Bits Bucket And Craigslist Finds For April 16, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
June 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
The Next Mortgage Crisis… So what inning are we in?
http://www.slate.com/id/2188982
According to Mr. Hussman, we are the beginning of the third. I will not argue with him.
what is the end game? What does it mean for the game to be over? Unless that is defined then we cannot estimate innings.
Game ends when the housing market and all the businesses that feed on it is put back in it’s place… that, by the way, ain’t at the top of the heep..
I’ll believe this mess is finally over when all those idiotic “Flip this McMansion” shows are finally off the air and the debtors featured on “My POS is worth WHAT?” crumble into hysterics when they learn their instant equity has turned into a lifetime of debt.
Now there’s a show waiting to happen. You should pitch it. Seriously. I might turn my cable back on for something like that.
Top of the 3rd, and the home team has run out of pitchers…
Bankruptcy is up to bat as the clean-up hitter, for the visiting team
If you define the start of the game as the creation of the Federal Reserve and the end of the game as the return to a free market money system then I would say we are in the 7th inning.
I’ll be dead by the top of the eighth.
Take me out of the con game
Take me out of my home
Buy me some food stamps & i’ll be ok, jack
I don’t care if I never get that house back
For it’s root, root, root for the homebuilder team
If they don’t get tax credits from the senate, it’s a shame
For it’s one, two, three credits & they’re bailed out
At the old con game
very nice!
I’d say the third inning ended with the near bankruptcy of Bear Stearns.
If Fan and Fred go down, game over.
The problem is housing could go into a 20 yr bear market like metals did. This would put us in a depression and bring back housing prices to about 1997 levels. The game will be over when all faith in fiat currencies is gone.
Could Fan & Fred go down? Is it possible? Hoz, Can you say it won`t happen?
I prefer to use the term 1st Trimester since this baby isn’t even a fetus yet!!
“Fetus” applies to the unborn human baby after eight weeks, still within the first trimester. But, pregnancy doesn’t make for very good housing bubble analogies, since it involves life at its innocent beginning, and moving forward, not backward.
On the bubble meter, I think we’re at the “Elvis is still alive in hiding” (i.e., denial) stage immediately following the “Elvis take a fatal crap” (reality) stage, but before the “Elvis is truly dead and smells awful” (acceptance) stage requiring an objective analysis of the corpse.
’scilla, fix me a peanut butter & banana sandwich…
I personally believe that Inning 4 will arrive when oil is no longer priced in dollars.
I am selling next mo and renting for at least a year. I may have missed the top, but at least I am in the game. I think I might spend the year in some cheap country like Argentina. I like their reds.
but will 2009 be to soon to re-enter CA’s wine country. i want a sweet place for $
RE: The Next Mortgage Crisis
Barney Frank (D-Mazz) will save the day.
Barney Frank is an excellent businessman. He was a pioneer of running a gay prostitution ring out of his home when no other politician would dare to.
I’m flashing on the word “inning” now.
Roidy
Barney the Communist, will save the day, by raising taxes on all the evil people of the country, those making over $96, 000 per year.
It was his lover that had the prostitution thing going on. You should be so lucky. There is a huge difference between being a Communist and merely pointing, out as he has, that trickle down fails on its own terms if there is no trickle.
The lesson of this bust is not that any particular ideology of conservativism or moralism or doomsaying won in the end, but rather that doing the math and paying attention to details at all times always matters. Eternal vigilence and all that rot, eh?
Third inning?
In some counties in CA, we saw more foreclosures than sales in March. This was a busy sales month. Going forward, as sales slow and foreclosures rise, what will the distressed inventory for sale look like?
Muy grande!
Whenever the Republicans talk of cutting taxes first and discussing the national security second, they remind me of a very tired rich man who said to his chauffeur: “Drive off that cliff, James, I want to commit suicide.”
Adlai E. Stevenson, Jr.
yeah, Stevenson was a real winner. Not.
Assassinations of character are always best performed by those that nothing about their intended target…
Stevenson was famous for his arrogance.
“When a supporter told Adlai Stevenson, the losing Democratic presidential nominee in 1952 and 1956, that thinking people supported him, Stevenson said, “Yes, but I need to win a majority.” When another supporter told Stevenson, “You educated the people through your campaign,” Stevenson replied, “But a lot of people flunked the course.”
Yes, raising taxes, increasing friction on floundering economy, is just the prescription….for a “brilliant” person.
Pandering to the lowest common denominator has led us to the point where we recently elected somebody that fit the bill, not once, but twice…
Where’s that gotten us?
“When a supporter told Adlai Stevenson, the losing Democratic presidential nominee in 1952 and 1956, that thinking people supported him, Stevenson said, “Yes, but I need to win a majority.” When another supporter told Stevenson, “You educated the people through your campaign,” Stevenson replied, “But a lot of people flunked the course.”
Thanks for the quotes. Repubs favor the none-too-bright…Ford, Reagan, the bush duo, for example. McCain is a bumbling geezer with a nasty temper…I expect he’ll do very well with Repubs.
“Stevenson was famous for his arrogance”
Wasn’t Adlai Stevenson the most intellectual Person ever to run for president?
I don’t think appealing to the intellect and reason wins elections. More like emotion and pandering to the baser instincts of the common man thru demagougery, lies ,manipulation of the media, visual appeal, propaganda blitzes, staged circuse rallies, haranging and rhetoric, all the tools of manipulating public opinion.
Arrogance or brutal honesty?
Some mistake intelligence and honesty for arrogance.
Call me old-fashioned, but the arrogant pukes who go out of their way to let everyone know about their supposedly “superior intellect”, are never as smart as they think they are.
The people who have their sh#t together don’t have to brag about it, everyone knows who they are. Actions/decisions speak louder than words.
“Actions/decisions speak louder than words”
For the last 7+ years, certainly.
And many, vice versa.
And for the eight years before that,
And for the four years before that.
I don’t think appealing to the intellect and reason wins elections.
Yep, otherwise we’d have Ron Paul as Prez.
Im so tired of hearing the term ” tax cuts” it makes me want to puke. that term is a oxymoron now days. The only real tax will be to abolish the IRS like ron paul wants to do.
I cant watch the evening news anymore, look where all this talking got us baby!
What we’ve seen is tax shifts off of the wealthy elite and onto wage earners. Median wage earners have never paid more in total taxes than they do now. The wealthy elite have never paid less.
When was it *on* the “wealthy elite”..?
Good point Rintoul.
The only real tax cut will be to abolish the IRS like ron paul wants to do.
That, or at least ending our imperialistic foreign policy. I imagine that’d save a few bucks (keeping in mind that the total cost of Iraq is estimated by Joseph Stiglitz, the Nobel winner, to be $3 trillion)
Of course your mention of Adlai Stevenson brought up the story:
“When a supporter told Adlai Stevenson, the losing Democratic presidential nominee in 1952 and 1956, that thinking people supported him, Stevenson said, “Yes, but I need to win a majority.”
This story is a favorite of George Will, and others. Unfortunately, there is no evidence anywhere that this story is true, or that it any way reflects Stevenson’s opinions. No reason, though, to let the facts get in the way of a good ideology.
email,call ,fax baney frank - he;s setting you up for a second mortgage
Last week I heard Frank on the radio. I was shocked by what I heard.
His plan’s goal is to stop home prices from falling suddenly, shocking the markets. His plan’s goal is to have the price drop be gradual over 3+ years!
Are you kidding! HELLO…..people buying homes this spring and summer, Barney Frank is tying to use gov’t’s power and funds to make sure you buy at an artificially supported price, only to have the price drop later, when you might need to sell.
It was NPR’s, On Point show.
Bring us more victims. We need more victims!
Its all about buying time and hoping for a miracle.
Buy now, before prices fall any farther!!
Barney Frank for Prez!!!
I cannot understand what is driving this man. But as I am in his district (how that district got defined I’ll never know), I write him, get ignored, write him again, get ignored, etc. He’ll be the first person I specifically vote against.
I come from a long line of NE Democrats, but have broken ranks a little over a year ago when Dodd and Frank decided to center their re-election campains on protecting the RE and mortgage markets and home prices…
I’ve been specifically voting against Stenny P. Hoyer for years. And I’m a Democrat.
I grew up in what is now Barney’s district. His district was largely redefined after the 1980 census because people thought they could get rid of him by putting him against Peggy Heckler who had represented most of the District for nearly 20 years. Barney was just finishing his first term at the time. Of course, it may have changed more since then.
If you listen to the rhetoric, his plan is allegedly to save the FB’s by slowing down price decreases. We all know that slowing down the price decreases just creates more FB’s and prolongs the pain. Barney is a smart man. He knows this too.
If you ignore the rhetoric, I think it is clear that the plan is mostly meant to help the TOWNS, not the people. It has been a long time since I studied the details of MA’s law on property tax increases, fondly known as Proposition 2 1/2 (named before it was passed). However, my recollection is that it has 2 main pieces. The total amount collected can’t increase more than 2.5 % each year (possibly adjusted for new construction) so you have to reduce the mil rate when you increase the valuation. The other part (again, I think) is that the mil rate itself can’t go up more than 2.5% per year, so that if the values plunge, the MA cities and towns can’t increase the mil rate enough to make up the revenue. In that circumstance, and if your primary concern is giving the local governments time to adjust to plunging revenue, it make loads of sense to slow down the decreases in value.
It is actually a plan to sacrifice some people, to save the local governments. But I doubt you will see that in a speech or a press release.
