Bits Bucket And Craigslist Finds For April 27, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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SOL moment for So Cal land speculators…
Calpers-Linked Land Partnership Gets Default Notice
By MICHAEL CORKERY
April 26, 2008; Page A3
A large California land partnership involving one of the largest U.S. pension funds has received a notice of default on a $1 billion loan after failing to meet certain terms of its lenders.
LandSource Communities Development LLC, a partnership that involves the California Public Employees’ Retirement System, received the default notice Tuesday, amid talks to restructure $1.24 billion of debt. The partnership, which owns 15,000 acres in Southern California, had received an extension to meet its current loan terms, including a required payment, but the deadline expired on April 16. The default notice applies to about $1 billlion of the total debt.
…
Hundreds of lenders, including banks and institutional investors, hold the syndicated debt. Barclays Capital arranged the financing in early 2007. At the time, LandSource’s assets were appraised at $2.6 billion.
Partnerships such as LandSource were a common way to own and develop land during the housing boom. They provided high returns to investors and lenders and a way for builders to keep highly leveraged land off their books. But the ventures have run into trouble as the value of undeveloped land has plummeted and as demand for new homes has eroded.
Wow, $82,600/acre in debt. That probably seemed like a good idea at the time. If you could farm if for corn or rice today, it might fetch $4,000/acre, making it worth $60,000,000 or $.06 on the $1.00. Somebody is going to get stuck. Check that….somebodies are going to get stuck…..as in State of CA employees!
State of California TAXPAYERS are the stuckees, as the legislature will make sure Calpers gets tax money to compensate for its loss.
My retirement plan includes staying away from these states with huge pension liabilities,( I just hope there will be some place left). The tax burdens on workers will only increase in the coming years.
Some “plan.” Have you happened to notice what the NATIONAL debt and unfunded obligations are up to these days, or how the dollar is being destroyed by the Fed’s printing presses? Shifting rooms on the Titanic won’t do much to increase your future safety.
Imagine the burden that was placed upon state employees to find the best return possible, the end result being a portfolio of poor choices…
“Shifting rooms on the Titanic won’t do much to increase your future safety.”
Not everyone on the Titanic drowned.
True. But there’s something to be said for working to change out the captain and crew for leadership that steers clear of the icebergs. Just a thought…..
vmaxer,
I’m with you, watching to see which states are not buried by underfunded pension obligations and skyrocketing property taxes. And keeping an eye on shifting demographics…
Would Calpers qualify for a mortgage bailout under Barney Frank’s plan?
Good post, Professor.
This is exactly the type of loan which is being covered up so as not to create a panic once all the J6P’s and Suzanne’s of the world
break away from American Idol and Dancing with the Stars long enough to finally realize the system’s been totally looted.
You can’t stop economic contagion, you can only hope to contain it.
How did last year’s subprime containment propaganda campaign pan out?
“The chief executive of the California Public Employees’ Retirement System is planning to leave by the end of the year amid tensions with the board, according to two people familiar with the matter.”
http://www.latimes.com/business/la-fi-calpers26apr26,1,1231405.story
Wonder how long until all of the “clairvoyant” small time land speculators here in the PNW realize their overpriced, low down payment, raw land anchors are never going to sell. Methinks they never intended upon actually paying them off.
http://www.larouchepub.com/other/2008/3514reject_big_lie.html
“Virtually everything you read in the major press about the economy is wrong, reflecting either deliberate lies or a lack of competence, and often both. There are often elements of truth in the reports, but the reports themselves paint a false picture designed to confuse and mislead the reader. We are living in a virtual “1984″ where the “news” departments have become the propaganda arms of the elite. On a daily basis, people are bombarded with falsehoods and trivia, designed to get them to focus on themselves and their fantasies, while crucial decisions affecting their lives and the future of the nation are made in the salons and executive suites of financiers and corporatist cartels, and carried out by their bought-and-paid-for politicians.”
I remember just a few years ago where media companies were up for sale and there was a bidding war between men with big money for them. It made sense why these guys would fight to control what went into the minds of J6P. Just like it makes sense as to whoever controls the Supreme Court controls the land. Not many J6P understand the way the TPTB control them. When people are worried about all the going-ons in their own life they fail to see that it was the TPTB that is indirectly causing their predicaments. Everyone gets mad at the president for the wrong decisions being made but I think that he is just a puppet for men even more powerful than him.
The fight is on for the mind of J6P.
Jeeze.. That’s a happy thought for the morning. Although, for the most part, I do agree; the situation is not all that bleak. The weak/dumb have always been herded by the MSM; now we have the Internet, and the generations before us had books to educate themselves on just about anything in the world. It’s become much easier to debunk BS; however, you have to be willing to do some research. It’s always been that way, and will always be that way.
“The weak/dumb have always been herded by the MSM”
Ha, ha, because all weekend they’re urging the masses to fill their cupboards instead of saving. Why do I get the feeling that two years down the road charitble food pantries are going to be flooded with expired/unwanted canned and dry goods?
Besides, how many can really make the transition from sushi to rice ‘n beans in only a few weeks?
Preach it.
How many Americans eat 50 lbs/rice a year? I mean really!!!
I cook a hell of a lot, and it’s a rare year that I get through 20 lbs even with having friends over for dinner virtually all the time. (There are other things to make too would be the point.)
Yep, foresee a flood of “donations” down the road. Man, they are really sheeple.
We do, we go through over 300 pds a year of short grain. I cook one full rice cooker a day and we eat it (we have a very Japanese diet). I agree that the average Northern and Mid Western U.S. household doesn’t go through 50 pds a year though.
You’re an exception then.
I would just get bored. I need variety in my diet, and that means a vacation from just about everything occasionally.
I probably do have 50 lbs lying around but it’s like 10 of basmati, and 10 of jasmine, and 5 each of carnaroli and vialone nano, and maybe an assorted 2-3 lbs of another five odd rices.
I really really doubt the average household goes through 50 lbs annually with their meat and side dishes conception of a meal.
Believe me, we get bored too. I just try to limit the amount of meat we eat (even though I LOVE steak, fried chicken, and greasy tacos) to small amounts - thinly sliced in sukiyaki, grilled satays, and stir fry. I make my own oriental pickles and condiments. The Japanese diet can be heavy in sodium if you’re not careful - but a little meat or fish, rice, veggies, miso soup and such are a very healthy diet otherwise.
My family of four probably eats 300 lbs/year. And, we don’t eat rice every day. But, we do buy 50 lbs at a time. Of course, a single large pizza is not enough for the four of us. Two boys and no TV means lots of expended calories.
Fair enough.
My largest cost is veggies. I don’t even want to think about how many pounds I go through annually (and I even make my own broth, etc.)
Those prices have barely risen. Only the products that have huge transportation and packaging and marketing costs seem to be skyrocketing.
As for the slightly “fancier” stuff, prices are dropping. Extraordinarily fast. Demand destruction is doing more to kill their margins so they need to lower the price or go bankrupt forever.
Buy rice now, or be priced out forever!
I agree with you. Cooking from scratch is the most economical way on average. We buy some pre-prepared stuff, but not much. I made pizza last night, 2 10″ BBQ checken, 1 10″ cheese, the only thing I didn’t prepare from scratch was the BBQ sauce and the cheese (mooz and gruyere). Total cost - about $5.00 for three.
You’re right, the prices on pre-prepared crap is skyrocketing, that’s good. Maybe it will slow down the lipid, ‘ose, and preservative intake of your average family.
Bubba from Forest Gump:
“Anyway, like I was sayin’, rice is the fruit of the land. You can barbecue it, boil it, broil it, bake it, sautee it. Dey’s rice-kabobs, rice creole, rice gumbo. Pan fried, deep fried, stir-fried. There’s pineapple rice, lemon rice, coconut rice, pepper rice, rice soup, rice stew, rice salad, rice and potatoes, rice burger, rice sandwich. That- that’s about it.”
http://www.bowhunting.net/susieq/squirrel.html
Presented with the dietary and budget needs of FBs in mind.
LOL - squirrel recipes. Too bad we didn’t know about this site back when Ms. Gao (sp?) was being a bit picky about who she’d sell, her property to.
Is the group publishing this article representing Lyndon Larouche, the conspiracy theorist? That doesn’t mean Hoefle is necessarily wrong, but I just want full disclosure here…
Executive Intelligence Review is published by Lyndon LaRouche, yes. Horrors! God forbid that you dare read anything written by associates of an 85-year-old economist the MSM has branded a “conspiracy theorist.”
You will now be directed to the approved, conspiracy-theorist-free MSM news outlet of your choice, where you can read all about Britney Spears and Paris Hilton and Lindsey Lohan….
Almost forgot to link to the Lyndon LaRouche wikipedia article
http://www.larouchepub.com/lym/2008/3507brit_suicide_club.html
Here’s something I bet you didn’t know about Wikipedia and the oligarchy-owned social networking sites.
Occam’s Razor
http://en.wikipedia.org/wiki/Occam’s_Razor
Anything written by anyone affiliated w LaRouche usually pegs my skeptic(aka BS) meter all the way to the right. And sometimes it even brakes the glass on the meter.
Either there are diabolical plans at work by sinister organizations, or people, reporters included, can be lazy and uninformed.
Most of the wishful thinking regarding the economy is that people want to believe tht their 401(k)’s won’t be wiped out, that companies like Bear Stearns were really solvent and that lending money to people who can never pay it back was a good investment strategy because the mortgages were “pooled” and diversified and could never fail. Simple greed got the best of them. They want to buy the optimistic news. News is for sale. Through advertising. Nobody is going to “buy” the product if there’s a bunch of talking heads on CNBC screaming sell! Get the heck out of your positions!
