Bits Bucket And Craigslist Finds For April 14, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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From CNBC: Wachovia, the fourth-largest U.S. bank, on Monday posted a surprise first-quarter loss, hurt by credit problems, and said it would cut its dividend and raise capital.
$.20 loss VS an expected $.40 gain OOPS!!
First GE now Wachovia Who would have thunk this would happen?
Nobody would - except the HBB gang!!
GO HBB Keep blogging and breaking through the cheer leading crap!!
It is going to be a rough week for the cheerleaders and the financially illiterate.
Yes, but CNBC is telling me that this is it for Wachovia - no more cash needed and no more surprises. The bottom is in!
http://www.charlotte.com/123/story/578736.html
This was in yesterday’s Charlotte paper. It is the story of Wachovia’s purchase of Golden West. What a disaster, especially considering the footnote to today’s story which is the nearly $400 million first quarter loss.
There are never just a few cockroaches. You have to wait for all of them to come out.
I had an apartment that was so infested, if you went into the kitchen in the middle of the night, you walked in, closed your eyes, flipped on the switch, waited for them to scurry away and only THEN opend you eyes back up. One time i was looking at the VCR and wondering why it was fast forwarding. It wasn’t roached were inside of the case, but walking in front of the LED display counter and it LOOKED like the numbers were changing.
One of the downsides to renting an apartment — you can’t control your neighbors who share your walls.
Been there myself, unfortunately, and why we only rent SFHs now.
Yeah… this is their kitchen sink…. just like all the other reports over the last 6 months…
I really and truly don’t know why these things keep being labeled “surprises”. If you knew Wachovia acquired Golden West, and you know that Golden West primarily did business in risky loans in California, then maybe you had a clue that Wachovia had a hurtin’ coming. Maybe you didn’t know when, but it had to come soon. Surely the people running the show know these things are coming. Surely the analysts aren’t THAT clueless - if they are, maybe I need to consider a career change, and pluck off some of that low hanging fruit. No, this must be a strategic effort to obscure the magnitude of the impact across all the economy.
Then again, I don’t really believe in vast conspiracy theories. Collective stupidity is always a favored explanation.
We have entered a new era, where doing apparently stupid things often turns out in retrospect to be surprisingly clever.
An owed to banks…
The minute Wachovia stinked up the joint
I could see they were a bank of distinction
A real big spender
Good looking, so re-fi-ned
Say, wouldn’t you like to know
What’s going on in my mind?
So, let me get right to the point
You’ve popped your cork and everybody can see
Hey, big spender
Hey, big spender!
Hey, big spender!
Spend a little time… in financial purgatory
http://www.youtube.com/watch?v=VQ7fQD3FiTk
I mentioned this over the weekend, but here’s a new article. High-end millionaire/billionaire ski/resort area in Montana may be in trouble:
Private Retreat in Turmoil
This is the Yellowstone Club near Big Sky, MT. The owner, Tim Blixseth (who has gone bankrupt before), purchased the land it sits on in 1992 for $178/acre. Recently he has sold lots for over $1 million / acre. Oh, yeah, and you have to pay an initiation fee of $250k to be in “The Club.” But you might get to see Bill Gates or Dan Quayle.
So anyway, the Yellowstone Club might be in trouble. This on the heels of the bankruptcy of two other Credit Suisse resorts, Tamaracka and Promontory in Utah and Idaho.
So much for the rich being able to ride out the downturn in the West!
It isn’t just the rich that will be affected, in terms of ski-resorts closing…
I expect the 20 or so ski-resorts in California to be whittled down to 3 or 4.
$60-80 lift tickets will be the great dissuader, for many…
I grew up skiing at Lake Tahoe; family had a modest vacation home, but it was fun. Used to see lots of average families on the slopes then.
rms:
I lived on the west shore for a year in the 80’s, had a season pass @ Homewood…
Fun times~
I learned at Heavenly. Lots o’ hippie skiers back then, LOL
Even if costs weren’t up, the snow has been HORRENDOUS the last 2-3 years in Tahoe. This season we didn’t even really get anything until January.
Not to mention expensive lodging, meals, transportation, etc.
Not all doom and gloom in Montana.
In Montana, a Whitefish Mountain Resort employee scanned the season’s final lift ticket at 4:00 p.m. last Sunday amid shouts of glee from skiers and snowboarders.
As of Sunday’s closing day, the resort’s snow reporters tallied a total of 426 inches of snowfall at the summit. The area saw an average of 3.12 inches of fresh powder fall every day of the season. Four hundred twenty-six inches is a new record for total snowfall, and the final settled snow depth of 132 inches at the summit is the second deepest reported on closing day, after the 1990-91 ski season.
The resort also reported one of its three best winters on record in terms of skier visits, with a significant increase over the ski 2006-2007 season.
Yes it’s been a great winter for downhill skiers, lots of snow in the mtns but not so much in the valleys. It doesn’t snow enough for me here.
RE: 426 inches of snowfall at the summit.
Global warming is upon us!
Yep “global climate change” is upon us:
For the NW it means wetter winters (stronger storms) and dryer summers. Which means more snow in the higher elevations.
About $2.8 billion of option-ARMs were more than 90 days late at Wachovia as of Dec. 31, up from $675 million a year earlier. Washington Mutual, Countrywide Financial Corp. and other option-ARM lenders have reported higher delinquencies this year, sparking concerns that Wachovia’s late payments may also escalate.
Option ARM’s are going delinquent, Say it isn’t so!!
Who would have thunk that?
HBBer’s have been talking about this going on 3 years now
Go HBBer Go!!!
Well the cat’s really out of the bag now:
Housing Woes in US Spread Around Globe
“In Spain, more than four million homes were built in the last decade, more than in Germany, Britain and France combined. Average house prices tripled in parts of the country, as Spain’s torrid economy attracted immigrants and Northern Europeans snapped up holiday homes along the Costa del Sol.”
“Now, though, thousands of those houses stand empty. The I.M.F. estimates that property is overvalued by more than 15 percent.”
Supply balloons, prices triple. “Overvalued by more than 15 percent.” How many multiples of 15 percent?
If the vacation home market in Spain fares similarly to the vacation home market in Florida and the U.S., Spain is screwed.
I really don’t buy this contagion argument that the decline in American housing prices is in some way causing a decline elsewhere. These other markets all had price increases far beyond those supported by fundamentals, some even more so than the United States. These other markets would each have eventually collapsed on their own.
I really don’t buy this contagion argument that the decline in American housing prices is in some way causing a decline elsewhere. These other markets all had price increases far beyond those supported by fundamentals, some even more so than the United States. These other markets would each have eventually collapsed on their own.
Absolutely. Britain in particular seems to have committed precisely the same fouls as the US - subprime loans, stated income liar loans, 100% and greater financing, prices tripling in 10 years or so against stagnant incomes, completely unsustainable levels of consumer debt. Their market would have imploded on their own with or without the US.
“I really don’t buy this contagion argument that the decline in American housing prices is in some way causing a decline elsewhere.”
The so-called ‘credit crunch’ appears to be a root cause.
Wrongo. The credit crunch is the result of financial institutions holding bad debts due to declining house values. It happened over a year after prices starting falling.
So what is the root cause of declining house prices, everywhere?
They were too damn high. It’s that simple.
I don’t think you guys are disagreeing. Housing prices were too high across the board, but they also rose around the same time. The catalyst in most countries were too low interest rates for too long. This is how the housing prices got out of control. The credit crunch started in the U.S., but there was never any true decoupling. The house price increases happened around the same time for the same reason and the decline is following as such.
I don’t think one can separate unaffordable prices from the “credit crunch.” There is no reason that price could not stay propped up on a permanently high plateau if credit standards were not tightening. But once prices reached a sufficiently high level to become unaffordable even with very loose lending standards, something had to give…
Right. In bubbles such as these, leverage and asset prices create self-reinforcing spirals; first up, then down. Another way of putting George Soros’s concept of reflexivity. I’ve also heard the latest buzzword of pro-cyclicality. In any case, get ready for the hangover.
Sure there’s a reason, and it’s as simple as they come.
If the real price of houses is greatly above historical norms, way more houses will be built than people can afford to buy. The reason for historical multiples of price/income is that is the price at which long-term supply meets long-term demand.
Low credit standards only give a short-time illusion of affordability, not a real increase in affordability. Eventually it comes time to pay the piper.
The subprime meltdown happened in the US a year after prices started falling. Prices started falling simply because there was nobody left to buy all the houses at the inflated prices.
I think it’s a semantic difference, but can we really say with certainty that no one was left to buy or is it that lending standards reached the point they could no longer be debased further, which made those willing to buy at any price unable? Like now, I think there are would-be knife catchers who are not being enabled to buy because of tight credit.
Regardless of the precise moment whether credit tightened or prices came down or maybe psychology subtly changed at the margin, as all bubbles do this one reached a point where it could not continue. And it did not. And now all of the self-reinforcing effects that drove prices up are driving them down.
“The subprime meltdown happened in the US a year after prices started falling.”
- But, interest rates were increasing a while before the meltdown. If interest rates were kept low, you might not have seen the effect immediately. Affordability is after all a combination of house price and mortgage interest rates. If interest rates hadn’t risen, prices might not have started falling.
“The catalyst in most countries were too low interest rates for too long.”
In this country, low interest rates worked in tandem with elimination of lending standards (low down, no down, option ARM, no doc, no income, etc) to form a toxic subprime brew which let prices decouple from incomes. But then decoupling reached its limit.
I agree. I also think one of the biggest supports to this recent bubble was one that is hard to quantify. The fear of losing money in housing pushed people to buy houses without looking at the fundamentals. If I had a dime for every time I heard “house prices never fall” or “things are different here” I’d be Warren Buffett rich right now.
I Humbly Disagree. What kept this going was the belief that prices would always go up. In spite of increasing home values and interest rates, as long as prices of homes increased, you could always sell and get out of the trap at least at a break even point, if not at a profit.
The cheese in the trap that caught the mouse was the belief in the myth that home prices would always go up!!!
IMHO!
And this blame falls directly upon the NAR and the MSM, who the former gave and the latter received payment in the form of ad revenue!
IMHO
Ahhhh,
The blame also fell upon the buyers, who were willing to suspend common sense and believe house prices always go up.
Many other countries were frothier, no doubt…
But who came out first with fraudy ratings & financials, and started the ball rolling?
Some of the international newspapers that I’ve read about two or three years ago were thanking Greenspan for their housing booms.
Here is one that I dug up: http://www.swissinfo.org/eng/search/Result.html?siteSect=882&ty=st&sid=6428491
Greenspan effect did much for Switzerland
Image caption: Greenspan’s cryptic pronouncements were legendary (Keystone)Related stories
27.01.2006
Top banks forecast solid growth in 2006 06.01.2006
Cautious optimism for Swiss economy 04.07.2004
Central bank sees upswing continuing Switzerland has reason to thank the departing United States Federal Reserve chairman, Alan Greenspan, as he hands over the reigns after 18 years in the job.
Swiss homeowners – the most heavily indebted in the world - have benefited particularly from Greenspan’s achievement in bringing down the long-term cost of debt.
Spain has a birth rate of 1.2! 2.1 is needed to sustain a population. Solution…build more houses!
Morocco and much of North Africa are really to help out with the population matter. Prices, though…
What is “Moorish” for Reconquista?
jihad?
“The problems in the U.S. are being transmitted to Europe,” said Michael Ball, professor of urban and property economics at the University of Reading in Britain, who studies housing prices. “What’s happening now is an awful lot more grief than we expected.”
Yep, Everybody in Europe was just sitting there minding there own business, not speculating, not flipping, not getting into debt up to their eyeballs and along comes the mean old U.S.A. and ruins it for everybody. Right!
The UK is the only place on the planet where I met people more real-estate-crazed than SoCal folk.
But at least in UK they have an artificial scarcity of land created by the government which decided a long time ago to keep urban sprawl contained.
Meh, so you move outside the “metro” area. How far can that be in the UK?
I’m not sure how the legality of it works, but the UK urban landscape is dramatically different than any US city.
I have a friend who lived about a 45 minute train-ride to the central station (whatever its called) in London. 45 minutes away was very much a village and 35-40 minutes of the ride was nothing but country side. No sprawling country houses or suburban tracts. none at all. The transition from countryside to dense london is startling.
I have friends in Brighton, and used to take the train to and from London all the time in the 1980’s, and there wasn’t much of anything once you got past the southern suburbs of London, back then…
London had its urban sprawl a long long time ago! You think Harrow, Camden Town or even Vauxhall etc were originally parts of London? That has to be the most sprawling city anywhere, except maybe for Mexico City.
@AdamCO -
That sounds like flippin’ paradise. I wish that were available around here. Where there are villages and countryside there are no trains, and vice versa.
**And I mean flippin’ to be a substitute for the f-bomb, not an attempt to make house flipping an adjective.
Check out a road map, California looks empty compared to England. England alone (not including Scotland, Wales, N Ireland) has a pop. density of 383/sq km.
hmmmmmm i think new zealand is not the uk
oh well prices our tipping big time here please send more money we need as much as you can supply ! theres a reason why nz has high interest rates, can you guess why?
“What’s happening now is an awful lot more grief than we expected.”
Good to know those British econ professors who study RE are just as clueless as the dolts at George Mason U and Harvard.
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.
Which countries are headed for an adjustment worse than the US? Did they also have exotic mortgage products, predatory lending, “liar loans” and subprime lending?
I have a hard time believing that any country will be hit harder by the “perfect storm” of the housing bubble crash than the U.S.
