Bits Bucket For July 5, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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The Gullible and the Greedy…
Every year, the world’s most boring people, namely its bankers, await their version of the “Swimsuit edition”, the annual report of the Bank of International Settlements or BIS. The latest version [1], produced on June 30, provides a fascinating glimpse into the thinking of the people who are often described as the central bankers to the world’s central banks. Of course, I use the term “fascinating” quite loosely here.
http://www.atimes.com/atimes/Global_Economy/JG04Dj03.html
Some posters here may be interested in this linked story, in case they missed it when it was originally published.
Apr 3, 2008
A conspiracy against gold
By Chan Akya
The answer is that no one really wants to live in Europe, not even the Europeans: thanks in equal part to the stupidly high tax rates and low economic dynamism prevalent in these economies. These explain the low birth rates across the continent, which have pushed most countries (eg Italy, Spain, Germany as well as all the Scandinavian countries) into sub-replacement demographic trends.
Looks to me like Europe fairs pretty well in the happiest country ranking.
http://www.financialjesus.com/2008/05/27/top-10-happiest-countries/
It’s a stange article in that it bashes the dollar, europe, holds out virtually no hope for the US to re-inflate then in the same breath says that gold will remain restrained. I found the whole article curious.
In a few short months, certainly no more than 2 years, it will be common knowledge that the Central banks have suppressed the gold market in order to give the appearance of low inflation and bolster their Fiat currencies. They will ultimately fail. Gold derivatives have risen from approximately 347 billion in notational value in 2004 to over a trillion today. There is ample evidence supported by central bank statements and by some of the actors themselves of this suppression.
Here is a brief review of when the suppression started and why. Note the authors and actors. Both articles are well worth the read and were found by googling “gibson’s paradox”.
http://www.gold-eagle.com/editorials_01/howe082201.html
http://www.safehaven.com/article-4800.htm
Here is an interesting manuever by IRAN with regard to the soon to be passed H-362 (US blockade and defacto declaration of war against Iran).
http://www.globalresearch.ca/index.php?context=viewArticle&code=CHO20080704&articleId=9501
Looks like this is shaping up to be the western central banking cabal against the rest of the world, using the US military no doubt.
That’d be my guess. Controlling, and I do mean controlling Iraq (2nd largest single known oil source) isn’t going to drift to the back burner, regardless the cost of human life, of US wealth. Darth Cheney was serious when he said “The American way of life is not negotiable.”…..at least not to his ilk and the banker boyz.
The Economy? Words Fail Me…
Think you’re worried about the economy? Phillip Swagel is a wreck.
The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month.
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/03/AR2008070303317.html
“A questioner asked about private forecasts, which, in contrast to administration forecasts, see a contracting economy through early next year. ‘You know, it doesn’t look like it to us now, but obviously we’ll have to see where we are at the end of the year,’ he answered.”
We know where he’ll be next January - out on his @ss with the rest of the administration flunkees. Good riddance.
This is soooo scary. It is almost like being in Titanic and I think someone on this blog has alluded to the similarities before. The Captain(s) sends out some hapless fool to let everyone know that the ship is sinking and because they want to avoid outright panic it is really not said, it is like “keep on partying because that is what we do here but when the ship starts tilting (sinking) we don’t really know what you should do” and do not use the word “sink” the ship is “tilting” not “sinking”; meanwhile those in the “common” areas are already drowning.
The entire idea is to prevent panic, tell everyone that everything is ok so big money interests can pull out while prices are high and then let it collapse. Happens every time.
Had Enough?
Exactly!
I’m not usually a tinfoil hat type, but why did Chuck Schumer single out Indymac Bank last week? Why not one of his New York banks, like Lehman?
“Had Enough?”
Way more than enough. I didn’t like this boat ride from the beginning.
How do I get in on the O vrs Mc TxChck bet?
Yeah, me too.
I’m socially liberal, fiscally conservative.
I’ve had enough of the Messiah though. Can’t bear the smug snot and his fairly wrongheaded economic policies.
Speaking of messiahs…to posit McSame as some kind of economic genius is like saying Jesus was the worlds best carpenter simply because he was Jesus…
I care more about judicial appointments and a less aggressive foreign policies, since they both are now advocating bailouts and have equivalent economic credentials.
McSame’s world-famous temper and borderline senility (newsflash: Vladimir Putin is not the president of Germany is going to get this country into another war. Obama seems much more rational and mentally agile…but we’ll see.
I do appreciate that McSame’s campaign advertising is helping our fearless leader pay his bills, at least.
Yeah, I used to do all that worrying about the judicial thing too.
I’ll give a counterexample. I threw out this challenge to my gay friends too.
Show me one SPECIFIC thing that Dubya has actually achieved against gay rights. Don’t just sit there, show me a specific policy decision that set the stuff back.
It’s all rhetoric.
Smoke and mirrors to rally the red states while raping them silly economically.
Nobody particularly likes McSame (me included) but the Messiah is actively dangerous.
Besides a buncha vague hoo-ey, I haven’t heard a specific answer yet.
“I care more about judicial appointments”
Four to eight years of federal judicial appointments by a left-wing activist with a Democrat Senate advising/consenting. What a nightmare.
Yeah, I used to do all that worrying about the judicial thing too.
With all due respect, I don’t think the Supreme Court’s positions on gay rights issues are the only ones that matter. If you don’t see a problem with the recent judgments on Separation of Powers, Torture and Rendition…or McCain’s positions on Net Neutrality or the Patriot Act, then I can understand why you would prefer McCain.
I’ve lost some enthusiasm for Obama as he has flip-flopped on the FISA issue, but as a “classically” conservative libertarian I support the Jeffersonian (and Franklinian) view that Government is at its worst when given too much power over civil liberties. Historically, the imposition of a police state is always justified by a vague threat to our security.
Post-9/11 is when I became a true Republican apostate. Read about the rise of the Third Reich, or better yet “1984″ if you want to understant why I think it is McCain who is actively dangerous.
And you genuinely believe that this is NOT smoke and mirrors while the economic rape game continues to play on because of what exactly?
Step up to the plate. Let’s hear a coherent argument for this over economics.
Okay, in all fairness even though I love this blog, economics and housing are not my ONLY issues. But even strictly economically speaking I think Obama’s the better candidate.
Obama bailout = $30B
McCain bailout = $10B
Advantage: McCain
McCain in Iraq = 100 years x 100 billion/yr
Obama in Iraq = 1.5 years x 100 billion/yr
Reagan+BushI+BushII deficit spending = $7T over 20 yrs = $350B/yr (assuming typical Rep spending and taxation priorities)
Carter+Clinton deficit spending = $2.5T over 12 years = $200B/yr (assuming typical Dem spending and taxation priorities)
Advantage: Obama
Incidentally, Deficit spending was negligible before Carter. I’m young enough to care about deficit spending. I no longer believe in the mythology that lowering taxes is a good thing for the economy if you can’t reign in government spending. At least the Democrats recognize that. Spending what you make is the very essence of fiscal conservatism.
BTW: I don’t consider turning the Constitution into toilet paper a “smoke and mirrors” issue…but that’s just me.
I don’t want to double post, but I just realized that I screwed up the link in my original post, so not sure if it will make it. That would suck because I included all the data supporting my conclusion as well.
I’ll just summarize and say that if you include deficit spending, the war, and a housing/bank bailout in the economic analysis…the Republicans will cost us a lot more money than the Democrats.
Spend what you take in and Take in what you spend is the First Commandment of a real fiscal conservative. To call the current batch of Republicans “Fiscal Conservatives” is the biggest smoke-and-mirrors job of all time.
Hah hah hah. You actually believe either of them?
You believe the 1.5 years, you naïve little pixie, you. I’m sure you belive in the dancing magic toadstools and how they will all cure the financial mess.
Look at the Messiah and his Countrywide connections. This is a man who is corrupt, and giving away taxpayer dollars BEFORE being president.
That’s a pretty impressive achievement in my book.
Hey, the Messiah has some sketchy connections, as we all do. And don’t forget that McSame was one of the “Keating Five” who managed to teflon himself out of it tanking his political career entirely.
Six degrees of separation…I have no doubt that some of my own acquaintances who “made a killing in real estate” crossed the line somehow during the boom. Doesn’t mean I’m complicit if I were to ask them to help me run for office.
His only big mistake so far is not vetting his people properly. He’ll learn. McSame will too.
Thinking about “jumping ship”? Want to leave the US with your assets intact? Think again! The asshats in congress who are in the process of sinking this ship don’t feel that you should be able to do so and have added this little tidbit into law.
http://www.nypost.com/seven/07032008/business/the_feds_have_come_up_with_an_exit_tax__118342.htm
Be sure to let your Senator know what a fine job they are doing!!!!
I’m sure that the feds will be able to single out a quiet humble average-looking, lower middle class-looking individual making trips back and forth between S.D. and Tijuana with a few dozen platinum eagles on his person each trip south.
