Bits Bucket For June 2, 2008
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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If you sent me an email about the California HBB meet-ups, you should have received the information by now. If not, please let me know and put OTR-SD, LA or SF in the message bar.
When times were good, Mark Gershman’s salary was all but an afterthought. It made up only about 20% of his pay. The remaining 80% flowed from sales, which were brisk, of the floors and countertops he sells in the once white-hot housing market of Scottsdale, Ariz.
Now? His commissions have shrunk, and he’s living mainly on the monthly stipend that is his salary.
http://www.usatoday.com/money/economy/2008-06-01-commission-tips-pay-income_N.htm?loc=interstitialskip
The article contains the following quote: “But the early ’90s price declines weren’t as dramatic as the drops we’re seeing now,” Timothy Warren Jr., chief executive of The Warren Group, said in a prepared statement. “Let’s hope that these lower prices bring buyers back to the market, so this slump will have a shorter duration.”
It has always disgusted me that those that have interest in real estate always try to make it sound that prices falling back towards an affordable range is a horrible thing. The fact of the matter is that it is needed for the future success of this Country. It is even more disturbing when public officials make such comments evidencing that they don’t have the ability to see beyond their own selfish interests.
And enough with this ignorant slump talk. Prices are still about 30% higher than they should be under historical norms. Slump? WTF! Other than in comparison to the period between 2000 and 2006 right now is more appropriately characterized as a boom. Even if prices fall another 20%, we will still be in the boom period. Why can’t ppl understand deviations are deviations, not the norm.
“It has always disgusted me that those that have interest in real estate always try to make it sound that prices falling back towards an affordable range is a horrible thing. The fact of the matter is that it is needed for the future success of this Country. It is even more disturbing when public officials make such comments evidencing that they don’t have the ability to see beyond their own selfish interests.”
I agree. But many of those public officials are stuck. When you’ve reduced your economy to borrowing money from the Chinese to buy and sell homes to each other (to paraphrase Paul Krugman from a few years ago) your options are limited. We need to get back to affordable housing and we need a real, sustainable economy.
And every force possible will be arranged against the idea of a sustainable economy with affordable housing. We just can’t have people: working decent jobs for decent pay, and then going home to spend a peaceful evening with their family in an affordable house. No - dissent must be created, the peons must be kept tied up and overburdened, etc. That way, the elite can continue to loot in peace.
Amen, Tim!
Home prices across the northern suburbs posted sharp declines from January to April, with double-digit percentage drops recorded in several communities compared with the same period last year, according to statistics released last week by The Warren Group, a Boston-based publisher of real estate data.
http://www.boston.com/news/local/articles/2008/06/01/home_prices_see_sharp_decline/
Mort. Defaults Keep Going Up… This comes as no surprise, I guess the big Gubmint bailout is running a little behind schedule.
http://online.wsj.com/article/SB121236060176236293.html?mod=todays_us_page_one
“On a trip to the Mideast over the weekend, U.S. Treasury Secretary Henry Paulson said there is “no quick fix” to high oil prices because it is an issue of supply and demand. He was on the trip to deliver a message to officials of Saudi Arabia and other oil-producing nations that soaring oil prices are putting a burden on the global economy.
Global demand remains strong while “production capacity has not seen new development,” Paulson said Sunday in Qatar. His trip was designed to urge Mideast producers to allow more outside investment to boost output.
The day before, though, the current president of the Organization of Petroleum Exporting Countries again blamed the weak U.S. dollar, speculation and the subprime crisis for the spiraling price of oil.”
Check out that last sentence. The subprime crisis is responsible for the spiraling price of oil??????? Well, OTAY! The next time I see an FB, maybe I should give them a good piece of my mind for driving up the price of oil.
Why do the oil producing states need outside investment to increase production? Presumably, they are making moeny hand over fist these days. Of course, if they invested their own money they might not use Haliburton or some other US firm to do their engineering, but that isn’t what Paulson was really out there talking about, was it?
/sarcasm off/
They need outside investment not in terms of money, but manpower. They simply don’t have the workforce to expand much of anything, except the social welfare rolls. Hell, I’ve been to Doha twice to try and help the Qataris improve their workforce, but it’s hard to motivate people when their government just hands them a cushy desk job and a stipend.
Captain Crunch, ahoy! I like your moniker.
Being a paranoid skinflint, I am looking for the next safe harbor when the parrots start hitting the fan here in metro DC. I know, I know, mixed metaphors fall somewhat short of the mark we have come to expect at HBB. Truly, we have become spoiled. Trust me when I say this is the best I can do at 1:20 am.
I rather like the idea of the expat life, have been toying with it for some time (teaching English in China? Leveraging my oil operations experience in Dhahran? Carrying coals to Newcastle?), but whenever I have needed a job it has been NOW. Truly, I have been a wage slave. But have always worked good problems with very competent people.
Now that the sprogs are gone, I can go wherever I want. So I want to begin preparation now, before all the Pollies want a cracker at the same time, just when the cracker supplies dry up.
How do I start feeling things out? Thanks much!
How come there’s no quick fix for oil prices…but an endless supply of quick fixes for housing prices? Why are the forces of supply and demand suitable to determine the price oil…but not housing?
Cuz oil is “an issue of supply and demand” and housing is the ATM machine for America. Can’t have a broken ATM. Free money for everyone.
If a majority of Americans owned barrels of oil in their basements, you can rest assured that the politicians would be fighting to keep oil prices high while subsidizing oil for “the less fortunate”.
I doubt it. Plenty of people actually “own” their houses outright, and congress doesn’t seem to give them a thought at all. It’s those that partake in the wage slavery scam of lifetime debt that seem to garner all their concern.
Actually congress thinks of outright-owners and their cousins the savers and the productive workers all the time! Since they’re the only one’s with $$$, they’re the only people congress can tap to buy votes from the majority (of non-savers and lazy-assers)
“I doubt it. Plenty of people actually “own” their houses outright, and congress doesn’t seem to give them a thought at all.”
Surely, you are joking. Congress is trying to protect “the wealth” of Americans even if that wealth is bogus. The fact that Congress has huge holdings in real estate certainly impacts their thoughts on the matter of keeping prices high. But if Johnny Lunch Pail owned oil, and paid property taxes on it, you can bet they would fight to keep prices high.
This food and fuel inflation has to be hurting the elderly fixed-income folks, and I’m surprised that we don’t hear more from the AARP; maybe they aren’t so powerful after all.
Can the management of AARP touch their own noses correctly let alone analyze complex relationships between prices, interest rates, inflation and currency devaluation?
Yes, RMS..why is not the AARP more vocal on this issue? Could it also be that that mythological savior of farflung housing markets - the wealthy senior - is not as plentiful as the REIC would have us believe?
Faster Pussycat — you are wrong about older people. I have been working with a retiree organization from the large corporation I work for — let me tell you that I know for a fact that the retired people who still want to be involved are in many cases much more motivated and on point than younger less motivated people still in the work force. Nothing fazes them — I need to learn html and maintain a website? ok, let me at it. I need to project manage this project — no problem, i’ve been running hoa projects in my neighborhood for years . . . not everyone is like that of course, but i’m sure the leaders of the aarp are. (in other words, no reason for you to feel so superior to older people, its an individual thing . . . stop the age discrimination
: )
I was talking about the management of AARP not old people in general.
However, your reading comprehension skills seems to be making a larger point too.
It’s not reading comprehension . . . its just that i don’t actually know who manages AARP . . . i’m assuming its run by their members though . . . ok, if you weren’t insulting older people, who were you insulting, why would AARP management in particular not be able to touch their nose for example, or understand the complex issues that you are such a master of?
By the way, I test in top 2% for reading comprehension, so I’m not too worried what *you* think about it ; ) my “misinterpretation” had nothing to do with reading comprehension and everything to do with the fact that probably neither of us knows much about aarp management and who is doing it, and your post does seem to veer towards ridiculing that organization . . . unless you just think all management of everything can’t touch its nose, which i don’t know you well enough to determine, oh sweet and aggessive pussycat
AARP is a big business. They don’t give a damn about their members - they just want to sell them stuff.
AARP is just another, I want your money organization. Evertime I receive an invitation to join, I write in black marker across the first page…”stick this where the sun doesn’t shine”. Obviously, they don’t read, cause they keep sending their crap to me. I figured it out once, that if you participate in all their programs, you could spend $300.00 per month, plus a membership fee. It just another organization building upon its own ego….and retirees money.
peaceful: this is a peaceful board, we don’t do that here.
Seems to me that Peaceful isn’t all that peaceful. Seems like your the one that just doesn’t get it. The AARP is a fee sucking orginaztion that DOES NOTHING for its members. Evidenced by their backing of the our GOVERMENT”s AGREEMENT WITH THE BIG PHARM NOT TO NEGOTIATE for the best price for Prescription Drugs under Medicare.What a total disaster!!!!!! I’ll
NEVER GIVE THE AARP A RED PENNY OF MY MONEY. Senoirs We Must UNITE!!!!!!!!!!!!!!!!!!!!!!
Senoirs, French?? -
AARP is a **business** that makes money off its members. These are some of the goods/services provided (sold) by AARP:
AARP Services, Inc., founded in 1999, is a wholly owned subsidiary of AARP. AARP Services manages the wide range of products and services that are offered as benefits to AARP’s 38+ million members. The offers span health products, travel and leisure products, and life event services. Specific products include Medicare supplemental insurance; member discounts on rental cars, cruises, vacation packages and lodging; special offers on technology and gifts; pharmacy services; legal services; and long-term care insurance. AARP Services founded AARP Financial Incorporated, a subsidiary that manages AARP-endorsed financial products including AARP Funds. AARP Services develops new products, manages and markets products and services, creates and maintains partnership and sponsorship relationships, and develops and manages AARP’s Web site, AARP.org.
http://en.wikipedia.org/wiki/AARP
I’m not the brightest flame that flickers, but a thought /question just entered the area of what some perceive to be my brain; could a demand for US dollars to purchase oil be the reason for the current run-up in the price of oil?
Raising interest rates would lower oil prices.
True, in the short term, but not back to $60 oil. $90 oil maybe. Long term, there really is a supply problem, and cheaper oil would only increase demand. We would be right back where we started but with higher rates crushing our debtor society. Fun choices, eh?
Sounded like Paulson was looking for another quick fix. Suspect all these quick fixes are what got us into this mess.
You want $60 a barrel oil? How about $20? Make me Chairman of the Federal Reserve, I’ll give it to you!
Ah, life. You can have anything you want. But you can’t have everything you want.
*and* it would lower house-prices! A win-win for everyone!
(When will the gub’ment start adding housing back into its inflation calculations to prove that inflation’s under control?)
We could cut consumption very quickly
1. Lower speed limit
2. Carbon tax with procedes used to reduce income taxes
3. Stop war in Iraq use money to improve US efficiency. The price of oil would collapse if we and our trading partners did this. Instead we send our president and others to beg those that brought us 9/11 ect for more oil. Pathetic
If the gas pain were as bad as the media makes it seem, people would voluntarily lower their speeds. This past weekend I drove up to Tennessee on I-75. I was on cruise at 80 and was for the most part one of the slower vehicles on the road.
Power required is proportional to velocity cubed
- It’s not just nature, it’s the law!
How about riding horses? They can go at least 35 mph and most people ride alone in their cars anyway.
Raising interest rates would lower home prices.
And at 14+ % ….”Investors”…. would not be buying 7 houses
Yeah, bring it on. HIGHER interest rates is a gift to us CASH COW’s and a BLESSING to those that seek affordable housing for the prices will bottom out on this housing debacle. The best possible solution for all. Let’s just get it done.
this winter will bring FBcicles:
PORTLAND, Maine—While people in most of the country may be worried about their summer air conditioning bills, many residents in the Northeast are way beyond that: They’re already thinking ahead to next winter’s heating bills.
And what those who heat their houses with oil are seeing is giving them sticker shock.
http://www.insidebayarea.com/business/ci_9446865
Two years ago when I owned a place with oil heat I was stunned to pay $1.90 a gallon for oil, which was costing me about $1200 a year for heating. Paying over double that price would be difficult.
$1200 for a winter in the NE doesn’t seem like a lot. I pay about $500 to $600 for gas heating in Georgia over the winter. And that’s for a winter that isn’t all that wintry really. Paying twice as much for a New England winter doesn’t seem so outrageous.
To clarify: it was $1200 two years ago keeping the temp at about 67. It would be at least $2400 now and that’s in upstate NY. While the $1200 may be somewhat reasonable, the $2400 is much less reasonable. Oil was used strictly for heating; gas and electric was another $80 or so a month.
I’ve got a coworker, smallist, older 3bed/1bath two story house (eg, typical New England SFH) with heat and hot water on oil. Two young kids and a stay-at-home wife. Hammers on them all the time to turn down the thermostat.
His oil was running $800 every three weeks last winter 275 gallons @ $3.00 a gallon + delivery fees, etc.), mid-November through the end of March.
Let me repeat that: $800 every three weeks.
When I rented a house a few years ago, $800 got me through the entire winter.
