Bits Bucket For June 25, 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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Texas R.E. Slump, Gives Mexico A Chance To Take It Back… June 25 (Bloomberg) — More than a century and a half after Mexico lost Texas to the U.S., Virgilio Garza wants a piece of it back.
A “Texas for Sale” sign and cowgirls in boots and white hats greeted Garza at the Convex center in Monterrey, Mexico, earlier this month. A Monterrey developer and investor, Garza was in search of foreclosed U.S. property to buy.
http://www.bloomberg.com/apps/news?pid=20601110&sid=aI3TvgKttLsA
More than a century and a half after Mexico lost Texas to the U.S.
Well actually Mexico lost Texas to Texas.
Has Texas ever been a part of the United States? I thought that it was a like a whole ‘nother country or something. Texans aren’t any different from the hillbillies around these parts. They’re just a bit luckier that they landed on a richer patch of grass than Jed Clampett. The Battle of San Jacinto did teach me to never got to sleep with an angry Texan nearby.
Texans: Humble they aren’t.
I lived in Dallas for three years and that schtick all seemed like a put-on to me. They’d say “everything’s bigger in Texas” and Texans would snigger.
They do have a lot of great music though.
Whatsup with that big hair thing, Texas?
the higher the hair, the closer to God.
My dad used to be in the oil business and had to travel to Texas sometimes. His favorite Texan jokes were something like this:
“You can always tell a Texan, but you can’t tell ‘em much”
“Does Texas have the biggest midgets or the smallest ones?”
Yogurt - despite the catcalls, good point.
More bad news for Boomers…
http://www.marketwatch.com/news/story/home-price-declines-eat-baby-boomer/story.aspx?guid=%7B408882CB%2D7FF8%2D4473%2D8E46%2DE0483DC5A4D5%7D
Barclay’s has to raise 8.9 billion.
http://www.bloomberg.com/apps/news?pid=20601087&sid=am_emWkm2YEo&refer=home
Analysts flip flopping on banking stocks (good for the credibility AND the skin)…
http://www.bloomberg.com/apps/news?pid=20601087&sid=afj3WAy4EYOA&refer=home
The Reconquista continues.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aI3TvgKttLsA&refer=home
I’m trying to get past the race thing in all this.
We sent a lot of money overseas and when it flows back we feel the inflation we already caused and prices equalize. Sometimes the money comes with people attached. Not a bad thing either.
Guy sounds like a buisness guy that started lots of factorys and other useful stuff.
Hell, I’m not sure about most of the complaining people do about Mexican’s crossing the border to work. We have so many lazy people on entitlements that aren’t willing to do anything.
If you/I/we were on welfare and couldn’t find regular work; why aren’t we out at the corner looking at under the table day labour work too? Would suppliment the wages pretty well. And I knew lots of guys in construction that worked on a cash only basis in the past. Don’t pull the labour laws thing on me.
Plus we get a few more of the senioritas in the country. Just about as much fun as all the Asian and Indian girls showing up.
All good.
Um, because most of us are law-abiding citizens and thus aren’t willing to work “under the table” for less money than it takes to put food on the table. We also aren’t willing to live 12 people per 1-bed room apartment. Patting the illegals on the back for this type of behavior only encourages it until that type of “under the table,” slum-like living condition becomes the only option as everything slides towards the cheapest option. It’s not about race: it’s about importing poverty and forcing the US to become a lawless slum where everything is “under the table.”
Also, do you REALLY think that the IRS wouldn’t nail a US citizen for “working under the table” while at the same time ignoring all the illegals? They get away with A LOT more than citizens can.
Amen, PTM!
James, can’t say much for your argument, I think you’re just horny.
Consumer Pain Goes Beyond The Pump
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/23/AR2008062302497.html
The rising cost of fuel is rippling far beyond what consumers pay at the pump. Companies across an array of industries are instituting fuel surcharges that are nibbling away at consumers’ pocketbooks. Like the airline industry with its baggage fees, businesses say they are being squeezed by higher gas prices and must pass on the costs to survive.
“We’re going to be paying higher costs across the board whether you pay it in the form of a surcharge or you pay it in the form of higher prices,” said Noreen Perrotta, finance editor at Consumer Reports, who recently paid an extra $10 to have her lawn mowed. “We’d better get used to it, and we better start budgeting for it.”
Soaring gas prices are pushing Americans to shop for bargains, change their driving patterns and vacation at home. But less attention has been paid to the impact of the many small and often indirect ways that consumers are paying for gas, and generally, there are no regulations governing how fuel surcharges are calculated or implemented.
And fuel surcharges are NOT counted in the CPI index only the base price increases… Compliments of: Sneaky Sneaky & Fake
——————-
across an array of industries are instituting fuel surcharges
Interestingly I’m seeing that more and more common folk are realizing that the gov’ts numbers are pure BS.
And they wonder why consumer sentiment is at its lowest in decades. The sheeple are starting to realize that something is horribly wrong.
NY DJ,
Fuel Charges are not included in the CPI? Your source please.
This source http://www.bls.gov/cpi/cpifacaf.htm suggests you are making up facts:
The CPI uses the SABRE reservation system to follow prices of airline fares. This is the same system used by much of the travel industry for accessing flight information and issuing tickets and is an excellent source for up-to-the-minute price information on virtually all regularly scheduled airline flights. Using this system, prices are obtained for the sample of quotes. For those areas that the CPI prices monthly, the CPI obtains prices every month. The remaining cities are priced bi-monthly, with approximately half in even months and half in odd months. Prices include all applicable taxes, domestic and international. Airport, Security, and Fuel Surcharges are also included. Care is taken to spread pricing evenly throughout the month to give appropriate representation to price trends occurring within the month. Each price reflects the purchase date of the ticket rather than the flight date, which, in the case of discount service, is typically a minimum of 1 to 4 weeks after the purchase date.
Check and mate.
Rethinking the Country Life as Energy Costs Rise
http://www.nytimes.com/2008/06/25/business/25exurbs.html?
Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the distant edges of metropolitan areas.
Across the nation, the realization is taking hold that rising energy prices are less a momentary blip than a change with lasting consequences. The shift to costlier fuel is threatening to slow the decades-old migration away from cities, while exacerbating the housing downturn by diminishing the appeal of larger homes set far from urban jobs.
Wonder if they’re rethinking the 6 car temple…
I think its a prelude to being a 6 person shared frat house..
Seriously what on earth are we going to do with all the 5 bedoom 5 baths and a 6 car garage houses?….. a bed and Breakfast …. a rooming house…a commuter crash pad?
Tired of the city noise, why not consider renting a spacious room with a like minded household and without the hassle of buying something?
and then the HOA’s what about them?
We ( the three of us) rattle around like peas in 2500 ft. Half the house isn’t used at all. I wish there were decent rentals here in the 1500 ft range. Our place in Mnpls was just perfect for us. Great location, 1450 very nice, upscale square ft, and best of all (for Mnpls) a heated parking garage…
Same here, two of us in 2400sf. I wanted something around half that but inventory was low. My first house was about 550sf, perfect for one person but crowded when I got married, and ridiculous when a step moved in with us.
I think too big is kind of spooky feeling, not cozy at all.
Our house is one of the smallest in our neighborhood as well, most of the others are at least 3500 ft. Even the ones that were built to this design (garden homes with small plots) have had at least 500 ft added during construction by the buyers. Who, except for the hapless couple next to us are all old couples with no one but themselves at home… Go figure.
I can’t wrap my head around houses with that much sq footage. We raised 4 children with less than 900 sq feet. A little more would have been nice then. Now I’m glad that I don’t have that much too worry with.
Ha. I like 4000 - 6000 square feet. Need that space feeling.
I clean my own house, so I draw the line at 2500 sq ft. Plenty of room for parties, prodigal sons, visitors, and hopefully, someday, grandchildren.
I was trying to figure out why TX needs 4-6K. Weren’t you a gymnast in the past? Room for cartwheels, handsprings?
Ha. I like 4000 - 6000 square feet. Need that space feeling.
What do you do with all that space? I’m sure it comes in handy with the dogs, but that’s still a heckuva lot of space.
I have 1800 here, plus a garage. Its getting tight!
4000 - 6000 feet sounds more like a pole barn.
Big houses are all about see me-dig me, in the ongoing struggle to keep up with the Joneses, real or imagined.
It’s the part of the bubble no one in MSM is thinking about. All these people with excess room in their house, combined with the financial pressures of inflation and unemployment will lead to more people consolidating. Kids and grand kids will move in with parents ect. People will rent out rooms. Suddenly the oversupply of houses will get much larger.
Wife and I have 1100 square feet. We have three bedrooms, so we have our actual bedroom and then each have a room for hobbies (me, the trumpet and music things; her, quilting and crafts). Having so much space is an absolute luxury. We lived for two years with 600 square feet and it worked out just fine.
4000 sqft sounds good to me. Our small family has filled up 2100 sqft, but that’s because we have way too many hobbies and a guest room to boot.
Now if you could give me 4000+ sqft with a 2100 sqft look, and 2100 sqft upkeep cost and utilities as well, then I’m a happy camper. Oh yeah, camping, another of the hobbies that takes up space (for storing a myriad of gear), but nothing like the wife’s sewing. Or the workout equipment.
“It’s the part of the bubble no one in MSM is thinking about.”
Yeah even the houses look like they’ve been pumped up with air. Real boxy, with short under the roof so the places look really bloated. I’ve never seen so many fugly two-story boxes as I see now. Like a little kid would draw…like this one.
Feh!
“….and then the HOA’s what about them?…”
We live in a bubble neighborhood full of flippers (140 homes, originally 3 were owner occupied…now about 35 O.O., with 30 thru the foreclosure cycle, another 25 on the way, more to come when the owners finally wise up.)
Anyway, a stuck flipper rented two houses to one guy, who brought in all his friends to rent rooms, so he could live for free. A 6 Bd, 4.5 Ba and a 5 Bd, 5 Ba. It was a nightmare. The HOA ended up fining the owner $8,300 over 11 months, before the owner could evict the idiot.
The funniest episode (most were tragic) was when a roomate swiped the “HOA Meeting Tonight” banner off the clubhouse wall and hung it from the staircase inside the larger house. He peeled of the “A”, so it read
“HO Meeting Tonight.”
Along came the HOA rep, click with a camera, and zap, out goes a letter with a $350 fine for stealing property!!
The $8300 is now a lien accruing at 6% annually!
The owner paid $535,000 for each house, thinking it was a great deal in 2007. The same models are currently selling for $349,000 and & $425,000, so he is upside down by over $300,000. When the bank forecloses, they will have to pay the back taxes, back bonds, PLUS the $8,300 HOA bill to clear title. There are so many ways the banks eat it raw these days….
I don’t think I ever knew the square footage of the house I shared in college but it was not all that huge and we had room for 19. It was specifically set up for group living but other than the bathrooms (some had stalls for multi-person use) and the bedrooms being tiny, the only concession we had to make was multiple fridges and putting colored sticky dots on your food.
4000 - 6000 feet sounds more like a pole barn.
——————————————————-
not in texas
A person should make these decisions rationally. At some price point, an exurban house more than makes up for increased fuel costs. You have to take your entire budget into account. Obviously, commuting long-distance in some gas-guzzling SUV is stupid. But people have traditionally commuted from the exurbs to save money more than to have additional space. I suspect that things will balance out ultimately. Of course, we probably still have several years worth of price corrections left to go, so I’m in no hurry. Unlike some of you guys, apparently, my wife and I both have space-consuming hobbies. So I would love to have a spacious house if I can afford it, even though I don’t need it to survive.
This NYT article talks up downtown condo living in places like Denver. But obviously the Werner family of 5 that is profiled in the article isn’t going to move downtown. If enough people frantically try to move out of the exurbs, all this means is that rents in the close-in burbs go up and the sale prices don’t go down as far. That starts to make the exurbs more attractive, by comparison.
I recently read an article about converting McMansions into nursing homes housing 10-12 residents. Given the state of nursing homes I’ve visited, this might just work.
Nursing homes or even rest homes do not work in 2-story buildings.
Of course, those condos pictured in downtown Denver cost $500k + HOA.
Sure, migrate to the city, if you don’t mind being shot or kicking bums off your doorstep every day. I am also sure having your stuff stolen regularly is a good way to reduce one’s energy costs: a stolen TV draws no power!
People are not going to move back to the city until the cities actually have real jobs and are not cesspools of poverty, drugs, gangs, and corruption. No amount of gas price increases or New Urbanist dreams are going to change that.
Also, people seem to forget just how much energy is involved in getting food and products into the cities and waste and other products out. Cities are not exactly environmentally friendly.
People are not going to move back to the city until the cities actually have real jobs and are not cesspools of poverty, drugs, gangs, and corruption. No amount of gas price increases or New Urbanist dreams are going to change that.
I wish someone would mention this to the urine-drinkers who are keeping San Francisco housing prices (both rental and for sale) sky high.
Actually, the denser a city, the more “green” it has the potential to be. I found this article I remembered reading a few years back:
http://www.walkablestreets.com/manhattan.htm
Illinois ready to sue Countrywide.
http://online.wsj.com/article/SB121436097291702365.html?mod=mktw
In Countrywide news, shareholders to vote on sale to BofA, the deal was approved earlier this month by the Federal Reserve
Sure Angelo bribe another senator, sell another 3 mil of your worthless stock, give another $400,000 loan to a maid,sell your worthless bank, just let me get back to my book on the Great Depression.
I wonder if Sen. Dodd would allow the state of Connecticut to sue Countrywide ?
CA joining in the fun as well.
Bloomberg: Countrywide Sued by California Over Mortgage Loans
U.S. corporate profits down 10%.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080624&id=8819002
Somehow that isn’t priced in to the projected price/earnings ratio published by the WSJ, is it?
“Ms. Madigan says she is asking … that her office be given 90 days to review any loans that are currently in foreclosure or that are moving toward foreclosure.”
Jeepers… like the year++ (often 2 years) it takes from lis pendens to REO in Illinois isn’t long enough already.
I’m all for going after the fraudsters, but there was a whole lot of kool-ade drinking going on here that had little to do with fraud.