I have a hard time believing that any country will be hit harder by the “perfect storm” of the housing bubble crash than the U.S.
I think the UK will be hit harder. Reasons: their national market is overvalued about as badly as California’s, and their economic strength in recent years has rested more strongly on the twin pillars of real estate and finance than ours has. Where, for example, is their Silicon Valley?
The UK’s real estate koolaide is also even stronger than SoCal’s.
The UK is overpriced, but it does not have a physical oversupply of housing like the US, due to development restrictions and (mostly legal) immigration. That may well limit the speed if not the magnitude of the downturn.
But right next door in Ireland, 1 in 7 houses is sitting vacant
Note the date on that article. Ireland is the Florida of northern Europe.
Erin Go Broke…
Most of the legal immigrants in the UK are poor, so I’m not sure how they are going to buy a £500K (used to be £200K) home. This is an excuse for why things are different in the UK that I just can’t agree with.
Worth mentioning that the speculative fever rain high in the UK…with the Spanish market imploding, many of the bag-holders are British “investors” with their vacation properties.
Nobody ever expects the Spanish Red Ink Position…
Nobody ever expects the Spanish Red Ink Position…
Immigrants were supposed to save the day in California too.
“Nobody ever expects the Spanish Red Ink Position… ”
Their chief weapon is subprime.. subprime and fees!
Repo-conquista
“Amongst our weaponry are such diverse elements as fear, subprime, ruthless efficiency, an almost fanatical devotion to the FED, and nice grinning mugshots!”
Tomas de Mortga-nada.
A man’s home is his Castile…
Cardinal Fang, fetch the soft, cushy FICOs.
around the globe, except for the Netherlands …
The RE mob, banksters and politicians (like our Finance Minister) continue to make statements that there is NO housing bubble in Netherlands, and that it is a great time to buy - despite the IMF saying that the Dutch market is at least 30% overvalued (number 2 spot after Ireland). In fact the Netherlands is probably number 1, because prices had already increased many hundred % in 1997, the year that IMF took as starting point for its investigations.
I wonder how long the denial is going to last. The Dutch market has been going up for nearly 25 years now, so most of the people who remember from personal experience that home prices can go down as well are retired, dead or have moved out of the country with their huge equity gains.
In due time.
Radicalization of minorities/immigrants in old Europe not yet complete.
Musical interlude…
http://www.youtube.com/watch?v=12P_jZVKBB0
From the article:
“That reality is spreading. Once-sizzling housing markets in Eastern Europe and the Baltic states are cooling rapidly, as nervous Western Europeans stop buying investment properties in Warsaw, Tallinn, Estonia and other real estate Klondikes.”
Yeah, but the REAL jewel in the crown is Albania. Yep. I’m investing heavily in land around Tirana before the word gets out and the other investers flock in. The Garden Channel is talking to me about a possible reality-show called, ‘Flip This Yurt’. After I make a bundle there, I’m gonna put some Dub-20’s on my oxcart and trundle off to the last great real estate frontier- Afghanistan.
Albania is a cautionary tale about bubbles busting, combined with a suddenly not so well-off, well armed populace…
Tell me if this sounds a little familiar?
“The wide appeal of Albania’s schemes can be attributed to several factors, including Albanians’ unfamiliarity with financial markets; the deficiencies of the country’s formal financial system, which encouraged the development of an informal market and, within this market, of the pyramid schemes; and failures of governance.”
http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
Is thare a quantitative difference between “no laws” and “many laws not enforced” ?
“A difference that makes no difference, is no difference.” - Mr. Spock.
In which Episode did he say that? (Just curious)
It was in one of the ST books, not an episode.
I have found most of the ST books (and Star Wars books as well) to be rather poor reading.
The ST books written by Peter David are good. Lots of humor.
“But some worry that the housing meltdown could spoil Ireland’s recipe for success. Like Spain, it attracted lots of foreign workers, many of whom came for well-paying jobs in the construction industry. That fueled the Irish rental market, which has remained buoyant and been a source of income for Ireland’s many real estate speculators. ‘If the immigrants go back home, will this hurt the rental market?’ asked Ronan O’Driscoll, a director in the Dublin office of Savills, a real estate firm. ‘If that happens, it would definitely cause foreclosures.’”
And in NYC? How many young people will show up here willing to pay $1,000 a month to share a one-bedroom with three other people if Wall Street isn’t hiring? And if the restaurant industry shrinks, how about those immigrants paying that much of their income or more for housing further out?
When I said I expected rents to fall eventually too, as in the early 1990s, people looked at me like I was nuts.
When I said I expected rents to fall eventually too, as in the early 1990s, people looked at me like I was nuts.
Absolutely they’ll fall, just as they did in SoCal in the early-mid 1990s.
The people who taunt renters with “all these foreclosed people will have to live somewhere, and will drive up the rental market” have forgotten these recent historical facts.
They also seem to have forgotten that the foreclosed units haven’t disappeared, hence supply hasn’t dropped.
“all these foreclosed people will have to live somewhere, and will drive up the rental market”
What about the ex-foreclosed having little things like 1st & last payments, security deposit & a ruinous credit rating…
No on the first 3 items, yes on the later.
Who’s going to rent to them?
About 6 months ago or less, the NYTimes did an article that Ben blogged about, featuring foreign buyers in the Manhattan market. Anybody remember that Irish carpenter with spec houses back in Eire, who bought a coop on Wall Street for 750K, because Manhattan RE is such a great investment? The brotherhood of international knife-catchers.
C’mon, the first plus last plus security deposit is in many cases less than one month of their old mortgage payment.
I’m sure those foreclosed upon, are loaded…
It’s likely that they’ll be plenty of knife-catcher accidental landlords desprate enough for tenants to rent out to them.
I love do a sword fight…
I love do a sword fight…
“She bought a cozy, one-bedroom apartment in the Dublin suburbs with her fiancé, Paul Colgan, in May 2006, at the peak of the market. They paid $575,000 — at least $100,000 more than it would fetch today. “I sometimes get shivers thinking about it,” Ms. Linnane said, “but I’ll let the reality hit me when I go to sell it.”
Any idea what the metric dimensions of a 2 x 4 are?
Any idea what the metric dimensions of a 2 x 4 are?
5cm x 10cm…and still just as hurty.
Hurtier with a rusty nail.
What are the metric dimensions of a rusty nail?
Lets see… 10d ~ 4.167p
“fiancé” LOL
First out of the chute - Wachovia reports “unexpected” loss -
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8UXUfg13HJw&refer=home
So much for containment.
Here we go. SKF up 5-10% today, it’s going to be a rocky one for the financials. It amazes me that anyone with half a brain didn’t expect the miss; one would think that the market would have priced in all the misses possible by now.
You know, I have thought that for some time now. To me, the ’story behind the story’ isn’t the losses or even their magnitudes, but the fact that the “analysts and experts” consistantly get it wrong- and nobody seems to notice. If I had a group of analysts who- despite the obvious trends- got it wrong month after month after month, I’d have them all out in the parking lot washing my car for minimum wage. And for those who defend those geniuses and their data (to some extent, rightfully so) and even scarier question emerges: Just how fast is it morphing and how f@cked-up must it be if the experts/boy-wonders really can’t figure it out?
Their purpose is “sales” not “analysis”.
Once you understand that, it’s all pretty clear. There are more if’s, but’s and maybe’s in those reports than in a legal document.
Not all salesmen are lying Sacks of S***. But that’s a helpful working asumption.
Cigar guy. They could figure it out if they wanted to, but they don`t want to.
Perhaps the analyst’s first clue is when they decided to report 4 days early?
that usually means good news
Looks as though Wachovia is using the Pick-A-Payment plan as well, in regards to their dividend payment. Which they have decided to pay the smaller payment for a while.
Priceless. What ticks me off is that they are still out there pushing this crap on people, and if they win-great. If they lose it is the FDICs problem.
KenWPA - funny you should mention it - I posted on HBB last week that I’d been seeing Wachovia’s ‘Pick a Payment’ ads on TV here in Los Angeles.
Normally, my eyes gloss over ads like this - after all, ‘House Values dot Com’ has been advertising breathlessly for years.
The Wachovia ‘Pick a Payment’ ad stopped my in my tracks,
because
a) its only been on for the last couple of weeks and
b) two of the 4 ‘Payments’ are Interest Only, and a 5-yr ARM.
Just the fact that they were still advertising I/O and ARMs made me sit up and take notice.
The world’s economic ministers declared on Sunday that shortages and skyrocketing prices for food posed a potentially greater threat to economic and political stability than the turmoil in capital markets.
http://www.nytimes.com/2008/04/14/business/14finance.html?_r=1&ref=business&oref=slogin
And what boils me is that people are screaming for food subsidies when subsidies are what has caused that whole damn fiasco to begin with. Remove the ethanol subsidies and mandates and watch food prices tumble. Even the far left ecowhacks now are admitting that ethenol was a damn poor idea. Of course they still want to force us to use those damn CFL light bulbs which give off horrible light, and create a mercury health hazard if broken.
When will people learn that the market works better than the government in most regards. If energy costs get too high then the market will slowly shift over to things like LCD lights, solar tech, wind tech, and higher economy cars.
People might say that free market is what caused the housing bubble but I’d say the opposite is true. A government creating a cheap supply of money, and then being available to catch companies when they fell is the r00t cause. If people have to put their hard cash money on the line with no recourse they think a little harder about who they loan it to. That’s the same reason I’m so much pickier about who I rent my rent house to since it’s paid off than someone with a rental that is fully mortgaged out. If someone torches my rental I lose an asset representing thousands of hours of work, if someone torches a mortgaged rental I can always wriggle out of the mess in foreclosure/bk.
“Even the far left ecowhacks now are admitting that ethenol was a damn poor idea. Of course they still want to force us to use those damn CFL light bulbs which give off horrible light, and create a mercury health hazard if broken.”
Whatever happened to the zero-population growth “movement” of the 1970s? The obvious answer to resource-depletion is fewer people–WAY fewer people, but apparently none of the bigwigs in either party thinks less is more.
American farmers claim they need subsidies to be competitive with farmers in other countries. But, can’t they sell their stuff here, instead of there, at prices that make importing food economically pointless?
If it takes two gallons of gas to produce one gallon of corn-based ethanol, which can only be sold at an affordable price with the help of government subsidies, shouldn’t someone in Washington realize that the whole thing is a joke? We’d be better off if the ethanol-corn-producing farmers grew nothing at all, and just took the damn subsidies, which, of course, is yet another American tradition.
I think farmers should not receive any subsidies, ever, for anything, but should succeed or fail on their own effort. Maybe if we stopped calling government handouts to them subsidies, and started calling them what they really are, humongous welfare payments, some of these farmers would be shamed into not taking them. But, I doubt it.
Tell that to the FLDS. I just readn article today where there is one guy with 9 wives and 126 kids. How in the heck do you feed all of them?
Lots of food stamps?
“Tell that to the FLDS. I just readn article today where there is one guy with 9 wives and 126 kids. How in the heck do you feed all of them?”
Biggest welfare queens you’ll ever see (and proud of it, too)–not to mention all the inbred kids getting treated at the many clinics here in N. AZ (on our dime). But, hey, it’s all about religious freedom . . . .
The only thing the ZPG movement did was persuade women like me to not have babies. Lotta good that did…3rd world and trailer trash went right on a’birthin’ babies. And it was just the same old Malthusian fallacy anyway.
I’ll agree ethanol is not the answer to our energy problems. I’m not a corn farmer, but like most farmers, have benefitted from higher grain prices resulting from the ethanol boom. However, those higher crop prices have led to astronomical increases in land prices, equipment costs, fertilizer costs, etc. I’m not sure agriculture is any better off now than a few years ago when all factors are considered. As for subsidies, I’d gladly give up any and all agricultural subsidies if the government would stop subsidizing housing, oil and gas, the airlines, all forms of alternative engergy (wind, solar, etc), food stamps along with the myriad other subsidies out there. Let us all survive or fail on our own. As for selling our commodities here at a price that would make imports impractical, it won’t happen under the current system. We can’t grow any commodity as cheaply here as someone else in the world can. I don’t think any of us want the government imposing embargoes and tinkering with the supply side of the food equation.
I meant to say tinkering with the supply side of the food equation any more than they already do. If ethanol has screwed things up, I don’t even want to think about grain embargoes, etc.
Using corn to make more energy is like Easter Islanders cutting down all their trees, to make more Morai…
Funny.
Texas farmer, if you want to see what happens when the govt starts tinkering with the supply side of food, check the recent farmer’s strike in Argentina. It all started with a hike in export taxes (35% to up to 44% for soy). Things are still messed up, and will be for a long time. Argentine farmers don’t get subsidies (there are a few fuel subsidies that go to big ag companies), and they are still competitive. The govt. wants to keep domestic prices low and a piece of the action on exports, so they tax the exports. It is not good, not good at all, at least not at those levels. But expect this sort of thing to begin happening a lot more as food prices keep climbing.
Far left “ecowhacks” were never behind ethanol. Midwest Republican Senators and Representatives taking bribes from corn farmers were.
Far left ecowhacks are too busy holding up traffic in their battery powered ecowack cars to give a crap about ethanol.
Or walking.
Or riding their silly hippie bicycles.
Or using silly hippie mass transit.
Or flying G 5’s
Yeah, I have to question that, too. The Rolling Stone had an article over a year ago on the ethanol blunder and they are about as far left as they come. It was just a way for the administration to appear environmentally conscious and still pay off their farmer buddies.
Lies…
http://www.lewrockwell.com/north/north619.html
That’s required reading…
Bullseye!