I always thought if the government was truly concerned about homeowners, they could put a moratorium on tax foreclosures. That would not require the passing of any laws, just the delay the foreclosures for a few years or so. Surprisingly, I have never heard an elected official try to float an idea like that.
I always thought that if the government was really concerned about home owners, they would abolish he state lotteries, so that the low lifes, wouldn`t be pissing their money away on pipe dreams.
So, basically, “Real Estate Always Goes Up” is enshrined in MA law?
The irony of Frank’s efforts to save people from themselves, is as Ron Paul points out (Ron claims to be a friend of Frank who agrees with him on many other issues) that Frank has long been a supporter of personal responsibility for so many things, yet when it comes to economic responsibility for oneself, Frank is all about the bailout.
It doesn’t add up.
I think the tax-rate part of it is that the mil rate cannot exceed 2.5% unless overridden by a local referendum for a specific issue -e.g., new school, etc.
Whats driving him is called ‘pandering for votes’.
…..what will the distressed inventory for sale look like?
Like this?:
http://www.stpfriends.org/STPSldShw/NorredHouseBack_071001.JPG
Nice little fixer upper, I’d imagine that go for around 400k out in La,La, Land.
You are being optimistic!
“…..what will the distressed inventory for sale look like? ”
That gutted shack is something which U might see out in selected IE areas such as fontucky, colton, norco, roubidoux, rialto, inner San berdoo and other really trashed out IE areas.
I have been into a lot of LA dumps and the gang writing on that home is sorry and unartistic by LA tagger standards. LA Gang graffitti in it’s highest form attains the level of a Michelangelo or Raphael Mural. Lots of examples of Gang tagger artwork displayed all over LA freeway retainer walls & overpasses.
Apart from the crime story, a mentally challenged man who worked stocking grocery shelves managed to save 151K by the time he was 58. If I were some of these FBs, I’d feel ashamed reading a story like this.
http://www.star-telegram.com/804/story/578063.html
i hope that woman gets her just rewards in the slammer
what a piece of trash.
and the fact that a mentally disabled man can save is telling
“…the fact that a mentally disabled man can save is telling”
Don Quixote: “Where art thou victims of non savers?”
Sancho Panza: “There my lord…driving the U-Haul’s”
Don Quixote: “Zancas, get Rocinante…there is work to be done!”
Boy, I’d like to see that article printed in the Marin IJ…
The story ends with this:
“She said the IRS keeps sending him letters, claiming that Bryant owes $40,000 — more taxes and penalties for cashing out his retirement plan early.”
Wow, why was the fine so low given how much was stolen? WTF?
Don’t know if this was covered a few days ago in another Bits Bucket thread, but there are some very insightful reports available about the Southeast Michigan housing market — full pdf downloads showing sales, number of homes for sales and months of inventory for every county and city in the area. They are also broken down by housing price range.
Detroit Free Press Article
“Odbert, 52, a nurse at St. John Macomb, built a new house in St. Clair County just before putting her home on the market in August 2005, just when the market started to slow. She’s working overtime to take care of both homes.
“As we keep going down with the price, it’s disappointing,” Odbert said. “The people come in, and it seems they want everything for nothing. They want you to pay closing costs, they want a finished basement, a three-car garage. They don’t seem to realize how much the owner put into it, and we won’t get it back.”
“They don’t seem to
realizecare how much the owner put into it, and we won’t get it back.”Just correcting the quotes for factual accuracy.
Sadly, it doesn’t correct the stupidity of the person in the story who said it.
Oh the funny quotes that arise when the people on Main St. try to play like they’re on Wall St. while chasing dreams that were manufactured on Madison Ave.
Chris,
I work in Birmingham, so have an interest in the reports. is there a link to those?
thanks
Yes it’s on the right column of the article. Just click on the Oakland County files.
http://www.freep.com/apps/pbcs.dll/article?AID=/20080413/BUSINESS04/804130611/1017
thanks
It’s just supply and demand. They never cry when the price is going up.
The cheap financing is gone and it’s not coming back.
1997 prices in 2010. This horrible spring “selling season” is really starting to make it obvious to the herd.
I was crying as prices went up! That’s how I found this blog! Of course no one was listening to us cry babies back then. We were the morons!
So much for transparency.
Much of the credit crisis is a result of banks having to mark-to-market their subprime-loan holdings because of the something called the ABX indexes. A company called Markit (Markit.com) organized these indexes.
There were plans to have Alt-A loan and auto-loan indexes, too. Somehow, those plans have been postponed. How convenient!
http://www.bloomberg.com/apps/news?pid=20601109&sid=aMX2xgJrrGB8&refer=home
United Subprime States:
The US government’s need to provide financial backing to the state-sponsored mortgage financiers that dominate the US housing market could pose a risk to the country’s triple-A credit rating, Standard & Poor’s, the credit rating agency, said on Monday.
In the event of a deep and prolonged US recession, S&P said the potential costs of propping up government-sponsored enterprises (GSEs) like Fannie Mae (NYSE:FNM) and Freddie Mac, which have implicit government backing, could cost the US government up to 10 per cent of GDP.
http://tinyurl.com/66epgt
starvation alert:
THE poorest countries face starvation and civil unrest if global food prices keep rising, says the head of the International Monetary Fund, Dominique Strauss-Kahn.
Hundreds of thousands of people would starve, he said in Washington. “Children will be suffering from malnutrition, with consequences for all their lives
http://tinyurl.com/5ue249
Most farm/food producers in our country are corporate, and they’d sell us out overseas for a few Rupees or Rubles, given the chance…
The best possible investment for 2008, is buying a year’s worth of food for you and yours.
And who was it that said land was “unproductive” the other day? Seems like a pretty smart investment if local food producers sell out overseas and the dollar crashes. A years supply of food will give you time to adjust your life, but assumes that the economy will recover to the point that you can afford food within a year.
Got food? Got “unproductive” land?
Ok. Farmer John. Step right up to the speculation and put your money where your mouth is. Bulk dirt is no less speculative today than 3 condos in Florida was in 2005.
A fool and his money is soon parted.
Space Ducketts.
I’ve heard reports that 2008 will be the first year since keeping records that the world will produce less wheat than it consumes.
Got Inflation?
I heard it loosely mentioned the other day (I think on NPR) that we’re actually 3 years into this trend. Not sure how that adds up.
RE: Children will be suffering from malnutrition, with consequences for all their lives
As soon as Obama’s elected, he’ll will sponser legislation bringing all of these starving people here, much like the thousands of Somalians now relocated to Lewiston, Maine.
WTF, there’s no need to speak English or have any transferable job skills. FHA will provide them will with repossessed houses and subsidies for property taxes and insurance. Who should be forced to pay their way in this treacherous world.
And how could anyone complain-after all it’s for the children.
HA! Not if jet fuel keeps going up in price! I see a return to the days when being able to fly was reserved for only those that could afford it. Farewell Greyhound in the sky! And good riddance.
I’m such a snob. Tube tops are just not appropriate when flying. Yes I’m talking to you Uncle Bob.
So will Airbus rename itself? Perhaps AirLimo?
When did the price of anything have to do with whether or not the “government” would do it???
I think it’s outrageous that my country is the dumping ground for all the 3rd world African and Latin countries. IF they are “refugees”, why not relocate them to KENYA, or the Congo, or some other neighboring country??
Why?? Because the European countries are rich and they are not. Simple.
Improve the lives of people I have nothing to do with, at my expense. That’s fair.
Yeah, um, that’s a great hypothetical scenario.
More importantly, it sounds like you’re saying if they ain’t white, they aren’t people with value.
(Is that the ethos that made America great?)
ET,
The deal with the Somali in Lewiston, Me. is a textbook example of Fed arrogance. They decided to accept thousand of refugees, and then placed them in Lewiston, a nice middle class/working class town without any real industry to support the tax base. Feds gave them subsidized housing, health care, food stamps, resettlement funds, etc. Of course these folks had no English, no transferable skills, there was no local employers who could absorb them, and the town and its’ citizens were largely on the hook for the additional costs of schools, English classes, afterschool programs, and other tax-payer funded programs. Maine, away from the coasts is pretty hard-scrabble, and the citizens got no similar breaks or benefits, were made simply to pay for the costs.
This happened after our failed intervention in Somalia–little screening was done on these folks, so no one know how connected they were to local warlords et. al.
But don’t worry, tens of thousands of Iraqis will be headed this way, with similar programs soon–maybe even to Chicago. So you can experience it for yourself.
The deal with the Somali in Lewiston, Me. is a textbook example of Fed arrogance.
Spike, I’m not quibbling with the Somali example — it does sound pretty badly managed. But that’s one pretty small example in a country with a long, successful history of immigration and assimilation.
I’m quibbling with the politically loaded hypothetical that A.) it’ll happen again under some administrations (and what would the other guy do, napalm them? Let them starve?), and B.) the inference that people in need elsewhere in the world (read: non-whitey) aren’t worthy of our attention or compassion.
As far as Iraqis go, we’ve f*cked up their country pretty well. Many of them deserve asylum, especially if they’ve put their lives on the line for Americans as drivers, translators, etc.
Et,
These aren’t immigrants, they’ve been granted asylum, and are moved here wholesale…in Lewiston, they moved several thousand economically disfunctional folks into the town and town the citizens basically to suck it up. As refugees, they get a whole different level of federal and state benefits and financial incentives…while the locals get nada.
With tens of millions without healthcare, and 1in 7 in Michigan on food stamps, and 1 in 10 in Ohio in the same fix, I suggest our compassion be directed to our own. And things will continue to spiral down.