Bubbles Get Whacked… A snippet from the Daily Reckoning…
We don’t have to tell you, but the ‘Great Moderation’ was a big fraud. There was nothing moderate about it. Instead, it was a period of extravagance…excess…over-the-top consumption and borrowing…and outlandish claptrap. It was claimed, for example, that the Wall Street firms were “adding value” by packaging subprime mortgages into securities and peddling them to towns in Norway. And it was believed that the Fed really had learned how to smooth out the business cycle and could henceforth avoid serious downturns. And inflation? That was a problem of the ’70s…not of the 21st century.
But every bubble pops. And the force of a correction is equal and opposite to the deception that preceded it. Naturally, the correction in the financial industry would have to be substantial. Nor is the Fed able to stop it. When a bubble bursts, the Feds can pump as hard as they want; the new cash and credit will go into a new bubble, not the old one.
You haven’t seen another bubble in the dotcom industry, have you? That one blew up eight years ago. It hasn’t come back – despite the best efforts of central banks all over the world. And don’t expect another bubble in housing either. We’ve seen the highest prices for housing – in real terms – that we will probably see in our lifetimes.
Bubbles…busts…bubbles…busts…the beat goes on. One sector gets pumped up…and then it gets whacked.
“We’ve seen the highest prices for housing – in real terms – that we will probably see in our lifetimes.”
I’ve used the very same statement and you should see look on their faces. Dead silence.
Linky?
Japan market may be the new bubble
Been there, done that. Went bust in 1990, not coming back. With currencies losing value something like precious metals might well be the next bubble, or green technology, or tulip bulbes…of course this time it’s different!
Stock market?
yeah
wmbz - “When a bubble bursts, the Feds can pump as hard as they want; the new cash and credit will go into a new bubble, not the old one.”
Bingo! Agree 100%. The specuvestors/hedge fund “engineers” have now applied their models to commodities. Gold down a bit, OIL UP!
And it’s crazy…you’re hearing the SAME thing we’ve heard with housing. Not a variation but the SAME ! Get in now, oil can only go up! They’re not making any more oil!
It is jaw droppingly mind boggling the similarities.
yes, I’ve made that point to the folks here who espouse those beliefs about gold and oil. It’s never a bubble when you are personally “invested” in it.
“No gold-digging for me… I take diamonds! We may be off the gold standard someday.”
Mae West
“It’s never a bubble when you are personally “invested” in it.”
So true!
I’m amazed at how many people try to make money off of speculation instead of real work. After a lot of reflection and consideration, I would agree if capital gains are taxed higher than real work, that is a good thing. But that would upset the ‘get rich quick’ crowd who actually believe that they support the ‘real’ economy.
If people can manage without government giveaway programs (i.e. health care or wars designed to benefit certain industries), then I would support an abolition of taxes altogether.
Yet try to say that recent increases in speculation is making prices go up, and otherwise rational people go whacky. It’s not that spec caused all the price rises but gives it that recent volatility, yes?
Oil production is facing real shortages while demand is increasing. Housing, tulip bulbs, fanatsy stocks, etc can be easily manufactured or printed. Oil on the other hand has to be located and then extracted out of the ground. Especially locating new resources seems to have been tricky over the last decades. Since no sufficient alternatives are in sight you have a lot of money competing for a scarce resource. Price will go up until another viable energy source comes online or demand decreases due to a recession.
Uhhm Mike, we know where it is, we just haven’t let the oil companies go after it, plus we keep finding better ways to find and extract it. We have limited supply on purpose for a wide variety of reasons, but soon we’ll be going after it no matter who gets elected in Nov.
http://www.manhattan-institute.org/pdf/Energy_and_Environment_Myths.pdf
See page 16 of the pdf
Matthew Simmons brings up a point that all the big oil fields have been discovered. The ones off the continental shelf that we politically cannot extract are not “big” oil fields and have been known for decades. Moreover, there is a huge shortage of workers, believe it or not, in the oil extraction business. A huge amount of workers are aging boomers in that line of work, according to Matthew Simmons. Equipment shortages are significant too. Even if they were super giant oil fields, it will take years to extract the first drop because of equipment and labor shortages.
Demand for fossil fuels is expected to increase significantly through 2030: http://biz.yahoo.com/ap/080625/energy_outlook.html if they can extract any of it
Thanks for being the only one in this particular thread who makes sense Mike!
I cut my gasoline use 10%, however, my watchband is an oil-based product. The container of my laptop computer is oil-based. Millions of Chinese people are buying more plastic-based products. Pesticides are oil-based. Fertilizes are oil-based.
Meanwhile, Ghawar has been in operation since the early 1960s, almost half a century. At some point it will be economicallly unfeasible to extract oil from Ghawar, the largest oil field in the world.
The North Sea oil production has long passed its peak. Cantarwell in Mexico is beyond peak.
It’s so odd that people here are reasonable about real estate’s oversupply while demographics show that the oversupply will get worse (boomers downsizing, trying to sell to fewer buyers) while they don’t understand the demand and supply situation with oil.
But, Mike and Bill, you would not recommend buying oil futures or gasoline company stocks today, would you?
I’d buy 10,000 gallons of gasoline (physical) today at these prices, if only there was a place for me to put it.
The reality is, all of us have a short leash of 10-25 gallons on hand and that’s it.
That’s our country’s Achilles Heel.
I have PGH stock (13% yield), but that is only 2% of my assets. I probably have more in oil and gas stocks in my mutual funds. Probably no more than 5% of my net worth is in oil/gas.
There are places now where you can buy gas futures and hedge your prices. One Gas Coop place in Coon Rapids MN, had folks buying gas at 98 cents a gallon a couple of years ago and they still had 3000 gallons left to go at that price…
Futures markets work effortlessly in stable markets, but tend to fall apart when unstable.
We are entering a “possession is 9/10’s of the law” economy.
I can’t wait to get a good job on one of those oil rigs.
Being out on the open water and all that.
Look as the price of oil goes up the cost effectiveness of replacing the SUV with a higher efficiency beater goes up real fast. So, the biggest users are faster to switch to more efficient vehicles. That should cut a lot of demand.
Secondly, lots of new car sales are of the focus and Prius and other smaller vehicels. Expect that to further dent consumption.
Expected actual shortages… not any time soon.
Prices? I don’t know. We created so many dollars and fiat dollars and treasury debts… that will compete for oil/steel exc.
Not sure how much going on is American speculator and how much is from China trying to get some value out of the dollars.
For all of you that think we will run out of oil and trying to break the oil addiction this one is for you
http://www.sfgate.com/comics/meyer/
“You haven’t seen another bubble in the dotcom industry, have you?”
Son of tech stock bubble
RE: Rethinking the Country Life
It figures that an idiot NYT reporter would equate “country living” with with 2-story ceiling heights, swing-sets and wrap-around porches.
More junk reporting by nit-wits without a clue.
Like saying I”m “going to Maine” when somebody is simply headed to Ogunquit, which is now nothing more than an over-crowded weekend haunt for Beantown weenies who can’t stand the Cape anymore.
RE: by packaging subprime mortgages into securities and peddling them to towns in Norway.
Completely and utterly detestable.
We as US citizens should be outraged.
Instead we acquiese to the status quo; re-elect incumbents; and self medicate with a mindless focus on professional sports and reality TV shows.
Cmon HD. You don’t like Chef Ramsay?
No, no, no, Top Chef is much better.
You did NOT just say that, you donkey!
(I like both shows)
RE: Cmon HD. You don’t like Chef Ramsay?
Not a clue who Chef Ramsay is…my TV viewing is now confined to a 3 minutes on the 6:00 local news to get the weather.
I think the number of commercials the networks now run per hour is contributing to the national mental illness problem.
HD - your point that gets me riled up more than any other is the one about “re-elect(ing) incumbents.” Very sad, to me, that so few in our country understand how much of what is bad can be undone by simply not re-electing anybody, IMO. Personally, I favor term limits of 8 years for any elected position, anywhere in the U.S., with the proviso that an 8-year Representative is eligible to be elected a Senator for a (barf withheld) further 8-year term. But as for lifetime Corrupticians, get the pitchforks and be done with ‘em.
You haven’t seen another bubble in the dotcom industry, have you?
Google is a dot-com bubble all on its own!
Inflation from Asia next up in the crisis string.
http://articles.moneycentral.msn.com/Investing/JubaksJournal/InflationFromAsiaTheNextCrisis.aspx
WaMu may have to set aside 30 billion through 2011 to cover losses.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080624&id=8818806
Note the author of this article…
Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Himani Sarkar
Even the WSJ is outsourcing its articles. Bhaswati is probably paid $5,000/year in India, vs $50,000/year for a US reporter. And ironically, the reporting is probably more factually correct and less biased!
Wow, there seems to be a lot of twists and turns in this correction.
Well, it’s a Reuters article so not as surprising. I suppose they’re a bit more worldly.
We’ve made it through some pretty tough times before…
http://money.cnn.com/2008/06/24/news/economy/colvin_recovery.fortune/index.htm?postversion=2008062504
In the 1970s, I never heard of “world peak oil.” Matthew Simmons’ book, “Twilight in the Desert,” out a few years ago presents powerful evidence that world oil production is peaking. US oil production peaked in the 1970s.
I do think that in ten to fifteen years things will be much better than now in the U.S. We will have abundant energy and cleaner air from nuclear power, solar power, and wind power. We will be less dependent on the Middle East and withdraw from any entanglements there.
There will be less worry about terror. Also the cities will be the best places to live and be stronger economically than ever.
However in the short run living conditions will be harsh. So the next president will be a one term president.
There will be less worry about terror. The part of this I agree on is there won’t be any worry about hijacked commercial airliners. There won’t be any still in business to hijack.
We’ll have used up all the economically extractable oil from that region to render them powerless and with no bargaining chips. They will go back to camel herding, just as they did in the early 1900s.
God how I wish I still believed that.
The scenario you outline IS a possible outcome of the crisis we are now entering but ONLY if we get everything right. Its threading a VERY small needle with a VERY coarse thread in my opinion. Do you really think we will shed our avaricious ways, come together to solve our common problems, develope workable, local solutions and go boldly into a new dawn? Do you REALLY think that will happen after all the evidence to the contrary over the past 30 years? We just aren’t smart enough, compasionate enough or spiritually evolved enough for that to happen. If anything, we’ve been moving BACKWARDS for the past few generations. No, I simply don’t believe that we will come through this intact. It will be blood in the streets, LITERALLY, before this is all over.
“We will have abundant energy and cleaner air from nuclear power…”
Uh, did I miss the part where we’ve solved the problem with radioactive nuclear waste?
Speaking of the ’70s, your argument sounds eerily familiar. Remember when we had a big hike in gas prices and shortages? Remember when there wasn’t enough gas to go around so you could only buy gas on odd/even days? (odd if your license plate ended in an odd number and vise-versa.) In the early 70s, we were going to change the world with solar and alternative energies so we would never go through that hell again. But, as soon as that crisis was over, everyone when back to their old driving habits, we were sold gas guzzling vehicles and homes far from our jobs, and those in Washington were happy with the petro-dollars deal… That is until the drug lords would only deal in Euros, then Saddam said, great idea - let OPEC deal in Euros too, then the shrubbery started a big war, which is draining the American economy, the Iranian oil bourse was born, and here we are again. Full circle.
Is the Federal Bailout bill why BAC agreed to swallow the fetid corpse that is CFC? Does this deal make sense for them because they are going to be able to offload the bulk of the defaulted mortgages off on the FHA, as these unaffordable loan are transformed into federally backed, more affordable (wink wink nod nod) loans?
And to top this off, there is $4 billion in the bill for municipalities to purchase from the CFCs of the world forclosures for signficantly above market.
Looks like the FHA, which is already bleeding, will need many of our tax dollars to cover the losses that this bill will make.
I believe this is what many posters here suspect. A good topic for the weekend might be the question of who benefits and how from the CONgressional bailout.
RE: fetid corpse…
“The mortgage aid plan would let the Federal Housing Administration back $300 billion in new, cheaper home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans….”
Congress has, without a doubt, lost it’s collective mind.
Print those worthless pieces of fiat currency, baby!
It’s really, really time to load the gun locker.
Only violence will have have a chance to stop the madness now.
This is just too ironic not to pass along…Julie Nixon Eisenhower, one of the ex-Prez’s two daughters, is an ardent supporter of Obama.
http://thecaucus.blogs.nytimes.com/2008/04/21/a-nixon-for-obama/
Ike himself wasn’t that political, except as needs be in the military. Both parties wanted to run him for president.
Julie is Nixon’s daughter, she married David, Ike’s grandson.
D’oh!
Maybe Julie should consult her tax advisor
http://online.wsj.com/article/SB121435112024101581.html?mod=opinion_main_commentaries
Hey chick.
Maybe you should link a real article about what the Tax Policy Center said instead of a trickle-down hack like Luskin?
http://money.cnn.com/2008/06/11/news/economy/candidates_taxproposals_tpc/
Let’s not forget the unmentioned tax of inflation. Borrow and Spend = Tax and spend on steroids.
I told my Obama loving friend that he may help people who recieve benies but what if he diddles with the death tax?
That shut her up. I told her that home she was hoping to inherit just may go to saving the anchor babies. Was that mean?
I’ll just change the way I receive income to avoid it as much as I can. Others will do the same.
“Was that mean?”
ROTFL….enjoying your humor, Ouro.
I’m stuck on where my useless vote is going. I don’t think Obama’s economic fixes are going to be positive for any of us.
But I also don’t want my son to get sent to fight a war for oil.
For me it keeps boiling down to someone who can calm down the scared masses through what’s going to be a tough time vs a candidate that I think might blow a gasket when negotiations get tough. Just the other day on CNBC one of McSame’s advisers was saying “Oil is being used against us as a weapon.” I really thought McCain was smarter than that. I had chills for the rest of the day.
The house is going to be worth more than $2 million bucks when her parent(s) die? Oh, by the way, if the current proposals on eliminating the estate tax entirely eliminate the step up in basis at deat. So, if there is no estate tax (which applies only to huge estates anyway) you get to pay capital gains when you sell the house!
The ESTATE TAX has a minimum of $3.5 million and only applies to about 800,000 families in the U.S.
