Gary Watts chimes in about bailouts of Freddie and Fannie at the OC Register and he finds it funny that no one learned from the savings and loan debacle.
“Should the need arise; the government — and ultimately the taxpayers — will have no alternative but to bail them out. In the end, it will be less expensive to rescue these two lenders than face the disastrous consequences. This was done in the ’80s with the savings and loans. Isn’t it funny how history keeps repeating itself!”
This isn’t funny. It wasn’t then and it isn’t now. Instead of a bailout, I’d rather see bonuses repaid and criminal actions prosecuted. Fannie and Freddie didn’t get into trouble by accident, through “bad luck”.
RE: Instead of a bailout, I’d rather see bonuses repaid and criminal actions prosecuted. Fannie and Freddie didn’t get into trouble by accident, through “bad luck”.
I’m with ya on that one, SD.
Nobody, of any consequence, other than the pair at BS who just got rounded up, seems to be bearing the criminal onus of this immense debacle.
Congress can roust the CEO’s of Big Oil, but when it comes to dragging the likes of Franklin Raines into hearings, there nothing but silence, because the disclosures of huge pay-offs and and campaign contributions will blow everything out of the water.
I think taxpayers are getting some idea….Yesterday went shopping in Westchester, Central Avenue. For all the years that I’ve had to drive there on Saturday’s I’ve never seen what I saw yesterday. -Space! Usually you can’t drive, you crawl through the avenue that is lined with strip malls, parking lots are packed and usually you witness at least one episode of rage over parking issues. Yesterday most lots were filled to maybe 70% capacity. The roadway was free and clear. It was more quiet than a typical Sunday morning in the past. I think people are getting it and they don’t have it.
This is odd to see no comments in the bits bucket.
My question involves taking out a HELOC or line of credit on your current home and buying a house for cash in a foreign country, Mexico in particular. If that person either walks or goes BK, is that home in the foreign country free & clear?
I would think it is. What a interesting transfer of funds.
Unfortunately, I bought a house for cash, cash.
The economy south of the border that is dependent on tourists is suffering; the asking prices for homes have dropped 10-15%, but there is NO activity.
An interesting story - My ex-maid from Mexico, used to clean about 8-10 houses per week making about $600/w. ( A great worker). All her “patrons” have cut back just this year, so she is now back in Mexico working as a nurse making $20/w.
My understanding is that you can’t purchase property outright in Mexico if you are not a citizen. There’s some legal maneuver where you “lease” it for 100 years through a trust or something like that.
That restriction only applies to land within 100 kilometers of the border, or 50 kilometers of the ocean. There are also restrictions on land that has oil under it.
“My question involves taking out a HELOC or line of credit on your current home and buying a house for cash in a foreign country, Mexico in particular. If that person either walks or goes BK, is that home in the foreign country free & clear?”
In a prior recession I seem too recall stories of multimillion dollar homes bought in Florida for just that purpose. Seems Florida allows a person who files bankruptcy in another state to keep their Florida residence free and clear and untouchable by out of state creditors.
I had some clients do this when Connecticut instituted an income tax. They purchased a home in Florida and declared it their main residence. They could afford it.
I know several people in NY that have done this. But now one couple has rented out their FL residence after unsuccessfully trying to sell. So I would think that “main residence” designation would be over.
Maybe it depends on which state you are trying to withdraw residency from, but you don’t have to buy real estate in another state to call that state your residency. You can rent. The former state, presumably with higher taxes, would not tax you.
My state of Arizona taxes me on all my income, even though I earn it in Maryland. I’m certain Califoria would do the same thing. In Arizona’s case, I get a tax credit for paying Maryland income taxes. In California’s case, I get no credit for income earned in Maryland. But I would get credit for income earned in Arizona if I was working in Arizona but living in California.
Kind of confusing but Turbo Tax is good on these issues. In April of 2006 I had a permanent residence in Hermosa Beach, CA. So I paid California taxes but got a tax credit for the taxes I paid on my income I earned in Arizona. At the end of 12 months I moved back to my same apartment unit I rented in Arizona and used that address as my permanent address. No longer paid California taxes.
The sanctuary state concept would seem work best if Florida was the only state offering it, just as Nevada made out when it was the only state offering gambling. But the sanctuary concept would probably fall apart, as did the Nevada gambling concept, if all the states began offering it.
About 10 years ago there was talk of Montana doing that. I forget the term but it would allow offshore-style banking. It was kinda crazy and didn’t go anywhere, and I still don’t understand how a US state could do that.
Isn’t Florida’s big attraction a homestead exemption for any primary residence, no matter how big? I thought Texas had that as well, which allowed John Connally to keep his ranch in BK for example..I think MT’s exemption is 200k now.
I’ve been following the posts here for a few months, and housing bubble writings for a couple of years now. I have a couple of thoughts, and a question (maybe a topic for a future post from Ben?)
Currently I live in Scotland with my wife. This time last year we moved from San Francisco where we had been renting a beautiful 2 bedroom flat in Noe Valley for $2100/month since 2003. We had looked at buying, and had even viewed a few lofts and flats in the mission and dogpatch, but I was having trouble getting my head around paying $800k to $1m for a loft that we’d then have to pay HOA fees on, as well as the $4k/$5k mortgage plus taxes. We could afford it, but it seemed a ridiculous.
We’re planning to moving back this time next year, and want to buy a single-family home in Oakland. I’ve been researching the market a bit, and we have a few friends who have bought there in the past 6 months. The market is definitely slacker than it was, but they were still faced with competition to secure their homes, and both paid over the asking prices.
So, from a personal point of view, I’m having trouble seeing the bust, at least in Oakland (we have some friends who bought a place in West Sac, the guts are strewn around for all to see there!) My wife, who grew up in the SF Bay Area, parrots the real estate crazies by telling me that prices never ever go down in those desirable neighborhoods, we’ll have to suck it up, or we’ll have to find the next up and coming neighborhood and buy there. I don’t agree with this, but it’s hard to point at real data about specific neighborhoods. My theory about why these markets haven’t crashed hard yet is because of people like our friends, who have solid incomes but haven’t been paying close attention to the market, they are amongst the last fools, (too bad for them,) who think they are being smart because the market has slackened a bit. Their realtors are more than happy to push that idea of course, since they are desperate to sell something to a qualified buyer.
So I’ve started to look at specific houses in Oakland on Trulia, trawling through the neighborhoods to try and find homes that sold a few times over the past 20 years. There appears to be only 10 years worth of homes sold data in there, not enough to get past the start of the last boom. But what I AM finding is eye opening.
http://tinyurl.com/6zcp4h looks pretty nice, in the hills, sold in 1997 for $295k, again in 2004 for $778k and now listed for $799k. It’s been ‘extensively’ updated which should add a few bucks to the value, but not 170% in 11 years. Using CPI $295k in 1997 is $381k today. Question is - will it see this level again? Should I expect this home, or one like it, to price at $400k or so in the next few years?
So my question is - when is the Piedmont / Montclair market really going to turn? I’m assuming the same is true in other affluent neighborhoods around the country, they are trailing the McMansions by a long way, but are presumably living on borrowed time.
Also - anyone know of a good resource for searching for actual sales records in Oakland over the last 20 years? I’d like to be able to do a search along the lines of ’sold for between $490,000 and $510,000 in 1999′?
You have to look at the distribution of sales versus listing prices. If the distributions are roughly equal, then you might have to wait longer than if all the action is at the bottom of the market (that is, the sales distribution is shifted to the left of the listing distribution).
I believe your intuition is right: the best buyers (previous renters, great cash and incomes) are likely purchasing the worst homes right now. That will not continue.
I would not advise purchase in California at this point. In two to four years maybe, but not until the air is out of the bubble.
Realistically, there are no non-service sector jobs in California to speak of. Manufacturing is gone overseas or staffed by illegals.
The creative arts, technology and Hollywood are seeing the same phenomenon as more movies and technology are developed off-shore and only imported back here for consumption.
The collapse of the fantasy-mortgage and banking business will reduce the California economy to desperation very rapidly.
Unless you are in the government, or a business serving the government, or in medical, we will see a continued slide into the abyss for California.
The only thing I would buy in California right now is a gun and ammunition. You will need it!
RE: The only thing I would buy in California right now is a gun and ammunition. You will need it!
Good advice, Joe.
When my kid left for SD a month ago, I gave him my Winchester Defender 12ga. and a Colt .45auto as going away presents.
He said when he opened the gun case at the airport check-in for inspection, there was quite a murmer in the line behind him when everybody looked to see what was in it.
Good advice Joe. Fact is the only things other than food and gas I have bought recently is a shotgun and ammo.
One more thing to add for notacrime, as CA revenues drop in lockstep with the deflating bubble economy watch the taxes increase across the board. The state and municipalities have burdened themselves with far too many expense obligations. Some of these are tied to strong union contracts. The Govenator tried to get a handle on the run away spending a few years back and was politically out maneuvered by the unions. I anticipate CA taxes will rise substantially to offset the inability of government to reduce spending. That may figure into your decision to return.
Husband and I rent in Oakland, on the Piedmont border. Are you aware of the spike in crime here? It’s no longer the neighborhood it was when Jerry Brown was mayor and the economy rolling along. I believe it will only deteriorate. I wouldn’t say that I’m afraid to walk the streets, but there’s a lot of stress on the small businesses that make this area so wonderful–shoplifting, gang members hanging around, not to mention restaurant takeover robberies.
I gave up looking for a home in Oakland/Berkeley a year ago because prices just didn’t seem to be coming down. As of this week, we have an accepted offer on a very nice, small, energy-efficient house in Eugene. We will be paying cash acquired mostly from the 2005 sale of our Castro Valley home, thanks to this blog.
I don’t know when the market is going to go south in the expensive neighborhoods of the Bay Area, nor do I know a source for Oakland data like you request.
But I have lived here for 48 years and can tell you that the Bay Area is not immune to economic slowdowns or real estate busts. I would expect the same forces now at work throughout the country to eventually take effect here.
I can also advise that there are reasonably nice places to live in the East Bay that have taken quite a tumble in price lately. Hercules and Benicia, for example, both are dropping fast. In some ways, they are better places to live than Oakland, IMHO, even the supposed wonderlands of Montclair and Piedmont.
The cheapest way to live in the Bay Area is to rent. Get a rent-controlled place in the City and hunker down. It gets cheap over time.
Thanks for the feedback - good to hear I’m not crazy!
The thing is, we could afford to buy one of those $1m places, our annual income is over $250k. But that’s still not buying us much! It seems to me like a couple making the kind of money that we are should be able to afford that 4 bed house a nice older, close-in suburb, plus the cabin in Tahoe or wine-country bungalow, and still have enough left over each month to save for the kids college etc. etc. Even by Bay Area standards we’re in the top few percentiles of income.
There really does seem to be a disconnect from fundamentals, and I’m getting pretty impatient waiting for things to right themselves in the areas that I care about.
Notacrime - have you been over to Patrick’s? (www dot patrick dot net)
Its based in the Bay Area, and I’m sure there would be some people there who could give you ‘word from the streets’ advice.
Not that you wouldn’t get great advice here, but, you know, horses for courses and all that.
Yeah that’s one of the sites I started reading a few years ago when I first starting trying to figure out why anyone would want to buy a house at those prices. Seems like it ended up being a bit of a link-dump without any added insight. Haven’t been there in a while though, will definitely go check it out, thanks.
I also am looking in the North Oakland and SF area. I’m finding Redfin very useful in giving a sense of what is happening with house prices in Oakland and the Bay Area. Prices are definitely coming down and show no signs of stabilizing. You can create and save your own searches tailored to your needs, and have them email you updates to your listings. Within each listing is a “Price Listing History” and a “Sales History” - I’ve checked out many in the most desirable neighborhoods and most are showing big price drops from 2006 and 2007 back to 2005 prices, and there are usually price reductions from the original listing prices as well. Your friends most likely were bidding up an already significantly reduced price.
If you ask to be emailed updated listings, you see many reduced prices. IMO the Bay Area is going down at least 20-25% more, but will likely take a couple more years. Remember, alt-a resets are just starting to kick in.
I’m past the point of being amazed at the actions of our governmental types. They are so deep in denial that they really believe they can make things better if they just keep refusing to recognize the magnitude of the problem out there. We have a major global error in our economy that can only be fixed with some major pain for all (not that they care about the little guy).
If there were only enough influential senior types out there who were courageous enough to admit the problem and institute the painful reforms - We would be in far better condition for it and our kids would thank them. I don’t see any sign from any party that shows thay are willing to do this…
The trouble is, we need far more politicians and senior government oficials to sign on and step up. R.P. by himself just gets the title of “quirky” at best from the M.S.M.
I suspect that we’ll get action at the 11th hour only because that particular iteration of pols and party in power will still be in office when the event occurs and will be blamed for it. THEN we’ll see frantic action - IMHO…
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Comment by Muggy
2008-07-13 07:39:18
“They are so deep in denial that they really believe they can make things better if they just keep refusing to recognize the magnitude of the problem out there.”
They aren’t in denial. Some of these guys know exactly what they’re doing.
RE: They are so deep in denial that they really believe they can make things better if they just keep refusing to recognize the magnitude of the problem out there.
The front page story in the biz section of today’s edition of the Beantown Glob, says we’re not even in a recession!
The boobs puttin’ this fish wrap together never cease to amaze me.
“Merchants of Debt” (article buried in the bowels of the A section of today’s SD Union Tribune)
Q. Why do they worry so much about whether these bonds will sell?
A. These bonds are certain to sell if they let the market decide on the interest rate, but the prospect of discovering the market’s risk premium during a solvency crisis and in the immediate aftermath of a vigorous high-level discussion of the mythical GSE debt guarantee is too scary. Thus they are trying to peddle the debt in advance over the telephone, and making provisions for the Fed to buy it at the yield they want the mortgage and bond markets to see, just in case private market participants won’t take the bait at that level of yield.