There’s no evil cabal at work here. It’s simple human nature trying to make a quick buck without hard work. The conspiracy theories are the real diversion.
Spot on!
LaRouch IS a conspiracy theorist, and always has been. If I remember, he ran for president and his campaign was a circus of lunatics ranting about the Trilateral Commission and Jewish secret societies. Though countless historians have debunked these claims over and over, they have huge followings that keep reprinting them. LaRouch is almost as nutty as David Ickey (sp?), who claims lizard aliens are coming to eat us, with the help of George Bush, Gardnerian witches, and the Trilateral Commission. His books sell very well, and lectures sell out, especially in London. The fact that the lizard alien idea came from defunct sci-fi series called V doesn’t rattle their faith at all.
Yeah, I think the profit motive needs to be ruled out before jumping to conspiracy theories, and the profit motive explains adequately nearly every craziness going of late– with powerful entities acting together only in that they are similarly interested in maximizing profits.
However, one should also know there is no such thing as an impartial news report. Everybody has their interests. It’s nice when people are open and state their personal attitudes and interests up front, but at the same time they have the right to say what they like without doing so.
–
“There’s no evil cabal at work here. It’s simple human nature trying to make a quick buck without hard work. The conspiracy theories are the real diversion.”
But, one can create a system, e.g., bailing out of Bear Stearns, whose functioning is similar to an evil cabal. It is human nature all right and highly centralized societies end up in the hands of ambitious “evil” people, or those in power become more evil over time after consolidating their powers. Both Greenspan and Bush used their power to keep power via manipulation of monetary and fiscal polices to their advantage couched in general good. People using power to keep power, at the expense of long-term general welfare, is quite acceptable.
Power of propaganda in undeniable and it has been taken to new highs. Successful propagandists, economic as well as political, make a very good living, no? At whose expense? I am sorry, but highly intelligent people can be easily duped. The so-called stock market is one example whereby those who run corporations make so much money for themselves that there can’t be much left for the shareholders, long-term. Dividends were meant as check on the corporate greed but propagandists were able to convince the educated that they are not important. Examples of success of propaganda abound.
Jas
Jas,
Good points, sir. It always strikes me as naive to believe that the financial elites, with the immense power and influence their filthy lucre can buy, would not seek, among themselves, to perpetuate and expand their power, wealth, and lack of accountability. H.G. Wells laid it all out in THE OPEN CONSPIRACY, which should be required reading for dupes who knowingly but ignorantly tsk-tsk at any notion that closed secret societies of the financial elites would ever deign to plot to advance their own supra-national agendas, at the expense of the rubes.
I love a good conspiracy theory, especially if there are aliens and/or leprechauns involved, so I’m going to cling to those theories with love and refuse to abandon them.
However, I must regretfully say that I, too, think that the greed, idiocy and unwillingness to examine reality that most people display are more than enough to be sufficient to cause the mess we’re in here.
As Jimmy says: ‘Simple greed got the best of them. They want to buy the optimistic news. News is for sale.’
Unless….Jimmy! Are you a leprechaun?! A-HA!
Olympiagal — Have you ever considered religion? Because there is little difference between conspiracy theories and religious beliefs. On second thought, maintaining religious beliefs can get quite expensive (e.g. 10 pct of your income)…
–
“Because there is little difference between conspiracy theories and religious beliefs.”
There are many secular institutions that have all the trappings of a religion. Any belief system propagated over time and believed “religiously,” a matter of fact, takes on the form of religion, e.g., belief in progress and science and technology to create better and better society over time (a belief in rationality). This process can and does exhaust.
In this scheme the cyclicality, or rise and fall, of societies is denied. I think that there is lot of denial among Americans as to what lies ahead. We have had a great run, but that might have already begun to reverse. There has been a tremendous change in the beliefs and habits of Americans since the end of the WW II, who is to know if it is for the better or for the worse?
Jas
good post. all this talk of Black Swan is just red herring. Things happen for obvious reasons if we are smart and wise enough. Anyone could have predicted 9/11 and some did but no one including the US government listened to those that did. Same goes for housing bubble, dot-com bubble and just about anything that people say is “a black swan” event.
The real situation is far worse than anything larouchepub.com has ever stated. Only the better angels of our nature have kept us (so far) from completely wrecking the world.
http://www.larouchepub.com/other/2002/2924fannie_mae.html
Call LaRouche and his associates conspiracy theorists, cranks, nuts, or political cultists if you will. All I can say is that I’ve been following their writings and forecasts since the mid-1990s, and they’ve been uncannily prescient with their political and economic forecasting. LaRouche has some truly brilliant minds working for him. LaRouche & Co. called the Bubble.com “new economy” fraud earlier and more authoritatively than anyone else. He called the run-up in commodities before anyone else (which made me a lot of money, incidently). He called the housing bubble (see linked article from 2002, or go to the EIR website and search on their archives) when all the usual pundits and the MSM were parroting the NAR line. So, call him whatever you want - as for me, I agree with Deng Tsou-Ping: “It doesn’t matter whether a cat is black or white, as long as it catches mice.”
Wow. Sounds like a modern-day Nostradamus
IMHO, tagging declining markets could speed the recovery, by helping their prices find equilibrium more quickly. Why shouldn’t lenders be allowed to charge their customers the cost of the risk of catching falling knives, anyway? It sure would go a long way to obviate the need for taxpayer-funded insurance if lenders were allowed the leeway to make prudent lending decisions.
NATION’S HOUSING KENNETH HARNEY
‘Declining market’ tag may threaten recovery
April 27, 2008
WASHINGTON – Could widespread designations of entire ZIP codes, metropolitan areas – even entire states – as “declining markets” hinder a real estate recovery and hurt minority groups and moderate-income buyers disproportionately? Growing ranks of critics say the answer is yes.
Since late 2007, most lenders, insurers and mortgage investment firms have compiled lists of local markets that they consider to be posing higher risks because housing values are dropping. Within those areas, borrowers are charged higher rates, loan fees and down payments – costs that can rise significantly when applicants have credit scores below designated minimum levels.
Headline of 2010: “World ends: minority groups, lower income buyers, gays & women most affected”
The front porch
News and notes about real estate and our built environment
April 27, 2008
“The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of our country. As we help people pursue the American dream, we need to have a market to operate fairly and effectively for all Americans. And our solutions must restore confidence in our markets, while not erecting barriers to future entrepreneurs, investors and home buyers.” – STEVE PRESTON AFTER PRESIDENT GEORGE W. BUSH NOMINATED HIM TO BE SECRETARY OF HOUSING AND URBAN DEVELOPMENT
His entire premise, IMHO, is flawed.
You’re telling me that if you took a bunch of responsible, upstanding people and made them all rent that after a few months, you would come back and find the place wrecked, the neighborhood destroyed, and the community values nowhere to be found? Or if you took a bunch of idiots, gangbangers and thugs and made them homeowners that suddenly they would be out at 6AM on a Sunday mowing their lawns and waiving to the neighbors?
Wake up, and welcome to reality. Some people are responsible and do the right thing when others aren’t looking. Others are not (we typically call them politicians). The fact that someone owns, or does not own a home makes NO difference.
Trashy people will take a 10M dollar home and make it sh**hole. Good people will take a 10K home and make it feel livable. People all of the sudden think that you can buy (or borrow) “class”. That is not true, you’re taught it (or teach it to yourself); that’s the only way to get it.
“…you’re taught it ….that’s the only way to get it.”
How about it you earn it? That is when it has meaning to people. If you “give” someone a house and provide $100,000 cash upon acquisition, it has no value to the resident. If that same person must work and save for 5 years, and invest their own time and money, then you will see them value it in their lives and actions.
Well said, Michael.
It’s not home ownership that ensures that people have a vital stake in the future of the country. The current system where the rewards flow to those in power and the tab is sent to those who aren’t is not one where the ordinary American is likely to feel they have a vital stake, home owners or not.
“Trashy people will take a 10M dollar home and make it sh**hole.”
Being poor is lacking in character, not money. Look no further than the losers who win the lotto and find themselves dead broke in a short time. The poor deserve no sympathy, IMHO.
The poor deserve no sympathy some do, some don’t, the same standard could be applied to any group.
“Being poor is lacking in character, not money.”
So your postulate is that people with money have character; people without money don’t?
IMO this position puts you in the category of “when you think you have no faults, that’s just one more”.
I was offended at first, being someone who tries not to be too interested in money. I think his point was that “poor” should be defined by character, not amount of money, which i agree with.
“Being poor is lacking in character, not money.”
You need a psychiatrist my friend.
I don’t think it’s fair to generalize here…obviously there are some exceptions of renters who take care of a place and owners who trash it. However, one of the indicators of value in a given area is the number of single family homes because there will be fewer renters (as compared to areas zoned for multifamily).
That said, homeownership should never be encouraged for those who truly can’t afford it and/or who don’t have the skill set to be good neighbors.
“That said, homeownership should never be encouraged for those who truly can’t afford it and/or who don’t have the skill set to be good neighbors.”
I’ve often had better, more honest neighbors among renters than owners. It has more to do with the type of people than with renters versus owners. When living in close proximity to others (apartments, condos, etc.) you will notice bad neighbors much faster.
It’s not the tenants, it’s the landlords. Landlords do the minimum necessary maintenance, emergency repairs and maybe some occasional superficial work to boost the rent, that’s it. The best way to maximize cash flow is to let the building slowly deteriorate, as long as it doesn’t provoke tenants to move or call the Health Department. Tenants aren’t going to do any repair or improvement with long-term payoffs either, because they have no security.
Trashy people will take a 10M dollar home and make it sh**hole. Good people will take a 10K home and make it feel livable.