Unless your friends home is a Greenwich mansion, it wouldn’t apply to her.
In other words, your reply is pure bs.
Edhopper. She said “if he changes the estate tax”. I’m assuming that he will lower the limits to anything over 10$.
All funds generated will go to reperations for African Americans.
Good luck.
And you found this in the tax policy section of his website, or seen this as a proposal from the Dems in Congress (Congress BTW are the ones who make tax laws.)
Or is this just more bullshit, racist scare tactics from the right wing.
(yes your comment on reparations is racist, Obama has never said or supported this. But you want to make a comment about how the Black man will spend your money. All I have to say to that is, how much will 100 years in Iraq cost.))
My comment was on your reading comprehension.
A lot of democrats had talked about changing the death tax to help with entitlements. Way back in the early Clinton days.
100 years in Iraq can be quite inexpensive depending on how practical you want to be about it.
And yes as a white guy, I am wondering how Obama, a black man, will act in office.
Have not heard his position on reparations. I suspect he isn’t off in that Maxine Waters category but he did sit through some rather odd sermons from his pastor. Of course he left that church as soon as it became apparent that it was hurting his percentages. Not that I’d think he is plastic or fake.
I just figure he was like the rest of us and on autopilot in church.
Remember Dick got the US out of an Asian war, not into one. He wrote a book called “No More Vietnams” with the message that the US should never get itself into another war without clearly defined goals and a clear exit strategy. He was also a multilateralist who met with Brezhnev and Mao and conducted negotiations with North Vietnam at a time when the country was engaging in direct combat with the US.
He also had a pretty good record on environmental and other mainstream issues. It could be argued he had more in common with Obama or Bill Clinton than with today’s Republicans.
Astute observation regarding Nixon.
I think Nixon’s Watergate deal was extremely overblown. However he pulled the crime of the centory by getting the U.S. off the gold standard. For that, he was the most crooked President.
“I think Nixon’s Watergate deal was extremely overblown.”
“Just days after Egypt and Syria launched a surprise attack on the holiest day of the Jewish year (Oct. 6, 1973), Israel urgently needed more tanks, planes and ammunition, its leaders argued. But 25 years ago, at the height of the Yom Kippur War, the White House responded that it would study the request.”
Nixon got payback.
Nixons “watergate deal”? WTF? The last time I heard, burglary was a crime. And it beyond naive to suggest it’s overblown when the President of the U.S behind the burglaries.
Has anyone actually listened to the Nixon tapes? Take a listen, he loses the shine real quickly.
My father detested tricky dick, and on August 10, 1974 there was one a hellova party @ our house.
“Has anyone actually listened to the Nixon tapes? Take a listen, he loses the shine real quickly.”
Yeah, he sounds like a sailor talking about how he’d like to diddle the cashier at the PX. Not much love of the middle-east clan either!
Nixon paved the way for our distrust of politicians and showed future criminals how not to get caught, and so far, so good.
Billy Graham doesn’t come off sounding to good either on those White House tapes.
Some people are a whole lot different when they are not in public.
Billy Graham was quite the bulwark to pit against the godless Soviet Union in the 1940’s, and was the perfect photo op that every president since liked to have present.
Much of our country’s infatuation with religion stems from how hard it was pushed on us in the Cold War.
Religion ain’t gonna put food on the table or gas in the tank, when push meets shove.
If someone up above would learn how to comprehend, he would have seen that I was making a relative statement. The closing of the gold window at Bretton Woods was a very big crime compared to the crime of the Watergate burglaries.
Also I heard that Nixon was not the first President who did dirty tricks. Funny how Americans think all the previous presidents were saints until Tricky Dicky.
Religion ain’t gonna put food on the table or gas in the tank, when push meets shove.
But at least religion can at least pacify the ignorant types so that they at least won’t commit crimes. This is on the same line that my dad told me many years ago. And my dad was no atheist. Very intelligent man who happened to be blind as a result of WWII service.
Meh, you guys talk about the gold standard like its a panacea. In reality we had bubbles with the gold standard as well.
Gold is a good hedge but not the ultimate cure all.
The Fed is the bigger problem with its guesses about interest rates allowing banks to make mischief.
I’m finally starting to understand this stuff and its too fricking late.
Gold is beholden to nobody, unlike every other financial instrument.
I think Bill Clinton had more in common with todays Republicans than Richard Nixon.
I can’t believe that people are so shocked and make such a huge deal that Clinton had an affair — which politicians in the US and worldwide commonly do — and treat it like its more (or as) “shocking” than Watergate, or arms deals, or removing our privacy rights.
I would rather have a politician that screws up his own personal life than one that screws up everybody’s personal life. President is a business position, not a religious leader. They are there based on ability to lead a country economically. Yet so many would prefer a dumb “non-elite” hick who doesn’t appear to have affairs and “sets a good example” . . .
I admired Clinton when I heard he diddled a woman outside of marriage. The French and Italians do this openly. It’s called “having a mistress.” Their wives know all about it. No BFD. Mitterand’s wife and his mistress both attended his funeral at the same time. As for Clinton’s policies, I disagreed with most. The Repub congress cut the spending in his term. It was not Clownton. If you don’t believe this, read the Constitution and learn about the functions of the President and the Congress (what they can and cannot do).
He also had a pretty good record on environmental and other mainstream issues. It could be argued he had more in common with Obama or Bill Clinton than with today’s Republicans.
Well, Nixon certainly did share the current president’s contempt for civil liberties and the Constitution, and his oversight of the domestic economy was similarly atrocious, but you make a decent point. The current crop of conservatives (at least as they are represented in office) have very little in common with Eisenhower, Nixon and Ford’s relatively nuanced positions on many issues.
Remember Dick got the US out of an Asian war, not into one.
We got out post-Nixon.
“Remember Dick got the US out of an Asian war, not into one.”
Not true. Nixon invaded Cambodia. Nixon was elected in ‘68…we had five more years of war in both Vietnam and Cambodia on his watch.
Good point, I forgot about Cambodia.
so he didn’t get us out of vietnam?
President Nixon was out of office 2 years before we got out of Vietnam.
“The Paris Peace Accords on “Ending the War and Restoring Peace in Vietnam” were signed on January 27, 1973, officially ending direct U.S. involvement in the Vietnam War.”
“Gerald Ford took over as U.S. president on August 9, 1974 after President Nixon resigned due to the Watergate scandal. “
True, except the strategy for and most of the withdrawal began in 1973 - and was done by April 1975.
Nixon left office in early August 1974.
As for domestic matters, I’ve read that Nixon proposed a nationalized healthcare system and signed the EPA into existence.
Not to belabor the point, but:
From Brittanica
“On March 29, 1973, the last U.S. military unit left Vietnam. ”
Nixon did unequivocably end US involvement in Vietnam.
re: hoz
I’m sure you meant to say, out of office for 2 years before we stopped funding South Vietnam to counteract China’s funding of North Vietnam, thus leading to the mass murder of South Vietnamese and Cambodians. Only 2+ million of them.
Nixon invaded Cambodia.
I don’t believe that was actually true. I think Nixon said “I’ll give another star the general that can take care of Cambodia” and never officially ordered any bombings or invasion. In fact, if I remember correctly, nobody knew about it for 3 months.
Kinda like how Bush was never really aware of the whole Scooter Libby outing Valeria Plame affair.
No documentation == no proof.
Seymour Hersh has covered this ground. Nixon, with Kissinger’s help, opened a back door to then S.Viet prez Thieu, convincing him the repubs would get him a better deal than the peace talks of ‘68, then on the table. Thieu bit, the talks collapsed, Nixon was narrowly elected, and the war went on. In 1969, B-52s carpet bombed Cambodia, technically neutral,and in spring 1970, Nixon launched an “Incursion” into Cambodia…with US ground forces.
Final terms of the “peace treaty” were remarkably similar to those proposed in ‘68 but 20k more Americans were dead.
Oil waiting on key reports.
http://money.cnn.com/news/newsfeeds/articles/apwire/5615f86d59d8d45fe7006849e0620b4c.htm
Things just keep getting worse for us Boomers.
http://www.marketwatch.com/news/story/home-price-declines-eat-baby-boomer/story.aspx?guid=%7B408882CB%2D7FF8%2D4473%2D8E46%2DE0483DC5A4D5%7D
“… many of these boomers are ‘going to be facing a mortgage payment well into retirement’…”
Which means they’ll have to keep on working and keep on paying into social security which will help finance the projected SS funding shortfall.
See? It’s all good.
If they can keep working …
For a Good Retirement, Find Work. Good Luck.
http://www.nytimes.com/2008/06/22/weekinreview/22lohr.html
“The biggest obstacle, experts say, is that most companies are reluctant to retain or hire older workers. At the top of the corporate ladder, executive recruiters are routinely told not to seek anyone over 50, notes Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School.
Similar sentiments, Mr. Cappelli said, can be found across the job spectrum. He points to a batch of evidence. In one survey, one-fourth of companies said they were not inclined to hire older workers. In a research experiment a few years ago, thousands of made-up resumes were sent to employers; younger workers who had the same qualifications as older workers were more than 40 percent more likely to be called in for an interview than someone 50 or older. In an industry survey, a majority of technology companies candidly said they would not hire anyone over 40.”
I’m 49. So far I have had no problem with age discrimination. Over 23 years in my computer field with 6 weeks total downtime. Well into the 6 figure annual income too. And I’m a techie. I keep getting head hunter calls. Got 2 or 3 more months left on my engineering contract here on the east coast then I hope to go back west for another lucrative gig.
Bill, what is your specialty?
Embedded Software engineering (the whole software development lifecycle). Years ago I was in avionics. Now I’m into information security. And I think infosec is much more lucrative than avionics. So much phishing and so forth you know.
If they CAN work. Everyone seems to assume the BBs will be healthy all their lives. What happens if/when a large portion become too ill to work? Have a feeling it’s going to be ugly.
You’re right to point that out. These kind of articles assume far too much about both the ability and willingness for seniors to keep working.
While individual exceptions obviously exist - what works for the individual should not be assumed to work for an entire cohort. Individuals will certainly succeed, but the group as a whole is in for some rough sailing.
For that generation, as with every generation, it’ll be up to individual…unless of course congress finally succeeds in outlawing the effects of aging and other natural unpleasantries.
You have a point there!
“Unfortunately, due to the rise and collapse of the housing bubble, this may not longer be the case,” the authors wrote in their introduction.
This still isn’t right. The boomers could have hung on to their original, smaller homes, paid them off and NOT accessed the equity, had it paid off by retirement. Just like in ye olden days. This didn’t have to happen this way.
“This didn’t have to happen this way.”
Housing expense is a major chunk of one livings expense. Pay off the house and one’s cost of living drops dramatically.
It’s all a matter of choices.
RE: Which means they’ll have to keep on working and keep on paying into social security which will help finance the projected SS funding shortfall.
So…as a private sector worker I’m suppose to keep workin’ to pay for all those gold bricking, produce nothing, government employee leeches who pension out with full paid health insurance in their late 40’s?
I hardly think so…
J-why retire anyway? Every time a fellow retires I set the calendar for a funeral in the next 12 months.
I could see retirement if I was a guy digging ditches but most of us use our minds for work. I really do believe that it is a quick way to lose your zest for things. If I was physically able I would still play football as I love it and I must say it is more fun to play than to watch.
“…Every time a fellow retires I set the calendar for a funeral in the next 12 months.”
Certainly the exception, not the rule. In this community where almost all are retirees, the only “early” deaths are due to cancer, which can hit at any age. I golfed on Monday, and had a 2-hour practice session with my tennis team on Tuesday (90 degree heat). Today we’ll be taking the neighbors on the pontoon boat for lunch and a swim. Gotta remember the sunscreen.
You speak of certainty and then back that up with personal experience? Men in particular exhibit increased mortality upon retirement, most especially if they retire before 60 or worked long hours at work which results in a sudden large gap in their lives. You would be well served by consulting the literature more and speaking of your personal experience less. Speaking of personal experience, most retireds in my life are like you: constantly broadcasting pernicious ignorance without any care for truth or consequences.
So the key to life extension is to not retire at all?
“So the key to life extension is not to retire at all?”
For many people that is true. People who’s personal identity is tied up in what they do should probably never retire. Buffett, for example, should probably never stop what he is doing.
People need a purpose in life, a reason to get out of bed in the morning. If that purpose is yanked away people will whither away and die. That’s how we are wired.
Too true Combo, my husband’s dad died at 55, after taking early retirement at 50.
We calculated that he had about 6 months of ‘happy’ retirement before he got ill with the cancer that eventually killed him.
He’d been a bigwig at the local British Telecom branch, used to making decisions and dealing with people every day.
His ‘mistake’, if you can really call it one, was in not planning meaningful and enjoyable ways of passing the time after retirement. He’d put all his effort into work, so had nothing to look forward to - so he became bored, then depressed, then ill.
Whether or not he would have become sick had he had gainful ‘employment’ of some kind is a moot point. Personally, I think his lack of direction certainly didn’t help in that regard.
So, yes, I agree that some people are better off working until they no longer can.
I know its made both myself and my husband think long and hard about what goals and achievements we want to have after retirement, as we have my late FiL as an object lesson.
I must know dozens of people that are busy making pile of money #5, to stick on piles of money #4, #3, #2 & #1.
They can’t get off the ride…
Me, i’d rather hang out @ my swimmin’ hole.
Stastically, women outlive men. A part of the reason may be the retirement issue.
Men retire from a job and need to search for a fulfilling pastime to fill in all the hours of the day. If he is successful in the search then he will have a successful retirement and will probably live a long time. If not, then he probably won’t.
A woman who has spent most of her adulth life as a wife/mother/homemaker will probably never retire from this role, she will merely extend it all the way to her deathbed.
Sheesh, retirees are the happiest people I know. They can be active in the community, go to conventions & volunteer for stuff, stay up late schmoozing…get up at 10 fresh as a daisy, wonder why we working stiffs don’t have time to go to this or that event with them.
Same with me, some of the happiest people I know are retired with full and active, involved lives. But I realize these are the people who have been self-selected from the vast pool of retirees.
There’s a great mass of unseen retired folks that spend much of their day sitting indoors, depressed, doing not much of anything, just running out the clock.