Already, rising [food] prices have spurred unrest in Burkina Faso, Cameroon, Egypt, Indonesia, Cote d’Ivoire, Mauritania, Mozambique and Senegal, according to the United Nations. In Pakistan, government troops were deployed in February to guard flour mills. Four persons were killed during food riots in the southern Haitian city of Les Cayes.
http://www.bloomberg.com/apps/news?pid=20601087&sid=admKeNIaN5pw&refer=home
Does anyone have advice about sites useful for following homes for sale? How do you feel about them? I know of the following:
-MLS
-Craigslist
-Yahoo
-FSBO.com
I also follow the local housing rags, newspaper classifieds, and drive around town.
NSO,
I use Coldwell Bankers site for specific homes, not homes in general. You can create a watch list of homes and it will send you an email whenever the status changes, pending, sold, price change, etc. It’s been pretty good. It shows the asking price and the selling price which is always nice.
…shows the asking price, and the selling price. Does it show what the price will be 3 years from now?
I like the coldwell banker site, too — cbmove.com — I just choose my city and select “new listings” once a week to keep up w/ asking prices. Of course, it only works in part of the mid-atlantic.
trulia.com
-good market stats too… you can see how any local market has performed in the past and present
The most useful site to me by far has been my county recorder of deeds’ website. Purchase/sale prices, leins, and lis pendens are all there.
Housingtracker has links to the reo sites of some (not all) lenders.
realtor.com….. for home sales
realtytrac.com …..to track foreclosures
http://real-estate.nextag.com/…….to find past
sales , also has some good charts
trulia.com……….has good info but estimates lag and tend to be high.Also has great info on “stats and trends” page.Shows sqft, median price etc.
Kijiji.com
Oodle.com
Iwanna.com
Hotpads.com
Postlets.com
Redfin.com
Justlisted.com
Realtor.com
Therealestatebook.com
I like ZipRealty.com, but I’m not sure of the national coverage.
Good for last sales price because it has a direct link to Zillow, showing the (useless) ‘Zestimate, but also last sale price.
Plus it does a simple price-per-square-foot on asking price, for both the Zillow and Cyberhomes ‘estimates’ and also tries to do ppst comps on recent sales - although ‘recent’ can be up to 6 months, about as much use as a chocolate teapot at this point in the process.
From outside Boston, over the last year and a half my wife have watched/visited 94 Different houses in our area through NewEnglandMoves.com, Coldwell banker’s site.
After 18 Months we been interested in 94 homes for sale. Here’s how they’ve faired:
49 Sold (52%)
16 Listings have been canceled (17%)
13 Listings have expired (13%)
5 Pending offers (5%)
11 Still available (12%)
This is very unscientific in it’s method. Houses have been added here-and-there every month.
Interesting point is that 30% are either Canceled or Expired. I have not been able to find them relisted.
I did something similar. I kept track of all places that were listed for two zip codes near the 128/mass pike intersection for the last 12 months. I used ZipRealty. I found 37 out of 72 sold (51%). The rest keep expiring and popping up again a few months later. I computed the original asking price vs assessment and found that places that sold averaged 115% asking/assessment while the ones that didn’t averaged 125%.
You’ve gone a layer further. I’m going to have to add some of your stats to my homes. Gracias.
Another one I like is to go to the local assessors database and collect the last price paid (Newton offers this, I don’t know about other towns) and compare that to asking. Some of these people with high asking to assessed ratios have no wiggle room while others can have room to lower their price quite a bit and still pull a profit.
I was looking around the area we are currently in today for something with 5+ acres. I found a place with 15 acres 2800 sqft built in 1971. They are asking 269k. In 2005 they paid 165k.
I’m gonna drive by there after work and see if they upgraded the siding to sheets of gold since their ‘05 purchase.
“About $2.8 billion of option-ARMs were more than 90 days late at Wachovia as of Dec. 31, up from $675 million a year earlier.”
Option Arms, Subprime, Stated Income, Private Equity, CRE, Auction Rate Munis, the list goes on and on….
As credit continues to tighten and more jobs lost and the economy slows further, what happens when half the country can’t meet its obligations?
“… what happens when half the country can’t meet its obligations?”
Then prices will drop.
Those who can get plain ol’ cash will buy from those who can’t, at greatly reduced prices.
http://www.nytimes.com/2008/04/14/opinion/14leamer.html
Still shilling away, shilling away …
silly pussycat it is different here
The joker who wrote that is Leamer, from Anderson Forecast…a shill outfit as noted. His brilliant conclusion…”weak market leads to lower prices and too little construction”. Does this dope not see the inventory overhang? And he’s opposed to lower prices..another Darwin award winner.
Buy now, before prices decline any further!
The irony of ironies is that as long as the prices are kept out of whack (price/income, price/rent), the builders will keep building and building and building …
Oh, the humanity!
‘..another Darwin award winner.’
He’s not a Darwin award winner, because he’s alive. No one has killed him…yet.
–
“The only solution is for the federal government to offer a temporary 5 percent tax rebate — up to $25,000 — for first-time home buyers.”
There is a price where people will buy homes without any govt incentive, Prof. Leamer. No wonder that I have little respect for most economists with access to media. Leamer’s forecast as of 03-11-08:
” Brushing aside conventional wisdom, UCLA economists say California and the nation will survive the housing slump and job losses without plunging into recession — although it will still be miserable for many Americans. “We are holding firm: no recession this time,” UCLA Anderson Forecast Director Edward Leamer said in a report being released today.”
Talk about the clueless! CA, especially, SoCal, has been in recession since June-July of 2007 and this guy can’t see what is happening around him. You need to get away from your ivory tower, professor. I have added Prof. Leamer to my list of rogue economists (a propagandist and not a scientist).
Ja
I wonder how many of those option arms are the deadly pick a payment? I kow someone who is making the min payment and each month is adding to the balance of principal. crazy! why? they can’t afford the interest only payment..doesn’t include taxes or insurance!
And Wachovia was still advertising them up until about a couple weeks ago or so, haven’t seen an ad more recently though.
I think they are ALL pick-a-payment; that’s why they call them “option.”
The number of FB’s making that minimum payment is dangerously high. Worse, the minimum payment is all they could ever afford; they were told they could sell of refinance before the jump.
Some of the last and nuttiest of these loans were option-ARM for only two months. A common mantra of realtors was “I can get you *into* this house for X per month.”
Of course the sheriff will get you out.
“…doesn’t include taxes or insurance.”
Yes, there is the other side to this genius underwriting! Loan the FB’s over 100% of the value, but don’t do anything like impound for taxes and insurance….they might not take the loan if they realized they could not afford it!
I bought a foreclosed house from Bear Stearns Mortgage about 2 weeks ago. I don’t see the seller’s closing paperwork, but they lent over $700,000 and I paid less than $300,000! The selling agent told me the taxes, insurance, bonds, and HOA all added up to another $14,000. The sales commission was 2.5%. BS Mortgage was lucky if they cleared $250,000. That is 35% of what they lent on the property 17 months ago! There is a long way to go if the dominoes start dropping. Only 36 of 138 homes have foreclosed in that neighborhood. All of them are overpriced and overmortgaged except three.
“Only 36 of 138 homes have foreclosed in that neighborhood.”
Are you sure the word “only” really belongs in that sentence?
“Are you sure the word “only” really belongs in that sentence?”
LOL - that’s what I was thinking.
“Only” as in a lot more are coming down the pike. There are many short sales coming up in the listings now. Those will be foreclosures soon. Everyone who paid $600,000 for a house now worth $300,000 creates a risk. That means 102 more homes……
The NYT is full of it
“The only solution is for the federal government to offer a temporary 5 percent tax rebate — up to $25,000 — for first-time home buyers.”
http://www.nytimes.com/2008/04/14/opinion/14leamer.html
What ya think?
Where will the monies come from? Oh yeah — I forgot that monies grow on trees.
I’d take that - or should I say, my husband would. He’s a “first time homebuyer” because the ones we have had have all been in my name. LOL
Aside from the odd exception like the above, it wouldn’t get any takers because there isn’t anyone left who is both willing and qualified to buy, who hasn’t bought already.
I’m willing* and qualified.
*when prices are affordable again…
Naw, I could do it too…I’ve always been a renter here in Manhattan. I bet there’s more than a few long-time renters who might come out of the woodwork and buy a $1 special upstate.
What ya think?
Home prices will immediately spike exactly $25 K because sellers know the money is coming.
And I also think that if that were to happen, I would DRIVE to Washington and storm into my Congressman’s office, demanding $25K to help “keep me in my apartment.”
Home prices will immediately spike exactly $25 K because sellers know the money is coming.
EXACTLY. Don’t they have people at the times who can understand this, or do they only staff people who come up with stupid ideas?
“a stimulus should commence in the second half of this year and be offered for about 12 months, depending on how the housing market is responding.”
Hey! We stopped the rebate and home sales slowed? Start the rebate again! Maybe we didn’t make it big enough….
Moronic beyond belief.
Quick, everyone annoint a first time bag holder to buy their property!
Annoint with K-Y, I presume.
“Only solution”? I know another solution: let prices keep dropping until supply meets demand. This is basic Econ 101, and it’s sort of embarrassing to see a “professor of management, economics and statistics” trying to repeal that fundamental law.
I agree with the assessment but this is no more the NY Times than a Robert Reich piece published in the WSJ conveys their philosophy.
Leamer is from the Anderson Center in LA. Which has been bought and paid for by the RE industry since Thornburg left.
Runt Reich is a Communist.
Look who signed it — not the NY Times Editorial Board.
I’d rather give $25K to a first time buyer than someone who HELCOed and spent. How about makign it $5K and cutting the price instead, however?
What if I buy a $1 dollar house in Detroit? Can I get the 25k? I promise, I’ll fix it up. Real nice.
It’ll cost you 25K just to bolt everything down.
LOL
Duct tape, baby.
I wonder how the generations of Americans who bought their first home without any such assistance will feel about this idea? People like my sister who bought in 1980 with a double digit mortgage for instance?
The pols and the MSM are trying their darnest to convince us that FBs are some kind of potent voting block - they are not! Most FBs won’t even make it into their polling place in November - but we all know who will vote - and the pols better wake up to that fact.
I don’t know. People who are in active distress tend to be the most activist. Comfortable people I think are less inclined to be activist. So there is some evidence that FB’s will be a motivated bloc of voters, trending towards those promising the biggest handout.
FB’s are certainly in distress. And they’re not a lazy group, just that most dangerous group* - stupid and motivated.
=============
* Some thinker once said that men fall into four groups, based on combinations of two “spectrums”: The spectrums are [smart-stupid] and [motivated-lazy].
The types are smart-motivated, smart-lazy, stupid-motivated, stupid-lazy.
The thinker said that the smart-motivated and smart-lazy were good for an organization. He said that the stupid-lazy could be put somewhere where they didn’t do much damage. But, he said, the most dangerous kind of person was the stupid-motivated. This kind of individual could seriously damage an organization.
FB’s strike me as being stupid-motivated.
(I found this tidbit in David Hackworth’s book, “About Face”. I wish I could recall the name of the thinker Hackworth quoted).
We will have to agree to disagree on this point. So far the most activist of FBs appear to come from inner-city groups that have a long history of tangling with banks and gov’t over fair housing, fair lending, etc. This bust is just another battle for them in a very long struggle.
Additionally, much of the noise coming on behalf of the FB comes from non-profits - many of whom have dubious ties to banks to begin with.
The media and pols are seizing on the idea of a motivated army of FB voters while ignoring the facts that outright owners, renters, and solid borrowers far outnumber them. They are creating the cult of the FB - but we will have to wait until November to see who is right. Even then, the results won’t really tell the truth - because there are so many touchstone issues this election. Perhaps exit pollsters will provide us with an idea of the political impact of the FB.
It’s funny, that quote had me thinking “U.S. Army” well before I got to who said it. Something about that organization really attracts the stupid-motivated :-). I miss David, I’d forgotten that came from “About Face”. Luckily I found a new fix for Hackworthian wisdom from John T Reed’s site (who I found thanks to one of the people here).
I’ve seen that attributed to Napoleon.
It is generally attributed to Erich von Manstein, http://en.wikipedia.org/wiki/Erich_von_Manstein , although without any definite citations.
People who are in active distress tend to be the most activist. Comfortable people I think are less inclined to be activist.
True enough, but past political involvement (voting, not political party involvement per se) and community involvement are better predictors of voting behavior.
My guess is the typical FB falls short in both categories.
How many of those people who bought in 1980 have heloc’d the equity out of their homes? college, medical bills,vacations, second homes. How many were depending on high RE values for their retirement? IMHO thats why most polls, I’ve seen, favor gov’t intervention to prop up RE values. Ben is right, it won’t matter.
I think the price point of “starter homes” would jump about $25,000.
What ya think?
I think the Times is almost as moronic as the idiots in Washington for thinking that throwing taxpayer dollars at the housing market is going to stop it from crashing.
Again, this is not the Times, it is a guest editorial. They have these from people all over the spectrum.
Next we’ll read that the only solution for poverty is to have the Federal government give $30k-$75k a year, net of health insurance premiums, to each poor family; amount depending on where they live.
PAGE ONE
Food Inflation, Riots Spark Worries for World Leaders
IMF, World Bank
Push for Solutions;
Turmoil in Haiti
By BOB DAVIS and DOUGLAS BELKIN
April 14, 2008; Page A1
How much of this is due to global (hyper?) inflation???
Don’t you know, it’s in the bag.