Back in the ’70s, the ultra-liberals running Minneapolis thought if welfare tenants were put into a better environment, that would uplift them socially as well. So, they built at least one luxury apartment tower, and moved in families from the bottom of the welfare rolls. Within days, the MPLS Tribune was reporting on the familiar smell of urine and feces in their stairwells, and within a decade, the building had to be torn down.
This is what ordinary people are doing to houses as they walk-away, from yesterday’s California thread…
“She’s seen homes with dishes piled high and junk scattered everywhere. In many cases, owners don’t have money to do repairs — that’s ‘very normal these days in this market,’ Titus said. ‘When people are really stressed, cleaning house is the last thing they feel like doing.’”
Thanks for reminding us of the American ideal of FREEDOM, jimmy. It gets a bit hard to remember what our country stands for against the noise of one-size-fits-all policy prescriptions.
RE: The American dream is FREEDOM
It’s been noted by various pundits that the average American woman voter is more than willing to trade her constitutional freedoms for security offered by government.
Hillary in ‘08!
“It’s been noted by various pundits that the average American woman voter is more than willing to trade her constitutional freedoms for security offered by government.”
Come one pal, not every woman is your ex-wife. Or Hillary for that matter. You’re much too smart a poster to stay mired in the past.
Women are more motivated by security and less by freedom than men are, past, present, and future. Could also substitute “Europeans” for women and “Americans” for men.
If this is true, then why do you consistently see a social pattern of female independence correlating with female income? ie. The easier it is for women to support themselves on their own salary, the less likely they are to marry. This extends to having children btw.
People are people. Anybody male or female who thinks otherwise - well, maybe we should just start classifying the bigots as sub-human.
I agree, totally. Or to put it another way: What good is it to own a wonderful house if you have no rights and freedoms? No good at all.
Which is exactly why an HOA should be avoided at all costs.
Having lived in a few totalitarian developments (HOA’s), I agree 100%. I never felt like a homeowner, more like a tenant with high expenses, living under a dictatorship.
Having a mismatch of my taste in color, on exterior house paint on the block, is the price of freedom. That’s what America is all about.
911 Reno! Looks like Reno, NV, has a serious case of the shakes and could experience a major quake very shortly. Even the small tremblors has cracked a number of houses already. Love to see the insurance tab for that. Wonder how many newly built crapboxes have been affected.
Are earthquakes really all that predictable nowadays?
Better link
I don’t know much about seismology, but it sure seems like Reno’s getting pretty shook up. OTOH, what’s the deal with Illinois? I never heard of earthquakes in Illinois before. Weird stuff happening everywhere.
Not weird at all — just infrequent.
http://en.wikipedia.org/wiki/New_Madrid_Earthquake
It must be either global warming or “terrorists”.
Nah, it’s NNMB cutting down all those Joshua Trees.
The tectonic plates are restless.
It’s clearly Bernanke’s doing.
I slept right through it, felt the 2004 one, though.
http://earthquake.usgs.gov/eqcenter/eqinthenews/2004/uskgad/#details
I was really shook up here in NE OH by its earthquake of Jan 1986. It put a large crack in my basement cinder block wall. Years later I discovered that, had I submitted a claim to my insurance company, I could have had the whole thing replaced by my insurance policy. It’s too late now. [still smacking self on forehead]
let one not forget that a quake has very little of the insured masses to partake in the re-building effort unless the tinderbox of flame is set upon the destruction in its aftermath.
Illinois earthquakes are infrequent, but expected in a lifetime.
But how many expect an earthquake in New York?
http://earthquake.usgs.gov/regional/states/new_york/history.php
I do, perhaps because I own a copy of this book.
The New Madrid fault is about 50 years overdue, it has historically gone off every 150 years or so, the last major quake along it sank Memphis and re-routed the Mississippi river. The accounts of the quake by the early residents of the area is frightening - huge chasms opening up with strange lights flashing over them, the ground shook for days with huge aftershocks, boats being left high and dry a mile from water. The River actually flowed backwards for a while. Imagine that happening today.
Link
http://en.wikipedia.org/wiki/New_Madrid_Earthquake
The book you referred to looks real interesting! I’m going to borrow it from our library. Thanks for the info.
It caused church bells in boston to ring.
I remember the 4.0 earthquake that struck Manhattan in 1985, just after the Mexico City earthquake. It woke me up about 7:00 am. As it was happening I thought about the stories from Mexico City of survivors being pulled out of rubble after a week and wondered whether I should try to run down 3 flights to get out of the building. Instead I rolled over and went back to sleep.
I have this aunt jauna. She moved out of Pasadena to Carson City to avoid taxes and earthquakes. She is the same lady who is leaving her historic bungalow to her Pasadena tenant, not to me, her charming, single neice.
She is stuck in Carson City. Let me know when the big one hits Reno.
Is her first name Tia?
We have two tia jaunas in my family. This same aunt bought some farm land near fresno to avoid cali tax. In the 70’s she bought pistachio and olive farms and recently passed them off to my brother, jack mormon. When we visited it was 230 acres of trees. How long would it take the land to refresh enough to grow wheat?
RE: Wonder how many newly built crapboxes have been affected.
The first thing the crapboxes skimp on is the quality of the concrete for the foundation. Just go ask the builders of the Big Dig.
And once your foundation craps the bed-it’s adios to the structural integrity of the stories above.
Some disgruntled laid of construction worker will surely blow the whistle to the P&C insurance companies to secure a bounty.
I’m in Lovelock
I’m all shook up
Mm mm oh, oh, yeah, yeah!
Finance & Economics
Spanish housing
Counting the costa
Apr 24th 2008
From The Economist print edition
Spain’s property boom is unwinding too fast for some banks
UBS
Wealth mismanagement
Apr 24th 2008 | BASEL
From The Economist print edition
The Swiss bank gives a candid account of where it all went wrong
OF ALL the banks to be caught up in the implosion of America’s subprime market, none has caused more surprise than UBS. How did a Swiss bank whose core business is the staid discipline of wealth management come so spectacularly to lose $38 billion betting on American mortgage-backed assets, battering its core capital and share price (see chart)? “It’s breathtaking,” says the head of investment banking at another European bank. Shareholders, who were out in force at the bank’s annual meeting in Basel on April 23rd use slightly riper language.
The mystery of how UBS (latest nickname: Used to Be Smart) got into this mess is being resolved.
…
Perhaps most worrying of all for battered shareholders is the implication of the investigation’s findings for UBS’s remaining exposures to the American housing market. There is scant reason to assume that the $16 billion-worth of Alt-A positions still on the balance sheet in March were researched or hedged any more effectively than their subprime sisters.
I like UBS, at least they won’t be coming to Uncle Sam hat-in-hand looking for bailout money. Also, they have broken my illusion of stable, conservative Swiss banking. Finally, they are actually being open and honest about their mistakes, at least relative to the sleight of hand being played by US investment banks with shady level 3 assets.
I’m glad you like UBS, because they are a primary dealer and are entitled to belly up to Uncle Sam’s window. Do check the member banks of the Federal Reserve.
I guess that explains why they Used to Be Smart. Now they are victims of the Fed’s morally hazardous below market lending rates for mega banks.
I thought as a foreign bank (and one of the largest banks in the world) they weren’t entitled to being bailed out…but of course they have an American subsidiary that should be eligible for a more limited bailout.
However, I doubt that with liabilities from both Switzerland and the USA that they would get all the candy that Bear Stearns did. Am I wrong?
Am I wrong?
On this issue, yes. The Fed does not discriminate among primary dealers.
The question which comes to my mind is whether the Frank bailout will implicitly help the Used-to-Be-Smart investment banks of the world at the U.S. taxpayers’ expense? My guess is yes, as the alternative would be price discovery in markets with an oversupply of overvalued vacant homes; it is these assets which support the value of Alt-A and prime MBS shoes that have not yet dropped.
Price discovery won’t occur either while the permabulls forecast rebounding prices “sometime in 2009″. They will just keep the assets off the balance sheet until it becomes clear that there will be no bounceback of prices. How long do you think they can hide this while they slowly bleed to death? As long as Unca Sam quietly lends our future prosperity away…
UBS? If they fall then the same scenario that made the Fed get their panties in a twist could actually happen. The counter-parties will fall and their counter parties will fall. The dominoes will start sooner or later, and it will be started by a smallish firm that is not really on the Feds radar.
Think of it like this: A smallish European or Asian firm cannot meet their obligations and fails. Their counter parties go “tits up”, and it keeps going until a medium sized firm that would be ok - if somewhat pressed - goes over the edge. As a matter of fact, make that two or three medium size firms. The Fed can’t handle that many at once, and we have a collapse. I really think that Bear was not a one-off … that Bear was a danger signal.
Roidy
Agree.
Lemme tellya, it must really suck to own a condo in Florida right now. I’m just renting here at the moment, and for the most part, this condominium complex isn’t too bad, it is being maintained, but one of the maintenance people told me they’ve got four places in foreclosure and another six delinquent, out of 70 units. Meanwhile, some newer knife-catcher residents treat the place like a kennel for their dogs and a playground for the entire extended family. Boo-YAH! Makes no never mind to me, I’m a renter and can leave any time I want, but not everyone here has that luxury.
I have decided I will never ever buy a condo as a primary residence, mostly because of my experience renting one and from what I’ve read on the HBB.
