Bits Bucket And Craigslist Finds For May 22, 2008
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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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Housing affordability best in four years.
Soon to be best in five, then best in six, and so on …
They can churn the “paint by numbers” articles for the next five years.
This is all good news, even if the measure of “affordability” isn’t what it used to be.
Perhaps younger folks who were “priced out forever” will be able to buy a house at a price that gives the a life as early as next year in many parts of the country.
It could take longer in NYC at this pace, however. That is not good for us.
………Perhaps younger folks who were “priced out forever” will be able to buy a house at a price……..
I don’t think so.
I think younger folks are getting smarter everyday.
There is a new rejection of the housing slave-system that older folks guaranteed them a lavish retirement. Older folks thought they could buy up all the inventory and scalp the younger generation, and others by holding all the cards…..houses.
They were wrong. The new hippies are here!
Just recently, 3 couples rented a house down the street from me. There are 4 cars parked in the yard every night, and all are gone or mostly gone by the time I drive by in the morning.(working hippies).
Apparently, all are working couples who are just not willing to be forced into poverty by paying most of their earnings for rent. I think this may be going on more and more in the Country, and I, for one, think it is past due. REFUSE to PAY ridiculous prices. Why be a Slave for a house? The “appreciation” game is over and the only combat is to just say “NO.”.
Real Estate Appraiser’s refer to this as “tenant compression”.
Gator:
I bought a $50,000 house in Gville a decade ago so a relative could go to UF law school. I could pay for it on one middling salary. Then I turned it into a rental after we left, and it cash flowed fine. Then values escalated and I dumped it (no, not at the top, but at a time when I could recould some losses from removing lots of trees thunderboomers knocked down). I have lost track of the Gator market out here in Fresneck, Calif.
The point I am trying to make, in a roundabout way, is that American life is a lot better when it doesn’t take dual incomes to pay a mortgage.
‘Crate
“The point I am trying to make, in a roundabout way, is that American life is a lot better when it doesn’t take dual incomes to pay a mortgage”
Welcome to: The not-to-distant Past! You’ve just entered the “Twilight Zone” …Where a pigs snot on a human face…is not Rosie O’Donnell kneeling at a statue of Joan Rivers…Nor Rush Limpbaugh standing on his head looking at the reflection of his a$$… but, simply a different way to look at REALITY!
x2 incomes = Higher “Home Prices” …what did I say something wrong?
Some kind of communal living arrangement would suit the huge McMansion duplex at the end of my street of little houses. Although I had kind of imagined the huge garage(s) being converted to some kind of workshop(s) and maybe someone working there as opposed to everyone commuting out.
Hopefully - this attitude will go beyond housing, and people take a real hard look at the lazy over-consumption of junk, junk-food, energy and resources.
I’m not talking about everyone living like a “hippie” (although that’s fine for folks who want to go that route) - if you want to live in the ‘burbs with spouse and 2.5 kids and the dog, that’s a-ok — but you’ve gotta cut back on the SUV, the ton of new clothes for everyone, the un-eaten food, the junk food - and limit youself to a few toys or consumptive entertainments.
If we burn through our production and resources - more and more of this country and its assets are going to owned by folks and countries and organizations that deploy their resources more intelligently than the American people on the whole.
Right on, diogenes!
I can’t believe these bumble@#$% like my nephew (due to the make-up of my hubbys family my nephew is only 10 years younger than me). The stupid little FB goes and buys two houses in Phoenix at the height of the market and was going to “flip” one. Of course years later it’s still sitting there. He must be just about played out by now. They are going to try “staging” it now, my mother-in-law tells me. It was hard to sit there and keep my mouth shut. “MAIL IN THE KEYS! IT”S OVER!”
It will also take forever here in Maryland and NoVa - the delusion runs as strong as the Potomac River. “Everyone is rich because of DC”… right… The median “starter home” in Montgomery County, MD costs over $500,000. The median houshold income is only around $100,000. Yeah, that works. A similar 5 to 1 ratio applies across most of the state, barring the far-flung western areas and some parts of the Eastern Shore. So, housing prices basically have to be cut in half here for them to really be affordable.
Truthfully, I am losing hope that this will happen. Our extreme left-wing-nut governor will do anything to keep the game going, and I can easily imagine DC sleaze buying up all the houses to prevent them from dropping to affordable prices.
They NEED to keep us in debt and housing prices high for property taxes, and they will do everything possible to prolong the pain.
I don’t know. I was in a somewhat gentrifying area in central Maryland, and about a week ago, saw a For Sale sign in front of a house, and on it was another sign that said “SOLD IN 7 DAYS”.
I drove back by in the past few days and the for-sale sign is there, but the “Sold in 7 days” sign is gone.
I think the White-Hat, “Swoop in and pay wishing price” buyer is going to get much more scarce.
They are still playing games. Interest rates bottomed out in February. I locked into a 15-year at 4.75%. Same lender now doesn’t offer anything below 5.25% and is charging higher discount points to get that.
Low interest rates = better affordability.
Raise interest rates and that affordability gain goes away.
They are also ignoring that inflation is well above income growth rate, leaving less room in the budget for housing.
Congrats on your 4.75% at your original home price/current balance! It’ll be years before anyone is fortunate enough for that combo.
“leaving less room in the budget for housing”
Leaving enough room in the budget is the nebulous part of the equation for me. With the potential of hyperinflation in the future it’s hard to guage what exactly would be enough over a 10 or 15 year mortgage term after set asides for college funds, retirement, and medical costs.
I’ve got a little bit left on a 4.25% that I’m just going to pay out. I can make better use of the money elsewhere, especially since I’ve already paid the majority of the interest.
Ooooh, jealous. If I had liked where I was I would have definitely arranged the same. Oh well. Que sera, sera!
Good job there.
Raising interest rates would serve to accelerate the rate at which the knife falls. Falling knife home equity losses are not factored into affordability calculations, which is one of many reasons they are bogus. Think about it: Can you “afford” to own an asset whose annual drop in value exceeds your labor market income?
What I would give for a 1% raise in interest rates! This “war on savings” is killing me!
It’s funny, but “the number” for retirement is now about $10 Million….esp. if you factor in the risk of losing Social Security and Medicare because you have “too much money.” If Obama got all the means-testing he talked about passed into law, someone who retired with $4M and someone who retired with $100K of DEBT would come out just about the same:
Figure you can only safely take $100K/year MAX out of that 4M and still be able to roll enough interest back in to cover cost-of-living adjustments. Plan on not getting any SS, Medicare, etc.
Now take the person who retires with 100K of Mortgage Debt. He’ll get that debt wiped out, tax free. Get Medicare, Social Security, food stamps, and housing assistance. And inflation-protected benefits.
My back-of-the envelope show this to be about the same value.
Folks with a few million will be scrambling to hide it offshore over the next few years…..
just remember that any increase in taxes is due to the massive debt incurred over the last 7 years. Just remember that over the last 7 years those who have so much money that they can live off dividends paid 15% tax rate while middle and upper middle class people who go to work pay much higher rates. Just remember that the alternative minimum tax was not adjusted, ie tax breaks for the top 0.1% at the expense of the middle and upper middle class. Just remember that inflation kills the poor, middle class, and upper middle class who depend on earnings and are less likely to be able to move their $ overseas or into commodities. Let’s not forget that SS is indexed to BS inflation #’s and likely will have the age of eligibillity moved back as well.
I’d like to see the specific numbers on your envelope, I’m going to guess you made some wild assumptions.
The bottom line is the country is broke, even worse the country is up to it’s eyeballs in debt. Because corporate America and the elite have raped it. The debts got to get paid down somehow, what’s your plan for that or do you fall into the Dick Cheney camp of deficits don’t matter.
If they *raised* the interest rates, it would help retirees AND it would make housing much cheaper, helping working folks, too! EVERYONE wins!
Except the Pig Men who feast on the free money handed out by Triple B Rated Bubbles Ben Bernanke. So, no rate hikes - not until ZIRP has caused hyperinflation.
Responding to Reuven.
Although it’s small comfort ideologically, the person who retires with eight figures has had the lifestyle, the homes and accouterments, the travel, the relative power position and the acquiescence/sense of entitlement that goes along with that income level. (This is not to say being lower upperclass doesn’t come with its own set of travails.)
Having lived at both the very top and the very bottom (try a tipi in the Sierra snows with a cat for six months…and not by choice,) I find that either is preferable to living the staid middling class struggle engendered by today’s consumerist society.
As far as I am concerned, ANYONE who survives 72 years of post-WW2 murka deserves enough $$$ every month to hang up their hat. If that’s at the expense of those who have made comparatively huge amounts of money, well, consider it a privilege to pay their way…cause guess what? You’re gonna be just as dead as the deadbeats sooner rather than later, and it’s not going to matter to you anymore.
Relying on resentment as a motivator has its charms, but ultimately the only one it hurts is your cholesterol level. Life is not fair. There is no justice. God is just pretend. So why not Enjoy!
pax
At the same time, even some of us live-below-your-means people would prefer lower interest rates. I have over 150k in law school debt (2006 grad), and my repayment for the private portion of the loan has gone down from over 1k to now $700.
I would really prefer it stays that low for the next 2 to 3 years, so I can pay the loans off.
I graduated quite a while ago, but my rates were every thing from 5% (about 3K in Pells) to about 9%. I was $70K in debt which was about $10K less than the top NYC law firms paid first year associates at the time. Now those same firms are paying about $160K. I don’t know if you have one of those jobs. I did, and I paid off those student loans in less than 3 years. It wasn’t fun, but it was doable. I wish you all the best luck in the world doing the same.
Maybe post-moderns with high end jobs and high end college debt should pray for more inflation (real inflation, e.g.: wage inflation.)
Given that 75% or so (?) of the congress is lawyers, we should be OK there…
polly:
yeah; big-law jobs aren’t fun but I have to take them. I guess it’s a nice way firms and law schools operate - school charges you through the nose and the only way to pay them back is by working at big-law. Without this debt, even at 170k (2nd year associate now) a lot of people would NOT do this job.
170k sounds like a lot, but after you take out rent and student debt (on an accelerated schedule) there is literally NOTHING left (will get better once SS maxes out in July). In fact, my partner and I will move in with a friend who is also making 170k a year now at a big law firm in order to save rent money so we can service debt faster. Sometimes the three of us look at each other and wonder: collectively we make almost half a million a year; why is that we have to live with others in order to save money?
You know the answer, that nasty four letter word: DEBT.
Where does it come from? When I went to school, you didn’t need gigantic student loans. I had none. My husband had none.
Easy access to student loans, and a gradual lengthening out of the educational pipeline.
Once again, people are comparing by howmuchamonth rather than what it costs them in real terms.
If you’re really curious, I have quite a few more thoughts on that (based on data + experience.)
I finished law school in 2005, but did it completely debt free by going to SCU at night while working full time in the Silly Valley. There are several senior associates at my firm who are still paying off student loans. The fulltime work + night school + heinous commute from the east bay meant I was a zombie for the first year or so of law school (after that, I figured out that actually reading 500 pages of decisions, etc. each week was way less productive than doing a quick skim and paying attention in class), but IMO it was a winning trade compared to the alternative of being in debt up to my eyeballs for the foreseeable future.
Pussycat, please share with us your wisedom.
Law schools are pretty expesnive nowadays - about $50k a year; $64 if you go to Columbia or NYC becuase “it’s NYC.”
Because of the school I went to, I can get the 160k first year job even if I were the last person in my class. So eventually the education will pay off. But sometimes I do wonder why people pay the same money to go to places like Brooklyn or Widner. Their chance of ending up in good paying jobs is not that good, but they have the same debt I do.
“why is that we have to live with others in order to save money?”
But that’s only for 2-3 years and then you are debt free w/that $170k (and probably more at that point) salary. Makes me feel like a dumba** for allowing those big loans to scare me. I guess that’s a strong “debt is good” story.
Bingo.
I dunno if I have any “wisdom” and the answer is totally different depending on whether you go to law school/med school v. engineering and the sciences. Different careers, different rules.
I’d argue that for many people going to a top law school is a calculated bet.
Why? I actually know people who hate law inspite of having graduated from the tippy-top law schools.
First, they took the jobs to “pay off the loans”. Then, they got stuck in a “lifestyle”, and had no other skills that would allow them to “get out”.
If you enjoy what you do, great. If not, it’s a really bad trade with severe consequences attached. Of course, not everyone looks at it that way when they first get into it.