Did one of our favorite RE “experts” get a job at GE?
http://www.bloomberg.com/apps/news?pid=20601087&sid=agF48JJKka5Q&refer=home
GE’s missed target is no surprise considering over half of their revenues come from 1 out of their 12 business units, namely GE Capital.
The unit that actually MAKES things- GE Infrastructure had a bang up year… Imagine - MAKING real physical things, what a concept…Brilliant.
When more money can be earned by building instead of lending is when GE will change their business plan.
REVIEW & OUTLOOK
Dollar Alarm
April 14, 2008; Page A14
Awakening from their long slumber, the G-7 finance ministers have finally admitted that a global run on the dollar is a bad idea. The currency markets will no doubt begin testing immediately to see if they mean it.
April 14 (Bloomberg) — The dollar isn’t the only casualty of the Federal Reserve’s rescue of seized-up credit markets. Bond traders are finding there is nothing special about Treasuries anymore, now that the Fed accepts substitutes for government securities as collateral — having concluded it wasn’t enough to reduce the benchmark interest rate for overnight bank loans six times since September.
http://tinyurl.com/636kr2
But with the ECB refusing to lower rates is there much to be done besides continually buying dollars? Particularly if the Fed lowers rates again?
Buying dollars with what, O Great Financial Guru? More dollars? OOPS, that can’t work.
The plan requires OTHER central banks buy dollars using freshly printed local currencies. In other words devalue your currency to support the dollar.
Good luck with that plan!
They pushed the Plaza Accord through, and all Japanese woes pretty much arise from Japan agreeing to do so. Good luck getting the Chinese to do the same with Plaza Part II.
That’s what I was referring to. The only thing the other CB’s can do buy dollars. We can’t do squat! (that’s politically acceptable that is…)
ok NYT…lets do the math first time buyer purchase 300k home…25k credit..in 09 home goes down in value 10%…..30k-25k=FB…
Even at that, they’d only get a $15K credit (5% of $300K). Only buyers of a $500K house get the full “credit,” as I calculate it. I have no idea how many first-time buyers can afford a $500,000 property, but I’d guess it’s not all that many. The tax credit does not waive down payment and FICO requirements, as far as I can tell. So there’s a fair bit of smoke in this, IMO.
The sheep finally “got” the memo (after years of warnings from us)
WASHINGTON - A growing majority say they won’t buy a home anytime soon, the latest sign of increasing pessimism about the nation’s housing crisis, a poll showed Monday.
In a vivid sketch of how the sputtering real estate market is causing distress throughout the country, the Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won’t be able to make their monthly payments on time over the next six months.
http://www.chicagotribune.com/business/sns-ap-housing-crisis-ap-poll,0,1553746.story
“This is a great time to buy, but not necessarily to sell,” said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can’t because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.
“We’re just going to have to slap a Band-Aid on it and stay here until the market gets a little bit better,” Jackson, 30, said in a follow-up interview.
He’s got it all wrong…it’s a great time to sell, not to buy. I don’t know about the specifics of the RE market in Missouri…but If he hangs on, he will very likely be more underwater than he already is, and if he is hoping for prices to rebound before selling, good luck. It probably won’t reach the peak when he bought for 10 years, even in Missouri.
For those unfamiliar with St. Louis County, Ferguson is not exactly your upscale locale. It is quite hard to imagine how one could lose thousands on a home purchased there (unless the subprime cash infusion drove prices through the roof in recent years).
Fraud?
Sorry if I’m overposting, but this quote is priceless:
The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling — good if you’re buying a house but bad if you have to sell one.
I lost faith in the objectivity of the article (or maybe the writer’s intelligence) when I read that sentence…
More hair of the dog, and from the American Enterprise Institute, no less…
OPINION
The Inflation Solution to the Housing Mess
By JOHN H. MAKIN
April 14, 2008; Page A15
The policy alternatives in the post-housing-bubble world are painfully unpleasant. In my view, the least bad option is for the Federal Reserve to print money to help stabilize housing prices and financial markets. Yes, use reflation to soften the pain for Main Street and Wall Street. If instead we let housing prices fall another 25%-30% – as predicted by the Case-Shiller Home Price Index – it’s almost certain that Washington will end up nationalizing the mortgage business.
No mention here of record number of vacant homes, unaffordable home prices (which I guess are supposed to remain indefinitely inflated?), or the sizable disconnect between local incomes and local home prices. What sort of “scholar” is this Makin fellow?
Chicago guy. How about a free market solution, as in, let home prices and incomes get back into alignment without Fed punch bowl respiking?
They will anyway.
Firstly, the Fed doesn’t print money. It lowers the cost of money below the market rate causing the functional equivalent of printing.
Secondly, there is no “money” being “printed” unless someone somewhere borrows it.
Thirdly, the new “cheap debt” can flow anywhere it pleases. Absurd internet schemes, gold, commodities. The last is certain to make the current problem worse because incomes are not rising, and Chindia is online.
Fourthly, no banker or trader in their right mind will push the new debt towards a clearly collapsing asset which is what housing is so the “fresh money” doesn’t have a chance of heading towards the falling knife. It will head somewhere else.
Lastly, all of the above points are completely irrelevant unless wages rise which they are not going to do with Chindia online.
THE END.
Thank you, for playing.
Faster,
bravo! this is the most succint debunking of inflation argument I have seen in a while. All inflationistas, please print and frame this and hang it where you can read it every day.
There are $9T demand notes looking for a home.
Deflationistas should post this on their fridge.
This debunking of the inflation argument ignores the borrower of last resort which is already talking steps to borrow more than it needs at the request of the Fed (think stimulus package). It also ignores the world-wide demand side of the dollar valuation. Falling world wide demand for the dollar can cause inflation just as much as increasing the supply (because it increases the supply in the US).
Finally, it ignores decreased production as a result of oil shortages and malinvestment in the economy. We may be producing a ton of stuff, but it is the wrong stuff. The result of this will be deflation in the malinvestments and inflation in the things that we should have been investing money in instead (food/energy/water).
Throw in a healthy dose of social disorder, government bailouts, and military adventures and the real cost of food, shelter, and clothing will be going through the roof.
I am going to answer the simpler one first:
Hoz,
Your number $9T is arbitrary. The point is that those notes are being held in specific instruments. If T-bonds fell 50% (not terribly likely just a thought experiment), that $9T will also collapse. So your number is terrifyingly meaningless in that context just like the nominal value of derivatives is fairly meaningless. And a lot of those dollars are being held in collapsing instruments.
That having been said, it’s not that easy for such volumes to move from instrument A to instrument B, particularly instruments with durational characteristics like commodities.
Assuming the Chindians are alive in 2020, they will still need wheat then, and there is no mechanism to move those trillions into the demand schedule for wheat out to 2020 that easily.
The only ones that will make out like bandits are the market-makers (in a generalized meaning of the word.)
That having been said, I am largely on the side of commodity bulls. However, that is NOT inflation. That is the end result of PAST inflation finally showing up where it belongs — in commodities.
This argument also shows why “measuring inflation” is completely and utterly meaningless. The “fresh money” can flow anywhere it wants, and it doesn’t have to be commodities.
I stand completely unconvinced, and I challenge anyone to refute the above. Put that in your beer, and snort it!
All inflationistas, please print and frame this and hang it where you can read it every day.
Still waiting for this “deflation” to happen.
But it is!!!
Rents are dropping, as are house prices, and there is a total collapse in the discretionary economy causing bankruptcies. If that’s not deflationary, I don’t know what is.
Read above for the explanation of how “fresh money” doesn’t flow into all channels equally. In short, inflation is asset-specific.
It stands to reason that “destroyed money” doesn’t collapse all prices either. It’s asset-specific.
I think a lot of people are missing the point here.
FPSS,
The $9T is not arbitrary, admittedly $6T is in US/GSE notes most have less than 3 years left (see TIC data). China’s trade numbers show that they may have gotten out of $200K in US currency in the last year. You are correct that it is past inflation that is going to show up, but not just in commodities. It has started in commodities and will go to equities next. Maybe some day it will go to Real estate, “How much do you want for Rocky Mountain National Park and Yellowstone park, we offer a two fer price?”
Due to our national psyche, the US is reticent to allow foreign purchase of our companies. This is not good. In fact the main hope for quick relief (less than 10 years) from this ongoing crash is to allow foreign purchase of US equities and for the cash received to be employed in new industries.
China and India have the moneys to keep commodity prices high for the next 30 years. The entire estimated corn production in the US can be bought for less than $100B, two months cash reserves increase for China. The US is broke.
ps. As for the beer, I do not snort; I sip daintily, one chug at a time.
‘Still waiting for this “deflation” to happen.’
Still watching it happen to real estate prices — last seen dropping at a 25 pct annualized rate (Case-Shiller-S&P Index).
>
But since most people are NOT going to default and walk away from their houses they will not experience this. But they are spending more on food, energy and healthcare. A lot more.
Then, they shouldn’t have trapped themselves between a rock (fixed income with Chindia online) and a hard place (needing to feed the alligator for 30 years, and feed themselves too.)
You bought the idea of the 30-year “American Dream” in your far-out suburb with the lawn for the kids — you live in the nightmare too. That’s the way the cookie crumbles.
What they “experience” is irrelevant to the inflation-deflation argument.
What they “experience” is irrelevant to the inflation-deflation argument.
I respectfully disagree.
bears sterns went from $80 to $10, housing lost a few trillion over the last year, stock market the same, money is being destroyed faster than its being created and fed will spend its remaining bullets trying to catch up, but they will fail.
Fix Bayonets!
This visiting scholar should be sent home.
Don’t send me home bro!
I think this might work however… global wage arbitration might kill it. So, if we try to inflate incomes to pay for the houses the dollars might just flow overseas and not into peoples incomes.
You could do this and go protectionist but that will kill a lot of the economy since we are one of the largest exporters.
Really seems like the endgame.
Another hair-brain scheme by the nutjobs at AEI.
I thought AEI was a shill for the ultra-conservatives. Shouldn’t they be advocating “free market” solutions?
Oh golly gee, I guess they like the free market only on the way up.
Nah, AEI is full of neo-con empire-building crony-capitalist fascists. CATO is the free-market think tank.
Pop quiz: which one do you think the Cheneys belong to?
As Nixon said, “We’re all Keynesians now.”
“If all the economists in the world were laid end to end, they still wouldn’t reach a conclusion.”
George Bernard Shaw
What planet do these guys inhabit? Another retard masquerading as a “scholar”.
Whatever you think of this opinion, it ain’t easy getting a PhD from Chicago econ…
It wasn’t easy becoming dictator of Germany, either. That doesn’t mean the person holding the title has any value to humanity.
If only that Austrian art school had accepted Adolph. He’d only be another angry artist on the dustheap of history…
So much for the 1,000 year REIC…
You got me on that one. If I recall, the guy had to get out of jail first.
clearly not, as it seems to require removal of all empirical knowledge of how economic systems behave when you actually do turn the printing presses on.
*sigh*
Right winger — improverish Americans who saved through inflation to limit the pressure for a government response to a wholesale fleecing by the rich. You can almost smell the desperation in these proposals.
“While there is a substantial risk that inflation may rise for a time – this would be the policy goal – monetization is more easily reversible than nationalization of the mortgage market.”
Wrong. All they have to do is sell the new entities, just like the Feds sold Fannie and Freddie before. The difference is investment losses for the rich vs. purchasing power losses for the rest.
“The difference is investment losses for the rich vs. purchasing power losses for the rest.”
WT - that’s how I see it, too.
Darned good thread, this one.
I will believe this when I see some hard evidence.
Stocks Reach Credit Limit
By E.S. Browning
Word Count: 1,367 | Companies Featured in This Article: General Electric, Endeavour International , Microsoft, Cisco Systems, American Express, Caterpillar, Talbots, Macy’s, Sprint Nextel, Starwood Hotels & Resorts Worldwide, Home Depot , Citigroup, Morgan Stanley
The stock market isn’t looking quite so resilient anymore.
General Electric Co.’s disappointing results, not just in its finance arm but throughout its businesses, put investors on notice that the problems with the U.S. lending system is sowing trouble throughout the economy. That threatens the bounce-back in the U.S. stock market, which had seemed to be on the mend after its deep winter plunge.
Watch 1327 or so. My timing could have been better but I’m holding long unless we roll down from there.
Same here - 1,327 and a break below 1,270 would be big I think.
Got another $2+ shorting that wacky SKF. Hope nobody here was the one who paid $117 premarket.
Bought 116 after the open
FXP is another wacky one
Hi Tx, Is 1280 next support after 1320ish?
I don’t know to be honest with you. Haven’t been paying that close attention the past few weeks. My general impression is still the longer this goes on, the nastier the rally is going to be.
Look at 1235.
666 could be troubling.
“666 could be troubling”
LOL
OT: SE Utah used to have a State Highway 666. We called it the Highway of the Beast. The tourism revisionists finally got it changed to another less “troubling” sequence of numbers.
From The Times
April 14, 2008
US Federal Reserve says that credit crisis is not over yet
Suzy Jagger in Washington
The credit crisis engulfing the banking system on both sides of the Atlantic has further to run, said the vice-chairman of the US Federal Reserve. As the US Treasury Secretary and central bankers gave warning that proposed financial reforms would not prevent a repeat of the biggest shock to the world economy since the Great Depression, Donald Kohn, of the Fed, said of the present trouble: “It is not over yet.”
U.S., Europe Warn of Further `Bad News;’ Strengthen Regulation
By Gonzalo Vina and Alison Fitzgerald
April 13 (Bloomberg) — Finance chiefs from the U.S. and Europe said the eight-month credit squeeze is still festering and urged banks to take steps to relieve it.