I might consider a condo if I get a second vacation/retirement home, once the market clearly bottoms of course. Florida isn’t on my list, but San Diego is…
We might get some good deals coming up in a year.
i just saw an ad on craigslst for rentals in a new condo development in whitestone queens ny
they are selling (well at least trying to) 1 beds for 400k or better
i just saw you can now rent these same 1 beds for $1650 a month
http://newyork.craigslist.org/que/fee/657694565.html
or if you do not want to be a dumb renter and choose to be a smart buyer
you can buy the same place -check out the prices
http://www.coldwellbankermoves.com/property/PropertyResults.aspx?SearchID=4001158#results_4001158_1608_2_0_0_10
I grew up in queens, graduated from Francis Lewis High School. Trust me queens is different. When ever I go back to Flushing it amazes me to see how different it has become. The growth in Flushing area comes from Koreans bringing cash and buying up properties. It pi$$es me off that most of the business in the area have most of the signs in some Oriental language. You feel not welcomed in your own neighbor hood. A realtor told me that most of the commercial buildings in queens are owned by the church of Korea. They are tax exempt. So the idea of selling to one type of immigrants such as Chinese, Koreans or Indians is loss of neighbor hood. They usually do not integrate well into the American culture.
Btw you can find great ethnic food in queens.
I grew up in Forest Hills in the 60’s and 70′ - Was just back there to clear up my dad’s estate - The old neighborhood has become much more Russian immigrant and more Orthodox Jewish with a smattering of Asian and people of color (various colors). I don’t know where the Irish and Italians went to. New York outside of Manhattan (below 125th st) has always been a city of neighborhoods each with their own ethnic makeup and cycles of rise, decline and re-invention. I find it kind of refreshing but I’ve been gone for 30 + years ( Northern California East Bay Area) and just come east to visit a few times per year . My 90+ year old mother however sometimes gets flustered at all the changes, but generally has acclimated to them surprisingly well.
I now begin to understand the geezer mentality when i bring my 15 yr old to visit grandma and tell her whet it was like in “my” day.
I second the food comment - much more interesting then when I grew up.
Same problem here, even in a nice area like Ponte Vedra Beach. I would estimate 85% of the people here are quiet and friendly. But others honk horns, allow their dogs to bark at 7 a.m. or 10 p.m., leave trash or various debris outside their doors, carry on loud group conversations in common areas, etc. One kid plays his drums in one of the garages every afternoon. If I owned, it would stress me out. But since I rent, I shrug it off. These “units” are worth 100 X rent, max.
Florida is different than other places - a lot more vacancies. I was in Clearwater last weekend vacationing and at night many finished condos are almost pitch black. Whereas in Northern Virginia the Fb’s are at least able to rent out the places (at a loss).
I know two doctors that are catching knives in the Mandalay Bay ave of Clearwater beach. But there are a limited amount of doctors that can afford to throw away a few hundred thousand dollars.
Another bubble is inflating. Didn’t these fools notice the news about Calpers’ land speculation fiasco? Or do they assume that some greater fool with buckets of money and boxes of stupid will always be waiting to take their overvalued ag land off their hands before they catch themselves falling knives? Perhaps some pension fund managers can be lured into buying overvalued farmland?
P.S. Krugman was apparently wrong when he said the Fed had run out of bubbles.
Agricultural land
Published: April 25 2008 14:51 | Last updated: April 25 2008 19:49
Agriculture used to be an asset class for ultra-pessimists only. Veteran Wall Street observer Barton Biggs, in his study of investment returns over World War II, concludes that “an unostentatious farm,” is the best way to preserve wealth if your country faces military occupation. But now, the phrase “bull market” has a literal resonance, as hedge fund managers get their Tod’s loafers mucky and buy up swathes of land. The theory is that the commodity boom has transformed the economics of agriculture.
Wow, I was wondering about this, Bear, if there wouldn’t be some sort of speculative land rush for ag purposes. LMAO! So much land around here was taken out of ag use and sucked up developers and now there may be a rush to reverse the trend???
BTW, I went to my local hydro-harvest farm yesterday, where they grow six acres of food on one acre of land. Can’t beat it and the produce prices are fantastic. But it is all veggies and some fruit. Don’t think grains do that well, however, we can all do with a few less grains and more veggies, IMHO. The guy who runs the farm consults people on how they can grow their own if they have a little land at home.
Good morning, Palmetto …
I don’t know if you are already familiar with the TED Confrences, but if you Google it up and search out “Michael Poland: The omnivore’s next dilemma” you’ll find inbeded 11:00 minutes into his 17:31 minute talk interesting information about a very productive experimental farm in Virginia.
hey, thanks for the tip, combo, I always enjoy your posts. I’ll check it out.
And wouldn’t it be great if people started plowing under their time consuming/money wasting/environmental distaster lawns and actually growing stuff they could eat in their yards ?
As as added plus, the reaction to this from the “too posh to grow potatoes” crowd in the HOAs is usually hilarious. When I was growing up, a friend of mine’s family owned a very nice house right beside the entrance to the Atlanta Country Club. Every year, her dad ( a well respected doctor) had great fun growing corn in the yard just to get the CC bunch all spun up.
I bet that much of the wealth in “an unostentatious farm” really existed inside the farmer’s head as he has the skills to farm the land. That is, a small farm is really a small business with a key employee (the owner/farmer). More bluntly put, I bet I would turn a prosperous farm into a worthless piece of land. I can’t even plant tomatos on time for the kids.
“I bet I would turn a prosperous farm into a worthless piece of land. I can’t even plant tomatos on time for the kids.”
I’ll bet you’d become a right good farmer if eating depended on it. BTW, there was a story on the news last night about some village in England that has a farm to feed the entire population of 400 people. Not a bad idea. Like to see that happen around here.
My personal view is that the corporate farms are one of the most disgusting things we’ve ever done. The massive hog and cow farms are an abomination. When you have lagoons of waste there is definitely a problem. But then again it stems from the hideous concept of the corporation. Greed and stupidity gone wild.
I wholeheartedly agree, NYC. I think these corporate farms have a lot to do with increase in allergies, diabetes and a whole host of ailments, plus a decrease in nutrition in food, etc.
I agree with your statement, but they have lowered the overall cost of food for the country. The price of food may not affect many on this blog, but for millions it’s a real issue. That $400 a month left over after the bills for the working poor wouldn’t stretch very far if there were no corporate Ag operations. Whole Foods is great for those of us who can afford it, however, MOST can’t. That’s why we do need the giant industrial farms. Just my humble opinion
Also, we wouldn’t eat as much meat if it cost triple what we currently pay. Actually, not just meat. All foodstuffs would cost a lot more if we depended on family farms to feed the world.
if we depended on family farms to feed the world there were either be more starving unemployed Americans or far more Americans would be eking out a subsistence working the land, according to philosopher Farmin B. Hard.
“lagoons of waste…”
The corporate farms are not efficiently managed. Those “lagoons of waste” are biogas in the making…Witness my heroes, the Crave brothers of Wisconsin,who use the waste from their dairy farm to produce enough biogas to power their farm and 120 houses in their neighborhood. There are dairy and hog farms all over America who could, with tax credits for installing the equipment, be doing the same, and powering homes and small towns across the country.
http://www.edgeboston.com/index.php?ch=style&sc=life&sc2=features&sc3=&id=71394
Here’s something to consider when bashing large “corporate” agriculture: my dad and I farm nearly 5000 acres by ourselves with no hired help, and we operate as a corporation. This is primarily for liability, tax, and estate planning reasons. Nonetheless, I don’t know how you could be more of a family farm than we are. Most of our neighbors operate in the same fashion and collectively farm tens of thousands of acres. There are virtually no small family farms left that rely solely on agriculture for their income. The economies of agriculture here just don’t make it feasible. I will agree that this is sad in many ways and most likely detrimental to our environment and health. Unfortunately our government and the public want cheap food, not necessarily healthy food. I also agree that huge corporate entities especially in the livestock undustry often leave much to be desired. I, myself, would be happy to reduce the size of our operations and diversify into fruits, vegetables, etc., and I hope a day may come when that’s possible.
http://www.larouchepub.com/eiw/public/2008/2008_1-9/2008_1-9/2008-8/pdf/46-48_3508.pdf
[Warning: PDF file] The agro-cartels, backed by speculative hedge funds, will soon be able to get away with charging whatever they want for their products, once they run family farmers out of business.
Txfarmer,
As noted, you are a family farm, and as you post, the corporate structure offers you protections. You weren’t the operations we were criticizing. You don’t mention what you farm…is it livestock? If so, would installing the equipment to produce biogas be something that you would consider?
Thanks for your input. I know most people realize there is a difference between family corporations and the huge mega corps like ADM, DeBruce, etc. I also know agriculture is becoming more centralized in the hands of those mega corps, and I agree this is not the way I want to see our food production handled. I’d hate to think we’ll wind up with food cartels the way we’ve wound up with energy cartels, but I don’t discount the possibility. Anyhow, we’re all crops–mostly wheat and grain sorghum. No livestock here, but we’re always on the lookout for new ways to improve our business. For the record, I don’t think ethanol or biofuels are the solution to our energy needs. The latest thing here is wind energy, but again, I’m not sure it’s sustainable without massive government subsidies.
P.S. Krugman was apparently wrong when he said the Fed had run out of bubbles.
Got a quote on that? I don’t think Krugman, or anyone else, would say that the Fed could not create another bubble, period. Rather, the housing bubble was so big that nothing the Fed can do could compensate for it, in the way the housing bubble compensated for the demise of the dot-com bubble. For example:
Meanwhile, anyone who expects the Fed or anyone else to come up with a plan that makes this financial crisis just go away will be sorely disappointed.
Link: After the Money’s Gone
And more to the point:
In July 2001, Paul McCulley, an economist at Pimco, the giant bond fund, predicted that the Federal Reserve would simply replace one bubble with another. “There is room,” he wrote, “for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing.”