You’re right pussycat. I always watched with bewilderment junior and midlevel associates buy NYC condos. They’re taking on a mortgage with the assumption that their income wouldn’t go down significantly over that period of time. Given that a good run at big-law is about 3 to 5 years, and that only 5% of the incoming associates will even be considered for partners, I don’t understand why they don’t feel more nervous about job security.
Most Wall St. assignments are roughly the same length, and for the majority, it’s a one-time gig. Unlike law, there is no future in finance for these folk.
It’s borderline mysterious how these people delude themselves with committing to a payment for 30 years.
The mind just boggles.
You wonder how much cheaper college would be if there wasn’t E-Z financing for student loans….
We are in the process of refi (with the daughter) the daughters row house in Baltimore. 30 yr 5/1 at 5.5%..she is just starting her MD intern/residency and then moving on. Anyway the strange part is that the 5.5% was an interest only loan. If with principal the rate would have been 5.75%, and this is with a major national bank. The LTV is 74% so no pmi.
I’m guessing the reason the I/O loan is lower is because you got an adjustable-rate mortgage.
Sure the first 5 years might be fixed, but once you get past that, the amortization kicks in AND the interest rates will likely go higher at the same time.
Wonder why your daughter got a 5/1 ARM when rates are at historic lows? Understanding that she wants to sell (presumably within 5 years) but what if prices are even lower then, and the only equity in the house is whatever remains of the downpayment?
Sorry my post wasn’t clearer.
When looking at things from the lender’s perspective, the lender wants adjustable-rate mortgages when rates are low. That’s because rates will likely increase on their investment as time goes on. They do not want to be stuck with 30 years of low rates.
With an ARM, the borrower takes the risk of higher rates. With a fixed-rate mortgage, it’s the lender who takes the risk.
Personally, I would always get a FRM when rates are low, no matter what the intention is WRT selling “in the future.”
Hope you can change it if it’s not too late…or that your daughter is comfortable renting it out (positive cash flow) or selling at a loss.
Even if the homes were affordable, doesn’t mean the skilled/ formally educated person makes enough to buy When it was affordable. Case in point, had some neighbors who were pilots for Skywest. 6 shared a house. None of them made enough money to even rent alone much less buy a home when the home prices were in the gutter here in the 94-98 yrs. And they were so low then. It all depends. Depends on alot of things.
And a skill or education isn’t the key factor.
I may be misreading, but are you saying your knew a bunch of people who were pilots and they couldn’t afford to rent a place to live?
At last, a MSM commentator who understands the upside to lower home prices…
OPINION
The Fed and the Mortgage ‘Crisis’
By WILLIAM M. ISAAC
May 22, 2008
…
When the headlines are not focused on the “banking crisis,” they are fixated on the dramatic decline in home prices – more than 20% from peak levels in some major markets. At the risk of being politically incorrect, I’m not sure why we are upset about a 20%-off sale in housing.
After years of double-digit increases, housing prices in the city in which I live, Sarasota, Fla., jumped an astonishing 35% in 2005 – an unsustainable rate of increase that was pushing housing prices beyond the reach of far too many people. We really needed our housing markets to cool down quite substantially.
Millions of people – particularly the young – will benefit from a significant reduction in housing prices. While those who purchased homes in the past couple of years are unhappy if their investment is under water, the housing markets will be back for those who are able to hang on – with help from their lenders where appropriate. Congress’s $300 billion “rescue” plan notwithstanding, the good news is that we have a lot of housing stock at more affordable prices for our growing population.
Which growing population is that? Without illegal aliens and spawn, would it still be “growing”?
it’s peaking dude
The economy’s in trouble, but home affordability is at its peak. Learn how to find the house of your dreams for a song.
So we’re back to 2004 prices. Call me when we’re at 1999.
ring… Ring… If you’re interested in Michigan we are back to late 90’s prices.
Nahh… The northeast is following Michigan….. right off the cliff. I’d rather stick it out here and enjoy all the wailing and gnashing of teeth by RealTurds, FB’s and knife catchers. Hehhehh…. These dopes are going to have to work for their retirement like the rest of us.
Consumers can’t save the economy.
“Consumers had the lowest percentage of unspent cash in the first quarter of 2008 since fall 1991, the report found.”
Yikes. I also love that the article said that corporations would have to save the economy. Banks aren’t all that eager to lend to corporations these days either. Corps can get money elsewhere, but those folks tend to want stuff other than mere interest in return - like an equity stake in the business or lots of revenue generating assets - and they are driving hard bargains these days.
A corporation’s job isn’t to “save” the economy. It’s to make money for its shareholders.
So what exactly does the writer recommend? Corporations borrow cash, and hand it out like candy to their employees during a recession?
What kinda morons write these articles anyway?
Morons who have never been out of a job.
“A corporation’s job isn’t to “save” the economy”.
Although at first glance that’s absolutely true, doesn’t it make sense to remember Henry Ford?
From Wikipedia:
“Henry Ford was a pioneer of “welfare capitalism” designed to improve the lot of his workers and especially to reduce the heavy turnover that had many departments hiring 300 men per year to fill 100 slots. Efficiency meant hiring and keeping the best workers.
On January 5, 1914, Ford announced his $5-per-day program. The revolutionary program called for a raise in minimum daily pay from $2.34 to $5 for qualifying workers. It also set a new, reduced workweek, although the details vary in different accounts. Ford and Crowther in 1922 described it as six 8-hour days, giving a 48-hour week,[14] while in 1926 they described it as five 8-hour days, giving a 40-hour week.[15] (Apparently the program started with Saturdays as workdays and sometime later made them days off.) Ford says that with this voluntary change, labor turnover in his plants went from huge to so small that he stopped bothering to measure it.[16]
Ford had been criticized by other industrialists and by Wall Street for starting the 40-hour work week and a minimum wage. He proved, however, that paying people more would enable Ford workers to afford the cars they were producing and therefore be good for the economy. Ford explained the change in part of the “Wages” chapter of My Life and Work.[17] He labeled the increased compensation as profit-sharing rather than wages.”
*******
Perhaps it is in a corporation’s best interest to “save” their market.
“Efficiency meant hiring and keeping the best workers.”
And now we have unions setting the standards of efficiency. If unions followed the same model of keeping the best workers, do you suppose companies would still be moving work to Mexico.
In the early 1900’s, it was a chore to get people to buy discretionary items, such as an automobile. Our economy has been living on borrowed time, for twenty years. Pardon the pun.
Not all unions are bad, not all unions are against the co’s.
K, Just like anywhere else in any field, even in Mgmnt,K, there are deadbeats. Um, Enron, etc, and in todays corps as well. Some mgmnt do bad things, hence the need for unions to rightly protect from illegal doings. Just as in any field, there are a small % that should be gotten rid of, but I don’t really hear from you that corp should be cleaned out either???
I wonder what the work environment would be like if all were in a position to negotiate their respective position.
When individuals are debt-free, unencumbered and unaffected, they can work as conditions are favorable or walk when they are unacceptable.
When you don’t need your employer you hold the keys.
Corporations hypothetically could “save the economy” by spending more on things like infrastructure, employees, etc. (i.e. expenses). They could do so by digging into their own cash assets, sacrificing their liquidity.
Two problems though:
- Where do corporations get their money? That’s right - from consumers. If consumers are strapping down, that means corporations are getting less revenue. Any reasonable corporation that sees revenue slowing will be inclined to *cut* expenses, not increase them.
- Even if corporations were to dig into their assets to increase expenses - where are such assets? Typically they’re in investments. Reducing such assets means reducing investments - thus driving down the stock market. Not exactly good for the economy either.
Several reports recently about the PEMEX-ification of the oil producing industry with many state owned “companies” following Mexico’s into decline due to lack of reinvestment. 40% of the state income coming from PEMEX, so nothing going back into the plants to keep the income coming (for a while.) The income is starting to drop, so now what? Fiddling while the oil burns.
So we know that the 100% of profits to the owners plan doesn’t work. Wonder how the X% to the executives and the rest to the owners plan is working out for other industries?
A corporation’s job isn’t to “save” the economy. It’s to make money for its shareholders.
It isn’t consumers’ “job” either; the point is that we’ve had a massive redistribution of wealth over the past 40+ years, and corporations are the only ones that have the resources to save the economy. Either they do it, or they won’t be making money for their shareholders for much longer.
Amazing how they (Corporations) just don’t seem to get it. They layoff left and right and those employees left are squeezed. Yet the employees (AKA “consumers”) are expected to perform feats of magic and spend more than they earn into perpetuity. Like Krusty the Clown would say: “It ain’t gonna happen kid”
People seem to have forgotten that the magic of trickle-down economics was supposed to save us all. Now that all the wealth has trickled up, we’re reminded that it isn’t anyone’s “job” to save our economic system. Amazing.
People seem to have forgotten that the magic of trickle-down economics was supposed to save us all.
Oh yeah, the Ol’ Trickle Down Enrichment Process — or as George HW Bush famously called it (before he bought in), voodoo economics.
It does not, in fact, appear to have saved us.
Who knew?
Geez wiz….. let’s see. “Consumers” don’t have cash. Where did it go? Hmmmm…. So it is the corporate slime that has all the money.
Is it really that difficult to see?
“Geez wiz….. let’s see. “Consumers” don’t have cash. Where did it go? Hmmmm…. So it is the corporate slime that has all the money.
Is it really that difficult to see?”
No, unless you have not been given the eyes to see.
Um, just who are the corporations supposed to sell their extra production to anyway, if they do spend to expand capacity? Obviously not the American consumer. The rest of the world? Take a trip to Europe or Asia and try to spot something made in the USA, other than perhaps the airplane you flew in.
Maybe they should try to sell all those Suburbans and Expeditions in India!
Kidding aside, you won’t find any American made consumer goods overseas for one good reason: they don’t exist! The crap is made in China and the good stuff is made in Japan, Korea and Europe.
Well, maybe this series of crises will wake up the nation and we’ll all learn to live less large and start making quality stuff and being innovative in unexpected ways…
Necessity being the mother of invention and all that.
I do know that I try hard to save and get really frustrated by the crap interest rates.
Still, I wonder how we’ll pay down the debt, balance the budget AND still have all the shiny new giveaways the candidates, especially Obama and Hillary (and I rather like Hillary!) are promising. Seems to me ending the war helps stop one major expense, but that doesn’t create wads of cash to do all the rest that’s being promised, much less address the deficit.
I think I better start work on that bunker since the Empire done gone bye-bye.
In January, I flew from Nairobi to Dubai on a Kenya Airways flight that was going on to Guangzhou China from Dubai. The man sitting next to me was a Northern Nigerian Muslim businessman, on his way to Guangzhou. We had a nice chat. Other than a handful of Westerners returning to the Gulf after holidays in Africa, almost all the passengers were businessmen, not just from Kenya but from all over Africa, on their way to Guangzhou for trade purposes.
Guangzhou is where you can buy goods, machinery, or whole factories (tailored for your needs in your country, Chinese-built, equipped with Chinese labor if you want).
Africa is now flooded with Chinese stuff. The US is irrelevant there (except perhaps for valued missionary social services). It makes me sad.
The US trade policy with Africa has been tied to political beliefs. China does not give a rat’s ass about political beliefs in other countries. China cares about its survival.
For China to survive, they must create 10MM new jobs every year. They need raw materials from Africa, Africa will buy from countries that do not exert or try to exert political pressure. If China makes it, African nations prefer to buy from China.
The US has been left standing at the gates in Africa and South America.
Thanks, hoz, for stating the obvious.
A few years ago, the US ambassador complained to the Indian ministry about the Iran gas pipeline deal they had going, the ambassador bluntly told him (and I paraphrase), “We deal with countries with a wide range of political beliefs. At the end of the day, we have to do what is best in the interest of our people.”
It was widely reported too. That was a public smackdown.
As Kissinger once said, “There are no permanent alliances, only permanent national interests.”
I’m pretty sure Ford and Opel/Vauxhall (GM) are the biggest car companies in Europe, not to mention Volvo and Saab which are american owned. Buick is huge in China and Daewoo is owned by GM, and Mazda owned by Ford. I really prefer GM and Ford’s european/asian products but unfortunately we don’t usually get most of them over here (well GM gives us Opels badged as Saturn, and the Daewoo Aveo so that is a start - I’d love a 30mpg euro Ranger with a small diesel but ford won’t make it happen).