That is going to put a serious crimp on the economy. And the towns just don’t have the money to put in natural gas lines (and I’m sure the oil heat guys and their political connections would shut that down anyway).
Out here, it’s propane, no natural gas. The 1500 sq ft modular a block away was costing its owners $800/month to keep warm last winter.
These numbers are astounding…
I just about have a heart attack when I see my electric bill for 150-200 bucks for cooling my house here in Tucson during the hottest part of the summer…. during winter/fall I average maybe 50 bucks a month.
Of course, we’ll have bigger problems when the water dries up in a few years =P
Of course, we’ll have bigger problems when the water dries up in a few years =P
Do people in the Southwest pay a lot for water, or no?
(I’ve only lived in freshwater-rich places.)
Yes, if it’s through the municipality. Less so if you have your own well- ground water is at 400 ft and it’s expensive to drill the well, about $25K.
I have about 3000 sq ft in lawn near Tucson. My summer water bills can run as high as $250/m. Last month was $150. Winter runs about $50. Sewer costs add $35/m.
However, areas near rivers such as Yuma have only 10 ft to groundwater, much cheaper.
Cost me about $200 a month last winter for my elect bill. That is heat, hot water, lights, laundry, pool filter, etc. No natural gas, no propane, no oil. Everything is electric.
For the Spring and Fall, with AC and heat both off, $125 elec bill. Summer I mostly use evap cooler. Last summer my highest bill was August at $225.
you can ram their SUV w your escort
Hey I resemble that remark…..My 96 escort has 53,000 miles so $4 gas really doesn’t affect me that much……
We still will go to Rockaway Beach at 11 am on Tuesday or Thursday mornings right after the street sweeper alt side , and get a parking space right on the beach!….its 20+ miles each way…but its still cheap fun.
I saw several suv$$$$$ sitting on the side of the road in queens yesterday with 4 sale signs
My 97 escort wagon just passed the 53000 mile mark too.
Love it as it gets 25 to 29 mpg - better that a LOT of newer cars.
Can zip around Queens all day on a Saturday and not even use a 1/4 tank.
Paid for, easy to maintain, low insurance, etc. makes it cheaper than renting even one weekend a month.
BUT the trickle down effect of gas prices on other prices is worrying. Plus, my employer’s sales figures/trends in gas dependent parts of the country have become worrying.
Were there some recent emission std changes on newer vehicles? I was looking at sedans for my husband in case there is any change to his employer’s corporate vehicle policy. I was very surprised to see that my V6 minivan actually isn’t that much worse on mileage than many smaller cars.
I never drive pure city so I can’t offer what I get for that. But in mixed driving we get 23-24 mpg/27 highway. I was a little disappointed as we had traded in his diesel Jetta which was driven mostly highway for up to 51 mpg. We were on the fence about trading that in w/mine or keeping it. Also I could have sworn my ‘95 4 cyl Camry was getting 33-35 highway.
The EPA changed the way it calculates mileage last year to make it more accurate to actual real-worlddriving conditions. The result is that the majority of cars now show lower mileage numbers.
If you ram a large SUV with your Escort, the other driver may not notice.
Went to the shuttle launch this weekned. SUV’s everywhere. I was really suprised. On guy in a Hummer did some off roading to pass everybody else that was waiting in the hour-long line of traffic to get out of the parking field. Talk about making my blood boil.
I live in Titusville and took some out of town friends to watch the shuttle launch. I need to find a way to make money showing out of towners which back roads to take.
The only thing dumber than a Hummer is the person behind the wheel of one.
We have one of the supposedly largest Hummer dealers anywhere in my little burg. It looks like it too. Acres of Hummers in every color, frying in the sun…
Sunday morning I went out for the newspaper and watched the lady at the gas pumps change the price from $4.06 to $4.14/gal. (Heard CNBC in the background today w/a teaser for a guest suggesting $12 -$13/gal could be possible in the US. Talk about anarchy potential!)
Later that Sunday I was following someone in one of those giganto Dodge pickups that’s extra wide w/double rear tires on each side. It was sparkly new–I was wondering how deep a discount he got on that baby. Seems some people are never phased. Must be one of the horsey set.
I noticed my favorite restaurant was packed as usual too. I guess those median income stats for the area must be too low.
/sarcasm off
I still look at the local forums only to read people telling others upset w/local taxes that they can move if they don’t like it. (Sigh)
Drove by a day care center the other day - 90+% SUVs lined up and ready to pick up the kids.
Jon,
I would have paid for some advice… traffic was a biatch. I watched form the astronaut HOF. It was worth the price of admission to see the pasty-white Britts turning purple in the Fla sun.
The subprime crisis is responsible for the spiraling price of oil???????
It is, indirectly.
The subprime crisis is responsible for the solvency (not liquidity) crisis of Wall Street. In response, the Fed is pumping dollars into the banks to try to keep them alive. These extra dollars are responsible for fall in the USD and speculation in oil, both of which are responsible for the increased USD price of oil
It’s the flight to quality (perceived or real) that drives oil speculation as well. Hedgies have nowhere to put their cash and god forbid they break even for a while even during a recession. I wish I knew where the money is headed next. Anybody have any idea where the next bubble will emerge?
Keep your eye out… you will likely see it forming before the Fed sees it popping
It makes me feel a little dirty, but I’d like to be on the side that makes the money for once in my life.
The euro price is also going up at a steep clip, though it’s trailing the USD so far. Don’t be fooled that this is only happening to the USD price.
It’s worse for the dollar, but it’s hitting everyone.
stammering hank:
DOHA, Qatar, June 1 — U.S. Treasury Secretary Henry M. Paulson Jr. said Sunday that there was no quick fix to high oil prices, which he called an issue of supply and demand.
Paulson said inflation in the Persian Gulf is “significant” but suggested that Gulf countries pegging their currencies to the weak dollar was not the only reason for it. He said it was each country’s “sovereign decision” whether it wants to de-peg its currency the dollar
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/01/AR2008060102020.html
June 2 (Bloomberg) — U.K. mortgage approvals dropped in April to the lowest in at least nine years and manufacturing growth ground to a halt, bringing the economy closer to a recession.
http://www.bloomberg.com/apps/news?pid=20601087&sid=afif_B0hFczI&refer=worldwide
Morning, all. Neighbor’s accursed wiener dog has been barking–as it does every night– pretty much non-stop since 1:30.* Gave up trying to sleep around 3 and gave silent thanks for Ben’s archives. It’s oddly reassuring to know that there are so many Cassandras running around out there in the intertubes. I’ve learned so much from you guys. Thanks!
*Neighbor is the regional Animal Control Officer–it’s a long and ongoing story. Suffice it to say the corruption and incompetence of Our Country’s Leaders has trickled down to even the lowest rungs of its bureaucracy. Fun fact: Did you know that in kern kounty you can get a “master’s degree” in dog-catching?
Weiner dogs taste like chicken franks.
You need to record the accursed dog barking for a month. Then sue the neighbor. I suggest $100 per hour the dog keeps you awake. Plus record all conversations to the local government about this. Or you can kill it. Try to lure a mountain lion in to your neighbors yard that would make sort work of that bitch. Maybe you can make your own blue ice and squash it when no one is around, blame American Airlines or one of the soon to be defunct airlines.
“You need to record the accursed dog barking for a month.”
Then you need to play back the recording 24/7 while you go on a month long vacation.
When I lived on a noisy street, I used white noise cds. There is a website for them. Also, get a good stereo with strong base. Play the cd on repeat. problem solved.
“Morning, all. Neighbor’s accursed wiener dog has been barking–as it does every night– pretty much non-stop since 1:30.”
Get one of those ultrasonic thingies that go off when the dog barks.
Hey, he’s already suffering from the dog barking, why would he add ultrasonic pain??
(BTW, don’t you have to put those on the dog? His neighbor might not let him.)
Only doggies can hear the ultra sonic thingies. We (people) don’t have sensitive hearing like that.
Yeah, but in England they drove off the teenage flock by playing Barry Manilow Muzak =
I’ve used one of those ultra sound thingies, with some success. A lot depends on proximity and type of dog, but it shut the ones up that were bothering me.
Teenagers and kids can hear them too. It’s a twofer.
We techies created the frequency wav mentioned in news reports about malls using it to drive away loiterers, and played it on our speakers when the bosses teenage sun was wandering around. More fun than teasing dogs…
where oh where are the coyotes?
seriously, small dogs are nighttime bait….
I found an antihistimine stuck in 1/2 a hotdog did the trick on that rare occasion..
now that’s clever….Benadryl does make most dogs drowsy (people, too, which is why some people use it for insomnia)…
Two words: “Cattle prod”
Preferably after a good rain.
the owner, not the dog, because HE is the actual problem
By slashing interest rates in the face of rising price pressures, has the world’s most important central bank sowed the seeds of a new inflationary era? It’s an alarming idea, but one gaining currency all the time.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/01/ccliam101.xml
“…In a recent private seminar, I heard Greenspan say: “If we allow inflation to re-emerge, growth rates will slow, living standards will suffer and we could well see US stagflation. And the only way you can truly contain inflation is by raising rates.”
It doesn’t help Bernanke that his predecessor has the brass neck to offer advice he refused to follow himself. But with producer price inflation above 6 per cent and one-year inflationary expectations hitting a record 7.7 per cent last month, US rates must rise….”
Buy US Treasuries soon to be yielding 2%! I still have more available. Act now or be priced out forever
Prices are not rising. Just look at GDP where the Bureau of Economic Analysis applied a 2% annual price deflator to arrive at real economic growth at an annual rate of 0.9%.
“They do not even have control over themselves! Do not believe them!”
“Please, please! The Americans are relying on what I called yesterday a desperate and stupid method.”
Baghdad Bob commenting on Ben Bernake?
I loved Baghdad Bob. We should have invited him to the U.S. and set him up with his own TV news program.
Or maybe as spokesperson for the NAR.
There are NO bulldozers in this development!
“”We have them surrounded in their homes”
“We don’t rule out that in their depression at being vanquished, those losers will become hysterical and commit even more folly.”
Baghdad Bob
“Prices are not rising…”
I assume you’re not counting: food, energy, health care, education, etc. Right…
I’m not doing the counting, the BEA is.
“The world has now changed. So weak is the US currency, so large are the country’s debts, and so powerful is this “structural” oil price shock that even an overtly political central bank like the Fed can no longer do what it wants.”
During this political season, let’s be reminded of these wise words:
You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away men’s initiative
and independence.
You cannot help men permanently by doing for them what they could and
should do for themselves.
Abraham Lincoln
someone should send that to Barry
Close but no cigar. It’s Rev William J. H. Boetcker (and it’s a very un-Lincoln-y quote.)
http://en.wikipedia.org/wiki/William_J._H._Boetcker
Yes, very un-Lincolny indeed.
Lincoln did not say any of this.
http://www.truthorfiction.com/rumors/l/lincoln-quotes.htm
You cannot bring about prosperity by discouraging thrift.
Anyway, how about sending this one to Bernanke and the man who appointed him?
Thats ok Yogurt. Any lie to continue the coddling of the wealthy elite is fair game to the GOP.
In other words, protect the wealthy elite.
Ain’t gonna happen.
Doesn’t matter who said it. It’s true. Making a rich man poor never makes a poor man rich.
Raise your hand if you’ve ever worked for a poor man?
How in the world will raising the capital gains/dividend tax rate to 20% make the rich man poor?
A better question is how will lowering the tax rate to 10% make society better off. Look at any 5 year period following a capital gains tax cut and you will see total capital gains taxes sent to the IRS increase. And you’re right it won’t make him poor. He’ll just take the money he’s investing with the tax rate at 15% and invest in something/somewhere else.
Liberals still don’t get it. Every time taxes go up, people don’t just stupidly stand there and pay up. They look for ways to minimize or eliminate that tax increase. It could be as simple as not reporting income, working less, setting up offshore accounts and everything in between. The only people raising taxes truly hurts is the middle class salaried working stiff who has no options other than to pay up.
I have a good friend who makes a decent living. I don’t know the exact figure, in the neighborhood of $500K a year. He has enough that he could take several years off without working. His plan, should Obama become president and his worst fears are met regarding taxes, is go live on a beach until someone can get in there and revert taxes back. Simplistic plan I know, but he is serious. And he’s absolutely right. If he has to pay over 50% of his income in taxes (not even counting sales tax, property tax, gas tax, etc) then what’s the point of working? So the government will go from getting 1/3 of 500K to getting nothing. Unfortunately I don’t make anywhere near what he makes, but I’ve started looking at options myself. Number 1 on the list is leaving the country for more favorable tax locales. My wife’s family is from S. America and we could get set up quite nicely there. She’s all for it.
The two of us are just small fries who doesn’t mean much alone. But you multiply the lost tax revenue from us by thousands and add in the thousands more who will just stop reporting their income and the thousands more who will pay their accountants to shuffle things around as to not pay taxes and the thousands of companies relocating offshore to pay less taxes….and it starts adding up to a lot of money.
Confiscating money from those who produce in order to give it to those that do nothing is a recipe for disaster.