Just broken spirits, waiting to die.
True, and here they seem to wander in to the casinos to play the machines all day.
It’s a statistical fact that when a USAF Chief Master Sergeant retires, there is a much better than average chance he will die within five years. It’s tough to transistion into other careers at the 50 yr mark most CMSgts are at when they retire, suddenly, they have no mission in life (and often no commensurate civilian job in terms of responsibilities), they just - die. I’ve seen it happen with such regularity that I’m a firm believer in the stat. That’s one of the reasons I retired at 20 years. I wanted to be able to have another career.
I have heard this too. It amazes me how some people derive so much personal meaning from their jobs. I guess that’s why some people are workaholics.
Jwhite,
regarding that article, It never ceases to amaze me how millions of adults who have been alive during the last real estate bubble and who had the ability to study personal finance, could ever think real estate, and not equities, was the best way to save for retirement.
The article was right on about the boomers who are renting and have been renting during this bubble. We renters have thrown away a very small amount on rent compared to how much the boomer buyers have thrown away to the mortgage banks.
I’m comfortable with my savings and it will get me through the lean times ahead while I will certainly not tap my 401k or IRA for another 18 years.
Stupid boomer buyers! I’ll be frequenting Hawaii and Florida coasts sipping Mai Tais while many boomers will be working as short order cooks.
Because we no longer have a mortgage, we have been able to take advantage of a couple of “need you here NOW” job opportunities for the spouse. She just turned 37 and she’s an Assoc VP (over several campuses). She’s ten years younger than the senior people working for her. Not too shabby.
All because we could move quickly. I’m going to school for a huge discount thanks to her position and when I grad as an NP, we will think about buying a nice chunk of land on the Tennessee River for our retirement home in the future. 1500ft max, we’ll build it. I don’t know why people don’t learn, and why they can’t see ahead more than 12 inches (if that).
Another piece about how lawyers are successfully challenging foreclosures because of the CDO nightmare and lack of paperwork…
http://www.nj.com/news/ledger/topstories/index.ssf/2008/06/newark_housing_authority_is_la.html
I think an intrepid renter who didn’t want to move could do the same thing.
I wonder how that would work with bill collectors, when they buy debt for pemnies on the dollar and sue for the full amount.
Unjust enrichment … Tx chick?
Why doesn’t the origial debt holder sue you anyway? If you defaulted on a Sears card why doesn’t Sears use its lawyers to sue you not some nameless corp that bought the debt?
by law they have to write the debt off after 180 days of no payment.
I don’t know why more people don’t fight the debt collectors though. It’s fun!
I just won a defense against a JDB last week. $15,000 lawsuit against me, but the original debt was for $3600 that was paid in full over 5 years ago (statute of limitations is 5 years in IL on revolving debt).
Countersued for 5 violations of the FDCPA. Judge dismissed their case, and they immediately told me they’d settle my case. No thanks, I have all the time in the world.
Also, txchick, the law does require that the original creditor write off the debt, but they do NOT have to sell it. They’re only required to write it off on their books, but can keep it in their control forever. CapitalOne does this. So do a few other large creditors. The reason to sell the debt is that MOST of the case, people who go 180 days without paying or talking on the phone will never pay. JDBs may pay 5-15 cents on the dollar, but their harassment techniques and high chance of getting a default judgment makes it worthwhile.
I love debt laws and have dedicated a better part of the last year helping friends of mine clean up their credit reports. My CRs were bad because I _did_ default, but I wasn’t a deadbeat. I called my creditors 3 months before my first missed payment. Lost a business, and knew I’d have about 4 months of no income before I received some cash from other businesses I owned. Not a single creditor would help me out, AT ALL. So I let them fall, then paid them off once my cash flow was better.
What a lesson that way in saving wisely. Now I pay off my credit cards BEFORE the statement cuts, and will have my FICO back to where it was pre-business failure by year’s end.
Nightmare of learning the FDCPA, the FCRA and all the other statutes. Texas law is hilarious, btw.
I know (re the 180 days) but Crapital One does sell off after the statue expires.
I also have made a hobby out of messing with this stuff. I am constantly amazed that more people don’t fight these guys and go after them for the numerous violations they almost always commit.
“after the statue expires”
Seinfeldian slip?
My gf defaulted on her student loans a few years ago over complicated circumstances. She has now made over 12 on-time payments but has received no word that her loan is now “rehabilitated” (out of default status). Is this a violation? I would love to find something on these collectors. Everytime she calls the company the person of interest is “at lunch”.
These (non-dischargeable) student loan collectors have many people by the balls. At least the typical deadbeat has bankruptcy as an option. The protections seem to be few for student loan holders.
Sears actually is or was one of the more proactive of the consumer lenders/creditors. I remember they would often be the only creditor who would show up at the 341 meetings in the chapter 7 cases and they would often ask the debtor to either redeem the debt or return the property (dishwasher, whatever).
Tx done any BK work since all the changes? Chap 7 did seem sinfully easy before. I haven’t had a case in 10 years, thinking about getting back in.
One thing that most people don’t realize about many large creditors is that they’re beginning to blacklist previous defaults. Just because a default disappears after 7 years from your credit reports doesn’t mean that the original creditor won’t remember.
My friend who just hit 780 on her report (it was 560 12 months ago before I helped her write some letters) was declined for a Macys card. She called, and they said she defaulted on a card from Mervyns or something many years ago. Blacklisted.
I was blacklisted at Chase (who happens to be my primary corporate bank and has been since 1993). American Express blacklists.
Original creditors have very little reason to sue because they have no interest in testifying or giving depositions if they’re called in as a witness or to back something up. Plus each state has different laws pertaining to SOL and collectibility of a debt. Tons of variations.
I remember that scene too from my associate days. Same idiot at the 341s always asking the same question: Do you plan to redeem or reaffirm on the bedroom furniture set/camcorder/lawn mower?
About 10 years or so Sears got whacked hard by the 1st Circuit (IIRC) for its practice of getting debtors to sign reaff agreements but not submitting them to the BK court for approval. Perhaps not coincidentally around the same time Sears stopped treating purchases made on their CC as secured debt and now those charges are unsecured like everyone else’s.
yeah, I knew I’d seen something written about Sears getting hit.
Dada: I know that Amex and Crapital One blacklist. Then there are the junk CC companies like HSBC (under various names such as Orchardbank) who give out small limit credit cards even after someone has defaulted on them previously. They give out like $250 limits and charge an immediate $60 annual fee. LOL. Knock yourself out on $190 of credit.
txchick: I never understood those “starter cards” with high AF.
When I tanked my FICOs, the first thing I did to repair my credit was head over to a decently sized credit union and open a large secured Visa account. The “secured” comment on a credit report means NOTHING to other creditors automatic approval systems. I believe my first secured card was a $10,000 Visa with a relatively local CU. Once I had no derogatories for 18-24 months or so, other approvals came along. The key to getting more credit is to have decent credit limits with others.
Getting a $300 credit line, no matter how bad your credit is, will only hurt you in the long run. Then again, most consumers are idiots and would run up whatever limit they go, which is why HSBC is brilliant with their rebuilder cards.
Personally, I have no desire to work with the big banks any longer. I don’t charge anywhere close to what I can afford to pay off, and I pay in full always, sometimes weekly. Credit is just a tool, and if I ever need it, it’s there. I could have (should have?) filed BK back in 2002, but I realized even then that I had debts to pay, and I paid them. I never paid a JDB or a CA, though, and never would unless they had ALL the legal backing to prove that they actually owned the debt.
Pay your damn debts.
I’m tired of paying for people who don’t pay their bills.
What’s wrong with you people?
On a housing bubble blog bragging about how you can get away with not paying what you borrowed.
Disgusting…………
“practice of getting debtors to sign reaff agreements but not submitting them to the BK court for approval.”
hooo-boy, and the debtor ALWAYS wants to reaffirm - just that one, because they don’t want to lose the Sears acct. BFD.
Thanks to the HBB, we helped a friend who was getting bullied by a bank with this tactic — told his lawyer to inform the bank that if they could produce his note, they could go ahead and foreclose. Bank punk shut up in a nanosecond.
In that case, it was a legit mix up — his loan had been transferred from one bank to another, and the auto payments weren’t hitting the new location properly, so they considered him behind even though it was their fault.
All of a sudden they got reasonable, found his payments and then “forgave” the penalties they were trying to extract.
Fact is, if you show up and say you own my house, you got to prove it to the judge. And remember, even judges hate lawyers.
Can you say colusion of the government and banks to destroy the responsible citizen. Discusting:
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/24/AR2008062401389_2.html?hpid=topnews&sid=ST2008062401804&pos=
“Still, critics expressed disappointment that banks were given such a large hand in writing legislation designed to ease a foreclosure problem they helped create.”
That’s a HUGE understatement. Disappointment? I can think of better adjectives than THAT…
Noun.
So I don’t understand the alternative here: small bailout versus humongous bailout?
“But Frank said the legislation was the result of many conversations with interested parties, including fair-housing advocates. Lawmakers and bank officials defend the provision as a balanced compromise, tempered by extensive input by government regulators, that gives homeowners a chance to stay in their homes while preventing the government from having to appropriate billions of dollars to buy nonperforming mortgages.
‘The alternative to having the banks as participants was a massive federal bailout,’ Frank said. ‘They [the banks] benefit, but they benefit by losing less.’”
*****
This is baloney.
The alternatives could include NO BAILOUT.
And this part, “the legislation was the result of many conversations with interested parties, including fair-housing advocates.”
Who are these “fair-housing” advocates, anyway?
Not a single thing about this is fair to renters, to the people who didn’t speculate in housing, as the majority of buyers in California were until recently.
I keep hearing about “fair.”
There’s nothing fair about preventing the housing market from correcting.
I can say “bravo” to the Washington Post editors for getting this information out in the open before the POTUS makes up his mind whether to follow through on his veto threat. It sounds to me like a bailout of the lenders, by the taxpayers, for the lenders.
Episode two of “The Smartest Guys in the Room”?
Dodd Deserves Financial Scrutiny
Stan Simpson
June 25, 2008
When Christopher Dodd is in the room, it’s a rare occasion when he’s not one of the smartest people there.
But Connecticut’s senior senator has been on the defensive in recent days, fending off questions about his stupidity. In getting himself in a cozy relationship with Countrywide Financial Corp., one of the banks he regulatesas chairman of the Senate Banking Committee, Dodd’s integrity is being questioned. And he’s probably blown any chance of ascending to a cabinet post if Barack Obama is elected president.
The ongoing flap comes a week after Gov. M. Jodi Rell signed landmark bills on ethics and on subprime mortgages — the two issues that now dog Dodd. The senator was in D.C. Tuesday pushing a housing bill that critics say is more a bailout for banks than for consumers snared in the foreclosure mess.
Anyone know of a way to fight this taxpayer travesty waiting to happen? Please don’t say ‘call your congressperson’, because that won’t matter a whit.
Seriously, I’m ready to march on Washington over this POS ‘Bank Bailout/Taxpayer fleecing Bill’. Just thinking about how close this is to passing is making my blood boil.
What do you think would happen here in the US if there was a run on the banks? It enough sheeple finally realized what was going on and started drawing cash out… what would the government do? What would the banks do? What would you expect to happen in the first week? The first month?
Thanks!
This is why we keep cash on hand plus at least a month’s supply of food. Things could get ugly when the folks can’t get their cash. But hey! They’ve always got plastic! (unless it’s maxed out or their credit line gets reduced to zero).
What would the sheeple draw out of a bank when they’re enslaved to the banking system through cheap credit? There is nothing to draw on.
Nothing - like the Doritos commercial that says “don’t worry! We’ll make more!”
Picture Bernanke in a kitchen apron handing newly printed bags of dollars to the banks.
Here’s a caveat to all of you that have in excess of 100k in an FDIC insured bank. Get BELOW that FDIC limit so you get your bag of Doritos…I mean money, in case the FDIC takes over the bank.
The $100,000 limit includes interest owed, so get down to $95,000, then be prepared to wait 9 months for you money and accrued interest.
Why 9 months? That is the proper gestation period after one gets boffed!!
Contrary to popular opinion the Fed cannot print money without congressional authorization. Do a search on what it takes to actually “print” more real money - it is far more arduous than most believe.
Additionally there is also only about $500 billion in circulation in the US and that number includes all money held by the reserve banks. The rest of the already printed money (about the same amount) circulates outside the US. If you really study the fed you will quickly discover the entire dollar world of all notes, loans, bonds is leveraged off the base (that;s why its called the monetary base) of the actual printed money - less than $1 trillion it total.
Those who don’t maintain some real cash outside the banking system (including safe deposit boxes) may wish they had. In any run all of your electronic access to money will be “clicked” off and ATMs will be shuttered. Don’t think so? Neither did the UK’s Northern Rock customers.
Relying on the FDIC is bit like wishing in one hand and s**ting in the other. Guess which one fills first? When teh FDIC was created, no one envisioned the magnitude of the problem we currently face and the FDIC over the last few years was not collecting anywhere near enough “insurance payments” from the banks. Of course now its painfully obvious.
The PTB didn’t have any trouble bailing out Bear Stearns did they? And Bear wasn’t even a deposit-taking institution. Its liabilities were all uninsured.
FDIC-insured deposits comprise a miniscule amount of the total liabilities of the US financial system. If FDIC becomes insolvent Congress will just bail it out as it did FSLIC.
Holders of FDIC-insured deposits will get their money back in no uncertain terms. They only issue is how much buying power that money will have.
Look carefully at the changes to banking in the late 1990s. Banks can effectively print money by making loans. That is one of the reasons M3 exploded.
“Here’s a caveat to all of you that have in excess of 100k in an FDIC insured bank. Get BELOW that FDIC limit so you get your bag of Doritos…I mean money, in case the FDIC takes over the bank.”
Or better yet put all your money in a Citi account or another one of the big US banks. They’re too big to fail.
FDIC is a crock of poop.
Reliance on the FDIC would be assuming we only lose a few banks at a time. Isn’t it true that even the FDIC could be overwhelmed and experience insolvency?