“The chain of bad news may not have come to an end,” Italian Finance Minister Tommaso Padoa-Schioppa said yesterday as the International Monetary Fund held its semi-annual meetings in Washington.
Despite the huge supply, still some Kool-Aid drinkers it seems:
http://www.freep.com/apps/pbcs.dll/article?AID=/20080413/BUSINESS04/804130611
I don’t think these builders and realtors are factoring in the one biggest reason for Detroit’s housing problem - The city is dieing and jobs are moving elsewhere. The same goes for the whole state which is as unfriendly to business as you can get.
…is as unfriendly to business as you can get.
Gosh, you mean we can’t trust their celebrity spokesman? Jeff daniels is so good that even my wife enquired where Michigan was after one of their businesses-please-move-here spots.
She was born near the equator and has a rather hazy idea of geography. I had to explain that it was 1000 miles colder than she likely wants to get.
Heheh, I loved him in “Gettysburg”. My Wife actually has a PhD in Cultural Geography so I’m always informed (whether I want to be or not) about the exact conditions in about anyplace we hear about. Brother…
My Wife actually has a PhD in Cultural Geography
Is that for real?
‘My Wife actually has a PhD in Cultural Geography so I’m always informed (whether I want to be or not)’
Oooh, you’re lucky. A value-added wife.
I don’t have a wife, but I enjoy spending time with land-use lawyers, cops and chefs. Auxiliary benefits, you know.
Yep… It’s for real… She’s a smart gal. Me, I’m lucky if I get the right shoe on the right foot…
I wonder where this idea originated?
April 10, 2008
SUBPRIME BAILOUTS IN GERMANY
Taxpayers Forced to Cover Risk of Banks’ Folly
By Wolfgang Reuter
The talk is still of government guarantees, but huge subprime-related losses at several German state-owned banks could soon start hitting taxpayers where it hurts: the pocketbook. The writedowns continue to mount and, in a worst case scenario, could leave taxpayers with a bill as high as €30 billion.
http://online.wsj.com/article/SB120813349057411671.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.319981
The Inflation Solution to the Housing Mess
By JOHN H. MAKIN
April 14, 2008; Page A15
“The policy alternatives in the post-housing-bubble world are painfully unpleasant. In my view, the least bad option is for the Federal Reserve to print money to help stabilize housing prices and financial markets. Yes, use reflation to soften the pain for Main Street and Wall Street. If instead we let housing prices fall another 25%-30% – as predicted by the Case-Shiller Home Price Index – it’s almost certain that Washington will end up nationalizing the mortgage business.”
[Absent from the article is any discussion of how to induce the WAGE inflation that would be necessary to prop up house prices, in an environment of a weakening job market and ever-increasing globalization.]
Exactly — how would reflation work with “wage inflation”?
withwithoutThis was my favorite quote:
“While there is a substantial risk that inflation may rise for a time – this would be the policy goal – monetization is more easily reversible than nationalization of the mortgage market.”
Easily reversible? How? By Volker-style interest rate increases? That was pretty painful the last time.
This guy is from the American Enterprise Institute. Aren’t they usually the ones crying “let the market solve the problem”? In this case, the market IS solving the problem, and rather swiftly at that.
He conjures the specter of nationalization or at least “reregulation of financial and mortgage markets after the election,” but if those are his real fears then fine, by all means let’s hear the free-market argument against those ideas without demanding a “reflation” that will have untold destructive effects on the economy, his appeal to Japan’s shining example notwithstanding.
How did that Japanese reflation experiment pan out?
Read above for why it can never pan out.
It has to to do with how debt is generated, and where it gets channeled by whom.
Whip Iflation Now!
strong job prospects…in Asia:
Despite the uncertainty in the U.S. economy, a major export market for Asia and a vital source of investments, job prospects in Asia remain strong, the head of Milwaukee-based employment-services group Manpower Inc. said.
http://tinyurl.com/6o2vs5
http://online.wsj.com/article/SB120816051613512367.html?mod=hps_us_whats_news
Growing Number of Americans
Avoid Buying Homes, Poll Shows
Associated Press
April 14, 2008 6:33 a.m.
WASHINGTON — A growing number of Americans say they won’t buy a home anytime soon, the latest sign of increasing pessimism about the nation’s housing crisis, a poll showed Monday.
Watch the gubmint roll out bigger and bigger bribes (like the $7K foreclosure purchase bribe) to talk financially prudent households into becoming knifecatchers.
While I deplore the squandering of taxpayer monies in this way, I’m all for encouraging knifecatchers to jump in - it’s much easier to track the decline of prices if someone is buying!
Good point. I have no problem with these policies, either, so long as traditional lending qualifications (such as requiring the borrower to have a means to repay the loan) are enforced.
You mean to say, you would have no problem with these policies if we weren’t going further in debt to enact them, no? I don’t mind people who want to play knife-catcher, but nothing is worth heaping on more tax-payer debt. The market would correct on its own anyways.
Guvmints fighting over $1 houses…..whoda thunk?? Guess they finally found the right price point to generate competition.
http://www.freep.com/apps/pbcs.dll/article?AID=/20080413/NEWS02/804130604/&imw=Y
Wait till the 1$ homes go back after they can’t take care of them or pay the taxes.
WASHINGTON - A growing majority say they won’t buy a home anytime soon, the latest sign of increasing pessimism about the nation’s housing crisis, a poll showed Monday.
http://tinyurl.com/62c93w
Paulson goes off the deep end:
He said he told his counterparts that checks from the stimulus package would go out in May and June and that they would add 500,000 to 600,000 jobs to the economy. He said that the federal government was helping more than a million homeowners keep their homes.
http://tinyurl.com/6rtq8w
“I explained that we’re watching this very closely,” Mr. Paulson said, adding that the housing bubble of the last several years had been “unsustainable” and that the decline in housing prices was “not pleasant” but “what needs to happen” for recovery to take place.”
i know that i have been out of touch lately due to my father’s health decline, but when did the powers of the country finally admit this is a “housing bubble”? the last comment i read said it was a “housing ballon” not a bubble.
takingbets-
Sorry to hear about your father’s declining health. Being there, is the most important thing you can do.
Paulson sounds so Adolf-ish, circa April 1945
Back then it was imaginary divisions, now it’s imaginary division.
Having just watched Downfall, I’ll be tasteless here and ask if David Lereah’s wife will poison all the children because she can’t stand the idea of them being raised in a world without the NAR.
I didn’t realize that paying down credit card debt could create so many new jobs.
Well it might save a few banks….
All the stimulus checks will do is help J6P catch up with his payday loans.
I would say that the rise of the Payday Loan Shop is a true barometer of how the American middle class is faring. I seem to recall reading that in some communities they now outnumber fast food places.
I wonder what percentage of American households patronize Payday Loan stores on a regular basis.
.
.
Found it:
“At least 10 million households get payday loans over the course of a year, according to the CRL.”
http://money.cnn.com/2007/12/13/real_estate/payday_lending/index.htm
I know of one town in Northern Alabama that has 13 of these “lenders” on one 3 mile stretch of main road. Some are actually right next door to each other. I believe Arkansas just told em all to close shop. What a racket.
sounds like the liquor stores in the Dallas I remember…doesn’t Arkansas have some strict usury laws, or is that a thing of the past?
Renting’s for suckers! SQUATTING is where it’s at!
http://www.salon.com/comics/tomo/2008/04/07/tomo/
Utterly subversive!
I have loved Tom Tomorrow for a very long time. A bit on the shrill side but always entertaining.
Law Firms Curtail Associate Programs As Economy Slows
By ASHBY JONES
April 14, 2008; Page B1
For associates at law firms, how quickly things have changed.
This time last year, salaried lawyers at many of nation’s largest firms had just scored a pay bump, as business was blazing and firms were scrambling to keep talent. Now, due largely to a slowdown in work relating to mortgages, real estate, mergers and private equity, some firms are taking such measures as rescinding offers to incoming associates and summer associates, asking first-year lawyers to start several months later and shortening their summer programs to save money.
I have a number of contacts at the various large national firms. The feeling everywhere is that everyone is going to be doing large layoffs, but they are all waiting for someone else to do it first. Reputations are very important, so being the first or second to do layoffs is bad. But being third, fourth, fifth, etc - not so damaging to your reputation.
Saw all of this in ‘91-’92: offers rescinded once accepted, firms that went BK, only 2 out of 30 summer clerks hired to start at 20% less than the previous class. Didn’t these firms learn anything? Guess not.
I read this summer that some firms in Dallas are paying $150K and up to first year associates. That stunned me. Most first year associates aren’t worth the space they take up.
160K in Chicago.
I graduated from law school last May. I feel sorry for my well-pedigreed brethern who might be laid off. Its going to be harsh to go from 160k to nothing. Hope they saved some of that dough.
Hope they didn’t run up a $100+ K student loan balance …
Investors fear for US bank losses
By Francesco Guerrera in New York
Published: April 13 2008 18:02 | Last updated: April 13 2008 18:02
Wall Street is bracing itself for a week dominated by news of large losses, multibillion dollar writedowns and thousands of job cuts as Citigroup and Merrill Lynch, two of the worst casualties of the credit crunch, report results.
Investors and bankers fear that another set of dire numbers by the two lenders will reverse the slight improvement in sentiment in recent weeks and quash hopes of an end to the financial turmoil soon.
“It is all on Citi and Merrill. If they are unable to show investors that they are moving past their current problems, we could be in for a long spring and summer,” a senior Wall Street executive said last week.
I saw some FBs in my neighborhood finally throw in the towel yesterday. These people never should have bought a house. They were long-term renters (due to financial constraints, not financial acuity) and had a bankruptcy recently. Two year ago January (at the peak) they bought a $590,000 house with 2 mortgages from New Century (subprime). I guess their loan re-set because yesterday there was a U-Haul out front all day. Now comes the foreclosure.
I wonder why they didn’t stay rent-free for the 6-12 months (or more) that it will take for the foreclosure to work through the system.
Maybe they got a loan to buy a cheaper house.
Economic policy must address savings shortfall
By Martin Weale
Published: April 13 2008 17:31 | Last updated: April 13 2008 17:31
The current credit crunch has focused minds on the extent to which the UK’s recent economic growth has been driven by the credit boom. But studies of saving have tended to focus on the issue of pension provision rather than the broader and simpler question: “are we living beyond our means?”
Raised an interesting question to me: are “house broken” baby boomers expected to decrease consumer spending in future years, and is that accounted for in projections? What if they just start saving for retirement?
On second reading… conclusion seems to be:
Since those profilgate seniors refuse/refused to save and we can’t make them change, the only reasonable response is for (UK) government to step in. Rather than aiming at balanced or slight surplus, the government should start running much greater surpluses in order to force “national saving”.
So - how would the youth of the UK feel about a plan like this? A generation of workers get to retire in their 50’s and 60’s and the next generation gets hit with higher taxes, less choices, and told to work to longer so that the “unthinkable” (people in their 50’s and 60’s have to go back to work) doesn’t have to happen?
I think in 2 decades or so, the most valuable commodity any country will have is young workers. Those who treat them kindly (reasonable taxes, emphasis on youth services), I think, will see an influx of them.
“So - how would the youth of the UK feel about a plan like this?”
How do the youth of the U.S. think about it?
“I think in 2 decades or so, the most valuable commodity any country will have is young workers. Those who treat them kindly (reasonable taxes, emphasis on youth services), I think, will see an influx of them.”
So what country do you recommend I tell my teenage daughters to move to?
Whichever country has more young workers than old ones, and will accept them.
Seriously.
If you don’t think the same gameplan is going to play out elsewhere with the passage of time, you haven’t learnt much from history and politics at all.
Your kid’s kids? Different story altogether.
Whichever country has more young workers than old ones, and will accept them.
Totally agreed.
So what country do you recommend I tell my teenage daughters to move to?
LOL - I don’t know. I’ll let you know when it happens, in about 2 decades or so give or take a while. *grin* All I really know is that screwing the young by protecting the status quo/expectations of the elders is not a great game plan when countries are losing the traditional balance of workers to seniors.
My ancestors made it here mostly because they were screwed by the already established generations (twice in fact, if you count the migration from Canada.) It’ll happen again if 1st world governments don’t take a hard look soon at the imbalance of resources between the young vs old.
I don’t know, but I bet some great music comes out of it!
That would include “youth bulge” countries such as Angola, Afghanistan, Haiti, Mexico…. Get your tickets early.
U.S. retail sales rise, but for the wrong reason…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSVu8P.brzMY&refer=home
Reporting nominal revenues as sales confounds inflation with changes in real consumption.
Purchases excluding gasoline were unchanged last month after falling 0.3 percent.
Even “unchanged” means “falling” if the figures aren’t adjusted for inflation.
You’re right!
http://www.marketwatch.com/news/story/irwin-kellner-dont-fooled-retail/story.aspx?guid=%7B26D04D68%2D85AB%2D4A50%2DB7CF%2D4F4C6D2074E9%7D&dist=hplatest
“To make matters more pressing, the savings rate has been hovering around zero for the better part of the past three years. ”
how do they calculate this? i know quite a few people that save money on a regular basis.
And apparently a similar number of people have been spending more money than they earned, on a regular basis. That should change now that there isn’t as much “E” to support the HELOCs.
So, gasoline sales receipts figure into retail sales - but gasoline prices don’t figure into core inflation?
Click.
Good point!
I’m ready for these statistics to include another decimal place. When you are talking about the size of the US economy and only rounding to the tenths place, you are potentially missing a crapload of data. Huge difference between .151% and .249%, but they both round to .2%
.151% = .2% and .249% = .2%
I have to admit I thought existing homes sales would be up by now at lower prices
nothing appears to be happening in my hood 22151
Lower prices? Try affordable prices. What are the rent to own and price to income ratios?