Also pretty much all desktop and laptop computers are American, as are most of the movies, TV and software.
I think its quite wrong to say we don’t make stuff - these days its more things like software and algorithms but even our auto industry is healthy outside of this country where they don’t have terrible unions and a bad reputation (which is largely undeserved in my opionion - I can name a dozen or so cars I know of with over 200k miles and only 1 is not a GM (its a 4runner))
“Americans simply can’t sustain a near-zero savings rate and an ever-growing debt load.” Why not? The gubmint has being sustaining itself for years with this strategy.
The gubm’nt can legally print and create money. As can the banks, through our wonderful and fraudulent fractional reserve banking system. If you try it, they put you in jail for counterfeiting.
Kinda like the lottery. before they legalized it you could go to your local coffee shop etc and play the numbers game. They paid off winners at 90c on the dollar. Since the gubmint got involved you get 50c on the dollar (if lucky). You all know where the bulk of that money gets lost.
“fraudulent fractional reserve banking system”—also referred to in some circles as “legalized counterfeiting’.
Another magic trick is “legalized extortion”, you know, “insurance”.
The ” Misery Index” article at the bottom of the above.
http://money.cnn.com/2008/05/13/news/economy/misery/index.htm?postversion=2008051410
In a nutshell: After a credit-bubble, there’s nowhere left to go. Consumers have already spent the money they don’t have.
RE: The Misery Index hasn’t even begun.
$57.3 trillion in Federal entitlement debts due and $12.00 per gallon gaz.
Gotta hand it to the Wall STreet gangsters. They saw it all coming and made the decision to loot the system before it all collapses.
Got guns?
http://www.businessandmedia.org/articles/2008/20080521145247.aspx
you keep on harping that 57.3 trillion debt. where did you get that number?
I recall that it was published by the GAO, if I am not mistaken.
nothing worse then paying for crap you no longer use or even have
Ha ha - I think of people who take out HELOC money for a big vacation, or put it on a credit card that doesn’t get paid off - that two weeks in Hawaii or Europe might have been great - but to be paying it off for months or years after the fact would drive me nuts.
A majority of people probably pay cash for a vacation - but I’ll bet it’s not an overwhelming majority. And if I’m wrong - then we’re worse off than I thought. And so is the tourism industry.
Well, the domestic tourism industry does have an influx of Europeans and Asians to look forward to.
Will they offset the debt-ridden Americans? I dunno. But with a weak dollar, it’s not a zero-sum game.
I’ll save the economy!
Can someone help me iron on this big “S”?
Sure, Ernest. And bring your wallet that says “Badass Motherfcker” on it!
Hey Ernest. I thought you were me….or I was you…errrr..
nevermind.
I’m hiding my super credit rating in the fortress of solitide (rented), where the condo salesmen can’t find it. (Filled out one of those “win the sportscar” deals at the town faire last weekend…)
When occasionally i’d go to Kaiser for something medical related, and they asked if I was allergic to anything, i’d always rather meekly say “kryptonite”, and the younger ones would always start entering it into the computer…
And the stupidity/lack of humor/knowledge of anything non Am Idol etc goes on..
kryptonite..hehehe-good one.
i’m young myself (28 - i hope that is still young) and i’m not surprised. i work with a bunch of smart people my age but when i’m not at work and i interact with others in my generation i’m blown away by the ignorance and complete lack of common sense - not true of all but a large chunk.
Hope Fortress of Solitude protects you against condo salesmen, Matt. Talking to one of them (or condo developers) must be like a trip to Bizarro World.
You know it’s going to be bad when the first words of the call are “This isn’t a time share deal, no siree!”
Oh no! What are they trying to sell you? Downtown high-rise? Transit corridor VMU? Neighborhood duplex or townhouse things? Or just anything they can possibly unload?
I answered at work because I was wondering who was calling me from New Orleans area code 504.
Had to cut her short saying I was working for actual money and couldn’t take anymore time for the call now. Too polite? My wife grits her teeth everytime I say something like, “Sorry, we can’t help you tonight.”, feeling that phrasing holds out undue hope for them, causing them to just call again later.
Too polite. I always figure that I didn’t ask them [solicitors] to phone me or knock on my door, my house is the one place on earth where I am (largely) in control of who I encounter, and I really value my freedom to work, cook, read, listen to radio, daydream - more or less thinking about what I choose to. It’s not so much a matter of my time I’m concerned about as the privacy of my consciousness.
And as far as they are concerned, they need to move on to their next call or door knock; I won’t waste their time.
I try not to be rude or nasty, just keep it as short as possible. My husband takes a kinder tone, and he ends up spending more time dealing with people that he doesn’t want to.
JP Morgan swaps…
http://www.bloomberg.com/apps/news?pid=20601109&sid=aF_f8gLLNvn0&refer=news
This one is long and complicated but well worth reading. You know, there is a reason that you can sometimes get a very slightly better rate on a floating rate bond and an interest rate swap than you can get for the fixed rate bond itself. There is additional risk in that transaction - in this case the risk was with the bond insurer - and you ain’t hedging that. If counties and municipalities start going bankrupt in any kind of serious numbers, the party is OVER.
RE: If counties and municipalities start going bankrupt in any kind of serious numbers, the party is OVER.
Here in Mazzland, Prop 2 1/2 overrides, to funded bloated school budgets, are being passed left and right, with the Greatest Gen crowd being the bagholders for the property tax increases to support the increased funding.
However, once the GG crowed die off and the heirs sell off and clear outta Dodge, these communites will be headed right for the bankruptcy cliff.
Newton, MA is planning on building a $197 million high school.
http://www.boston.com/news/local/articles/2008/05/22/big_ticket_schools_prompt_a_scolding/
Our district really binged on rebuilding the elementary schools, except for the one we use. They were planning too, but apparently ran out of money — whoops.
“There is additional risk in that transaction - in this case the risk was with the bond insurer - and you ain’t hedging that.”
The term for a swap hedging such risk is a “cost of funds swap.” The swap provider pays the rate due on securities. Of course this is much more expensive, and hard to get if the credit/liquidity provider is not also the swap provider. Ive worked on a few, but mainly munis go with the % of LIBOR interest rate swap because it results in the lowest fixed rate because the muni assumes basis risk arising from changes in the tax law. Not saying it’s right, but just like J6P munis normally go for the lowest rate and to hell with the risk.
Also the credit risk with respect to the credit/liquidity provider would also exist in a variable rate deal without a swap. I do understand, however, the view the munis should not enter into variable rate debt.
Interesting, Tim. I didn’t know about cost of funds swaps. I assume that the bankers didn’t offer those to the county in question because it wouldn’t have shown the kind of savings they could show them with just an interest rate swap.
I know that the problems with the insurers is fairly recent (at least for this go around), but do you know when was the last time this issue came up for munis? Were they always insured? The general line is that munis are pretty safe and the insurance is just an extra layer of security. If munis are so safe, why the insurance? Is it just because trying to figure out the safety of a debt by a municipality that can vastly reduce its income stream by a local vote is too hard or too conditional on taxpayer sentiment?
I don’t get why the local officials thought that they could get a more complex instrument, pay huge fees, still have the same risk as fixed rate debt and save money. My dad always told me you get paid for skills and taking risks and that is it. If you aren’t bringing work or risk to the table, you aren’t going to get paid. Then he sent me out into the yard with a paper bag and a weed digging tool. I only got paid for dandelions that had their entire root systems intact. Not very lucrative, but I had to help with the yard work anyway. And I pulled a LOT more dandelions than I got paid for.
Unless the muni is highly rated based on its own credit, they need credit enhancement/liquidity to market floaters. Also, they are usually subject to weekly tender, and need to make sure there are available monies to pay the tender price. In addition, many bonds are based on pledged revenue streams, and thus, the applicable credit is the credit of the pledged revenue. I have never seen downgrades of insurers before across the board.
There are two components for the lower rate, the increased risk, and the ability to sell floaters (which the market often prefers while hedging interest rate risk). The first part really is just risk assumption, the second is market efficiency optimization.
Thanks, Tim. Clear and informative, as always.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_weil&sid=aLklP1rkra7w
How long does the word “temporary” mean? The accountant who wants to stay employed knows the right answer: “How long do you want it to mean?”
That new twist on an old joke goes a long way toward explaining Freddie Mac’s net loss last quarter of $151 million, which was smaller than analysts’ estimates. In reality, Freddie is gushing much more red ink than that. Yet hardly any of it is showing up on the company’s income statement.
That’s mainly because the government-chartered mortgage financier has deemed $32.4 billion of paper losses from mortgage- related securities as “temporary.” Freddie’s big sister, Fannie Mae, is in a similar, though less extreme, position with $9.3 billion of such losses.
and FRE is the more stable loan dealer
wow
these places are the ultimate in GOV “HELP”
Another oil record. What’s it going to do today?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDneiOlNhmkQ&refer=home
Maybe we aren’t allowed to ask the right “question”
“As detailed in an earlier article, a conservative calculation is that at least 60% of today’s $128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. US margin rules of the government’s Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. At today’s price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population. “
That last sentence says it all. Of course, I really don’t feeling like riling up any peak oilers this morning. Yesterday’s bits was a little much. Don’t worry fellas, we’re run of oil…sooner (or later)…happy?
Where does that quote come from?
Obviously the author has no friggin idea of commodities trading. There are just as many speculators that think the oil market is going down. Commodities are a zero sum opportunity. At some point expiration happens and if it is a bubble the longs will have to get out or take delivery. In the silver bubble the price of silver dropped from $45 to $10 in 7 trading days.
It’s very tempting, isn’t it.
Not for this old fart. Tempting is to Short financial stocks and short SKF, take the moneys and invest in 6 month zero coupon Brazil notes and watch the market whipsaw, picking up 2% on the SKF deterioration and maybe another 10% on volatility moves, net return after 6 months 28%. Sharp Ratio 1.25
I’ve got a short SKF from 112.50 this a.m. Only giving it 55c though before I stop out
OK, Hoz, you just convinced me — gotta read up on this Sharp ratio thingee…
“There are just as many speculators that think the oil market is going down. ”
If that were true - would the price not be flat? The fact that it keeps going up to me indicates that more speculators think the market will continue up - at least in the short term.
Or perhaps if not more actual speculators - at least more volume of speculation (speculators * money speculated for each).
In other words - price changes are driven by imbalance in expectations of the investors (speculators).
If it were that easy to push up oil prices by trading futures OPEC would have been doing it for decades.
Use your head.
“In other words - price changes are driven by imbalance in expectations of the investors (speculators).”
Speculators are 25% of the NY Merc’s oil trading; the buying is Airlines, refiners, trucking and any users of large quantities of oil. Sellers are OPEC, The oil companies and speculators. The demand has not fallen yet, Mr. Lutz believes US demand will drop at $6/gal and demand will not fall significantly before that price point.
I’ve got a long position (15 gallons) with stops @ around 6.
Pardon the lame question, but this fast an increase in such a short time (from $90 to now) means it’s got to be speculator-driven, doesn’t it? I can’t think of anything else going on this year that would have such an effect on supply or demand.
What am I missing? I ask because the questions put to the oil execs yesterday seem so lame, especially Durbin’s, although I know the companies get lots of tax breaks.
I think you’re missing the drop in the value of the $$$ + speculation.
I guess if a stock goes up 500% in 2 years and trades with a PE of 150, it is not in a bubble because Mr. Cramer puts a buy on it and says its safe, but if it is a commodity that is up 50% based on demand, its a bubble.
Here is what you are probably missing:
http://bp2.blogger.com/_Vo6z5fxMMqs/SB-fTKCxz7I/AAAAAAAAANk/EZyX_azRFZo/s1600-h/oilmarket.JPG
Once demand exceeds supply, prices don’t rise in a linear or logical fashion.
Consider the last beer at a party of alcoholics. Now, the normal cost of a beer may be three or four bucks. Maybe as the supply gets low you can raise the price. But the last few beers? Say you’ve got a six pack and ten drunks who need another? The sky is the limit.
Perhaps more speculators have become aware of http://theoildrum.com. Now they are on the bandwagon and there are more of them betting everything they have on oil getting extremely precious very soon. I know some of you refuse to even go to that URL. Some of you dismiss peak oil without studying what the peak oilers are saying and how they are backing up their statements. I call that fear. If I was in a mean mood, I’d call it stupidity! LOL.
