/2008/US/04/13/us.olympics.ap/index.html

 
 
 
Comment by Professor Bear
2008-04-13 11:10:37

Just ran some median list price calculations on the SD MLS (thanks ziprealty.com). What a difference a year makes!

Median condo list price
4/28/07 $357,415
4/13/08 $287,020
Dollar decline in median list price = $70,395
Percentage decline in median list price = 19.7 pct

Median SFR list price
4/28/07 $589,971
4/13/08 $477,032
Dollar decline in median list price = $112,939
Percentage decline in median list price = 19.1 pct

My untested hypotheses about this median list price calculation are
(1) that it provides an upper bound on the median market value;
(2) that the bound is much looser in a “buyers’ market” (aka “falling knife market”) than in a “sellers’ market”;
(3) that it is a lagging indicator for median market value (i.e., the median market value of homes has already fallen well below these levels), as it collectively takes sellers a long time to get over the denial stage of the housing bubble stages of grief, and many sellers will foolishly hold on to their falling knives until they one-by-one individually realize they are holding on to a falling knife and capitulate.

Comment by Professor Bear
2008-04-13 11:47:14

Zip Code level median list prices for North County:

ZipCode 4/28/2007 4/13/2008 Change($) Change(%)
92128 $639,000 $545,000 -$94,000 -14.7%
92129 $662,000 $599,000 -$63,000 -9.5%
92064 $864,000 $754,450 -$109,550 -12.7%
92130 $1,199,500 $1,200,000 $500 0.0%
92127 $1,309,900 $1,150,000 -$159,900 -12.2%
92067 $3,697,500 $3,797,500 $100,000 2.7%

Interesting how the highest price zip codes (92130 and 92067) have barely budged, while lower priced zip codes have all sold off. Is this an artifact of the growing chasm between rich and poor, or is there some kind of high-end price stabilization program that makes sure the high end never drops?

Comment by Professor Bear
2008-04-13 11:49:58

One more possibility: The quality of homes offered at the high end may be improving just sufficient to offset declining prices for comparable-quality homes.

 
Comment by Tulpenwoerde
2008-04-13 15:19:54

Alternate possible explanation: it takes longer for desperation to percolate up from the weaker to the so-called stronger hands. Or, in a similar vein (and forgive me if I botch the economics lingo), demand is least elastic at the high end, and substitute supply need not be considered as early.

Comment by Professor Bear
2008-04-13 17:02:06

“…demand is least elastic at the high end,…”

This would mean that a big increase in inventory would not result in a large drop in market value. I am completely unconvinced. When there is more inventory, sellers go into competition to find buyers, and a Darwinian process ensues whereby those who lower their reservation prices find buyers and those who do not lower their reservation prices keep their homes on the market forever.

There is a better chance that high-end owners have the financial staying power to keep their homes off the market until prices return to levels where they feel comfortable selling, but I see no shortage of recently-built (since 1998) inventory at the high end driving down the market. Who knows how much of this is flipper-owned inventory trying to exit the market?

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Comment by Tulpenwoerde
2008-04-13 21:27:16

“…those who do not lower their reservation prices keep their homes on the market forever.”

From my casual observation, this seems like the current state of affairs in many high-end zip codes. Of course, some folks will inevitably need to sell sooner or later.

 
 
 
 
 
Comment by Terry
2008-04-13 11:16:23

Considering all the bo-ha about the housing bubble, I have come to the conclusion, that the future will be nothing more than a ten year period of adjustment. We will see prices come down to the $80.00 sq ft level, with depreciated prices on same for existing houses. The over supply caused by excessive building will wash out in about five years. The people facing forclosure…homeowner wannbees..will become renters again and the balance of owners to renters will equal out as before. The people in forclosure, either by speculation or keeping up with the jonses, will revert to their base..renting. Houses will again become a place to live, not an investment. Anyone seeing the housing curve over the last 100 years can easily see, that the past 5 years were a fluke brought on by a credit bubble. As in the past, 10% down will become the norm, with 30 yr fixed. Bailouts will not help…this will reach its natural conclusion, regardless of infusions of help.
The best thing the American public can do is to write the credit reporting agencies in mass and tell them to stick their fico scores and credit reports up their ass. Close all accounts to future charging, in mass. If peple would only realize, that if you believe their line of shit, they own you. I could care less about my fico score….I don’t use credit….I ‘m a penny pincher and damn proud of it. Oh, and for those who say its better to borrow the money and use the cash in investments, after you pay the fees, pay the taxes..you loose.