As Mr. McCulley predicted, interest rate cuts led to soaring home prices, which led in turn not just to a construction boom but to high consumer spending, because homeowners used mortgage refinancing to go deeper into debt. All of this created jobs to make up for those lost when the stock bubble burst.
Now the question is what can replace the housing bubble.
Running Out of Bubbles
Like you said earlier, nothing can fill its shoes - at least not quickly enough to avoid a significant downturn.
The only way most will get to participate in the current commodities bubble is to stock up on mac ‘n cheeze and search for the cheapest gas stations. No way for J6P to profit from this one.
As I was stocking up at Trader Joes yesterday, I realized that most people who work there or any retail places, don’t really have 200.00 extra dollars to just go out and stock up. I didn’t put my cous cous back on the shelf, but I was embarrassed that I was hoarding mayo and cereal. Got rice cakes?
Extra dollars? People buy because the value they get from the products they exchange money for has greater value than the cost incurred in procuring the money. Yes, you should be embarrassed about hoarding mayo (gag reflex just to write the word), but not because it’s costing you money.
I was referring back to comments he made in 2005. Anyone who cannot see the problem at this point is probably not a tenured professor of economics at Princeton.
Quite right - more likely a former tenured professor of economics at Princeton who has a better paying job now.
What does pay have to do with it? Some folks would rather be smart than rich.
But they’re neither smart nor rich.
A kind of purgatory on Earth I guess. Stuck in between.
Actually, I’d just argue that the Academy is a certain kind of aspirational job for the upper middle-class.
You’ll have an averagely good life doing averagely good work, and the work will have the illusion of intellectualism even though the vast majority of all research papers in any subject are largely “incremental” and hence pure cr@p.
The academy was never about true intellectualism. You’d have to have real intellectual debates for that to happen, and accuse your colleagues of peddling garbage. That will never ever happen. You need to stroke their ego to get tenure, and then keep doing that to be a full professor or a named one.
It was never about the smarts; just about getting enough perks to be averagely happy.
Of course I have a quote:
May 27, 2005
Running Out of Bubbles
By PAUL KRUGMAN
From the above:
In July 2001, Paul McCulley, an economist at Pimco, the giant bond fund, predicted that the Federal Reserve would simply replace one bubble with another. “There is room,” he wrote, “for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing.”
As Mr. McCulley predicted, interest rate cuts led to soaring home prices, which led in turn not just to a construction boom but to high consumer spending, because homeowners used mortgage refinancing to go deeper into debt. All of this created jobs to make up for those lost when the stock bubble burst.
Now the question is what can replace the housing bubble
As it becomes apparent that we are near the end of the Feds easing cycle, I expect that we will see a major correction in commodity prices. Once the hot money starts to leave it’ll be a rush for the exits. The hedge funds will find themselves holding the bag. Residential real estate will seem down right liquid next to trying to unload an overpriced farm. The good ole boys should be able to buy land back at a discount and send the carpet baggers packing.
“The good ole boys should be able to buy land back at a discount and send the carpet baggers packing.”
I am relishing the prospect of this future Schadenfreudistic moment!
I agree. I always enjoy seeing a hedge fund take in on the chin. These bozos go from one asset class to another driving up prices and leaving a trail of destruction in their wake.
How exactly do they “take it on the chin”?
They take 2% of assets yearly, and 20% of any profits. If it goes under, tough titties for the investors.
What have the individuals actually lost?
“How exactly do they “take it on the chin”?”
“If it goes under, tough titties for the investors.”
I’m including the investors “taking it on the chin”.
You mean the pension funds?
Yeah, OK, that’s gonna be really tough on someone. Not the managers of the funds though.
‘These bozos go from one asset class to another driving up prices and leaving a trail of destruction in their wake.’
Where are the customers yachts?
2 good FL articles today:
Downturn in market hurts local banks:
http://www.sun-sentinel.com/business/sfl-flzlocalbanks0427sbapr27,0,1730698.story
and
Pets are often the victims in foreclosure:
http://www.sun-sentinel.com/business/sfl-flhlppets0427sbapr27,0,6300871.story
Both the Swap-a-Home.com and the Private Financial Club Join Forces May 2nd in St Charles, IL to Combat the Foreclosure Epidemic.
http://www.webwire.com/ViewPressRel.asp?aId=64230
“”The “Foreclosures-Swap-a-Home-Group” has introduced an exciting new format to combat the painful, foreclosure epidemic. This group is designed for those families in a foreclosure situation who are looking for solutions. The “Swap-a-Home” group has developed strategic methods to help families who are struggling and assist them in finding a resolution before it becomes to late.
Their goal is to help families. They rescue them from foreclosure; pre-qualify them as tenants who are actually trying to lease option; and move them into a remodeled home that they now can afford.
At this event, they will be demonstrating the “Full Circle” of their program and how to make a connection. Whether it be the Credit Repair Specialist, The Hard Money Financing, the Short-Sale Expert, or the Rehabber/Remodeler.”" (…cont’d)
Not sure how I feel about this.
Leigh
If that don’t set off every fraud bell and whistle - I don’t know what would.
This sounds like a variation of buy-and-leaseback that some investors pursue. Rest assured these homes will be at the very high end of affordability.
Lease options are one of the oldest RE scams around. A high “future downpayment” is collected up front by the owner from as well as higher rent that has a percentage “applied toward the future downpayment”. The poor sap of a renter is usally someone who cannot get finaincing one the lease option period expires, and the landshark owner then pockets the”downpayment” and finds another sap to screw over in the same way.
Oil prices. To the moon, Alice, to the moon!
http://news.yahoo.com/s/ap/20080427/ap_on_bi_ge/britain_refinery_strike
Oh boy. Why not post neon signs everywhere and say BUY PETROL (gasoline) NOW!
Everybody’s Business
Wall Street, Run Amok
By BEN STEIN
Published: April 27, 2008
Under an interesting set of rules promulgated by the Securities and Exchange Commission in 2004, called “Alternative Net Capital Requirements for Broker-Dealers That Are Part of Consolidated Supervised Entities,” the amount of capital that had to underlie assets was reduced substantially. (Mr. Einhorn rightly says that this set of rules should have been called the “Bear Stearns Future Insolvency Act of 2004.”)
It looks to me as if the inmates are running the asylum. One truth, that deregulation is sometimes a good thing, has been followed down so long and winding a road that it has led to an immense lie: that deregulation carried to an extreme will not lead to calamity.
http://www.nytimes.com/2008/04/27/business/27every.html?_r=1&ref=business&oref=slogin
I don’t recall Ben being the type who would slam the market makers.
Talked about this last summer. It had a lot to do with the run up in stock prices last year.
Ben Stein’s current words bear no resemblance to the pro-Wall Street pablum he used to utter, just 6 months ago…
I suspect he’s lost a good deal of money on his dubious investments, things he thought were double-plus-good.
And now they are double-plus-un-good. Maybe that apology he had to write to Peter Schiff after he was made to look like a complete fool when Merrill Lynch blewup had some impact.
Ben, awesome story alert: there was a story on local news last night talking about the risk of the coming hurricane season and abandoned FL properties. Sorry, I have no link, but can you imagine a half-finished Miami glass tower in legal limbo getting smacked?
From the report the problem sounds (say like a used car salesman being filmed with a handycam) hhhhuuuuugge!!!!
hey, Muggy, when I used to live in Ft. Liquordale, and we’d see these glass towers going up (like around the Cypress Creek I-95) area, we used to call it “Slice ‘em and Dice ‘em”. I don’t know what idjit thought glass tower in Florida were a good thing. Oh, yeah, great for a view, but the heat they generate sucks and there’s too much risk in a windstorm.
If a hurricane hits Florida this year, the countryside will be dotted with partially destroyed, uninsured and abandoned homes.
This is where, in my opinion, new urbanists win: if the structure will not be rebuilt after a distater, it should not be built at all. Any structure with purpose, that is well positioned, scaled and built, will naturally be rebuilt.
Why re-roof an abandoned McMansion in North Port? Right, you don’t because it’s worthless. This dilemma is only made possible by the autombile and cheap oil.
Escape from the suburbs; Idiocracy meets the Road Warrior.
A lot of development all over the USA was made possible by the autombile and cheap oil, not just in Florida. I expect a lot of that development to be abandoned or re-purposed.
They don’t actually use glass, do they? Isn’t it Lexan, which is an infinitely stronger plastic (that looks and feels like glass), and used for storm shields, jet cockpit windscreens, etc?
We spec’ed Lexan to shoot out of cannons because it’s shape distortion / mass wouldn’t distort as much as most other materials.
The financing being advertised in latest Harley Davidson ad has a familiar smell to it. Relevant parts posted below.
INSTANT GRATIFICATION MEETS COMMON SENSE.
For no money down and payments starting as low as $99 a month*, you score the incomparable excitement of a brand new Sportster motorcycle at a cost that’s entirely practical.
*Monthly payments increase substantially beginning in year three. Offer valid on new, previously untitled 2006, 2007 and 2008 Sportster 883L and XL 1200 models; and 2007 Sportster XL50 models financed through Eaglemark Savings Bank (ESB), a subsidiary of Harley-Davidson Credit Corp, subject to ESB credit approval. For example, a 2008 Sportster 883L with a $7,425 ($7,525 in California) MSRP, no down payment, a 72-month repayment term and 8.39% APR, would result in 24 monthly payments of $99 followed by 48 monthly payments of $152.48($155.39 in California); a 2007 Sportster 1200C with a $10,165 ($10,265 in California) MSRP, no down payment, a 72-month repayment term and 11.25% APR, would result in 24 monthly payments of $150 followed by 48 monthly payments of $225.92 ($229.17 in California); APR and monthly payments may vary and are based on evaluation of applicant’s credit. Your actual terms may vary.