Here is the link to the quote:
http://www.financialsense.com/editorials/engdahl/2008/0521.html
Possible double post to NotinMontana:
http://www.financialsense.com/editorials/engdahl/2008/0521.html
it is NOT the hedgies / speculators, it is HeliBen and his friends that is providing the easy money for all this speculation. The hedgies are just doing their job in the markets, taking advantage of the opportunities that the FED is handing them on a silver platter.
“The hedgies are just doing their job in the markets, taking advantage of the opportunities that the FED is handing them on a silver platter.”
Well, since chewable easy to swallow home equity money have been vomited from their mouths, they are now trying to recover nutrition by devouring on black liquids…which will effect not just FB’s but EVERYBODY…Wall Street eats while looking at a nation losing flesh…Anybody sense the “Anger index” beginning to rise?
there is still unlimited amounts of home equity and other easy money available outside the US (e.g. from the ECB). Don’t assume that the credit spigot has been turned off just because US home prices are plunging …
Well - ? then it IS the speculators/hedgies, fueled by EZ money, yes?
i think the easy money that heliben provides is just a small fraction of this. it is more like the accumulated wealth from tax cut over the years and freed up capital *dislodged* by the sovereign funds. i read before that the tax cut in the early 2001-2002 was adding something like 200B+ per year to the wealthy in US and that the sovereign funds/foreign reserves had amass about 4 trillion. even if the losses to the current crisis is say already 1trillion there are still about 4trillion+ floating around. how much oil is consumed daily? say 90mbb x 150. about 12-14 billion dollars only per day. just do that math, with say, 10% of that capital floating around used for oil speculation.
Watching it closely. DUG (ultra oil short) put in a bullish hammer yesterday on heavy volume, but looks like it will get tested today. Markets are deviant, that’s all I know. More fortunes are going to be lost trying to short this oil market than will be made on the long side.
I’m watching DBA (agriculture ETF) because it takes 10 calories of fossil fuel energy to produce one calorie of food energy for our consumption.
There’s my horse. Thank you!
Mega Bubble in OIL!
I’m dumping my oil position soon………………
Fundanmentals have taken a back seat, and we have hit ludicris mode, headed to plaid!
I’ve been slowly adding to my relatively small short position for the past week. It’s about time for Colonel Sanders to pull the emergency stop lever and send Dark Helmet flying helmet-first into the bulkhead.
In a partial 26.95
I knew there was an ETF like that. I just can’t keep up with all of them.
Anyone think oil is going to test $150 before it implodes? Is it a pure momentum play at this point?
Neither can I. I added this article to my favorites list and refer to it. At the bottom of this article is a pretty good list of commodity related ETFs.
Commodity ETF List
http://finviz.com/map.ashx?t=etf
ETF map of the world scroll click expand - whee and its fun and constantly updated.
Very cool. Thanks Hoz!!!
From Yahoo news:
“Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week’s earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.”
I hear things are getting so desperate, the Chinese signed Vin to a 5 film deal.
UBS selling shares at a 31% discount to raise cash.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aK19_vvo0XqQ&refer=home
This is all part of the Bernanke-program where he urged “financial institutions to remain proactive in their capital-raising efforts.”
AKA issue more debt or dilute the shareholder’s equity.
Who wants an extra serving of SKF with that?
Sounds like a timeshare racket to me.
The dirty wash from the Jefferson County Sewer problem. SEC investigation underway.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aF_f8gLLNvn0&refer=home
Its just my opinion, but based on my experiences, new/modern houses are much less forgiving of lack of maitainence than older houses.
By the time damage is observed in a new house, the items needs replacement because it cannot be repaired.
The wood turns to sugar.
Be advised.
Friend of mine in construction industry for a long time calls residential construction in the US today: “Modern American $h!t Construction” and recommends a purchase of a home from the late 80’s early 90’s at the latest. All the bubble construction is cr@p due to cheap materials, cheap labor etc.
He no longer does residential construction, but instead focuses on highway/Airport sub-contractor work.
He says none of the national builders’ product are worth a $h!t and that you should focus on small local builders, retain your own building inspector who will monitor construction, confirm that they do not use illegal immigrant/cheap labor (they do not pass labor cost savings on to you, just their shoddy work product) etc.
I would add to that observation. Older, turn of the century row houses and single family, solid masonry structures, provided they have been well maintained and retrofitted, are also good. As an architect with a LOT of experience with turn of the century and older construction I can attest to the fact that ‘they just dont build em like they used to’.
ALL of the crap built within the last 25 years WONT last the next 25. Suburban sprawl is thus largely ’self correcting’ in that respect but it will be an ugly and painfull process before the land heals itself.
Just be aware that “turn of the century” house doesn’t mean what it used to
You need to qualify that now!
From someone who owned an 1890 house - I can vouch for what you say. That house was solid as a rock. In many cases when I wanted to install a new stud - I couldn’t use 16c nails - because they would bend when I tried to hammer them into the old hardwood studs! (true 2×4) So I had to use screws - and pre-drill at that. The redwood siding was incredible as well.
I now own a 1997 vinyl siding house. While it’s a lot nicer house in many respects - the general quality of materials isn’t nearly as good. I thought I could live with vinyl siding - never again though. I’d rather go through the pain of painting every few years and have wood siding, or else brick.
That all being said - there are a lot of things that have improved over the years - like electrical and plumbing. That’s really been due to improvements in technology though, not improvements in building quality. One area though that has generally improved is foundations - over time the industry has gotten better at understanding how foundations are affected by drainage and soil types and such.
I hear ya! My house was built in 1910, genuine 2×4’s and 1″ think shiplap siding. Seasoned yellow pine, its as hard as oak.
The exterior was stucco’d in the 60’s and its solid as a rock. When I bought it the rood needed replacing and some of the trim work was pretty rotted but I knew it was basically sound and I have never regretted it.
I replaced all of the windows with Pella double glazed low-e double hungs that look almost exactly the same as the original windows. All of the systems have been replaced, new 200amp service (the original wiring was truely frightening) new copper plumbing (I dont trust PVC) and a new multi-zone central air system (two stage high efficiency heat pump with gas back up). I did my ‘homework’ on this project and called on a lot of my professional connections in the A&E biz (such as getting the windows at cost). I couldn’t be hapier with how it all turned out and you couldnt pay me to live in a ‘modern’ house.
RE: Friend of mine in construction industry for a long time calls residential construction in the US today: “Modern American $h!t Construction”
Honest and legit appraiser’s were calling BS on this crap construction with FAIR construction quality ratings and REMAINING ECONOMIC LIFES of less than 30 years back in the late ’80’s.
However, a FAIR rating and REL of lesser than the mortgage
period spelled NO SALE of the note to the GSE’s.
The originator would then beat up on the underwriter to get another appraisal drafted by another source more accommodative to the lender’s NEEDS.
Then the credible appraisal source was subsequently removed and replaced by the newbie liars and data reporting fudgers.
WE DON”T NEED NO STINKING HONEST APPRAISAL! YOU TELL THEM TO CHECK ALL THE BOXES AS AVERAGE!
No disagreement with your assertions, but older homes aren’t insulated worth a crap and cost more to heat and cool.
Well, at least more per sq. ft. Now, if you’re comparing a “typical” older home of 1500 sq. ft. with today’s “typcial” home of 4000 sq. ft. perhaps all that less space makes up for the thermal inefficiencies. And there’s things you can do at the margin to seal up older homes, replace window$$$, etc. But it can be really difficult to increase the R-Values of walls, and next to impossible to insulate the perimeter of the foundation after the fact.
I plan on building my own at some point because building homes to really take advantage of natural heating and cooling is still almost an “exotic” practice. Sigh.
I’ve wondered what it would take to put 2×4s, insulation, and a vapor barrier, and wallboard to interior side of the exterior walls of my 1950 masonry wall house.
If your wall is masonry and nothing more, then you would want a good 3-4 inches of insulation and you would need the wall.
If there’s existing framing, in a lot of cases, a simple 1″ of extruded polystyrene would make a major improvement, without additional structural reinforcement. Wood is a good but not perfect insulator, and provides a thermal bridge for heat transfer. Less insulation without the thermal bridges winds up with the same equivalent overall R-value.
The big problem I see with those kind of retrofits is all the trim and mouling issues around floors, windows, and doors. I’d like to see the home improvement industry address this challenge, it will be needed.
You can also screw styroform insulation (the stuff that they put on the outside) onto the interior of the exterior wall, depending what your interior wall was constructed of, and then put gyp boad onto that. Can you sacrefice the 4″ of floor space. Electric needs to be extended, window trim to redo. I can’t do on my small house because of small space and heating vents make it a pain.
Jim,
Use core fill insulation. 2×4’s don’t need to be rated. Just use a reputable core fill contractor as the only thing holding it back the foam is 5/8″ gyp board. I believe you’ll see a dramatic difference.
Since the existing plaster in my house was for the most part pretty badly deteriorated I bit the bullit and tore it all out which allowed me to put a full 4 inches of EPS foam in the walls. R30 at a minimim! Yeah Baby! My utility bills are less than 1/4 of what they were when I bought the place.
However, demolishing and hauling away plaster and lath is a BITCH and I would NEVER to it myself EVER again.
Yep. Corefill is beautiful stuff.
Shoe, great book called “Little House on a Small Planet.” You won’t learn anything about energy efficiency, but it has some interesting ideas. Amazon. Shay Salomon.
Rained a bunch last night, downright chilly. Colo. got snow.
Lost, thanks for the lead, it’s on my wish list for next order. I like the choice of topics. Small is always more energy efficient and easier to heat.
Got down to freezing last night. All the peppers and tomatos are covered. Snowflakes. If global warming doesn’t hit here pretty soon I’m moving to Tucson.
looks good
Hate to break the news to you, but it’s cool and rainy here in Tucson.
I’m hoping to find a house from the 80s-90s when we buy again in the next 3-5 years. Depends on the home, but some of the 80s homes just have nice practical and homey designs. Seems like the majority of the new McMansions are “Tuscan style,” and most I’ve seen look cold sterile and gaudy, with ceilings that are too high, and starcases and kitchens that are too grand. They’re not tastefully grand, and they’re not tastefully Tuscan. They’re like white trash trying to be classy.
the love children of Faux Tudor and Terrible Tuscany
I bet you don’t like Britany Spears either.
not surprising considering the shoddy materials and shoddy labor used to build most of these new mccrapshacks
I guess only Germany still has high quality contruction, thanks to the lack of a housing bubble.
My brother in law is a general contractor and had the same observation…
The illegals from the day labor site day puts up 2×4s covered with chicken wire, stuccoed and it’s sold for 400K.
Just garbage.
On the bad side, I just finished looking at the rapairs needed on the outside of my chimney from water damage. Bad flashing or caulking or something at the roof probably. And likely my not cleaning gutters religiously.
On the good side, I think we finally found a family of competant and fair repair people worth their weight in oil. They are going to finish up Sunday to do the extra work for the damage they uncovered.
http://www.news-press.com/apps/pbcs.dll/article?AID=/20080522/NEWS01/805220359/1075&referrer=FRONTPAGECAROUSEL
————————————————
May 22, 2008
Southwest Florida: Garage sale economy
By MARY WOZNIAK
mwozniak@news-press.com
Garage sales have morphed in Southwest Florida from a means to purge the flotsam and jetsam in people’s lives to simply helping them survive.
A plunging economy, soaring gas prices, the highest unemployment rate in 15 years and skyrocketing foreclosures are forcing Southwest Florida residents to hold garage sales not to downsize or de-clutter, but to make ends meet.
People being foreclosed upon are moving out of state and lightening the load by selling possessions. Real estate and personal property auctions of household items also are rising.–>
Brandi Hurd, 33, is moving her mom and her sister into her three-bedroom, two-bath home because her sister, Jennifer Coleman, 36, is undergoing a short sale of her home.
Hurd already has a husband and two young children.
Her mother, Hazel Coleman, 56, lived with Jennifer and was laid off after 29 years in the communications industry. She also lost her health insurance.
“I’ve even used my retirement,” Hazel said. “I’ve tried everything.”
So now they’re going back to the old way of life, she said. “Family living together and consolidating everything.”
Only one thing doesn’t make them feel bad, Jennifer said.
“We’re not the only ones.”