The burden has fallen disproportionately on the west–the US, the UK, Australia, Canada. Just thinking, the Somali traditionally are cattle herders…might have done well in some remote spot in Argentina, if moving them physically was truly imperative.
Most of the G8 countries are signatories to various UN treaties that require them to take in “X” number of refugees per year from politically unstable countries.
As badly as it gets administered sometimes, as world citizens it would be nice if we could help out a little bit. I’m not saying their need should enslave us to provide for them, but it’s a drop in the bucket.
Also, african immigrants are the most educated and highest earning segment of the annual immigrant population in the United States. Seems that if the immigrants from a particular region benefit the US economy so greatly that it behooves the US to return the favor.
Off topic, but can anyone explain to me why the stock market as not yet tanked? With all the bad news about realestate, banking, recession, unemployment a God knows what it stays above 12000. What or who is propping the market up!!!
…where do you suggest people put their money instead?
where do you suggest people put their money instead?
Oh, I guess the market will never tank again since there’s nowhere else to put one’s money?
“More importantly, it sounds like you’re saying if they ain’t white, they aren’t people with value.”
Really? You must be reading something different then I am. I didn’t get that out of his statement.
When all else fails, use the race card.
Spike 66 and Ernest can disagree with me intelligently.
You apparently cannot.
Spike chose to address the economic advantages between immigration vs. asylum. Ernest, apparently, doesn’t see things as you do. I chose to address your sarcastic, race baiting, black vs. white comment.
Rather than give the man a fish and feed him for a day, why not teach them to fish? Why not get these people into farming and growing their own food?
Yes, and then when they do, take that away too!
Totally OT:
Tom said:
Rather than give the man a fish and feed him for a day, why not teach them to fish? Why not get these people into farming and growing their own food?
Because Somalia hasn’t had a central government since 1991 - its ‘run’ by a factional mosaic of tribes and alliances, whose borders change every few years. Leaving the population to hope and prey that they’ll be around at the end of the season, to harvest what they can…
Added to which, the northern parts of Somalia are turning into desert due to the steady encroachment of the Sahara - turning the northern Sahel land into desert and the slightly more productive southern land into Sahel. Not to mention frequent droughts. And increasing plagues of locust eating every piece of available vegetation.
Sahel is crappy land to try and grow food crops in - its best suited to nomadic pastorialism, with small populations taking advantage of seasonal grazing, before moving on to prevent overgrazing or erosion. In other words, totally unsuitable for a large permanently settled agricultural population, except in the coastal regions.
If they had governmental organisation and money like that their northern neighbours in Saudi Arabia or Dubai, they could probably spend their way out of the crisis - but as they have a smorgasbord of factions vying for power (often violently) , and an average per capita income of around $500 a year, it ain’t gonna happen…
I taught quite a few Somali refugees when I was an Adult Education teacher in London a few years back - and had a chance to talk to them about the situation in their homeland.
Basically, they have 3 choices -
A) revert back to a Bronze Age existance by following their herds and hoping they don’t encroach on neighbouring faction’s land and/or avoiding environmental disaster.
B) Moving overseas - Somalia has one of the largest Diaspora populations of Africa.
Or C) - dying.
On the plus side - they have one of the lowest AIDS/HIV levels in Africa, due to their isolation over the last two decades, and thier strict Sunnii faith.
But that’s sort of like saying “well, I have terminal lung cancer, but at least I haven’t fallen to my death off a high building. Yet…”
Of course, this all gets very little coverage in the Western press because they have neither a Moonbat Dictator like Mugabe running the show, nor vast oil/mineral resources of interest to the developed world.
Anyway, sorry to harp on about Somalia - and Tom - on the whole I agree with your sentiment about ‘teaching a man to fish’ - but I find it very sad what has happened to them, and also an object lesson that no country is to big to fail, if the cards always fall the wrong way.
“Give a man a fish, and you feed him for a day. Teach a man to fish, and he’ll invite himself over for dinner.” - Calvin Keegan
http://ipsnews.net/news.asp?idnews=33142
“They killed people; they threw them out of their farms, they destroyed the economy. Now they want us to rescue them,” Gerry Whitehead, whose land was seized in 2002, told IPS.
There are many reasons people are starving in Africa most having to do with wars.
The discussion was about Somalia.
The article you reference is about Zimbabwe.
Very different situations, though, imho, both very sad.
War famine disease = population control for those who don’t believe in birthcontrol and family planning. Unfortunately we all get swept up in it.
When I was in Jamaica they had a huge PR program called ease the squeeze, the gov offerred free monthly birthcontrol injections and a huge PR campaign. A doc told me it cost them 10 cents a month. Not sure how they are doing with the food inflation but sounds like a very sound investment.
and remember
Abstinance only will save the day.
http://en.wikipedia.org/wiki/Demographics_of_Africa
Even with famine, wars, AIDS, etc….the population apparently just keeps growing. Any predictions on where it will be in 25-50 years?
“The population of Africa has grown exponentially over the past century, and consequently shows a large youth bulge, further reinforced by a low life expectancy of below 50 years in most African countries.[1]
The total population of Africa is estimated at 888 million (as of 2005). It has doubled over the past 28 years, and has quadrupled over the past 55 years (UN estimates [2]). Population is projected to reach one billion by 2015. The most populous African country is Nigeria with 133 million (as of 2006), followed by Egypt (79 million) and Ethiopia (77 million).
Liberia, Burundi, Uganda, the Democratic Republic of the Congo, Madagascar and Burkina Faso have annual population growth rates above 3%.
34 out of 53 African countries are counted among the world’s “Least Developed Countries”.
More than 40% of the population are below 15 years in most sub-Saharan countries, as well as the Sudan but with the exception of South Africa,[2], in Uganda as many as 50% (as compared to 20% in the USA). Infant mortality is high, with as many as 190 deaths per 1,000 live births in Angola, and between 25% and 50% malnourished in Tanzania, Kenya, Sudan, Mozambique, Madagascar, Zimbabwe, Zambia, Angola and other countries.
HIV/AIDS is widespread in sub-Saharan Africa, with some 11% of adult population infected and an estimated 2 million deaths caused by AIDS in 2005.”
bear market rally not fooling anyone:
Swift, sudden and destined to fizzle out, stock market bear rallies can offer investors a glimmer of optimism when the trend appears to be a one-way street south.
http://www.stuff.co.nz/stuff/dominionpost/4481316a26497.html
Just seems like the market is very reactive right now, and all I seem to hear is constant pumping that the bottom has arrived on CNBC. I used to think markets were more predictive of future earnings, but I just don’t see how we’re not tanking some more based on the news and outlook. Any little good news seems to be a sign that we have ended recession, ignoring the fact that foreclosures are still rising, banks will lose more money, and inflation is eroding the consumer spending power.
Crude -$114.46 - $115 today anybody? I’ve noticed Bloomberg is wall to wall sunshine and happiness articles on how global confidence is increasing because the Fed lowered rates and saved B.S. - I wonder if it has anything to do with what Citigroup is going to report today? JP Morgan profits are down 50% and they’re in better shape than most of the big banks. Lot’s of speculation on their earnings (all called for some earnings) yet no speculation on Citigroup - not a peep.
Euro is knocking on $1.60 right now
It’s supposed to hit $1.60 today.
Wells buys Citigroup deposits and accounts out West.
http://www.marketwatch.com/news/story/wells-fargo-acquire-deposit-loan/story.aspx?guid=%7B4A1A19C8%2D523C%2D431D%2DB43E%2D445CA5D39D46%7D&dist=TQP_Mod_mktwN
Why in the world would Citibank get rid of $500 Million in deposits & $60 Million in loans?
It seems like an envious position for a bank to be in nowadays, as you’re more likely to see $500 Million in loans and $60 Million in deposits…
I used to think I understood the banking biz~
It’s about time. In other industries, when companies get in trouble, they sell off divisions until they get the cash they need. Earlier this week, Fremont capital sold a division.
IMO these sales are good sign, burning the furniture. Stop crying to the government and start slimming down.
As I recall, the regional banks that reported this week only made money because of cashouts from the Visa IPO. They actually lost money if this one time payment is discounted. I think Citi is trying desperately to raise capital just to get through the year.
That’s how I read the story Jwhite, yet somehow it was supposed to be good news (at least that’s the tone I took from it). Take out the one time gains and I think the banks in question were all down.
I personally think the whole Visa IPO was a thinly disguised effort by the banks to put off admitting insolvency for another quarter. Who knows? In a couple more months maybe the slack jawed masses will have forgotten this current nastiness with another juicy Brittany Spears scandal and all will be right in Never Never Land?
Why in the world would Citibank get rid of $500 Million in deposits & $60 Million in loans?
It seems like an envious position for a bank to be in nowadays, as you’re more likely to see $500 Million in loans and $60 Million in deposits…
Are they setting Citibank to be the one that gets flushed. All the good assetts are sold at a low price or traded for junk. Then Citi uses the junk to get treasuries from the FED and uses the treasuries as a hedge in some destine to fail deal. The treasuries are taken as collateral and the FED keeps the trash.
Sounds about right to me. Good assumption.
Today’s headline: “Euro hits record high against greenback”
Tomorrow’s headline: “Euro hits record high against greenback”
Next week’s headline: “Euro hits record high against greenback”
Next month’s headling: “Euro hits record high against greenback”
…
A record low for the buck. Again.
This little factoid frosts my a__ more than anything else in this whole bloody mess…
“A record low for the buck. Again.”
Dubya: This administration has a strong dollar policy!