I agree Manny. Considering the wealthy elite have never paid a lower % of their $$$ in taxes, I say it’s time for the rest of us(the majority) to get a big fat tax cut. And to pay for this, tax the wealthy elite and the same rate we are taxed. Or would you prefer we borrow at a 6% premium to make up for the lost revenue?
“better question is how will lowering the tax rate to 10% make society better off. Look at any 5 year period following a capital gains tax cut and you will see total capital gains taxes sent to the IRS increase”
Yes because the wealthy sell their stock in order to lock in gains, believing rightly that the tax break might vanish in the future.
“Liberals still don’t get it.” ???
Here’s the one middle class conservatives who support the right of the elite not to pay taxes don’t understand. Inflation is a tax. If the US doesn’t pay it’s bills and runs up debt (as has happened over the last 7 years) the value of it’s currency falls and you get inflation combined with rising interest rates. Sorry Cheney Deficits do matter.
“Every time taxes go up, people don’t just stupidly stand there and pay up. They look for ways to minimize or eliminate that tax increase. It could be as simple as not reporting income, ”
It’s called tax evasion, if you ramp up prosecution you’ll solve the problem. Ask Wesly Snipes. Unfortunately we’ve rolled back prosecution on tax cheats.
I always love that threat, we just won’t work as hard if capital gains taxes go up. Sitting on the beach is going to affect his capital gains how??
Seems to me they were all working (or rather investing) prior to the tax cuts?
If your friend actually works for a living and gets a pay check you should ask him how he likes AMT. I’m in the same tax bracket as him and have a lot invested and I can tell you AMT hits me much harder than the cap gains tax and dividends tax break helps. I mean really if you’re going to state that increasing the capital gains tax will keep people from working, what about AMT. That crushes middle and uppermiddle income Americans. Most conservatives like you don’t even understand the shift in the tax base created by AMT combined with dividend and capital gains tax cuts.
All this crybaby talk about “…..moving out of the country, if so-and-so gets elected…..” reminds me of all the crybabys that took their football and went to the house, if the game wasn’t played in their favor.
The more things change, the more they stay the same…….
Don’t let the door hit you on the ass on the way out. But don’t bother coming back, either.
I’ve always judged people by “who showed up” when times got tough. That’s when you find out who you can count on.
It’s getting close to “Put-up, or Shut-Up” time in the Land of the Free, and Home of the Brave.
“Number 1 on the list is leaving the country for more favorable tax locales. My wife’s family is from S. America and we could get set up quite nicely there. She’s all for it.”
Don’t try giving up your citizenship to avoid taxes. If the IRS decides that was your reason, they can STILL tax you for something like 10 years…
OMG, I don’t want to destroy the rich. I only want them to stop destroying us.
More importantly I’ve worked for several rich men who started out poor men. Since so many of our well to do are former poor men w/a hunger in their belly, I would like to counter your question with my own: why do we want to cripple the poor men?
Great point.
A country that preserves wealth for those that have not earned it (skimmers, thieves, rich politically connected kids, bankers ect) and suppresses those who are hungry and wish to make money will collapse.
Raise your hand if you’ve ever worked for a poor man?
—————————–
Me!!! (raising hand)
Most small business owners (who employ most workers) are NOT rich.
When libs talk about “the rich” they are not usually talking about the **productive workers** who form companies that provide necessary goods & services and pay their employees a reasonable fraction of their own pay — hedge fund managers and assorted deal makers DO NOT qualify as “productive workers”. It’s usually those who control information or money flow who are “rich,” not the workers.
If the top 1% of wealthy/income earners were to fall off the planet tomorrow, I do not believe anyone would actually notice, except there would be more money for the actual workers. The highest-paid/wealthiest are not so bright, not so talented that they deserve to be paid 1000X or more what their employees make. NOBODY is that good.
–
“In other words, protect the wealthy elite.”
That is the same in today’s term as: Protect the King!
“Wealthy elite” are America’s rulers, whether or not the American People admit it. Democracy = Domination of Money. And we have come a long way in that direction.
Jas
All apt principles to be sure, but ‘most certainly not Lincoln’s.
http://www.bartleby.com/73/1117.html
The “Brat Stop” located at I-94 and WI Hwy. 50 west of Kenosha used to have a close equivalent of that printed on the cover of their menus - and they attributed it all to Lincoln too.
Now, if you can’t trust a WI bratwurst peddler - who can you trust?
Actually those quotes were not Lincoln’s, they were William Boetcker’s:
http://en.wikipedia.org/wiki/William_J._H._Boetcker
… and perhaps the most pertinent “cannot” of Boetcker has been left off the list:
“You cannot establish security on borrowed money.”
The full list is:
1. You cannot bring about prosperity by discouraging thrift.
2. You cannot help small men by tearing down big men.
3. You cannot strengthen the weak by weakening the strong.
4. You cannot lift the wage earner by pulling down the wage payer.
5. You cannot help the poor man by destroying the rich.
6. You cannot keep out of trouble by spending more than your income.
7. You cannot further the brotherhood of man by inciting class hatred.
8. You cannot establish security on borrowed money.
9. You cannot build character and courage by taking away man’s initiative and independence.
10. You cannot help men permanently by doing for them what they could and should do for themselves.
… and perhaps the most pertinent “cannot” of Boetcker has been left off the list: You cannot establish security on borrowed money
Now why would that be?
“There ain’t no free lunch”
?
And let’s have something that Lincoln actually said:
“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.
Speech to Illinois legislature, (January 1837); This is “Lincoln’s First Reported Speech”, found in the Sangamo Journal (28 January 1837) according to McClure’s Magazine (March 1896); also in Lincoln’s Complete Works (1905) ed. by Nicolay and Hay, Vol. 1, p. 24.
http://en.wikiquote.org/wiki/Lincoln
Sorry, couldn’t resist another one:
Allow the President to invade a neighboring nation whenever he shall deem it necessary to repel an invasion, and you allow him to do so whenever he may choose to say he deems it necessary for such purpose, and you allow him to make war at pleasure. Study to see if you can fix any limit to his power in this respect, after having given him so much as you propose. If to-day he should choose to say he thinks it necessary to invade Canada to prevent the British from invading us, how could you stop him? You may say to him, — “I see no probability of the British invading us”; but he will say to you, “Be silent: I see it, if you don’t.”
To provision of the Constitution giving the war making power to Congress was dictated, as I understand it, by the following reasons: Kings had always been involving and impoverishing their people in wars, pretending generally, if not always, that the good of the people was the object. This our convention understood to be the most oppressive of all kingly oppressions, and they resolved to so frame the Constitution that no one man should hold the power of bringing this oppression upon us. But your view destroys the whole matter, and places our President where kings have always stood.
Letter, while US Congressman, to his friend and law-partner William H. Herndon, opposing the Mexican-American War (15 February 1848)
Those who cannot learn from history are doomed to repeat it.
George Santayana
No, it was Lincoln who said that…
Allow the President to invade a neighboring nation whenever he shall deem it necessary to repel an invasion, and you allow him to do so whenever he may choose to say he deems it necessary for such purpose, and you allow him to make war at pleasure.
Of course, as soon as Lincoln got to be President, he was all in favor of that. Funny how that happens, isn’t it?
Big ol’ can o’ worms lobbed out there! I won’t go there, except to say - it’s over - let it go.
I did not check the source, it was sent to me in an e-mail.
They are good points none the less. Of course it does make the point that a person should be responsible for their actions, and that does not sit well with some folks.
I find it interesting that so many people could tell that the tenor of the quote was not Lincoln. I actually would have guessed Ayn Rand.
sounds like feudalism to me.
Brent Saba had just dropped a church group off at Philadelphia International Airport on Sunday morning and was heading north on Interstate 95 when it happened: His 15-passenger van ran out of gas.
Saba, a 24-year-old church pastor, made it to the shoulder just past the Ben Franklin Bridge and waited more than 30 minutes for someone to stop and lend him a cell phone. Then he waited a while longer for AAA to arrive with fuel.
With gas prices hovering at $4 a gallon, motorists like Saba are putting less fuel in their tanks—then coming up empty on the highway.
http://www.insidebayarea.com/business/ci_9447186
“With gas prices hovering at $4 a gallon, motorists like Saba are putting less fuel in their tanks—then coming up empty on the highway.”
That plan may not work out very well unless motorists like Saba also reduce their driving mileage.
These people are idiots. As if not putting more fuel in at each station visit helps save money. The only solution is to drive less.
Besides, I know that when gas prices are going up rapidly I want as much fuel in my tank as possible. That way as the prices rise the gasoline in my tank gets more valuable. Keeping ones tank on E while prices are rising quickly is equally retarded as thinking putting in less fuel saves money.
The contrary is also true, when prices are falling it’s best to keep your tank empty.
Not putting more fuel in saves money.
A corollary of the rocket equation, although not the increasing acceleration version.
But clearly, lugging around less mass in the form of fuel (and assuming it is costless to spend your time fueling) does improve MPG!
http://en.wikipedia.org/wiki/Tsiolkovsky_rocket_equationv
And if your cash flow situation is so tight/desperate that keeping your tank full/empty matters, you’re in a world of hurt regardless.
Well in theory driving with less gas in the tank will yield better mileage. That could have been the motivating factor in his decision.
Speaking of which - what about the notion that you get more gas when you fill up in the morning, while it’s cooler? (at least in the summer).
I am guessing that this may be technically true - but I’ll bet the amount gas saved is incredibly miniscule.
In Texas, I’m waiting to see more empty tanked empty bedded pickups spun out/flipped on the highway. These NASCAR Truck Racing wannabes don’t need any less weight on the rear end the way they weave through traffic.
Wachovia board ousts CEO Ken Thompson.
“No single precipitating event caused the board to reach this decision, but a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and its performance,” the firm said in a press release. It added that, “the board believes new leadership will help to revitalize and reenergize Wachovia and enable it to realize its potential.”
Here’s the link to Marketwatch.com:
http://tinyurl.com/64fbn9
“Walk-over-yah” has proven to be astoundingly corrupt and incompetent all at once. I am surprised that they would take any action against any member of the band of crooks that runs the show over there.
Last time Wachovia tried to r.e.vitalize and r.e.energize itself by buying option ARM lender Golden West, things didn’t work out so well…
“There are three ‘vicious cycles’ the U.S. economy must face, former treasury secretary Larry Summers told the Financial Times. The first is a liquidity cycle, a kind of wash cycle in which unreasonably high asset prices are laundered out of the system… People are forced to sell…thereby sending prices down further. The second is a ‘Keynesian cycle,’ in which a slump in the economy rinses out the habits of the bubble period. People begin to spend less…and save more. This, in turn, gives rise to the spin cycle - where, as we imagine it, people get dizzy and depressed because their incomes are going down; they can’t borrow; their costs are rising; and they’re getting poorer.
“Where are we in these cycles? Probably only at the middle of the first cycle.”
I wonder if Henry Paulson thinks there might be a quick fix to high oil prices, or if it’s a supply and demand issue? grin
Looking at real estate listings in a US/Mexico border area where a friend just bought, the … descriptions are interesting.
“Wrought-Iron Porch” is how they describe an iron cage that separates the front door and front room window from the driveway and side walk. The iron cage itself is as tall as the house, 1/3 the width of the house, and about 3 or 4 feet deep. Technically, you could get a couple of chairs on the cement slab (which is part of the driveway/sidewalk and not raised or porch -like in any way).
“Lively view” describes another on a very busy corner.
“Manhattan Living in the South West” describes a very small condo conversion. In fact, it has “secured parking” in case you can’t stand to wait an hour or more between busses.
“Limited large lot opportunity, perfect for a school” heralds the demise of one of the people of privilege old boys’ clubs (no commuter-immigrants allowed unless they are washing up in the kitchen or have Anglicized their name and hold sufficient government or military contracts).
“Cozy rock house, minutes from everything” older 1930s house. Actually a conversion to a duplex near higher education institutes.
Lots of lots and lots of houses, newly completed. You’ll see an entire street up for rent or sale, one listing after another after another with identical generic pictures and descriptions. Some with teasers such as “Be the first to move into this beautiful neighborhood!” Or how about the only one?
sheesh, there’s been a bunch of articles on what’s been happening along the border, where the narcotrafficantes are shooting it up with the Mexican police and military. In one town on the New Mexico border, the police just up and quit their jobs and the chief asked for political asylum in the US. Political asylum. Think about that for a minute, because it sort of means that the drug traffickers are in charge.
I read a book called “Down by the River” about the drug trade in El Paso and Mexico. Passed it to a friend who lived in El Paso and Juarez most of his life and the friend said it was dead-on (sorry) accurate.
There’s no “sort of” about it. The drug traffickers are in charge.
And the rest of El Paso has its hands full with continuous strain of family structure obliterated by the constant War on Terror and the War on Drugs and the War on Immigration. And nothing I see in the papers even talks about gangs, so gods only know what else is going on on the ground there.
Nice neighborhood:
CNSNews.com - The U.S. State Department has issued an alert, warning travelers that the “equivalent to military small-unit combat” is taking place across the southern U.S. border in Mexico and that Americans are being kidnapped and murdered there.