And, don’t forget, the head of the FDIC has a proposal for it to make 5-year payment-free 20% down payment loans to FBs.
FDIC Finalizing Direct Home Loan Plans
http://www.cnbc.com/id/24381609
It enough sheeple finally realized what was going on and started drawing cash out
What cash?
Bingo. The savings rate in the US is NEGATIVE.
Oh and just an FYI. US banks DO NOT have to comply with a request to withdraw money from your savings account on the day you request it. They have a grace period (I think 30 days). They are only playing nice when they allow you do it these days. Hence we can’t have runs on cash savings accounts.
Checking accounts are a different story.
If you really want to F**K the US banking system. Immediately take all your earnings and convert them to cash and put it under your pillow…..oops there goes the multiplier effect!
What do you think would happen here in the US if there was a run on the banks?
The Government would do the same thing FDR did, close the banks for a ‘holiday”. Let things cool down and reassure the masses everything is just fine.
I had a now deceased attorney tell me once that the FDIC had up to seven years to pay out balances on insured accounts, up to $100,000.00 Not that they would do it. Anyone with more than $100,000.00 in an FDIC insured account is screwed for the amount beyond that anyway. In the event of failure.
So how would the holiday work? I’m trying to envision how this is going to play out over several weeks. Will we be able to write checks to pay our bills? Even if someone had cash to cover their bills, how would they pay them to a faceless entity seven states away?
Are some of you saying the banks will magically reopen with more funny money so everyone can have their money back? Is there any other option?
We operate a small business from our home so I’m trying to imagine how we will do business with clients (billings, cashing checks, etc.) and continue on with our own lives.
Wow, a bank holiday sounds like the perfect vacation…
In reality, around 10,000 banks went tits up from 1930 to 1933, and our banking system was in shambles, when FDR closed em’ all down.
How will Americans react to the neo-runs about to come?
Combine a healthy dose of fear with panic, and thanks to the information age, it won’t take 3 years for most of our banks to fail, more like 3 months.
The FDIC has 1.22% of deposits covered, should the banks fail.
I hope that you aren’t an unlucky 98.78%’r
“The FDIC has 1.22% of deposits covered, should the banks fail.”
Since FDIC insurance only covers amounts under $100k, they technically don’t need to cover 100% of deposits. Big depositors would lose ONLY if another bank is not enticed to step up and acquire the failed bank/deposits.
Currently, there are plenty of healthy banks that would absolutely love to acquire good deposits - they are hard to come by.
Sallie, if your bank fails, chances are very good that another one acquires it and you don’t lose a dime. Also, that is typically pre-negotiated, so a sale happens the day of closure. You can usually get your cash the very first operating day for the new bank.
Just my 2 cents, unless it gets really ugly, I don’t foresee an FDIC insurance problem.
Mr. Drysdale…
Who is going to take over your bank in Beverly Hills when it fails?
The Clampetts could for all I care. The lovely Miss Hathaway and I have invested our ill-gotten gains in a nice remote island. Then, after I knock her off for being such a dam prude . . . I’m sure I could entice a hottie or two to accept my deposits.
Not true. List a beneficiary on death and it goes to 200k Put your wifes name on it too and it goes to 300k.
Space is right . . . you can “structure” your deposits to increase insurance coverage. It is not really a secret or anything, ask any new accounts person at your bank.
And to clarify… Say there are runs on a few banks. Would other banks act preemptively to keep it from happening there? What could they do?
I don’t see Americans being as restrained as the folks in the UK from several months ago…
“as restrained as the folks in the UK”?
You mean the ones lined up for hours in front of Northern Rock, demanding their money? I guess the restrained bit is that they didn’t resort to breaking the doors down and throwing bricks through the windows.
Exactly. I just don’t see orderly lines outside of banks in portions of this country… Scary if you ask me…
“Exactly. I just don’t see orderly lines outside of banks in portions of this country… “
I do. People are in orderly lines all the time when they should be throwing rocks!
South African Consumer Price Inflation Index (CPIX) is now up to 10.9% Y/Y.
And this statistic was pulled out of whose joshuatreehole?
I’d be surprised if the true price inflation index was closer to 20% in SA.
Analysts backtracking of banking buy recommendations…
http://bloomberg.com/apps/news?pid=20601213&sid=afj3WAy4EYOA&refer=home
GS sez May upgrades were a “mistake” - and there’s hardly a peep. Ah, those sweet May days - remember them? I wonder if those that bought long into that GS-inspired rally do?
Weekly mortgage aps drop (again).
http://www.marketwatch.com/news/story/mortgage-applications-down-93-last/story.aspx?guid=%7B7DE64A1B%2D2E1E%2D4E1D%2D83A9%2D47A7F6F39EA9%7D
People forget that while inflation in food and energy isn’t “counted” by the Fed, inflation in chemicals IS. They’re the backbone of a lot of industries and price increases ripple up through ALL of them This ought to get the Feds attention.
http://www.marketwatch.com/news/story/dow-chemical-raises-prices-energy/story.aspx?guid=%7B0FF0969B%2D9924%2D4217%2D89CD%2DC7AE27AFF6A8%7D&dist=MostReadHome
Yeah, I want to see them spin this one away.
I was switching through channels last nite and came across Larry King on CNN. He had on a panel of “experts” to discuss the housing bubble. The panel was Donald Trump, Richard “Casey Serin’s my best friend” Kiyosaki(sp), some Realtorwhore, and some host of a Realty show.
Guess what? They all said now is a GREAT TIME TO BUY, and a BAD TIME TO RENT. They used every talking point you could think of to spin how you should buy now, now , now.
I almost threw up in my mouth after watching 5 minutes of this crap. I had to turn the channel or I would have tossed something large and heavy through the TV screen.
On another note, this save BOA/CFC legislation being rammed through CONgress is criminal. We all need to call CONgress and GW and loudly express our opposition to this, or WE will end up paying over 1 TRILLION in taxpayer dollars to bail out these crooks.
Um, that was Babs Corcoran again.
Trump is a hoot, isn’t he? A caller asked what to do after being foreclosed on and he said “buy another house”. Really.
That CNN scenario reminds me of all the talking heads who kept saying to buy tech stocks - so some listened and did such all the way down.
Good for them!
Time to kick GM off the Dow?
http://money.cnn.com/2008/06/24/markets/thebuzz/index.htm?postversion=2008062414
NARscum should be reporting resales this week. How they going to spin May’s numbers? I believe signed contracts jumped but they didn’t get financed.
I noticed a violent V shaped whipsaw in regional areas on hardtacks webpage. Just a month ago, we discussed here on this blog that sales are increasing but based on this chart, it appears that 1)More new inventory is coming on or 2) those sales didn’t get financed and went back on the market. Either way, inventory today is higher than just one month ago.
Economists vs Consumer - Who’s going to win?
http://money.cnn.com/2008/06/24/news/economy/confidence_recession/index.htm?postversion=2008062415
I used to leave in Houston.
Couple of days back Fox News was showing a wild police chase of a car. It was on Westhimer Rd, I-610 and US 59 South. This was during the peak hours before around 8:00 AM
I was surprised to see less traffic cars on the I-610 and US 59. It used to be a parking lot.
Houston I guess will be the last market to go since it’s rolling (at least at the high end) in $140 oil.
I lived in Houston during the last oil bust. That 59/610 interchange was a parking lot 20+ years ago. Do you remember the tent cities north of town where the people who came to Houston from Michigan looking for work lived?
20+ yrs ago I was 8 yrs old!
Hoz / Tim / Anyone Else
I posted this few days back but did not get all the answers.
MBIA and AMBAC had insured various CDO/ structured products backed by residential mortgages. Are there monoline insurers that insure CDO backed by commercial mortgages?
How do you short CMBX index?
Are there any CDO backed by credit card debts and auto loans. Is there any index for cc and auto CDO? Is there any way to short these CDO/indicies?
I think that next shoe to fall would next commercial backed mortgages, CC and auto.
What would be a good starting point to educate your self on derivatives?
Hoz and Txchick are the traders. The market has become a place I can not predict anymore because I no longer understand the mindset of others (I have a tendency to see and avoid bubbles as soon as they begin, thus missing out on the big gains and losses). I usually just go long with index funds, but the economy is so screwed, I went all cash or cash equivalent last year trying to protect my principal which I will use to buy a house and invest the rest in the market in index funds for the long haul when I feel we have bottomed. I am in the derivatives business but only work with munis (although they are all essentially the same as all others except the tax-exempt aspect of munis adds another layer of complication). Any form of debt can be securitized and has been securitized, and I am sure the insurers had a hand in all of it. As for understanding derivatives, the structures are ever changing and will never be the same. I get most of my knowledge from seminars and conference calls with the tax guys and investment banking brain trusts. Most published materials I find have an agenda or are backwards looking. We try to create new structures and the tax guys push the IRS on whether we can do it or not. Also it looks like you are more looking for ways to play the investment angle with derivatives, I have not done that. I note that it is the investment banks and the insurers that have most of the exposure, so they should move up or down in correlation (although filtered through investor perception which I feel is unpredictable and uninformed). Some with more exposure to different products than others.
My post seems to have been lost. Maybe it was too long. In short, I am a conservative investor, putting my money into real estate or index funds for the long haul at historical low points (because this is a uniquely bad time to be invested, I went all cash and guaranteed return investments last year to protect my principal). I am a turtle. Hoz and Txchick are the rabbits. Most of my knowledge regarding the structures is acquired at work. The structures change constantly, especially today, and I find published work outdated, biased or backwards looking. Wish I could be more help.
What you didn’t like my help?
liked it but needed more information.
thanks
Don’t we all. Good luck finding it. Maybe we have some hedge fund managers here….doubt it though.
RE: Finally…
http://www.komonews.com/news/20656789.html
As a resident of the fine state of Washington, I commend the otherwise incompetent inhabitants of the state house. Truly an inspired piece of legislature. Now, wondering how I can get ‘deppetized’ to hand some of those $124 suckers out myself.
Sup y’all, much to discuss, but very little time on the road.
The kool-aid is just starting to flow in Rochester, NY. I went to a bar last night in an “up-and-coming” ‘hood where people are “flipping houses left and right.” I have visual confirmation of Ben’s bar-fly theory.
Delaware beaches… H O L Y F R I C K. You have NO idea. None.
More to come later. I’m off to Skan-town, the fortress of CNY.
Flipping in Rottenchester? Bad joke?
Headed back to Rehoboth Beach, DE for a week next week. I look forward to seeing the thousands of empty McCrapShacks that went up while I was there 2004-2006.
The ‘hood in Rochester is the South Wedge. Yup, freakin’ Gregory St. I think I’ll sit that one out.
As for DE, brace yourself Exeter. I could not believe the drive down. UNREAL. One awful McCrapBox development after another. I was in Bethany, so I saw Rehoboth. I don’t know what towns are north of that, but seriously, I’ve never seen so many new developments in my life, and I live in Florida!
As for Skaneateles, word is nothing is moving. I do know that one house intown sold for $1mil - not on the water!!
Yeah. I posted here on the blog about the abomination Sussex County Delaware has become. I had a 2 year project there during the peak of the housing bubble. It was surreal, very much like a dream. Hundreds of developments, mile after mile down HWY1 and RT13 from the northernmost part of Kent County all the way to the VA border on the penninsula. All the big publicly traded names too. KB, Lennar, Troll etc….Nevertheless, I won’t be surprised. I’ll likely be ever more gleeful at the sight of all the forsale signs. My contacts there tell me the economy is turning sour there quite rapidly with the fuel prices really hammering the locals and natives. Lay offs continue also.
Funny, I grew up in Wilmingon and used to go down to the DE/Maryland beaches in the summer sometimes (1970s/80s). Bet I wouldn’t recognize it, though even then Ocean City, MD, was pretty built up with huge condo towers
“As for Skaneateles, word is nothing is moving.”
Cazenovia inventory up close to 50%. There are SOLD signs swinging though….well, at least as long as the bank funding follows through.
I remember getting lost somewhere between Millford and Dover last year (north of Rehoboth) while trying to avoid a backup on 404. I was stunned to find little pockets of tract McMansions, usually 10 to 20 partially built with maybe twice that many bare lots. This was in the MIDDLE OF NOWHERE!!!!!!. Previous corn fields or second growth forest. It was bizzare. That’s when it really sunk home just how screwed we are and it ecplained perfectly the insanity along rt1 going into Rehoboth. I would expect most of these ’shacks’ to never be sold and most likely be plowed under in the next few years to return the many once more to the corn fields which at least make some economic sense. As JHK has said repeatedly. It was the word mis-allocation of resources in human history. A crime against all rationality. It makes me literally sick thinking about it.
Spot on Sleeper. Insane speculation in what was nothing but bean/corn/wheat fields. I’m certain there are multiple ground zero’s for the bubble but I’d say Sussex Co Del is one of them. Seeing it go down first hand was an experience I’ll never forget. It was like a parallel universe.
What part of Rochester?? I’ll be back there soon and would like to check it out.
Hey Ben, I screwed up the email addy in my last post. Sorry if I broke it!
http://www.syracuse.com/news/index.ssf/2008/06/city_auditor_misses_payments.html
Business co-owned by city auditor misses mortgage payments
While the man elected to keep watch over Syracuse’s finances spent his days working at City Hall, his own business — a mortgage company — fell behind on its mortgage payments.
“Someone else was running the company because I couldn’t be at City Hall and The Funding Source at the same time,” LaTessa said.
Syracuse Common Councilor Ryan McMahon, also a part-owner, succeeded the previous manager.
+++++++++++++++++
Look at all the politicos w/their fingers in this one. Explains a lot. A commenter mentioned LaTessa also owned the Syracuse area realtor “Weichert”
That is simply the history of Buf-Roc-Syr. I can name 10 “projects” of the top pf my head that do nothing but stuff the pockets of developers in bed with municipalities; the most egregious being the Fast (leaving) Ferry in Rochester.
I know of a “low income” housing project underway in Rochester. It’ll be interesting to see who ends up in jail at the end of it all.
The insistence of many that the Destiny USA megamall (meant to rival the mall of America) is still a viable option in this expected worldwide slowdown drives me nuts.