Harry Browne, author of “How I Found Freedom in an Unfree World,” had the prescription right. A quiet non-political type easily can find ways to get around any draconian law. The winner is the reader of HIFFIAUW who understands fully well that the biggest threat to ones personal freedom is the individual himself, by making artificial traps - marriage, social relationships, business relationships, religion, morality, and government. Understand you are working with people here, not Gods.
The most valuable bit of advice that one of my grandfathers gave me was this:
The free-est individuals use the fewest legal services.
America - love it or leave it. Either way, you’ll take it in the shorts.
At least some international accounting types who figure out how to set up a foreign trust or some other offshore-bank-secrecy-aided will make a few buck on this.
It dawned on me about a week ago while taking a shower.
I feel like Sarah Conner in T2.
Where you know what’s coming but nobody else does. I’ve tried to tell as many people as I could for years now. I just don’t believe they realize how bad the sh*t storm will be for the unprepared.
When the people finally realize they have been sold out by the corporations with the full blessing of the US gubmint they will become outraged.
The time for being pissed is upon us.
I’ve got a wonderful life in almost every aspect. But I’m getting more pissed with each passing day watching our politicians at work.
If I wasn’t pulling the family train I would seriously think about living ‘off the grid’.
This housing bubble is but one component of a much larger problem. Wait and see.
Mike
If I wasn’t pulling the family train I would seriously think about living ‘off the grid’ ??
And there in lies the trap SV Guy….I went through the same analysis when I was pulling that train….I decided to stay for a multitude of reasons knowing that there was some bad baggage that was going to come with it…Now, the children are going through the same process…Should I stay or leave…Its hard to say if I made the right decision…
Dave,
I’ll be tied down here for at least the next few years.
After that who knows?
Fortunes will be won and lost in this debacle.
I’ll keep waiting for my chance.
BTW I lived in Santa Clara for 17 years. What a great little city. Excellent city services, lowest utility rates in the bay area, excellent proximity to SV companies. And maybe the 49ers as well!
Mike
Not as nice as it use to be but still a pretty nice place to live…
“But Treasury Secretary Hank Paulson, who was in London yesterday, and Swagel’s other superiors in the Bush administration left him with an impossible task: appearing on camera to put a favorable and reassuring gloss on an economy that has gone to the dogs.”
Sounds to me like this guy is not cut out to be a porcine beautician.
Academics seldom are.
Not a diss on academics; the exact opposite, this is their best quality. Wisdom lies in not taking such jobs if you don’t have the personality for it.
The economic crisis is an event that will be utilized to consolidate power at the federal level as well as to further curtail our freedoms and deconstruct the constitution. Here is the process on how the FED is going on a power grab.
http://www.rense.com/general82/fedd.htm
Always interesting postings:0
Add to that Times today
http://www.nytimes.com/2008/07/05/business/05sec.html?hp
Pandoras box for sure.
Holy mother of, what are our politicians thinking?
Oh yea, their own pockets.
But see…
Morning Edition had quite a report this morning. Started out about the Starbucks closings. Finished with a “retail consultant” who said that the US has about 19 1/2 square feet of retail per person and the number really should be closer to 10 square feet. Yike! He is talking about possible elimination of half the retail space in the country. That may be the scariest economic prediction I’ve heard yet.
Here’s the link:
http://www.npr.org/templates/story/story.php?storyId=92254880
After 1 year of the credit crisis why is it that some banks are only now stopping their option-arm practices?
This housing bubble has more to do with available credit than anything. As long as people can get these rediculous loans prices are not falling to more reasonable levels quickly.
I’d like to see a topic that discusses who is still lending by means of these rediculous loans and how long this might go on.
Hope springs eternal?
I personally don’t want to see the option ARM disappear. I don’t want to see any particular loan disappear, I’d prefer if banks and investors just vetted each borrower to see what they can afford.
There are a few examples of why option-ARMs make sense for a rare few people. My case is one of them, although I don’t have an option-ARM.
If you’re self-employed and have a varying monthly income but a consistent annual income, the option-ARM makes sense. It makes even more sense if you think you can pay off the mortgage quickly, say in 5 years versus 30. I know a few people in my industry who get paid 3-4 times a year (large dividend distribution), and on regular months they’re paid little.
I would never get an option ARM, I’d rather save up 3-4 years of mortgage payments before getting a regular fixed mortgage, but I do understand why it is reasonable in rare cases.
Nonetheless, it isn’t the option-ARM that is bad, it is the lack of underwriting standards to see if a borrower can truly afford the loan.
Option ARMs have been painted with a bad brush, because so many of the loans which will never be repaid over the next few years happen to be option ARMs. A rational approach would be to clearly recognize the role of bad underwriting in leading to this problem, and allow the loans to continue to exist.
There is no obvious reason why a lender could not profit off such loans by making them available to the right customer class at the right interest rate. Unfortunately, the lending industry failed miserably in its effort to properly underwrite these loans within recent years, and would apparently prefer to blame a loan category instead of their lousy underwriting practices for the problem at hand.
” I don’t want to see any particular loan disappear”
I see no reason for stated income loans, ever.
You’re forgetting the original reason for stated-income loans. They weren’t for people trying to claim they had MORE money than they really did; they were originally designed for people who wanted to look like they had LESS money than they really did.
You’d pay for this by putting more money down, and a slightly higher rate.
In other words, if you put 33% down, you’d get your mortgage, no questions asked. This was entirely reasonable, because the bank had little risk when there was no bubble….
No one lost while prices were rising. You could even have negative amortization while prices were rising and still come out smelling like a rose.
Stated income is poorly advised under any situation. Retrospective studies in California alone showed that 90% of liar loans overstated income, and a full 50% grossly overstated income! This loan product is simply too vulnerable to abuse.
I wish the IRS took “stated income” tax returns, however.
yeah…and I wish the IRS would start collecting income tax on those stated incomes.
However, you didn’t get what I said.
Stated income loans, pre-bubble, were used by people who were hiding income, not people who were lying about income.
If stated-income loans required 33% downpayment, as they used to, there would be no problem.
A 0%-down stated income loan is idiotic
You can still hide income without getting a stated loan product. You can overstate debt, or even set up an REIT. There are more honest ways to skin a cat, if all you want to do is hide your income.
I still don’t see how stated income loans are ever a good product on a CDO portfolio, or how it got rated AAA? If they should continue to exist at all, they should never be collateralized and securitized.
Are you for the IRS collecting taxes on the unstated incomes as well?
.
I don’t understand “stated income” loans:
Aren’t stated income loans…. basically… ADMITTING that you are cheating on your taxes?
I mean… if all of your income is properly stated on your tax return… even if self-employed… then why not just use the tax returns as proof of income.
Why do banks accept someone’s claim of income when there is no documentation backing it up.
Ridiculous.
no reason for stated income loans ??
For people on 100% commission or a developer they are very important…I have done deals that took me upwards to three years to realize the income….
I disagree with you. I don’t think an option-ARM, esp because one of the options is neg-am, is a good idea for ANYONE. Trying to even-up income variations is silly, because you pay a huge price for paying the minimum. If you need to do this, you don’t have enough savings.
An interest-only mortgage can be a useful tool for people who have the resources to be able to write a check and make the mortgage go away, if they need to, and plan on paying it off in one lump within a few years.
A very wealthy person might use one, for example, if they plan to sell another home that may take a few years (large estates always take a few years to sell, even in the best of times), or they’d rather not liquidate certain assets all at once. (However, if they had to, they could…)
I agree with you. I’d rather not live in a nanny state where certain types of loans were off-limits because the people can’t be trusted.
But the people can’t be trusted!
So the compromise would be that any loan that had any sort of government backing or guarantee would be “traditional” (20% down, no more than 3.5x income, etc). For banks willing to take the risk with wacky loans, they’re on their own.
This will never happen, of course. Politicians continue to call no-money-down ajdustable loans “affordability products” even though they could be the most expensive way to purchase a home.
“I disagree with you. I don’t think an option-ARM, esp because one of the options is neg-am, is a good idea for ANYONE. Trying to even-up income variations is silly, because you pay a huge price for paying the minimum. If you need to do this, you don’t have enough savings.”
Suppose someone has a very rich aunt who is terminally ill, and whose will states the home buyer is the sole beneficiary. The home buyer is 100 percent certain of the availability of a large pool of wealth within a couple of years’ time, and can hence afford a much larger home than what could be financed out of current income. Wouldn’t it make sense for such an individual and a prudent lender to make financing available which began with low payments that later increased when the inheritance became available?
Like A.B. Dada, I do not agree with eliminating choice from the lending market just because these loans were subject to severe misuse by lenders during the last days of the bubble.
I agree the types of loans are not the problem it’s securitization and the rating agencies. As soon as lending institutions can off load risk they have no incentive to make prudent loans.
‘This housing bubble has more to do with available credit than anything. As long as people can get these rediculous loans prices are not falling to more reasonable levels quickly.’
I’m sorry Bob, but this is just rubbish. Sure some of those loans are around; always have been, always will be. But US house prices have already undergone the biggest correction in modern history, and we’re just getting started.
Some of the posters here can’t put dates together. There was a bubble in Austin Texas in 1998, when I first started thinking there was a problem. Posters here have noted that prices took off in Massachusetts in the mid to late 90’s. (And that bubble popped first too, in the US). Prices in Flagstaff went sky high starting in 1999, probably as a result of CA speculators, meaning their bubble started previously.