Rep. Dennis Kucinich began the first of two days of hearings to call attention to the “largely unrecognized … and totally blameless victim — neighborhoods.” The Ohio Democrat and former Cleveland mayor heard made the case that concerns about creating a moral hazard — or rewarding risky behavior — were countered by the fact that neighborhoods weren’t at fault for the impending foreclosure boom.
http://blogs.wsj.com/developments/2008/05/22/kucinich-neighborhoods-are-blameless-victims-in-subprime-crisis/?mod=homeblogmod_developments
With all due respect to Rep. Kucinich — Kucinich is wrong:
EVERYONE is at fault — lenders, infestors, borrowers, appraisers, realturds…EVERYONE!
Unless these scum preyed upon someone with mental disabilities, there ARE no “totally blameless victims” here.
I was in my spanish bank yesterday and was hearing how they are now getting home keys given back to them every Monday, one day it was 14 sets! (my daughter knows the staff in there very well and was having a general chat).
Needless to say all the articles in the english language publications here (Marbella) say it’s a great time to buy.
Driving around it seems like everything is for sale, asking prices are still in the realms of fantasy, not sure if anything is selling as there is no reliable source of sales data.
Aqui, Key
LOL!
Porque no tengo dinero!
deudor culiado?
Claro que no todo es un lecho de rosas.
What inflation is costing you this year.
http://www.marketwatch.com/news/story/15-minute-tip-heres-how-much/story.aspx?guid=%7B64551AC6%2D0771%2D4191%2DA2FC%2D22D31582999E%7D
Interesting, but she left out one of the big inflation factors: increased taxation.
Wrong, increased taxation is deflationary because it reduces spending power.
Increased spending is inflationary, particularly when financed by funny money.
Excellent smackdown of a lie.
Thank You Yogurt.
Increased taxation occurs with inflation only if salaries rise. Usually in inflationary states salaries rise to compensate for inflation. Thus people move into higher tax brackets and are hit more and more by the alternative minimum tax. Ie your spending power does not go up, but the government get’s a higher percentage of your spending power.
Remember folks deficits don’t matter.
Meanwhile back at the cheney ranch, the creators of this disaster move their money overseas, and into land and commodities. They pay 15% rate on dividends and are not affected by inflation. The middle and upper middle income americans are being fleeced. Blind the sheep with religion and faux patriotism then sheer the sheep.
Don’t like the banking losses? Lets change the banking rules.
http://www.marketwatch.com/news/story/banks-reportedly-lobby-relaxed-write-down/story.aspx?guid=%7BD6C8FF6E%2DD6C4%2D420C%2D85A9%2D79F7B5B2C43A%7D
Used house salespeople are a whiny bunch!
http://www.pressofatlanticcity.com/106/story/164448.html
“As we talk to our sellers about the declining market we are actually facing and the fact that they have to be aggressive in pricing their homes if they expect to find a buyer, the statistics in your article are baffling and impact our credibility with customers,” Dawe said.
Let them debate away. As long as they are “debating”, they are doing no damage.
The rational proactive ones will try and get the holders of long-term equity to undercut their FB neighbors, and find them nice rentals. Those folks will make money on the way down, and one more time if the people ever want to buy again.
The gig has changed.
This is a big switch from 2005 when my RE “agent” wouldn’t lower my asking price as much as I wanted her to. She actually said “it will lower the area comps”.
I told her I knew she had “bought my listing” by pricing too high, and I would call the local RE board if she gave me any more trouble. I then told her I didn’t trust her at all, and that all she cared about was her commission. I got a blank stare.
I sold the next week, for 20% off the initial “wishing price”.
(I knew it was too high but things were insane and I thought okay let’s try it- in retrospect I realize I should’ve listed 10% lower initially but…)
Dealing with those agents was a nightmare, one of the reasons I dread buying is having to even TALK to one of them again.
Liars, all of them.
Just threaten to use the five point palm exploding ARM technique, kiddo.
After this financial disaster, any of you wondering what is coming next? How about the deferred bill for public employee health care and pensions?
http://www.nytimes.com/2008/05/21/business/21pension.html?adxnnl=1&adxnnlx=1211459119-GiKZtu7jHJqVYrdBHr7dZA
“By firing its actuarial consultant last week, the New York State Legislature shone a light on one of the public sector’s deepest secrets: All across the country, states and local governments are promising benefits to public workers on the basis of numbers that make little economic sense.”
“Financial burdens have been hidden” as a result, said Jeremy Gold, a New York actuary and economist who was one of the first to call attention to the gap between actuarial figures and economic reality. Many economists now agree with Mr. Gold, saying they believe actuaries are routinely underestimating the cost of providing governmental pensions by as much as a third.The difference “is going to come out of services, and the services are for the working poor.”
Or higher taxes. Or bankrupcy. And lower wages and benefits for future public employees, who are less motivated and qualified as a result. Already happened several time in several cycles in NYC — stock market up, cut contributions and increase benefits. Stock market down — lower pay and benefits for new public employees, higher taxes.
I have a feeling that some of this will get worked out by the fact that most people are broke and won’t be able to retire and collect on their pensions or retirement medical and will croak at work at age 71
For the fourth quarter of 2007, the OFHEO survey said Atlantic City area prices fell 1 percent, even as the Realtor survey showed them rising 10.7 percent in the same period.
Hard to believe that the upstanding, honest, thoughtful, customer oriented NAR might not be giving accurate information. I hope that this member of the housing industrial complex becomes fractured and increasingly irrelevant.
AZ Lender
do you have some links on becoming a private lender ?
tia
This might get you started:
http://www.gotti.com/
Out of bullets?
http://www.bloomberg.com/apps/news?pid=20601087&sid=a55TkTSG..3U&refer=home
“Federal Reserve policy makers signaled that an economic contraction in the first half won’t be enough to spur further interest-rate cuts because of a rising threat from inflation.”
Up until know they’ve been able to choose the “rock” in their “rock and hard place” choice. Now what?
Outa options - keep lowering rates, you destroy what’s left of the dollar and unleash rampant inflation. Raise the rates and the financial sector buckles, housing actually has to find its market level, the auto industry loses even more, and J6P screams bloody doo doo as his/her ARM and credit card rates goes through the roof. I like option 2 Bob…
Strangely enough, just the act of keeping rates flat in the face of a floundering economy sends an inflationary signal (that the Fed is concerned with inflation). So the 10-year rises, making more people concerned that someone smart knows something they don’t, and they bail on 10-year notes too, driving up the yield, etc.
I’m not in the “hyper-inflation” camp, but I do think that the 10-year is artificially low based on a flight to quality, and the belief that the Fed knows “something”, and that “something” is that inflation is tame.
all just talk to give the impression they care about inflation; I’m sure HeliBen is going to lower rates again with the next sign of panic in the markets.
Why can’t we just have recessions anymore? Why can’t such an awesome and mighty economy be allowed to weather a lil’ ole recession? Could it be that the PTB has serious doubts as to whether or not this consumer economy can even survive one without experiencing some serious socioeconomic disruptions this go around?
you said it
Farm bill procedure a joke:
In their excessive pork induced euphoria, congress neglected to send 34 pages of the bill they signed to the president, so the wrong bill was vetoed and that veto then overridden by the House.
http://www.marketwatch.com/news/story/farm-bill-mistake-creates-big-mess/story.aspx?guid=%7B5BC15A4C%2D6546%2D4BA1%2DB08E%2DB2BD24D95F07%7D&dist=TNMostRead
“We are trying to understand the ramifications of this congressional farm bill foul-up. [b]We haven’t found a precedent for a congressional blunder of this magnitude,[/b]” Scott Stanzel, a White House spokesman, told the AP. “It looks like it may be back to square one for them.”
They will have to pass another bill just to make sure it is constitutional.
The constitution, a mere trifle.
STAGflation tips?
have many of the income /div stuff
bwc,igd,
any pics ?
tia
Honestly, what is “stagflation?” Shouldn’t we be casting this term to the dustbin of history? It was created in the 1970s by a bunch of idiot journalists who don’t understand economics. Either the economy is producing xx.x% more per capita than it was last year, in constant dollars (or seashells or gold coins or whatever,) or it isn’t.
pssssst…..
Want to buy some stagflation movies, cheap?
IMO, stagflation (for J6) means rising costs with lower wages.
We’re there.
“Financial burdens have been hidden” as a result, said Jeremy Gold, a New York actuary and economist who was one of the first to call attention to the gap between actuarial figures and economic reality…”
I recall hearing David Walker, the former Comptroller of the U. S. (GAO) say the entitlements for the Baby Boomers was at $44,000,000,000,000 not showing on our books. Our national deficit was not $9,000,000,000,000, but $53T.
But in the 0’s, and it puts our books into real perspective. That doesn’t include compunding interest. This country is in big trouble.
Article out earlier this week put total unfunded burden above $500,000 per household. $60+ trillion, mostly SS. Medicare, and gov. pensions.
Darrell in PHX-
Thank you for the update.
Darrell; $500,000 is a scary number, but…
Assume a couple, both 25 y.o. combined income of $80k. They buy a house, mortgage is for $240k, they remain childless, work to age 65 and live to be 85 y.o.
$264k int. over 30y on mortgage
$244k S.S/Medicare over 40 y.
$488k state and fed inc. tax over 40y
$090k ins. on house over 60 y
$120k tax on house over 60 y
——-
$1,196,000
No inflation or tax hikes (hah!)
No clothes
No cars
No phone, cable, utilities
No health care
Et cetera
$500,000 doesn’t look so bad now.
In NY, the RE tax would be $540K over 60 yrs.
Your numbers aren’t discounted. According to David Walker, head of the GAO (I think he recently left) back in 2006, unfunded liablities (discounted to the present at that time) exceeded 90% of the net worth of every single american at the time. Of course, americans will continue to earn but the counter to that is that government continues to rack up liablities and are doing so at an increasing rate.
Government shouldn’t be allowed to borrow. They should be forced to pay for everything with tax revenues.
But then you’d have to cut expenses when you cut taxes. That isn’t possible.
That isn’t possible.
Sure it is, it’s just not done. And that’s exactly the point, it would FORCE a reckoning in near real time. If they want to spend everyone’s net worth, take from the current population and not the population 20 years from now. It would force a situation where the pols may start to be held accountable.
But as long as we are all just apologists (waaa, we can’t do that or we will have to CUT EXPENSES!!), they (we) will continue to run this country into the ground. At least we will be consistant with the path of previous great empires.
This is why I believe the US will be dissolved in much the same way the USSR dissolved. Once the feds can’t pay the “monthly nut” there will no longer be any reason to continue the charade. It will be the state’s version of “jingle mail”.
RE: Article out earlier this week put total unfunded burden above $500,000 per household. $60+ trillion, mostly SS. Medicare, and gov. pensions.
USA Today-Front page article on Monday.
$500k per family….LMFAO!
Bring out the guillotines.
Nah. Just issue 10 to 30 trillion of Assignats…
another boat company bites the bullet
“Brunswick Corp., one of the largest manufacturers and distributors of consumer marine products in the country, will cease production of its Bluewater Marine brands — including Sea Pro, Sea Boss, Palmetto and Laguna boats — with the upcoming 2009 model year, which commences July 1.
The U.S. marine industry has been in a prolonged slowdown since late 2005, driven by an uncertain economy, high fuel prices, the housing slump and other economic factors that have affected consumers’ confidence and eroded their discretionary spending,” said Dustan E. McCoy, Brunswick chairman and CEO. “As a result, we are assessing the recovery potential for all marine segments in which we participate, their fragmented nature, the costs of our continued presence in certain of them, and the position of our brands.” …
Costar
The only reason I would like oil down is to allow the FIBs to vacation anywhere but Wisconsin! Or if the gas gets expensive enough I won’t have to worry about a water skier flying into my sails again. :>) Maybe it will cut down on boating accidents.
Hoz, I’m waiting patiently for all the powerboaters to go bankrupt and free up some marina space for me.
Get me a slip in Chicago and I’ll happily stay south of Wisconsin
How about Gilson Park in Wilmette?
I have no car (so you really don’t have to worry about me invading Wisconsin anyway).
If it’s not easily accessible by foot, bus, train, or bike - it really doesn’t work well for me.
The Linden Purple Line stop is close to Gillson Park, but that’s quite the ride up from the Loop.
A few years ago, we joined the sailing club at Northwestern up in Evanston, just a few stops closer than Wilmette. It was a pain to get up there after work and didn’t leave much time for sailing before dark.
A spot at a downtown marina would allow me to be on the water after work and still have 3+ hours of sailing left.