“Recent Mexican army and police force conflicts with heavily-armed narcotics cartels have escalated to levels equivalent to military small-unit combat and have included use of machine guns and fragmentation grenades,” said the State Department alert.
http://www.cnsnews.com/ViewNation.asp?Page=/Nation/archive/200805/NAT20080516a.html
Sure, when it’s upstanding tax-paying citizens they issue an alert. When it’s 400+ young women in mass graves over the period of a couple of decades, the only mentions of a problem are on “tinfoil hat” or “bleeding heart” websites.
FEH.
All those weopons paid for by the war on drugs. Drug cartels get rich and fight to keep it going. Legalize and tax it then throw anyone convicted of public drunkeness DUI ect into jail. Problem solved.
I’ve talked about the menace that is the Michoacan drug cartel, before…
They are growing extensive amounts of marijuana on Federal Land, all over the Sierra Nevada.
Last year, a friend in the government whose job it is to raid these gardens, related to me that he’d seen the word “TURICATO” carved into trees, at a number of growing locales.
I googled it and look what comes up…
Mexican Drug cartels using terrorist beheading tactics
“On Tuesday, police recovered the body of a man who had been shot 24 times with machine guns in the Michoacan city of Turicato. Messages had been attached to the unidentified, 35-year-old victim’s body, including “Anti Z” and “greetings, Z family. This is for the traitors to their country,” the government news agency Notimex reported.”
http://la.indymedia.org/news/2008/04/216872.php
Whats the price of the dollar doing to drugs?
It’s not so much prices, but people are switching from more expensive drugs, to wicked, wickedly cheap drugs. (meth)
“Problem solved.”
Yeah, the gangs used to that good money will have to quit and enroll in junior college.
/sarcasm
I wonder if endless flights of Predator drones over the border, putting missiles into any para-military druggie vehicles that dare cross into our territory, would discourage them?
Why are we playing in the “sandbox ” on the other side of the world if we can’t keep our own border safe?
Yeah, the gangs used to that good money will have to quit and enroll in junior college.
Consider alcohol. After it became legal again, the violent gangs of the time that were running the illegal alcohol trade continued to commit violent acts in support of that illegal activity even to this day.
Er, wait…what?
Yeah I live near Chicago and those boot leggers and rum runners are really dangerous.
We should jail people for DUI with 1 strike rule, we should jail anyone who breaks into a house or business (most offenders get off with probation), any violent crime should go to jail for a long time.
Soon
with the tax revenue all of the problem users would be in jail
The responsible users and the license businesses would pay the tab
There would be little profit motive for criminals.
PBS-online Documentary
Mexico:Crimes At The Border
http://www.pbs.org/frontlineworld/stories/mexico704/
Pinched Consumers Scramble For Cash
http://online.wsj.com/article/SB121236369683536435.html?mod=hps_us_whats_news
Whoa! They’re not gonna leave even a tiny patch of wool on those sheep. And so goes the greatest transfer of wealth in human history.
First strip the wool, then go after the skin.
This article is a good look at how people make illogical choices when distressed. From the article:
“The so-called REX Agreement, launched last year by REX & Co., a San Francisco real-estate investment company, offers a different strategy. Not technically a loan,it gives homeowners a cash payment, typically about 13% of the home’s value. Upon a sale of the home — or the owners’ death — the company pockets as much as 50% of any change in home value during the time the agreement was in force. To qualify, applicants need not have much equity in their home. The minimum is 25%.
Such an arrangement sounded good to Tom Terrill, 75, of Kenilworth, Ill. After being diagnosed with an autoimmune disease in 2001, he didn’t expect to live more than a few years. So, he stopped working and began focusing on enjoying life.
But after receiving a lung transplant in 2005, the retired financial-services executive now has a longer life expectancy — and a rising cost of living that exceeds his Social Security and investment income.
“I needed to do something to get more cash or reduce my expenses or live in a very, very much downsized [home],” he says. In May, he signed a REX Agreement and received about $406,000 in exchange for 50% of any future change in the value of his $3 million home.
Some financial planners are skeptical of such newfangled products. A home can be a valuable buffer against unexpected expenses, and if owners are “taking future appreciation and selling it and using the money now, what are they going to do in the future?” asks Jon Beyrer, a fee-only financial planner in Solana Beach, Calif. He would look at a transaction like the REX Agreement only “as a last resort,” he says.
Tjarko Leifer, managing director for marketing and strategy at REX & Co., maintains that with a REX agreement, homeowners “continue to participate substantially in the future change in value of the property, and the equity you have built up in your home is not eroding over time.”
Even the most financially savvy consumers are breaking some time-honed rules. Paul Herman, 51, is an attorney who represents consumers with debt and credit issues. He recently started a new law practice and went through a divorce. At the same time, his Boca Raton, Fla., house sat on the market for months without selling. With money getting tight, he went to his bank to investigate a business loan. But “with the rates I’d have to pay, it wasn’t worth it,” he says.
He tapped into his retirement savings instead, taking one loan and one taxable withdrawal. His logic: “Why plan for retirement if you can’t make it today?”
UBS losing more clients as it’s investigated
http://www.bloomberg.com/apps/news?pid=20601213&sid=a7szKbS1Bi5A&refer=home
Student Loans Start to Bypass 2-Year Colleges
http://www.nytimes.com/2008/06/02/business/02loans.html?adxnnl=1&ref=business&adxnnlx=1212404427-shBZIvR9iCH9F/BTFTUGEA
The banks that are pulling out say their decisions are based on an analysis of which colleges have higher default rates, low numbers of borrowers and small loan amounts that make the business less profitable. (The average amount borrowed by community college students is about $3,200 a year, according to the College Board.) Still, the cherry-picking strikes some as peculiar; after all, the government is guaranteeing 95 percent of the value of these loans.
It reminds me of when banks blacklisted neighborhoods that weren’t considered as profitable for mortgages.
Another danger for students is that as they are forced to find and switch to replacement lenders, they may lose track of some debt obligations and miss a few payments.
Then they should be taking a remedial “how to pay your bills on time” class, so they begin to realize that keeping track of debt obligations is a good idea…..
Good heavens, the markets are just awash in bad news today, the Dow futures are down 60 points. The PPT must be warming up in the bullpen.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVqxDj07nQSk&refer=home
Usually bad news has proved to be a bullish contrarian indicator for U.S. headline stock market index prices. Take last Friday’s action, for instance: Every time the DJIA tried to plunge below the opening bell level, it bounced back up like a cat off a hot tin roof.
I’m still on the market sidelines, I want to see where things are headed before making any plunge back in. Not so much as to where the market’s headed, but where the Dollar is headed and what inflation is going to do. That’s going to determine my course of action. I’m actually bullish on the Dollar though, I’m looking for some steep rate hikes by the Fed over the next year to kill inflation.
What makes you think the Fed will raise interest rates at this point, when home prices are dropping at double-digit rates? A rate hike at this point would exacerbate U.S. housing price deflation, which is already occurring at the fastest rate ever
(including the Great Depression / 1930s).
National Survival.
Keep in mind too that any upward movement in interest rates could cost the govt a fortune if T-bills are forced to follow.
I agree with all that’s been posted - to an extent.
here’s Watcher’s post from above.
“By slashing interest rates in the face of rising price pressures, has the world’s most important central bank sowed the seeds of a new inflationary era? It’s an alarming idea, but one gaining currency all the time.”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/01/ccliam101.xml
In a nutshell, the article summarizes what I believe is happening. The Fed is no longer in control of its destiny, neither is the country. The point has been reached where other’s control our destiny andf they want to have higher interest rates - I believe they’ll get them too IMHO.
Jwhite,
Not totally sure about the interest rate things being the only factor you should consider. Rates can be low and you can have deflation.
Looking at lots of the money blogs they check how much credit is being extended vs redemed, M3 and M3/M0 ratios.
In past deflationary periods rates were very low and cost of money was low. Qualification to get the money was very difficult so credit contracted.
You make some very good points James. I’m betting on an inflationary - followed by a deflationary cycle. The Fed will have to raise rates to please its new foreign owners sooner than later IMO, when that occurs, the credit driven bubbles on everything will collapse. The dollar will be worth more IF the foreign market continues to hold them. If not, well, all bets are off.
I’m thinking that I will hold my dollars until the deflation begins, then, I’ll purchase attractive equities and assets with a long horizon in mind. I’ll also purchase a nice Tennessee riverfront tract in the NW of the state where we would like to retire to. As always I’ll keep a supply of AU on hand as well as a prudent stock of cash and comestibles.
Until then, I believe I will take advantage of the free tuition I’m lucky to have (courtesy of the wife) and do some re-education into a growth field (I’m thinking nurse practitioner or PA specializing in Gerontology). When the inevitable hard times hit, I want to have everything we need and some of what we want already on hand as well as a fairly bullet-proof occupation.
What else can we do?
There is little chance that the Fed will raise rates over the next 18 months. The Fed wants to help out large commercial and investment banks. The rate cuts were to lower the cost of funds for those leveraged institutions (12:1 for commercial banks, 30:1+ for investment banks). The last thing that the Fed wants to do is to raise the cost of borrowings for banks.
Exactly, tuxedo.
It is ALL about recapitalizing the banks right now.
What does “PPT” stand for?
Plunge Protection Team.
AKA “President’s Working Group on Financial Markets “
Doesn’t seem to be working too good today.
The day’s not over yet…
Plunge Protection Team
Pointy Plated Tinfoil
Thanks. I didn’t know anything about that…
Bloomberg does it’s Long Island Foreclosure Tour article.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a1qrqxe61SAI&refer=home
“You have some mold issues; you can definitely assume some water issues,” said Dean Miller, a broker on the tour. Then again, he said, the asking price for the 1951 Cape Cod at 68 Lois Court was $312,900, down from $457,101 in February.”
Cape Cod = working class Levitt House. Probably needs something like a gut rehab after nearly 60 years, unless it has had a series of upgrades (most have). And, these sorts of areas face neighborhood change, perhaps rapid given the racial attitudes of the old timers (those more comfortable with diversity might have stayed in Brooklyn).
As the original owners die out, there will be zillions of these on the market. Down from $457K? How about up from $150K before the bubble?
ABSA (South Africa’s largest bank and mortgage lender) now forecast a 4.5% real drop in house prices in 2008, however they tend to be overly optimistic and I would bet on larger drops.
On one of yesterday’s threads, someone made the comment about how there would be another leg down in the northern states when higher heating bills (caused by $120+ per barrel oil) came due. He said a typical New England house heated by oil could use 250 gallons a month and thus pay as much as $1,000 a month, not including electric!
That caused me to dig out this past winter’s electric bill (we’re all-electric here). The highest bill was $194 for 34 days. The second highest bill was $165. Total heated square feet is 2900, including 900 sq ft in the finished lower level, and we have a single 4-ton heat pump.
To all you HBBers who pay your own utility bills: What’s the highest you paid last winter and how large is your heated space? If you have both electric and gas service, don’t forget to include both bills.
We’re up here in Minneapolis (along the river called D-Nile)…
We are on the equalized billing plan with both our electric and natural gas. Monthly combined is: $192.00 which is constant for 12 months.
Keep the Central A/C humming at 74 degrees when home, 72 degrees during the night (to ensure a good nights sleep), and keep the furnace (80% efficient Nat. Gas) at 72 F during waking hours /occupied hours and 64 degrees during the night during the 8 months of winter we typically have.
Our house was built in 1996, has over 3000 finished square feet (including basement).
I bet if we replace the electric dryer with a Nat. Gas, we will reduce the monthly elec. bill by over $10 while increasing the gas bill by $2 to $3 for an overall net savings. Something to consider once it craps out.
Where in Mnpls? We just left Plymouth last year.
Hi JWhite;
Champlin. Did you hear about the hail in Plymouth over the weekend? Tornados in Coon Rapids (EF-1) , and Hugo (EF-3 which caused many homes to become flattened and killed a 2 year old boy) last weekend.
We’ve been in the Maple Grove-Champlin area since 1989 (on our 3rd and hopefully final long-term house).
Not leaving (had a head-hunter call from Boston, told him thanks, but no thanks, call me with a Marketing Manager or Director opportunity in Twin Cities.
Gas heat/water, electric everything else.
Jan/Feb gas is around $175 a month. Nov/March it’s $100 including hot water. Rest of the year $40 for just hot water. So just heating costs anywhere from $60 to $135 a month. I keep the heat at 68 during the day and 60 at night.
Electric is $70-100 a month without A/C during Oct-April. When using the A/C it ranges from $200 to $350 depending on how hot it gets. Temp stays at 75 in the summer.
House is 2700 sq ft. It’s old with old windows and almost non-existent insulation. I’m renting so I’m not about to change the windows, but I make that up in a very reasonable rent given the house/location.
“We are on the equalized billing plan with both our electric and natural gas. Monthly combined is: $192.00 which is constant for 12 months.”