There is no reason this debt issue would not sell in its entirety without Fedsury backstopping, but the potential implication would be revelation of a lack of faith in the GSEs coupled with a crushing jump in mortgage rates on GSE-guaranteed loans. I am unsure about the possible implications of a higher-than-expected yield on the debt issue for the financial positions of the GSEs.
Could anyone who understands please explain to me how the approach described in last paragraph posted below would not constitute a government guarantee of GSE debt?
WASHINGTON – Treasury Department officials were working the telephones yesterday to make sure that Freddie Mac, one of the nation’s two troubled mortgage giants, will be able to sell $3 billion of its securities tomorrow in a previously scheduled sale that has now become a crucial test of investor confidence.
Although officials said they were optimistic the sale would be a success, anything less would pose new questions about how far the federal government is willing to go to prop up Freddie Mac, its sister Fannie Mae and other faltering financial enterprises.
Officials spoke yesterday with major banks that usually purchase securities, like the short-term debt offered by Freddie, to ensure that these firms still plan to place bids tomorrow. This was part of an effort by officials at the Treasury, the Federal Reserve and other agencies this weekend to gauge market sentiment and check that investors still have faith in Freddie Mac and Fannie Mae after the steep decline in their stock prices last week.
At the same time, Treasury officials were considering several options to backstop the sale in case they discover that interest in the securities is flagging, according to sources familiar with the discussions. Under one alternative, the Treasury or Fed would purchase the securities directly.
Other possibilities are allowing the Federal Reserve Bank of New York to buy the debt indirectly through private brokers or asking private firms to purchase the debt while extending to them either a public or private assurance that the government would back the securities if Freddie were unable to cover its obligations.
Rates could rise on Freddie, Fannie woes
If your mortgage is owned by agencies, though, don’t panic
By Amy Hoak, MarketWatch
Last update: 4:06 p.m. EDT July 11, 2008
CHICAGO (MarketWatch) — Get ready to see mortgage rates rise somewhat as Freddie Mac and Fannie Mae are buffeted by turmoil, but don’t sweat it if you have an existing mortgage that may be owned by the agencies, industry observers say.
Fannie and Freddie, which are sponsored by the government, help keep mortgage rates more affordable by buying up loans in bulk and making sure lenders have stable access to capital to issue loans to consumers.
But the financial markets have been rapidly losing confidence in the two mortgage giants and that doesn’t bode well for their willingness to lend money to Fannie and Freddie at reasonable rates, said Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter. If it costs more for the GSEs to raise capital, costs are likely to trickle down to the borrower.
“This confidence crisis or panic doesn’t help mortgage borrowers, since if investors won’t lend money to Fannie and Freddie at a good rate, it will have a detrimental impact on mortgage rates offered to borrowers,” Cecala wrote in an email response to a question. “So we could see some slight rise in mortgage rates as a result.”
He doesn’t, however, expect the interest-rate disruption to be long lived, “given the government’s willingness to support Fannie and Freddie at all costs.”
The government helps keep mortgage rates affordable, not houses. In other words, the government helps people get into more debt at a lower interest rate rather than less debt at a higher interest rate. What is that old saying about “refinancing an interest rate, but not the principle…”
Anyone who trusts these people to fix this mess is insane.
These articles provide a rare direct glimpse into the willingness of the Fedsury to directly pump in money to the housing market in order to keep prices propped up (a direct effect of suppressing the risk premium on GSE debt).
BOSTON (MarketWatch) — Freddie Mac shares ended a wild session Friday down about 4% after earlier losing more than half their value as the market battled the federal government for the hearts and minds of investors.
Shares of both Freddie Mac and Fannie Mae were pressured by prospects that the mortgage giants, which help make the American dream of home ownership possible for millions, will need to be bailed out by the U.S. taxpayer.
A report that the Federal Reserve will allow the mortgage giant to access the discount window to relieve capital pressures later rallied the shares from more than 50% losses into positive territory, though they later slipped back into the red.
…
The government “most assuredly would back” Freddie and Fannie in light of the hand that the Federal Reserve took in engineering the acquisition of Bear Stearns Cos. by J.P. Morgan Chase & Co. earlier this year, said David Ader, a government-bond strategist at RBS Greenwich Capital, in a note to clients.
The debt of Fannie and Freddie rose sharply Friday morning as buyers swooped in amid growing speculation that the U.S. government would backstop the struggling companies’ obligations. See related story.
Agency debt with five-year maturities saw the biggest gains in early New York trading, with the premiums demanded by investors falling as much as 14.7 basis points over Treasurys on the Freddie Mac 3.75% note due June 2013, according to TradeWeb.
Two-year maturities tightened between one and seven basis points, while 10-year notes came in up to eight basis points. A basis point is the equivalent of one one-hundredth of a percentage point.
If the government were to make its implicit guarantee more explicit by stating its support of agency obligations, including the mortgage bonds they guarantee, these securities would benefit since any lingering doubts about their safe-haven status would be removed.
The prospect of injecting liquidity into the GSEs is doing little to support the dollar. It looks as though that pesky macroeconomic budget constraint has again reared its ugly head, offering policymakers a choice between supporting Uncle Buck and propping up the GSEs.
The US dollar dropped to within a cent of the all-time low against the euro on concern losses at Fannie Mae and Freddie Mac may deepen even after policy makers said the companies aren’t facing a government takeover.
Treasury Secretary Henry Paulson said the government is supporting the two largest buyers of US home loans in ”their current form.” The euro touched a record versus the yen as stock markets pared losses.
”The concerns about Fannie and Freddie just highlight how bad things are and how vulnerable the financial system is,” said Benedikt Germanier, a currency strategist at UBS. ”It’s not supportive for the dollar.”
Years ago, did anyone read the book “The Panic of ‘89″? I recently saw it an found it an to be an amazing parallel to the Central Banker’s attempts to save this sinking ship. Ironically, the book makes the Fed look like heroes.
FYI, The commercial foreclosures are about to blow NYC real estate out of the water.
DC- Any predictions about how much pain the dual loss of Fannie and Freddie will cause to the DC area?
I can’t imagine Freddy and Fannie going BK will have much impact in DC. The “bailout” will assure every overpaid drone in those two institutions will get to keep his/her job. Just the few at the very top won’t see their usual bonuses. Even if they merge the two institutions there will be a remarkable lack of redundancy and few jobs will be lost.
“Ironically, the book makes the Fed look like heroes.”
I am guessing it focuses on minute-by-minute details of the policy response, without giving much insight on the policy history that brought about the crisis?
The percentages are higher, but I ‘m sure this has been true for years. Down sizing will not be a choice, but a fact.
Many Retirees Face Prospect of Outliving Savings, Study Says…Nearly three out of five middle-class retirees will probably run out of money if they maintain their pre-retirement lifestyles, a new study from Ernst & Young has concluded.
The study, set to be released tomorrow, finds that Americans will have to drastically reduce their standard of living before retirement to live comfortably, or even avoid destitution, later in life. Middle-income Americans entering retirement now will have to reduce their standard of living by an average of 24 percent to minimize their chances of outliving their financial assets, the study found. Workers seven years from retirement will have to cut their spending by even more — 37 percent.
Yep. I know people who retired only seven years ago who are totally screwed. Their “financial advisors” (people who can fog a mirror) then promised them 10% annual drawdowns in their investment capital.
A ten percent drawdown in a three-or-four percent world guarantees destitution.
“Most people, if they look at their life expectancy and they think they will live to 90, they are nuts to retire at 60. They’re going to be living in poverty at 80″
I plan on working till 75. My family is very long lived and consistently lives into their 90s. This idea that you should retire at 52 doesn’t work for me. I’d be bored out of my mind within 6 months.
I see a lot of folks out there who just expect that they’ll have the income somehow or don’t even think about it because they’re too busy spending. These are going to be some sad, angry folks in a couple of decades. I’m sure they’ll demand legislation to “fix” their little problem and they’ll probably get it. However, will the U.S. be in a fiscal condition to pay out by then?
Yes, but working past 70 is a solution only for those that have taken the time to learn new skills and invest in themselves. It is an option/solution for individuals - not an entire generation.
The average worker drone probably won’t even have that choice available to them. Especially when one considers the relatively young average age of our immigrant population and the global workforce in general.
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Comment by combotechie
2008-07-13 07:28:27
“Yes, but working past 70 is a solution only for those that have taken the time to learn new skills and invest in themselves.”
Agree, but isn’t that true of everything? Those who are well prepared for life do well, the others don’t.
Comment by Jwhite
2008-07-13 07:34:52
That’s why there is and always will be strata in our society - Those who can adapt (plasticity)will do well, those who can’t - won’t. We used to be a nation of adaptees - and we could be again. From what I see and read, many companies are starting to wake up to the fact that older workers are pretty reliable and cost effective and many of the younger generation are far less so. As long as the older ones don’t slide into functional obsolescence.
I think that a majority of skilled workers will have opportunities in the future for occupations that may not be top shelf, but will help pay the bills. I also think the government will be forced to lift the earnings cap that reduces SS benefits and allow workers to earn far more before their benefits are reduced.
I’d like a lump sum payout option. I think I could do better with my money than they can - particularly since my account is empty anyway - except for the rustling of 2% government paper…
I plan on working until at least 67 myself. I think I would be bored out of my wits if I stopped working. Maybe at age 59 I will reassess my situation and want to work until at least 80.
I try to stay in good health myself. My number one thing is avoiding obesity and I have a good handle on that. It’s calorie restriction and cardio work mostly. Fitness swimming when I have access to a cool enough pool, otherwise the lifecycle and brisk one hour walks on the treadmill. Lots of Green Tea and moderate supplements help too!
I hope to be able to go back as a permanent employee in five years and stop this long distance traveling. I have two Arizona places in mind where I could be in bicycling distance to work and only need a car on weekends. I worked in those two locations before and I like the people who work there. Besides, the work is very interesting and fun.
This will become a huge social issue very soon. I know this sounds very opinionated, but the Cult of Retirement is a total sham invented to get people to let the boyz play with their money.
Even though every single day pages like Yahoo! Finance have a shill story with a picture of frolicking seniors - the reality is far different. Come to the big city and watch actual seniors scurry to the grocery store and avoid getting run over or otherwise harassed.
Those seniors toting their little grocery carts (my mom is one of them) are from the last of the saving generations too! Imagine how long those that follow them will last - particularly with the expectations they have.
Scary insight — mainly because it sounds entirely plausible. The next thirty years will provide confirmation, as we learn what share of the 401(K) generation achieves a retirement standard of living anywhere close to the first wave baby boomer generation who got big social security checks in exchange for minuscule contributions to supplement their generous defined benefit pensions.
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Comment by aladinsane
2008-07-13 09:06:50
I wouldn’t be too harsh on the oldest boomers…
They’ve been paying into social security since 1964 (ouch!)
Comment by Bill in Maryland
2008-07-13 09:31:06
Out of economic necessity, my three sisters will continue working until they drop. This may or may not be the pattern with the rest of the boomers. In case most boomers postpone retirement, there will be more consumer spending than anticipated, which could be good for the economy.
In my case, I like taking luxury vacations. I pay the way for a couple of my sisters to go along. Currently it’s a week at a time but I will expand it to two weeks eventually.
Eight years ago at age 41 I started worrying about age discrimination. But so far I have not felt any age discrimination. In fact, my client between 2003 and 2007 and its parent company (current client) value my work and have mentioned that I’m important to them.
I think many Americans, myself included, are negative on the economy as a whole but positive about their own job outlooks, just like I am. I think this includes lots of boomers who still like to be involved at work.
Comment by lostcontrol
2008-07-13 10:37:13
Wait to you it 50 and a recent graduate or foreign worker can do/will do your job for 50% to 75% of your current salary.
Then, I suspect you will be concerned about “age discrimination”!
BTW, your clients may cut back their expenses, thereby reducing/eliminate you as a supply source. Please do not think it will not happen. It will. The only thing that seems to be growing is health care and war and in order to increase profits, wages of employees must stagnate or decline.
just my $0.02 worth.
Comment by Skroodle
2008-07-13 11:07:28
I agree with you lostcontrol. My company is downsizing and offering “early retirement” packages to those employees 50+. I know several that really have no choice - its either take the package or be layed off next month. Argentina seems to be the outsource flavor of the month. I feel for the people who are right now training their replacements.
Culture of retirement also allows business to get rid of those well paid experienced people and replace them with younger folks who get paid a lot less. Skills increase in jobs up to a point, but there is probably little improvement after a certain time. Now, if you are the sort that improves your skills and moves up, it might be worth it to keep you around. Knowledge workers are especially valuable in offices that aren’t good at documenting the past. But if you are a low level person who worked up to a higher position through training? Maybe they can just find a youngster who got that training to begin with (thanks to mom and dad paying for college, etc.) and who will do the job for less.
This goes along with my comment a few weekends ago regarding expensive retirement communities. There are many of them in my area that are priced in the $3, 4, even 500s and have gourmet kitchens, vaulted ceilings, etc. To me, that’s not downsizing. And I can’t believe the market is as big as it appears for this kind of retirement living. I think this is another area where people are “told” they can afford it and just believe it.
“I think this is another area where people are ‘told’ they can afford it and just believe it.”
I’m trying to present countering arguments, backed by data, to ward off the financial wolves attempting to prey on some of the older folks I work with. There’s an age - sixty on up - that brings out the “financial advisers” who want to get you to turn over to them your 401k and cashed out pension.
It’s a tough sell to convince people that the financial dreamakers are out to loot them. Facts fall well short in overcoming emotions.
I have a financial advisor who does not know the entirety of my net worth, precisely because I’m aware she is a saleswoman and she has tried selling me products that financial books advise against. I’m well aware she earns her money if she sells me those products. Turns out that Vanguard has less expensive do-it-yourself products that do the same thing.
Sorry, to burst your bubble, but I asked Roland Sturm (a top health-care researcher) this once and he noted that obesity rarely kills someone fast and outright. It just brings on all sorts of expensive-to-treat comorbid conditions. So, unless you can force feed the fatties to the point they pop, your plan is probably doomed.
Like every thing else in America, its called hope, not fact. And even if he is correct, how long will it take and can we all afford to wait that long for the outcome?