Haven’t heard much about how this is impacting sales of the ginormous RV “2nd homes on wheels” that clutter our town all summer season. That market (and the whole associated lifestyle for the retirees) has got to be hurting bad.
ISTR Winnebago is not doing well, just like the gas crisis in the 70s.
Got a couple of former neighbors who moved into an RV a couple years ago. They spend more time staying put, than, say, late 2006.
from newsweek:
Running on Empty?
The RV industry is the newest casualty of the economic slump.
http://www.newsweek.com/id/137176
Check yesterday’s bits bucket. Do a search for RV. I posted a link about that industry. Or search CNNMoney where I’m pretty sure I got it from.
So far this year again, not owning a boat hasn’t been a burden to us…
Our neighbors have used their boat once, with us along for the ride.
Did you see the Journal article expecting more tourism from Illinois, Iowa etc due to smaller vacations? I wasn’t as thrilled as the people interviewed. Hopefully the lakes are more open. I noticed less traffic last year even and if we can just keep half of the trailered boats off my lake, I’d be pleased.
Here is an interesting story, about a “CONgresswoman” from California. She bought a spec house and “walked away”. Big money being lost by the lender.
It’s now wonder the buffoons in Congress are so worried about the poor, over-extended debtors. They drank the Kool-aide, too.
I tried the link, and it worked for me, although it looks rather bazaar. It is from Capital Weekly online version, from the prior issue, first story:
http://www.capitolweekly.net/article.php?_adctlid=v%7Cjq2q43wvsl855o%7Cx4uqgziu44gxoa&issueId=x48gnuowgqsg6o&xid=x4ptlrmv0w0r6x
http://money.cnn.com/2008/05/13/smbusiness/off_hours_montana.fsb/index.htm
A story of a man whose family has been on a particular piece of farm land for 100s of years and how he’s utilizing the influx of CA money to help him keep it.
Imagine if our farm land was carved up for people who only wanted to produce (or maybe just hoard the property) for themselves.
That was a sad story. 5 generations of farming that land and his kids most likely won’t be able to afford to keep the farm.
My Dad grew up on a dairy farm here in Mission Valley (San Diego). Now there are no more farms just a bunch of ugly strip malls.
Thanks! Good article.
I saw on TV for the first time an ad for Reimers Ranch county park, on an oxbow of the Pedernales river (near Hamilton Pool Park). I see on the web that it has been a park since 2005, with biking trails, rock-climbing etc.
Even while it was an active ranch, the Reimers family used to let the public in for $2 a car through daylight hours, with a few rules: no guns, no nudity, no drugs; civility and clean-up expected. They let people through the gate right in front of their house.
They knew that they had some beautiful land and they were willing to make it available to others for fishing, picnicking, hanging out in the country - even though it was an inconvenience (and a risk) for them.
The whole area around there, which was country when we used to go there, is total exurban sprawl. I’m sure they could have made a LOT more money selling to a developer rather than the county. They really were wonderful and generous stewards of their beautiful land.
Those lands are worth so much now that the heirs really get whacked with inheritance taxes, so they just sell it off.
France’s finance minister on Wednesday urged central bankers to reduce the “misalignment” in the world’s major currencies
“…France has lobbied for lower interest rates among countries using the euro and has suggested that the European Central Bank broaden its mandate to include bolstering economic growth, beyond its goal of controlling inflation. While Ms. Lagarde said that the bank’s president, Jean-Claude Trichet, was right to be concerned about inflation, she said he was “overly focused” on it.
The French president, Nicolas Sarkozy, has not yet discussed his specific objectives when France assumes the presidency of the European Union on July 1. Ms. Lagarde declined to give details about her aims. But she said she hoped to forge a consensus on a stricter rule book in the banking and insurance sector, including “coordinated supervision” across the 27-member bloc. …”
NYT
http://www.nytimes.com/2008/05/22/business/worldbusiness/22franc.html
I suspected France would be the first to crack. Now Italy can jump ship.
If France and Italy leave the Euro they will find themselves with double digit interest rates. That is the inescapable outcome of devaluation.
Fallout From a Bailout
How the Bear Stearns Intervention Will Haunt the Fed
By Vincent Reinhart
Thursday, May 22, 2008
“…It is probably impossible for anyone who was not in the room during those negotiations to accurately assess that balancing act. Still, there is one certainty: That decision to solve the problem immediately at hand will have long-term consequences. In particular, the Fed’s action tipped the political balance toward providing direct subsidies to households having trouble meeting their mortgage payments.
The bailout of Bear’s creditors has allowed the political question to be reframed. Now voters can be asked more than whether federal aid should be given to overextended homeowners. Consider a question such as: “Given that the government has provided funds to an investment bank, do you think government aid should also be given to households failing to meet their mortgage obligations?” The word “also” describes an expansion of government and a redistribution of income as an exercise in fairness. In effect, greater unfairness among households in offering debt relief to some now seems insignificant when compared with the unfairness wrought by the Fed between the financial sector and households. …”
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/21/AR2008052102429.html
“That decision to solve the problem immediately at hand will have long-term consequences. In particular, the Fed’s action tipped the political balance toward providing direct subsidies to households having trouble meeting their mortgage payments.”
If this proves true, I anticipate many more households having trouble meeting their mortgage payments going forward, especially including households that deliberately choose to purchase a home which is beyond their means in order to qualify as ‘having trouble.’
That reminds me of the 70’s. My mom’s college roommate went to college (a private college no less) for free because her parents bought a second home and went into debt. Pretty sweet. (Plus, the size of the debt was shrinking b/c of inflation. Doubly sweet.)
With crap like that going on, I can kind of understand the appeal of Reagan.
DUH.
Actions beget consequences not necessarily anticipated a.k.a. feedback loop.
What’s suggested ain’t happen’. They aren’t about the trash their own power to bail out a bunch of whiners.
–
“How the Bear Stearns Intervention Will Haunt the Fed”
Why? They were NOT playing with their own money. The whole mortgage lending was a fraud because the so-called lenders (brokers) were not lending their own money. We have agents who are making decisions with no consequences to them. Such a system, at some point, turns into a Ponzi scheme. And that is where we have been and still are until there is no more money from the Fed and the USG.
Jas
Banks are trying to weasel out of their writedowns:
http://www.ft.com/cms/s/0/07cb8b1a-275e-11dd-b7cb-000077b07658.html
“The world’s leading banks have stepped up pressure to relax controversial accounting rules with a new plan aimed at breaking the “downward spiral” of huge writedowns, emergency fundraisings and fire-sales of assets. ”
“The proposals on “fair value” accounting by the Institute of International Finance, an alliance of 300-plus companies chaired by Josef Ackermann, Deutsche Bank’s chairman, would enable financial companies to cushion the blow of financial crises by valuing illiquid assets using historical, rather than market, prices.”
One Reason “Not” to Vote for McCain
Education crusader McCain’s new aide
http://www.azcentral.com/news/articles/2008/05/20/20080520mccainkeegan0517.html
I kid you not, if this lady becomes the McCain “Expert on Education” or whatever that title might be, our educational system will never be the same.
I was working with the parent group at New Way Learning Academy against Ms. Keegan and all I can say is that in her mind its “Her Way or the Highway”. She has no skills as a leader and apparently has nothing in her that allows her to listen to reason.
In the course of 30 days we formed a new school, incorporated it, and found a new location. The next day she resigned from her post as the President of the Board of Directors.
dept of ed DOE hasn’t educated one child
DOE energy not one barrel of oil
who care who he picks
we care about cap gains-div taxes and reduced spending
and “NO BAILOUT”
With all the respect in the world, who gives a rats a$$ about this stuff. I’d be more worried about a commander in chief who doesn’t know how many states are in the U.S. and is scarily uninformed about the goings on in the rest of the world.
I bought my books used for my MBA for $200
education is cheap and w internet almost free
EXETER don’t watch this !
http://youtube.com/watch?v=8xtNr5-up0U
Hey, great song - it applies to some church leaders I know…
I ‘m beginning to believe Obama may be our next prez, esp. if he can tap into that kind of religious ferver.
If you’re aware of how it all works, you’re less likely to be manipulated by anybody, good or bad.
Somebody is skeerd! Lots of somebodies…..
All it takes is one gaffe to taint a Republican for life. The political establishment never let Dan Quayle live down his fateful misspelling of “potatoe.” The New York Times distorted and misreported the first President Bush’s questions about new scanner technology at a grocers’ convention to brand him permanently as out of touch.
But what about Barack Obama? The guy’s a perpetual gaffe machine. Let us count the ways, large and small, that his tongue has betrayed him throughout the campaign:
* Last May, he claimed that Kansas tornadoes killed a whopping 10,000 people: “In case you missed it, this week, there was a tragedy in Kansas. Ten thousand people died — an entire town destroyed.” The actual death toll: 12.
http://michellemalkin.com/2008/05/21/barack-obama-gaffe-machine/
I look forward to many entertaining episodes this fall.
and SKF just gave me back the $$$ I gave to the Hildebeest yesterday so there is some symmetry there
tx, you are amazing. You have fun, life is but a dream, ain’t it?
Until I get my 1099 every year from the trading firm.
On a CD. LOL
My wife and I were just talking last night about previous vice presidents compared to the current occupant, and Quayle’s name came up and both of couldn’t remember one thing he did in office.
So I looked up a few quotes to better remember him by…
Thanks for the memories, Dan
“Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.”
“I have made good judgements in the past. I have made good judgements in the future.”
“I was recently on a tour of Latin America, and the only regret I have was that I didn’t study Latin harder in school so I could converse with those people.”
“What a waste it is to lose one’s mind. Or not to have a mind is being very wasteful. How true that is.”
I wonder when BO is going to make it to that last of the 57 states.
Puerto Rico is the 51st
Palmyra Atoll is the 52nd
US Virgin Islands is the 53rd
Trust of the Pacific Islands is the 54th (Wake, Midway et al)
American Samoa is the 55th
The Menominee Nation is the 56th
Damn whats the 57th again? Ontario? The part of the US that is so smart they don’t pay any taxes to Washington.
It’s the state of Discontent
where your wife complaints about having to pay off her student loans and claims this is a “mean” country
despite the fact she makes 300K per year and had a household income of $4M
She’s a real piece of work
All it takes is one gaffe to taint a Republican for life.
Laugh.
That perception is too absurd for words.
The Perpetual Gaffe Machine that is our Current Leader is a refutation of that thesis all by himself. What an embarrassment. What a maroon. And yet he was given a pass on his laziness, insolence, stupidity, and arrogance — hundreds of times by the mass media, and not once but twice by the citizenry, electorally speaking.
A maroon? I don’t think he went to A&M.
It’s almost as though someone slipped in between the George H.W./Quayle admin. and lowered the standards. By a lot.
Hi txchick57,
I gather from you comments that GW doesn’t scare the sh*t out of you. Our oh soooo knowledge King George. Jail to the Chief. GW is a complete idiot and has set this country back a 100 years. Last thing we need is a 3rd term of GW, ie McCain. Can’t believe you made the statement you did, thought you were smarted then that. Guess I was wrong.
Link?
BTW, we try to avoid adhominy attacks on this blog, just sayin’
(well, unless they’re concerning RE people, politicians, et al.)
Yep, I guess you were.
http://www.realclearpolitics.com/articles/2008/05/history_will_redeem_bush.html
Man, that’s probably the dumbest thing Ed Koch has ever written or said, and he’s had his own fair share of gaffes.
thought you were smarted then that. Guess I was wrong.
[sic]
I hear ya, I had to vent because I gave a month of my life to fighting this @$^%* and I this is where I let it out.
How about a commander in chief who doesn’t know the difference between Al Quida and Iranian militants in Iraq?
That’s John McCain.
“How can you tell if they’re VC?”
“Easy, if they’re running, they’re VC. If they’re standing still, they are well trained VC.”
Foreclosure forecast grim
Recent hiccups in prices are not a sign of recovery
By Emmet Pierce
STAFF WRITER
Nearly 50 San Diego County dwellings per day were lost to foreclosure in April, as the tally of mortgage failures rose 169 percent above last year, DataQuick Information Systems reported yesterday. Buckling under the weight of risky adjustable-rate loans, many borrowers are giving up on ever bringing their debt current.