Article from the NY Times,
http://www.nytimes.com/2008/04/14/us/14drug.html?hp
Co-Payments for Expensive Drugs Soar
Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.
But the result is that patients may have to spend more for a drug than they pay for their mortgages, more, in some cases, than their monthly incomes.
Yes sir, that market based health care is really great. Good thing we don’t want any of that socialist medicine. If sick people want drugs, they should just work harder so they can afford them.
If there were a few large buyers negotiating with drug companies for prices, their profits and prices would quickly become less stratospheric.
I appreciate that drug companies do a lot of societal good, but predatory, monopolistic pricing significantly undermines that societal good. So, the society should attempt to limit that monopoly.
Microsoft has a monopoly on the desktop? And can get users to pay exorbitant prices for the software? There were anti-trust rumblings againt Microsoft a few years back. Now imagine if Microsoft sold a life-saving drug that specifically had no competing products. And on top of that, the government was paying for it.
This is a significant reason there are runaway drug and healthcare prices.
One reason is that when Bush and the Republicans passed Medicare D, they specifically forbid Medicare to negotiate the price of drugs. Plus the fact that you have a Government backed monopoly through patents.
That bill was written by the drug company lobby. it passed in the middle of the night by very few votes. The chair of the committee is now working for a drug company making millions. … What a crime against humanity.
Expansive drug costs have soared as well…
I came of age during the $10 four finger lid~
We’ve heard plenty about moral hazard from the institutional point of view… what about individual moral hazard. I think that all the promises from candidates and the apparent mandate for a bailout are encouraging people to withold payments (at least in some cases). Basically, this entire mess is encouraging borrowers to strongarm there way into a cheaper morrtgage that they don’t deserve. Thoughts?
One truth of lending
Tom Toles in Washington Post
http://tinyurl.com/5rgw97
Yes, we have no diplomas…
EMI turmoil hinders Citigroup efforts to reduce its loan exposure
“…Uncertainty about EMI’s finances is frustrating efforts by Citigroup to reduce its loan exposure to the music company.
Citigroup financed Terra Firma’s buy-out of the British music company last year, leaving it with about $5bn (£2.4bn) in EMI loans - one of its largest single exposures.
The bank tried to include those loans in a $12bn portfolio that it plans to sell at a discount to private equity firms. However, Citigroup was forced to remove the EMI loans from the package after it was unable to provide adequate financial information to potential buyers, people familiar with the matter say….”
FT
http://tinyurl.com/5mxwdo
Not only do these clownish banks have awful exposure, they are also perched on a narrow cliff and a storm is brewing…
More vindication today. Another construction company owner said to me “You were right about housing and that was two years ago.”
Congrats, exeter!
From Bloomberg;
April 11 (Bloomberg) — Ayn Rand’s novels of headstrong entrepreneurs’ battles against convention enjoy a devoted following in business circles. While academia has failed to embrace Rand, calling her philosophy simplistic, schools have agreed to teach her works in exchange for a donation.
The charitable arm of BB&T Corp., a banking company, pledged $1 million to the University of North Carolina Charlotte in 2005 and obtained an agreement that Rand’s novel “Atlas Shrugged” would become required reading for students. Marshall University in Huntington, West Virginia, and Johnson C. Smith University in Charlotte, North Carolina, say they also took grants and agreed to teach Rand.
http://bloomberg.com/apps/news?pid=20601109&sid=as6BR0QV4KE8&refer=home
If it’s a public university they could probably refuse on the basis that Rand’s philosophy amounts to a religion.
“Ayn Rand has a kind of absolutist ethics,” Brook said. “She believes in right or wrong, good and evil, but based on secular principles, not religious principles, and I think there’s an appeal for that now.”
Reality bites…
..
LOL !
I graduated from Marshall in 1989 with a BS in Chemistry.
GO HERD !
..
Long time lurker here with another data point to share…
I went to UW-Madison’s admitted MBA students event over the weekend. What’s interesting about them is that the program is career specialized right from the beginning and there are, I think, 13 specializations to go into. The people who were going into arts administration, brand management (marketing), and supply chain were having the most fun. But some of the ones who were going into applied securities analysis and especially real estate were some of the most dour people I met over the weekend.
I wasn’t able to get too much into it with the real estate people, but the ones I talked to mentioned significant lay-offs and one graduating real estate student had a look of pure dread when the conversation turned to his future. If even MBA’s with a real estate focus are getting all out of sorts, I have to imagine it must be just brutal out there.
“I wasn’t able to get too much into it with the real estate people, but the ones I talked to mentioned significant lay-offs and one graduating real estate student had a look of pure dread when the conversation turned to his future.”
A fellow city planner, who was already had a masters in that field, was going for an MBA at NYU in the 1980s, and paying a high tuition price to get it. He told me the night of the 1987 stock market crash the finance professor walked in and said “the jokes over, do some financial calculations on the payback for this degree, and walked out. Many of those going full time quit to program (he didn’t).
My wife suffered through four long years of night school at CUNY (Baruch) for her MBA. Not as good, perhaps, but a better payoff.
So, I have a question for the group.
With all of these foreclosures do you think the mental health impact of all of this “failure” will create an increase in diagnosis to explain this problem of people’s poor financial misjudgment?
See, I am witnessing a real example right now with my father in-law. He went through 3 foreclosures back in 2006 (primary residence, vacation home in Northern Michigan, and a flip in Florida.) Anyway, since all of this he is now diagnosed with “Bipolar Disorder”. Apparently his behavior of making irrational financial investment decisions with borrowed money (all 3 properties were heavily HELOCed or had zero down when purchased) means that he obviously wasn’t in his “right mind” and that the only way to explain such behavior is to give him a condition.
So, now I’m supposed to act like he is some sort of mental health case and simply ignore the fact that he has always been a poor financial decision maker. Of course, I don’t say anything openly since he is my kid’s grandfather and my wife’s father, but really this is just absurd.
Anyone else experience any new “diagnosis” of a fellow FB? Do you think mental illness will spike with all of these financial woes?
Chris,
I have the exact opposite problem. Emotional, yes, but I am so risk adverse that my brother says its pathological.
When I do buy stocks, I dump ‘em. I am terrified of reliving the dot com wipe out.
I truly need a finance therapist and a magician money manager!
That comment took 43 minutes to post!
Firstly, there is nothing wrong with being “risk averse”.
Anyone who tells you otherwise is either trying to sell you something, or hasn’t managed their finances for very long.
In fact, I will argue the exact opposite. You SHOULD be risk-averse. Someone like me would possibly get classified as “aggressive” but I assure you I am risk-averse.
That’s what good money management is. A reasonable gauge of probabilities and outcomes along with some understanding of how mass psychology affects outcomes, and a clear understanding of the difference between a sound bet that results in an unfavorable outcome v. an unsound bet (very very hard, I assure you.)
Risk averse? F*ck yeah! I’m betting my money not someone else’s.
why do you buy even “buy stocks” when/then you “dump ‘em”.
Of course they will, do you actually think that people will take responsibility for their actions anymore??? Don’t want to hurt their delicate self esteem and fragile ego do they?
Of course taking responsibility is something unheard of in America today. So, of course I expect these issues to be dismissed under the guise of mental health or other excuse. I guess it’s no worse than these FBs blaming the mortgage broker, loan officer, or realawhore for their dumb decisions.
Lot’s of people will experience a “realty check”, which can trigger.
“Anyone else experience any new “diagnosis” of a fellow FB? Do you think mental illness will spike with all of these financial woes?”
Facetiously speaking, all these dumbasses who speculated on the way up weren’t of right mind then so what makes you think they’ll have sound judgement when their silly infestments reverse course??? On a side note, your grandfathers speculation is exactly what drove prices to the stratosphere. His greed locked out those who actually needed shelter but he viewed it as an investment….. and that infestment landed him in the funny farm.
On a side note, your grandfathers speculation is exactly what drove prices to the stratosphere.
As an aside to the mental health thing, I’m not sure this analysis holds up to scrutiny. I don’t see how suppliers have it in their capacity to drive up prices. To the extent that a person might have purchased a house for speculation, I imagine the speculation does not force up prices. Since that house is back on the market in a short time, that purchase hasn’t really affected supply and therefore doesn’t really affect prices.
I heard once a short discussion on the prices of certain wines. I’m not a wine connoisseur (I make my own:) but I understand some wines are pretty expensive. The conventional wisdom is that the expense of the wine derives from the fact that the grapes from which the wine can be made are from a certain area of France and land in that area is very expensive.
The discussion I heard was that the force of prices in that analysis is backwards. In fact, the price of the land is driven by consumer demand for the wine. So if, say, the grapes in that region made a wine which tasted like urine, the wine would be undesirable and the land from which it is made would lose desirability (and value) proportionately. That makes more sense to me.
With regard to housing, builders don’t have the capacity to just increase prices at whatever rate they want. Price increases (and increased activity such as building, rehabbing, etc) were driven by a willingness to pay more (which was in turn driven by cheap/easy credit). In short, buyers were bidding up prices.
There are a **lot** of apartments and condos where I live that are being held to flip. A lot of old rental towers are in the process of being converted into condo developments. For example, the unit we used to rent for $600 a month in 2000 is now available for purchase at $320,000 (the whole building was converted from a rental building to condos). Someone renting it out would need to get a minimum of $1,800/ month just to break even. This may be temporary, but it certainly is real.
I have no idea how it could be done without over-regulation, but I think that property flipping should be a crime. Punishable by extreme death.
“In short, buyers were bidding up prices.”
Thank you for conceding that fact. Grandpa is case in point.
What does your wife think about this??
Our entire area could be considered mental if this was legit.
She believes he has a problem and that the diagnosis explains a lot. But her concern is more long-term not necessarily one to find an excuse for what happened. She feels what happened happened and it’s time to move on to deal with the future instead of dwelling in the past. Which is a healthy way to deal with this.
She doesn’t think he is fault free. Just that what benefit is there dwelling on it.
And had things not taken a (much needed) turn for the worse? He would have been told he was a genius.
As with everything else these days, gotta’ find someone (or - in this case - something) else to blame other than admit a mistake and take your lumps.
I think we need the psychiatric community to develop a new illness to attribute to FBs. Something along the lines of “No common sense disorder” (NCSD for short
).
Hard to talk about any case without all the facts, but I can say for a fact that my wife’s bipolar contributed directly to our eventual F’edness. My primary contribution was not recognizing that I needed to cut her off from our money, thinking that her problem was just temporary and that I needed to “be supportive”. It can happen, and in some cases it can happen to someone who seemed relatively normal prior to the first manifestation of the problem.
To address your final question, yes, I think that easy credit probably has allowed a lot of mental illness and various brain disorders to fly under the radar for the last decade or so, and you will start to see a lot more of it as the easy credit dries up. The problems of the liquid and crazy seldom become everyone else’s problem. When the money runs out, however…
I had an elderly client who was told he was getting dementia…one thing he did was keep buying cars. He’d find a “good deal” on a 2 yr old Toyota, whatever, and buy it. Drove his wife crazy. But I can see how an old guy who coveted cars all his life, has some money to spend might get carried away..it could be anyone, really, if buying stuff has always been their main entertainment anyway. I worry a bit about my hubby because he likes to shop much more than I do, and is always looking to buy stuff.
overspending is one of several classic signs of the manic phase in bipolar disease…
You and your wife should be aware that there is a genetic component. Also, the stereotypical cycle (manic highs followed by depressive lows) doesn’t hold true in all cases. It’s a really complex disease.
April 14 (Bloomberg) — The U.S. corporate earnings season got off to an “awful” start and stocks will continue to fall, according to Goldman Sachs Group Inc.
“Early signs are awful,” a team led by New York-based David Kostin, Goldman’s U.S. investment strategist, wrote in a note today. “We expect generally disappointing results and a swath of lowered profit guidance that will drive the Standard & Poor’s 500 Index lower in coming weeks.”
After this bailout rally ends I expect a more downward direction for Stocks.
In the auction rate securities markets, there were 44 failed auctions from 1984 to 1987. There have been thousands in April of 2008 alone. 60%+ failure rate. And the media mopes continue to call this a credit crunch instead of credit insolvency, these bank auction failures will continue and new corporate loans will not be originated.
This is just the beginning of the insolvency issue, no surprises in the next 6 months as businesses continue to fail.
bloomberg.
http://tinyurl.com/66b252
should say 1984 -2007
That’s the wrong game to have a .400 batting average, in.
April 14, 2008 10:20 A.M.ET
BULLETIN
Stocks backslide into week
Indexes dip, but retail-sales data soothe some of the bite. Wachovia is in focus after detailing a surprise loss, dividend but and share sale.
Higher gas prices are encouraging the Wall Street dumb bunnies.
That and they think they might get more rate cuts.
That’s ok… cut rates… try and save the banks who made stupid loans. All they will do is cut off more oxygen to the consumer with higher gas prices and food prices but oh CPI does not include those.
The consumer is dead. 70% of the economy has been wiped out.
So what will eventually happen to commodities? They will come down as demand weakens. I hope the smart money gets out before that happens.
“Wachovia is in focus after detailing a surprise loss…”
Ignorance is not something one should celebrate. There are no surprises in any of these reports or in any of the reports scheduled for the next 2 weeks.