All of this was *** YEARS *** before widespread use of subprime, much less interest-only and option arm loans. This was a classic financial mania. Just like RE bubbles before, just like the internet stocks, just like tulips. And anyone that says different can’t use a calendar.
But would the bubble have grown anywhere near the level it did without the reckless lending practices? Markets have their ups and downs and I suppose that you could characterize the normal ups as minor bubbles, but it seems to me that prudent lending would have stopped the mega-bubble from getting so big that it’s jeopardizing the world economy.
i wonder if it could be argued that, when I issue a loan i know will be immediately repurchased by someone else, and the consequences of default are not my concern, it’s prudent to do so.
Ben,
Rubbish? I’ve been calling a housing bubble before this blog was put together. Not that I disagree with you because we are on the same page.
In the last paragraph you state that this was a classic financial mania, if reckless mortgage lending doesnt have anything to do with it and option arms and subprime arent behind it, than what exactly is it? If all we had were traditional fixed mortgages, the bubble would never had gone to the extremes that it has unless of course you believe in 100 year mortgages.
If we had to pay cash for houses, or if we had to put down a 20% we would not be in this mess today.
Mortgage lending is behind the bubble anytime you can use vasts amount of leveraging you will see a bubble form. The products that wall street came up with were behind the housing bubble, pure and simple. As we’ve witnessed it doesnt take much for people to be paid to look the other way. Regulations do absolutely nothing when there is a buyer for a bad product.
Ben, I’m surprised that you dont see mortgages as a problem. Its like Health Care and Insurance. If we didnt have insurance, health care would be affordable.
‘If all we had were traditional fixed mortgages, the bubble would never had gone to the extremes that it has’
I didn’t say otherwise. Just that it was already a bubble before the lenders lowered the standards. My very first housing bubble post in October 2004, on a blog that doesn’t exist anymore, was about a table that showed prime lending collapsing in late 2002-03, and subprime exploding at the very same time, especially in 2003. If you will remember, the buzz words in 2004-05 were ‘finding new pools of borrowers’ and ‘affordability products.’
It’s clear the lending industry turned to this stuff to keep the party going. But the party was already going. I have quotes from the spring of 2005 saying this straight out.
Also, note that low down loans, etc, still exist, yet we have seen prices fall more and faster than anytime in history. If credit was the cause, this couldn’t be the case.
Manias are built on speculation, and that is built on psychology. The psychology of the mania has been broken and that’s why prices are in free fall.
Where’s the forum?
The mania first got out of control when we had the introduction of net-related tech stocks (an asset class that never existed before) and the rise of leveraged borrowing due to hubris and incestuous watchdog relationships at the Fed. Greenspan was in power for entirely way too long.
I would even argue that the end of the Cold War and the longest peacetime expansion in modern American history led to irrational exuberance on the part of investors. It was bound to end badly when coupled with the attitude change of “debt is income” from J6P to Congress that was brought about by cheap money from sovereign funds and corporate welfare in the form of tax giveaways.
“If we had to pay cash for houses, or if we had to put down a 20% we would not be in this mess today.”
You’re dead on with that one but that case can be made for every single sale-able item. I’d wager those $150 pair of Nike’s would be a third of that price without the overabundance of cheap credit.
If we had to pay cash for houses, or if we had to put down a 20% we would not be in this mess today ??
Why stop at houses ?? 20% down on everthing !! Cars, boats, equipment etc…No more 100% purchase with the credit card either…20% cash and 80% on the card…
Its not the leverage that’s the problem it’s the underwriting….What’s wrong with 100% financing to a person that has just finished their residency and has secured a job at Johns Hopkins ??
Johns Hopkins doesn’t pay that well - academic medicine pays a lot less because it involves research. Private practice is where the money is.
“Why stop at houses ?? 20% down on everthing !! Cars, boats, equipment etc…No more 100% purchase with the credit card either…20% cash and 80% on the card… ”
You mean similar to conditions in 1960 before the age of economic entitlement? The world still turned and the sun still burned then without eeezzzy credit.
You mean similar to conditions in 1960 ??
Exactly !!
Johns Hopkins doesn’t pay that well ??
The pay is irrelevant….My point is that if you have a “Bankable” job like a doctor, there is nothing wrong with 100% financing as long as the underwriting was done appropriately….
I strongly disagree, Dave. Even physicians can become FBs by overestimating future income or quickly going underwater by paying ridiculous wishing prices. Especially newly minted physicians who have had their heads buried in a book so long that they can no longer appreciate what a reasonable asking price is, and the hubris and greed that come with long years of denial. A surprising number of them have crappy FICOs because of excessive borrowing, BTW.
overestimating future income or quickly going underwater by paying ridiculous wishing prices ??
If you have appropriate underwriting this won’t likely happen…When I purchased my first home the ratio of income to debt service was about 25%…As the years went on I saw that number move to 33%…Still quite manageable IMO….However, in the last five years those past underwriting guidelines have been ignored, particularly on the stated income side…My point with the doctor is that you probably can get a good fix on his income and job security so if your following good underwriting guidelines a 100% mortgage is not necessarily that risky….I also agree with you that just because you are a doctor that you are immune from reckless financial behavior…
Flagstaff and Sedona were sky high in the early 1990s. I remember looking at a place in Flagstaff in 1994 and thinking I would never make enough money to live there.
and I also remember seeing the heavy condo building in the Uptown part of Dallas in 1998 and 1999 and thinking another bubble was underway.
Hahaha!
I remember looking at homes in Sedona in the 1990s thinking what a bargain they were compared to homes in my Orange County, CA neighborhood.
I think that easy credit will prolong the falling of house prices, so I don’t think that Bob’s statement is rubbish. Some of us hoped that prices might fall even faster than they have. I’m still seeing a lot of denial on the part of sellers and agents. I’m also seeing multiple offers on the cheapest houses in my area, Sacramento, which helps to prop up prices. Problem is that even “cheap” houses are still too expensive and have a long way to fall. I’m hoping for an acceleration in the autumn. This slow-motion recession is hard to watch - I’d like to get it over with.
Hear in Monmouth county NJ, I noticed a problem around 99. The internet / stock bubble was raging and with income on Wall Street booming and a general wealth effect setting in, house prices moved beyond what rents could justify. I have rented in an affluent area since that time and have always paid less than a conservative estimate of the cost to own. I use only the monthly payment of a 30 year fixed with 20% down and property taxes. I thought that it was strange that the math wasn’t working. That’s when I became interested in housing prices and wondered if maybe via the internet, for the first time, an average kook like me could actually track what was going on in the opaque world of residential real-estate.
My landlord was “very relieved” that we wanted to extend our lease for another year.
If they had eliminated/severly restricted them any earlier they would have been “giving up market share.” Try getting desperate CEO’s to agree to that until you can *prove* that the product will result in sever losses. A few might have tried to hedge/insure against losses, though the success of that is questionable when you have problems with your couterparty/insurer, but to take and action that will result in immediate loss of market share? That makes the stock go down NOW and then your stock options are worth less. Try getting someone to take an action that will result in the evaporation of 30% of his net worth over the course of a week. Call me when you pull it off.
Good morning
not if you are a person looking for a job in queens ny though
http://www.queenstribune.com/news/1215095490.html
i have to get ready for my 2nd job i am working
i feel lucky
this will hopefully apply more downward pressure to local wishing prices
traffic was real light yesterday both going and coming from long island
As a for instance one of my employees, whose gross income is around 38k and he is single bought a $250,000 home in December. I’m not privy to all the info but he said that he put 5% down. I just cant see the numbers working for him here.
38k salary
250k home
foreclosure
it’s easy
Here are my humorous responses:
He would have to steal a lot of Post-Its from the supply closet.
Maybe your new color copier is too good and he is using it on 20’s.
And my serious response:
More likely, you should consider the impact if he goes into foreclosure (will he move out-of-state and you need to replace him).
I’d keep a close eye on the books….and the company gas card.
He’s single, but do you mean unmarried or living with someone single?
If he has a roommate, it’s doable. Not safe, not wise, but doable.
$250k - 5% = $237,500
$237,500 / 30 years @ 5.75% fixed = $1,385.99/month
If he makes $38k and takes home $2216 per month after taxes, with a roommate kicking in half, he’s just at the 35% net income level for payment. Of course this ignores property taxes, maintenance and utilities, but it’s possible.
At $38K/year, every mistake is very costly. Even $500 can set you back for a while.
There is no room for error in your plan. For 30 straight years. And the roommate will get old after a while.
This is a bit hard to swallow. It’s not doable at all.
and let us not forget. One’s mortage payment is guaranteed for 30 years and one’s source of income, or cash flow, is in no way guaranteed and let’s not forget sickness, and the myriad curve balls that life throws at one. and given TPTB’s fondness for globalization and free trade, salaries and standard of living will be decreasing for the sheople.