Boy I’m jealous of that bill tgun. We were on a similar plan. We paid $240/mo for 2200 sq ft—no air conditioning and we kept our heat set at 62. That was a reduction from $286/mo earlier in the winter before the spring warm up. (Grrr-National Grid of NY)
I think I’ve mentioned before I have friends that own a 200 year old 4000 sq footer. They have oil and last winter paid out over $1000/mo while running a very powerful woodstove on the first floor. That wasn’t the first time I’ve heard that $1000/mo figure around here (in hills south of Syr). Someone told me they were paying that 3 years ago. Can you imagine what they’re looking at now?
Carrieann;
Yes, it’s not too unreasonable. Our nat. gas here runs about $1.10 per therm (up from less than $0.45 per therm in 1999).
Xcel Energy (formerly NSP- aka Northern States Power) has pretty reasonable residential rates… we get a lot of our electricity from Canada (Manitoba hydro-power) during the summer, a small portion from wind (Buffalo Ridge in SW Minnesota) which would be a lot larger percentage if the tree-huggers would allow for new high voltage transmission lines to be built so that the wind generated power can be moved to Minneapolis-St. Paul where it is needed.
Worked for Xcel a number of years, was a Certified Energy Manager and New Product Developer. Remember our President of the newly merged company state: “… we will become the Enron of the North…” That was in 2001 prior to 9/11 and the later Enron implosion…
LA-inland empire-highest peak costs (1200 sq ft living space)
Winter-
Gas-150/mo(furnace)
Electric-30/mo
Summer-
Gas-15/mo
Electric-160/mo (AC)
Utility costs have been going up since 2000 (read Enron fiasco). Anticipate further increases.
I guess I should have added that peak summer AC(electric) is August with the AC running from July-Sept. and the peak winter Furnace (gas) is Jan-mid March. Throughout the remainder of the year, gas is around 15/mo and electric is 30/mo.
Orange County 963 square feet built in 1918 and insulated by owner and contractor to R-19 minimum and R-25 in third bedroom with a cathedral ceiling. Two of 3 exterior doors with glass are double-insulated; fourteen of sixteen windows are double-insulated. Average electric is $55 on an annual basis with A/C cycling allowed at the lowest level. Average gas cost on an annual basis is $35 per month, with newer efficient heater wrapped in a blanket outside in an aluminum shell. Less than $100 per month seems to us to be a small carbon footprint, but we still wish solar was more approachable! -
Gas-150/mo(furnace)
I think Californians need to improve their insulation codes. My winter NatGas bill in the dead of Winter is $180 for a 3000 sq ft house. And NatGas prices have shot up here as well.
Way cheap… when I lived in New Orleans more than a decade ago I paid more than $150 a month in winter for electric heat or summer air (800sqft). It’s probably 10-20% higher now. No one in the Big Easy seems to have a house with any insulation.
Our electric is up to $80 per month in Brooklyn, with no AC (but lots of ceiling fans, two computers, etc).
We have gas heat, stove and hot water, with a bi-monthly bill. In summer, it’s $60-$80 every couple of months. But in winter, it can be as much as $380 or so for the two months.
Having a rowhouse with just two exposed sides, sun coming in large front windows from the south, and an electronic thermostat that lets the house cool to 55 overnight and when we are out during the day on weekdays (never falls below 60), all helps.
I guess that’s a peak of around $270 per month for Jan/Feb.
Don’t forget gasoline. We generally fill up about once a month in winter, when we don’t take many trips out of town (we walk, take transit, bike mostly). At about 10 gallons, that would be over $40 per month.
I guess that would be a peak of $310 per month for energy.
Max of $200 a month year round in upstate SC. That includes heat, water, sewer for a 70+ year old house with not a lot of insulation. We run several computers most of the day and dry clothes on the line.
Sold my 1960 vintage house in Maryland in 2006. Rancher, 1600 square feet, with another 1600 finished downstairs. Oil heat and oil hot water. I was on the budget plan, so I paid the same amount 11 months of the year, not just in the winter (the 12th month was an adjustment month, in case the budget estimate was off). Back then I was paying $323 x 11 months to heat that space (also including the hot water). Yes the house had insulation (as much as could be added without tearing out the walls.) Heating oil has since doubled. So I guess the lucky new occupants will be paying on the order of $600 a month.
I’m now renting 1800 sq ft. with a heat pump. Last winter’s highest electric bill was under $200.
Funny, looking at the California thread yesterday.
I had considered moving there for a job. So, I was tracking properties for a while. Maybe a few desirable areas are doing well. Maybe.
I saw lots of stuff with 100+ DOM.
Realtors claiming the low end in San Jose getting multiple bids. Lots of property on the market there and its sitting for many many months.
But suddenly there are bidding wars, eh?
It’s theoretically plausible, if the houses with 100+ DOM are overpriced and the new listings are aggressively priced.
In Sacramento, there’s been two distinct markets for at least a year. In one, homeowners are listing at or near 2005 prices and watching the houses sit for the better part of the year. In the other, houses are priced below comps and move quickly. Most of these aggressively priced homes are REOs, but increasingly it seems that people who have “equity” and want to move are willing to price it to sell.
It is worth noting that most homes seen on the MLS are in the category of listings at or near 2005 prices — i.e., homes priced to never sell. One has to either look at recent comparable sale prices or price indexes (e.g., Case-Shiller/S&P 500) to get a picture of where market values are headed, as homes priced at the market value tend to get snapped up pretty quickly.
I actually had a conversation once with a used home seller about whether bidding wars could occur in a market downturn. The answer is yes, provided the home is listed at a price below market value. Anyone who has had a basic economics course can understand the reason: If the price of a good (a house in this example) is set below the market price (where the supply and demand schedules cross), then the number of buyers willing to pay for the good exceeds the supply. In this example the supply is fixed at one (the house the seller is trying to unload), and if the price is lowered sufficiently, there will be many offers, regardless of how soft the market is, as they aren’t making any more land.
Any seller who doubts me on this can try their own experiment: List your home 10 pct below the price for which the most recent comp in your neighborhood sold, and I predict you will have ten offers before the following weekend.
The used home sales person (UHSP) with whom I spoke described a rival in her circle who “made the mistake” of listing the home price below market. Consequently, a large number of UHSP’s in this market ended up writing offers on the same house. As only one offer was accepted, the rest of them worked for a zero percent commission, which led to much wailing and gnashing of teeth.
LOL. As if writing an offer is not a cut-and-paste exercise.
PB .. I have looked at well over 200 homes this past year so I have a pretty good idea of comparative value. I found a home last week listed at 469. It easily could have listed for 529K. It had been on the market for 2 days when I saw it. An offer had already been made. I made an offer that day with an additional 4 percent off. They took the house off the market the next day.
To clarify, you offered 4 pct below 469 and the seller took the home off the market? Or did they sell to the other party that made an offer?
They could have been hoping for multiple offer scenario to get a run up in price close to the 529K, then pulled from the market when it didn’t happen. Fishing for knife catchers scenario.
PB … took the house off the market. yes 4% below the 469.
I can also see this bidding war taking place…
Homebuyer1 one goes out and bids 500K on a REO.
Can’t qualify and comes back and bids 480K….
Can’t qualify and comes back and bids 420K… and asks the bank to fix the roof
Homebuyer2 shows up and bids 385K and has cash…
Bank rejects offer because of Homebuyer1
Homebuyer1 can’t qualify at 420K and goes off to figure out what he can afford.
Homebuyer2 panics and goes off to look at other property
Guy at the bank approves his brother in law for a loan at 386K and buys the property.
Anyhow, if the asking price was a dollar there would be a bidding war. Just this aint producing prices that are going to carry the market price upwards.
Realtors claiming the low end in San Jose getting multiple bids.
Do you know how many months of inventory in San Jose? (cuz the used house salesmen there are pretty damn useless.)
I look at bubble markets inventroy tracking for southern cal but don’t have a comparable source for northern california.
The realtors there told me cheap homes were available but only in questionable areas with out good schools. After going to a bunch of houses found on zip; I had to agree.
Multiple bidders? I don’t believe it. Too much inventory and going at a substantial discount.
We see a simialr pattern in the south bay of LA. Prices are flat in the “good” areas but the marginal areas are crashing. See plenty of housing stock going for 40+% discount.
Eventually the outmigration and lack of plankton causes the high end to collapse. Its just not there yet.
There also seems to be a substantial number of “investors” poping up and trying to flip houses again. Or condo conversions. They are going to get burned. I’d consider investing in some really depressed markets but really don’t have the kind of capital required.
Investment money starting to move out of oil.
http://www.247wallst.com/2008/06/hedge-funds-dum.html
PAGE ONE
TAPPED OUT
Pinched Consumers Scramble for Cash
By ELEANOR LAISE
June 2, 2008
After a long binge of borrowing, U.S. consumers face a credit crunch and a sagging economy. To sustain their living standards, many Americans are doing what comes naturally: scrambling to raise more cash.
This is pure desperation.
Forget the fact that whole life is moronic. $45K to pawn a $250K policy is sheer desperation.
WHOA!!! Watch out below.
I hate to say this but I’ve got cash coming out of every corner and I’m spending some of it.
But look at the guy on the bottom of the article. Savvy move! I remember when Rex agreements were discussed on this blog. In a depreciating house price environment, getting someone to pay you for half your house’s equity at the peak might be a savvy move!
Realtors claiming the low end in San Jose getting multiple bids. Lots of property on the market there and its sitting for many many months.
But suddenly there are bidding wars, eh?
James, I have high-lighted the reason why your questioning this.
Number of Foreclosed Homes Keeps Rising
Lenders Cut Prices To Jump-Start Sales As Inventory Grows
By JAMES R. HAGERTY
June 2, 2008
The number of foreclosed homes owned by lenders continues to rise despite signs that they are increasingly willing to slash prices to sell those properties.
Lenders and investors in mortgages owned about 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic, a research firm based in Santa Ana, Calif., that collects data from lenders and county clerks. The April total works out to about one in seven previously occupied homes available for sale nationwide.
Investors Seek Some Solace In Limp Data
By Mark Gongloff
Word Count: 499
Like the five stages of grief, there seem to be five stages to Wall Street’s acceptance of the economy’s fate.
The first stage was denial, when an incipient credit meltdown and the biggest housing-market swoon since the Depression were greeted last fall with new records in the Dow Jones Industrial Average and the S&P 500. Some are still in this phase, gamely arguing that a housing collapse is nothing much to worry about, but they’re scarce.
“LIMP DATA”… Phizer to the rescue!
How is it that oil prices surging past $133 a barrel does not constitute a “big financial shock?” Got inflation?
Six principles for a new regulatory order
By Lawrence Summers
Published: June 1 2008 19:12 | Last updated: June 1 2008 19:12
After a modest interval with no big financial shocks, policy attention is turning to the task of preventing future crises and managing those that occur.
To ensure the subprime vampire stays asleep in its coffin, international regulators and supervisors are devising a plan to drive a stake through its heart. I am wondering if the GSEs will be exempt?
Plan to make complex debt more expensive
By Gillian Tett in London
Published: June 1 2008 23:31 | Last updated: June 1 2008 23:31
International regulators and supervisors have started drawing up plans to make it far more expensive for investment banks to hold large volumes of complex financial instruments, such as mortgage-linked securities, in their trading books.
The move is intended to prevent a recurrence of the type of massive, unexpected losses that emerged at banks such as UBS in recent months, as a result of the subprime turmoil in the US.
The new measures, which are being spearheaded by the Financial Stability Forum – a committee of global regulators and supervisors – could force banks to rethink the business models they use to repackage assets such as mortgages into complex financial securities.
In particular, supervisors believe that the rules will reduce incentives for banks to engage in so-called “warehousing” activities – the practice of keeping repackaged assets inside a bank for an indefinite period, before selling them to outside investors.
One senior western policymaker said: “These changes are significant. They are definitely going to make some warehousing activities more expensive.”
I guess Professor that zero economic activity will be stable.
Got to love when the government decides to “help”.
What does this story portend for jumbo elephant U.S. mortgages in a global market for loanable funds?
My hunch is that it is going to become much harder for middle-class U.S. households to financially hang themselves by purchasing homes at price points they cannot afford (i.e. $417,000+). By implication, the price of homes at these superrich valuations has a long way to fall before the supply glut can be absorbed by cratering McMansion demand.
Banks shut the door on £1m-plus mortgages
By Matthew Vincent and Sharlene Goff
Published: May 30 2008 20:16 | Last updated: May 30 2008 21:05
Multi-million pound mortgages from high street lenders are heading for extinction, mortgage brokers said yesterday, as banks impose tough new limits on how much they will lend, or charge steep arrangement fees of up to £40,000.
Land Registry shows downturn gathering pace
By Delphine Strauss
Published: May 31 2008 04:29 | Last updated: May 31 2008 04:29
House price inflation slowed for the eighth successive month in April, the Land Registry said on Friday, confirming evidence from mortgage lenders that the housing market downturn is gathering pace.
Its index showed prices fell 0.2 per cent in April, the third consecutive monthly drop after declines of 0.8 per cent and 0.1 per cent in March and February.
It is the first time the Land Registry’s index, based on residential sales since April 2000, has shown a quarter-on-quarter fall in prices.
Okay, try not to disturb your co-workers with your sobbing:
http://www.nytimes.com/2008/06/01/fashion/01rich.html?em&ex=1212552000&en=d3fe3d03622d334b&ei=5087%0A
As I read that article the lyrics of a certain Kanye West song kept running through my head.