There’s around 20 gallons of gas in a barrel of crude (along with other forms of oil) and the price of gas @ the pump hasn’t kept up with the spot market, as the powers that be know if they raise it too much, America grinds to a halt…
as the powers that be know if they raise it too much, America grinds to a halt…
I’m not a financial whiz in any sense, but I suspect the oil-powers-that-be, including their henchmen in the White House, know that if gasoline gets too expensive, Americans might finally figure out how to use less gasoline (read, conservation, alternative energy)
And once that happens, that particular house of cards will tumble.
I wonder if it has anything to do with what Citigroup is going to report today?
Minor note: I believe Citigroup reports on Friday, not today.
I stand corrected.
Coffee-less fog this morning…
Which of the big IBs issued the shocking analyst’s report a few years ago suggesting $100 oil prices would soon be here?
equity bloodbath:
Wall Street faces the growing risk of an equities bloodbath in coming months as the credit crunch spreads to the wider economy and earnings crumble, according to a pair of grim reports issued by Goldman Sachs and Wells Fargo.
http://tinyurl.com/3pxvt8
I think the shorts are going to take a bloodbath first.
Whose job is it to kill the shorts and how do they perform it?
Find a sovereign wealth fund and Arab investors willing to pump billions into whatever their shorting on a moments notice. After all, it’s just play money anymore for all practical purposes out in the real world…
“they’re” My grammar is no good before noon…
I hope somebody does a careful analysis some time over the next several years on the effect of the global central banking community’s pumping in “play money” to mop up the messes they make on the present instability of the global financial system.
You mean a “post mortem”?
Weak hands
One: down support, we’ve just begun
Two: the shorts are through
Three: Paulsons’ men are on a spree
Dirty dozen!
“The equity markets have not yet priced in a prolonged downturn in economic growth in my opinion. We are still in the early stages of the credit crunch. Earnings estimates for the second half of the year are likely still far too high,” he said
Neither has the housing market… all price reductions and foreclosures we’ve seen so far are merely the result of removing easy credit from the equation and killing the notion that home prices only appreciate in value (what a crock!!). Expect continued steep drops in home prices when the effects of the economic downturn noted in this article take hold..
“removing easy credit” = “removing easy and fraudulent credit”..
Well I don’t think that the possibility of further price declines has been priced in yet. Most of the knife-catchers that are buying now are convinced that they’re buying at the bottom.
Agree… Many won’t get wipped out though as many did buy off the peak of the grossly hyped market.. A few more years of shakeout will kill the notion that they are another Donnie Trumpy in the making however… and that’s a good thing..
I wonder how long it will take to forget this mess and for a new generation of speculators to crowd in? I guess I’m getting ahead of things. Hard to forget the mess when many haven’t even acknowledged it yet.
Mmmm…so….stay in cash, right?
You’ve got it.
Consider the options:
cash
http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax
not cash:
http://quotes.ino.com/chart/?s=NYMEX_GC.M08.E&v=dmax
What if the FDIC only had $52 Billion* worth of funds to bail out all of you that carefully saved your money, should banks start failing?
* That’s all they’ve got…
How many cents on the dollar is that?
1.25 Cents per Dollar…
more layoffs coming for wachovia
found this blog of former disgruntled wachovia employees
this should help the real estate market
http://www.indeed.com/forum/cmp/Wachovia/05390c183c137e1e7570470d?myst=200
I don’t understand what they’re talking about. Do you?
Looks like the account sellers were supposed to give people free Crown accounts for 90 days. Then, when the account holder could not maintain the balance requirements (which appear to be ridiculously easy to maintain), the account sellers were supposed to switch the accounts to a free type. This, apparently, caused the account sellers to get double credit for each account that was switched. Wachovia is firing these folks for gaming the system even though it was, apparently, what they were told to do.
What I got from it was that the comissions were higher for Crown Accounts than they were for Free Accouns. Crown accounts offer 90 days free before the fees start.
So, when a customer wants to create a free account, they were actually creating it as a Crown. This way they could collect the higher comission on the Crown account. Then after 90 days, just before the fees kicked in, they switched it to free.
When I worked at MCI we had kind of the opposite thing happening. We’d sign up a new customer on a half-price for 30 day program…. Then AT&T would call them and ask why they switched. “Oh, we can give you half price for 60 days”. The customer would swich back to AT&T. Then we’d call the customer. Why you switch back? “Oh, well we can give you half price for 90 days”.
In this case, should the salesman get the comission for selling the “half for 30″ or the “half for 90″.
Well, what a lot of customers that made a lot of calls would do would be to wait the 90 days on one plan, then call the other company. Switch for 90 days. Then 90 days later, call us back to switch back.
Another comission?
It took years for MCI and ATT to finally realize it was a no win game chasing these serial switchers.
Looks like some kind of systemic dishonesty that the firm is trying to bury.
Story of the day: NY Times: Big Tax Breaks for Businesses in Housing Bill
“In the Senate bill, the nation’s biggest home builders, some now on the verge of bankruptcy, won a provision that would let them claim millions in tax refunds by charging their current losses against the huge profits they made three or four years ago. Other struggling industries would benefit from this provision.”
As much as it pains me to say this, I don’t blame the Senate on this one given what home builders represent to the economy and jobs.. Won’t have the effect they are looking for I don’t think until home prices and wages get back in line… that’s happening as we speak contrary to the stomping and whining of the RE machine (although not quick enough for my liking)..
Disagree. It’s a straight gift to the existing players, and the taxpayers’ money is going to be eaten up in the losses.
Better to have the bankrupt builders actually bankrupted, and either do nothing (the preferred option) or use the money for something to aid first-time buyers. There will be no shortage of aspiring entrants to the homebuilding business once the supply/demand equation is back in kilter.
Good point..
Disagree. You need to come out west to see how much of our exurban areas have been overbuilt with ugly, stucco-box McMansion tract homes to appreciate the absurd level of overbuilding which has occurred. Many of these homes sit vacant and falling into desuetude. Builder CEOs cashed in millions and millions in stock shares just at the point when their companies were about to head south. Now to complete this ugly picture, taxpayers will be asked to reward them with tax breaks? Hair of the dog cure for hangovers don’t actually work — this is an old wive’s tale. It is unlikely to fix anything, but may result in a continuation of the McMansion overbuilding problem for a bit longer, with even larger price declines in housing prices than have already occurred (the perverse silver lining?).
I am out west… BUT, everyone on this HBB is delusional if they think Congress won’t act to protect jobs … even if those “jobs” add little to our country’s long term economic health (like housing related jobs).. that’s the point I trying to make, not that I think a “construction or housing job” is worth a whole lot to our country’s long term health personally… (I don’t).
You’re delusional if you think a hair-of-the-dog stimulus is going to somehow reflate the building industry against a record bust and the resulting inventory overhang.
Last I checked Congress was costing jobs. Their rate cuts have caused inflation like mad and we have truckers and companies laying off, school districts not hiring, etc all because of the inflation being caused by Ben Bernanke and our government. The medicine i worse than the illness in this case.
Why does Congress always have to act? They just make the matters worse. You are the one who is delusional.
Why protect jobs for illegals? I mean, they are the ones building all the McMansions. Or are we talking about protecting executive positions at firms like Lennar, KB, etc.?
If this actually keeps construction workers a little more employed, then at least the bill has that merit, even though I disagree with it overall. I think the money will go right to golden parachutes though.
Rather than putting construction workers to work building more homes that aren’t needed we should put them to work rebuilding our schools, bridges, roads, power lines ect. Let the home builders fail, how hard is it to rebuild this industry. At the first hint of improvement mom and pop outfits will rise from the dirt.
We need to save the immigrant jobs of the housing industry at all costs! Mexico is reeling from the drop in remittances and the price of corn! We need to provide for our wider and future constituencies!
It would also be nice if these companies would learn to put some of their profits in good times towards paying down debt or building cash reserves instead of insane expansion. Any bail out lessens the lesson.
Hair of the dog cure for hangovers don’t actually work — this is an old wives tale.
Hair-of-the-dog cures do work, because the body is re-intoxicated. This is not necessarily a wise choice, however — it merely delays the day of reckoning (i.e., detox of the system) or masks the symptoms. Which may be the part of the analogy that you’re missing.
How about all of the folks whose jobs were sent off shore and are no longer employed or making less money in the services industry. Shouldn’t they get these benefits too? After all, it was a loss.
Instead Joe6Pack is told to suck it up, retrain and find a new calling. Shouldn’t the builders do the same? Perhaps the banks with a service sprucing up foreclosures or offer security to prevent squatters from moving into foreclosures. Etc.
Testify!
Are you pro-union? If you are not, then in my opinion you have no reason to weep for those affected by off-shoring.
I think you may of missed the point. The question is should we be weeping for the builders?
Preach!
This will cause the exact opposite of what they expect. If the builders do not go bankrupt, they will tax that tax subsidy and continue building houses at a loss. This will continue to flood the market with unneeded houses and hasten the price collapse.
I disagree for many reasons. One reason is that subsidies are a slippery slope. Once they start, where do they end? If an industry can’t support itself now, when can it, and how on earth is it ever fair to burden taxpayers with the cost of floating private businesses? It’s a net loss for the average taxpayer.
Gosh, you mean if I had written “homebuilder” on my form, I could write off current losses against previous “profits” upon which taxes were paid? Gee, how many homes do I have to build?
Banks & Bailouts…
http://www.lewrockwell.com/rozeff/rozeff201.html
Conclusion: abolish the Fed. Of course I completely agree.
the incredible shrinking city:
YOUNGSTOWN, Ohio (CNNMoney.com) — Youngstown, Ohio, has seen its population shrink by more than half over the past 40 years, leaving behind huge swaths of empty homes, streets and neighborhoods.