If the deal wasn’t chock full of tax breaks including Empire Zone tax relief for workers never or only temporarily hired, I might not care about an empty dying megamall far from any locations I frequent. But the tax situation in CNY is beyond the pale.
When the yearly tax bite on smaller, older homes is several thousand more than 10% of the median household income of a town there’s a financial impact to be reckoned with.
For NYers, Bruno is retiring to “spend more time with his family”.
I guess he decided to jump one step ahead of the law. Is there a more corrupt pol in Albany than this old dog?
Some would say Sheldon Silver.
Who is the bank bailout helping? Seriously?
If the banks sold the mortgages to investors, why do the banks need bailouts? How many mortgages are owned completely by actual banks and not investment subsidiaries? If the investing subsidiaries and investors lose all their invested money, why would this hurt the banks at all?
The process, as far as I can tell, went from a bank furnishing a mortgage to selling the mortgage in blocks to investors. The bank then handled collecting on the mortgage, sending the proceeds to the investors minus the bank’s small cut.
I don’t see the point of bailing out anyone. If there are banks with a lot of loans on their books, then I understand how the bailout would “help” the banks, but does it make sense to pay off a bank’s outstanding mortgage if the homedebtor still is paying on it? Of course not. What if they paid off the homedebtor’s loan on behalf of the homedebtor? Then they’d just refinance and cash out whatever equity was paid off. Doesn’t work either.
I look around me, and I see dozens of homeowners walking. In our town, median income can’t be over $30,000. I live in the ghetto (on purpose, thankyouverymuch), and the homes on my street selling for $150,000 (100 year old homes, generally in good shape) are beautiful but at 70 minutes from Milwaukee or Chicago, the incomes will never support anything over $100,000. Considering how many “boom businesses” here are probably going to fail (3 Home Depots, Lowes, Menards, a billion and a half carpet and flooring stores, etc), I don’t even know where people could work. Thankfully we have overpriced subdized train services nearby to get to the urban areas, but even that’s a 1 hour trip each way.
I live in the ghetto (on purpose, thankyouverymuch),
Funny.
I just moved into a very small apartment in a building that I used to own. I call it the hood. My friends were horrified when I told them where I was going. The apartment is extra small, but it is a great exercise in downsizing and making good use of available space. Last nite I took a walk down memory lane, strolled down the street where my folks used to live. The only house that looks exactly the same as when I left is Uncle Fuzzy’s.
A friend of mine asked how much my rent was. ( for her brother who is looking for a place.) My rent is less than half what her bro is paying, but then again I don’t think he’d feel comfortable where I live. He now resides in a very beautiful and (as yet) unTollified area.
Living in the hood does have its advantages, as long as you know your territory.
Dada: have you ever come across any good strategies for getting tax liens off a CR? That’s one that has stumped me.
It’s not looking so different any more on the high end of the SD real estate market.
Housing troubles reaching to coast
Defaults, foreclosures still high across county
By Roger Showley
STAFF WRITER
June 25, 2008
…
DataQuick analyst Andrew LePage said he detected a worsening situation in coastal neighborhoods after comparing defaults in May with average default rates over the past year.
Of the 20 ZIP code areas with the biggest increase in the default rate, six were along the coast: northeastern Carlsbad (ZIP 92010), 13 defaults, up 85.7 percent over the past year; Del Mar, 5 defaults, up 65.2 percent; Encinitas, 22 defaults, up 57.1 percent; Mission and Pacific beaches, 15 defaults, up 50 percent; Cardiff-by-the-Sea, 6 defaults, up 50 percent; and La Jolla, 16 defaults, up 45.5 percent.
“It’s still mainly a problem for South County and certain inland areas,” LePage said. “But it’s not as if the coast is clear. The problem is worsening a bit on the coast and in much of inland North County.”
The graph on the front page of today’s WSJ suggests that consumer confidence began plummeting about the time real estate price appreciation went into reverse. It is clearly imperative for the Fed to respike the real estate punch bowl in order to restore consumer confidence. If they don’t follow this plan, you can bet that Chris Dodd will have more talks with Ben Bernanke out in the Congressional wood shed going forward.
PAGE ONE
Consumer Confidence Plummets
Home Prices See Sharp Decline;
Fed Is Likely to Hold Interest Rates Steady
By KELLY EVANS and ANTON TROIANOVSKI
June 25, 2008; Page A1
American consumers, battered by falling home prices and soaring gasoline prices, are at their gloomiest in decades, raising fears they might cut back on spending later this year and tip the economy into a recession.
PPT punch, anyone? There is a lot of spike in there today leading up to the Fed’s foregone decision to stand pat. The funny part is how the MSM likes to pretend that a done-deal can move markets. The great and powerful Wizards of Fed must get the credit, even when their action is to not act.
need another chance to distribute before the election/next year. I think this will be it. Could get up to 1500 again before tankage
REAL ESTATE
More bad news, boomers
Home-price declines will eat into nest eggs. Wealth to drop at least 25% for homeowners who will be in the 45-to-54 age bracket in 2009.
“The median household headed by those between 45 and 54 in 2009 will have about 25% less wealth than the median household of that age in 2004, according to the report. That household’s wealth will decline to $113,268 in 2009, from $150,113 in 2004.”
Really? The house I own provides me with a certain wealth benefit — the right ot live in it rent-free.
I expect that housing benefit to be worth exactly the same in 2009 as it is today, and was in 1994 when I bought it.
And if I decide to move into something smaller, even if I get less I’ll pay less on the other end, making no difference how high or low prices are.
I think those in trouble are those who are planning to have their house and eat it too.
“Really? The house I own provides me with a certain wealth benefit — the right ot live in it rent-free.
I expect that housing benefit to be worth exactly the same in 2009 as it is today, and was in 1994 when I bought it.”
You had better think through net worth implications of falling housing market valuations before you get too sure about this.
“…Wealth to drop at least 25% for homeowners who will be in the 45-to-54 age bracket”
Awwwww, be optimistic would you PB, in that age bracket… they’ll have 20 years for the “market” to turn around, ….but now that I think about it…they might still be paying for the x1 war in Afghanistan & x1 war in Iraq. O.K., you win, it’s more bad news.
Slow down guys, the boomers deserve everthing they’ve
ransomedworked hard for.I’m voting Republican.
http://www.imvotingrepublican.com/
Just a little humor this morning.
“America… just a nation of two hundred million used car salesmen with all the money we need to buy guns and no qualms about killing anybody else in the world who tries to make us uncomfortable.”
Hunter S. Thompson
You forgot to add “100 million realtors” to the population count!
“Peak Oil”
Sorry about your oversized SUV.
http://www.slate.com/id/2193825/
Here’s something I’ve been thinking about lately: My mixed income neighborhood used to have lots of rentals. I pay $850 for a 1000 sq ft 2 bedroom apartment and that was pretty standard rent four years ago when I moved in. It’s not the greatest apartment but it does the job and provides a nice, safe living environment (and leaves a lot of extra cash in my pocket).
Over the last few years many of the rentals in my ‘hood have gone luxury condo. For the first time in four years I’ve been casually looking at rentals again on craigslist. A lot of the luxury condos have reverted back to rentals but the rent has doubled! The average two-bedroom in my neighborhood is now listed for $1,500 a month! There are dozens of three bedroom luxury rentals for $2,000 and up! This doesn’t make sense to me because I don’t live in a neighborhood where people are going to rent 3 bedrooms for $2,000 a month.
My question is what does this all mean? First of all, are these luxury apartments renting? Secondly, will rents on these luxury apartment return to the historical norm i.e. less than $1,000 for a two bedroom? And thirdly, will rents in my neighborhood be permanently higher from now on because the rental apartment stock has gotten significantly better? I don’t know how this is going to play out…..I ask these questions because if my landlord looks on craigslist and sees no two bedrooms for less than $1,200 with the average being $1,500 he might be inclined to raise my rent, even though my apartment is by no means a luxury apartment. Thanks!
Hi eagle,
It all depends on what kind of landlord you have. If s/he’s the type that values a good tenant who pays on time, does minor repairs, doesn’t cause trouble etc. I wouldn’t worry too much about LL’s eyes getting big $$ signs in them. It’s more of a hassle to find a good tenant than most folks know.
Also, those luxury condos going back to rentals sound like failed flips. The operative sentence in your post is this:
“I don’t live in a neighborhood where people are going to rent 3 bedrooms for $2,000 a month.”
So unless your LL is a total newb s/he knows the rents that your particular market will bear, and will leave you the heck alone.
I think you answered your own question with this remark,
“I don’t live in a neighborhood where people are going to rent 3 bedrooms for $2,000 a month.”
As in housing, as in oil, as in rentals…without inflation in wages it just aint gonna work out like heli ben wants.
Are bovine brains really stupid enough to believe that jawboning is all the Fed needs to do in order to control inflation? Talk with no follow through could actually have the opposite effect (some combination of higher inflation and lower dollar than if they had played mum).
ECONOMY: FOCUS
ON CENTRAL BANKS
Wall Street to Fed: Keep on talking
Markets hope for inflation warning from Fed to firm up the greenback as growth slows, reining in the need for a rate hike later in the year.
Bovine inspiration is all they’ve got left.
The entirely predictable FOMC meeting announcement was met with a violent clash between fundamental investors unloading shares and the dark money forces which protect the stock market from a major selloff.
Dark Vader?
http://online.wsj.com/article/SB121435274385201723.html
Small Banks Face a Looming Hit
From Builders’ Interest-Reserve Loans
By LINGLING WEI
Regulators are increasingly worried about a lending practice that allows real-estate developers to delay paying construction-loan interest but can mask problems at the banks that made the loans.
Small banks, which are more exposed relative to bigger banks, have $280 billion of outstanding construction loans overall, mostly to condominium developers and home builders. When the loans were made, the banks calculated the interest that would be paid and put that money aside in “interest reserves.” In essence, the banks pay themselves until the loan becomes due or the property generates cash flow.
Regulators fear this practice can be abused to keep recording loans as performing even though the underlying real-estate projects are failing.
Think about it…
How else was a small bank gonna make money the past 6 years or so, if they didn’t get involved in the housing bubble?
They went all in with your money…
Fed Talks Tough on Inflation
http://biz.yahoo.com/ap/080625/fed_interest_rates.html
(LOL. Hey Bernanke, you know, if you’re remotely interested in fighting inflation — try raising rates and stop flapping your mouth! You’re starting to look like an idiot!)
(LOL. Hey Bernanke, you know, if you’re remotely interested in fighting inflation — try raising rates and stop flapping your mouth! You’re starting to look like an idiot!)
Starting??
Two big apparent differences between 1992 and now:
1) A recession had already occurred in 1992 (7/90-3/91 according to NBER daters), whose aftermath was still weighing on consumer confidence;
2) Home price declines were nowhere near as deep nor as ubiquitous as they are now.
Consumer confidence is in free fall
View on economy hits lowest level since 1992
By Ellen Simon
ASSOCIATED PRESS
NEW YORK – U.S. consumers are the gloomiest they’ve been since the tail end of the last prolonged recession. Inflation, sinking home values and soaring gas prices have pushed confidence to the lowest level since 1992. Consumers’ view of the economic future has never been lower, raising worries that already weak consumer spending could deteriorate further.
‘…could deteriorate further.”
Could? What’s the difference… between could & will?
Hey PB, …what you trying to win the “Eyeore” Trophy again today?
New home sales drop 2.5% from May - that’s what? A 30% yearly drop?
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B3DC7340D%2DA4D4%2D4D06%2DA517%2D1FE7A831735F%7D&siteid=mktw
Why don’t they ever mention the rate of new home completions (caution: .pdf) (”Single-family housing completions in May were at a rate of 869,000; this is 8.9 percent (±12.2%) above the April figure of 798,000.”) in conjunction with the rate of new home sales? One gets a rather incomplete picture without putting supply and demand together on the same page.
BTW, in case you don’t have your calculator handy and don’t care for mental arithmetic, 869,000 - 512,000 = 357,000 new homes added to the inventory pyre.
BULLETIN
U.S. NEW-HOME SALES FALL 2.5% IN MAY
ECONOMIC REPORT
New-home sales fall 2.5% in May to 512,000 pace
Builders slash prices and further reduce inventories of unsold homes
By Rex Nutting, MarketWatch
Last update: 10:00 a.m. EDT June 25, 2008
WASHINGTON (MarketWatch) - Sales of new U.S. homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000 as sales in the West fell to a 26-year low, the Commerce Department estimated Wednesday.
The decline nearly matched economists’ expectations for a decline to a 510,000 rate from April’s revised 525,000. It was the lowest sales pace since the 501,000 rate in March. See Economic Calendar.
New-home sales were down 40.3% compared with a year earlier.
–
Vital Part of Housing Bill Is Brainchild of Banks
Mortgage Aid Under ‘Credit Suisse Plan’ Would Benefit Lenders
By Jeffrey H. Birnbaum
Washington Post Staff Writer
Wednesday, June 25, 2008; D01
A key provision of the housing bill now awaiting action in the Senate — and widely touted as offering a lifeline to distressed homeowners — was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials.
Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt.
After the bank proposed this to Congress in January, it became known as the “Credit Suisse plan” among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.
…
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/24/AR2008062401389_pf.html
What a surprise that the USG is serving its real owners – Bankrupters and Fraudsters of New York City. Fed had done its part earlier. What a system!
Jas
Of Zurich, you mean.
One thing and one thing only matters here — what is the value of the house?
If lenders are expected to take 85% of that value, a pliable appraiser (does any other kind get business) could actually give them 120%.
Near the bottom? Hardly.
I rent in this building - 2 bed, 1.5 bath, and about 1200 square feet. My rent is probably half of the carrying cost (PITI+HOA) and I get a parking spot.
http://www.trulia.com/property/1061904851-330-W-Grand-Ave-1203-Chicago-IL-60610
The above is 400 square feet less and $35,000 for deeded parking. I don’t know what the HOA fee is, but I am guessing at least $500 as there is a 24hr doorman and the place is spotless.
I can see your building from my office window — I’m at 343 West Erie.
Our extra photo studio space is around the corner from you at 318 W. Grand, in the space on the north side of the street that’s been for lease forever. The landlord wants some ridiculous price for the space (used to be a night club, I think), but we’ve been using it month-to-month for about a year. The difference between his wishing price and what we pay is several thousand dollars a month.