How dumb do you have to be to not see the obvious connection between income, consumption and wealth?
Gotcha! Your link is phoney. You took a story from an early edition of the National Lampoon and then cut-and-pasted it into a New York Times on-line shell. What tipped me off was the part about children not being invited to the right birthday parties. Thanks for the satiric humour on a Monday morning.
Hahahaha! Good article.
“One of her clients recently confessed that his net worth had decreased to $8 million from more than $20 million, and he thinks that his wife will leave him. He has hidden their fall in fortune by taking on debt to pay for her extravagant clothes and vacations.”
Good RIDDANCE and a POX upon her I say…
Scusa me, I’ve gotta go wretch for a while.
Same here…..it’s stories like this that would turn me into a flaming socialist.
That article is an eye-opener.
How much is a 35 carat diamond worth?
The Jonker III an Emerald cut 35.5cts sold for $$$ in 1975. The other cuts are quite a bit less expensive. They are all pretty. I’m just partial to the Emerald cut.
Me too although my favorites are the Asschers.
What did you say? The asschewers?
Yeah. Just checking.
As a former hairstylist, I color and trim my own hair.
If you turn your head upside down, comb out straight, snip ends!
Works for long hair only.
Money saved: $100.00
$150 haircuts for women are luxuries? OK I agree that a lot of those people in the article are loopy. But I just find the notion of a $150 haircut to be an example of an extravagant expense. My wife spends that easily.
I was asked to buy a $100 braiding for a birthday present 20 years ago. I don’t recall whether it happened (I’ve repressed most of that relationship’s memories). On second thought, if it had occurred the relationship likely would have ended sooner due to eye pain.
I hate it when I have to cut back on my “$10,000-an-hour jet rentals.”
My favorite article from the NYT last week
Racial Shift in a Progressive City Spurs Talks
By WILLIAM YARDLEY
Published: May 29, 2008
“…“I’ve been really upset by what I perceive to be Portland’s blind spot in its progressivism,” said Khaela Maricich, a local artist and musician. “They think they live in the best city in the country, but it’s all about saving the environment and things like that. It’s not really about social issues. It’s upper-middle-class progressivism, really.”
Ms. Maricich, 33, who is white, spoke after attending this month’s meeting of Portland’s Restorative Listening Project. …”
http://www.nytimes.com/2008/05/29/us/29portland.html?ex=1212811200&en=4db56a5ba6ac8528&ei=5070&emc=eta1
The goal of the project, which is sponsored by the city’s Office of Neighborhood Involvement,
Office of the Neighborhood Involvement? Man you know a city has few if any problems when taxpayer money can be wasted on garbage like this.
Oh, Portland has plenty of problems…..
The good news is that there are lots of creative ideas bubbling up here. That outweighs the goofiness that political correctness provides.
This is just the beginning as cities regentrify with the mass re-immigration of the “burb” dwellers back to the urban environment due to energy prices and shifts in demographics.
Expect to see much more of this in the future as the current urban dwellers are forced to move out to the abandoned burbs and exurbs.
Oh Lord.
OMG,
I can’t stop laughing. I’m laughing so hard, tears are rolling down my face.
Thanks txchick I needed that laugh.
“A year ago, he would have only flown Gulfstreams,” Mr. Sullivan said. “Now it’s moving to the point where he’s flying Beech jets and Learjets.”
Oh that poor, poor man. My heart just goes out to him.
Roidy
P.S. (_*_)
This is one way to drive trading to foreign exchanges (like Iran):
Two of the world’s largest energy exchanges have forced traders to deposit significantly more money when investing to curb volatility in energy markets and drive out speculators.
The New York Mercantile Exchange (Nymex) and ICE Futures Europe in London, the former International Petroleum Exchange, have now tripled “margin calls” for some contracts.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/31/cnoil131.xml
If the US and other Western countries want to stop oil speculation they will have to use the only tool that works - positive real interest rates.
Would today be a good time to buy the dip?
Uncle Buck is hanging tough today against the backdrop of a U.S. stock market swoon. My recollection is that the Japanese Yen similarly held up very well in the early 1990s while the Japanese stock market sank like a rock.
Down, down, down. Would the fall never come to an end! `I wonder how many miles I’ve fallen by this time?’ she said aloud. `I must be getting somewhere near the centre of the earth. Let me see: that would be four thousand miles down, I think–’ (for, you see, Alice had learnt several things of this sort in her lessons in the schoolroom, and though this was not a very good opportunity for showing off her knowledge, as there was no one to listen to her, still it was good practice to say it over) `–yes, that’s about the right distance–but then I wonder what Latitude or Longitude I’ve got to?’ (Alice had no idea what Latitude was, or Longitude either, but thought they were nice grand words to say.)
– Lewis Carroll –
Alice’s Adventures in Wonderland
The Black Monday stock market crash was preceded by a spring selloff in the l-t T-bond market. Perhaps the market’s reflexes have subsequently improved?
Nope.
Fair to say you’ve moved up your prediction of a July/August downturn? Or do you see something else?
It’s hard to read. I’m short and staying short unless something changes. Liquidity will be abysmal the next few months as usual.
Is the PPT on summer vacation today?
The PPT is broke and out of ammo.
Looks like it was saving its big salvo for 3:30 pm.
meet your competition:
LONDON - If you thought you worked long hours, consider 39-year-old Lee from South Korea. A civil servant at the ministry of agriculture and fisheries, Lee gets up at 5:30 a.m. every day, gets dressed and makes a two-hour commute into Seoul to start work at 8:30 a.m. After sitting at a computer for most of the day, Lee typically gets out the door at 9 p.m., or even later.
By the time he gets home, it’s just a matter of jumping in the shower and collapsing into bed, before starting the whole routine all over again, about four hours later. This happens six days a week, and throughout almost all of the year, as Lee gets just three days of vacation.
That’s right. Three days
http://www.forbes.com/2008/05/21/labor-market-workforce-lead-citizen-cx_po_0521countries.html?feed=rss_popstories
I caught a 6:00 am flight from Seoul to Hong Kong about 25 years ago, and on the bus ride @ 4:30 in the morning to the airport from the city, I watched dozens of women sweeping the streets with brooms, in some outskirt city on the way…
Hard working people.
And this is “progress?”
“A civil servant at the ministry of…”
Cough, has anyone seen Lowry, uh has anyone seen Sam Lowry?
What does he actually achieve at the “ministry”?
Anyone can work all day but what do they actually achieve?
You consider this “competition”?
BWAHAHAHAHAHAHAHHHHHHHHHHHH!!!
Two hour commute each way? Don’t know what he does besides burning a lot of oil.
I lived in Seoul for a year teaching english, and got a good look at the hard working culture. The number of hours for many is a badge of honour, but they’re so bloody tired the efficiency and effectivness are poor. I generally avoid Korean products because sleep addled minds do not produce quality.
Wow…. that Korean nitemare sounds remarkably similar to what the apologists for the wealthy elite want for you, your spouse and children. Wage enslavement.
My wife doesn’t want to move twice, but she wants to own two houses at once instead (three actually, counting the vacation home.)
I joked that I could commute to Houston from DFW. With 10 yours of travel I could get about 4 hours sleep per day (more if I dozed along the quiet parts of I-45). I thought that was a joke…
Another headline lie from our friends at marketwatch.com: Any reading of the ISP diffusion indexes below 50 indicates contraction. The stock market is not buying it.
BULLETIN U.S. MANUFACTURING ACTIVITY PICKS UP IN MAY
U.S. May ISM manufacturing index 49.6% vs 48.6% in April
By Greg Robb
Last update: 10:03 a.m. EDT June 2, 2008
watcher, this one’s for you…
KEVIN KERR
The dollar is a victim of globalization
Commentary: Gold bars and a strong lock might be the best answer
By Kevin Kerr, MarketWatch
Last update: 12:01 a.m. EDT June 2, 2008
Good stuff; I wonder how it got on Marketwatch.
Grand Theft Auto-Destruction
A new interactive video game that pits you against Bernanke, Paulson & ’ssshrubery. (Axis of See No Evil)
For a free demonstration:
http://www.frbsf.org/education/activities/chairman/index.html
So you want to be chairman of the Federal Reserve
My son and I went out bicycling this weekend, and we visited a spec home development that is under construction with some units already selling since prices were reduced. They have a model home on one corner, and two new homes directly across the street have recently sold.
The new owner of one of them had his gas BBQ out front on the sidewalk. His pickup truck with a Union Jack in the rear window was parked with one front wheel up on the curb. He and his wife, both morbidly obese, are drinking with several friends while standing in the street as well as blocking the entire sidewalk, and their music is loud too. It was hot out, so she’s a wearing cheap tank top that allows her belly with stretch marks to hang-out. True white trash stories!
I’m sure the RE sales folks in the model home were pleased to have the neighborhood’s newest residents out front in style.
“…His pickup truck with a Union Jack in the rear window…”
Was this trailer park in Britain or did you mean the Stars and Bars?
Heheh, around here parts, call the “Stars and Bars” the Union Jack and you’ve got a fight on yur hands mister…!
You folks are correct; it’s the southern Stars-n-Bars.
Hope those under 40 do not feel this post is a personal attack but, truth is, for many of those under 40 years old they have led an “entitled” life for the past 3 to 4 decades. I suppose I’ve got to that stage in my life where I’m saying things which, when I was younger had someone older remarked, “When I was your age…..,” I used to roll my eyes.
However, things were a LOT different 30 years ago and FAR different 40 or 50 years ago prior to the designer cloths boom, the tech boom and a few other booms which have led up to this point in time.
A lot of it has been created by greed (a.k.a easy credit). In the UK, for instance, there were only one or two mortgage companies 40 years ago. In order to get a mortgage, you need a big downpayment, a secure job with several years tenure, a pile of paperwork to back it up and, if memory serves me correctly, you couldn’t get a loan if you wanted to “Buy To Let”. (”Buy to Let” is a big problem in the UK at the moment and the current failure of the biggest lender is sending a few shock waves through the UK market.)
I’m not smart enough to know why everything changed from conservative financial practises to what it has become today which is a, “I’m entitled to it” attitude, outside of the fact that greed by financial institutions feeding on the gullibility of the financially unaware formed the basis of this mess. Look no further that the housing boom and bust which helped workers making $18,000 a year buy $600,000 homes.
Now the chickens are coming home to roost. Again, I’m sounding like my mother with her, “The piper always gets paid,” advice to me when I was younger. She also had another saying if, for instance, I made a stupid move. “You made your bed - you lie in it.” These days, it’s more like, “You made your bed - don’t worry if it gets messed up someone else will re-make it.”
I have no idea where all this will end but it’s not going to be an easy fix. When I read stories about these young couples (under 30 and many under 40) who were able to spend freely, buy what they couldn’t afford and borrow what they can never repay, I get the feeling a lot of them are going to get a very nasty shock and feel a lot of pain in the coming years now that the, “Piper wants paying.”
Most look to government to solve the problem but, unfortunately, there are so many bad signs out there which inlude the decline of the USA as a world power, it’s incredible debt, it’s loss of credibilty, the rise of asian countries, the decline in the value of US currency, the massive wealth being created by the oil producing arab states, that I think the majority of the under 40’s are going to have to come to terms as to what it’s like in the real world.
One thing is certain. Things will change for the majority. Governments cannot continue to print money. We have seen in past history what happens when they do and current examples of what Mugabee is doing in Africa simply proves the point.
Gen Y’s need for affirmations often accompanies an intense sense of entitlement. A therapist with the Aspen Education Group describes it as “I want it now! Now! I have to have it right now!” A Gen Y with a sense of entitlement will also refuse to take responsibility when he makes a mistake. For example, if he gets a speeding ticket, he expects his parents to pay for the ticket and increased insurance premiums and to keep on driving as if nothing happened.
http://aspeneducation.com/article-entitlement.html
Hmm…so who failed? The Gen Yer or his parents who refused (and continues to) refuse to set genuine limits?
I’ve met 50+ years old who fit the above description.
It’s easy to blame young people if your old and old people if you’re young. We have a big mess on our hands and the transition will be hard for everyone.
Responsibility can be spread far and wide. The media are responsible for encouraging “stuff” competition. Schools are responsible for teaching to a test instead of teaching life skills, but responsibility ultimately lands in the lap of the parents. I don’t see it as an old v. young thing, but as a changing landscape that merits review. On a positive note, today’s kids, generally, are less racist, sexist and homophobic than their predecessors.
Oh for pete’s sake. I’m over 40 and our parents said the same thing about us.
There’s nothing new under the sun: Every generation is the same and has been bitching about the prior and next gen since the time of the Phoenicians.
Heh - 4 decades ago were some of my best pre-natal memories. Those good old days.
So I agree with you, except for the generalization that it’s going to be hard just for the under 40’s. How many baby boomers (with the notable exception of this board) are wandering around with no real “backup” plans for retirement other than SS? Why in the world do people think that retiring at age 53 (like my MIL) is something the world “owes” them?