This came from http://www.harley-davidson.com. Didn’t post the direct link as I suspect HBB would have eaten the posting which appears to be a common occurrence for me these days.
I few years ago you had to practically get on a waiting list for a new harley, now they’ve got unsold 2006 and 2007 on the lot.
The ultimate item of discretionary spending. Buy an old Triumph Bonneville for about $2000 and fix it up - nice bikes with character.
http://cgi.ebay.com/ebaymotors/1983-triumph-750-bonneville-tsx_W0QQitemZ270231218857QQcmdZViewItem
I had a Bonneville many years ago. I had to tie a net on the on the back to catch the parts as they fell off.
Heheh, yea, the older ones were very English in nature, just like my Spitfire, but ya know, I loved em for their idiosyncrasies and I didn’t mind. The newer ones are better (and easier to start) than the old ones.
Just some insight on the auto market.
I’m a dentist, and a car salesman came to me last week in pretty bad pain. He didn’t want his tooth extracted yet, because he wanted to wait for the insurance to kick in and cover $50. He said the auto market is so bad, he didn’t want to risk the $50.
I offered to wait for the money (felt bad for the guy).
How could such a patriotic icon resort to the use of an asterisk? And they own bank too? Good thing the name has “Eagle” in it, otherwise one might think they’re just another greedy money making outfit.
the tale of the HOG is now being spun on the techno bidding platform known as Co-Part. Co-part is a bastion of the export/rebuild market for totalled vehicles unloaded by the insurance industry to so-called “savvy” deep pocket cash buyers.
The HOGS coming home to roost at banks with bad toy debt are now being unlocked in the virtual world. I have it good authority that everyone wants to own a hog farm. Please try to ignore the hissing inflated pig in the room.
I have a single cylinder HD that is fitted into a 45 frame. This HD has an interesting history:
The motor was made in 1929 and the frame in 1933. HD was having such a hard time selling motorcycles during the Depression that they took old inventory (1929 engine single cylinder) and put the motors in frames made for 2 cylinder 1933 45 engines. This was for two reasons. The single cylinders were cheaper to sell and you could ride longer on a gallon of gas.
On the lighter side of financial analysis:
Financial Analysts Offer To Talk About Recession For $5
http://www.theonion.com/content/news_briefs/financial_analysts_offer_to
I have never read a book about the stock market. I know nothing about it, so someone please tell me why it as not gone into a swan dive.
FD, the stock market is basically valued by the earnings and profit of the companies owned by the stockholders. Housing related industries are but a small part of the stock market. Many, many companies are reporting strong earnings and positive business forecasts. The fundamentals are good. Most investors look 6 months forward to make their investment decisions. I do and I have recently taken 20% of my assets which are invested in Treasuries and put them into the Total Stock Market Index Fund. My Treasuries performed very nicely over the last 20 months, so I sold some at the high and bought into stocks during a recent dip.
All that being said, I would not put my whole portfolio into stocks, because having some balance if very important. It is hard to predict the future, but I am betting some $’s that 6 months from now, many of our business will be doing very well.
I bought some stocks earlier this year against my own better judgment. They are above water so far — LOL!
Uncle Buck’s got your back, don’t worry.
“FD, the stock market is basically valued by the earnings and profit of the companies owned by the stockholders.”
At the risk of (again) getting labeled as a conspiracy theorist, how do you know there is not a price support program which helps keep investors confident the stock market will always go up? I see very little evidence the stock market is efficiently pricing in bad news these days, unless you take a foreign investor perspective (i.e., the value of the U.S. stock market must look pretty low right now if you live in a Eurozone country).
“please tell me why it as not gone into a swan dive.”
After real estate bubbled, there is no place left to place money.
Retirement funds are flush with cash because employment is still strong and multinationals (like oil) are reaping rewards from the dollar decline, and with bond rates so low, it leaves stocks.
“…and with bond rates so low,…”
Which naturally raises the question, with rampaging inflation, what keeps bond rates so low?
dollar recycling FCB’s who need to feed the unwashed masses who manufacture plasitic bullshit for the globo-consumo tard.. The bond vigalantes have been usurped by the powerful elite of confused forex trading robots.
“I have never read a book about the stock market. I know nothing about it, so someone please tell me why it as not gone into a swan dive.”
Answer: Paxilated Traders. The term “paxilated” is derived from the original word pixilated, to describe the mania, and subsequent detatchment from reality, induced by consumption of high doses of antidepressant medications over long periods of time.
I don’t believe it - I’M the one who has to bring up the point that the stock market HAS TAKEN a swan dive since 2000, as measured in ounces of GOLD.
sheesh.
But the correct answer is, as is the correct answer to most things in life, is that IT’S ALL RELATIVE.
A postal carrier told me Friday about a letter carrier in Morgan Hill with a 5000 sq.ft. house that he is trying to unload for some $800K. Seems that the letter carrier was trying to unload the property and move to Texas to retire; he already bought in Texas, can’t unload his white elephant in Morgan Hill and is mad because he can’t afford to retire if he can’t unload the Morgan Hill property at his wishing price. I hope I can continue to get up dates on this story.
Weather great here in Monterey Co. Yesterday went to Seaside and ran on the beach, then walked along the coast in Pacific Grove and ended up in Carmel at the deli for a sandwich to eat while setting above the beach basking in a cool breeze. Unbelievable, people everywhere in the business district of Monterey, Pacific Grove and Carmel. Business owners had to love the increased sales after the long winter drought.
Please post your updates on this story…I bet he is the canary in the coal mine when it comes to retirement plans. I really fear for the economy in this country when young and old alike wind up competing for the same dwindling number of available jobs because no one can afford to retire.
Even with inflation, salaries in this country will be dropping like a stone.
I’d rather compete with a few old geezers than a billion Chinese.
Really sad because if he is retiring now from the Postal Service, he should be under the “good” retirement plan, which would provide for him fine…if he hadn’t gotten greedy with his real estate purchase.
Aren’t pensions and social security (like IRAs and 401Ks) untouchable by bankruptcy court?
Steel companies doing well. They’re actually competitive with the lower $
http://www.bloomberg.com/apps/news?pid=20601109&sid=aRdwCOLJimgY&refer=home
Comment to Fresno Dude, two threads up:
You see here that the steel industry is doing well. This is a good example of why the stock market is holding its own against the housing crises.
We are doing well in salvaging old scrap metal and turning it into new steel, instead of shipping it to China and having them do it.
A growth industry?, ixnay.
Dutch auction, anyone?
11135 FLORINDO RD., SD - Rancho Bernardo, CA 92127
List Price: $495,000 - $545,000
ZipRealty will give you up to $2,970 cash back.*
Bedrooms: 5
Full Baths: 3
Partial Baths: 0
Square Feet: 2,250
Lot Size: 6,500 Sq. Ft.
Year Built: 1970
Listing Date: 10/01/07
On Market: 209 days
Type: SFR
Status: ACTIVE
MLS #: 076078072
Description
Seller will entertain offers between $550k to $620k. Price reduced.Fully remodeled home. New kitchen cabinet,new flooring, new paint,new doors, new carpet, fully remodeled bathrooms,… Many to list.Great location with a very nice view.Upstairs 2 bedroom and bath not in accessors record.
ZipRealty Price Track:
Price Reduced: 11/08/07 — $645,000 to $599,000
Price Reduced: 01/09/08 — $599,000 to $560,000
Price Increased: 01/10/08 — $560,000 to $599,000
Price Reduced: 01/10/08 — $599,000 to $560,000
Price Increased: 01/26/08 — $560,000 to $600,000
Price Reduced: 02/26/08 — $600,000 to $550,000
Price Reduced: 04/14/08 — $550,000 to $495,000
Is this home possibly in one of the markets that has been “unfairly tagged” by lenders as declining in value?
Whoa! FIVE bedrooms and only 2250 square feet?
Jeez -we have 3 @ 2500 ft and the two small ones are REALLY small. It sounds more like teeny tiny holding cells than bedrooms.
JW,
I raised 4 boys in a 1780 SF 3 Bd 2 Ba and we were comfortable. It is not that hard to see 2 more bedrooms in an extra 500 SF. A bedroom that is 12 x 14 is decent and that is 168 SF. I don’t think your comment is on target.
If the space were arranged differently in our rental it would probably be better. The home is broken into 2 living areas. It has a 600 ft master suite with 3 closets and a very large bathroom. then a large living room, medium sized D.R, and Kitchen. The last 2 bedrooms are 10 x 11 with a medium bathroom to share. They’re so small that we had to put the kid’s furniture in both of them to fit. 12 x 14 would be very nice. But, in a town with only 2-3 non-ghetto rentals, we can’t be choosers…
“raising four boys”
jingle –
Hats off to ya, pal.
This is the first five bedroom home in 92127 that I have seen listed below $500,000. Someone will snap this home up for sure after one more price increase to $600,000, as moving prices up and down like this in front of a real estate invester’s eyes is like waving a red cape in a bull’s face.
:-) 
“Price Reduced: 01/09/08 — $599,000 to $560,000
Price Increased: 01/10/08 — $560,000 to $599,000
Price Reduced: 01/10/08 — $599,000 to $560,000
Price Increased: 01/26/08 — $560,000 to $600,000
Price Reduced: 02/26/08 — $600,000 to $550,000″
Again, what’s with the price ranges? What turd thinks this is clever? Yeah, 550-620, I’ll offer 619 - don’t want to “hurt anyone’s feelings”!
Oh, and thanks for helping get those bedrooms and bathroom onto the “accessors” record!