I think this sounds like the stock market. Your analysis may be correct, however if everyone one is going the opposite direction, how long can you wait for them to turn back in your direction?
Just Stupid me, mind wandering in the ozone again.
lol
When I was a lad, very few in the Soviet Union owned a car, it was almost unheard of…
______________________________________________________________
Russia to become Europe’s largest automotive market
“Russia is poised to overtake Germany this year to become Europe’s largest automotive market by vehicles sold, auditor PricewaterhouseCoopers LLC said.”
“The surging price of oil has revitalized the country’s economy, providing many Russians the means to buy foreign-made cars. Meanwhile, rising fuel costs have made car ownership more expensive in Europe and the U.S., where sales are stagnating.”
“Car sales in Russia rose 41% in the first half of 2008 to 1.65 million, with a total value of $33.8 billion, PwC said in a report, citing figures from the country’s customs service and a trade group. The auditor said that the figure is larger than the number of new-car registrations in Germany, but that Russia’s total includes used imported cars.”
President George Bush: ‘Goodbye from the world’s biggest polluter’
“The American leader, who has been condemned throughout his presidency for failing to tackle climate change, ended a private meeting with the words: “Goodbye from the world’s biggest polluter.”
“He then punched the air while grinning widely, as the rest of those present including Gordon Brown and Nicolas Sarkozy looked on in shock.”
It gets worse~
_________________________________________________________
“One official who witnessed the extraordinary scene said afterwards: “Everyone was very surprised that he was making a joke about America’s record on pollution.”
“Mr Bush also faced criticism at the summit after Silvio Berlusconi, the Italian Prime Minister, was described in the White House press pack given to journalists as one of the “most controversial leaders in the history of a country known for government corruption and vice”.”
“The White House apologized for what it called “sloppy work” and said an official had simply lifted the characterization from the internet without reading it.”
Actually sounds to me like he’s simply being truthful and doesn’t have to lie anymore… We ARE the biggest polluter and the line on Italian politics is true. See? We’re at the point where the truth is not welcomeor tolerated. I’d say we’re in big trouble.
My dad and I had a discussion about this a few years ago. I told him W was the worst prez in history. Keep in mind my father voted for dubya. My dad says no, coolidge was much worse. Whatever.
I feel certain other G8 Members requested all lamp shades be removed, so as not to allow him to make a bigger fool out of himself, than is already necessary…
I have been a Dem for 40 years. It seems I have been unlucky in my choices for candidates. I even voted for John Anderson. This election, I will be voting for R. Nader. As far as I know, he hasn’t taken any corporate contributions!
I could be wrong. Does anyone know anything different?
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Comment by SaladSD
2008-07-13 20:48:38
Arghhh. voting for r. nadar worked out really great for the US the last time around. You can slice and dice the Dems all you want but the GOPs and their pig trough take the CAKE.
I watched a National Geographic (or Discovery Chanel) special several weeks ago that plainly stated China is the #1 polluter by far on this planet. Seems to me they didn’t sign that joke treaty called Kyoto either. The U.S. was good ways down the list, I don’t remember where we ranked according to their study, top 10 I think.So it looks like G.W. was wrong if he said we were #1. I also read that moonbats never stop barking, turns out that is also true. No worries OwlGore can gas up his G-5 and get right on the problem,no real rush though, according to the supreme leader of the moonbats we have less than 10 years to go, before we all perish.
of course the US is down on the list, they outsourced most of their polluting production over the last years … the US finance economy only pollutes the virtual (and social) world. I’m pretty sure that if you check pollution (and energy consumption) per citizen, the US is the undisputed number one on the list.
“President George Bush: ‘Goodbye from the world’s biggest polluter’”
Bush was probably being ironic.
The whole “USA is the world’s biggest polluter” is such a crock anyway. It’s like saying China, the world’s most populous nation, is the world’s leading producer of human excrement. Well, duh. Of course the world’s most productive economy is going to produce the most undesirable by-product (although we also have the best means of cleaning up and containing it). But naturally people who are pre-disposed to be negative about America are going to focus on what comes out the back end.
As PRESIDENT he is held to a higher standard and should not say jokey cr@p. Again, I can’t believe all the “held to a higher standard” junk said about Clinton and his affair, but W gets away with anything he does. As PRESIDENT W has no place making dumb jokes like that that make our country look bad. The same people that held Clinton, better at his job as President, to a higher standard in his personal life, fall all over themselves excusing W every time he says and does things to embarass and degrade our country.
BFD! We’re the largest polluter in the world. We’re also the largest economy in the world so it is expected we would be the largest “polluter”.
I also always get a laugh out people saying we consume 25% of world’s resources yet we’re only 3% of the world’s population. Well again, we’re 25% of the world’s economy so it’s expected.
For as bad as “W” has been, Gore (the insane meglomaniac) or Kerry (the anti-patriot elitest) would have been outright disastrous. We got the “best” of all the terrible choices.
Funny, I would describe W as both an insane megalomaniac and an anti-patriotic elitist.
Frankly, if someone had intentionally set out from the beginning to utterly ruin this country in 8 years, they could not have done a better job than he has.
I recall that the housing bubble crowd, the acid rain crowd, oil at $100 a barrel crowd, the fresh water shortage crowd, the recession crowd, and the no WMD crowd were also mocked and scorned.
From The Sunday Times
July 13, 2008 US Treasury rescue for Fannie Mae and Freddie Mac
Treasury secretary looks at $15 billion cash injection for crisis-hit mortgage lenders
Iain Dey and Dominic Rushe
US TREASURY secretary Hank Paulson is working on plans to inject up to $15 billion (£7.5 billion) of capital into Fannie Mae and Freddie Mac to stem the crisis at America’s biggest mortgage firms.
The two companies lost almost half their market value last week as rumours of a government bail-out swept the stock markets, hammering share prices around the world.
Together, the two stockholder-owned, government-sponsored companies own or guarantee almost half of America’s $12 trillion home-loan market and are vital to the functioning of the housing market.
The capital-injection plan is said to be high on a list of options being considered by regulators as a means of restoring confidence in the lenders. The move would protect the American housing market, but punish shareholders in both companies.
Under the terms of the proposed move, the US government would receive a new class of shares in exchange for the capital, which would be hugely dilutive to shareholders.
Wait a minute, i thought they just said they were well capitalized? How many times will they play this game?
I’m guessing the jig is up for the manipulators.
I keep wanting to believe people, but know that I shouldn’t. One day, when no one believes them any more they are going to start telling the truth and everyone will assume that what they said was false.
So, who is going to pull some cash out of their bank on Monday just incase the other banks aren’t as “well capitalized” as they are letting on?
I for one will be pulling out my money, I have plans to spend it (on capital investments) and the last thing I need is for it to be tied up in FDIC for a few months. Forgoing 3% interest is far better “insurance” than FDIC insurance.
It is sad that you can put your money in the bank for safe keeping and the bank can “fail” and it is considered “just part of business” instead of Fraud! Particularly when said failed bank continued to open new accounts and take new deposits (that they knew they could not repay).
FDIC is just a confidence game that distorts the market and encourages trust to be placed on organizations that do not deserve it.
“The risk is that they’d be treated as equity, or partially
as equity,” Foux added. “That’s a big risk, but at 14 percent
you almost think that’s worth that risk.”
The capital-injection plan is said to be high on a list of options being considered by regulators as a means of restoring confidence in the lenders. The move would protect the American housing market, but punish shareholders in both companies.
restoring confidence for whom, for homeowners who need to be reassured of all their entitlements? I guess the best way to damage confidence in the lenders forever is to stick it to the investors that put their money into these companies. I’m pretty sure the Paulson gang is again going to punish foreign investors (mostly pension funds etc., ultimately people you can’t blame for what is happening now) and protect the Wall Street gang. The USA is already financially and morally bankrupt, so why not …
I guess from the few US citizens that still have some money left, and didn’t move it offshore in time
and probably from foreign pension funds, wealth funds etc. again - if Paulson and Bernanke spend enough on bribing the managers of these funds.
But I guess hyperinflation or some kind of Argentina-like scenario is the only option left if the FED wants to keep fighting the market. We are probably going to find out pretty soon about that.
I have a tin hat like some of the others on this website, however, If I was W, I would want to get out of town as fast as I could, so that this mess does not occur on “my watch”!
Whatever the govt does (Fed and Treasury), its called kicking the can down the road!!!
When did you decide this and how many others are making that same move? When does the next domino fall?
I have exposure to BoA (where I do my banking), Stellar One (for my business account) and my employer uses Wachovia.
I wonder how many businesses will be unable to make payroll because their business accounts were at IndyMac? How long until they can start getting their money from FDIC? How much coverage does a business account get? A company with 25 employees could easily have payroll from 50K to 100K each month.
Finance & Economics
American housing The wrecking-ball response
Jul 10th 2008
From The Economist print edition
How to deal with a glut of empty homes
TUMBLING house prices in America, rising foreclosures and a glut of unsold homes have produced a variety of unusual, even desperate, responses from policymakers. Of the 129m housing units in America, 18.6m stand empty. At 2.9%, the home-owner vacancy rate, which measures the share of vacant homes for sale, has reached its highest point since measurement began in 1956. At the end of the first quarter there were 2.3m empty homes on the market, an increase of more than 160,000 from the end of 2007. There is a vicious circle: the huge number of houses on the market pushes home prices down, and as prices decrease, mortgages become harder to refinance, leading to more foreclosures, vacancies and so on. The more homes are on the market, the less chance that prices will stabilise.
…
In prepared remarks for a speech earlier this year, Ben Bernanke, chairman of the Federal Reserve, praised programmes that seek to demolish the most ramshackle units in order to “mitigate safety hazards and reduce supply.” Unlike mortgage bail-outs, this policy does not encourage risky lending. However, it requires cities to spend money on demolition merely to lose money through reduced taxes.
“Of the 129m housing units in America, 18.6m stand empty.”
That’s astounding on a national basis, nearly 15 percent vacant. Has it ever been higher? How high will it go as the economy contracts and more people double up?
There are millions and millions of vacation/2nd homes in this country. How many people are going to give up on their winter florida home or summer cabin at the lake with todays gas prices and next winters higher airline prices; at the same time of recession and growing job losses.
“There are millions and millions of vacation/2nd homes in this country. How many people are going to give up on their winter florida home or summer cabin at the lake with todays gas prices and next winters higher airline prices; at the same time of recession and growing job losses.”
For those that move back and forth between two homes seasonally, I don’t think the higher transportation costs will have much impact. However, for those that have a lake home they like to use several weekends a year, gas costs could be a factor. But even if they’d want to sell, who’d be buying? The vacation housing market should get hammered far harder than the primary residence market.
The snowbirds will still have to heat their northern homes while relaxing in the sun. Natural gas/heating oil prices aren’t looking good for this winter.
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Comment by SDGreg
2008-07-13 07:56:19
“The snowbirds will still have to heat their northern homes while relaxing in the sun.”
Good point. Subfreezing does a number on plumbing.
Comment by Bill in Maryland
2008-07-13 09:45:30
Yeah these braggarts owning 2 or 3 homes, thinking they are financial geniuses are in a continuing big drain out of their pocketbooks. My buddy is still in denial. His Jamaica house is vacant 51 weeks out of the year. He rents out two Biscayne Bay condos in Florida (but the renter will probably find a less expensive place to rent at the end of the lease). He has 160 acres in flyover country. This is his retirement plan. And no, he did not study personal finance, which says real estate investing should never be a significant part of your retirement planning. My buddy says his real estate is doing great!
Depends on which timeshare. I like my timeshare. All but one of the resorts are in the U.S.A. It forces me to take a vacation and the amenities are great. I particlularly like its Hawaii locations (I have been to 2 out of 5 of the Hawaii resorts so far).
Prices may go down on these (especially overseas ones) though since the next few years people will probably not afford vacations. So I would not buy one if I had to do it over again.
“The British economy is braced for further turbulence this week as the fallout from the second largest bank failure in US history spreads across the Atlantic.”
“Terry Smith, an influential City commentator and chairman of stockbrokers Collins Stewart, said: ‘It is every bit as true today as it was in the Thirties that, if America sneezes, the rest of the world will catch a cold.’ Asked if he thought the crisis had reached its zenith, Smith said: ‘We are nearer the beginning than the end. I’m afraid there is going to be more pain - quite a lot, actually.’”
‘In America, they have lent money to people with no proof of income to buy five-bedroom houses,’ she said. ‘That has not happened in Britain.’
I work with and am friends with many Brits, but they can be a bit holier-than-thou. The above statement is just a wee bit misleading: the British banking industry has been very loose with zero down mortgages, buy-to-let mortgages, equity loans, personal loans, etc. To infer that there is no home-grown problem in the UK is utter crap. Their bubble is the worst I have seen anywhere.
‘In America, they have lent money to people with no proof of income to buy five-bedroom houses,’ she said. ‘That has not happened in Britain.’
My sarcastic comment is that it didn’t happen because they don’t have any five bedroom houses. Even absent some of the overtly fraudulent activities that were common in the U.S., prices in Britain still bubbled higher than in America relative to incomes. Britain will have its crash too and, like the U.S., there’s much debt that may never be repaid.
sure, I have seen many examples on television of all the systematic fraud that has been going on in the UK for years. There where mortgage shops where for an additional fee they would provide a fake passport and job history to register the mortgage debt on. Of course their was loads of fraud, otherwise homeprices could never be what they are now.
Netherlands is a similar story, although there the unlimited homeowner subsidies are a major factor for the enormous price runups (around 1000% now over the last 15-20 years) and fraud is probably a bit less than in the UK. As long as prices go up nobody cares about fraud or lax lending standards, and in most of Europe that is still the situation.
Don’t think people have learned a bit from the US, the sheeple in Europe still think it is different there. There is a bit more gnashing of teeth though lately, because homes are refusing to sell at todays wishing prices. In Netherlands it now takes 4-5 months to sell the average home, probably a record just like all the other housing market records that were shattered over the last years. Some of the other speculator markets like the Spanish Costas seem to be dead too, nothing is selling. Sometime, price discovery will start.