We’re all in this entitlement boat together - greed and laziness know no particular age group. The next 2 decades are not going to be pretty.
Mike,
I suspect we are the same age. I heard and learned the same as you from parents who started their lives during the GD.
While I have no off spring, the attitudes expressed by my nieces and nephews agrees with your characterizations.
Young people are in for the shock of their lives going forward.
imho
I think Gen Y’s biggest hurdle will be the fail-safe way in which they were raised and constantly praised, with no sense of balance and/or the way the world really works.
Oh please,
My nieces and nephews are generation Ys. They are well balanced, and like generations before, are learning how the world really works.
Y am I not surprised?
Well….what will probably happen is the kids who’s parents quietly taught them “old fashioned” ideals will end up assuming leadership as this generation moves forward.
Those other kids taught to believe they were the center of the universe will either adjust or spend their adult lives steeped in ever present angst. Oh well.
Yeah I think the real problem will be that when you teach patience and respect for others to young children the teachers have patience for the learning curve.
When you learn it as an adult it’s usually after a large helping of anger and even a deserved backlash served your way. Some will learn the lesson. Others will just go through life bitter and needy.
big shock for their parents, too, as the kids will be living at home for years to come….
Hope those under 40 do not feel this post is a personal attack but, truth is, for many of those under 40 years old they have led an “entitled” life for the past 3 to 4 decades.
While it’s kind of silly to make generalizations about an entire generation of people, I’d still say that, broadly speaking, Baby Boomers in the developed world have led the most self-entitled existence in history.
Not coincidentally, your timeframe coincides with the 60’s social revolution. It wasn’t just about sex, drugs, and rock and roll. Parenting began a revolution then as well - very much for the worse.
Combine that with the fact that pre-40’s workers have yet to experience a significant, let alone serious, economic downturn as adults, and you have a double-whammy with regards to lacking a sense of responsibility and consequences.
I’m talking economically and socially - the two are inexorably tied IMO.
The pill changed everything…
by the mid 60’s, women didn’t have to have 4.7 kids anymore.
I know I’m opening a huge can of worms here (and probably will piss off a lot of people in the process as well), but oh well…
I see Roe v. Wade as a big indicator of the change. It is perhaps the ultimate example of the removal of the need to deal with the consequences of a bad decision; of a “me first” entitlement attitude.
The timing is likewise not coincidental.
Um. Maybe it has more to do with the fact that Uncle Buck left Aunty Gold around the same time, and after that he felt truly fruitfull and multiplied unchecked?
Roe Vs. Wade. That’s a good one.
Oh yeah. Caveat. I’m 39 and this whole generation stuff is total load of c-r-a-p. If anything it’s the Boomers to blame because they are in control of the system that allows the younger crowd to wallow in entitlements.
Chicken, egg. You decide.
I wasn’t implying any cause and effect relationship - just correlation.
Can you expound on the relationship of inflation with sense of entitlement vs. responsibility? I don’t make that connection.
Totally agree with boomers being to blame (at least partially). They’re the ones who raised the under-40 crowd (”echo booomers”), thus my statement above about parenting and the 60’s social revolution.
Disagree with your statement about “generation stuff”. IMO the problems primarily started with the boomer generation. IMO the sense of entitlement started with the kids raised during post-WWII prosperity - the boomers. It continued even moreso with the echo boomers, who not only inherited their parents’ sense of entitlement, but added to it by the lack of the experiencing the economic troubles of the 70’s and early 80’s, the lack of even secondhand knowledge of the Great Depression (since their parents hadn’t experienced it either).
Generalizing of course.
I’m not smart enough to know why everything changed from conservative financial practises to what it has become today which is a, “I’m entitled to it” attitude
I think it started with the greatest generation pampering the boomers and the boomers raising kids who can do no wrong. This behavior was certainly taught.
Its nothing new.
America had a huge problem with King George and that whole ‘“I’m entitled to it” attitude’ back in 1773. I just think the British Imperial attitude has tricked down to the serfs and commoners.
When I see “buy to let”, I always read it as “buy toilet”….
One’s sense of entitlement is often inversely proportional to the amount of calluses on one’s hands. IMO
Wamu’s Chairman Killinger and Wachovia’s CEO Thompson are both stepping off this morning. Wachovia’s board drove Thompson out, with a cratering stock price and a useless purchase of a mortgage lender in Cali finishing off the former CEO. As for Wamu, finally, Killinger is gone.
Homebuilding slump hampers construction spending
http://biz.yahoo.com/ap/080602/economy.html
Private residential housing construction dropped by 2.3 percent last month, the 26th consecutive monthly decline. Private non-residential activity, however, rose by a strong 1.6 percent, pushing activity in this area to an all-time high as spending on shopping centers, office buildings and hotels all showed big gains.
So how does non-residential keep up this pace? I thought money was tight even for non-residential.
Government funded road and bridge projects?
Question for equity mavens. What would be the dip price in oil at which investment in drillers would be a good buy? I expect the spot price of oil to pull back, but to what price I don’t know. I would be holding the US drillers for several years unless Congress dredges up the old windfall profits tax idea. If that were to occur I would switch over to the international, integrated oil behemoths.
Watch the OIH, not spot crude. Maybe buy a pullback to 170?
Did you guys see this? A variation on my idea of using an inspector to jam the price down on a house you’re interested in.
http://www.nytimes.com/2008/05/31/business/yourmoney/31money.html?em&ex=1212552000&en=9304692400100ffb&ei=5087%0A
This is standard practice, no?
It’s like hiring a detective and promising a cash bonus for a job well done.
I like that, tx. I just emailed it to some friends who are house shopping in an overpriced area. I’ve been encouraging them to lowball.
I like them, well written. I might try the seller-to-buyer rebuttal. Not sure I can do it with a straight face though… may have to have my wife handle it
Cerberus has sold off most of its stake in Chrysler and GMAC…
http://www.marketwatch.com/news/story/cerberus-sold-most-chrysler-gmac/story.aspx?guid=%7B74B5874E%2D4408%2D45C3%2DA97C%2D27EAC2D86449%7D
It looks as if the 3-headed dog bit off more than it could chew…
Indeed! Wonder when Hercules will wander along to vanquish it?
i was going thru my junk mail this morning and came across a solicitation from a mortgage broker/lender company for refinancing my home. these bozos are still offering option payments with defered interest and calling it a 30 year fixed loan. i quote: if making minimum payment only, this loan will defer interest. loan will recast at 125% and may have a prepayment penalty. 3.25% for the first year of the loan. I thought our beloved leaders put a stop to this kind of lending? which banks are still making these loans available?
S.F. budget may pit layoffs against givebacks
San Francisco Mayor Gavin Newsom will unveil a record $6.5 billion budget today that includes threatened layoffs of 250 to 350 city workers to help erase a projected $338 million deficit, City Hall sources say.
The layoffs, along with the elimination of hundreds of unfilled positions, would be among the most extensive that City Hall has seen in years - affecting everything from the Public Health Department and Human Services to the Recreation and Park Department.
Whether workers actually lose their jobs, however, may depend in part on whether Newsom gets what he wants from city employee unions - namely, $29 million worth of givebacks.
“The unions that have contributed thus far have definitely helped to save jobs and preserve vital services,” Phil Ginsburg, the mayor’s chief of staff, said Friday. “Obviously, if additional unions also decide to contribute, it will minimize the impact of a very difficult budget year on all of us.”
Without union concessions, the cost to the city of pay raises and improved benefits for the existing workforce - coupled with the expense of new hires - is predicted to hit $143 million next year.
New hires? That’s right. The city may be staring at hard times, but it’s also taking on a surge of new police officers, nurses and Municipal Railway workers - with Muni alone looking to add 169 positions in fiscal 2008-09.
So far, however, clerks and trade unions have said “no way” to pay cuts.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/06/02/BAHQ110M9C.DTL
Indian giver:
sometimes offensive : a person who gives something to another and then takes it back or expects an equivalent in return.
___________________________________________________________
Whether workers actually lose their jobs, however, may depend in part on whether Newsom gets what he wants from city employee unions - namely, $29 million worth of givebacks.
Some numbers and questions in San Francisco:
$6.5 billion budget (equal to Chicago’s - a city with 4x the population of SF)
SF: $6.5 billion/800,000 residents = spending of $8,125 per resident
What do I get for $8,125 of annual spending?
At the very least, in one neighborhood where I used to live, I got people who urinated by our garage door every morning (and this only a short way from a former mayor’s residence).
In San Francisco we get a city and county (same geography) government that has 8,180 staff “earning” more than $100,000 per year.
That’s right - you read that right. 8,180 making more than $100,000 per year; or one out of every 3 city employees.
This is NOT a city government - this is a High End Welfare Project.
(Can any municipality in the world match this level of spending per resident? Certainly no residents, anywhere, get less for their city’s spending… and where else in the world where one can live in neighborhoods where the median household income exceeds six figures - and yet still feel relatively “unsafe”?)
*****
I have to give the Chronicle credit for this one:
“Cities pay huge salaries despite fiscal crises”
Erin McCormick, Christopher Heredia,Carolyn Jones
San Francisco Chronicle Staff Writers
Sunday, March 30, 2008
“A city nurse earned $350,000. A fire department battalion chief pulled in more than twice as much as the mayor. And a municipal park ranger took home $188,000 in overtime on top of his $71,000 salary.
Such generous payouts were criticized for hastening the fiscal downfall of the city of Vallejo, which narrowly averted bankruptcy this month. But the nurse, firefighter and ranger aren’t from Vallejo - they’re among hundreds of top earners working for the cities of San Francisco, San Jose and Oakland.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/29/MN7OVQOPK.DTL
$6.5 billion budget (equal to Chicago’s - a city with 4x the population of SF) …
… In San Francisco we get a city and county (same geography) government that has 8,180 staff “earning” more than $100,000 per year.
Zowee!
Chicago is no hotbed of fiscal restraint, but those are some crazy numbers you have there.
Hah - you should see what DC employees get and there are only 588 thousand here. A big scam (IMO) is to not hire enough employees and then favored employees get to work overtime and rake in overtime.
WM @ 8.92 down from a 52 week high of 44.60
WB @ 23.05 down from a 52 week high of 54.95
Both announced they are dumping their CEOs today.
As I said last year, banks starting with the letter W make great short sale candidates. (Banks starting with the letters A thru V also make some great short candidates also, such as B, C, and F)
Where can you go to option-squat the “C” ticker symbol (just in case.)
The stock market is succumbing to profit-taking, which follows four consecutive advances. Weakness is broad-based, with 84% of S&P 500 components posting a loss.
http://finance.yahoo.com/marketupdate/overview?u
is this what we call it now? Profit Taking?
I also love the euphemism, “distribution day.” The first couple times I heard/read this I didn’t understand it at all, but in order to make sense of it I just thought of the 5 D’s of Dodgeball:
1. Dodge
2. Duck
3. Dip
4. Dive
5. Dodge
Timely Northern Colorado stats - notice a continuing trend??
For the month of May, 2008:
In Fort Collins, there were 219 single family homes sold vs. 275 last year, down 20.36%. Eighteen new homes sold vs. 20 new homes sold in May last year, down 10% in number sold, and down 8.89% in median price.
In Windsor, 37 SF homes sold vs. 57 last year, down 35.09% in number sold, and down 4.53% in median price. Eleven new homes sold vs. 18 last year, down 38.89% in number of homes sold, and down 17.28% in median price. In Windsor, no homes priced above $595,000 were sold, although 129 were available.
In Loveland, 118 SF homes were sold vs. 138 last year. In Loveland, no homes sold for more than $850,000, although 71 were available.
In Greeley, 130 SF homes were sold vs. 138 sold last year, down 5.8% in units sold and down 11.76% in median price.
In Boulder, 89 single family homes were sold, as compared with 146 sold in May last year, down 34.04%.
[Source: Information Real Estate Services, IRES]
Do you have a link to data? I’m curious about Boulder median.
Try this:
http://realtytimes.com/rtmcrcond5/Colorado~Fort_Collins~bjjohanningmeier
Boulder is way toward the bottom, median is in the $550k range IIRC.
I also don’t know if Boulder includes Louisville, Broomfield, etc.
“In Loveland, 118 SF homes were sold vs. 138 last year. In Loveland, no homes sold for more than $850,000, although 71 were available.”
*****
Loveland? As in right by Loveland Ski Area by the Eisenhower Tunnel?
If so, this is a glaring example of the kinds of sales statistics that resort/getaway mountain communities are facing.
118 sold in year…
None for more than $850,000…
71 available for that price or higher…
There’s a disconnect here between sellers and buyers that is only going to be solved by time.
A long time. In the buyers favor.
Loveland the city is not by the ski area - it is in the upper Front Range area, just like Berthoud is nowhere near Berthoud Pass. Colo is kinda quirky like that. And the 118 sold is for the month of May, not the year - sorry for the confusion.
Regardless, sales have slowed YOYOY and the upper end is really slow. One can get an awesome house for $850k in Loveland, problem is, not enough J6Ps can afford the niceties. Builders didn’t see the disconnect between wages and home prices until it was too late.
Dow down 205 points… PPT next at bat.