Now, in a radical move, the city - which has suffered since the steel industry left town and jobs dried up - is bulldozing abandoned buildings, tearing up blighted streets and converting entire blocks into open green spaces. More than 1,000 structures have been demolished so far
http://tinyurl.com/6kgh6v
“Under the initiative, dubbed Plan 2010, city officials are also monitoring thinly-populated blocks. When only one or two occupied homes remain, the city offers incentives - up to $50,000 in grants - for those home owners to move, so that the entire area can be razed.”
It used to be “musical chairs”, now it is “last man standing”…
Interesting. That’s the first I’ve heard of this type of thing. This is a prototype of what will happen in many places over the next 50 years.
And to think these houses were much more sturdily built than today’s Stucco Jungles. How long will McMansionville USA hold up to abandonement?
So bring it on, and pray that someday soon we start building communities with more sustainable ideas in mind.
… and with at least some planning for anti-growth.
Negative growth is what many preach out of one side of their mouth, but the other side supports massive illegal immigration. If the concept of sustainable or dare I say it: reducing populations is good for the world in general, why not for the United States?
I think its a great idea. Parks vs. boarded-up houses is a total no-brainer.
You actually get ad hoc parks when you demolish houses in quantity…
I’ve seen picture of neighborhoods in Detroit, with 5 house gaps on either side of a standing house.
Housing construction falls sharply in March with building permits down as well
Housing construction dropped by 11.9 percent to a seasonally adjusted annual rate of 947,000 units, a much bigger decline than economists had been forecasting.
http://biz.yahoo.com/ap/080416/housing.html
Economists seem to be wrong more ofter than the local meteorologist.
Very, very few economists have had this one wired since the start.. same for “analysists” and Fed policy pundits… gross underestimation by all… too many cafe’ lattes…
I think they were expecting only a 5% average decline if I remember… I hope these guys and gals aren’t getting a bonus this year.
A few years ago, I used to follow the monthly job creation/loss numbers. Before the actual report, I would hear/read what the economists polled thought the number was going to be. I discovered that there was utterly no correlation between what economists said about those numbers, and the actual numbers. Their predictions were completely random. I did this for like an 18-24 month period. It was like reading a horoscope, and about as accurate.
I guess when people want to believe something (”I can tell you the future!”) and you tell them that thing, they’re going to be gratified. Regardless of the accuracy of what you tell them.
Eurozone inflation at 3.6%.
ECB target 2%
Still no rate cuts, bad bad news for Spain.
http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1090,30070682,1090_33076576&_dad=portal&_schema=PORTAL
Yet, another housing mania placed squarely on the chopping block…
“You’re paying for the nation’s debt addiction through both direct and indirect taxes. And unfortunately, Uncle Sam is going to need more money.”
US Deep In Debt And Still Digging
http://articles.moneycentral.msn.com/Investing/JubaksJournal/USDeepInDebtAndStillDigging.aspx
Holy capituola! SD home price declines look even worse when split out by used SFRs and condos…(Simpson’s paradox in action?). Note the “New Homes/Condos” line most likely reflects a shift in the composition of sales from condos to new homes, rather than an increase in the price of same-quality new homes.
March 2008
March Housing Prices for the County
MEDIAN PRICES Mar. ‘08 Feb. ‘08 Mar. ‘07 Change Mar.
‘07- ‘08
Resale houses $417,000 $430,000 $560,000 -25.5%
Resale condos $290,000 $300,000 $385,000 -24.7%
New homes/condos* $450,000 $553,500 $420,000 7.1%
All combined $395,000 $415,000 $490,000 -19.4%
link to data
Don’t forget to adjust for inflation. Almost a 30% decline in one year.
Must be an anomaly… can’t be??? data must be wrong.. the researcher must have an agenda… it’s San Diego for heavens’ sake !!
This story will be repeated in San Fran I believe as well when the ALT and Prime loans start to crumble en’ mass..
We haven’t even seen the effects of Alt-A and prime resets just yet. The top end of the market is doing better than the bottom…so far.
Again, this is good news for San Diego. That city had a housing affordability crisis.
As long as conforming mortgages remain available for those who actually live within their means, falling prices will solve that crisis.
I think that SD still has an affordability problem.
“I think that SD still has an affordability problem.”
Yes, but a couple more years of 25 pct annual losses should clear it up.
Yea, it is incredible how fast things decellerated this last year, the numbers for which we’re just now getting to see. In Sacramento we were down 25%+ YOY. Crazy.
Figures don’t lie, but liars do withhold figures.
Bankers Cast Doubt On Key Rate Amid Crisis
By Carrick Mollenkamp
Word Count: 1,687 | Companies Featured in This Article: Citigroup, Reuters Group, Bank of America, HBOS
LONDON — One of the most important barometers of the world’s financial health could be sending false signals.
In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable.
Libor plays a crucial role in the global financial system. Calculated every morning in London from information supplied by banks all over the world, it’s a measure of the average interest rate at which banks make short term loans to one another. Libor provides a key indicator of their health, rising when banks are in trouble. The interest rates on trillions of dollars in corporate debt, home mortgages and financial contracts reset according to Libor.
In recent months, the financial crisis sparked by subprime-mortgage problems has jolted banks and sent Libor sharply upward. The growing suspicions about Libor’s veracity suggest that banks’ troubles could be worse than they’re willing to admit.
The concern: Some banks don’t want to report the high rates they’re paying for short-term loans because they don’t want to tip off the market that they’re desperate for cash. The Libor system depends on banks to tell the truth about their borrowing rates. Fibbing by banks could mean that millions of borrowers around the world are paying artificially low rates on their loans. That’s good for borrowers, but could be very bad for the banks and other financial institutions that lend to them.
Let’s examine the notion that artificially low rates are good for borrowers. Suppose I am a homedebtor who was just induced by abnormally-low interest rates to purchase an unaffordably-priced home. The home’s supposed value is artificially propped up by low rates due to this alleged wide-spread lying by banks about true borrowing costs. Most widespread lies eventually come to light, and if this is a lie, it is likely to follow the normal course, at which point interest rates could shoot up. What would happen to the “fundamental value” of overpriced homes if interest rates suddenly rocketed up (as they did from 1980-1982)?
Artificially low interest rates also help to keep stock prices propped up on a temporarily high plateau.
This is a temporary effect of banks trying to hide pain that will inevitably become public. I don’t think it’s a big deal.
The lower rates will cause mal-investment in normal times. However, right now, credit is so screwed up that lenders are increasing spreads to counteract any downward movement in LIBOR or other benchmark rates.
If you are already a borrower, the reality is that the difference in rates that they are talking about won’t change a thing. If you’re in trouble, a short term mis-pricing of debt gives you a short term windfall, and puts off the day of reckoning by literally several days to a few weeks. If you’re not in trouble, you have a bit more cash in your pocket…big deal.
Americans See Buying Opportunity in Housing: Zogby/Reuters Poll http://www.cnbc.com/id/24155570
“The survey of 1,049 likely voters found that 53.8 percent thought this was a good buying opportunity as home prices have fallen sharply in many parts of the country. Some 41.6 percent said it was not a good time to buy, and the rest were unsure.”
Are we in for a dead cat bounce?
How many of that 53% own homes or want to sell one. How many of that 41% are buyers?
The devil is in the details.
I still see investors buying up all the houses because they think they are getting a deal.
They are all just knife catchers. That’s ok… local government would love to collect tax revenue from them.
Exactly. Plus how many would be buyers qualify for a loan?
From what I hear, its a great time to pick up a used BMW. Doesn’t mean I’ll be doing that any time soon.
My cousin visited us in a nearly brand-new Lexus about two months ago. He picked it up at deep discount from a former owner who could not keep up the monthly payments.
We bought one last year for the Wife - excellent condition, 3 years old, 1 owner, 43,000 miles. Paid 39% of what it sold for new. I LOVE the resale market.
I don’t see the appeal of the Lexus brand. Except for the top of the line models they are just gussied up Toyotas (which I also don’t like). The only reason I could see for buying a ToyoLexus is because you intend to drive it for 15+ years.
I agree, the Wife has an LS which is top of the line, it’s the most aerodynamic car sold in America (for that year I’m sure), it gets an unbelievable 25 mpg on the highway (that’s with a V8) and about 20 in the city. It’s so quiet you’d think the engine had stalled (tried turning over a running engine a couple of time) and it’s the tops for reliablity and customer satisfaction for many years running. A three year warranty doesn’t hurt either. I intend on keeping that car till it collapses into junk which is what’s about to hppen to my eight year old Taurus (which is going to the kid this year - heheheh).
I have a Land Cruiser, bought used. We looked for a used Lexus SUV - same truck as the Cruiser, but usually cheaper used. Perception is that you need Lexus parts, but Toyota Parts work just fine. We (and by that I mean my husband) does all of the car work.
yeah, you have to like quality and reliability to be into Lexus. I prefer a GM product that fails at 40,000 miles. mmmmmm–rental cars.
I’m actually looking for another LS (an older model) with about 90-100K on it (about 12K in price) to replace the car I’m handing over to the kid. I have a friend with a 16 year old LS400 with over 160K on it - runs, drives, looks perfect. She just washes and vacuums once a week, changes oil on it regularly and does the scheduled maintenance - that’s it. I’m gonna try and get another 100K out of it. Gotta love it.
yeah, you have to like quality and reliability to be into Lexus.
I think so. I find most of them to be pretty ugly (what is it with Japanese styling?). If I were to buy a Japanese luxury car I would stick with Acura. At least they look OK. And don’t ask me about Nissans. If you look up the word “ugly” in the dictionary, there is a picture of a late model Maxima next to it.