Have to agree with you LL/MoC - the Brits can be a bit holier-than-thou about the Yanks, especially when you take in to consideration that the UK had a bad housing crunch itself back in the early 90’s.
Though, bear in mind, to the average Brit, a 5-bedroom house is almost a mansion…
I think they’re more appalled at the size of the houses we have over here (along with everything else), than the mortgage mess. Lots of people in the UK consider the US as the bastion of excess and overconsumption, so the line about 5-bed houses is probably more a double-take at the size, rather than the financing.
Word I’ve had from UK friends is that the housing market there is about 1 year to 18 months behind the US, so there’s still a lot of ‘who, me?‘ and ‘what has the US situation got to do with my mortgage?’ type of talk.
Although the more savvy amongst them are starting to see cracks. Housing prices are just starting their slippery slide over on that side of the pond, so the cheerleaders are still rah-rahing, albeit to a smaller crowd.
And, yes, the UK banks and lending institutions were as bad as the US ones when it came to giving money away on overpriced houses. I read a few months back that mortgages at 7 or even 10 times income were being issued, and I have personal experience of the price increases in London, at least.
I looked at an Estate Agent’s window while I was back there this spring, and was horrified to see places in my old ‘hood going for about the same as they would in Westside L.A. And this was in scraggy old Southeast London, not ‘toney’ by anyone’s criteria.
1-2 montsh ago a BBC TV program about the housing market had one of the big UK property tycoons explaining that London prices were already down by 20-30%, and not 1-2% like the government claimed then. This guy had sold a large chunk of his property (valued more than 1 billion pound) 1-2 years ago, because he thought the UK market was seriously overvalued.
UK is far behind the US, and the Netherlands again seems to be at least 1 year behind the UK; 10x income loans are still fairly normal here (although the central bank now suggests banks should not go over 6.5x income). You would guess the Dutch can learn something from the fallout in the US and UK, but up to now they don’t seem interested in taking any economy classes.
I read that to my girlfriend - she thinks it’s made up - because it is so chock full of juicy dramatic goodness.
As for me, I don’t care if it’s made up or not, the take away point is that stories like this will now percolate through society’s layers and the “crisis” will further embed itself into our popular culture.
It is that more complex social digestion of these events that will keep people out of the stores.
Sounds like your typical high priced call girl who saw a big wallet and married it.
Posh rediecoration, Hampton homes, expensive summercamp and divorce in 3 months?
This just pisses me off so much i am contatcing the mans lawyers and see if we can do something to stop these low class wimmin from getting any money….damn my gf and i have money problems and we are watching everything we spend, but we know splitting up is not the answer…..maybe i got a good woman….ya think?
Conversely, I know of several extremely unhappily married couples who are struggling financially and stay together only for the dual income. I get so sick of hearing them continually complain about each other. Oh, and, then there are all the affairs that this situation breeds. What a mess.
“Women, typically, if they’ve lived one particular lifestyle, assume that their husband should just solve the problem.”
We’re nothing special, but my (almost ex-ed) wife has not worked in well over a decade, and she never was a primary earner or worker when she did. Her best year for earnings was $14k working for her parents, Mine was 10 times that working for MegaCorp. (20x if you count stock cash ins). And she only worked erratically the first few years of our marriage. I’ve worked continuously since leaving school.
When I took a job in Austin, in large part because I couldn’t find anything at that level in DF/W, she couldn’t get her head around the fact that is was tough to find to job that paid at the level we were consuming at.
I will never forget a surreal conversation we had where I realized that she truly sincerely believed that the reason I was still unemployed (it had been a couple months at that point) was that I just wasn’t interested or trying very hard to find work. And that surely there were $100K+ jobs to be had just down the road in our small town/’burb, and it must be that I wasn’t interested enough in changing my occupation to get them. The idea that there were very few high-paying jobs for which I was qualified for, or that there was fierce competition for them completely escaped her.
She had been very fortunate that I had taken care of her financially for so long, such that she never never had to worry or wonder, and that the magic green Amex card always ‘just worked’. And considering that I had met her when she was in college, she never really had to survive by herself economically, and thus lacks the personal experience of it.
As a result, she built up her world-view out of being fortunate and made it her baseline. Not having to concern herself with economic details led to her having a Disney-esque vision of how things work. It was easy for her to spend the money she didn’t have to make, and to not care about much things cost. It became hard for her to understand that just because we had it (money) yesterday, there is no ‘right’ or ‘entitlement’ or ‘guarentee’ that says we will magically have money tomorrow.
Interesting. More fuel for us confirmed singles. However, either she would never listen to you or you did not effectivly communicate to her the situation. The problem we see is how someone interprets what another person says. Comprehension level from her perspective seemed like it could use a lot of improvement. Then you get to the point asking yourself “is it my fault that she does not understand high paying jobs in my line of work are very difficult to come by?”
‘Comprehension level from her perspective seemed like it could use a lot of improvement.’
Possibly a good b*tch-slap would help with ‘comprehension levels’. Jeeze. People are blind and/or iggerant a whole lot of the time. Women AND men. I wouldn’t wish my childhood on anyone, but it sure did make me grateful for what I have now. And which I obtained by myself, for myself. You know, the house with running water, warm clothes for winter, shoes, food…little things like that.
Congrats on the pending divorce. Sounds like you will be well-served to be shut of her. Are you still in Austin? Many fine drinking establishments there, where you can hoist a beer in celebration of your newly won freedom (purchased, no doubt, with a large chunk of your past and future earnings…).
We’ve worked out a pretty good arrangement for right now, basically a happy separation. She lives in Rockwall, I live in Austin. We get together about 25% of the time. It’s a far better situation for our kids, and a little better moneywise than a divorce in Texas would be.
We might eventually split, or we might not. To her and my credit, we’re working this out without any drama or hard feelings. Compared to the things I read on some of the Divorced Dad’s forums, I have it pretty easy.
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Comment by CA renter
2008-07-14 01:30:58
I sincerely hope you work things out.
It’s one thing for the “singles” to cheer-on your divorce, but divorce is a sucky thing for the kids and family unity (divorced kid of a divorced kid, married to a divorced kid here).
Being single is wonderful if you never plan to have kids, but it IS important to marry — and stay married for LIFE — if you plan to have a family. Not everyone can do it because of abuse, infidelity, etc., but it sounds like your problems can be worked out.
“Debt advice experts warned yesterday that, despite the Chancellor’s calls for leniency from lenders, Northern Rock was now aggressively pursuing defaulting borrowers as part of its efforts to repay the £25bn rescue package it received from the government. Chris Jary, director of Action for Debt in Durham, said: ‘There used to be a small group of sub-prime lenders who you knew would always go straight to court. But recently it’s Northern Rock who have become more aggressive, taking legal action as soon as they can.’”
“House repossessions at Northern Rock are running at twice the rate they were before the bank was nationalised in February.”
Also (not related to Northern Rock):
“Homeowners struggling to meet their mortgage payments would be able to sell their homes to the local authority and rent them back as tenants under radical proposals being considered by the government to prevent the misery of repossession.”
“Asked to confirm that she was considering rent-back schemes, enabling homeowners to become council tenants in their original houses rather than be repossessed, she said: ‘We are looking at that. I have to be certain that the choices I make do actually help to limit the damage; and, importantly, is it a short-term fix or a long-term impact?’”
“The scheme would be expensive. Councils would need central government funds to buy the houses. But it could save on the long-term costs of rehousing homeless families and allow councils to increase their housing stock at relatively low prices.”
“…repossessions…running at twice the rate they were before the bank was nationalised in February.”
Ha, ha, now that the British FBs are into the state - the state isn’t so benevolent anymore! Now, are our FBs really sure it wouldn’t be easier to just walk and avoid getting similarly “helped”?
The irony, of course, is that a large percentage of this housing was once Council owned, 20-25 years ago.
Maggie Thatcher (hawk, spit) had the ‘brilliant’ idea back in the 80’s of ‘privatising’ council housing stock, to allow renters to buy their own houses at discount. ‘Homeownership Society’ a little early and a little east….
Of course, many of the owners sold on as quick and as profitably as they could, leading to a massive over-appreciation in house prices, and the inevitable crash in the early 90’s.
Leaving low income people and renters with a greatly depleted housing stock, stuck between renting recently privatised council houses at whatever rents the owners asked, or joining Housing Associations where the rent was set at ‘market rate’ (ie several times higher than the Council itself would have demanded, had housing stayed in the hands of the council).
So - LOL - what comes around goes around.
Whodathink council housing would have made a comeback for ‘Thatcher’s Children?’
“High-profile Australian property investor and author Michael Yardney warns New Zealanders they could be ripped off by Australian property marketers.”
“Some marketers are taking advantage of “many” investors turning to Australian property because they recognize the New Zealand market is in a slump. They are selling “off the plan” properties with extravagant capital growth promises of 20 or 30 per cent.”
OT, more bad news for the Florida and Las Vegas tourism industries:
“Both places are facing alarming reductions in commercial air service as airlines whack away at markets where fares are traditionally cheap. According to OAG, the airline-schedule data company, the number of flights scheduled for this fall is down nearly 13 percent for both Las Vegas and Orlando, versus the same period last year.”
“With airlines parking hundreds of unwanted aircraft, he said, “there are an awful lot of airplanes sitting around and available to someone who is thinking about maybe running charter flights in partnerships with specific destinations.””
They still have to be run profitably or subsidized. Those aircraft being parked are the least fuel efficient and hence have the highest operating costs. Would casino-subsidized charter flights necessarily add capacity? Might the remaining carriers just cut more flights? Airlines are trying to reduce supply enough so they can raise fares high enough to cover their operating costs.
Whatever approach the casinos take, they’re likely looking at fewer visitors and higher operating costs.
Mr. Bailey (Dan, not George) was no friend of Angelo.
Mr. Bailey, 41, promised in his e-mail message that he would pay every nickel he owed if Countrywide would modify his mortgage in a way that allowed him to keep his home. He sent the message to a grab bag of Countrywide e-mail addresses, which he had received from http://www.LoanSafe.org, an online forum for borrowers.
Among the recipients of his e-mail was someone he had never heard of before: Angelo R. Mozilo, Countrywide’s co-founder and chief executive. Lo and behold, Mr. Mozilo replied — inadvertently, as it turned out.
“This is unbelievable,” Mr. Mozilo said in his message. “Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting.”
According to an April report by the State Foreclosure Prevention Working Group, a unit of the Conference of State Bank Supervisors, a regulatory alliance, about 70 percent of delinquent borrowers weren’t getting help in renegotiating their mortgages.
“Based on our analysis,” the working group reported, “the collective efforts of servicers and government officials to date have not translated into meaningful improvement in foreclosure prevention outcomes.”
Could it be that there is little reason for the banks to modify mortgages since they realize that if that the fed will eventually bailout the FB and the banks?
Outside of the outstanding mortgages, banks are sitting on taxes, liens, decaying assets and potential neighborhood lawsuits and backlash.
This stuff is piling up fast.
I’m not really sure what banks can do, other than get them off their books, fast, which means taking huge losses or insolvency. Maybe sitting like deer in the headlights is the best option. At least your paycheck still comes every two weeks.
“As hundreds of blazes continue to char California, additional National Guard troops and overseas crews are being called in to assist exhausted firefighters, and President Bush has scheduled a visit to the state.”
“Gov. Arnold Schwarzenegger on Friday ordered 2,000 more National Guard troops to join the 400 already on firefighting duty. Australia, Canada, Greece, Mexico and New Zealand are also sending firefighters and equipment, federal officials said.”
“We are stretched thin, and our firefighters are exhausted,” Schwarzenegger said. “The fire season as we’ve known it is pretty much over. … Now we have fire season all year round.”
We need a reason to pull our troops out of harm’s way on a failed mission, and by virtue of living in a 115 degree Iraq-Tijuana-adjacent rathole where people are shooting at you, or planting bombs underfoot…
They are used to Hades, in other words~
They are also some of the most fit Americans around.
Have any of you Googled the year 2012 lately. The volume of new material about the end of time which is supposed to be 2012 is staggering. The end therefore is only a little over 4 years away.
Wildfires, hurricanes, all sorts of natural disasters are suppose to increase as they are doing. World War III and atomic disasters
will finish it off. In 4 years we may not have to worry about
housing problems.
What ARE you talking about? Of course she ‘believed’ in Santa! How could she not believe in the Big S?
Are you implying something or other here? No, no–don’t answer, because I can’t hear you. Not one little bit.
Mayan calendar? Their numbering system was base 12, not base 10 (decimal) like ours, so 2012 in base 12 is, um, somebody help me out here. I just know it’s a bigger decimal number.
Oh what the heck.
2 x 12 raised to the third power = 3456
0 x 12 raised to the second power = 0
1 x 12 raised to the first power = 12
2 x 12 raised to the zero power = 2
——
3470
The dates are already converted to our calendar, and IIRC the Mayans used a base-20 number system (and a less used base-60 for astrological calculations, just like the Babylonians), not base-12.
Anyway, the point being that the supposed ‘end’ of the Mayan calendar is actually just a big shift - an end of one Grand Cycle and the beginning of the next one.
Its only in Western thought that its ‘the end of the world’ - the Mayans recognised that it would be a big change, but not the end of everything.
I’m sure I’m not the only one who senses a ramping up of craziness, both human and natural, but I doubt very much that the entire world is going to stop like a wound-down clock on exactly 21/12/2012.
My favorite Y2K story came from a friend in a small town, that had a church of evangs/tax-evaders/militia (they hit the trifecta!)
A few hours before sundown on December 31st 1999, the faithful blocked the street, guns at the ready, in case somebody was going to take over their little piece of nothing, on just the other side of nowhere.
They brought sleeping bags and stayed on constant vigil, until noon the next day.
I wish I could create as good a story, maybe come up with the end of days in the Menominee calendar. Nah, my friends don’t even know the day let alone the date.