IRWIN KELLNER
Don’t be fooled by retail rise
Commentary: Consumer cutbacks in spending are likely to continue
By Dr. Irwin Kellner, MarketWatch
Last update: 10:32 a.m. EDT April 14, 2008
PORT WASHINGTON, N.Y. (MarketWatch) — Anyone who thinks that the U.S. economy will stop sliding and start climbing as early as the second half of this year is ignoring the 70 percent of the economy that is in deep trouble — the hapless consumer.
Don’t be fooled by the slight rise in retail sales last month. The 0.2% increase in March compared with February was in dollar terms — unadjusted for inflation. And, as any consumer will tell you, prices of consumer goods have been soaring of late.
How about stock market indexes that won’t correct no matter how bad the news? Should we sheeple be fooled by them?
I bought the dip.
Fourteen: Zero-hour, Jiménez cuts the cable, Franco cuts the phone
The fifth column is enabled by the fourth estate…
http://en.wikipedia.org/wiki/Fifth_column
Great movie.
Anybody catch 60 Minutes last night and the story about the Kanzius cancer machine?
Great story~
you can bet that someone will put a stop to it. there is too much money being made to let people get well! i sure hope he trys to get other countries involved that would want to take the financial burden off themselves for money they spend to pay for radiation treatments.
I didn’t see 60 Min but I have read about it. Radio waves, right?
http://www.cbsnews.com/sections/60minutes/main3415.shtml
12+ minute segment- Thank You aladinsane.
The only thing that can save the beloved NW PA (he has stated he would try to keep manufacturing of the equipment there if it succeeds). Take a look at his video of setting salt water on fire as a potential alternate energy if you are into the peak oil thing…
That was a great piece done by 60 minutes.
I worked for one of the largest bio-tech firms and this looks more promising than any of the drugs that are in the pipeline and out on the market.
Just a jab here about personal choices. It sure is nice to drive a vehicle that gets 28-34 mpg. Here in Arizona I see mostly trucks and RV’s. In a downward spiraling economy with high and higher energy costs, those hogs are looking more and more like white elephants driven by dupes. Flame away.
No flame here. But RV’s are the epitome of mobility. I know alot of contract guys who are or did live in their rigs while working including myself. Doing so is another way to offset hotel costs and pocket the difference.
I can see it for contractors & traveling tradesmen, for sure. But for an occasional vacation I don’t get it.
I won’t flame, but I’ll say that I’m happy with my 10 year old 4 Runner that gets 19mpg on the highway. But then again, it’s paid off, and my commute to work is only about 7 miles each way. And it’s great for hauling my dogs around to adoption days, as well as hauling materials, lumber, etc for all the projects I’ve been doing on my house.
I agree that there are a lot of monstrous SUVs out there that are completely unnecessary and get terrible gas mileage. Personally, I’m happy with what I have, and financially it makes a lot of sense. Then again, it’s also small enough that I can fit in compact car parking spots (and I mean truly fit).
J
Comment by drumminj:
“I won’t flame, but I’ll say that I’m happy with my 10 year old 4 Runner that gets 19mpg on the highway. But then again, it’s paid off, and my commute to work is only about 7 miles each way.”
Makes sense. You have short drives and it’s paid off. I can’t see anyone faulting your rationale.
No-Down-Payment Mortgages Gone for Good?
“The more equity that a borrower has — or, if you will, skin in the game — in any investment, the more likely they are to have a higher degree of responsibility toward it,” he said.
Goldhaber said that those in the mortgage industry also have a responsibility to put homeowners into the proper mortgage product. These days, it’s irresponsible to give people a loan for 100%, he added.
http://finance.yahoo.com/loans/article/104832/No-Down-Payment-Mortgages-Gone-for-Good?
really? why the change of mind? could it be because they have to keep the loans they make, instead of selling them to pension funds… etc ? where’s ACORN when we need them?
Yesterday a poster mentioned that visiting Australians observed that the US looked dirty and ramshackle, reminicent of a South American 3rd world city (I presume they were referring to LA).
Anyway, some UK’ers that I correspond with made the same observation about California, especially SoCal: pockets of prosperity, but in general it looked dirty and run down, with a 3rd world feel to it.
We were on vacation in SoCal last year. The kids (teens) and I drove from Anaheim to Universal Studios. Their eyes almost popped out of their heads at how ugly the part of LA that we drove through was. And I’m not talking about ugly heavy industry zones (one expects those to be ugly), but places where people actually live.
Heck, you only have to drive a few blocks away from the sanitized “Anaheim Resort” area to see the blight. Supermarkets and other stores (like Walgreens) with uniformed security guards. And one is supposed to pay a stiff premium to live in places like this?
As a Los Angeles native, I loved the place and would not consider wanting to live anywhere lese…… until I joined the navy and lived somewhere else. Now I would not want to move back.
Razor wire of freeway signs to deter vandals, but still there is grafiti everywhere. Old, run down, overcrowded, crime infested, packed with illegals and homeless… Islands of “nice” in a sea of filth.
I love how TV shows still glamorize SoCal. Little do out of state TV viewers realize that Santa Ana is the real OC, and that only the priviledged wealthy live in places like Laguna Niguel.
What is sad is that a few decades ago Orange County was a really nice place. It is sobering to realize that it only took about 20-30 years for it to become the filthy, run down place it is today.
This should be a lesson and a warning to other places, especially those found on today’s “Best places to live” lists that are now so popular. If your local government has “growth at any cost” policies then your community’s future will look a lot like central OC.
Disneyland was the beginning of the end for OC. The neighborhood of the park got so trashy that old man Disney couldn’t stand it..and planned to do it better in Disney World.
Mmmm…
DL opened in 1955. OC was nice for another 20 years or so. IIRC, Walt boy’s complaint was that DL ended up surrounded by cheap motels and restaurants. I think that perhaps he (or his brother Roy) realized that they lost a money making opportunity by not buying up the surrounding land in Anaheim (which they lacked the funds to do so at the time). To also be fair, there was no room to add theme parks and resort hotels like they did in Florida. Adding anything beyond DL and its step sister California Adventure will involve buying up expensive properties like they have done with the infamous “strawberry field” which IIRC they paid over $100 million for (its not adjacent to the existing property and its too small for a theme park).
Disneyworld is designed to extract the maximum amount of cash out of customers (oops, I mean “guests”). Its designed to be captive. No running across Harbor Blvd for a quick and affordable lunch or dinner.
What is also interesting is how Disney got Anaheim to spend a lot (over 1 billion IIRC) to upgrade the “resort area” around Disney’s property. The place probably now looks the way Walt Disney wanted it to look.
I haven’t seen DL in a long time, but that was the only reason so many people began heading out that way in the 50s, that and Knotts. I went there the first year as a kid..a lot was still unfinished. Let’s face it, the whole damn southland was better in oranges and olives than it what came after.
I like the mountains and the beaches… Mostly stay west of the 405… costs are out of control though.
East of the 405… its god forsaken desert all the way to… Colorado.
Looking at relocation to San Jose… not sure if it is any better.
Looking at relocation to San Jose… not sure if it is any better.
Uhhhh. Yes, I suppose it’s a bit better, but San Jose certainly isn’t great either.
you’re right, it was hideous bike ride to the beach yesterday in 86 degree weather. (Hello, every city in the world has not so nice areas.)
Was talking to a yacht salesman who just worked the Newport Boat Show at lovely open-air bar. Says the guys with money are bending people over and getting great deals on boats these days…
Every place has its redeeming qualities, but as a former SoCal person I know that the weather and beaches are overrated. Not worth the 3-4x price premium, not by a long shot. Plus unless you can afford to live in Richistan-by-the-sea it means that you will have to pay 600K for an old crappy house in a crime infested neighborhood, breathe lots of smog and sit in traffic jams all day. And when do you get to “enjoy” the weather? At work? While commuting?
One thing that I also noticed after moving away was that on the ocassions when I visited SoCal later it looked really bad. I think that if you live there long enough that you get used to seeing the blight and it seems normal.
tee hee… yeah it is all blighted here and terrible. Y’all keep fleeing to Texas and wherever…
Enjoy beautiful Santa Ana and Canoga Park and your daily commute in that parking lot known as the LA freeway system. And why assume that everywhere else is like Texas?
But you have got the “fleeing” part right. Like Darrell-in -Phx said, I could never ever imaging moving back to that hell hole.
It is really cold in Austin today and was even colder yesterday. Horrible.
Please stay where “the guys with money are bending people over and getting great deals on boats.” Have fun.
“Looking at relocation to San Jose… not sure if it is any better.”
Take it from me, it’s not.
look what I got today.
“You have one new message at Treasury Department Federal Credit Union.”
Huh? Its from
Crisis to affect markets for a decade: JP Morgan
http://biz.yahoo.com/rb/080414/credit_jpmorgan.html
G-7, you sunk my battle$hip
No improvement yet for Northern Colorado:
For the month of March, 2008:
In Fort Collins, there were 171 SFH sold vs. 204 last year. Seventeen new homes were sold, vs. 28 last year, down 39.29%. Four new condos were sold vs. 11 last year, down 63.64%.
In Windsor, 42 SFH were sold, median of $309,420, as compared with 50 last year, median of $405,000. Thirteen new homes were sold vs. 20 new homes sold last year.
No homes priced above $627,725 were sold, although 121 were available.
In Loveland, 98 SFH were sold, vs. 119 last year. Nine new homes were sold vs. 16 sold in March last year. Also, 3 condos were sold, median price $103,000, vs. 14 last year, median price $141,000 (down 78.57% in number of units and down 26.95% in median price).
No homes were sold that were priced above $925,000, although 47 were available.
In Greeley, four new homes were sold, median price $189,015 (vs. 15 new homes sold last March, median price $300,000); down 73.33% in number of units, and down 37% in median price.
In Boulder, 74 single family homes were sold, as compared with 98 sold in March last year (down 24.49%); new median price $525,000 (down 7.88% from the same period last year when the median price was $569,900).
[Source: Information Real Estate Services, IRES]
In Windsor, 42 SFH were sold, median of $309,420, as compared with 50 last year, median of $405,000. Thirteen new homes were sold vs. 20 new homes sold last year.
Sound like those expensive Water Valley homes aren’t moving.
There was an article in today’s Coloradoan about the Water Valley private plane (I doubt that there will be a story about when its sold later):
http://www.coloradoan.com/apps/pbcs.dll/article?AID=/20080414/BUSINESS/804140301
Chris in Birmingham-I have a friend in Tampa who bought maybe 15+ homes and condos in 2005 and thought he was going to retire well off. Some were interest only, who knows what kinds of loans he got. His brother-in-law told me last year he thinks he is bipolar and that caused his buying spree. The friend still says he’s o.k., he’ll rent them out, he’ll sell some of them, hold them a few years. He’s says he’s doing o.k. But I saw the signs of bipolar when he was on a high and buying. If he is bipolar, and I think he is from observation, he does not know it. He thinks he is a good businessman.
Well since the market’s bipolar…. unfortunatly that would only work if his cycle was ahead of the market instead of behind. Perhaps the timing has worked out before and that why he has money and thinks that he’s a great businessman.
Photos of a faltering master-planned “community” 50 miles north of Las Vegas
http://www.roamingphotos.com/us/nv/coyotesprings/
Foreclosuregeist
oMG they are using sprinklers in the desert to grow landscaping for a planned community!!!!! what a waste of water! at least a drip system people. such wastefulness all around, “makes me wanna holler throw up my hands and scream”
rant off
is this on the highway to Salt Lake? Gawddd…I’ve been down that road a million times, and all they need there is another gold course sucking up water…
…all they need there is another gold course sucking up water…
These photos were taken in January ‘07. I’ve been trying to keep track of this place for a while - I’m sure it’s all but shut down now.
It was coyote ugly already, a year ago…
There’s been a lot of boom and bust in that desert from SB to St. George! My dad bought some lots in palmcaster way back in the 1950s, trying to be like the old guys who got rich off of LA property, but it never did anything…until 2002 or so, us heirs were able to unload them for 38K which I thought was a ridiculous.
I love how they have just one section of wall, just one area of grass, just one letter on the sign. Once they have just one house they can print up the brochure.
50 miles form nowhere…..
There are several tracts like that in Bullhead City,AZ and Laughlin, NV.With one exception.They were further ahead in building and sold some homes.All the builders have packed and left leaving those who bought in uncomplete “master planned communties.
On a recent trip there I saw a condo complex completely finsihed with None sold.The ads say pool and clubhouse to be built in phaseII.
It will take a very long time for all the inventories to clear.You are correct about this one being a “ghost town”.
Obama Links US Dollar Woes to Bush Policies
http://www.reuters.com/article/politicsNews/idUSN1037424920080410?feedType=RSS&feedName=politicsNews
…. The dollar has lost roughly 40 percent of its value since 2002. In recent months, the pace of the dollar’s drop has accelerated as investors around the world have lost confidence in the health of the U.S. economy.
Obama, who has taught constitutional law at the University of Chicago, used a professorial style to giving a longer version of the answer that modern U.S Treasury secretaries routinely offer when asked about the U.S. currency — that its value reflects economic fundamentals.
But he went a step further in saying that President George W. Bush’s policies have hurt the economy and therefore weakened the dollar.
“We’ve been borrowing money like nobody’s business from China. We’re like that cousin who always comes over and never seems to have job. You know that guy who always has new rims on his car,” Obama, who is vying to be the Democratic nominee against Republican Sen. John McCain in the November election.
We’re like that cousin who always comes over and never seems to have job.
How painfully accurate!
“…. The dollar has lost roughly 40 percent of its value since 2002. In recent months, the pace of the dollar’s drop has accelerated as investors around the world have lost confidence in the health of the U.S. economy.”