How do you like living in River North?
Looks like folks are really cutting back on the fuel consumption.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BFF5741FD%2DA560%2D4307%2DBBD9%2DBB5C516830AB%7D
RE: Looks like folks are really cutting back on the fuel consumption
Not here in Mazzholeland.
Roads are jammed with joy-riding “what me work a summer job without A/C” kids in their parents Volvo XC station wagons; the weenie FL winter home carpetbaggers poking along at 15mph in their Lincoln Town cars; the quintessential soccer Mom wheeling around that monster Suburban with a boatload of screamin’ kids headin’ to ice cream stand; and the legions of lawn mowers with their 3/4 ton pick-ups hauling trailers filled with tons of commercial yard maintenance equipment.
Peak Oil?
Ha! Ha!
Here’s the email I was talking about yesterday. Feel free to abuse this clown.
From: Attorney Alexander Johnson Date: June 24, 2008 10:11:19 AM EDTTo: realestate-170-announce@meetup.comSubject: [realestate-170] Cramer predicts Florida is rebounding
To All Associates:
The extremely popular Cramer is predicting a turn-around for Florida. Given his enormous popularity Nationwide, people will listen to him, he has the ability to change peoples thinking. As we all know so much of this slowdown has been psychological. Send this video to EVERY buyer sitting on the fence. This first aired on Jun 17th.
See the interview on “The Street”
Law Office of
ALEXANDER PATRICK JOHNSON
420 SE 13th Street
Ft. Lauderdale, Florida 33316
Telephone (954) 779-7050
Facsimile (954) 779-3369
Web: FloridaREI.com
–
This message was sent by Attorney Alexander Johnson (eviction@bellsouth.net) from Broward Real Estate Investors Network.
To learn more about Attorney Alexander Johnson, visit his/her member profile
To unsubscribe, click here
is this the same video link i posted here last week? or has he continued on with his bottom calling?
WooWoo I’ll buy anything Mr. Cramer says to buy! He is never wrong.
I find it hard to believe that Mr. Cramer would be stupid enough to advocate buying any real estate.
Mr. Barnum has been proven correct numerous times.
in some skf 129.65. I would think they’ll sell this off going into the meeting. Seems like easy money. Stop @ 127
thanks!
Geez oh Pete I’m jealous.
A longtime lurker needs some help….
A friend of mine in the SF Bay Area sees all of the price drops/foreclosures going on and thinks that by 2009, it will be safe to buy a house. Other than trying to convince him to spend some time reading this blog (er, he’s got an extremely short attention span), what charts/articles sum up the hell that SF Bay Area is facing?
In particular, I know some of you have mentioned that Alt-A/Option/NegAM have been used extensively in the SF Bay Area. Where’s the data for this? I’ve shown him the Credit Suisse 2007-2015 mortgage reset chart, but he has a hard time believing that large numbers of SF Bay Areans used Alt-A/Option/NegAM loans.
thanks……
In which towns/neighborhoods is your friend looking to buy? That could possibly make a bit of difference, timing-wise.
Sorry I can’t remember the source of the numbers, but I think it was on the order of 60-70%+ Alt-A in the Bay Area, and even higher than that state-wide. But don’t quote me on that.
How to manage the world economy through two crises
By Martin Wolf
“Two storms are buffeting the world economy: an inflationary commodity-price storm and a deflationary financial one.
…Yet, as I argued last week, global monetary policy is probably too loose, despite the adverse impact of the credit crisis on high-income countries. In many emerging countries output is growing quickly, with inflation rising strongly. If, as seems likely, the world economy cannot grow as fast as people hoped only a year or two ago, emerging economies have to be part of the adjustment. This will become still more obvious when, at last, the high-income countries recover fully.
…In the short term, the biggest monetary policy requirement is a tightening in emerging economies, many of which now have strongly negative real interest rates. A precondition for such a tightening is a relaxation of exchange rate targeting. Monetary tightening is less obviously necessary in high-income countries, though the US Federal Reserve may have cut too far.
…. In India, the cost of fuel subsidies is now almost as large as public spending on education: this is scandalous. No less important, however, is abandonment of the silly idea that price jumps in oil or food are the result of wicked “speculation” - a fantasy promoted by dangerous populists across the globe….”
http://www.ft.com/cms/s/0/998ea5ae-424e-11dd-a5e8-0000779fd2ac.html
Heard on the radio yesterday while driving to the PO: Gas and electric company report lots of utilities being turned off as people report needing the money to pay for food and gas.
I guess since it’s summer time you can just light up the BBQ and hang a lantern outside while drinking beer.
If they can’t afford the gas + electricity, do you think they can afford the beer?
You can if you apply lizard brain math.
That comment really struck me Salina. To me it sounds like a duh, and it is scary. I promise not to choke up.
It’s not just homeowners that are in a struggle. Renters are renting because they can’t afford a house, and people who work spend it on just staying ahead.
Help the renters too Dodd!
Maybe the rescuers can give renters a utility and health insurance credit. I’d be happy with a $2500.00 deduction.
Third World conditions:
No electricity
Standing in line for food
Tent cities
It has been sneaking in the backdoor and looking for more people.
“…Standing in line for food”
What like they are waiting in a queue to get into a concert?…might be a tad more chaotic than that…especially if there are any “temporary” shortages.
“…Chanos notes that people tend to prefer positive reinforcement; short-sellers, he observes, are constantly told “you are wrong.” The number of people who can take the heat and succeed professionally on the short side, he said to the assembled group of directors, “would fit at a couple of tables.”…
“There is a lot of hanky-panky going on in corporate America, gang,” he said. “And it continues to this day. There is always incentive to shade the truth, to make things appear rosier than they are.”
Ah Ms. Tx, We used to say “short sellers were right, but the longs had more fun getting there. ” All the cursing, swearing, anger over being long Enron or Worldcom conversation for a decade. lol
http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=11591349
It could be worse.
You could be playing a negative theta game with huge eventual payoffs. Now, that would really hurt on a daily basis.
Emerging Multinationals: Manufacturing
In a Rapidly Changing Global Landscape
How Powerhouses from Emerging Markets are Reshaping
Global Manufacturing
16 pg pdf.
http://www.researchrecap.com/wp-content/uploads/2008/06/tl_emerging_multinationals__manufacturing_in_a_rapidly_changing_global_landscape.pdf
“…The growth of the EMs will make life even more uncomfortable
for any companies concentrating on a national or regional
market. As Zhang Ruimin, CEO of Haier, puts it, “In the
globalisation era, there are two categories of companies.
One is the international company, and the other is the one
taken over by the former group. There isn’t a third choice.”
Excerpts from Dr. Enzio von Pfeil’s June 25, 2008, appearance on CNBC Asia:
# What’s your view on the U.S. dollar?
* “Superpower currencies always fall: the Empire runs out of money, and thus prints more of it. The result is that the supply of dollars rises, while demand for dollars falls (on account of competitor currencies like the Euro, the Australian or New Zealand dollar, etc), and down goes the price of the dollar.
* On a six month view, you may see some short-term dollar strength, particularly against the Euro: if the Fed raises rates and the ECB does nothing, the dollar looks less unattractive vs. the Euro….”
http://seekingalpha.com/article/82615-strategies-for-surviving-stagflation-in-the-u-s-and-asia
CONgressional bailout question:
If a house could actually be sold at assessed value, why would the banks accept 85% of AV? They would clearly be better off approving a short sale and taking 100% of current assessed value.
It seems to me that the deception behind this bill is that “assessed value” in a rapidly falling market can be grossly inaccurate. Lenders will ONLY submit loans to this program if they believe the assessed value to be substantially higher than true market value.
Am I missing something here?
“In a June 2 speech at a high-level United Nations food-security conference in Rome, U.S. Agriculture Secretary Ed Schafer said that biofuels accounted for only 2% to 3% of this year’s expected 43% surge in global food inflation. His report relied on data supplied by Edward Lazear of the Bush administration’s Council of Economic Advisers.
The problem? It didn’t count the impact of biodiesel production, which uses soybeans as its main feedstock, according to USDA chief economist Joseph Glauber. It also didn’t count the impact higher soybean prices have had on global food prices.
It turns out that makes a difference. In the past year the price of soybeans, one of America’s biggest crops, has soared as more of the beans were used for biodiesel and since fewer acres of beans were planted last year to accommodate more acres of corn for corn-ethanol…
Mr. Glauber testified before the Senate Energy and Natural Resources Committee that biofuels have actually contributed up to 10% of the overall increase in global food prices….”
WSJ
Blame speculators not energy policies. Only off by 400% not bad for a government.
This just in:
FED cuts rates by 50 bps.
Ushering in a wage price spiral to counterbalance high energy and food costs.
Opens discount window to Vinny the thumbreaker.
Throws fixed income seniors under the bus.
Bernanke quote: “Hey, those people dont need more money, they need to get a job”.
Paulsen comments: “Benny called me last night so I could give the boys down at Glodman the heads up. Its all good. They are levered up over 60 to 1 into the commodity sector. No bailouts, just inside information with which to support the incomes of my buddies.”
joking off/
Uncle Vinnie does not need the Fed Discount window to run his operations. He does very well with his 10% off the top.
Let the old folks play at night. “Old people don’t need companionship. They need to be isolated and studied so it can be determined what nutrients they have that might be extracted for our personal use.” Homer Simpson
In keeping with the themes:
Cummins Northwest LLC
official notification (this on the heals of the Filtration and Exhaust products price increases last month)
ALL Cummins New and Reman prodcuts will have a 3% across the board price adjustment…..
cites:
“variances in global commodity costs”, “medium steel transportation costs in $/ton”, “ground transportation costs”, “and fuel surcharges”
—-inflation moderation my chocolate covers arse, they are now monthly prices increases.
not to let DOW Chemical get all the attention on pricing power:
hows a bout the short list.
1. Federal Mogul Corp.
2. Interstate McBee
3. Fastenal
-these are just the national accounts.
Lest you forget the 18% increase across the board at WalMart since Jan 1.
but, but……were rollin back prices dontcha know.
hoz, sometimes you upset my branding strategy.
just let em think what they want.
Sorry Mr. Voz
No more branding allowed.
mmmmm, canned old people the new store brand of luncheon meat flavored snack.
I used to eat spam, but the canned old people is so much tastier.
“… Iran has 13 to 15 supertankers idling in the Gulf with capacity to hold as much as 30 million barrels, the ship-tracking data shows. Iran has not said how much oil is in the tankers. Hojatollah Ghanimifard, executive director of international affairs at National Iranian Oil Co., said June 2 that some vessels were storing crude while refineries carried out annual repairs.
The chart of the day lists 16 Iranian ships, of which 13 are idling either at the country’s Kharg Island oil loading facility or the nearby Soroosh Terminal, according to AISLive data on Bloomberg. The signals of two other vessels at the facilities were tracked last week. Each supertanker has the capacity to store about 2 million barrels of crude.
Ghanimifard said that the “number of vessels will decrease by the end of June,” as refineries that can process Iran’s sulfur-rich crude reopen after maintenance. …”
Bloomberg
I would presume the ships to be full of oil and that there is oil hoarding going on. This would explain the current shortage in the world. “Get me out of dollars and into the new currency- oil”, he slimely said.
“…and that there is oil hoarding going on.”
Connect-the-dots
Cheney right ball war itch = Iran preparing for nuclear spanking
Israel will need our help… carrying out attacks as Cheney-Shrub proxy … Cheney-Shrub to McSame: “See here pilgrim, I told ya we help ya win that election…heeheeheehee”
i always wondered how we are to believe that if iran had nukes they would attack israel when for all these years they possessed the greatest nuke of all…oil.
The country had no problem believing it when it was Iraq that could launch a nuclear/bio attack in 45 minutes.
Fool me once, fool me..won’t get fooled again - GWB
Cheney-Shrub to McSame: “we’re working on it…we’re working on it…we still have 4 &1/2 months to go”
McCain says only World War III would justify draft
http://news.yahoo.com/s/nm/20080625/pl_nm/usa_politics_mccain_draft_dc
I guess Neil Young is not going to contribute any Looney’s to McSame’s campaign? :
“They’re not threatened with going to war, the imminent draft, that they’re going, that they’re going to be in the lottery, that they’re gonna go, and maybe die. Kids today are thinking, “Will I work for Google? Am I going to be lucky enough to work for Google? Or whom I’m going to be working for? Am I gonna get a dotcom job? Maybe I’ll be working in an environmental company. Maybe I’ll get some cool job. Maybe I want to be a designer, maybe fashion. What am I gonna be doing with my life?”
“They’re not going, “I don’t want to go to Vietnam. I don’t want to go to Afghanistan. I don’t want to go Pakistan.” There’s no threat so there’s protest. So our generation, my generation, still remembers what we went through, and they still have the fire. They’re making a lot of noise about Bush. When I see them out in the crowd, I’m not disappointed. I’m proud of them, because they’re still there. Because they remember what it’s like.”
http://www.reuters.com/article/entertainmentNews/idUSN2538558920080625?pageNumber=5&virtualBrandChannel=0
I would post this in the Cal tonight if I were to stay awake long enough, but this is too funny to miss
San Diego Running Low on Assets
Jun 24, 2008
Amita Sharma
“The city of San Diego is running out of assets to put up as collateral for loans. As a result, it’s taking out loans against some of its most essential properties. Some say that’s a sign of desperation. But city officials say there’s no need to worry. KPBS Reporter Amita Sharma has more.
It’s been done for decades in San Diego. The city has pledged its most precious jewels as collateral to borrow money in the form of revenue bonds to pay for everything from expanding the trolley to renovating Qualcomm Stadium.
Portions of Torrey Pines - sight of this year’s U.S. Open - have been used as collateral. So have parts of Balboa Park, Qualcomm Stadium and 11 fire stations. This spring, the city added another key asset as potential collateral to borrow money — the police headquarters building downtown….”