Anyone else read the insufferable Jeff Opdyke columns in the WSJ? He writes navel-gazing thumbsuckers about his family and if they’re typical, we’re fooked. I can’t link to today’s column, but basically the story is he left a real good job in NYC and moved the wife and kids back to her home in Baton Rouge so she could work as a hospital administrator and be close to her family. Well, she lasted a couple of months at the hosp, and now they realize they’re not happy where they are. So they’re going to up and leave to follow their dream to live abroad, in Hong Kong.
Meanwhile they’ve been doing the usual over-the-top remodeling of the house they bought in La., including a quirky Asian-themed bathroom. He pondered if it would hurt eventual resale value, but decided it was more important to follow your dream of the moment then worry about that crass calculation. This is from an older column that ended up at a real estate site.
If you do plan to live somewhere for years, why invest so much effort and money if the end result leaves you uninspired, albeit with a slightly fatter bank account?
To me and Amy, this new room will make our house a more comfortable home. And that’s the ultimate message: Assuming you’re going to live somewhere for a while, the value in a remodel isn’t in the resale.
It’s in the emotional payoff of living in the house you want. Today.
So recently he’s been writing about (1) how hard it is to sell their home in this market (2) how expensive rents are in HK. LOL! And now (3) that Asian bathroom remodel wasn’t such a great idea after all, especially since you never know when you might want to follow your dream somewhere else.
It’s petty stuff, but his musings reek of so much serious self-indulgence that I wonder where the adults are in this family. And this is a guy who apparently writes financial advice books.
I love Utarr, I love Utarrr.
Ahhh, the Sabbath Day in Utarr, Land of Righteous Saints…say, speaking of righteous thingies, do you guys want to hear about a precious, wonderful miracle? You do? Okay!
I’ll tell you all about it. See, I pawed through my old stuff, and after enjoying the comical yearbook photos of me in olden times, I opened the closet in my old room and looked wistfully at the beer brewing supplies stowed in there. I used to homebrew quite a bit. I wondered if I could possible get a few keg cannisters, a CO2 cannister and a couple giant enamel pots back on the airplane to Washington, and I picked up a keg and gave it a sentimental shake and lo, it sloshed! What could this be? I distinctly recall drinking alllllll the contents before leaving for the real promised land, which is of course, Thurston county, WA, and so there should be nothing in there. But there was! I gingerly cracked it, and it was clearly an oatmeal stout. I hollered for my brother, Alan, who is known in Santaquin as ‘Big Al’, I hollered to him to quickly come and observe this miracle, which was clearly like unto the loaves and fishes miracle performed by Sweet Baby Jesus on the mountain, you know the one, refreshments unending for those who stayed to hear all He had to discuss. Only THIS miracle was even better, because I can get fish and bread at any old supermarket around here, but I can’t get any beer worth drinking. (Utarr has terrible, empty beer. That’s why I started homebrewing so long ago, when I was 8 or 9 or so.) And here was a keg full of the precious fluid! Sweet Baby Jesus had perceived my lack and had generously helped me out. For verily, does not scripture say, ‘…He will satisfy thy needs in a sun-scorched land..?’ (Isaiah 58:11) And baybee, if Utarr is not verily a ’sun-scorched land’, then there ain’t no such thing, nohow.
So I shouted for Al and he came and agreed it was indeed a miracle, and I invited him to partake of this miracle, even though he’s not very righteous, for does not scripture say ’show charity and you won’t get in as much trouble as you deserve to be in’? (1 Peter 4:8) And verily we did partake of the miracle, yea, with gratitude.
Yea, and a little while later we raised a joyful noise unto the Lord (Psalms 98:4) and my mom shouted downstairs to us to stop that infernal racket and to get out in the fresh hot air and so we did, and there was the setting of left-over fireworks and also a nice bonfire of old apple crates and orchard prunings and I was much pleased, as were the mutant mule and the horses, as they always seem to enjoy a good bonfire, although not the firecrackers so much.
You may have been a Lutheran in a former life. (Unlike LDS adherents, Lutherans enjoy their lagers, not to mention their dark roasts, without fear of divine retribution.)
“Lutherans are not allowed to enjoy anything” (Lars, a great drinking friend and Lutheran) . A tremendous guilt complex over enjoyment doesn’t stop the drinking.
I love being old line Episcopal - We don’t have the guilt of the Catholics or the restrictions of the Baptists. We actually have FUN in church (not to mention the beer at our shrimp boils)…
I was at a dinner with my wife’s family…her parents and sisters and one sister’s boyfriend.
So we were talking about wine-making I guess (I like to make my own) and I pointed out how that made me like Jesus (he made wine, I make wine…). There was a moment of silence and then my sil and her bf start laughing and my wife is reprimanding me (”Marc!…”). Clearly that particular observation isn’t acceptable…
Speaking as a man on the loin cloth, I can vouch for the miracle which Olympiagal has experienced today. It is not so much the beer, but the ability of such a story to bring a believer back from the depths of hell that signifies the miracle. In layman’s terms, what we encounter is a resurrection of a lost article, a treasure that hath been buried, but has risen from the sublimated depths of Ogal’s mind. So today, let us rejoice and give praise, for the choicest of beers has found its rightful owner and the angels weep for joy!
July 13, 2008
…
Scientists say a warming Pacific Ocean means more moist air is sweeping over far Northern California. Because of Shasta’s location and 14,162-foot elevation, the precipitation is falling as snow, adding to the mass of the mountain’s glaciers.
“It’s a bit of an anomaly that they are growing, but it’s not to be unexpected,” said Ed Josberger, a glaciologist at the U.S. Geological Survey in Tacoma, Wash., who is studying retreating glaciers in Alaska and the northern Cascades of Washington.
The profusion of houses that popped up like Spring flowers over our country the past decade were typically built far out from shopping/recreation/medical/employer locations where land was cheaper for developers, but they turned out not to be the “away from the maddening crowd” deal they were before cheap gasoline/diesel. Those who bought before the housing bubble into walking communities/neighborhoods with good access to public transportation/shopping/recreation/medical/employer locations nearby are looking pretty wise in these $4-5 dollar a gallon times. The trend of young people relocating to urban areas is no anomaly, they have already learned a valuable lesson from the mistakes of others.
Good point and I hammer away at that issue when it comes to the modern survivalists. There are no reasonable paying jobs in the burbs. North Dakota or South Dakota (I forget which) has been losing young people for years as they go elsewhere to college and then stay in the large cities out of state where the good pay is.
You can grow your own food on 5 acres but you still may want to have emergency surgery (oops, nearest hospital 100 miles away). Or gang of theives comes on your property and outguns you (oops, county sherrif is 50 miles away, or oops, you are nearsighted like me and have a bad aim). You may be wanting to trade food for some good quality furniture at some point (oops! delivery of a $500 sofa costs $500!).
‘…you are nearsighted like me and have a bad aim..’
Well, jeezily, man! Practice! Or, and this is also a good idea for a fun weekend activity; just mine the perimeter.
And as for the $500 sofa, you could try making it out of pallets, because that’s funner anyway. I love pallets. In fact, I’m making a pallet table right now, and it’s painted pink and white with leftover house paints. When that’s dried I’m going to paint a giant oyster on the top, and little darling barnacles on the side, also with leftover house paints.
Or gang of theives comes on your property and outguns you (oops, county sherrif is 50 miles away
I don’t know if this is historically measurable..but I would imagine riots like in LA in the early 90’s where roaming gangs actually DO outgun others (and/or pull you out of a vehicle and beat you near to death) is a lot more likely than the same or similar happening in a rural area.
Anyway, generally cops don’t do much good with regard to preventing crime or stopping ongoing crime. Heck, that guy in the big rig in the LA riots got beat like hell on national TV and still no one showed up. Having a cop near doesn’t help if they just decide not to show. I’d much rather have some of my friends/neighbors near rather than some cop I don’t know, if something like that happened.
And a shotgun (or a scope for the longer shot) helps the near-sighted thing. As do good dogs.
Death of globalisation consensus
By Dani Rodrik on 7/13/2008
Emirates Business 24/7
“The world economy has seen globalisation collapse once already. The gold standard era – with its free capital mobility and open trade – came to an abrupt end in 1914 and could not be resuscitated after the First World War. Are we about to witness a similar global economic breakdown?…
Recent events have heightened the urgency with which these issues are discussed. The presidential electoral campaign in the United States has highlighted the frailty of the support for open trade in the world’s most powerful nation. The sub-prime mortgage crisis has shown how lack of international coordination and regulation can exacerbate the inherent fragility of financial markets. The rise in food prices has exposed the downside of economic interdependence without global transfer and compensation schemes.
Meanwhile, rising oil prices have increased transport costs, leading analysts to wonder whether the outsourcing era is coming to an end. And there is always the looming disaster of climate change, which may well be the most serious threat the world has ever faced….”
I cannot foreclose on him yet, its against regulations.
You’re not fooling anyone, you know.
Look. Isn’t there something you can do?
… enter Obama, McCain, Bernanke
Sure, we will just lower interest rates, bail out the economy, and push his food and energy prices through the roof until he cannot pay his mortgage any more. Then you can take him away.
As the self-appointed censor on this blog you’ve asked me that question before, and I’ve answered it before. I follow a wide range of publications, as do many others on this blog. However, I’ve subscribed to EIR for twelve plus years and despite the high cost ($360 a year) it has been worth every penny in terms of the quality of the writing and analysis. While I don’t agree with many of LaRouche’s prescriptions for how to fix what ails us, EIR is a unique and valuable resource with many analyses that are of interest to those in here who seek a deeper understanding of the global financial crisis in general and the housing bubble collapse in particular.
If you have a problem with reading anything from a “LaRouchie” point of view, kindly skip my posts and continue to get your information from those beacons of truth and wisdom, Murdoch-controlled media outlets like the WSJ and similar MSN propaganda.
I am not a sensor — that is Ben’s role if he chooses.
I was just commenting on the extremely homogeneous nature of your sources. Feel free to post on, and quote the Moonies and the Branch Davidians if you wish as well.
(Comments wont nest below this level)
Comment by NoVa RE Supernova
2008-07-13 18:02:43
Professor Bear,
My guiding principle is the same as Thomas Jefferson’s: “”There is no truth existing which I fear, or would wish unknown to the whole world.” I seek out the truth where I can find it, even in “extremely homogeneous” sources, and share what seems relevant or helpful to others in illuminating the uncharted territory ahead. I repeat: If you’re bothered by the source, kindly skip my posts, but let others in here judge them on their own merit.
OK, I will offer no further comments on your sources. And thanks for the Thomas Jefferson quote, which is a breath of fresh air on the day the SEC has announced a crackdown on “false rumors.”
February 5, 2008
Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International
Historical Comparison*
Carmen M. Reinhart
University of Maryland and the NBER
and
Kenneth S. Rogoff
Harvard University and the NBER
“….At this juncture, the book is still open on the how the current dislocations in the United States will play out. The precedent found in the aftermath of other episodes suggests that the strains can be quite severe, depending especially on the initial degree of trauma to the financial system (and to some extent, the policy response). The average drop in (real per capita) output growth is over 2 percent, and it typically takes two years to return to trend….
The huge run-up in equity prices was similarly argued to be sustainable thanks to a surge in U.S. productivity growth a fall in risk that accompanied the “Great Moderation” in macroeconomic volatility. As for the extraordinary string of outsized U.S. current account deficits, which at their peak accounted for more than twothirds of all the world’s current account surpluses, many analysts argued that these, too, could be justified by new elements of the global economy….”
And from the pdf “…Once again, the United States looks like the archetypical crisis country, only more so. The Big Five crisis countries tended to experience equity price falls earlier on than the U.S. has, perhaps because the U.S. Federal Reserve pumped in an extraordinary amount of stimulus in the early part of the most recent episode….”
The graph on pg 6 of housing price declines current drop (Jan ,2007) vs average decline is worth a long look, especially for prospective buyers.
(This is what the graph Hoz referenced appears to suggest.)
The data for U.S. home prices is the Case-Shiller Index, and appears in the graph to end at a level of 127 in 2007, down by six points or 4.5 percent (6/133*100 = 4.5).
But we already have heard the Case-Shiller Index was recently down by 15.3 percent YOY, which suggests that the next data point (for 2008, not shown on the graph) might come in around
127*(100-15.3)/100 = 107.5,
compared to the “Average for the Big 5 Crises” T+1 level of around 117.
The above supports my conjecture that a bigger-than-average bubble results in a faster and deeper correction.
I find it fascinating when I come here to reflect on things I just read, and I get a strong pingback on the mental machinations going forward….
Interesting notions of you going long the China this week. Based on my anecdotal investor group apathy, depsondency, and capitulation behaviors, I would say…that must have some merit.
I did the unthinkable on Friday…. bought a tiny slice of a bank in what apperars to be systemic lack of confidence in the GSE’s, but thats gonna get wrapped up in an announcement tonight or tomorrow morning.
Hi voz,
Me crazy? I did not buy any bank stock. Buying any bank stock is worse odds than a crap shoot, that is crazy. You just aren’t a typical ex-Cal to Oregon-transplant-commie are you? LOL
hozzie baby… somtimes you gotta go with a longshot. They havent started burying survivors just yet.
Sure hope I didnt offend you with the crazy ole coot snark, its just my way.No offense intended. Ive been watchin and waitin since last August to get a piece of this nugget, but I needed two other entities to make an equity power grab, and sir, Im here to tell ya. They both moved on it, and that was my signal. We all have our favorite horses.
other anecdotal indications:
massive Friday postings/viewership across a broad spectrum of blogoshphere. Also, a heightened sense of awareness by the give-a-shitters, apathy, capitulation, and despondency amongst array of monied friends regarding the banks. Its just a game, sometimes you’re right and sometimes you are wrong, but I buys my tickets and I take my chances.
Ah the joys of having more money to spend than one can use reasonably.
“UAE to farm its own caviar
By Simeon Kerr
In the comic novel Salmon Fishing in the Yemen, a western fish expert teams up with a sheikh to bring salmon fishing to the mountains of the south-western Arabian peninsula.