Governor discusses challenge of deficit
Solution sought via lottery bonds
By Ed Mendel
U-T SACRAMENTO BUREAU
SACRAMENTO – Gov. Arnold Schwarzenegger said he was “tearing up the credit card” when he asked voters to approve $15 billion in deficit bonds four years ago. Part of that package was a measure that promised there would be no more borrowing to cover future deficits.
Dark Vader reminds me of a high roller that loses a considerable amount of money over the tables in Vegas, and is playing 15 spot keno tickets, in a mad attempt to play catch up…
I have seen Lifelock being recommended here few times in the past so thought would share this yahoo story….
Lifelock is not a lock afterall…
I almost signed up for this service, but thought is was fishy. The $1,000,000 guarantee is not for stolen value, it is the amount they will spend to straighten out your credit record in the event of a theft. PPuuuulllleeeasse. $1,000,000? What is the most they might ever spend writing letters to credit bureaus??? $25???
Lifelock can put a lip lock on my love handle. LOL
“Up to” $1 million IIRC.
This is so freakin easy and I think it’s free, or for a nominal fee. I found it out at Clarkhoward.com. There are form letters available online, you can print them out, you mail them to each of the three credit bureaus, Experian, TransUnion, Equifax. You tell them to freeze your credit file forever, you give some evidence of your identity (copy of drivers license, utility bill, etc) You mail it to them, they return an acknowledgment with a PIN number. In the future, if you want to obtain new credit, you call them, give them your PIN, tell them you want to unfreeze your file for xx number of days, and it costs 10 bucks.
“There’s nothing to indicate my identity has been successfully compromised other than the one instance.”
Nice doublespeak……this guy should be a realtor.
If you have invested, don’t look up their backgrounds…
Stock market falling up again today. Guess the bulls are still trying to figure out whether the Fed really means to stop its rate cuts before oil prices go all the way to the moon…
Is this the news that is driving the Wall Street rally? Maybe traders are buying stocks as a hedge against higher oil prices, even though they dumped shares yesterday as a hedge against cessation of Fed rate cuts. Go figure…
Fall in US crude stocks sends oil to $135
The rise followed data from the US government showing a sharp fall in inventories of crude oil and gasoline, just before the start of the US ‘driving season’ - 08:52
Essence of macroeconomic budget constraint:
- If the Fed tries to print away their troubles, oil and food price inflation kill the American household budget.
- If the Fed stands pat or raises interest rates, tightening credit kills the American household budget and increases the rate of home price decline.
l-t T-bond yields: To infinity, and beyond!
thanks to record high oil (and other commodities) there is even better chance that official CPI numbers will be ‘lower than expected’ from now on, so HeliBen can lower rates again!
Buy, buy, buy (stocks)!
the fed
Losing appetite for reductions
As oil and food prices swirl higher, central bankers appear loath to
cut interest rates more, even if the economy sinks into recession.
Ok, question for you traders. Am wondering if this could be a poor man’s arbitrage of some kind.
Ford is taking a dive today now that it says it won’t be profitable in 2009. Stock currently is at around 7.30. Is Kerkorian’s 8.50 a share offer still out there?? If so, is there any reason someone couldn’t buy now, sell to Kerkorian and make an easy 15-16 percent??
oh yes.
Keep an eye on SIRI for a double bottom.
Going to take a look right now.
I bought Ford at 6.75. I’m a very slow trader. Maybe 1 transaction a month. I think I’ll wait a few months and then accumulate some more.
IMHO, there the best positioned of all the US car companies, unless GM manages to hit a home run with the “Volt” (doubtful!)
I agree about Ford.
They have been planning to make fewer cars for a while now. Analysts couldn’t believe that they were “giving up” market share. I’m sure most of them still haven’t connected the dots and noticed that auto sales are heading down the tubes - Ford is just being proactive.
GM has been hyping the Camaro for about 4 years now, and they still don’t have it in production yet. That may give you a timeline for how soon the Volt will be on sale.
Keep in mind though that the only place Ford is willingly “giving up” market share is in it’s fleet sales to rental car companies.
IIRC in nearly every sales report they put out, even when you subtract out fleet sales, they’re still losing sales and customers.
There are a lot of mopes that bought Ford with the idea of selling to the supreme mope mugwump. Assume the tender is for 100MM shares and Mr. Mugwump accepts 10MM shares. What are you and the other mopes going to do with the other 90MM shares? The converse is true, if 100MM are tendered and Mr. Mugwump pulls a Henry Singleton and takes them all! Where will the stock price settle $11 ?
The risk reward is atrocious.
BULLETIN
U.S. HOME PRICES DOWN 1.7% IN FIRST QUARTER FROM FOURTH QUARTER OF 2007
U.S. Q1 OFHEO home prices down 1.7%
By Ruth Mantell
Last update: 10:13 a.m. EDT May 22, 2008
WASHINGTON (MarketWatch) — In the first quarter U.S. home prices fell a seasonally adjusted 1.7% — the largest quarterly price decline on record, the Office of Federal Housing Enterprise Oversight reported Thursday. Prices fell 3.1% in the past year.
The good news: All real estate is local.
The bad news: Almost all local markets now have falling prices.
Housing and ECONoMY
Home prices down 1.7%
Prices skid in 43 states during the first quarter in the largest quarterly price drop on record, U.S. agency OFHEO says.
Does anyone have the list of seven states where prices did not fall? My guesses:
- Alaska
- North Dakota
- South Dakota
- Montana
- Idaho
- Kansas
- Nebraska
How’d I do?
Don’t forget the state of denial.
You could be right regarding Kansas. The MLS here in Wichita claims sales numbers are down about 12% but prices are slightly higher (cite).
I think Arkansas is still up. The counties I track (central AR) have still been moving up, but the upward yoy movements are getting smaller. For example, a year ago the yoy increase (average sales price not median) was 15% give or take and now is down to 2% increases give or take.
NW Ark may be down…not sure. If it is, it might be enough to drag the state as a whole to negative…
I should add that the rate of sales are down dramatically yoy, just the mean price is still up (for the counties I track).
What the HELL is their justification for “seasonally adjusting” this price drop??? It’s not like OFHEO shows a drop every year at this time of year!
And yet they report the drop is only half as large as it really is.
Is that the truth? How do you seasonally adjust year-to-year numbers? This bugs me about the CPI, too. OK, month-to-month exclude food and energy, but at some point you gotta report year-to-year on the whole basket of goods.
Foreclosures accelerate US housing slide
By Chris Bryant in Washington
Published: May 22 2008 16:23 | Last updated: May 22 2008 16:37
The US house price slump accelerated in the first three months of this year as a tide of home foreclosures added to a glut of unsold properties, a new report revealed on Thursday.
House prices dropped by a seasonally adjusted 1.7 per cent in the first quarter, the biggest decline in the history of Office of Federal Housing Enterprise Oversight house price index.
Texas banks a different world
The Sad Tale of Lewis Ranieri and Franklin Bancorp
May 22, 2008
“…The stock is trading < $1 vs. $21 a year ago and appears to be headed for a delisting, thus adding yet another name to the dozens of smaller banks delisted over the past year. Let’s look at the numbers and see what Ranieri and his team should have known and when. …
Given the above profile, it seems clear that Ranieri and his management team at FBTX were aware of the bank’s poor financial performance going back years. It appears that in the beginning of 2006, FBTX made a deliberate decision to extend duration by increasing the WAM of the bank’s portfolio, which now is 2x the 2.35 year WAM for the peer group.
Was this change in portfolio duration by FBTX an attempt to roll the dice and save the bank by betting on the direction of Fed interest rate policy? It’s hard to say from the regulatory data. But given the years of sub-peer financial performance and especially the nose bleed LGD on the bank’s loan portfolio (98% in Q1 2008), the one thing that Ranieri cannot say is that this dismal situation is a surprise.”
INSTITUTIONAL RISK ANALYTICS
Back to 20% down.
http://www.reuters.com/article/ousiv/idUSN0951352620080522
“People of modest means have seen the American dream of home ownership move further out of reach. Even affluent buyers, who took advantage the last decade’s low interest rates and looser lending standards to move up to more expensive homes or to buy investment properties, are seeing their options evaporate.”
Actually, lower prices are improving affordability. Exotic mortgages just allowed sellers to sell for more, and affordability plunged.
Not everyone needs 20 pct down.
Low income housing policy nowadays operates through knifecatcher-encouragement subsidies. How it works:
1) GSEs and FHA offer low-downpayment mortgages w/ gubmint guarantees.
2) Qualifying (low income) homeowners buy homes they cannot afford and live in them for a few years until they figure out that they cannot afford to repay the loan, at which point the home goes back to the lender.
3) The lender is made whole by the gubmint guarantee, courtesy of the U.S. taxpayer, and they also raked in commissions up front, so it is all good!
Forgot one detail on knifecatcher subsidy policy: When the subsidized knifecatchers eventually get foreclosed, there will have to be a save-their-homes bailout to make sure they can stay in unaffordable mortgages forever.
Story from Dallas: my brother is looking to buy a home for his family. I am not even going to try and talk him out of it, but we have had conversations about this bubble many times.
He made an offer on a house last week. The UHS came back to him and said that the property was in multiple offers, and if he wanted to raise his offer, the sellers would go with him. He replied, “please tell the sellers these exact words, go f*** yourselves”. The sellers agent came back later that day with a counter offer. My brother walked.
At least some of my advice has sunk in.
What part of town is this? I know they’re still pulling this crap every time they find a live one (buyer).
Flower Mound area, I believe. He is shopping in the $400,000 - $600,000 range. We laughed - he definitely gets the scam and knows he has plenty of inventory to choose from.
There is absolutely no reason or excuse to pay within 15% of an asking price in Flower Mound unless it’s a REO. That area is grossly overbuilt.
At least he had the good sense to not fall for that line of BS.
Here’s something else to think about. Is he planning to be there VERY long term? If not he is looking in too high of a price range. You cannot resell out there with any ease over about 200K. In the DFW exurbs, if you insist on living there, it is crucial to stay not too far from the center pricewise unless it is on the low end. The expensive houses are lovely dinosaurs. Places like Southlake, Colleyville, etc. (west of there and even higher end) have plenty of stuck Clownifornians who bought there at stupid prices with their California winnings but will never be able to get out with the money intact.
That is true, my cousin was looking for a place on the north side of Chicago, they told her the same thing. The property needed close to 100k of work done, she walked.
I just want to smack sellers/banks and their agents when they pull that crap.
No! Buy Mine! Me! Here in the back! You can shoot the squirrels!
Hey, I’m 10 miles from Flower Mound in the nicer direction! Me, Over here! Tackle him dear!
No. No. No. There is a much better bargain waiting for him in Rockwall. Large lot full of big trees, Beautiful big well built home, 75 yards from the lake, quick access to the tollway, everything… Squirrels too!
I wish you’d drop me the MLS listing.
gymnastgal32 at yahoo dot com
I’m always looking
Dang squirrels chewed a hole in one of my fascia boards.
Now the painters found a small hole bird pecked in a siding board high up on the other side of the house.
Frikken critters have me surrounded, and they’re coming in!
Sure, there was one other offer. It was for 50% off the asking price.
It sounds pathetic to hear the “there are other offers” line used.
Barak Obummer.
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About what?
Jas
Well, since we’re voting for one-third of the government’s power on whether someone says in a speech that we have 57 or 42 or 99 states, I’ll just say that I won’t be voting for him because I know his inaugural anthem will be “I get a kick out of you.” You know, a good n-working song, not like “The Camptown Ladies!”
What you doing, Barack?
I’m the new President of the United States of America.
Civil Service! Put it there, bro!
A song, a REAL song!
One of the all time great movies!
Mike
“Have you gone berzerk? Can’t you see that man is a ni?”
Here come those tears again, just as I was getting over them…
House Prices Force Americans To Sleep In Cars
Increasing numbers of women and elderly people are taking advantage of a scheme in one of America’s wealthiest cities that enables the homeless to sleep safely in their cars at night.
Organisers of the programme say they are seeing ever more unlikely people living out of their cars in the exclusive beachfront city of Santa Barbara, where the average house costs more than $1 million(£500,000). Many hold down part-time jobs while bedding down for the night in their vehicles.
Barbara Harvey, who worked as a loan processor, told CNN she had little choice but to live in her car after losing both her job and her apartment. She had been spending more than 75 percent of her income on rent.
Now she lives in her Honda SUV with her two golden retrievers, sleeping in one of the two women-only car park refuges run by New Beginnings Counselling Centre, a community outreach organisation.