Hock the cop station the golf course.
http://www.kpbs.org/news/local;id=12065
Fleet Enema is leaking…
I live in Woodland Hills , California which is in the San Fernando Valley .Today I had to go to the rental office and casually mentioned that I saw a lot of vacancies in my several hundred townhouse rental community. They responded “we haven’t been this full in years with whats going on with the housing market” “With all the selling and foreclosures”
The units rent for 1900 -2500 for 2 bedrooms and 2500-2800 for 3 bedrooms.Much higher than they were just a few years ago and although they do seem to be resorting to some promotions such as $1000 off move in and occasionally 1 month free rent it looks like they are getting it.
I’m not too happy ,was hoping to hear they were slow as this rent is killing me and I really am spending more than I should on rent. My children are very happy here though with lots of room for them to play multiple pools ,playgrounds and kid’s even though I should move I have to consider standard of living as well.
I wish this downslide would speed up here. House have come down but in good neighborhoods still way overpriced.
It seemed high to me and I am not familiar at all with rentals in Woodland Hills. I went to Craigslist and there are an awful lot of rental house and apartments 3bdrm up for less than $2200. Obviously they could all be scams, but with that many rentals, prices will break soon.
Wall Street Journal editorial about Barack Hussein Obama’s plan to destroy America:
http://online.wsj.com/article/SB121435112024101581-email.html
When uncorked, champagne bottles do exactly what imploding bubbles do: THEY POP!
Strange financial physics of the inverse bubble
By John Kay
Published: June 24 2008 19:23 | Last updated: June 24 2008 19:23
Some literary journals invite their readers to compete in the invention of new words to describe activities or concepts that have not yet acquired a label. In current markets, what we need is a term for the opposite of a bubble.
…
But bubbles are puffed up, not puffed down. That is why we need a phrase to describe the anti-bubble. Perhaps the analogy is found somewhere in physics. We observe a bubble when a tiny quantity of matter expands to become a very large object. The opposite is when a large quantity of matter seems to be compressed into something even smaller. That process needs to be distinguished from the black hole, from which no value will ever emerge – as at Enron, where short-sellers drove the price towards its fundamental value of zero. In the opposite of a bubble, as in the bubble itself, speculative activity and momentum trading take prices steadily away from fundamental value.
The right term for the phenomenon remains elusive. A bottle of champagne awaits for the most compelling entry.
“…But the more immediate problem is the depletion of excess cash in the Social Security trust fund, which has been used for years to cover a portion of the annual budget deficit. Government economists predict that the Social Security surplus will start shrinking in 2011 and dry up completely by the end of the next decade, exposing government-wide budget deficits of a magnitude not seen since Bush’s first term….”
Washington Post
June 21
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/20/AR2008062002889.html
That is 5 years before the CBO (The Budget and Economic Outlook:
Fiscal Years 2008 to 2018 pg 121; Jan 23, 2008) says it will be shrinking. So enjoy your US Treasuries for the next 3 years, then there will not be anybody left to buy them.
lockbox=casket
yours in trust,
The Dearly Departed.
PS: smoke em if you got ‘em.
Today’s WSJ has a book review of “Confessions of a Subprime Lender”, written by Richard Bitner. Most of the info presented in the review has already been talked about on this blog, but some items haven’t (to my knowledge). Some interesting items:
Car debt is recorded by only one credit bureau; the loan officer simply drops that bureau from the borrower’s credit report and the debt disappears.
If a borrower’s credit score is too low, it can be manipulated. A person with good credit is paid a fee for each account they let someone with bad credit use.
Bounced checks? No big deal; just give the underwriters copies the first page form each month’s statement, leaving out the grisly details.
Borrowers income too low? Desktop publishing programs allow for near-perfect replication of pay stubs and W-2s.
House Republicans Assail Housing Rescue
June 25, 2008 3:10 PM
ABC News’ Z. Byron Wolf Reports from Capitol Hill: The bipartisan housing bill currently before the Senate appears to be bipartisan only in the Senate.
As senators prepare to vote on the sweeping bill, which seeks to create an up to $300 billion program to refinance at-risk mortgages into private loans with government backing, over in the House, Republicans are getting ready to play some strong defense against it with the barely related but symbolically powerful special loans that some Democratic senators received from Countrywide.
Several House Republicans had called last week for hearings on the “Friends of Angelo” program, named for former Countrywide CEO Angelo Mozilo, but with the Senate poised to pass its Housing legislation soon, a high profile, anti-housing bill Republican, the minority leader, called again for hearings.
“Before the House moves forward on a massive housing bailout at the expense of every American taxpayer, there are significant questions that must be answered about the ‘Friends of Angelo’ program and the sweetheart loans provided to key Democratic lawmakers,” House Minority Leader Rep. John Boehner, R-Ohio, says in a statement.
Washington Mutual shareholders approve $7B investment
Washington Mutual Corp., the country’s largest savings and loan, says its shareholders have approved a $7 billion investment from private equity group TPG and other institutional investors.
SEATTLE —
Washington Mutual Corp., the country’s largest savings and loan, says its shareholders have approved a $7 billion investment from private equity group TPG and other institutional investors.
Does anyone know the name of the 9 patriotic Senators who voted against the Frank-Dodd handout bill?
Reuters said the the handout would cost $300,000,000,000. I was only figuring $170,000,000,000.
Here are some facts for y’all:
If you’re in the top 25% of taxpayers, with an adjusted gross income of $62,068 or more (2005 numbers) how much will your family pay?
The top 25% pays 86% of the taxes. So 14% of that $300,000,000,000 will be paid by the rest of the population, the rest by you. That means $258,000,000,000. There are 37,500,000 in the top 25% (assuming 150,000,000 income tax returns filed).
That means if you make $62,068 or more, you’ll be paying some house flipper or specu-vestor $6,880. Don’t you feel like punching someone?
Was wathing Fox Financial they were talking about the Bail out bill having parts written by Bank of
America and Credit Suiss some garbage about only loans that could have a chance of being paid back going in to the program, supposed to be an arcticle in todays Washington Post buisness section about it.
2 UBS forty dollar calls aug 08 out of 5300.
thats how thin the market is in financials.
108,143 open interest calls on GM at 25 January 09. 2067 changed hands.
95000 at 35 on GM 1/09…
open interest at 5 dollars 1/09? 51 and 20 changed hands.
wanna do the 17.50 fair value of dividend income stream? or the global spin off ala Phillip Morris? the more things change the more they are the same.
The only way to play options is to buy calls in a stock that you wish to own and exercise them. Sometimes a firm or a large trader can pick up a couple of million shares for a few pennies that would cause the stock to move 5 points if you tried to buy on the exchange. It saves the large trader a lot of moneys. The same is true of selling in the money puts. It is a means to acquire stock without affecting the market.
A lousy housing fix just keeps getting worse
Rocky Mountain News
Wednesday, June 25, 2008
The “Housing and Economic Recovery Act of 2008″ was bad enough before the stench of a scandal began to rise from the offices of two senior senators with oversight of financial matters. With conflict-of-interest now haunting the bill, too, it should be absolutely radioactive.
Should be. In fact, it isn’t. Indeed, the legislation will surely pass the Senate any time now. It’s an election year, and lawmakers are determined to act.
We’ve opposed the bill for months, and during that time it’s only gotten worse. One recently added provision would assist financially stressed homeowners by having the federal government (meaning taxpayers) assume any risks of mortgage defaults. It’s this “Countrywide bailout” section of the bill that has drawn extra scrutiny, and rightly so. In recent years Senate Banking Committee Chairman Chris Dodd, D-Conn., and Senate Budget Committee Chairman Kent Conrad, D-N.D., received massively discounted mortgages from Countrywide that weren’t available to customers who didn’t have connections.
Dodd, the lead sponsor of the bill, secured no-closing-cost mortgages at interest rates of 4 percent and 4.25 percent and continues to insist he got no special favors.
Conrad, for his part, admitted calling Countrywide CEO Angelo Mozilo about a discounted mortgage to buy a $1 million beach house, and also asserts nothing untoward happened. Right.
Countrywide, the nation’s largest mortgage lender, was vilified on Capitol Hill during the subprime meltdown. It is, however, about to be bought by Bank of America. And that bank stands to benefit handsomely from the bailout provision.
Go Ensign!
UPDATE 1-Lone US senator vows to block housing rescue bill
Thu Jun 26, 2008 1:26am BST
By Kevin Drawbaugh
WASHINGTON, June 25 (Reuters) - A lone Republican lawmaker dug in his heels on Wednesday and vowed to block a major U.S. Senate housing market rescue bill until he gets his way on renewable energy tax credit legislation.
“I don’t have any problem being an obstructionist when you’re trying to do something really good,” Sen. John Ensign of Nevada told reporters, leaving Democratic and Republican supporters of the housing bill frustrated.
“I regret that my colleague from Nevada feels as he does, but he’s put in jeopardy a bill that could make a difference,” said Connecticut Democratic Sen. Christopher Dodd, chief architect of the sweeping housing measure.
Dodd Angrily Watching Clock on Housing Bill
By Jesse A. Hamilton
on June 25, 2008 12:43 PM | Permalink | Comments (3)
Sen. Chris Dodd was mad enough on the Senate floor this morning that, at one point, he said, “I appologize for getting emotional on this issue.” The source of his ire is a lone Republican senator who is holding up the nation’s housing bill.
The proponents of the foreclosure-prevention legislation — which apparently number most of the Senate at this point, based on a 83-9 procedural vote yesterday — thought the bill could probably be put up for a vote by the end of yesterday. But a single senator — reportedly Sen. John Ensign of Nevada — has been pushing to attach a renewable-energy tax credit amendment to the housing bill.
Because Dodd and Company said they won’t take any non-housing-related amendments, the process has struck a temporary impasse until the debate clock runs out (5:45 p.m. for the first one, then it’s unclear whether further 30-hour windows will have to be set.)
$300 Billion Housing Rescue Plan’s Momentum Slows in Senate
Wednesday, June 25, 2008
By Trish Turner
WASHINGTON — Although more than half of the Senate favors a $300 billion bill to stanch the flow of home foreclosures — passing a key test vote this week with flying colors — the likelihood of it quickly becoming law is diminishing because of a seemingly unrelated matter.
A Senate leadership aide told FOX News on Wednesday that it is possible the mortgage bill will not be complete this week, meaning the bill would be put on hold at least until after the one-week July Fourth recess and dangerously close the month long August recess.
But Senate Majority Leader Harry Reid, D-Nev., vowed his chamber will complete the bill, even if he has to postpone the Senate’s vacation.
The problem lies in an energy proposal from Reid’s home-state colleague, Republican Sen. John Ensign, and Sen. Maria Cantwell, D-Wash. Their amendment would extend renewable energy tax credits for one year, costing the federal government $19 billion. None of this cost is offset by spending cuts or tax increases, so House Democrats led by the fiscally conservative Democratic Blue Dog coalition have soured on the measure.
This article demonstrates how real life can sometimes be stranger than fiction.
6pm BST / 1pm ET
Subprime crisis: US foreclosures bring homelessness to the middle class
* Dan Glaister in Los Angeles and Anna Bruce-Lockhart
* guardian.co.uk,
* Wednesday June 25, 2008
* Article history
Homeless people living in cars and mobile homes across the US are being joined by a new breed: the middle-class.
As mortgage foreclosures continue rising month on month, growing numbers of middle-class professionals are losing their homes and downsizing from four bedrooms to four wheels.
With numbers rising, New Beginnings, a homeless agency in Santa Barbara, California, has launched a Safe Parking Programme, aiming to provide a refuge of sorts for those who have nowhere to go other than their vehicle.
Guy Trevor lost his job as an interior designer when the market contracted, thanks to the mortgage foreclosure crisis.
With his furniture sold and his belongings in storage, he now lives in his car, spending the nights in one of the 12 gated parking lots in Santa Barbara run by New Beginnings.
“I see myself as a casualty of a perfect storm,” he said. “The people sleeping at the parking lot are very friendly. They’re just like me - they come from normal, everyday homes. I think a lot of people in this country don’t realise that they, too, are a couple of pay-cheques away from destitution.”
Mortgage foreclosures in the normally comfortable seaside area of Santa Barbara county are increasing month by month.
In May there were 150, with the total for the year to the end of last month reaching 800, according to figures from the county assessor’s office.
Each month, an auction of foreclosed properties is held on the steps of the Santa Barbara courthouse.
“The way the economy is going, it’s just amazing the people that are becoming homeless,” Nancy Kapp, the programme’s coordinator, told CNN. “It’s hit the middle class.”
How should we expect Mr Market to react, given the misapplication of MIT-style engineering solutions to fix a fundamental problem of vanished trust in the global banking system? Until trust is restored, I don’t expect the credit crunch to right itself.
European Bank-Lending Anxiety Returns
By Neil Shah and Carrick Mollenkamp
Word Count: 852 | Companies Featured in This Article: Deutsche Bank, Barclays, UBS
LONDON — Tensions in Europe’s short-term lending markets are on the rise again, repeating a pattern that central bankers had hoped to end by pumping in hundreds of billions of dollars in recent months.
The pressure partly reflects an end-of-quarter effect, as banks hoard cash to make sure their finances look healthy when they report second-quarter results.
But it also demonstrates that fears of further write-downs and possible failures aren’t going away. Bankers and analysts say those worries could keep interest rates high for months, compounding the adverse impact of the credit crunch on the broader economy.
The Short View: Credit fears resurface
By Jamie Chisholm
Published: June 25 2008 19:21 | Last updated: June 25 2008 19:21
Fears are mounting that conditions are set to deteriorate markedly in credit markets.
Lehman Brothers warned this week that spreads on credit default swaps, which track the cost of insuring corporate debt against default, could soon spike beyond the levels seen at the time of the Bear Stearns rescue in March.
Spreads tightened a touch on Wednesday as the market hoped the £4.5bn ($8.9bn) secured by Barclays augured well for raising capital in the banking sector. However, the trend since mid-May has been disturbing.
The Markit iTraxx Europe index of investment-grade debt has crept back up from the recent low of 66 basis points to 96bp today. Across the Atlantic, the CDX has moved over the same period from 91bp to 130bp.
Sentiment has soured as investors have become more worried that the fallout from the subprime debacle is increasingly infecting the real economy.
“…debacle is increasingly infecting the real economy.”
rewrite: …the real real economy… in the real real world!