On the other side of Arabia, life is not quite imitating art – but a United Arab Emirates-German joint venture is building a vast sturgeon fish farm in Abu Dhabi.
While the novel’s madcap idea ended in disaster, the Abu Dhabi initiative aims to provide a lucrative export opportunity for the UAE as it seeks to diversify away from oil production, while also helping safeguard the future of the endangered species.
Bin Salem Group and United Food Technologies, its German partner, are investing $80m in the project, centred around a climate-controlled facility in an industrial park on the outskirts of the capital. Here 64 swimming-pool-sized basins will house thousands of sturgeon, ultimately providing up to 40 tons a year of caviar and 710 tons of smoked and sliced sturgeon meat. …”
Financial Times
Student ensures econ is no longer the ‘dismal science’
“It was a classic case of supply and demand.
Entering his senior year at Pittsburgh Allderdice High School, Seth Weidman felt there was demand for an Advanced Placement economics class.
So he decided to supply one.
At least one night a week for nine months, Seth taught college-level economics to a group of his fellow Allderdice students, traveling from living room to living room with his dry-erase board in tow.
Fueled by Doritos, pretzels and the occasional homemade tiramisu, Seth’s students in the “Weidman School of Economics” numbered 18, with nine of them eventually taking at least one of the two AP economics tests offered.
Thus far, the results have been spectacular. The students took 12 total tests, and of the eight scores that have come in this month, six are 5’s — the highest possible on a scale of 1 to 5 — and two are 4’s. Depending on what colleges the students attend, those scores likely will qualify them for course credits or advanced standing.
Nationally, fewer than 15 percent of students who took the tests in 2007 scored a 5 and just more than 25 percent scored a 4….”
Put the kid on the White House Economics committee! Or maybe he can teach Mssrs. McCain, Gramm and Obama and a few hundred other politicians some sense.
Took a drive into the Central Valley and the number of people selling their car/rv/5th wheel/his & hers jetskis/suv/boat/atv’s on the side of the road, is somewhat amazing.
Easily twice as many vehicles for sale, vs. this time last year.
When the FDIC has to issue a statement on a Sunday, out of fear of Monday, it means we are getting very close to push meeting shove…
_______________________________________________________________
“FDIC Chairman Sheila C. Bair said, “Over the past weekend, I have seen news reports which have fairly and accurately reported on the conversion of Indy Mac Bank into a conservatorship operated by the FDIC. I have also seen inaccurate and inflammatory reporting which could well cause needless, unnecessary worry and angst among bank depositors throughout the country.”
I think I’ll go to BofA for fun tomorrow and take out about $5K in cash just for the hell of it. If they ask why, I’ll say I like to carry a knot in my pocket weighin’ at least five grand and the general feeling of wealth that comes with it.
Sunday July 13, 8:14 pm ET
By Jeannine Aversa, AP Economics Writer
Fed offers to lend to mortgage companies, Treasury plans possible equity investment
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies “should such lending prove necessary.” They would pay 2.25 percent for any borrowed funds — the same rate given to commercial banks and Big Wall Street firms.
The Fed said this should help the companies’ ability to “promote the availability of home mortgage credit during a period of stress in financial markets.”
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies should they need to tap it and to make an equity investment in the companies — if needed.
when was this announced? i just got back from a weekend trip to the coast. can anyone forsee what kind of trouble this is going to cause? thanks for any answers, i have trouble putting the pieces together sometimes! LOL is that slow whitted or just dumb whitted?
If Fannie Mae and Freddie Mac were ordinary corporations, the sudden collapse of investor confidence last week would have set them to work on their bankruptcy applications. But they are not ordinary corporations — and they are likely to survive because their debt securities have been viewed for decades as ultimately backed by the U.S. government. Barring the unlikely event of a credit market loss of confidence in the U.S. government itself, they should be able to attract the necessary financing for continued operations.
“Thus, because the U.S. government will not allow Fannie and Freddie to default, they should be able to survive. If housing prices turn up again and their losses are stanched (or if they can raise more capital to cover the losses they will suffer in the future), these two companies will get through this period. This is by far the most likely outcome of the current period of stress.”
—
And thus (paraphrasing), the worlds financial system won’t become insolvent due to bad GSE debt. Why even bothe rto use “or” there?
This is a sideshow. The rest of the article is very interesting. Moral hazard, moral hazard,and everywhere a dollar to drink.
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Gary Watts chimes in about bailouts of Freddie and Fannie at the OC Register and he finds it funny that no one learned from the savings and loan debacle.
http://mortgage.freedomblogging.com/2008/07/12/should-us-backed-mortgage-giants-be-bailed-out/
“Should the need arise; the government — and ultimately the taxpayers — will have no alternative but to bail them out. In the end, it will be less expensive to rescue these two lenders than face the disastrous consequences. This was done in the ’80s with the savings and loans. Isn’t it funny how history keeps repeating itself!”
This isn’t funny. It wasn’t then and it isn’t now. Instead of a bailout, I’d rather see bonuses repaid and criminal actions prosecuted. Fannie and Freddie didn’t get into trouble by accident, through “bad luck”.
RE: Instead of a bailout, I’d rather see bonuses repaid and criminal actions prosecuted. Fannie and Freddie didn’t get into trouble by accident, through “bad luck”.
I’m with ya on that one, SD.
Nobody, of any consequence, other than the pair at BS who just got rounded up, seems to be bearing the criminal onus of this immense debacle.
Congress can roust the CEO’s of Big Oil, but when it comes to dragging the likes of Franklin Raines into hearings, there nothing but silence, because the disclosures of huge pay-offs and and campaign contributions will blow everything out of the water.
Fookin’ hypocrites.
You’re so right on that one, SDGreg!!!
None of this was an “accident.”
“Be assured, that our government and the Federal Reserve will do whatever is necessary, but with measured steps.”
That last step is a doozy.
“That last step is a doozy.”
And it’ll be the taxpayers, not the Fed, taking it. Ugh.
I think taxpayers are getting some idea….Yesterday went shopping in Westchester, Central Avenue. For all the years that I’ve had to drive there on Saturday’s I’ve never seen what I saw yesterday. -Space! Usually you can’t drive, you crawl through the avenue that is lined with strip malls, parking lots are packed and usually you witness at least one episode of rage over parking issues. Yesterday most lots were filled to maybe 70% capacity. The roadway was free and clear. It was more quiet than a typical Sunday morning in the past. I think people are getting it and they don’t have it.
E.F. Hutton?
Gary Watts my…er…
Gary Watts!
Dang, my kitten is more credible.
Dear lawd,
Leigh
This is odd to see no comments in the bits bucket.
My question involves taking out a HELOC or line of credit on your current home and buying a house for cash in a foreign country, Mexico in particular. If that person either walks or goes BK, is that home in the foreign country free & clear?
I would think it is. What a interesting transfer of funds.
Unfortunately, I bought a house for cash, cash.
The economy south of the border that is dependent on tourists is suffering; the asking prices for homes have dropped 10-15%, but there is NO activity.
An interesting story - My ex-maid from Mexico, used to clean about 8-10 houses per week making about $600/w. ( A great worker). All her “patrons” have cut back just this year, so she is now back in Mexico working as a nurse making $20/w.
Rocket
My understanding is that you can’t purchase property outright in Mexico if you are not a citizen. There’s some legal maneuver where you “lease” it for 100 years through a trust or something like that.
That restriction only applies to land within 100 kilometers of the border, or 50 kilometers of the ocean. There are also restrictions on land that has oil under it.
“My question involves taking out a HELOC or line of credit on your current home and buying a house for cash in a foreign country, Mexico in particular. If that person either walks or goes BK, is that home in the foreign country free & clear?”
In a prior recession I seem too recall stories of multimillion dollar homes bought in Florida for just that purpose. Seems Florida allows a person who files bankruptcy in another state to keep their Florida residence free and clear and untouchable by out of state creditors.
I had some clients do this when Connecticut instituted an income tax. They purchased a home in Florida and declared it their main residence. They could afford it.
Owning property in a state does not automatically qualify someone for residency. But hey, if no one’s checking (and no one is), why not?
What’s the point of this blog, again?
Gee, how did we get ourselves into this mess?
GHW Bush rented a hotel room in Houston while (Vice)President to maintain his Texas residency.
I know several people in NY that have done this. But now one couple has rented out their FL residence after unsuccessfully trying to sell. So I would think that “main residence” designation would be over.
Maybe it depends on which state you are trying to withdraw residency from, but you don’t have to buy real estate in another state to call that state your residency. You can rent. The former state, presumably with higher taxes, would not tax you.
My state of Arizona taxes me on all my income, even though I earn it in Maryland. I’m certain Califoria would do the same thing. In Arizona’s case, I get a tax credit for paying Maryland income taxes. In California’s case, I get no credit for income earned in Maryland. But I would get credit for income earned in Arizona if I was working in Arizona but living in California.
Kind of confusing but Turbo Tax is good on these issues. In April of 2006 I had a permanent residence in Hermosa Beach, CA. So I paid California taxes but got a tax credit for the taxes I paid on my income I earned in Arizona. At the end of 12 months I moved back to my same apartment unit I rented in Arizona and used that address as my permanent address. No longer paid California taxes.
Ummmm, so maybe an answer to a state’s financial woes is to attract capital form other states by setting up a hands-off policy such as Florida’s?
LOL, combo, Florida is making a name for itself as a “sanctuary” state.
The sanctuary state concept would seem work best if Florida was the only state offering it, just as Nevada made out when it was the only state offering gambling. But the sanctuary concept would probably fall apart, as did the Nevada gambling concept, if all the states began offering it.
About 10 years ago there was talk of Montana doing that. I forget the term but it would allow offshore-style banking. It was kinda crazy and didn’t go anywhere, and I still don’t understand how a US state could do that.
Isn’t Florida’s big attraction a homestead exemption for any primary residence, no matter how big? I thought Texas had that as well, which allowed John Connally to keep his ranch in BK for example..I think MT’s exemption is 200k now.
I’ve been following the posts here for a few months, and housing bubble writings for a couple of years now. I have a couple of thoughts, and a question (maybe a topic for a future post from Ben?)
Currently I live in Scotland with my wife. This time last year we moved from San Francisco where we had been renting a beautiful 2 bedroom flat in Noe Valley for $2100/month since 2003. We had looked at buying, and had even viewed a few lofts and flats in the mission and dogpatch, but I was having trouble getting my head around paying $800k to $1m for a loft that we’d then have to pay HOA fees on, as well as the $4k/$5k mortgage plus taxes. We could afford it, but it seemed a ridiculous.
We’re planning to moving back this time next year, and want to buy a single-family home in Oakland. I’ve been researching the market a bit, and we have a few friends who have bought there in the past 6 months. The market is definitely slacker than it was, but they were still faced with competition to secure their homes, and both paid over the asking prices.
So, from a personal point of view, I’m having trouble seeing the bust, at least in Oakland (we have some friends who bought a place in West Sac, the guts are strewn around for all to see there!) My wife, who grew up in the SF Bay Area, parrots the real estate crazies by telling me that prices never ever go down in those desirable neighborhoods, we’ll have to suck it up, or we’ll have to find the next up and coming neighborhood and buy there. I don’t agree with this, but it’s hard to point at real data about specific neighborhoods. My theory about why these markets haven’t crashed hard yet is because of people like our friends, who have solid incomes but haven’t been paying close attention to the market, they are amongst the last fools, (too bad for them,) who think they are being smart because the market has slackened a bit. Their realtors are more than happy to push that idea of course, since they are desperate to sell something to a qualified buyer.
So I’ve started to look at specific houses in Oakland on Trulia, trawling through the neighborhoods to try and find homes that sold a few times over the past 20 years. There appears to be only 10 years worth of homes sold data in there, not enough to get past the start of the last boom. But what I AM finding is eye opening.
http://tinyurl.com/6zcp4h looks pretty nice, in the hills, sold in 1997 for $295k, again in 2004 for $778k and now listed for $799k. It’s been ‘extensively’ updated which should add a few bucks to the value, but not 170% in 11 years. Using CPI $295k in 1997 is $381k today. Question is - will it see this level again? Should I expect this home, or one like it, to price at $400k or so in the next few years?
Another example:
http://tinyurl.com/68c7hx - sold in 1997 for $600k, now listed for $1.35m.
So my question is - when is the Piedmont / Montclair market really going to turn? I’m assuming the same is true in other affluent neighborhoods around the country, they are trailing the McMansions by a long way, but are presumably living on borrowed time.
Also - anyone know of a good resource for searching for actual sales records in Oakland over the last 20 years? I’d like to be able to do a search along the lines of ’sold for between $490,000 and $510,000 in 1999′?
You have to look at the distribution of sales versus listing prices. If the distributions are roughly equal, then you might have to wait longer than if all the action is at the bottom of the market (that is, the sales distribution is shifted to the left of the listing distribution).
I believe your intuition is right: the best buyers (previous renters, great cash and incomes) are likely purchasing the worst homes right now. That will not continue.
I would not advise purchase in California at this point. In two to four years maybe, but not until the air is out of the bubble.
Realistically, there are no non-service sector jobs in California to speak of. Manufacturing is gone overseas or staffed by illegals.
The creative arts, technology and Hollywood are seeing the same phenomenon as more movies and technology are developed off-shore and only imported back here for consumption.
The collapse of the fantasy-mortgage and banking business will reduce the California economy to desperation very rapidly.
Unless you are in the government, or a business serving the government, or in medical, we will see a continued slide into the abyss for California.
The only thing I would buy in California right now is a gun and ammunition. You will need it!
RE: The only thing I would buy in California right now is a gun and ammunition. You will need it!
Good advice, Joe.
When my kid left for SD a month ago, I gave him my Winchester Defender 12ga. and a Colt .45auto as going away presents.
He said when he opened the gun case at the airport check-in for inspection, there was quite a murmer in the line behind him when everybody looked to see what was in it.
Good advice Joe. Fact is the only things other than food and gas I have bought recently is a shotgun and ammo.