I wish Zip Realty would refuse to accept/post this “price range” crap. Pick your price and post it. “Will entertain offers” my a–. “Begging for offers” works. So does, “Desperate for an offer,” etc.
oy vay! only in brooklyn ny can this happen
gotta love those pre construction prices
builder flees with 15 million of fellow hasidim’s $$$
http://www.nydailynews.com/news/2008/04/27/2008-04-27_builder_flees__40_hasidic_families_face_.html
Mazal tov!
He did a financial Bris on his buddies by abscounding with their shekels…
Sigh. Well now that they have bupkis, at least, they get to kvetch about it for the rest of their life.
For all those waiting for the high end properties to hit the wall, welcome to Brentwood-BelAir 90049, where tons of 2 Million dollar listings are reaching 100 days on the market. Bubbleiscious!
David, you travel in different circles than most on this blog. We all play around with each other about our differences. I think it’s mostly in good fun. I would love to hear some updates from you. What are you hearing from the cocktail crowd?
Hello. Saw two ads today with something I have not seen in a long time: OWNER FINANCING.
One is a row house on Capitol Hill the other is a condo at Dupont Circle (downtown - Washington, DC.) I happen to know that the condo is in building that has less than 50% owner occupancy. Have friends who have lived there for years. Really surprised me when they told me about low owner occupancy. Seems to be extremely well run building. So much so that I alway thought of buying there.
http://austin.craigslist.org/rfs/657113133.html
Looks like a flipper property in Austin. Offering owner finanacing with 3% down …
NOT close to downtown, this is commuter heaven.
Just out of curiousity…does anyone think that urban fireplaces are really worth having anymore? Most municipalities are passing legislation limiting woodsmoke, even with the rising cost of gas. In fact, it seems there is increasing regulation of woodstoves as well. From what I have read, fireplaces are expensive to maintain, drafty and tend to increase heating bills as well as access for vermin.
Does anyone see fireplaces being phased out in future construction trends?
Not when they’re a primary source of heating for FBs who can’t afford electricity…
Fireplaces are very inefficient as plain open holes. You can put inserts in them which drastically increase the efficiency, they also reduce the amount of smoke polution.
There is such a thing as a masonry furnace. It is 200+ year old technology from far northern Europe AFAIK. It uses a massive amount of masonry with a intricate pattern of air passages that together allows the operator to build an extremely hot fire (which much lessens smoke pollution) that could not be tolerated by a conventional fireplace. The thermal mass of the furnace stores the excess heat given off and gives off this heat by radiation and convection of air through its passages. The fire can be built as seldom as once a day — the furnace captures the heat & gives it off for many hours after the fire goes out. It is as far from an open hole in your roof as could be. Few masons know how to build such a thing, so it is extremely expensive to build. Its high cost is mostly due to ignorance. Every million dollar house in the cold parts of the country should have one as part of their heating system, but virtually none do.
Is there a gas version of a masonry furnace? I seem to remember hearing about that some time when I was complaining about forced air gas heat.
Never heard of a gas-powered masonry furnace. My knowledge of physics indicates there’d be no advantage.
— Nearly all the energy in natural gas is available as heat simply by burning it, so the highly-efficient gas furnaces now available move about 95% of that heat into the dwelling. The residue of natural gas is CO2 and H2O. You can burn a small amount of natural gas or a lot, depending on the size of the burners & how many heating cycles it needs to place a given amount of heat energy into a living space. Forced air or heated water circulates the warmed air comfortably.
– Wood burns differently. Burning it produces heat, CO2 & H2O just like natural gas, but also smoke & tar residues, which contain wasted energy and go to pollute the air & need cleaning out from the chimney. If you can burn wood hot enough, more of it turns into heat, CO2 and H20, and much less of it into smoke & tar. If you blow out a candle, the wick tends to smoke for a while. If you blow it out but keeping blowing at just the right rate, the wick glows red, no visible smoke is emitted, and then the wick suddenly goes dark as the wax solidifies & stops supplying fuel to the fire. The ceramics in regular fireplaces might crack under that intense heat, they don’t trap heat for later release very well, and the intense heat radiating out of the wide open fire pit is too much for nearby structures and people. Regular fireplaces also allow too much heated air out the chimney. Masonry furnaces maximize heat into the living area and minimize the undesirable stuff. The door to their fire pits is very small and basically serves as a place to put the fuel, not a place to radiate heat into the living space. At least that’s what I learned from reading.
Thanks Tresho.
I’ll contact my brother and try to find what I think I remember hearing about. When I find out, I will post in bb.
The salient feature was to have radiant heat, rather than forced air. Maybe it was some material other than masonry.
I think that I didn’t pursue it further because it was an expensive option, and while fuel efficient, not cost effective in Austin climate.
Yes. They are nice and romantic. But, I can’t see them as economical ways to heat a house. People I know that use wood to heat their houses use a very efficient stoves (not a fireplace) and insulate the house quite well.
As mentioned inserts can be pretty efficient. You can have it built to be part of the heating system, so that the heat generated from the insert is moved around the house just like the heat generated from an electric or gas heater.
I have a buddy whose parents have had one for 20 years. They spend less on wood than what it saves them in electricity in the cold months.
Our rental has two fireplaces — made the place drafty as hell. I temporarily sealed them up by taping large sheets of styrofoam over their faces (more than just the openings).
The problem wasn’t just the flue — that can be temporarily plugged with a balloon-like device — but the area around the firebox isn’t insulated. So, in effect, we had a giant section of wall that was uninsulated and drafty.
I think if you really want to heat with wood, you need something like a Franklin stove. What’s interesting around here is that quite a few of the houses built in the 1970s and 1980s have a wood stove in the basement, are wet bar in the basement, and a hot tub on the back porch. This is an upper-middleclass suburb of DC.
From what I’ve read, masonry furnaces are far superior to Franklin stoves.
http://austin.craigslist.org/rfs/647859952.html
“IF PURCHASED CONVENTIONALLY, WE WILL MAKE YOUR PAYMENTS FOR 1 YEAR!!!”
The market here doesn’t seem so hot anymore.
$100K equity = $100K overpriced to today’s prices (and bottom hasn’t been reached).
Isn’t this ‘we will make your payment’ on a conventional bank loan = fraud?
Not a fraud. Just a date with the bankruptcy court.
What is lease purchase?
“The market here doesn’t seem so hot anymore.”
It doesn’t, does it? It seems like a lot of chinks have appeared in the facade in just the last few weeks.
Can I get a mortgage for $589K that fully amortizes in one year?
We have had a number of discussions on the blog about how long the housing bust might last and I was thinking about this last night. I have been of the opinion that a 5 year bubble would result in about a 7 year bust. So say around 2011-2012 time frame. But I am wondering now if that might be quite a bit optimistic as there is a factor this time that might prolong the downturn. If house prices really drop back to the mean, say a 30% national drop, 10’s of millions of homes will be underwater. Of course a lot of these will be foreclosed fairly quickly, but there may be many millions that people will try to keep and just pay the bloated mortgage. But, there will always be cases where even a non-FB will have to move and these events will occur over a very long time. Might this mean, for example, that even in 2020 there will still be people dying, getting divorces, loosing jobs etc that will abandon their house to foreclosure keeping prices down for decades?
It’s almost inconceivable that house prices will only fall to the mean, if by that you mean historical average relative to rents or incomes.
One of the defining characteristics of bubbles is that when they pop they overshoot on the other side.
I wouldn’t argue with that. I was just wondering how the psychology of the low prices will play out. I think the evidence we have seen is that it takes quite a few foreclosures to drive the price down substantially. What I am saying is I think a steady rain of foreclosures, even at a fairly low rate, will KEEP the prices down and I think the depth of ‘underwaterness’ will keep that rain coming for a long time.
The Pentagon Strangles Our Economy: Why the U.S. Has Gone Broke
Defense-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. The U.S. has become the largest single seller of arms and munitions to other nations on Earth. Leaving out President Bush’s two on-going wars, defense spending has doubled since the mid-1990s.
In an attempt to disguise the true size of the U.S. military empire, the government has long hidden major military-related expenditures in departments other than Defense. For example, $23.4bn for the Department of Energy goes towards developing and maintaining nuclear warheads; and $25.3bn in the Department of State budget is spent on foreign military assistance (primarily for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic, Egypt and Pakistan)
$1.9bn to the Department of Justice for the paramilitary activities of the FBI; $38.5bn to the Department of the Treasury for the Military Retirement Fund; $7.6bn for the military-related activities of the National Aeronautics and Space Administration; and well over $200bn in interest for past debt-financed defense outlays. This brings U.S. spending for its military establishment during the current fiscal year, conservatively calculated, to at least $1.1 trillion
http://www.alternet.org/story/83555/
That’s because in the foreseeable future, the only thing that will classify the United States as a superpower anymore will be a large and potent military. Much like the Russia post USSR. It was an economic basketcase - but it had thousands of ICBMs and could not be discounted. I think we’re entering the “If you don’t respect us, then fear us” phase. We actually ask the question of “what defines a superpower and why?” in one of our classes.
Good point JW. Seems to me we’ve been in the “if you don’t respect us, then fear us” phase for several years.
It will only get worse in the years to come regardless of administration IMO. The neighborhood is going to get a lot rougher in an era of grim competition for energy, natural resources, and food.
“oderint dum metuant”,
http://www.merriam-webster.com/dictionary/oderint%20dum%20metuant
I think Caligula is reported to have this as his motto. Nothing new under the sun…
“If you don’t respect us, then fear us”
That’s the way it should always have been.
We’re trying to maintain hegemony on inertia alone, much like Britain after WWI. The end had already come about 1900 or so, but like in economics there was that recognition lag. We’re in the last throes of that lag right now IMHO.