You provide good reasons to avoid catching falling knives in the home purchase market. It is best to buy a home on a fixed-rate mortgage when the market is near the bottom, as you always retain the option to sell (provided you avoid HELOCs and other home-equity cashout financing) if circumstances make it impossible for you to continue paying your mortgage.
“It’s not doable at all”
BINGO. None of the financing is doable when a borrower can’t count on his job being there for more than a year or two. I’ve been there, done that and will never be enslaved to a banks terms again.
At $38K/year, every mistake is very costly. Even $500 can set you back for a while.
True, but it still isn’t impossible. Does the buyer possibly have a second job or second source of income? Parental help, maybe?
There is no room for error in your plan. For 30 straight years. And the roommate will get old after a while.
My first few purchases always included a roommate, but I was able to afford the mortgage solo. After paying off the loans quickly, I was able to “step up” to better places for cash. Even my most recent home purchase has a roommate who pays the property tax portion of the bill (home has no mortgage, though).
Roommates always made sense for me: someone to watch the pets when I travel, someone to help with the dishes and cleanup, someone to watch over the house when I’m away. Current roommate works third shift at a hotel, so it works perfectly.
This is a bit hard to swallow. It’s not doable at all.
I’d agree that this guy is probably an FB, but there is a slim chance he has other income, too. $250k needs $83k a year of income, though, so it is VERY doubtful that a guy making $38k a year has a roommate who makes $38k a year, plus a second job pulling $10k, but it is possible.
He had a girlfriend that left him, so potentially she was helping out but the problem is he qualified for the loan. Banks should be looking at his ability to borrow not his roomate unless of course its a 2 family home, which it is not.
I know this employee very well, he does have additional income but he’s lucky to pull in another 10k from that. I’ve run the numbers and I just cant see how he pulled this off.
I even tried to tell him not to buy. He knows I rent my place, and I even sat him down and tried to teach him a few basic affordability rules. In the end he bought the house, he said he got a great deal because the asking price was 325k a year earlier. I said well if you wait a year the asking price will be 180k, if you can just wait.
Oh well, hes young enough to learn a valuable lifes learning lesson.
This is one of the features of the superbubble that started in 1981 and ended in 2006.
Interest rates can only go from 18% to 1% once. This is not repeatable.
Classic American attitude - buy it if it is “good deal” even if you can’t afford it or don’t need it.
shopper: I go such a great deal on this dog food. It was on sale for half price AND I had a coupon for another $2 off.
friend: But you don’t have a dog…
But I can turn around and sell it to someone with a dog, no problem.
Right.
But he can fix it up and sell it for more money! Oh, wait…
cool.. a built-in slave..
He’ll do whatever you tell him to do if it’s prefaced by the hint you might have to cut his hours or pay..
Yep.
Fear = The Great Motivator.
Bob:
Unless he is dealing drugs on the side, how can the numbers work?
Or maybe he has to ask you for a $10,000 rasie soon, or find aonther job that pays more.
bigger is better baby
http://www.nytimes.com/2008/07/05/nyregion/05forest.html?_r=1&oref=slogin
Haha, great article. Love the idea of foreigners moving into an area, building huge homes with their probable savings (rather than mortgages), and peeving the commoners who can’t afford such luxury.
Gentrification cuts both ways. I have a lot of respect for those who came here from afar with cash and build their own neighborhoods.
I spend a lot of time in Chicago’s Ukrainian Village, and love to see the lack of English being spoken. Even with the youth. They came decades ago, bought their homes, built their neighborhoods, and no one stopped them “for the good of the neighborhood.”
Let the Bukharians come in droves, let them build their neighborhood, and let the kooks of the past move away to where they can afford to live.
A big house for a big extended family I don’t mind. A big house for DINKs who “need their space” is noxious.
I don’t see why it matters which demographic gets a particular kind of space. The only issue is whether they can afford it. This isn’t the Soviet Union…one size does not fit all.
True, my bad…
Anyone who has the cash to build a house, no matter how ridiculously big it may seem to you, has every right to build one and gets no complaints from me.
If you want to live under a government that assigns houses based on family size and need, I regret to tell you that the Soviet Union no longer exists. Your next best bet is China.
“Anyone who has the cash to build a house, no matter how ridiculously big it may seem to you, has every right to build one and gets no complaints from me.”
Of course they have the right to do it. And I have the right to find it as distasteful as my neighbor who drives solo in her Suburban day after day. Wasteful, plain and simple.
But, no, I don’t want the gov’t telling us we can’t do what we want with the portion of our incomes they do allow us to keep.
I spend a lot of time in Chicago’s Ukrainian Village, and love to see the lack of English being spoken. Even with the youth.
Sure, there are still a fair number of Ukrainians in the neighborhood — lifers that’ve held on to their property through thick and thin, younger generations that’ve inherited places, and people that’re drawn back to visit the neighborhood because of cultural destinations like their church or the museum.
But it’s clear that the area gentrified pretty heavily. It’s now a jumbled neighborhood, demographically. A decade ago or 15 years ago, the Ukrainian Village was indeed the place you’re talking about. It’s not anymore, IMO. It’s still has some of that identity — but it’s simply not the same ethnic enclave it once was.
In checking out the housing forecast on CNNMoney.com for San Diego:
http://tinyurl.com/5waon4
The forecast projects a decline of less than 15 percent for all of 2008 and 2009. That would leave prices in 2009 at still more than 6x income. The projected decline seems greatly understated. I note at the bottom, the source is listed as FiServ Lending Solutions.
Are lender forecasts still this flawed? Would this explain, in part, their reluctance to sell REO’s and their willingness to still make loans that might not seem prudent if using more realistic price decline projections?
IMO, the biggest factor holding back price declines is the ongoing lack of transparency on bank balance sheets. Once Helicopter Ben stops printing money at the TAF window, then banks will have to come clean to their investors when margin calls are made.
I predict that this won’t happen until short term stagflation gets so bad that the Fed has no choice but to raise interest rates, and most insiders predict this will occur by the end of the year. So I am thinking bank failures by late ‘08 to early ‘09, and a rapid decrease in REO and foreclosed property prices sometime before then as banks desperately try to raise cash.
“The forecast projects a decline of less than 15 percent for all of 2008 and 2009.”
That would require a large decrease in the recent rate of home price decline (recently well above 10 pct per year). Methinks whoever cooked up this forecast should dust off the chapter in their calculus book on first and second derivatives, then try to find some evidence that there is no hysteresis in the rate of home price change. I believe the data suggests there is a lot of hysteresis, due to growing awareness among prospective buyers about the risk of catching a falling knife.
PB, I don’t understand your post.
I’ve never heard of “hysteresis” of a non-Boolean dependent variable where there is minimal system instability at zero, and IIRC rates of price changes are not a boolean quantity (they are a dependent continuous variable) with a maximum stability at zero.
In fact, I would be surprised if there are any good models available since the rate of historical home price changes have been mostly linear (except at inflection or “shoulder” points), therefore the second derivative is typically zero. Since the real estate market is not a bounded steady state system, I think the only applicable mathematical model is a non-linear one with a discrete set of inputs…such as loan resets, income fluctuations, identification of comps, credit availability/monetary policy, consumer confidence, etc.
I have a background in Physics but not in Economics so maybe there is something I’m not appreciating. Without knowing what specific models they are using I don’t think there is any meaningful way to comment on their methodology.
Let’s see, weren’t they predicting a 2% fall in 2007, and the actual fall was 14% If they’re off by a factor of 7, then prices in 2008-2009 will fall by 7 X 15 = 105% Whoops!
Bucktown + West Loop Chicago
What is up with sticky prices? I have a ton of friends who rent in these areas, paying $900 for a 2bdrm, $1400 for a 3bdrm and the sucker sellers still want $300k-$450k? Morons!
Ahh, the days of living in the West Loop before gentrification, where 4000 square foot lofts ran for $80k. Not that long ago either. But $600k? Hahaha. With no garage, no parking, no central A/C, ancient heating… I don’t think so.
Flabbergasted, though, that buildings with 3 units for sale have sticky prices. Tick, tick, tick. Getting bored waiting, but also am in no rush.
Oh, based on some of my customers, Chicago boutique retail is down 40% YOY, Chicago restaurants down 30-50% YOY (some of that is smoking ban), Chicago pubs vary between up 20% and down 70%. Going to be an ugly, ugly summer.
Most of my friends in their 20s and early 30s are skipping the bar and partying at home. Packaged goods sales are up significantly.
Cubs or White Sox?
Cubs!!! (ex-Lincoln Park-er here)
Cubs!!!!
Cubs!! (Ex-Wrigleyville dweller here.)
Formerly lived at Grace and Fremont in Wrigleyville, but a White Sox fan since moving to Chicago.
The Cubbies.
Cubs !!
WHITE SOX! All the way.
Oh, based on some of my customers, Chicago boutique retail is down 40% YOY, Chicago restaurants down 30-50% YOY (some of that is smoking ban), Chicago pubs vary between up 20% and down 70%. Going to be an ugly, ugly summer.
The people I know who own or operate restaurants (in Wicker Park, Logan Square, Pilsen) are still doing OK, but they’ve had to raise prices and keep a tight rein on portion sizes and waste. They’re working harder to make profits, for sure, but they’ve still been able to fill seats.