One more thing to add for notacrime, as CA revenues drop in lockstep with the deflating bubble economy watch the taxes increase across the board. The state and municipalities have burdened themselves with far too many expense obligations. Some of these are tied to strong union contracts. The Govenator tried to get a handle on the run away spending a few years back and was politically out maneuvered by the unions. I anticipate CA taxes will rise substantially to offset the inability of government to reduce spending. That may figure into your decision to return.
Stay out of Alto Mexico!
AKA Aztlan
Husband and I rent in Oakland, on the Piedmont border. Are you aware of the spike in crime here? It’s no longer the neighborhood it was when Jerry Brown was mayor and the economy rolling along. I believe it will only deteriorate. I wouldn’t say that I’m afraid to walk the streets, but there’s a lot of stress on the small businesses that make this area so wonderful–shoplifting, gang members hanging around, not to mention restaurant takeover robberies.
I gave up looking for a home in Oakland/Berkeley a year ago because prices just didn’t seem to be coming down. As of this week, we have an accepted offer on a very nice, small, energy-efficient house in Eugene. We will be paying cash acquired mostly from the 2005 sale of our Castro Valley home, thanks to this blog.
Good luck with the move to Oregon. Remember, they pump your gas for you.
I’ll keep an eye on the Tribune and Chronicle online to see how the crime is looking.
I don’t know when the market is going to go south in the expensive neighborhoods of the Bay Area, nor do I know a source for Oakland data like you request.
But I have lived here for 48 years and can tell you that the Bay Area is not immune to economic slowdowns or real estate busts. I would expect the same forces now at work throughout the country to eventually take effect here.
I can also advise that there are reasonably nice places to live in the East Bay that have taken quite a tumble in price lately. Hercules and Benicia, for example, both are dropping fast. In some ways, they are better places to live than Oakland, IMHO, even the supposed wonderlands of Montclair and Piedmont.
The cheapest way to live in the Bay Area is to rent. Get a rent-controlled place in the City and hunker down. It gets cheap over time.
Thanks for the feedback - good to hear I’m not crazy!
The thing is, we could afford to buy one of those $1m places, our annual income is over $250k. But that’s still not buying us much! It seems to me like a couple making the kind of money that we are should be able to afford that 4 bed house a nice older, close-in suburb, plus the cabin in Tahoe or wine-country bungalow, and still have enough left over each month to save for the kids college etc. etc. Even by Bay Area standards we’re in the top few percentiles of income.
There really does seem to be a disconnect from fundamentals, and I’m getting pretty impatient waiting for things to right themselves in the areas that I care about.
Notacrime - have you been over to Patrick’s? (www dot patrick dot net)
Its based in the Bay Area, and I’m sure there would be some people there who could give you ‘word from the streets’ advice.
Not that you wouldn’t get great advice here, but, you know, horses for courses and all that.
Yeah that’s one of the sites I started reading a few years ago when I first starting trying to figure out why anyone would want to buy a house at those prices. Seems like it ended up being a bit of a link-dump without any added insight. Haven’t been there in a while though, will definitely go check it out, thanks.
I also am looking in the North Oakland and SF area. I’m finding Redfin very useful in giving a sense of what is happening with house prices in Oakland and the Bay Area. Prices are definitely coming down and show no signs of stabilizing. You can create and save your own searches tailored to your needs, and have them email you updates to your listings. Within each listing is a “Price Listing History” and a “Sales History” - I’ve checked out many in the most desirable neighborhoods and most are showing big price drops from 2006 and 2007 back to 2005 prices, and there are usually price reductions from the original listing prices as well. Your friends most likely were bidding up an already significantly reduced price.
If you ask to be emailed updated listings, you see many reduced prices. IMO the Bay Area is going down at least 20-25% more, but will likely take a couple more years. Remember, alt-a resets are just starting to kick in.
US Treasury rescue for Fannie Mae and Freddie Mac
Treasury secretary looks at $15 billion cash injection for crisis-hit mortgage lenders
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4322440.ece
_______________________________________________________________
$15 Billion is chump change in the scheme of things, when you’re down a Trillion or thereabouts…
It’s as if blood was streaming out of a thousand cuts, and they stuck a few band-aids on a few of the wounds.
This can only end badly…
15 Billion is the entire yearly NASA budget… guess we should cut back.
U.S. Monthly Spending in Iraq - $12 billion in 2008
I’m past the point of being amazed at the actions of our governmental types. They are so deep in denial that they really believe they can make things better if they just keep refusing to recognize the magnitude of the problem out there. We have a major global error in our economy that can only be fixed with some major pain for all (not that they care about the little guy).
If there were only enough influential senior types out there who were courageous enough to admit the problem and institute the painful reforms - We would be in far better condition for it and our kids would thank them. I don’t see any sign from any party that shows thay are willing to do this…
Ron Paul has been telling us what’s really going on
for 25 years +/-.
Mike
The trouble is, we need far more politicians and senior government oficials to sign on and step up. R.P. by himself just gets the title of “quirky” at best from the M.S.M.
I suspect that we’ll get action at the 11th hour only because that particular iteration of pols and party in power will still be in office when the event occurs and will be blamed for it. THEN we’ll see frantic action - IMHO…
“They are so deep in denial that they really believe they can make things better if they just keep refusing to recognize the magnitude of the problem out there.”
They aren’t in denial. Some of these guys know exactly what they’re doing.
RE: They are so deep in denial that they really believe they can make things better if they just keep refusing to recognize the magnitude of the problem out there.
The front page story in the biz section of today’s edition of the Beantown Glob, says we’re not even in a recession!
The boobs puttin’ this fish wrap together never cease to amaze me.
I think a dying newspaper industry has found a strange bedfellow, in a dying financial industry…
Kin-dread spirits keeping each other going
I’m amazed by some boobs that come in pairs though.
“Merchants of Debt” (article buried in the bowels of the A section of today’s SD Union Tribune)
Q. Why do they worry so much about whether these bonds will sell?
A. These bonds are certain to sell if they let the market decide on the interest rate, but the prospect of discovering the market’s risk premium during a solvency crisis and in the immediate aftermath of a vigorous high-level discussion of the mythical GSE debt guarantee is too scary. Thus they are trying to peddle the debt in advance over the telephone, and making provisions for the Fed to buy it at the yield they want the mortgage and bond markets to see, just in case private market participants won’t take the bait at that level of yield.
There is no reason this debt issue would not sell in its entirety without Fedsury backstopping, but the potential implication would be revelation of a lack of faith in the GSEs coupled with a crushing jump in mortgage rates on GSE-guaranteed loans. I am unsure about the possible implications of a higher-than-expected yield on the debt issue for the financial positions of the GSEs.
Could anyone who understands please explain to me how the approach described in last paragraph posted below would not constitute a government guarantee of GSE debt?
Freddie Mac facing $3 billion hurdle
Treasury hoping sale of securities goes smoothly
By Jeffrey H. Birnbaum and Steven Mufson
THE WASHINGTON POST
July 13, 2008
WASHINGTON – Treasury Department officials were working the telephones yesterday to make sure that Freddie Mac, one of the nation’s two troubled mortgage giants, will be able to sell $3 billion of its securities tomorrow in a previously scheduled sale that has now become a crucial test of investor confidence.
Although officials said they were optimistic the sale would be a success, anything less would pose new questions about how far the federal government is willing to go to prop up Freddie Mac, its sister Fannie Mae and other faltering financial enterprises.
Officials spoke yesterday with major banks that usually purchase securities, like the short-term debt offered by Freddie, to ensure that these firms still plan to place bids tomorrow. This was part of an effort by officials at the Treasury, the Federal Reserve and other agencies this weekend to gauge market sentiment and check that investors still have faith in Freddie Mac and Fannie Mae after the steep decline in their stock prices last week.
At the same time, Treasury officials were considering several options to backstop the sale in case they discover that interest in the securities is flagging, according to sources familiar with the discussions. Under one alternative, the Treasury or Fed would purchase the securities directly.
Other possibilities are allowing the Federal Reserve Bank of New York to buy the debt indirectly through private brokers or asking private firms to purchase the debt while extending to them either a public or private assurance that the government would back the securities if Freddie were unable to cover its obligations.
Rates could rise on Freddie, Fannie woes
If your mortgage is owned by agencies, though, don’t panic
By Amy Hoak, MarketWatch
Last update: 4:06 p.m. EDT July 11, 2008
CHICAGO (MarketWatch) — Get ready to see mortgage rates rise somewhat as Freddie Mac and Fannie Mae are buffeted by turmoil, but don’t sweat it if you have an existing mortgage that may be owned by the agencies, industry observers say.
Fannie and Freddie, which are sponsored by the government, help keep mortgage rates more affordable by buying up loans in bulk and making sure lenders have stable access to capital to issue loans to consumers.
But the financial markets have been rapidly losing confidence in the two mortgage giants and that doesn’t bode well for their willingness to lend money to Fannie and Freddie at reasonable rates, said Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter. If it costs more for the GSEs to raise capital, costs are likely to trickle down to the borrower.
“This confidence crisis or panic doesn’t help mortgage borrowers, since if investors won’t lend money to Fannie and Freddie at a good rate, it will have a detrimental impact on mortgage rates offered to borrowers,” Cecala wrote in an email response to a question. “So we could see some slight rise in mortgage rates as a result.”
He doesn’t, however, expect the interest-rate disruption to be long lived, “given the government’s willingness to support Fannie and Freddie at all costs.”
The government helps keep mortgage rates affordable, not houses. In other words, the government helps people get into more debt at a lower interest rate rather than less debt at a higher interest rate. What is that old saying about “refinancing an interest rate, but not the principle…”
Anyone who trusts these people to fix this mess is insane.
These articles provide a rare direct glimpse into the willingness of the Fedsury to directly pump in money to the housing market in order to keep prices propped up (a direct effect of suppressing the risk premium on GSE debt).
Is it to early to conclude that GSE debt is guaranteed, while their stock prices are sunk forever?
Freddie stock recovery fizzles
Mortgage giant bounce-back tied to Fed, Dodd remarks
By MarketWatch
Last update: 6:05 p.m. EDT July 11, 2008
BOSTON (MarketWatch) — Freddie Mac shares ended a wild session Friday down about 4% after earlier losing more than half their value as the market battled the federal government for the hearts and minds of investors.
Shares of both Freddie Mac and Fannie Mae were pressured by prospects that the mortgage giants, which help make the American dream of home ownership possible for millions, will need to be bailed out by the U.S. taxpayer.
A report that the Federal Reserve will allow the mortgage giant to access the discount window to relieve capital pressures later rallied the shares from more than 50% losses into positive territory, though they later slipped back into the red.
…
The government “most assuredly would back” Freddie and Fannie in light of the hand that the Federal Reserve took in engineering the acquisition of Bear Stearns Cos. by J.P. Morgan Chase & Co. earlier this year, said David Ader, a government-bond strategist at RBS Greenwich Capital, in a note to clients.
The debt of Fannie and Freddie rose sharply Friday morning as buyers swooped in amid growing speculation that the U.S. government would backstop the struggling companies’ obligations. See related story.
Agency debt with five-year maturities saw the biggest gains in early New York trading, with the premiums demanded by investors falling as much as 14.7 basis points over Treasurys on the Freddie Mac 3.75% note due June 2013, according to TradeWeb.
Two-year maturities tightened between one and seven basis points, while 10-year notes came in up to eight basis points. A basis point is the equivalent of one one-hundredth of a percentage point.
If the government were to make its implicit guarantee more explicit by stating its support of agency obligations, including the mortgage bonds they guarantee, these securities would benefit since any lingering doubts about their safe-haven status would be removed.
The prospect of injecting liquidity into the GSEs is doing little to support the dollar. It looks as though that pesky macroeconomic budget constraint has again reared its ugly head, offering policymakers a choice between supporting Uncle Buck and propping up the GSEs.
US dollar nears all-time low
* July 12, 2008
* Page 1 of 2
The US dollar dropped to within a cent of the all-time low against the euro on concern losses at Fannie Mae and Freddie Mac may deepen even after policy makers said the companies aren’t facing a government takeover.
Treasury Secretary Henry Paulson said the government is supporting the two largest buyers of US home loans in ”their current form.” The euro touched a record versus the yen as stock markets pared losses.
”The concerns about Fannie and Freddie just highlight how bad things are and how vulnerable the financial system is,” said Benedikt Germanier, a currency strategist at UBS. ”It’s not supportive for the dollar.”
I can’t think in terms of Billions & Trillions, so…
We owe the loanshark $1000 and he wants his money, and we show up with $15.
Who needs a knee, anyway?
Years ago, did anyone read the book “The Panic of ‘89″? I recently saw it an found it an to be an amazing parallel to the Central Banker’s attempts to save this sinking ship. Ironically, the book makes the Fed look like heroes.
FYI, The commercial foreclosures are about to blow NYC real estate out of the water.
DC- Any predictions about how much pain the dual loss of Fannie and Freddie will cause to the DC area?
I can’t imagine Freddy and Fannie going BK will have much impact in DC. The “bailout” will assure every overpaid drone in those two institutions will get to keep his/her job. Just the few at the very top won’t see their usual bonuses. Even if they merge the two institutions there will be a remarkable lack of redundancy and few jobs will be lost.
“Ironically, the book makes the Fed look like heroes.”
I am guessing it focuses on minute-by-minute details of the policy response, without giving much insight on the policy history that brought about the crisis?
The percentages are higher, but I ‘m sure this has been true for years. Down sizing will not be a choice, but a fact.
Many Retirees Face Prospect of Outliving Savings, Study Says…Nearly three out of five middle-class retirees will probably run out of money if they maintain their pre-retirement lifestyles, a new study from Ernst & Young has concluded.
The study, set to be released tomorrow, finds that Americans will have to drastically reduce their standard of living before retirement to live comfortably, or even avoid destitution, later in life. Middle-income Americans entering retirement now will have to reduce their standard of living by an average of 24 percent to minimize their chances of outliving their financial assets, the study found. Workers seven years from retirement will have to cut their spending by even more — 37 percent.