 
Comment by Professor Bear
2008-04-13 15:18:53

Banks’ self-regulation plan shunned
By Chris Giles and Krishna Guha in Washington
Published: April 13 2008 18:48 | Last updated: April 13 2008 18:48

Deep-seated tensions between private sector bankers and the public authorities emerged at the weekend in Washington after both sides advocated conflicting solutions to the credit crisis.

While the banks sought a self-regulatory approach centred around a new code of conduct and banks’ disclosure of how far they met these codes, finance ministers and central bankers insisted on much more prescription and regulation.

Mario Draghi, the Italian central bank governor, and chairman of the Financial Stability Forum, whose report was endorsed by the Group of Seven on Friday, said the FSF’s proposals had, and needed, real teeth. “We call them, with a gentle word, recommendations. Some are actually policy decisions.”

Jean-Claude Trichet, the governor of the European Central Bank, was more blunt. He welcomed the private sector’s decision to encourage better risk management and transparency but insisted self-regulation was not sufficient. “We all have to take our responsibilities very seriously and displease the private sector, where necessary.”

Tim Geithner, the president of the New York Federal Reserve, said: “We have to find a better balance between discipline and regulation in our financial system.”

I am certain I am oversimplifying the situation, but how about a little more regulation during the boom times and more laissez faire during the ensuing busts? Otherwise, you encourage “too-big-to-fail” financial entities to take heads-we-win/tails-you-lose gambles with the stability of the global financial system.

 
Comment by Professor Bear
2008-04-13 15:22:02

Here is some news to warm Watcher’s heart:

G7 fears sudden slide in main currencies
By Krishna Guha and Chris Giles in Washington
Published: April 13 2008 15:31 | Last updated: April 13 2008 18:52

The Group of Seven industrialised nations has signalled shared concern over the danger of a disorderly slide in the dollar and sterling, following bouts of extreme weakness in the two currencies in recent months.

The warning came in a new sentence of the G7 communiqué, which said “there have been at times sharp movements in major currencies, and we are concerned about their possible implications for economic and financial stability”.

The G7 pledged as before to “monitor exchange markets closely and co-operate as appropriate”.

Comment by aladinsane
2008-04-13 16:39:53

“monitor exchange markets closely and co-operate as appropriate”.

Translation: The Dollar is so screwed…

 
 
Comment by Professor Bear
2008-04-13 15:24:33

Subprime ‘just one of many problems’
By Chris Giles and Krishna Guha in Washington
Published: April 13 2008 22:22 | Last updated: April 13 2008 22:22

The subprime mortgage debacle was not a unique problem for the global economy but just one of many points at which an unsustainable global economic system could have shattered, Tommaso Padoa-Schioppa, Italy’s finance minister, told the Financial Times.

Speaking after chairing the International Monetary Fund’s governing body, which included an informal brainstorming by finance ministers and central bank governors on the long-term outlook for the global economy, Mr Padoa-Schioppa insisted that the path of global economic growth had been unsustainable and the US was unlikely to be the main motor for growth over the coming decade.

“If we think that solving, or emerging from, the crisis means going back to the configuration of growth before the crisis, we would be making a mistake because we were on an unsustainable path,” he said.

 
Comment by Professor Bear
2008-04-13 15:32:41

Best of luck to George Soros in driving a stake through the heart of the discredited rational expectations ideology which underlies the fantasy that heavily-regulated markets are self-correcting.

False ideology at the heart of the financial crisis
By George Soros
Published: April 2 2008 18:11 | Last updated: April 2 2008 18:11

The proposal from Hank Paulson, US Treasury secretary, for reorganising government regulation of financial institutions misses the point. We need new thinking, not a reshuffling of regulatory agencies. The Federal Reserve has long had authority to issue rules for the mortgage industry but failed to exercise it. For the past 25 years or so the financial authorities and institutions they regulate have been guided by market fundamentalism: the belief that markets tend towards equilibrium and that deviations from it occur in a random manner. All the innovations – risk management, trading techniques, the alphabet soup of derivatives and synthetic financial instruments – were based on that belief. The innovations remained unregulated because authorities believe markets are self-correcting.