People in antiques and vintage say business is slow. There is pretty fierce competition for the A-list items at estate sales and through other channels (vintage buyers never reveal all their methods). Some of their slowdown has been offset by increased interest from Europe and Asia, but not all of it.
Rehoboth Beach, Delaware update-
1) All you CA/AZ/NEV/FL folks talked about “spinners” for years now yet I’ve tried to imagine just what they were. The east coast clan is happy to report the first sighting (that I’m aware of) of a spinner in Rehoboth Beach and it was a sight to behold. The guy was half ballet dancer, half comedian doing his best to attract attention on Highway 1 in front of Rehoboth WalMart.
If things are so well here as stated by the local RE Crime Syndicate, why the need for a sign spinner?
2) Lewes, the town adjoining Rehoboth to the north- Headed down to Lewes beach yesterday evening for fireworks display. Our local contact taking us through all the back roads. Development after development, many finish and as many incomplete. Saw one development built *right next to a concrete batch plant*… UNREAL. However, the development that caught my eye was a higher end layout with more For Sale signs than I’ve ever seen in a development. What made it more interesting was the style and architecture of shacks. Clearly, they were designed by a very competent architect. Although too large, they were indeed quite appealing. Not too much gingerbread to make them garrish, but just enough to set the tone. Very well done Mr. Architect. I can only guess at the fantasy prices of those houses but I can easily say the upper crust would be willing to part with a small fortune to live there. In that case, why so many for sale signs? And tons of lots available if you don’t find the house you’re looking for.
Based on all the reports from folks in Florida, my sense tells me that Sussex County Delaware mimics the early stages of FL. I don’t know if the fundamentals will ease the blow here. DE is a low/no tax state surrounded by high tax/high dollar cost states. However, based on local and native commentary, DE RE took off like mad beginning in 1998.
I was in Delaware this week. Visiting my mother, in southern DE. The prices in the beach communities defiantly went through the roof. The thing I find interesting is that prices seem to drop off dramatically, as you go inland.
The wife and I then drove down to Hilton Head, S.C. via the Chesapeake bridge tunnel.
It seemed like every spare piece of farmland had corn growing. All the way to Hilton Head. Their may be a lot more corn available this season than traders realize. This is, of course, anecdotal.
I used to go to Lewes often in the 80s. I loved the fact that it was a somewhat sleepy beach town just down the road from the faster paced areas. There was a great crab shack that had outdoor picnic bench dining with BYOB. We would bicycle down the road to the state park beaches which were always pretty deserted. At least back then, anybody with the proper equipment could drive onto the beach. People would poke fun at Lewes for being so quiet or “dead”.
How Jesse Helms Made a Difference
http://online.wsj.com/article/SB121521073192129407.html?mod=opinion_main_commentaries
I was appalled at the hate spewed forth by some of you this week and really didn’t understand where it was coming from. If you want to read a more balanced article on Jesse, read this. If not, froth away.
yeah.,. i tried to get in on one thread but it mysteriously disappeared.. but, it’s all for the best because i was gonna really pound someone and mighta done some serious damage..
..may he rest in peace.
That’s kind of a bizarre post…
“i was gonna really pound someone and mighta done some serious damage..”
and this thought
“may he rest in peace.”
Seems a little conflicted.
I opposed some of his stances, the article soft pedals the guy and how unbending he could be on matters I consider basic human rights. He polarized and created situations that might have come to better fruition w/o him creating such dissent. He often made things worse in terms of finding solutions.
Having said that, I always admire and respect character and people who stand up for what they believe, whether I agree with them or not, unless they’re just so far off base that they’re insane. He was an intelligent and articulate guy, and he made people think, and that’s always good (and often difficult).
But shoots, I can’t say I think much of any politico. Same as it always was.
I think it’s total bullsh*t when people ask for blog comments on a public figure and the only acceptable ones you can leave are insipid compliments and banalities.
To wit:
“That Adolf Hitler, he was a great guy…at least he united Germany and fought the Soviet Union”
-or-
“That Idi Amin, we’re gonna miss him. My condolences to his family”
Fricking give me a break…
Thank you for posting that. I was beginning to feel like I was an intemperate bigoted person for not liking Jesse Helmes, the man who once said about the 1963 Civil Rights protests: “The Negro cannot count forever on the kind of restraint that’s thus far left him free to clog the streets, disrupt traffic, and interfere with other men’s rights.”
More from Wiki: “Helms had close ties to the rightist Salvadoran death squad leader Roberto D’Aubuisson and was considered a main sponsor of D’Aubuisson’s political party, the Nationalist Republican Alliance. When confronted with evidence that D’Aubuisson ran death squads that systematically murdered civilians, he replied that “[a]ll I know, is that D’Aubuisson is a free enterprise man and deeply religious.”
He represented the tobacco industry. I wonder if he smoked. RIP, Jesse.
There may still be time for you to attend the funeral.. He’s got 7 grandchildren all of which should be present, and you can tell them what a despicable man their grandfather was, and that the world is actually better off without him to their faces.. It might cheer them up.
Why should Lost care about what his grandchildren think? She never said she is friends with them.
I know some FBs who could use some comforting as well as they grieve over their losses, but I am glad you reserve your opinions, appropriately, for the blog.
(Hope this doesn’t post 2x)
What does that have to do with anything? I would never do that, even if I didn’t like the guy I would never take it out on his family. I have a very basic regard for freedom of speech and respect for my fellow humans. I would rather talk to him about his beliefs and try to figure out where he’s coming from than just blindly hate him for them.
See, Joey, I really do respect people, even if I disagree with them. If you don’t, it’s setting the groundwork for true misunderstanding and hatred, which has done a lot of damage already, no point adding to it. Just MHO. And I meant it when I said RIP, I hope that for everyone, eternity’s a long long time, assuming you believe in it.
(Hope this doesn’t post 2x):
Joey, what does that have to do with anything? I would never do that, even if I didn’t like the guy I would never take it out on his family. I have a very basic regard for freedom of speech and respect for my fellow humans. I would rather talk to him about his beliefs and try to figure out where he’s coming from than just blindly hate him for them.
See, I really do respect people, even if I disagree with them. If you don’t, it’s setting the groundwork for true misunderstanding and hatred, which has done a lot of damage already, no point adding to it. Just MHO. And I meant it when I said RIP, I hope that for everyone, eternity’s a long long time, assuming you believe in it.
What I commenting on was the extreme hate that was coming from some on this website, such as rot in hell and all of that stuff. What the article points out is that there were a few good things about his life.
To many times when you disagree with a liberal you’re a hateful, mind numbed bigot but IMO there’s a lot more hate on the left.
My experience has been that labels tend to polarize people. As a redneck environmeddler, I try to look at both sides of the story. My biggest complaint is people who try to control what I think or say or who try to take away my liberties, I don’t care what they call themselves. I love libs and neocons alike if they don’t meddle with our basic freedoms and they don’t abuse kids or animals.
Also, Saddam Hussein was a straight shooter, so let’s not forget to mourn his passing, or at least show some respect for his family’s sorrow.
Your response is clearly on target. Not all deserve to be respected. If we are all judged on our treatment of others, then some don’t deserve to be respected.
lost,
so how is the museum job working out?
I was only there for a few hours this week, but I guess it’s going OK, everyone seemed to be working hard while I was there.
Thanks for asking, Lost. Hope you had a good 4th.
Lost,
please put some exhibits from your job on the site.
Will be much appreciated.
Could draw possible increased visitors and contributions.
Good iuck,
OK, here you go!
http://www.youtube.com/watch?v=qkoC5Bs5BlU
lost,
Not joking, being serious.
Well, did you watch it? He was VERY serious. He was successful, too.
But you don’t have to be serious to be successful. In fact, you don’t HAVE to be successful. You can be seriously successful, or successful at being serious, but it’s hard to be both.
I watched the first part of it. Hey, I looking for dinos, ancient stuff.
“he made people think, and that’s always good”
Losty is pretty nice, so I’ll say it. He was a Class A hypocrite.
He got an underage maid in his mother’s house pregnant, and though he sent her money, he kept his “secret family” hidden. He spent his political life railing against “loose morals” and “uppity colored folks”, ignoring the rights of his own child, and his own failings.
He was a profoundly dishonest man.
Off to the shooting range to practice, always admired a straight shooter.
Your godlike insight into Jesse’s mind and motivations is most impressive.
Would you be willing to hear my confession? I don’t ask for forgiveness, just guidance.
Well, one thing that disturbs my good conscience is that I really enjoy pissing on certain people’s graves. Is this a sin?
joey, you don’t need insight into their minds, you just look at their actions.
I don’t need insight into a person’s mind to understand their actions? Well, that’s easy for you to say since you share Spike’s omnipotence.
For instance, for you it’s obvious why he opposed abortion. He hated women.. right? And his opposition to AIDS funding can only mean he wanted homosexuals to die a slow, agonizing death.