(I love this tin foil and coathanger helmet thing :D)
You can tell the market has hit some kind of resistance point, as steep declines have flat-lined…
I have to go make a phone call, so all those losses better be erased when I get back.
We need some multi billion dollar write downs to drive the markets back up.
Wall Street Says -2 + -2 = 4 as Liabilities Get New Bond Math
http://www.bloomberg.com/apps/news?pid=20601109&sid=a2ppBYA0ELaU&refer=home
Merrill Lynch & Co., Citigroup Inc. and four other U.S. financial companies have used an accounting rule adopted last year to book almost $12 billion of revenue after a decline in prices of their own bonds. The rule, intended to expand the “mark-to- market” accounting that banks use to record profits or losses on trading assets, allows them to report gains when market prices for their liabilities fall.
The new math, while legal, defies common sense. Merrill, the third-biggest U.S. securities firm, added $4 billion of revenue during the past three quarters as the market value of its debt fell. That was the result of higher yields demanded by investors spooked by the New York-based company’s $37 billion of writedowns from assets hurt by the collapse of the subprime mortgage market.
“They can post substantial gains as a result of a decline in their own creditworthiness,” said James Cataldo, a former director of treasury risk management for the Federal Home Loan Bank of Boston and now an assistant professor of accounting at Suffolk University in Boston. “It’s completely legitimate, but it doesn’t make sense by any way we currently have of thinking of net income.”
Good Grief!
This is scary. Just because their debt holders lost money because the value of the debt owed by ML dropped doesn’t mean that ML’s liability changed.
Sometimes, I do feel the country is being looted by the big financial companies.
What are these companies really doing? Making money off of gambling? Making new gambling games that big institutions can play? Arbitrage?
And it seems the system is rigged. A top executive can make more money in a year than his grandchildren could spend in a lifetime. It makes no difference whether a chief executive officer ran the company into the ground or made it profitable - they all walk away with massive sums looted from the company.
The head of Wachovia is being removed due to poor performance by the company. My first thought was, how many 10’s or hundreds of millions will this joker extract from that company? How much money did the last head of Bear Stearns walk away with?
It seems that, for these big financial companies, since they spend their time manipulating money, they are in fact able to subtly extract (loot) gigantic amounts of wealth for themselves while doing it. For doing what exactly?
Oil company execs make absurd sums. But they are bringing oil from the producer to the consumer. With the big financials, it becomes much more murky as to just what it is they are doing. But we know that when their gambles and arbitrage go bad, all of us will be forced to pay.
I can’t help but think the system might be having problems.
What’s happening now in the highest levels of finance in the USA just before the fall of consumerism, is similar to the way chunks of Russia were sold off on the cheap, just after the fall of communism.
I agree. This is really beginning to worry me. I keep hearing people marvel at “stability and resilience of the US economy”. What I suspect is that the US economy reacting to these issues albeit slowly.
The system has problems because so many are saying that there are no problems.
Roidy
The Fed embraces inflation
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/TheFedEmbracesInflation.aspx
Morgan Stanley, Merrill, Lehman Ratings Cut by S&P
http://www.bloomberg.com/apps/news?pid=20601087&sid=aboab0yH.acg&refer=home
Morgan Stanley, the second-biggest U.S. securities firm by market value, was lowered to A+ from AA-, S&P said today in a report. Merrill Lynch, the third-biggest firm, was cut to A from A+, as was Lehman Brothers, the fourth-biggest firm. The outlook on all three New York-based firms remains negative, S&P said.
And this after the numerous “all is well” spiels coming from Paulson, etc. And S&P doing their job???
Remain calm - all is well.
http://tinyurl.com/4qo8jj
LOL
Sub-Zero Inc./Wolf Appliance Inc. (www.subzero.com) has cut more jobs at its Fitchburg headquarters as a result of lower market demand for its products.
The maker of high-end appliances has laid off 27 salaried employees and eliminated 16 open positions in addition to previously announced reductions in hourly production workers.
http://www.madison.com/tct/news/stories/289359
I just met a guy who works for Sub Zero. I posted a post a few weeks ago that he had purchased his house from a “friend” who was also a banker and gave him the loan at the peak of the market. He was trying to refy into a fixed rate loan. He worked as a cooking instructor for Sub Zero. He said they would fly customers in for demonstrations. My guess is that job got scratched.
I’ve been using Trulia for a while to browse listings and find out about new foreclosures (tons in Sac), and it looks like they just added a new function that allows you to browse snapshots using this really cool black interface layout.
http://snapshot.trulia.com/
I’m using Firefox 3 in Linux and experienced a few script errors when I tried to expand some listings, but I’m sure it works fine in Internet Explorer and Firefox 2.
“And if all others accepted the lie which the Party imposed—if all records told the same tale—then the lie passed into history and became truth. ‘Who controls the past’ ran the Party slogan, ‘controls the future: who controls the present controls the past.’”
George Orwell
Wells running dry in Visalia
Water table low because of housing, retail development
“Lane Fye was surprised last week to discover that his water well in south Visalia had come up dry.”
“[It] cost me $1,800 to get it drilled deeper,” he said.”
“Fye called on the services of Brian Geary, manager of Visalia-based Carver Pumps. The call came as no surprise — a combination of mediocre rainfall and high demand are causing wells to dry up throughout the Central Valley, Geary said.”
http://www.visaliatimesdelta.com/apps/pbcs.dll/article?AID=/20080531/NEWS01/805310316/1002
______________________________________________________________
All over the Southwest, cities overbuilt and paid little heed to future water needs…
And now they have a mighty thirst to contend with, on top of having shaky finances~
Everyone seems to make fun of the midwest and a lot of other places. I bet real soon people are going to be moving back east in droves.
Lower crime
Plenty of water
Cheap land
and perhaps the scourge of illegals will be driven out too.
No shortage of illegals in flyover country, unfortunately.
aladinsane - just curious - how are the wells flowing up in your area near sequoia? and what’s the elevation like on kaweah lake?
Unbelievable This guy wants $500+ for a condo - in Missoula! LMAO!
You could get a pretty nice little ranchette for that here. Why on earth buy a 2-level condo near some busy railroad tracks…this is whack.
This is a little off topic, but I am starting to actually feel bad about all of this. It’s not just the fascination of the housing crash, but all of this other crap happening along with it: Oil, gov’t denial of real inflation, Alt-A, bank failures, food riots and starvation, speculation and the uber-rich, denial of the depth of the problems, etc. This is really getting scary, and I don’t scare easily.
Roidy
Welcome to the scary ranch.
http://news.yahoo.com/s/ap_travel/20080602/ap_tr_ge/travel_brief_beijing_olympics;_ylt=AuUgyPhaTebgvkBxIG6n5eKs0NUE
Apparently people aren’t flocking to the Olympics in China.
Is this a commentary on China?
Is it a commentary on the financial health of the world?
In my eye, things like this, and the first drop in US oil consumption in 25 years are the best barometers of financial health.
A rise in Chinese nationalism based on shared pride over government and private responses to the earthquake.
Go China Go!
Go China Go!
Go China Go!
Calls For Higher Interest Rates
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/01/ccl
A Return of That ’70s Show?
By PAUL KRUGMAN
Published: June 2, 2008
Which decade is it, anyway?
“…You might think, then, that everyone would be congratulating Mr. Bernanke and company for their good work. But at an economic conference I recently attended, many of the participants — including people with a lot of influence in the policy world — seemed to be bashing the Bernanke Fed.
You see, fears of a 1930s-style financial meltdown are apparently out; fears of 1970s-style stagflation are in. And the Fed stands accused of being soft on inflation…
And even if the financial crisis doesn’t come back, higher rates would further weaken an already weak real economy. Never mind whether we’re technically in a recession: it feels like a recession to most people, and higher interest rates would make it worse.
The bottom line is that while expensive gas and food are inflicting real harm on American families, they aren’t setting off a ’70s-type inflationary spiral. The only thing we have to fear on that front is inflation fear itself, which could lead to policies that make a bad economic situation worse. …”
NYT
http://www.nytimes.com/2008/06/02/opinion/02krugman.html?_r=1&oref=slogin
So the Federal Reserve will continue to sacrifice the dollar. This will not be a slow death
This was a goofy weekend for editorials opinions from economists!
Samuelson sounds like Sen Clinton. Mr. Mankiw’s lowering corporate tax rates is equally stupid.
It’s Only Going to Get Worse
Everything you always wanted to know about the housing crash, but were afraid to ask.
http://www.weeklystandard.com/Content/Public/Articles/000/000/015/170jdcim.asp?pg=1
A good article from Lawrence B. Lindsey “Its only going to get worse”
Which decade is it, anyway?
the one that the young pay the way of the old?…think about it.
find the happy youth and you find the currency,
cut the kids off, stop buying the milk? close the mill? no more checks?
http://www.portfolio.com/interactive-features/2008/05/Wall-Streets-Graveyard
This is good for Halloween
Bill Gross on CNBC May 22
PB this is for you.
http://www.cnbc.com/id/15840232?video=750604305
And you should read Mr. Gross’ comments in this months PIMCO investment report.
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm
“…What are the investment ramifications? With global headline inflation now at 7% there is a need for new global investment solutions, a role that PIMCO is more than willing (and able) to provide. In this role we would suggest: 1) Treasury bonds are obviously not to be favored because of their negative (unreal) real yields. 2) U.S. TIPS, while affording headline CPI protection, risk the delusion of an artificially low inflation number as well. 3) On the other hand, commodity-based assets as well as foreign equities whose P/Es are better grounded with local CPI and nominal bond yield comparisons should be excellent candidates. 4) These assets should in turn be denominated in currencies that demonstrate authentic real growth and inflation rates, that while high, at least are credible. 5) Developing, BRIC-like economies are obvious choices for investment dollars….”
Inflation really hit home at the grocery store this evening when I paid $4.99 for a gallon of milk. I am thinking of developing a taste for gasoline, as the per gallon price is considerably cheaper.
PB,
my 3 girls drink 2 gallons a week. I stopped drinking milk over ten years ago….Im a cheese and yogurt kinda guy. 3 girls… and one man….cant be like that in a long term sustainable situation…they gotta buy their on milk at some point.
higher prices solve high prices. when?
I have a counter point to all the statistics showing all the houses for sale and the high inventory.
I would posit that the public inventory of for sale homes needs to add the shadow inventory of people hanging on to put their homes on the market, and people who cannot find new jobs, and are hanging on.
My evidence is in our local area of homes popular with young professional families. There are normally about 3 to 5 sales hitting each summer selling season. This year there are none. It is almost eerie.
Odd that evidence of non homes on the market is evidence of even more supply waiting to hit the market. There may be at least double the number of homes ready to hit the market at sign of an upturn.
The housing market is stuck, and will be stuck for years, maybe 10 years. Clearing current and shadow inventory will take at least that long. Remember if you have two years supply of homes, it will take at least 4 years to clear the supply even if there is significant growth in sales. The only thing that can mitigate this is builder bankruptcy.
higher rates coming…..its not to late to refinance…or if your thinking of getting off the fence…
good luck….
junebugs to a lightbulb.
I hear cowbell near a bears den…
I have not ready comments in 2 days.
I know you’re asking yourself…
what is money? who is going to pay for the mess? what do I really need now and what do I want in the future?
why is the world different than my perception?
I toured my first lumber mill…..going full tilt 3rd shift…. produce or die.
food, oil, metal,wood, the mental hand. and stuff that makes ALL things…..the exchange of fiat for tangible goods is just getting underway….you dont know the value of something unless the thingy that you possess is sought out by others…this is why I come here…
dont get left behind/
Soros sounds alarm on oil ‘bubble’
By Joanna Chung in Washington
Published: June 3 2008 05:06 | Last updated: June 3 2008 05:06
Billionaire investor George Soros is to tell US lawmakers on Tuesday that “a bubble in the making” is under way in oil and other commodities and that commodity indices are not a legitimate asset class for institutional investors.
He is expected to tell a congressional committee that rising oil prices are the result of a number of fundamental changes and factors in the market, but that the relatively recent ability of investment institutions to invest in the futures market through index funds is exaggerating price rises and creating an oil market bubble.
“I find commodity index buying eerily reminiscent of a similar craze for portfolio insurance which led to the stock market crash of 1987,” Mr Soros will tell the Senate commerce committee, according to a draft text seen by the Financial Times.
“In both cases, the institutions are piling in on one side of the market and they have sufficient weight to unbalance it. If the trend were reversed and the institutions as a group headed for the exit as they did in 1987 there would be a crash.”
Honda Civic is the Best Selling Vehicle in the U.S.
Folks, today is a historic day in automotive history: The Honda Civic was the best selling car in the United States in May, beating out the long time leader, the Toyota Camry, by 53,299 [Civic] to 51,291 [Camry].
What’s even more amazing is that the Toyota Corolla even beat out the Camry, 52,826 to 51,291.
And to make Honda’s achievement even more amazing, it beat out the Ford F-150, long the best selling vehicle, by 53,299 [Civic] to 42,973 [F-150].
Today is a great day in Honda land, indeed, and congrats are well deserved.