“It went to hell in a handbasket,” the 67-year-old told CNN. “I didn’t think this would happen to me. It’s just something that I don’t think that people think is going to happen to them is what it amounts to. It happens very quickly, too.”
New Beginnings runs 15 car parks in the affluent city where the homeless can park at night. The lots are owned by churches, non-profit organisations, city and county authorities and open from 7pm when staff have left for the day to 7am. Two are women-only. The programme is thought to be the only one of its kind in the nation.
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/2003921/House-prices-force-Americans-to-sleep-in-cars.html
You can get away with sleeping in a car as long as the weather is decent, but in cold they turn into iron-insulated deep freezes, and hades hotel in hot.
Mortgage market up in ARMs…
MORTGAGES
Long-term mortgage rates fall, ARMs rise
Adjustable-rate mortgages up on forecasts that Fed is done with cuts
By Amy Hoak, MarketWatch
Last update: 11:04 a.m. EDT May 22, 2008
CHICAGO (MarketWatch) — Long-term mortgage rates fell slightly this week while ARM rates ticked up, according to Freddie Mac’s weekly survey, released on Thursday.
Can we form a group or “association” call the NAAR, Nation association of Anti Realators, these useless wastes of life are no lobbying congress to make perm the gov backing of jumbo mortgages, it makes me sick, becuase I know more americans are against this just like the BS farm subsidies, the housing subsidies, iraq, ect, yet our so called gov does not listen to majority, just the rich minority or vocal anoying minority(ACORN), if we ban together as a voting block, and can get say a million or more members accros he country maybe then we could get some change but who knows, it’s pay to play in washington these days…
Agree, but there seems to be little interest among the anti-bailout crowd.
That’s why I don’t mind Dick Armey being behind the “Angry Renter” site. At least we know he’s connected and can get the message through to the right people.
Report: Calif. congresswoman loses house in foreclosure
http://blogs.usatoday.com/ondeadline/2008/05/report-calif-co.html
The credit crunch is hitting the halls of Congress, with reports from California that a member of the House lost her house in foreclosure earlier this month.
Capitol Weekly reports that Rep. Laura Richardson “slipped into default” after she “fell behind on her mortgage payments as she loaned her Congressional campaign $60,000.”
The publication cites tax records that show Richardson took out a $535,000 loan — covering 100% of the sale price — when she purchased her pied-à-terre in the state capital about 17 months ago.
By March, the paper says, a “notice of trustee’s sale” indicated that the debt had passed $578,000.”
But in a statement quoted by the Los Angeles Times, Richardson, a Democrat, says “the residential property in Sacramento California is not in foreclosure and has NOT been seized by the bank.
“I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions,” she says. “I fully intend to fulfill all financial obligations of this property.”
It may be too late. “” (cont’d)
Ya just can’t make this stuff up!
Leigh
My favorite quote from the article is: “Richardson on Wednesday blamed the frequent job-shifting for financial problems related to the Sacramento property.”
Hmmm… I don’t about any of you but changing jobs has never affected my ability to pay my bills, especially since she was never unemployed. She just moved up in her career. Seems she would have a higher likelihood to pay her bills in this case.
And this irresponsible person is an elected official. She should have accepted more bribes.
“Since being elected to serve in the House of Representatives, Richardson was assigned to serve on the influential Committee on Transportation and Infrastructure and Committee on Science and Technology. Congresswoman Laura Richardson intends to focus on homeland security, providing greater resources for first responders, adequate and accessible health care services, proper transportation utilization and better utilization of nationwide funding for Federal programs.”
And you wonder why the government is $57T in debt.
The Far Out Financial Chemistry Kit
“Inflation will return to the 2% target,” claimed Mervyn King, head of the Bank of England last week. “Growth will eventually recover to a sustainable rate.”
No tripping out there, perhaps. Just like Albert Hofmann’s wobbly bike-ride six decades ago, the credit cycle will get us all home in due course, ready to turn once again from boom to bubble to bust.
But what was the Governor smoking when he claimed that “in these [current] circumstances, the household saving rate is likely to rise”…?”
http://www.safehaven.com/article-10316.htm
____________________________________________________________
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Great international data source (Excel sheets):
http://www.oecd.org/dataoecd/6/5/2483894.xls
See table under HousePriceRatios.
Enjoy!
Jas
Awesome find, Jas.
“Think for yourself and question authority.”
Timothy Leary
–
But not the authority of democracy and democratically elected leaders and their appointees.
Jas
ok i looked and this was not the first post today!
Calif. congresswoman’s home threatened with repo
Thursday May 22, 11:49 am ET
By Don Thompson, Associated Press Writer
Calif. congresswoman’s home threatened with repossession after she fails to pay mortgage
http://biz.yahoo.com/ap/080522/congresswoman_s_house.html?.v=1
psilocybinflationary economix
Truth In Politics: Illinois Gas Prices And Taxes
Illinois Sen. Dick Durbin complained to oil company bosses at a hearing on Capitol Hill about Chicago having the highest gasoline prices in the United States. Largely ignored was the role taxes are playing — an astounding 10 levels of taxation.
The watchdog Civic Federation says that on a $4 gallon of gas, the total tax is 79.2 cents.
http://cbs2chicago.com/politics/gas.prices.taxes.2.729939.html
‘Tis true — our county rates for sales tax, gas tax and sin taxes on liquor and tobacco are some of the highest in the land.
Those onerous rates sure bring in a lot of extra revenue for border towns in Indiana and Wisconisin, though.
Damn Chick;
my sister says the guys at JP morgan are waiting for me to open up an account! I told her I could be in over my head, especially since there is alot of reallocation and etc. to clean up my pandora portfolio. Let the shaking begin.
KISS
If they cannot explain what they are going to do to make you moneys in 5 minutes, it is to complicated.
they charge way too much
and probably stick your “cash” in ARS
tell them to pound sand
I agree!!!
Nobody’s sticking ANYTHING in my ARS!!!
“Price ceilings create shortages and price supports create supply gluts.”
Can this apply to the real estate situation? How can it create a glut if sales are slow? Would builders keep building regardless of sales? Would sellers keep their houses on the market regardless of sales?
I wonder what the myriad local, state and federal attempts at price supports are going to ultimately do the market.
- U.S. housing market already has a huge supply glut, thanks to myriad stimulative govt interventions (interest deduction, low-downpayment abd zero-downpayment mortgages, govt guaranteed mortgages, $500K capital gains exclusion on primary residence, etc)
- If successful in backstopping price declines, the proprosed Congressional “housing rescue” would freeze prices at a level above the market clearing equilibrium, which would draw a horizontal line above the free market equilibrium in the standard Marshallian supply and demand graph
- Used home supply and new home supply will continue to exceed demand so long as the price is artificially propped up, leading to a further increase in the record number of vacant homes, and more money thrown down the REIC’s rat hole.
Fed urged to control future asset bubbles
By Krishna Guha in Washington
Published: May 16 2008 00:02 | Last updated: May 16 2008 00:02
The Federal Reserve should use regulatory powers aggressively and pro-actively to limit the threat from future asset price bubbles, Frederic Mishkin, one of the Fed’s governors, said on Thursday.
Mr Mishkin, a top academic economist who is intellectually close to Fed chairman Ben Bernanke, said “it falls to regulatory policies and supervisory policies to help strengthen the financial system and reduce its vulnerability to both booms and busts in asset prices”.
Such policies “could be made a standard part of the regulatory system and would be operational at all times”. But he also proposed using regulations dynamically to deal with bubbles as they emerge.
“Future bubbles will almost certainly create unanticipated difficulties, and as a result, adjustments to our policy stance to limit the market failure contributing to the bubble could be very beneficial if identified and implemented at the appropriate time,” he said.
His comments in a speech come as the US central bank is reconsidering its traditionally hands-off approach to asset bubbles after two bubbles – housing and the earlier dotcom bubble – in the space of a decade.
EDITOR’S CHOICE
Analysis: Troubled by bubbles - May-15
Editorial comment: The asset price controversy - May-14
Comment: Keep hold of basic rules of finance - May-14
Fed looks at ways to fight asset bubbles - May-13
Fed ready to boost size of credit auctions - May-13
Former FOMC member warns on inflation - May-08
Yeah, now that the horses have run away, focus all your attention on the barn.
What happens if the next one is a flood by the river?
As long as they keep negative interest rates, the bankers will separate the fools from their money. In fact, I would even go as far as to argue, it is their DUTY to do so just to show the miserable cowpokes how the real world works.
There will be plenty of time for “statistically significant” regressions later.
This one was supposed to be under PB’s thing about central banks “targeting” asset bubbles.
Schadenfruede for the day:
Had talked to a friend of a friend about her beautiful house in W. Colorado on 5 acres, her husband has a new job and they badly need to sell. It sounded like a pretty nice place, she quoted me a price, FSBO, sounded like she thought it was really high from the way she talked. I told her I was interested, the price was actually OK, especially for the area. I told her to call me and I’d come take a look.
After a few days, no call, so I call her, she doesn’t want to talk, I sense something’s fishy, she finally tells me they’ve upped the price 100k and already have a buyer. My RealtorRadar (TM) went off big time, so loud I was sure she’d hear it, but she didn’t. (I have them for sale cheap if you don’t have one already, I even make my dogs wear them, although they seem to have an innate sense.)
Yup, I was right, checked the MLS a few days later, there was the house with “Under contract.” I felt a bit like you might feel when the turnip truck leaves w/o you, but got over it pretty fast (about 3 seconds), as I knew I was just fiddling and not too serious.
Fast forward, house back on the market, the deal fell through from financing. Now she’s stuck with a smarmy RE person and a 6 month contract at a price that’s way too high. Pure schadenfruede.
Offer her 100K less than the original price.
That, my dear, is true schadenfreude.
PS :- Take pictures and a video too.
Yeah, I thought of going through the RE person and offering her $125k less, but I’ve decided not to,as I’m not yet ready to end my life of service to others (via making lowball offers on houses).
Oh it all depends on whether you liked the place enough. I thought maybe you did.
If not, keep up the good work.
Got the listing? I like looking at stuff out that way.
http://www.rmwrealestate.com
this has a bunch of listings you can browse, the one I was looking at is MLS: 584526 under the Cedaredge heading.
Excellent commentary on the current speculative oil boom from “The Australian”:
http://www.theaustralian.news.com.au/story/0,25197,23743273-7583,00.html
Here’s one from Craigslist (Western Slope, Colorado) I’m thinking of offering 40k, it sold for that about 8 years ago (and no, it’s not that close to Telluride). And what does it tell you when the property’s asking is 475k and the taxes are $13.37 ???? Maybe there’s a bubble??
“$475000 Cowgirl Heaven (Telluride, Colorado)
This is one of the most beautiful and diverse properties on Hastings Mesa… The land features exceptional views of the Sneffel Range, the Wilson Range, and Alder Canyon. There is a forest of Aspen trees and oaks. … Ideal for mountain get away, equestrian pursuits, (one can ride forever right out off the land) family home or fishing base.
35.78 Acres
Very low taxes: $13.37 per year”
are there utilities on the property?
A well, don’t know about elec., etc. Snowed in bad all winter. lots of snow. Check it out on Colo. W. Slope Craigslist under RE for sale.
This little piggy played the market.
This little piggy bought a home.
This little piggy was underwater,
This little piggy had no equity.
And this little piggy went “Wee! Wee! Wee!” as they took away his home.
Shout out to my boyo who frequents the “Dew Drop”, but only on thirsty thursdays…
looks like the big three hedgies are looting the Krona, got a comment on the Nordic Central Bank steppin in to stave off the looting operations?
Fallout From a Bailout
How the Bear Stearns Intervention Will Haunt the Fed
By Vincent Reinhart
Thursday, May 22, 2008; Page A25
The Senate Banking Committee approved legislation Tuesday that would empower the Federal Housing Administration to provide relief to mortgage borrowers teetering on the brink of default. The House has already passed similar legislation. Only two months ago, mortgage aid was viewed as unlikely, but the odds now favor it becoming law. For this change of fortune, the legislation’s chief sponsors, Sen. Chris Dodd of Connecticut and Rep. Barney Frank of Massachusetts, should thank one person in particular: Federal Reserve Chairman Ben Bernanke.
“The average American, meeting the struggle to live within his or her means, bridles at the notion that those who are overextended should be helped.”
So why are we helping when the pols say they shouldn’t?