But unlike (!?) you, i do need insight. I have the feeling this man was deeper than that. 10:48:44 I would rather talk to him about his beliefs and try to figure out where he’s coming from.. because 10:47:36 I try to look at both sides of the story.
Look, I don’t hate Helms, I just disagree with him. Why all the anger? I made no call on why he hated abortion, I would assume it has something to do with his religious beliefs. But he did say some things that give insight into where he was coming from, so I can make judgement calls based on that and disagree with him.
But look, I don’t understand at all why you’re so upset about this, he’s not related to you or something is he?
And hey, I’m going to have to think about this omnipotence thing a bit, it’s a new concept to me, had nary a clue, may not be all it’s cracked up to be.
Spike,
If you’re talking about Jesse Helms, then that’s terrible, but to be honest it sounds like about 85-90% of the politicians in Washington.
Hypocrites are the only people that Jesus ever got mad at and if that’s what Jesse was, then maybe he is in hell.
Lip,
yeah, I’m talking about Helms…he impregnated an underage maid in his mother’s house, then sent her out of state with their child…though he went on to marry and have children, never acknowledging the existence of his black daughter publicly.
He vehemently opposed extending fundamental American rights to his own daughter…railing against “loose morals” while he himself had committed statutory rape.He whipped up racial animosity for political gains.He damaged people’s lives.
A man who hides the existence of his own child, and tries to deny her basic American rights as well is no man at all.
I used to hate Jesse when I was young and one of the head commies at Carolina. Later on after a loter of travel overseas, I came to appreciate the man and his philosophy.
Wow…..never thought I’d read that on this blog.
I’m ambivalent about the man, but I agree the overt hatred directed at a deceased fellow human being was sad to see. I know it goes on a lot at certain sites, I like to think this group is above that kind of thing. God rest his soul.
Yes, God bless his bigoted, racist, soul. Maybe the Big One can explain to good ol’ Jesse that it did create all men equal, regardless of skin color.
Oh, c’mon! that’s the best you can do? Is that what passes for good ol’ fashioned ‘Murrican ingenuity these days?
We need a rant, a good ol’ fashioned rant. Something about raping his women and children with a big black dildo and making them bleed out of every orifice.
You new fangled people make we wanna weep for the good ol’ days. Back then, we knew how to insult people. This country is going to the dogs.
Thank you for taking the time to point out my rather pathetic Jesse insult FPSS, but my dearly departed Catholic upbringing reared its ugly head and produced that boring, sentimental, heavenly response. I will in the future try to write more effective rants concerning bigots and racists, but I doubt I’ll be able to reach your level of spot on, sophisticated insult.
http://www.freep.com/apps/pbcs.dll/article?AID=/20080701/NEWS06/80701099
From the article:
“Tague told WOOD-TV in Grand Rapids that Johnson believed that VanderStelt took advantage of him in a real estate deal. Johnson bought a house through him in 2005, then recently decided to sell it and went to a different real estate agent. The second agent told Johnson that, because of the slumping housing market, the home was not worth what he had paid for it.”
Mrs. Exeter suggested this article be sent to every RealTard on the planet. Take a look at the suspects age…. 73 years old going berserk on a realtard.
The comments are interesting. A couple of realtors admit that they lie to get their commissions. I always thought they were just stupid and believed what the NAR was telling them. Liars, cheaters worse than retarded.
What is it the REIC hopes to get out of the mortgage rescue bill which makes it a more valuable use of scarce monies than paying their industry workers’ paychecks?
PAGE ONE
Housing Industry Ramps Up Political Donations
By ELIZABETH WILLIAMSON
July 5, 2008; Page A1
WASHINGTON — The housing industry already has given more money in political contributions this election cycle than in the entire previous cycle, while winning favorable provisions in an emergency housing bill moving through the legislature.
Through May, mortgage bankers and brokers, real-estate companies and home builders had given more than $95 million to federal candidates and political parties so far this election cycle, according to the nonpartisan Center for Responsive Politics. That compares to about $57 million at this point in the 2006 cycle.
The recipients include people with key roles in the legislation. On the Senate Banking Committee, they include Chairman Christopher Dodd (D., Conn.), ranking Republican Richard Shelby of Alabama, and Sen. Elizabeth Dole (R., N.C.). On the House Financial Services Committee, recipients include Rep. Paul Kanjorski (D., Pa.), committee Chairman Barney Frank (D., Mass.) and Rep. Spencer Bachus (R., Ala.)
The largess comes as property companies lay off thousands of workers and trade associations lose members to financial troubles.
Much of the cash is going to members of committees guiding work on the housing rescue package. It would provide more than $300 billion in government-backed mortgages to homeowners threatened with foreclosure. It also would establish a regulatory regime for mortgage lenders and set higher limits on some government-backed loans and other incentives for buyers and builders. Democratic leaders hope to send the bill to the president this month.
Stinks to high heaven, and clearly bipartisan. How congresscritters can be allowed not to recuse themselves from voting on a bill where they receive donations and kickbacks is absolutely unconscionable.
Um, that’s the way business is done in Washington. Been that way for decades. We have the best Congress money can buy.
Recoupling into a slowdown is a b!tch.
Hot to Cold:
After Rally, Tokyo Stocks Fall 12 Days
By Tom Lauricella and Lisa Thomas
Word Count: 776 | Companies Featured in This Article: Toyota Motor, Honda Motor
Japanese stocks were an unexpected haven from world-wide market turmoil in the second quarter. Now the question is whether that brief run is over.
The Nikkei Stock Average eased 0.21% Friday, its 12th consecutive decline and the longest losing streak since at least 1960. (U.S. markets were closed Friday for Independence Day.)
The Nikkei is down 8.4% in the past 12 trading days amid concern that high energy prices, a sluggish global economy and the weak dollar will crimp export demand.
toyota.. ford.. hyundai.. all sorts of TV ads for holiday ’sales’.. $1000 in free gas.. $1,500 cash rebates.. zero-interest 72 months, guaranteed $3 gal/gas for 5 years, etc.
I know this sales push is common but i think it’s diffferent this time.
Last week i had a car problem and the Lincoln service dept connected me to it’s voice mail.. wtf. So i called Parts in hopes of talking to a human, but he wanted my number and to call me back later.
He did, and told me he was the only person in parts and Service was similarly shorthanded. Things are so slow lately the dealer had laid off many people.
I bought my first GM recently (a slightly used Vibe). Prior to that, was a Ford girl for about 15 years. Always went to the dealer for service when I owned Fords. Switched to a small, family-owned service station since getting the Vibe (my parents have been taking their cars there for years so I trust them). Could not be happier. They are so reliable, responsive, and good to me. Had a stuck sunroof issue recently - they took me in right away and didn’t even charge me (I tipped the service guy $20 anyway).
I feel like I A) got the Vibe at just the right time (traded in an Explorer back in November - I’m ear-to-ear grinning every time I go to the gas station) and B) moved away from dealership service just in time. Especially with GM’s woes. Heck, the closest Pontiac dealership to me closed a few months ago anyway.
The vibe is basically a toyota matrix with a Pontiac emblem.
true… and the Toyota Voltz is the Japanese right-hand drive version of the Pontiac Vibe..
Built by NUUMI, a joint venture between GM and Toyota. They currently build 3 vehicles, employ 160 robots plus a few human beings… The plant size spans the equivalent of at least 88 football fields..
“GM places around 12 managers each year at the plant to learn lean techniques..”
http://en.wikipedia.org/wiki/NUMMI
i like it.. my guess is the basic style will be most popular in the coming years.. lots of cargo space, many comforts and options, and good fuel milage.
If it had an option for a larger engine and some kind of a tow package, i’d consider getting one.
I’ve been inside NUMMI.
It’s hard to accurately describe the size of that building. It’s enormous inside.
Mike
No this is impossible. Toyotas *never* have reliability issues. Everybody told me so. This is Groupthink, signing out.
A Fund Manager’s Worst Nightmare
Stuck With Financial Stocks, Handlers
Can Only Wince; ‘I Have No Choice’
By DIYA GULLAPALLI
July 5, 2008; Page B1
PLAINSBORO, N.J. — It wasn’t pretty.
Financials, as usual, were taking a dive. And at BlackRock Global Financial Services mutual fund, that meant another stressful day.
Jack Silady’s lament on today’s stock market: ‘It’s a financial, so people just sell it.‘
Fund manager Jack Silady showed up for work Monday to watch holdings like American International Group Inc., Lehman Brothers Holdings Inc. and Fannie Mae sink some more. On the trading floor, a segment called “More Pain For Financials?” flashed on the television.
“It’s not a fun time,” said the bespectacled Mr. Silady, 59 years old, who has managed the roughly $400 million in the fund and other offshore money for almost two years. “Everyone wants to own oil and commodities and everything else, and don’t want to hold financials.” But “I have no choice.“
The family and I spent a very enjoyable 4th in Idaho Falls yesterday. We noted that there is little or no sign of downturn, but there are many, many for sale signs.
On a related note, I can’t recommend I.F. highly enough as a place to spend July 4th. If there is any one thinking about going to Yellowstone or Jackson Hole for vacation next summer then taking a day in I.F. to see the fireworks is something to behold.