I really have no understanding of people that call themselves conservatives and yet have little economic knowledge and want to continue increase military (not defense) spending.
Ron Paul gave a great speech a while back on the difference between military spending and defense spending.
what makes a country strong is not the enrichment of the defense industry. we have more than enough weaponry to wipe out the globe 3 or 4 times over. It’s entirely missing the point of the article posted above. If we were to have used half the money to make America stronger, really strong from within, we’d be far better off then we are today.
Well, a lot of people seem to think that “Space” spending is done in space too. (I suspect it must be done via wire transfers through large antennae.)
“Defense-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. The U.S. has become the largest single seller of arms and munitions to other nations on Earth…”
There is a term for this duplicitous use of language, but I’ve forgotten it. The first sentence has nothing to do with the second, but the second is sandwiched in, in a way that dulls the impact of the first.
First sentence says: Pentagon spent $1T of taxpayer $ last year.
Second sentence says: US arms merchants also make a fortune selling their stuff to other countries.
I don’t much care about the second, but the first sucks. We are not at war with anyone, nor do we need to be. Most of that $1T is for occupation of sovereign countries and for the support of countries that currently have better economies and should be supporting themselves. IMO.
In two weeks we’ve moved to a new concensus on Wall Street: stock market has value, especially financials and consumer durables; dollar has bottomed; commodities, esp. gold, will plummet; credit crisis is almost over. (Morgan Stanley CEO John Mack just said we are in the bottom of the eighth or top of the ninth inning; I’ve been taken to task for saying Florida is in 5th or so.)
Meanwhile, on Main Street, the situation would appear to be worse than ever: housing inventories continue to rise, prices are currently falling rapidly in many areas, and financial institutions are under siege.
Conversation with a financial advisor at one of the largest IBs this a.m.: her group has a client who parked $6mm in auction rate securities over the course of the last year in order to cover his tax liability. Now, they couldn’t get a bid and the IB has had to loan the client the money to pay his taxes.
Any comments, add’l info on the auction rate securities markets?
I read that a few weeks ago. You would have to tie me down if that happened to me. Lend me the money? You better f**king find a way to GIVE it back to me.
“we’ve moved to a new concensus on Wall Street”
Speaking for yourself and other greater fools?
As for myself, I will wait and see how well that value holds up when the risk premium on l-t T-bonds shows up…
Hey Prof,
I think you may be “irony impaired” or perhaps “sarcasm challenged”.
Roidy
No problem, PB just has a sick need to hurl gratuitous insults and elevate himself a propos of nothing. And he insists on the last word. Fire away.
Farm costs eat profits for struggling Michigan farmers
Record prices for crops are soured by fertilizer, fuel, equipment hikes
Article stresses how the contracts that farmers enter into for selling their produce ahead of time can be a gamble for them. One farmer knows he could have gotten more money if he had held out a little while, but that’s a risk all farmers must take, he said. Sometimes he contracts high and other times low.
“I try to make the right mistake,” he said.
http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=/20080427/BUSINESS/804270358&referrer=FRONTPAGECAROUSEL
“There’s more bleeding to come. A recent report from the Empire Justice Center, a statewide nonprofit law firm based in Albany, predicted more foreclosures. It said the Hudson Valley will be particularly hard hit as subprime loans that have a rate-reset feature ratchet the borrowers into higher, less-affordable payments.
Living in the Hudson Valley, I can tell you this place is gonna be stockton,CA part 2, it may be worse since every house built in the last 6 years have been 600K plus McMansions and there are no local jobs to support that price, a majorty of the poeple who baught these work in NYC which is a 2hr train commute each way, but heads are rolling on wall street also, there will be absolutly no-one to buy these things unless they cut the price 50-60 percent, and heating and cooling these things will kill you…
Currently working/living in lower HV. I’ll confirm your and the articles assertion that this place is set for a financial tsunami. Dude, they are STILL building here, within walking distance from me and everywhere along my 45mile trip to work. The FSBO/Realtard sign swaps occur daily on the same bloated junk. These aren’t energy efficient designs with clean architecture. They are 4000+sqft monstrosities. Guys on my jobsite commute in from areas on the commutable margin, i.e, sullivan county, upper dutchess and they are getting squeezed big time. A couple bought big behemoths in Sullivan Co 3 years ago and you can hear the stress in their voices. The hard fact is that are NO employers in Dutchess, Orange and Sullivan counties so how do you account for the 600k price tags plus heating costs? A friend works at UBS and said nobody knows whats coming but they know something bad is going down. I know handfuls of people who are trying to sell but whine that they can’t. I keep my mouth shut most of the time but sometimes I tell them I know how they can sell in 24 hours. They look at amazed and ask how and then get indignant when I give them the answer…… lower your price.
I have driven on Route 17 for the past 22 years. I know the area very well. I have friends who work in high paying jobs in Manhattan. Having a home near Liberty or Roscoe is a great getaway for them during the summers. It is a very beautiful area. I am thinking about buying land or a small home for retirement there. For NYC people the choice is expensive CT or Ugly NJ. Sullivan County is a beautiful oasis.
Sullivan County is no less costly than CT. Of course Greenwich is pricey but there is more to CT than Stamford/Greenwich/CosCob.
A builder friend of mine is just finishing a brand new 5000 sq ft 3 story house on Lake Louise Marie with an elevator. This area has small bungalow style homes. This monstrosity stands out like a sore thumb. The owner has hired an interior designer to custom design the interior. High net worth owners with Bentley will be moving in shortly. This house will cost around 900K. I doubt if a comparable luxury house can be bought in queens or Long island for this price. I am not sure if lake Louise Marie is Orange County or Sullivan. IMHO it is small and not a very pretty lake. Not something like the adirondacks
Upstate NY’s savior?
Retired state workers, who don’t like the heat or cold extremes in states that don’t tax their municipal pensions.
Of course, if the cancer of high property/school taxes follow retirees upstate, and the property tax and income ta lines cross, then it’s look out below.. And don’t even ask about NY pension fund investments in builder bonds… That s–t keeps me up awake at night thinking of my family…
Does anybody find it interesting how little the press covered Israel’s attack on a supposed Syrian nuclear facility, a few months ago?
It was a no-fly zone for the not so forth estate…
The interesting part was how little the Syrians whined about it. Spoke volumes.
The whole thing was bizarre, really.
Both sides probably have something they don’t want to ‘fess up.
Syrians should return the favor x2.
North Korea doesn’t export cohones, so they are stuck.
May you receive twice the returned Syrian favors.
I have to laugh at the hypocrisy of the clueless people who pander for Israel for no good reason. Ask them, and they will never answer why they pander. Yet, the 1947 UN partition agreement was a forced agreement resulting from a terrorism campaign waged on UK forces and Palestinian residents.
Oh I see. That terrorism is acceptable.
Real estate in Calgary, Alberta, Canada is correcting ! Home of $120/bbl oil. Guess they have enough land there too.
Notice how the RE guys dismiss it.
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=9fbf00d5-579f-4bdc-a92b-d3ac89f47ba1&k=11131
I think Elizabeth Razzie (housing shill) of the Washington Post may be pointing at us:
What do you think of bloggers who seem to root for an even bigger bust?
McEnearney: I’m not seeing that.
Foster: Good Lord. I’m not either. I’m hoping it’s just a fringe bunch of nuts. Because, you know, I think that would be awful for the whole economy.
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/26/AR2008042600166_pf.html
“Foreclosures, that would be where I’d head. Buy for investment and rent ‘em.”
From the link, from the old coot who started Long & Foster…he also has foreclosure bus tours going.
eos come, eos go
US airline goes bust
Just some insight on the auto market.
I’m a dentist, and a car salesman came to me last week in pretty bad pain. He didn’t want his tooth extracted yet, because he wanted to wait for the insurance to kick in and cover $50. He said the auto market is so bad, he didn’t want to risk the $50.
I offered to wait for the money (felt bad for the guy).
Back to the Point:
It Really Is the Asset Bubbles, Stupid(s)
“…Long-term economic growth involves labor availability, quality of education, technological change, and capital investment, none of which the Fed has any control over, unless it is in slightly lowering efficiency and growth through an extreme aversion to recessions. The role of the Fed in influencing this critical factor of growth and hence employment is thus greatly exaggerated….
Bubbles bursting in major asset classes are a completely different story. They are extremely dangerous and, ironically, they really are substantially controllable by the Fed. If major asset classes are allowed to bubble away without moving to moderate them, we will all have to deal with the consequences of an excessive number of major asset bubbles breaking. An increasing number of us believe that nothing is a greater threat than this to financial and economic stability. Six years ago as we reeled from round one of this twin bubble show, I wrote in “Feet of Clay” a diatribe against Greenspan’s behavior then (attached to this letter on our website); “If everything goes right (as a bubble breaks) there will always be lots of pain. If anything is done wrong there will be even more. It is increasingly impressive and surprising how much we have done wrong this time! The stability of the U.S. economy can only be protected against the very real dangers of (an asset pricing) bubble breaking by the Fed
and its Chairman being willing at rare intervals to take some political risk.” It’s a pity that nothing has changed in six years….”
Jeremy Grantham of GMO
1st quarter report April 2008
https://www.gmo.com/websitecontent/JGLetter_ALL_1Q08.pdf
Caution 13 pg pdf
I recommend for any historians, any that are interested in stock markets and any that like bubble markets :>)
My stock recommendation is Merril’s fund (if you are eligible - I am not), but I have been in T. Rowe Price Africa & Middle East (TRAMX)
I can not make heads or tails out of this:
http://saltlakecity.craigslist.org/rfs/658559230.html