Regulators ought to have known better because it was their intervention that prevented the financial system from unravelling on several occasions. Their success has reinforced the misconception that markets are self-correcting. That in turn allowed a bubble of excessive credit to develop, which extended through the entire financial system. When the subprime mortgage crisis erupted it revealed all the weak points. Authorities, caught unawares, responded to each new disruption only after it occurred. They lacked the ability to foresee them because they were in the thrall of the market fundamentalist fallacy. They need a new paradigm. Market participants cannot base their decisions on knowledge, or what economists call rational expectations. There is a two-way, reflexive interaction between the participants’ biased views and misconceptions and the real state of affairs. Instead of random deviations, reflexivity may give rise to initially self-reinforcing but eventually self-defeating boom-bust sequences or bubbles.

Comment by vozworth
2008-04-13 17:52:16

I enjoy your penny pinching ways as the flood of earnings will punish those who failed to provide quality earnings guidance.

Shoe dropping season and foreclosure season all at the same time?

I aint got the bullets for that turkey shoot.

 
 
Comment by Professor Bear
2008-04-13 17:08:01

From a contrarian standpoint, doesn’t this story pretty much imply that stocks will go higher this week, as the all-knowing, all-seeing stock market has already priced in any and all bad news that could ever possibly come out of this spate of earnings reports?

MARKET SNAPSHOT
U.S. stocks brace for flood of earnings reports
Financial woes regain spotlight as WaMu, Citigroup, Merrill Lynch report
By Nick Godt, MarketWatch
Last update: 7:17 p.m. EDT April 11, 2008

NEW YORK (MarketWatch) — Concerns about the impact of the credit crisis and the weak economy will come into sharp focus next week, with investors set for a flood of earnings from ailing financials as well as the technology sector.

Comment by ACH
2008-04-13 20:19:30

The whole thing is irrational. I just try to make rational inverstment decisions. That’s all I can do.
Roidy

 
 
Comment by vozworth
2008-04-13 17:49:12

I coulda swore that japanese equity markets opened three percent to the upside, and now looks three percent to the red.

6% daily swings…..gonna be a tough week on the Wall. however, this would indicate double up and down ETF’s should have at least some 12% winnners.

good luck to the timers and scalpers…

 
Comment by Professor Bear
2008-04-13 20:43:56

The global economic outlook is rapidly but predictably swinging from that of decoupling to contagion.

Expansion in Asia to slow, says IMF
By Krishna Guha in Washington
Published: April 12 2008 01:40 | Last updated: April 12 2008 01:40

Asia is not likely to escape the impact of the US-led global downturn, the International Monetary Fund said on Friday, although it added that growth was likely to remain high relative to other regions of the world.

The IMF said it had cut its forecast for growth in Asia this year and now projected more moderate expansion of 6.2 per cent – down 1.75 per cent from 2007. It said 2008 would be a “challenging year” and that “the balance of risks remains on the downside” – lower growth – in spite of high inflation.

Comment by Professor Bear
2008-04-13 20:55:42

More evidence here of noncontainment / nondecoupling — a natural aftermath to shutting down financial regulation and letting systemic risk run amok.

What are the implications of this news for the theory that real estate investors from other parts of the globe will prop up the U.S. housing market?

Housing Woes in U.S. Spread Around Globe
Derek Speirs for The New York Times

Emma Linnane in her apartment in Dublin. Its value has declined by $100,000.

By MARK LANDLER
Published: April 14, 2008

DUBLIN — The collapse of the housing bubble in the United States is mutating into a global phenomenon, with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports and even parts of northern India.

This synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well.

In Ireland, Spain, Britain and elsewhere, housing markets that soared over the last decade are falling back to earth. Property analysts predict that some countries, like this one, will face an even more wrenching adjustment than that of the United States, including the possibility that the downturn could become a wholesale collapse.

 
 
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