Agreed. I think this is 53% of people saying now is a good time for SOMEONE ELSE to buy a house so they can sell theirs.
Reminds me of a study from back when I lived in HI. Should the stat build light rail to ease congestion on the H1. 75% said yes. Would you ride it? 20% said yes. They all wanted the rail so that EVERYONE ELSE would ride it and get off the road so they could dirve without the traffic.
Instead they built the H3 for 1.14 billion for what? Over $100,000,000 a mile for the 14 mile system that almost no-one uses??? (I retired in HI in 2000). It was comical how empthy that thing was even on a week day.
You can’t get a dead cat bounce without cash sitting on the sidelines in the hands of willing buyers. Do you see a pocket of cash somewhere waiting to find the next investment opportunity in a falling knife market?
I was being facetious. Of course there will not be a dead cat bounce — credit is tightening and those of us with cash are sitting on the sidelines waiting for the correction to take place.
I think that the article’s title was trying to suggest a bounce. When you read the article, however, you find that only slightly fewer than half of the people surveyed think it is a good time to buy. The thing that stood out to me was that 41.6% said it was not a good time to buy. People are starting to wake up. A year or two ago the number who thought it was not a good time to buy was much lower.
The 53% have their houses for sake.
I don’t think you get a dead cat bounce in RE. What you get is volumes picking up after prices have dropped far enough, then inventory squeezed out of the market, and homebuilders coming back into certain markets and building homes to the new reality of prices.
I think we’re 18-24 months away from the last phase in the first markets to emerge from this mess, but in some markets, volume has begun to pick up.
I’m going to say something that will surely be controversial.
Some of the 53% may be right.
There are some markets where you can buy homes for prices that are actually in line with your income, and not too far out of whack with rents, and prices have dropped VERY far already.
If you are trying to time the bottom–we’re not there yet, so it’s not a good buying time.
BUT, if you are an average Joe who wants to buy a house that he can afford for his family, and can get the school district he wants, and plans to live in it for 7-10 years, there are lots of homes to look through, and actually an opportunity to negotiate price and terms (inspections, etc.).
I’m sure though that a lot of the 53% think that this is the case in every market. That is not true.
The global food crisis intensified on Tuesday as Kazakhstan, one of the world’s biggest wheat exporters halted foreign sales and rice prices shot to a record high after Indonesia stopped its farmers from selling the grain abroad.
…
Wheat prices moved higher to $9.11 a bushel and traders warned prices could rise further as the Kazakhstan ban together with restrictions in Russia, Ukraine and Argentina have closed a third of the global wheat market.
http://www.ft.com/cms/s/0/38cd4d58-0b15-11dd-8ccf-0000779fd2ac.html
Went short oil and ag today. (via dcr and dba)
Yikes.
It’s a dollar play.
Im going long form 1065 via the K-1, its a bitter renter play, you people gotta live somewhere.
“Long positions from speculators, or bets that crude-oil contracts will rise, outnumbered short positions by 64,699 contracts in the week ending April 8, or nearly 40% higher than the previous week, according to the latest report from the U.S. Commodity Futures Trading Commission.”
http://www.marketwatch.com/news/story/crude-oil-inventories-contract-oil-spiking/story.aspx?guid=%7B9EC4D841%2D5664%2D4873%2DAA86%2D1665F3E600ED%7D&dist=hplatest
Foreclosures: Leaving Homes and a Financial Mess Behind
http://www.cnbc.com/id/24133099
Wall Street knifecatcher…
Merrill Upped Ante as Bonds Fizzled
Merrill Lynch is expected to report another quarterly loss and $6 billion to $8 billion in new mortgage-related write-downs. A look at how the firm got in so deep and its flawed efforts to recover sheds light on why the credit squeeze is proving so deep and persistent.
http://tinyurl.com/6g8hb6
From Dean Baker;
McCain Proposes Special Summer Tax Break for Exxon
“That is what the headlines on Senator McCain’s proposal to remove the gas tax for the summer driving season should have read, since that would be the predicted effect of his plan.”
“…if we reduce or eliminate the gas tax, the price doesn’t change, the lower tax will simply allow Exxon and other oil companies to keep more profits…”
There are plenty of federal (and state) taxes imposed at the pump. McCain’s theory is that the reduction of that tax (as had been discussed back in the 70s at the last gas price melt-up) reduces the cost per gallon to the consumer.
How is a tax cut for my mom filling her gas tank somehow a tax cut for Exxon?
Prices are set by supplyand demand. At x price, people will keep buring gas as always. At y price, people will carpool, trade in the SUV for a compact, forgo a trip, etc.
Let’s say supply and demand come into balance for max profitability at $3.70.
It doesn’t matterhowmuch of that $3.70 is tax. The price where supply and demand balance is $3.70. Cut the tax, the price may fall for a couple days, then the demand will pick up and push the price right back up.
“Cut the tax, the price may fall for a couple days, then the demand will pick up and push the price right back up.”
Which is exactly Ed’s point. A big huge tax shift off of Exxon and onto us.
So you’re saying that if they raised the gas tax, the price would rise temporarily, then demand would fall, causing the price to fall back to $3.70?
That’s exactly correct, in a true equilibrium economic situation. However, with gasoline as soon as prices drop some people will get their H2 running again causing the prices to run back up.
McCain’s theory
…more precisely, the theory fed to McCain by his advisors…
“I’m going to be honest: I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated.”
John McCain
On-the-job septuagenarian training?
No thanks~
I haven’t decided which candidate is picking the best advisors. Hilary seems to be firing them pretty quickly when they displease, at least.
Is it Obama or Mccain that has the advisor who is the cast off former personal-ambassador-without-portfoilio-of-Vicente-Fox-to-the-undocumented-Americans-who-were-still-Mexican-citizens on his staff?
Cognitive disconnect strikes financial markets (again!):
Earnings Slump at J.P. Morgan, And Continued Stress Is Expected
By Donna Kardos
Word Count: 526 | Companies Featured in This Article: J.P. Morgan Chase, Visa
J.P. Morgan Chase & Co. on Wednesday posted a 50% drop in first-quarter net income as it marked down $2.6 billion in leveraged lending and mortgages and quadrupled its credit-loss provision.
Banks Results Provide Balm For Investors; Stocks Gain
A Wall Street Journal Online NEWS ROUNDUP
Word Count: 503 | Companies Featured in This Article: J.P. Morgan Chase, Wells Fargo, Coca-Cola, Intel, International Business Machines, eBay, Merrill Lynch
Stocks rose early Wednesday after better-than-expected results from J.P. Morgan Chase and Wells Fargo boosted sentiment at the height of earnings season.
AHEAD OF THE TAPE
By MARK GONGLOFF
Credit Losses May Not Be Over For Banks
April 16, 2008; Page C1
April 16, 2008 10:07 A.M.ET
BULLETIN
Bulls applaud earnings, data
Quarterly profits from J.P. Morgan Chase, Coca-Cola and Intel all contribute to optimistic tone. Data show that U.S. housing starts remain weak and that retail-level inflation is under wraps.
Am I having an earnings nightmare, or are all these bylines from the same day’s financial news? Help — my head is spinning!!!
MARKETWATCH FIRST TAKE
A sign of the (good) times
Commentary: J.P. Morgan’s profit drop obscures bank’s strong standing
By MarketWatch
Last update: 9:21 a.m. EDT April 16, 2008
NEW YORK (MarketWatch) — In banking, like sports, a champion is not necessarily defined in the good times, but in adversity.
…
The enthusiasm is a result of what the first quarter results do not say: J.P. Morgan is the strongest of its field. Forget the results. The bank bid for — and won — Bear Stearns Cos. It did so with the confidence of the U.S. Federal Reserve. And not only did the bank not seek foreign capital to boost its balance sheet, J.P. Morgan was putting its excess capital to use: making a bid for Washington Mutual Inc.
Though rebuffed, the offer was just another indication that J.P. Morgan has entered the rarified air of Goldman Sachs Group Inc., the investment bank that also has shown remarkable resiliency while its competitors have stumbled. Even more remarkable, unlike Goldman, J.P. Morgan is a commercial bank with billions of mortgages on its books.
Good thing the all-seeing, all-knowing stock market is always right about the value of companies, or those billions of mortgages on the books might be cause for concern.
William Gross of Pimpco wants to prop up housing prices.
http://tinyurl.com/5peex6
He claims it is a nasty and dangerous situation. We will soon find out how nasty and dangerous it really is. This WS bear market rally will be over soon. We have not seen a true capitulation. I capitulated in 2001. I understand what that means. We are not there yet.
Roidy
“We have not seen a true capitulation.”
You’ve got that right. Stock market valuations are based on profits rising from an all time share of national income in a recession. How could these values be supported?
My guess is that the supply of money is still high enough that it is sloshing to stocks because with inflation rising and real estate prices falling, everything else looks worse.
“How could these values be supported?”
With other people’s money?
And to think there were people on this very blog who idolized Bill Gross only a year or two ago…told ya he was a phony.
I wouldn’t say idolize, but he did have a good investment track record and some intellgent things to say about the broader economy.
The housing bust seems to have brought about a nervous breakdown, with some of the nonsense he has been spouting.
Come to think of it, LOTS of people have started spouting nonsense since housing prices started falling. Fear and desperation.