Most people are a bit incredulous when I tell them this, but it’s the best fireworks display I’ve ever attended. I think the motto might be, “fire for effect”. Anyway, my $.02.
Not all industries are shrinking with the slowdown. I can’t help but wonder whether at least some of the young Americans driving the popularity boom are among yesterday’s housing market geniuses, who understood better than the older generation why “real estate always goes up”?
Bourbon makers pouring it on
Distillers expanding to fill surging demand
By Bruce Schreiner
ASSOCIATED PRESS
July 5, 2008
ED REINKE / Associated Press
Wild Turkey master distiller Jimmy Russell signed a bottle of Rare Breed bourbon at the distillery’s gift shop Wednesday in Lawrenceburg, Ky. Wild Turkey sold more than 1 million cases worldwide last year for the first time.
LAWRENCEBURG, Ky. – To Wild Turkey master distiller Jimmy Russell, the piercing sounds of a warehouse rising in the Kentucky countryside are the sounds of prosperity.
“As long as you see work going on – and the construction, and increasing your size – you know your business is doing well,” said Russell, who started working for the bourbon maker in 1954.
Distillers are expanding their bourbon production and storage and dispatching sales teams around the world, bullish for a traditionally Southern beverage gaining popularity worldwide. Surging exports, the weak U.S. dollar and rising popularity among younger Americans are driving the boom.
“It’s an exciting time to be in the bourbon business,” said Max L. Shapira, president of Heaven Hill Distilleries Inc., a family-owned liquor company based in Bardstown. “Most of the time that I’ve been in the business – up until about the last 10 years – everybody was trying to consign the bourbon category to that great liquor store in the sky.”
Possibly, but I’m not one of them. The KY Bourbon festival is kinda fun too… small town feel and tons of bourbon related whatnot… the Maker’s bourbon chocolates are awesome.
I think the main surge has been more due to a growth of cocktail culture in general and guys not wanting to drink the many vodka backed martinis peddled accross the US. And then overseas there is the popularity of all things American as the dollar drops to new lows. Beam, Makers, and Jack have always been available at duty free around the world, now they are so much cheaper compared to the various eurobrands.
Looks like theres a bubble now in persian rug stores with going out of business signs in the window.
Luxuries get the axe first every single time. Not terribly surprising.
During the first gulf war, I had friends make large sums of money buy selling persian rugs. They would buy them in Dahran or Barain for $50-$100 and sell them for $1000.
Home furnishing stores are always going out of business, judging from their ads. (Though I suspect, in the current market, some of them are actually closing for real.)
As for it being a persian rug place… I’m told (by reliable sources) that the bottom has largely dropped out of that market, not due to the economy, but due to the government giving large numbers of Americans a chance to shop at the source.
COMMENTARY: THE WEEKEND INTERVIEW
Theodore J. Forstmann
The Credit Crisis Is Going to Get Worse
By BRIAN M. CARNEY
July 5, 2008; Page A9
New York
Twenty years ago, Ted Forstmann contributed a scathing – and prescient – op-ed to this newspaper warning that the junk-bond craze was about to end badly: “Today’s financial age has become a period of unbridled excess with accepted risk soaring out of proportion to possible reward,” he wrote in October 1988. “Every week, with ever-increasing levels of irresponsibility, many billions of dollars in American assets are being saddled with debt that has virtually no chance of being repaid.”
Within a year, the junk-bond market had collapsed, and within 18 months Drexel Burnham Lambert, the leading firm of the junk-bond world, was bankrupt. Mr. Forstmann sees even worse trouble coming today.
For a curmudgeon, he is a cheerful man.
When we met for lunch recently in a tony midtown restaurant, he was wearing a well-tailored suit, a blue shirt and a yellow tie. He spoke with the calm self-assurance of someone who has something to say but nothing left to prove.
“We are in a credit crisis the likes of which I’ve never seen in my lifetime,” Mr. Forstmann warns. He adds: “The credit problems in this country are considerably worse than people have said or know. I didn’t even know subprime mortgages existed and I was worried about the credit crisis.”
I’m seeing more and more of these kinds of comments on the internet and (surprise, surprise) in MSM. It seems to be more and more drum beats for “preparation,” but to prepare for what isn’t exactly addressed. This morning the headlines read that Americans aren’t prepared for an asteroid hitting the earth, and I thought to myself if they follow this advice, they might be prepared for when the banks close, or when they can’t get/afford gas for their SUVs to escape their over-priced McMansions, or when they find out they are maxed out of their plasic, or when there’s nothing in the grocery store because the truckers can’t afford to deliver the goods.
When pulled my crystal ball from its velvet box this morning, it was glowing hot. I saw the date July 8 for some sort of financial blow-back, August 6 for earthquake, October 1 for politico/economic lapse, and December 12 for earthquake again. The names Joe Biden (possible VP or Prez Candidate?) and Ingrid Betancourt (recently released from Colombia) looming large in future politics.
You can take your tin foil hats off now. Everything’s going to be OK.
“I saw the date July 8 for some sort of financial blow-back, August 6 for earthquake, October 1 for politico/economic lapse, and December 12 for earthquake again.”
Just to be prudent I’ve marked it on my calender . . . .
America’s Best Places to Raise a Family
http://promo.realestate.yahoo.com/americas-best-places-to-raise-a-family.html
Raising a happy family requires more than just a good school system. With that in mind, we ranked the remaining counties using 10 data points: cost of living, graduation rate, standardized scores, home price, property tax rate as a percentage of median home price, percentage of homes occupied by owner, per-capita income, air quality, crime rate and commute time.
I’m gagging after reading that story. How to raise Stepford children.
“It’s the best of the best,” says the 47-year-old Schwartz, also a Hamilton County councilman, referring to the area and its quaint hamlets, low crime and desirable cost of living. “It’s a great place to raise your family. It’s safe, it’s fun, it’s affordable and it’s growing.”
It’s qualities like these that landed Hamilton County atop Forbes’ list.”
Just another example of how everyone thinks growth is a wonderful thing. “It’s affordable and it’s growing.” A system that works only when there’s constant growth has another name - cancer. The brainwashing is complete.
“A system that works only when there’s constant growth has another name - cancer.”
Excellent!! I’ve been searching for a retort to the “growth is good”, “growth is unavoidable” and “you can’t stop progress” crowd. Thanks.
You’re welcome, wish it were original.
Lost, may I make a suggestion to you to make money with your alternate lifestyle.
Cut costs!!!
If you should open a general store and buy no-name goods less than the brand names, I see a future for you.
The local general store prior to the 1940″s sold grains in barrels at the general store. Clothes patterns and cheap sewing machines were sold for the fabrication of clothing.
Just a thought for those disconnected from the grid.
lots of luck!
Lost, I already buy almost everything wholesale, except a few grocery store items, including my coffee (very good). Except not for gas, but I bike a lot.
The real key is to figure out how little you really need and live accordingly. I’m not disconnected, at least not from the grid.
The real secret to living a better and longer life is to unplug your TV, lots of free time then. IMHO.
Lost,
my suggestion was for you to go this route to provide something to the public.
My mother, who is 78 years old, stated that this is the way it was in the 1930″s when she grew up.
Make your own clothes, and buy no name at cost(less marketing and advertising).
You, I suspect, will be at the beginning of the next cultural wave-buy cheap, but good. It will cut out all the excessive costs. Screw NY and Hollywood marketing and advertisement.
Again, good luck.
PS: Your museum must have photos of digs and Dinos that they would allow you to place on various websites. Sell yourself and your contacts. Go for it. It can not hurt business.
Lost,
I apologize, my intent was to not necessarily be inexpensive, but offer as a business, the benefit to the public.
With the serious decline in assets and with the high costs of food, energy and clothing, daily living will become more difficult.
Someone will figure out that cutting the expense of advertisement and marketing maybe able to save some percentage of the cost of basic necessitatives. That is why I suggested the opening of a general store for no-name and bulk foods and clothing fabrication. With regard to fuel, I understand that buffalo piles can be used as an energy source or whatever.
I suspect that the new trend is costs and back to nature (pre 1940″). You may want to take advantage of it.
Regards,
Lost, I really do appreciate your concern for my future economic well-being.
Lest you worry, I want to reveal something to you:
I’m actually independently wealthy**. I don’t worry about things like most people would. I have everything I need and suspect I always will. But thanks for your concern, I really do appreciate it.
**(I’m rich in stars, hiking boots, coyote calls, old beat up jerry cans, pinion trees, REI tents, lizards…)
Lost,
I had the same exact attitude in my 20’s and 30’s as a baby boomer. Money wasn’t important, but changing the world was, though I must say I was not a radical. Just a cog in the wheel doing what I thought would help people. This is why I stayed in worker safety at the ground level instead of using my position as a stepping stone to upper management and greater income.
I am now 60, and I have come to realize that saving others and forsaking my own welfare was somewhat naive.
Things look different now!
Whatever… Why is youth wasted on the young. Great hopes and dreams without hindsight! Guess I am just envious of your future prospects.
Well, I wish you luck,
lostcontrol
This list looks suspicious to me. Sarasota is massively over-crowded, and constantly has water problems (sewage leaking into the water supply).