“But the economy is fundamentally sound” bemoan the wealthy elite/conservatives. What they never seem to say is just whos economy they’re speaking of.
why buy usa dollar with the low interest rate? whats the point of losing money anyhow one would of thought as money got tighter interst rates would increase? not decrease i guess they want to devalue the dollar
More Bush Policies:
Paulson Says $600 Payments Will Add 500,000 - 600,000 Jobs
http://www.nytimes.com/2008/04/12/business/12paulson.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1208146579-aK2MzTzmx04sOQbIa6ZgWw
… He (Paulson) said he told his counterparts that checks from the stimulus package would go out in May and June and that they would add 500,000 to 600,000 jobs to the economy. He said that the federal government was helping more than a million homeowners keep their homes…
Old: Goldilocks Economy
New: 3 Little Pigs Economy (’ssshrubery, Paulson & Bernanke)
Gas prices could pass $3.50 in weeks
By JOHN WILEN, AP Business Writer
59 minutes ago
Gas prices fluctuated over the weekend but appear poised to resume their relentless trek toward a record high milestone of $3.50 a gallon. Forecasts call for gas to peak as high as $3.65 within a month.
Oil prices, meanwhile, rose to within a dollar of last week’s record of $112.21 a barrel as the dollar fell and oil supplies were disrupted in the U.S. and overseas.
At the pump, the national average price of a gallon of gas edged lower overnight to $3.373 a gallon, 0.1 cent shy of a new record set Sunday, according to a survey of stations by AAA and the Oil Price Information Service. Still, prices are 0.8 cent higher than Friday, and almost 53 cents higher than a year ago.
The Energy Department recently predicted gas prices could average as much as $3.60 a month this summer, and said the daily national average could rise as high as $4 a times. Prices are already over $4 in some parts of the country.
“Gas prices could pass $3.50 in weeks”
Im sure thats national average but here in San Diego the local 7-11 ,usually the best in area was at $3.83 per gallon as of yesterday.
They said
$4.00 by Memorial Day? How about next week or so here.
We were up in LA this past weekend and gas was $3.89, IIRC. Over $4.00 for the premium grades.
Ford projects engineering budget cuts by 30%. Well, there goes more high paid wage and engineering contract jobs. What do you bet, the first jobs cut will be in outsourced/overseas jobs?
I am not sure how many of these projected job cuts will occur in MI, however, haven’t they taken enough of a beating?
Don’t beat me bro!
I predict that both Ford and whatever is left of Chrysler will be Chinese owned within 5 years (maybe less).
Oops, forgot source…
http://tinyurl.com/6hbvt2
“This is Gold, Mr. Bond…
All my life i’ve been in love with it’s color, it’s brilliance, it’s devine eminence.”
http://www.youtube.com/watch?v=U1TmeBd9338&feature=related
Volcker Stands Tall, Greenspan Keeps Shrinking: Caroline Baum
Where are the INS when you need them? I guess they were told to keep one eye open on illegal workers in LV.
Quote from LV SUN article
“After dozens of interviews, the Sun concluded in an April 6 story that 60 percent to 80 percent of the Las Vegas Valley’s residential construction workers are illegal immigrants. Tens of thousands of these immigrants who have lost construction jobs are no longer feeding money into the economy. Many are leaving Las Vegas.”
http://www.lasvegassun.com/news/2008/apr/14/immigrants-boost-economy-how-much/
AP Poll: Many Worry They May Fail to Make Monthly Mortgage Payments Soon
http://biz.yahoo.com/ap/080414/housing_crisis_ap_poll.html
In an ominous snapshot of how the sagging real estate market and sour economy are intersecting, the Associated Press-AOL Money & Finance poll also found that 60 percent said they definitely won’t a buy a home in the next two years.
That was up from 53 percent who said so in an AP-AOL poll in September 2006. Only 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.
Yet there are plenty of prospective kinfe-catchers:
–Fifty-nine percent think now is a good time to buy.
‘Tranche warfare’ breaks out over CDOs
By Aline van Duyn and Michael Mackenzie in New York
Published: April 14 2008 18:45 | Last updated: April 14 2008 18:45
“Tranche warfare” has broken out in the $450bn market at the heart of the credit crunch as hard-hit investors scrap over the pools of debts that make up so-called collateralised debt obligations.
Some investors in the differently rated and ranked slices of CDOs – known as tranches – have taken advantage of the little-noticed terms in the structuring of such instruments to seize control of the assets and cut off payments to other debt-holders.
Sweet mother of god! They are eating each other now.
FREAKIN’ AWESUMMMMMMMMMM!!!
PB, this should be at the top somewhere.
WOW! This may mean that the dominoes are about to fall.
Roidy
I think they misspelled “Trench Warfare,” no?
Pun, no?
Clever too.
It makes sense for the senior holders of the crap CDOs to liquidate the CDO if they can. Typically, the AAA tranche represents 80% of the CDO. If the trustee can sell all of the underlying loans at 80 cents on the dollar then the AAA holders get out whole while the junior tranche holders get 0 (100% loss). If the CDO continues in existence, losses on the loans could increase over time. If the underlying loans lose 35% through foreclosure and sale then the AAA tranche takes a 15/80 loss or about 19%.
So if the CDO documents allow the AAA tranche to liquidate the CDO for say a credit downgrading, then it behooves those tranche holders to do so.
It was only a matter of time till the gready started to feed on each other…This is just the start…
Now I understand being underwater on your mortgage.
http://cgi.ebay.com/30-08-Acre-Parcel-Tampa-Florida-Tax-Lien-Foreclosure_W0QQitemZ250234554957QQihZ015QQcategoryZ15841QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
“Land Use
Description”
“SUBMERGED”
lmao….now thats funny……
I live about 7 miles from that property.
It’a actually worth looking into.
Developers continue to develop and builders continue to build in Manatee County, Florida; one of the hardest hit and most overbuilt places in Florida.
From the Bradenton Herald (Florida)
“LAKEWOOD RANCH –Even with 5,000 homes on the market in Manatee County, Schroeder Manatee Ranch is making plans to begin building more.
The Lakewood Ranch developer is convinced the economic cycle will eventually improve and consumers’ appetite for new homes will improve.
Later this year, SMR plans to begin building 4,422 homes on 1,520 acres between State Road 70 and 44th Avenue East in a new residential project known as the Northwest Sector. New residents are expected to start moving into the project’s first neighborhood called Central Park by mid-2009.”
..
Just what are these people going to do when they move here ?
People are leaving FL in droves. I know of three (3) families here at work that threw in the towel and moved to TN/NC/GA in the last six months.
Only a fool would buy a home out there at Lakewood Ranch.
..
Anyone see the articles on why Forntier Airlines went into bankruptcy?
Book a flight using your credit card, and the credit card company charges you and forwards the money to the airline. But, if the airline then goes under before the flight is delivered, you can dispute the charge and the airline has to give you the money back.
So, the credit card companies have started holding the majority of the money used to buy airplane tickets, until you actually take the flight. Instead of getting paid when you book, credit card companies told the airline they weren’t getting paid until the actual flight.
To me, this does seem like a credit crunch issue. They were profitable, just lost access to the 0% loan against future revenue.
It’s a cash flow issue not a credit issue.
However, when you are leveraged to the motherf*ckin’ gills (pardon my language) like most American businesses and households are, then this “cash flow” becomes an issue.
Southwest moved into DIA and forced Frontier to compete with them on price. Unlike SW Frontier did not hedge fuel prices.
So, the credit card companies have started holding the majority of the money used to buy airplane tickets, until you actually take the flight. Instead of getting paid when you book, credit card companies told the airline they weren’t getting paid until the actual flight.
Funny how the CC company sends us the bill right away, even charging interest when applicable. I gotta get into that racket!
I flew Frontier many times over the Rockies going home from college, etc. Nothing safer than those old turboprops they used to fly. Cheap fares, too.
Comment by In Colorado:
“What is sad is that a few decades ago Orange County was a really nice place. It is sobering to realize that it only took about 20-30 years for it to become the filthy, run down place it is today. This should be a lesson and a warning to other places, especially those found on today’s “Best places to live” lists that are now so popular. If your local government has “growth at any cost” policies then your community’s future will look a lot like central OC.”
Yes indeed-e. That vast traffic jam with fouled air that is the environs north of Atlanta, Georgia. Back in 1971, the year dad moved us there it was semi-rural and easy to drive a few miles and be in the sticks. Today it’s an example of what uninhibited growth can do to a place. I clearly remember having to wipe the layer of brown dust/particulate off mom’s things when I visit them in Roswell (well north of the city). Between the high pollen count years and the toxic air quality, it’s not uncommon to hear parents chatting about taking their young kids into the doc for respiratory ailments.
I remember flying out of the old Atlanta airport Southern Airways terminal and walking out of the doors and up the steps of the prop driven airliner that had just taxied up. It was the height of summer, the air conditioning had gone out in the terminal, and I was wearing my USAF full dress blues… That wool must have shrunk 2 sizes from the sweat!
CNBC Market Crap Announcement
“BearStearns to begin massive layoffs”
Got up really early to go to Capitol Reef Nat’l Park to take some photos. Beautiful day and the place seemed really empty, no tourists at all, just a few. I liked it, but am wondering if it’s slower than usual, every other time I’ve been there it’s more crowded, and I’ve been there quite a bit. This is the time of the year the hikers, etc. go, as it’s not hot yet. The Euros come in the summer. Bet it’ll be crowded then, if the dollar stays low.
I would think the most remote National Parks would be the first to notice a drop-off in tourism.
This will be quite the summer for Yosemite & Sequoia-Kings Canyon National Parks, as Europeans tourists exploit the Dollar’s weakness, en masse~
Motel, Food & Gas prices here in the states are ridiculously cheap, compared to what they pay in the old country…
Pop open a cold beer before wading through this lengthy retrospective. On second thought, make sure you have a full six pack on hand.
Timeline: Sub-prime losses
I read the headlines. Will read the full stories tomorrow when I have that six pack. Thanks.
Wall Street
by Jesse Eisinger
It’s (Really) the Economy, Stupid
Apr 14 2008
“…There will be blood. In March, the markets got a reprieve, as hope rose that the crisis had passed. Unlikely. Over the next year, we will continue to see home-price depreciation. And much worse. We will have more failures similar to that of Bear Stearns. Since the banking system is pulling back, it will be much less willing to lend to consumers and, more significantly, to companies, which won’t have the money to invest in new plants and research and development. That means layoffs are just beginning. Personal bankruptcy is rising, and corporate bankruptcies are starting to go up. State and local governments will enter financial crises. The future holds massive pension shortfalls and retirement agonies. The problem is that the Fed has fired most of the bullets from its six-shooter, yet the enemy advances. The next president may well be dealing with markets in a continued free fall and a Fed that’s out of ammo and suffering serious damage to its reputation….”
Conde Nast
http://tinyurl.com/6pcttr
US Issues New Mexico Travel Alert This is not about one of our states.
Insight: Watch out for aftershocks
By Stephen Roach
Published: April 14 2008 17:15 | Last updated: April 14 2008 17:15
Every financial crisis is different, but at some point, they all end. It is hard to know if the end of this one is at hand, but there are grounds to believe the worst of the fire-storm may be burning itself out.
Maroons…
Sinking US housing market maroons homeowners in unfinished or empty projects
The Associated Press
Published: April 15, 2008
Living on overpriced Long Island, I see that while prices are softening (especially in Suffolk, farther from NYC), they have not yet fallen in Nassau (close in to NYC) like I read about in California and other places — especially in nice (but still overcrowded!) areas close to NYC for the commute to be decent. But the rent/buy comparison people suggest you make does not make rental a no-brainer even financially and makes me wonder about the future of the market here. It is possible it won’t fall as much as I daresay I hope it will? It has gone up insanely since I bought in 2001 and I am unwilling to trade up even though I’d love to move to get away from the airplanes here (the joy of living too close to Kennedy airport… painful lesson).
House rentals are hard to come by here at least so far (the main MLS site doesn’t even show them, but some individual agents list them, and there are far fewer than homes for sale), and I want to give an example. While it might be worth renting to avoid equity losses that are coming if the market finally does truly tank, on a “current” basis it is not so obvious. It makes me despair as I am only here for the wife (overcrowded, overpriced, etc.) as her family is here.
I wonder how people find the calculation here… Modest house (60 X 100 property, 1900 square feet 1950’s split, not an upscale area) goes for perhaps $475,000 (down from maybe 525-550 at peak, just an educated guess). Taxes are around $8000 (in nicer areas such as Roslyn, they are easily 20K a year for a 900k house. Yes this place is insane. People blather about the schools incessantly as if it justifies all the abuses this place heaps on them). Anyway, I figure with 0 down (just for the calculation) at a 6% mortgage that is $2375 / month + $650 roughly or $3050 / month. Figure 30% federal deduction on the whole amount + 7% deduction on amount over the standard NY $15k deduction gives $25550 - $1400 or around $2000 net after tax deductions a year for average income in the area. Figure $1k/year insurance. Now even in this modest area (Lynbrook or Oceanside for example, not Manhasset or Great Neck), you can’t rent the same house for under $2k a month.
And rentals seem to scale similarly… $1million dollar house rents for at least $4500 / month, etc.
This does seem different from California where I read of housing renting for half that using the same calc.
There is a reason that Long Island has a huge exodus of people 18-34 and people surveyed say they want to leave in next 5 years. The area remains generally unaffordable to first time buyers… OR renters I would say. My wife is a native here (which is why I am here) and all of her friends from high school except one are in NC, Florida, etc.
Any thoughts here? Have people done this comparison in other areas with different results? Thanks for your time.