I still respect Mr. Gross. He is not a phony and was one of the earliest callers of the shadow banking system. The method that Mr. Gross uses to calculate risk/reward is similar to the one I use. We both come out with the possible contraction of US GDP greater than 20%. If there is anything that can be done to stop the contraction then the government should do it. I do not think there is anything that can be done, Mr. Gross feels that there is a chance to save millions of people from misery.
save us with inflation is what I am guessing but hoz you don’t think it can be done…. what do recessions usually contract GDP to ?
In the great depression GDP contracted 25%. It was ugly. I have a large family, extrapolating the probable effects to relatives in California, New York, Florida etc means an awful lot of misery. There is no where to hide.
Misery is a good teacher.
” I do not think there is anything that can be done, Mr. Gross feels that there is a chance to save millions of people from misery.”
By buying his bonds? Or by artificially propping up the housing market, which Gross has repeatedly said the Government should do. Sorry. I haven’t trusted him since he was making predictions for rate CUTS as early as 2005. He has way too much vested interest in maintaining the status quo of absurd housing prices, rampant debt, and reckless/irresponsible homedebtors and lenders.
Note: The Great Depression would not have been TGD if Hoover had not started a trade war with the Smoot-Hawley Act. He did some other very stupid things like try to persuade businesses to keep wages artificially high, the Fed at that time tightened credit too much, prop up farm product prices. It would have been better had they left it all alone. Hoover deserved his rep.
Idiot.
Roidy
San Diego Union Tribune can’t hide the facts any longer, now that the median has dropped below 400k. They manage to find 3 zip codes where prices have gone up (in this quarter with very low sales):
http://www.signonsandiego.com/uniontrib/20080416/news_1b16neighbor.html
“In fact, prices declined for all but three of the county’s 59 ZIP codes that recorded at least 20 sales between Jan. 1 and March 31 of this year and last.
Bucking the trend were Encinitas, La Jolla and Ocean Beach, which experienced price gains, while in Mission Beach and Pacific Beach, the median price remained relatively unchanged from last year to this.
That comes as little surprise to real estate agent Cindy Wing, who sells homes in the 92107 ZIP code, which includes Ocean Beach, Sunset Cliffs and part of Point Loma.
“We’re selling paradise because it’s the beach, and it’s beautiful,” Wing said. “That’s how I feel when I sell. It’s kind of a vacation feel in your everyday life. And it’s affordable compared to areas like Del Mar and La Jolla.” ”
The example they show is a Spanish revival “4476 Granger St” which sold for $957,000 after at least 6 months on the market and an asking price drop of $350k. The listing agent (and 50% owner)? Surprise: Cindy Wing.
I have done my own Case Schiller index for 92107, and I can guarantee that prices are dropping in 92107 just as everywhere else. They houses that increase in price or stay the same are houses where the owner has pent a couple of 100k’s on improvements….
Three of the Horsemen of the Apocalypse speak with forked tongues…
April 16 (Bloomberg) — Richard Fuld, Lloyd Blankfein and John Mack say that the credit-market contraction is winding down. Investors whose bank stocks plummeted aren’t convinced.
Fuld, chief executive officer of Lehman Brothers Holdings Inc., told shareholders at the firm’s annual meeting yesterday that the “the worst is behind us.” His comments followed similar remarks last week by Goldman Sachs Group Inc.’s CEO Blankfein who told investors “we’re closer to the end than the beginning,” and Mack, Morgan Stanley’s chief, who said the crisis will probably last “a couple of quarters” longer.
It’s not the first time that banking executives expressed optimism that turmoil in the credit markets was contained or approaching an end. And they were wrong. Total writedowns were about $97 billion at the end of December and surged to $181 billion by the end of February. The world’s biggest banks have recorded $245 billion in asset writedowns and credit losses since the beginning of 2007.
Used Copper Mania:
In Minnesota, scavengers have dismembered a copper-coated Buddha, stolen statues from Theodore Wirth Park, snatched plates off of graves and stripped warehouses and construction sites of tens of thousands of dollars worth of the precious metal.
Cannibalized houses can also be deadly. Twin Cities area police can point to maybe a dozen homes that have caught fire or exploded because copper thieves didn’t bother to turn off the gas. One house near 3200 Colfax Av. N. was blown to bits in March.
Thieves most often hit foreclosed homes, but not always. They broke into Keili Mac’s Minneapolis home while she was out of the country and took copper gas pipes. They left the gas on, the house exploded and the city demolished it. The victim returned to find her house gone.
“I’m amazed someone hasn’t gotten killed or hurt yet.”
Could happen to anyone living in a place with copper pipes.
Copper has quadrupled in price in less that 10 years. $4 copper is simply amazing.
Many base metals have gone up 500% in the last two years. The rare earth metals have gone up 500 -1000% in the last 18 months (of course China has the market cornered on rare earths and are non exportable).
Imagine how many coppers across the country, that are in hot pursuit of copper thieves?
several houses around me with fancy copper gutters and downspouts, etc. Overall, we don’t have much crime, but….
Who coped the copper clappers?
http://tinyurl.com/umxnt
6 Arrested in copper thefts from DE farms.. Copper theft on the rise..
I always thought that you weren’t supposed to use copper for natural gas.
What do you expect from national builders who do anything they can to cut a corner?
Husband: “Honey let me hang this picture for you”. Pounds nail into wall….PSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS
Wife: “Why does it smell like gas in here”
Husband: “Its’ the dog, bring me my cigarettes”
Radio news today here in DFW had an under-construction school ripped off for 200 ft of copper conduit and copper wire over night. The 2 bandits were caught on the roof
We piling into skf today or what?
Hope you didn’t. Ouch.
I hold a good sized position in this. As TX has mentioned many times, it’s mostly for trading. But I have held on to it anyway. It is a “dynamic ETF”, so it tends to wipe out your gains on days like today. But today was a great day to buy it because if past trends hold, the financials will give back their gains, and continue to decline.
TOP of the BUBBLE
Las Vegas market: The median price paid per square foot for resale houses fell to $132 in February, down 27.5 percent from a year ago and nearly 31 percent below the $190 peak in June 2006.
Is June 2006 an accepted as the absolute top of the bubble by HBB?
I would concur with this date, but would like to hear other views.
I’ll agree to that for the Phoenix metro, although the second derivative of price went negative in mid 2005.
Different markets had different peaks. June 2006 seems right for Vegas. PHX I think was a couple months later….
Wait…. We have Case Shiller!
http://www2.standardandpoors.com/spf/pdf/index/CS_HomePrice_History_032544.xls
Looks like Vegas was Aug 2006. PHX June 2006. Miami was back in Dec 2006 (wow, I thought they were earlier). San Fran was May 2006.
But yeah… in general summer 2006 was the peak.
LV is way ahead of SD; our PPSF is still up around $200 at best.
From Paul O’Neil, former Treasury Secretary — “strong dollar” policy a joke.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ackYQhodd4Nk&refer=home
The article does no justice. The WBBR interview aired at noon today at it was right up our alley. He had some scathing words for the FedReserve, Treasury and the supply side voodoo priests of the Bush administration. He characterized the BS housing finance as borderline criminal and “sacrificing the poor for the benefit of a few”, etc etc. Fantastic interview.
When Paul O’Neil went on 60 minutes about 6 years ago to describe what being the only honest man was like, in an administration full of deceit…
The day after, Bush announced we were going to Mars, to trump his story. A day after that, Rumsfeld donated $100k to 9/11 victims, to trump it a bit more.
I actually think W and co. thought they were doing the right thing with regard to Iraq, and were merely wrong. Not so U.S. fiscal and economic policy.
The Financial Times published an article asking which negative legacy would be greater for the Bush Administration. It voted for the fiscal and economic policies.
Has anyone noticed listings that say, “No HFA or VA, needs strong buyer”? They have been popping up a lot around here (Auburn, CA). Investors are taking over the market on cheap homes (not saying homes are cheap, just they are buying up the cheapest), it’s getting really bad.
“listings that say, “No HFA or VA”
Sometimes houses are so damaged that it is obvious to the listing agent that FHA and VA standards could not be met. If you are missing the entire kitchen, and say, the bathroom sinks, etc., then you would be hard-pressed to get even a conventional loan that requires a house to be 95% complete.
There are other financing options, but I doubt that they would be available for average buyers. Cash works.
Long Island Home Prices Fall as Slowdown Cuts Demand
In Suffolk, the median fell 6.5 percent to $360,000 and inventory increased 5.3 percent to 14,141.
http://tinyurl.com/3f46y3
IMHO this is the best article I have seen this week. It covers everything!
Scavengers on the Urban Savannah
“…Ms. (or Mr.) Marla’s look that early morning could best be described as drag-hippie-trucker-on-the-road-to-Burning Man, the composite parts including a tan tie-dyed denim jacket paired with matching bell-bottoms bought at the annual Fat Girl Flea Market, a belt buckle in the shape of a giant “G,” and a tan vest worn over a navy blue hoodie kept pulled up as the 7 a.m. chill took hold. Mohawks may look cute, but they do nothing to retain body heat.
…In a reversal of the traditional American narrative of aspiration, an awful lot of people at the Brooklyn Flea turned out to have ditched lucrative white-collar jobs to hawk goods from folding tables on the street. In a sense, that even includes the Brooklyn Flea organizer Mr. Butler, who toiled in the salt mines of finance until Brownstoner’s success provided him with an unlikely way out.
“I graduated Princeton in ’92 and moved to Williamsburg in ’03,” he explained. “I bought on old fixer-upper in ’04 and started the site, and I realized I was miserable working on Wall Street and that Manhattan was only for rich people and felt played.” …
NYT
http://tinyurl.com/6qfnyp
All right Aladin Sane a fellow traveler to burning man. lol
Burners tend to wear birthday suits, not bell-bottoms…
Orangu-tan Mozilo has been quiet as a church mouse for months now…
Wonder what he’s up to?