On the other hand, it has a zillion empty condos and houses people are trying to unload. I want to know if the author(s) of this article, or the people compiling the list, have real estate interests in the any of the places they’re promoting.
Also, these “Best Places to Live” articles do immense damage when people people take them seriously. Tampa was on several of these lists for a while (supposedly coincidentally with massive local PR campaigns hawking the area), and hundreds of thousands of Yankees suddenly showed up, thinking it was El-Cheapo, a fictional paradise. Within five years, they turned it into Newark.
Forbes did a similar article on the wine country of Colorado’s North Fork Valley (Delta to Paonia). It was amazing how the RE pushers used that to sell their product. It was reprinted in local newspapers and copied and placed in every RE PR piece imaginable, repeated endlessly, every time I would call on a property I got the spiel.
And I like the way you dealt with the bootlegging of your name.
I always cross my fingers before reading one of those “best places to retire” articles, hoping this area won’t be included. So far, so good.
Thanks. The real estate pushers destroy everything, don’t they? I think you’ve previously expressed your opinion of developers.
I don’t hate developers, just greedy do-whatever-it-takes developers. Heck, there are some nice places to live that wouldn’t exist w/o developers.
I drove to a national park yesterday, 200 miles RT.
I kept wondering where the traffic was. I probably saw 20 cars the entire trip. In another era, just last year even, it would’ve been non-stop traffic.
A new word has been coined: “staycation”.
Now’s the time for contrary thinking and to take those trips that were put off because of crowds.
We are becoming our parents (grandparents?) who went on a family vacation once a year to not so far places, had a little pull trailer and stayed in campgrounds. Back to the 60s/70s.
Yet another reason to live where you want to be, or be where you want to live…
Unless one drives a very long distance on his vacation and has a gas guzzler the increase in his transportation expenses may be offset by a reduction of his lodging expenses.
Motels need to fill their rooms and may begin offering interesting enticements to the few travelers on the road.
If you’re completely risk-neutral (like me), here’s a trick that works extraordinarily well on average.
After 2pm or so, call all the nice hotels or B&B’s in the destination you are heading to, and ask them for a deal. Say you’ll call them back. You’ll get at least one great deal.
In the worst case, there’s always a crap hotel somewhere you can crash at but most likely, you’ll NEVER have to.
At 2pm, they have a choice between a guaranteed guest, and nothing at all. They bend every single time.
Great idea! Thanks.
I have never booked a hotel in my life while going on road trips (except perhaps the initial night) and I have always found nice stuff, and even managed to stay at hotels far outside my league once in a while.
Think of a booking as guaranteed insurance for a room.
The moral is obvious.
Another bubble popping: Googly Woogly.
Looks like there’s gonna be a lot of pain coming down the poopchute to the Woodside-Atherton-Shallow Alto crowd.
BWAHAHAHAHAHAHAHAHHHHHHHHHHHHHHHHHHHHH!!!
“Buffett once told me there are three ‘I’s in every cycle. The ‘innovator,’ that’s the first ‘I.’ After the innovator comes the ‘imitator.’ And after the imitator in the cycle comes the idiot. Which makes way for an innovator again.” So when Mr. Forstmann says we’re at the end of an era, it’s another way of saying that he’s afraid that the idiots have made their entrance.
“We’re in the third ‘I’ for sure,” he interjects an hour after first introducing the “rule.” “And that always leads to something. Innovators don’t just show up. Some disaster takes place because of the idiots, and then an innovator says, oh, look at this, I can do this, that or the other thing.” That disaster is now.
And he continues:
“In other words, ‘In order to fix what’s going on in the United states there’s going to have to be a certain amount of pain. The market’s going to have to clear somehow ….and it’s hard for me to believe the market gets fixed without’ upheaveal in the financial system, the economy, and the country as a whole. ‘Things are going to fail. Enterprises are going to fail. The economy is going to slow’, he warns.”
Opportunity will abound for those flush with ready cash and armed with information.
“Buffett once told me there are three ‘I’s in every cycle. The ‘innovator,’ that’s the first ‘I.’ After the innovator comes the ‘imitator.’ And after the imitator in the cycle comes the idiot ??
Boy oh Boy…That is sure applicable to what’s happened in the home building industry over the last 5 years…….
I’ve have thought of shorting Google but never pulled the trigger.
I might have to pull the trigger on this trade.
I am going to enjoy watching the smug Googleites confront reality.
Mike
You shouldn’t ever short until the fever breaks.
Some realtor-type was just on the Fox News “Cashin’ In” show. Of course, it is a great time to buy, “.. . . best buyer’s market since World War Two.” But it is a great investment only if you are in it for the long term. So, in the short term, I guess that its value will continue to plummet, but it will eventually recover to current prices or maybe higher? I think that I will skip that whole “short-term” plunge step.
I am sure that he is usually a tool, but Jonas Max Ferris disapproved of the “buy now” advice and went off on the TV improvement shows. He said something like your $50,000 kitchen will diminish in value every year until it reaches zero. And that the stainless steel fridge will be as unwanted as an avocado green one. Nice.
I read an article about 2 or 3 years ago saying stainless was passe. I’m sure it was in a glossy high-end house mag with lots of ads for the latest, just another way to get you to buy, have to be on that cutting edge.
I never did like stainless, hard to keep the fingerprints and dog nosemarks off. I was looking at an ad for a house for 70k, a real dump, but it had a stainless frige. And you can even buy a stainless microwave at Lowe’s - 60 for the regular, 100 for stainless.
To me, being on the cutting edge implies possible bloodshed and pain.
However, a well made stainless steel sink is great - my parents one has lasted more than 40 years that I am aware of - has always stood up to whatever we have done to it and cleaned up great. However, I am scared of losing my deposit on the ceramic/porcelain one that my landlord has - it just doesn’t clean up right - anyone got a good idea how to remove rust stains?
Bar Keepers Friend (sold where the usual canned abrasive cleansers are sold) instantly gets rid of rust, and polishes the stainless.
I meant to say polishes the porcelain. It works on both porcelain and stainless. If I recall, it isn’t toxic either. Just use it like any abrasive cleanser.
“anyone got a good idea how to remove rust stains?
One way is to use salt and lemon - pour a generous amount of table salt over the stain, then apply fresh lemon juice. Leave it for several hours (overnight is best) and scrub off.
IIRC, there are also several proprietry brands as well - like ‘Whisk Rust Stain Remover’, ‘Barkeeper’s Friend’ and ‘The Works’.
mild acid works.. several kinds are common.. many commercial products like Naval Jelly use phosporic.. Or use lemon juice (which contains some citric acid).
If you wanna see something neat, find the rustiest bolt or bit of iron you can, dunk it half-in half-out of a cup of water along with one package of KoolAid (most of which is citric acid, a solid, plus some food coloring) and leave it overnight or longer.
The submerged part will have a soft black coating.. wirebrush that off.. clean iron underneath.
OH god, and we drank that stuff by the gallons as kids. YIkes, Koolaid. Oh and when on the swim team, we just poured the open Koolaid packet into our mouths.
Didn’t think a thing of it, nor our parents.
Straight sugar shots
“The eagle and the dragon”
Nice reporting from UK:
http://www.telegraph.co.uk/portal/main.jhtml?xml=/portal/2008/07/05/sm_america05.xml
Copy above url onto your browser search and click through to read article.
Looking for online calculators to determine monthly takehome after Federal income taxes, Virginia state taxes and SS/Medicare withholdings assuming $425K/year and no deductions.
Thanks.
Somebody looking at $425K a year wants online calculators and tax advice? Good grief, man. All you really need to know are three things (max Va. tax rate, max Fed. tax rate, and $ cut-off for SS/Medicare) that you can find with a few google clicks. What is this, Superintendent of Fairfax County Public Schools?
More important (and more inside) information is that restaurant and fast food meals in most localities in Va. are taxed 9-11%, real estate taxes tend to be lower than the national average, personal property is taxed, and the Virginia State Police are everywhere on the highways, and have a well-deserved reputation for porcinity.
My accountant is overwhelmed by my primary and secondary businesses, and I had always left these matters to him and have not looked at tax tables in over two decades; I had not realized how much of this information is so readily available - and how high taxes are for employees!! Holy Cow!!
Anyway, there are more important things than a paycheck, such as family health, and that is what is concerning me right now.
Thanks for the reply and information.
hello…..a long time lurker….loved what everyone has to say here…hope this thing doesn’t turn up in ‘bold’…up here in the Seattle area….and it is still nuts here….neighbor across the street bought in 89 for 190k…sold last week for 409k…in 3 months from an asking price of 440k
Graham….Rove…..Lieberman….and Charlie Black.
Do voters need to know anything more about McCain and his “brain trust” before they make up their minds?
To me, this group tells it all.
This from HuffPo, but it does say it all, doesn’t it. YIkes.
And Graham, is really a hairdresser dressed up as a politico.
“Fire in the Discotheque”
http://bloomberg.com/apps/news?pid=20601109&sid=apzVtzPXqSc0&refer=home
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nevermind