I just got a chill
The rich are very different. They have more money to lose.
Sunny side of the street
America’s wealthy see buying opportunities in sluggish real-estate market
By Amy Hoak, MarketWatch
Last update: 7:41 p.m. EDT April 15, 2008
CHICAGO (MarketWatch) — Is now a good time to buy real estate? The size of your paycheck likely will play a big part in how you answer that question.
While many average Americans are skittish about the housing market, some of the country’s richest citizens see the current conditions as perfect for buying, according to the Annual Survey of Affluence and Wealth in America, released on Tuesday by the American Express Publishing Corp. and Harrison Group, a market research and consulting firm.
Tatonnement adjustment distorted by hair-of-the-dog stimulus proposals…
ECONOMIC REPORT
Home builders discouraged by actual sales
By Ruth Mantell, MarketWatch
Last update: 3:52 p.m. EDT April 15, 2008
…
The housing market is “still groping for a bottom,” said Mike Larson, a real estate analyst at Weiss Research.
This local condo conversion hit Craigslist today. $149k may not seem like much, but it’s a motel conversion, so they’re just studios with 612 sf. Very nicely done up, but they’re situated between a main railroad trunk like and Interstate 90. To get downtown you have to drive or walk through a creepy railroad underpass. They worked forever on these but it’s been since last summer and I don’t think anyone lives there yet.
The Turn of the Screw
Banks face closer scrutiny
By Peter Thal Larsen, Gillian Tett and Jennifer Hughes in London
Published: April 16 2008 19:48 | Last updated: April 16 2008 19:48
Banking regulators moved to tighten the screw on the industry on Wednesday with rules aimed at preventing a repeat of the crisis that has rocked the financial system.
IBM profit rises on services, software strength
http://biz.yahoo.com/rb/080416/ibm_results.html
Another 250 point gain tomorrow? I recall Txchick saying that the market would be in rally mode till June or so.
All the bad news must be behind us now, except for oil and gas prices, housing depreciation (US and world), jingle mail, crashing consumer sentiment, 17 year low in housing construction, exploding food prices, increased credit card delinquencies, falling dollar and increased jobless numbers, but the street is making money, so up goes the market.
Any thoughts about what comes next? Is this wild uptick a blip or a trend?
try SPWR for a mindless momentum play
Ill take that long SPWR with a short side of PXP…
I think that sounds like a very interesting trade…very aggressive, and Im in a mood today.
A doubler in a month? That is certainly momentum. Thanks, Tx. I had that at 34 and sold at 50, bought at 55 and sold at 60, bought at 70 sold at 65, but I haven’t paid it any attention in a couple months. I guess I should have paid closer attention!
Just got off the phone with one of the bigger dealers in physical precious metals, in el lay…
He tells me:
Mostly buyers now, and problems on the wholesale supply end…
Silver (in pure form i.e. 999) is in short supply, nobody has much.
Gold 1oz Kr’s & AE’s were really hard to find when Gold was in the low $900’s, easier to locate now, but premiums have risen a bit.
It’s getting interesting~
Might be to all the pumping on TV/radio for gold. You could tell me more about this I bet. If the invisible hand is accumulating without the public participating, it won’t be much of a blow-off top?
I just got off the phone with my barber and he told me I should come into his shop first thing each morning for a trim.
FT Home
Subprime fallout
US mortgage clock ticking, Dodd warns
By James Politi and Krishna Guha in Washington
Published: April 16 2008 22:02 | Last updated: April 16 2008 22:02
There are only a few weeks left for Congress and the Bush administration to agree on large-scale government intervention in the mortgage market, according to Chris Dodd, one of the most senior lawmakers overseeing US economic policy.
In an interview with the Financial Times, Mr Dodd said that a compromise deal needed to be reached before home prices collapsed further and election-year politics took over. “I am optimistic at this point, but this has to happen fairly quickly if it is going to be meaningful.”
Global funding pressures intensify
By Michael Mackenzie in New York
Published: April 14 2008 22:37 | Last updated: April 14 2008 22:37
Strains across money markets intensified on Monday and are approaching levels last seen in mid-December when central banks announced liquidity provisions to alleviate year-end funding pressures.
This was illustrated by higher swap rates, which compare the difference between overnight lending rates set by central banks and three-month Libor, the rate at which banks lend to each other.
…
“Despite the best efforts of the Federal Reserve to lubricate the wheels of the funding markets, the fact remains that banks still hoard cash at nearly all costs,” said William O’Donnell, strategist at UBS.
“If banks are loath to lend cash to each other, it’s hard for us to see any stand-down from historically tight lending standards now being reflected to consumer and institutional borrowers.”
Wednesday, April 16, 2008
Dow’s happy bank losses aren’t worse
JPMorgan sign
After JPMorgan and Wells Fargo announced big drops in 1st-quarter profits today their shares promptly shot up and the Dow jumped for joy. Why? The numbers actually met or exceeded expectations. Bob Moon reports.
…
What investors heard today was JP Morgan chief Jamie Dimon declaring the credit crisis may be “75 to 80 percent through.” What they didn’t hear were any specifics backing up that rosy outlook. Maybe he knows something we don’t, but listen closely to this exchange during a call with analysts, and maybe he doesn’t.
ANALYST: Anything that would give you some signs of stabilization of the loss and delinquency rates in the home equity portfolio?
JAMIE DIMON: No, it’s exactly what we saw, higher. More houses are going negative equity. Roll rates are high. Home prices we expect to still go down. We have not seen it.
Dimon’s formal statement today predicted economic weakness, stress in the capital markets, more credit losses and lower earnings, “possibly through the remainder of the year, or longer.” Stay tuned to find out if these mixed signals remain cause for celebration.
Wednesday, April 16, 2008
Hoarding threatens global food market
Rice is shown while drying in Thailand warehouse
Worries of a world food shortage led more countries this week to suspend grain exports. What will happen if nations keep hoarding supplies? Host Tess Vigeland asks Javier Blas, who covers the commodities market for the Financial Times.
So, it appears that the grain shortages are resulting from distribution issues rather than production issues. Plenty of grain is being harvested, it’s just not finding its way to the markets.
Thus the ongoing increased global grain production will drive prices down locally and will screw the local farmers while the politically entrenched distributors will rake in the bucks.
Except in countries such as the U.S., of course, where free markets rule (think the Chicago Board of Trade) where Supply and Demand are freely allowed to discover each other.
There’s an economic lesson here to ponder for anyone who wishes to do so, IMHO.
Last I checked, there was a widening income gap between college educated and non-college educated workers. Frum’s (flawed) analysis does not bother with this necessary comparison. Thus it confounds the effect of a declining U.S. macroeconomy on college-degreed workers with the effect of getting a college degree versus the alternative. Perhaps he should have studied more econometrics when he was in college.
Wednesday, April 16, 2008
It’s time to study the value of college
David Frum
College education costs continue to soar at the same time studies show college graduates getting paid less. Commentator David Frum says Americans should re-examine the real value of a college degree in today’s economy.
TESS VIGELAND: Today, yet another student loan provider announced it will suspend lending at several schools. The credit crunch, and a drop in federal subsidies, are prompting more and more student lenders to put out “Not Open for Business” signs, and all this comes right at the time when high school seniors are making decisions about which acceptance letters to say yes to.
Commentator David Frum says it’s time we reexamine the real value of a college degree in today’s economy.
DAVID FRUM: Surging prices, collapsing returns, ending in a crash — housing? Yes, but the pattern may equally apply to another area of middle-class aspiration — college education. And as high school seniors receive their fat or thin acceptance or rejection letters this month, maybe we should all take a closer look at what their money buys.
…
Some politicians suggest that the best solution is for government to subsidize college even more than it already does, but what if subsidies are themselves the problem? Just as homeowners ignored dangerously rising home prices, so long as low interest rates kept monthly payments low, so students may ignore rising tuition, so long as aid and loans conceal the true cost.
Colleges and universities are charging more and more for a product that seems worth less and less. You don’t need a college degree to figure out that cannot continue.
VIGELAND: David Frum is a resident fellow at the American Enterprise Institute. His latest book is called “Comeback: Conservatism That Can Win Again.”
Wednesday, April 16, 2008
Is China free from U.S. economic woes?
A stock exchange board in Hong Kong.
China reported today its economy grew 10.6% in the 1st quarter, which may seem red hot, but it was 11.9% last year. So is China catching America’s subprime cold? Or is it immune? The answer has big implications for the global economy. Scott Tong reports.
Allow me to offer some statistical evidence that this story some how neglected to mention:
China shares nosedive as panic selling reigns
By Cao Qian 2008-4-15
…
SHANGHAI stocks were hit again by a “Black Monday” crash yesterday, with the benchmark index tumbling 5.62 percent, the biggest single-day slide since January 28, amid concerns over further fiscal tightening measures by the government.
As a huge percentage of shares declined, the Shanghai Composite Index lost 196 points to 3,296.67. The index has now fallen 46 percent from its record high in mid-October last year.
Yup — we’ve got decoupling, all right. U.S. stock shares have been going up this week.
I have one thing to say regarding the careful research that went into this story:
BwaHaHaHaHAAAA!
what?
who said short china signal on the 4th of April?
……they know nothing…they cant even play the game.
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 month 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.
If you sell your house for a 250K profit on top of 150K of normal income will you be subject to the alternative minimum tax in the same way that you would if you had 250K in long-term capital gains?