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/12/AR2008071200143.html
Yep. I know people who retired only seven years ago who are totally screwed. Their “financial advisors” (people who can fog a mirror) then promised them 10% annual drawdowns in their investment capital.
A ten percent drawdown in a three-or-four percent world guarantees destitution.
“Most people, if they look at their life expectancy and they think they will live to 90, they are nuts to retire at 60. They’re going to be living in poverty at 80″
I plan on working till 75. My family is very long lived and consistently lives into their 90s. This idea that you should retire at 52 doesn’t work for me. I’d be bored out of my mind within 6 months.
I see a lot of folks out there who just expect that they’ll have the income somehow or don’t even think about it because they’re too busy spending. These are going to be some sad, angry folks in a couple of decades. I’m sure they’ll demand legislation to “fix” their little problem and they’ll probably get it. However, will the U.S. be in a fiscal condition to pay out by then?
And working until seventy and beyond will go a long way toward solving the social security underfunding problem.
Yes, but working past 70 is a solution only for those that have taken the time to learn new skills and invest in themselves. It is an option/solution for individuals - not an entire generation.
The average worker drone probably won’t even have that choice available to them. Especially when one considers the relatively young average age of our immigrant population and the global workforce in general.
“Yes, but working past 70 is a solution only for those that have taken the time to learn new skills and invest in themselves.”
Agree, but isn’t that true of everything? Those who are well prepared for life do well, the others don’t.
That’s why there is and always will be strata in our society - Those who can adapt (plasticity)will do well, those who can’t - won’t. We used to be a nation of adaptees - and we could be again. From what I see and read, many companies are starting to wake up to the fact that older workers are pretty reliable and cost effective and many of the younger generation are far less so. As long as the older ones don’t slide into functional obsolescence.
I think that a majority of skilled workers will have opportunities in the future for occupations that may not be top shelf, but will help pay the bills. I also think the government will be forced to lift the earnings cap that reduces SS benefits and allow workers to earn far more before their benefits are reduced.
I’d like a lump sum payout option. I think I could do better with my money than they can - particularly since my account is empty anyway - except for the rustling of 2% government paper…
I plan on working until at least 67 myself. I think I would be bored out of my wits if I stopped working. Maybe at age 59 I will reassess my situation and want to work until at least 80.
I try to stay in good health myself. My number one thing is avoiding obesity and I have a good handle on that. It’s calorie restriction and cardio work mostly. Fitness swimming when I have access to a cool enough pool, otherwise the lifecycle and brisk one hour walks on the treadmill. Lots of Green Tea and moderate supplements help too!
I hope to be able to go back as a permanent employee in five years and stop this long distance traveling. I have two Arizona places in mind where I could be in bicycling distance to work and only need a car on weekends. I worked in those two locations before and I like the people who work there. Besides, the work is very interesting and fun.
This will become a huge social issue very soon. I know this sounds very opinionated, but the Cult of Retirement is a total sham invented to get people to let the boyz play with their money.
Even though every single day pages like Yahoo! Finance have a shill story with a picture of frolicking seniors - the reality is far different. Come to the big city and watch actual seniors scurry to the grocery store and avoid getting run over or otherwise harassed.
Those seniors toting their little grocery carts (my mom is one of them) are from the last of the saving generations too! Imagine how long those that follow them will last - particularly with the expectations they have.
Is it mere coincidence that 2008 is the first crack @ the $.$. money, for the oldest boomers?
“I know this sounds very opinionated, but the Cult of Retirement is a total sham invented to get people to let the boyz play with their money.”
I agree with your opinion.
Scary insight — mainly because it sounds entirely plausible. The next thirty years will provide confirmation, as we learn what share of the 401(K) generation achieves a retirement standard of living anywhere close to the first wave baby boomer generation who got big social security checks in exchange for minuscule contributions to supplement their generous defined benefit pensions.
I wouldn’t be too harsh on the oldest boomers…
They’ve been paying into social security since 1964 (ouch!)
Out of economic necessity, my three sisters will continue working until they drop. This may or may not be the pattern with the rest of the boomers. In case most boomers postpone retirement, there will be more consumer spending than anticipated, which could be good for the economy.
In my case, I like taking luxury vacations. I pay the way for a couple of my sisters to go along. Currently it’s a week at a time but I will expand it to two weeks eventually.
Eight years ago at age 41 I started worrying about age discrimination. But so far I have not felt any age discrimination. In fact, my client between 2003 and 2007 and its parent company (current client) value my work and have mentioned that I’m important to them.
I think many Americans, myself included, are negative on the economy as a whole but positive about their own job outlooks, just like I am. I think this includes lots of boomers who still like to be involved at work.
Wait to you it 50 and a recent graduate or foreign worker can do/will do your job for 50% to 75% of your current salary.
Then, I suspect you will be concerned about “age discrimination”!
BTW, your clients may cut back their expenses, thereby reducing/eliminate you as a supply source. Please do not think it will not happen. It will. The only thing that seems to be growing is health care and war and in order to increase profits, wages of employees must stagnate or decline.
just my $0.02 worth.
I agree with you lostcontrol. My company is downsizing and offering “early retirement” packages to those employees 50+. I know several that really have no choice - its either take the package or be layed off next month. Argentina seems to be the outsource flavor of the month. I feel for the people who are right now training their replacements.
Culture of retirement also allows business to get rid of those well paid experienced people and replace them with younger folks who get paid a lot less. Skills increase in jobs up to a point, but there is probably little improvement after a certain time. Now, if you are the sort that improves your skills and moves up, it might be worth it to keep you around. Knowledge workers are especially valuable in offices that aren’t good at documenting the past. But if you are a low level person who worked up to a higher position through training? Maybe they can just find a youngster who got that training to begin with (thanks to mom and dad paying for college, etc.) and who will do the job for less.
This goes along with my comment a few weekends ago regarding expensive retirement communities. There are many of them in my area that are priced in the $3, 4, even 500s and have gourmet kitchens, vaulted ceilings, etc. To me, that’s not downsizing. And I can’t believe the market is as big as it appears for this kind of retirement living. I think this is another area where people are “told” they can afford it and just believe it.
“I think this is another area where people are ‘told’ they can afford it and just believe it.”
I’m trying to present countering arguments, backed by data, to ward off the financial wolves attempting to prey on some of the older folks I work with. There’s an age - sixty on up - that brings out the “financial advisers” who want to get you to turn over to them your 401k and cashed out pension.
It’s a tough sell to convince people that the financial dreamakers are out to loot them. Facts fall well short in overcoming emotions.
I have a financial advisor who does not know the entirety of my net worth, precisely because I’m aware she is a saleswoman and she has tried selling me products that financial books advise against. I’m well aware she earns her money if she sells me those products. Turns out that Vanguard has less expensive do-it-yourself products that do the same thing.
RE: Many Retirees Face Prospect of Outliving Savings,
The government should encourage more fast food eating which will kill off all the fatties and contribute to better genetics in future generations.
Sorry, to burst your bubble, but I asked Roland Sturm (a top health-care researcher) this once and he noted that obesity rarely kills someone fast and outright. It just brings on all sorts of expensive-to-treat comorbid conditions. So, unless you can force feed the fatties to the point they pop, your plan is probably doomed.
Captain Credit Crunch,
Like every thing else in America, its called hope, not fact. And even if he is correct, how long will it take and can we all afford to wait that long for the outcome?
I think this sounds like the stock market. Your analysis may be correct, however if everyone one is going the opposite direction, how long can you wait for them to turn back in your direction?
Just Stupid me, mind wandering in the ozone again.
lol
When I was a lad, very few in the Soviet Union owned a car, it was almost unheard of…
______________________________________________________________
Russia to become Europe’s largest automotive market
“Russia is poised to overtake Germany this year to become Europe’s largest automotive market by vehicles sold, auditor PricewaterhouseCoopers LLC said.”
“The surging price of oil has revitalized the country’s economy, providing many Russians the means to buy foreign-made cars. Meanwhile, rising fuel costs have made car ownership more expensive in Europe and the U.S., where sales are stagnating.”
“Car sales in Russia rose 41% in the first half of 2008 to 1.65 million, with a total value of $33.8 billion, PwC said in a report, citing figures from the country’s customs service and a trade group. The auditor said that the figure is larger than the number of new-car registrations in Germany, but that Russia’s total includes used imported cars.”
http://english.pravda.ru/business/finance/11-07-2008/105759-russia_automotive_market-0
____________________________________________________________
Our new car sales are down around 30%, theirs are up 41%.
China’s new car sales are up 17%
And some of you wonder why America is using less oil, and yet the price keeps going up?
That actually makes me feel good. Are the Russians really doing well, finally, or is it just a few? Talk about a long-suffering people.
Things were so crappy in the Soviet Block in the 1970’s, that my parents would take a few rolls of toilet paper, on their Slovakian Sojourns…
The stores had lots of nothing.
Si Slovenka?
“Nebát se a nekrást” ( Not to fear and not to steal)
Tomáš Masaryk
aladinsane,
just an inquiry, do you have an education in math, engineering and physics?
Just asking.
I would never limit myself to just those 3…
That means less oil to export of course…
President George Bush: ‘Goodbye from the world’s biggest polluter’
“The American leader, who has been condemned throughout his presidency for failing to tackle climate change, ended a private meeting with the words: “Goodbye from the world’s biggest polluter.”
“He then punched the air while grinning widely, as the rest of those present including Gordon Brown and Nicolas Sarkozy looked on in shock.”
http://www.telegraph.co.uk/news/worldnews/2277298/President-George-Bush-%27Goodbye-from-the-world%27s-biggest-polluter%27.html
______________________________________________________________
It’s really sad, @ a time when we need a leader the most, we have the least.
But read on dear friends…
It gets worse~
_________________________________________________________
“One official who witnessed the extraordinary scene said afterwards: “Everyone was very surprised that he was making a joke about America’s record on pollution.”
“Mr Bush also faced criticism at the summit after Silvio Berlusconi, the Italian Prime Minister, was described in the White House press pack given to journalists as one of the “most controversial leaders in the history of a country known for government corruption and vice”.”
“The White House apologized for what it called “sloppy work” and said an official had simply lifted the characterization from the internet without reading it.”
Actually sounds to me like he’s simply being truthful and doesn’t have to lie anymore… We ARE the biggest polluter and the line on Italian politics is true. See? We’re at the point where the truth is not welcomeor tolerated. I’d say we’re in big trouble.
“We’re at the point where the truth is not welcomeor tolerated.”
Exactly right!
And where exactly would Benito Mussolini fall on the list?
W is a Fuc*ing embarassment.
I hope those that voted for him are proud.
My dad and I had a discussion about this a few years ago. I told him W was the worst prez in history. Keep in mind my father voted for dubya. My dad says no, coolidge was much worse. Whatever.
Keep in mind I can’t stand the Dems as well.
Mike
I feel certain other G8 Members requested all lamp shades be removed, so as not to allow him to make a bigger fool out of himself, than is already necessary…
SV guy,
I totally agree with you!
I have been a Dem for 40 years. It seems I have been unlucky in my choices for candidates. I even voted for John Anderson. This election, I will be voting for R. Nader. As far as I know, he hasn’t taken any corporate contributions!
I could be wrong. Does anyone know anything different?
Arghhh. voting for r. nadar worked out really great for the US the last time around. You can slice and dice the Dems all you want but the GOPs and their pig trough take the CAKE.
I watched a National Geographic (or Discovery Chanel) special several weeks ago that plainly stated China is the #1 polluter by far on this planet. Seems to me they didn’t sign that joke treaty called Kyoto either. The U.S. was good ways down the list, I don’t remember where we ranked according to their study, top 10 I think.So it looks like G.W. was wrong if he said we were #1. I also read that moonbats never stop barking, turns out that is also true. No worries OwlGore can gas up his G-5 and get right on the problem,no real rush though, according to the supreme leader of the moonbats we have less than 10 years to go, before we all perish.
Now back to some real news, of interest…
Bush simply let his real feelings show concerning his European weenie “friends.” I’m glad he did it.
It depends on the type of pollution. China rates #1 in CO2 emissions, while the good old state of TX ranks 7th in the world for total pollution:
Texas is world’s seventh biggest polluter
http://www.telegraph.co.uk/earth/main.jhtml?xml=/earth/2008/01/18/eatexas118.xml
For overall pollution, the US is ranked 39th best:
http://sedac.ciesin.columbia.edu/es/epi/downloads.html#summary
For CO2 emissions, US is now 2nd:
http://news.mongabay.com/2008/0614-co2_emissions.html:
of course the US is down on the list, they outsourced most of their polluting production over the last years … the US finance economy only pollutes the virtual (and social) world. I’m pretty sure that if you check pollution (and energy consumption) per citizen, the US is the undisputed number one on the list.
“President George Bush: ‘Goodbye from the world’s biggest polluter’”
Bush was probably being ironic.
The whole “USA is the world’s biggest polluter” is such a crock anyway. It’s like saying China, the world’s most populous nation, is the world’s leading producer of human excrement. Well, duh. Of course the world’s most productive economy is going to produce the most undesirable by-product (although we also have the best means of cleaning up and containing it). But naturally people who are pre-disposed to be negative about America are going to focus on what comes out the back end.
As PRESIDENT he is held to a higher standard and should not say jokey cr@p. Again, I can’t believe all the “held to a higher standard” junk said about Clinton and his affair, but W gets away with anything he does. As PRESIDENT W has no place making dumb jokes like that that make our country look bad. The same people that held Clinton, better at his job as President, to a higher standard in his personal life, fall all over themselves excusing W every time he says and does things to embarass and degrade our country.
George W. Bush is a confirmed boob. And that’s the kind that does not come in pairs, fortunately.
Are you sure? It may come in triplets.
Clinton, Bush, “next president”.
No, no, no,
It should be kennedy, johnson, nixon, ford, carter, regan, bush, clinton, bush, future pres. (how far back do you want to go).
BFD! We’re the largest polluter in the world. We’re also the largest economy in the world so it is expected we would be the largest “polluter”.
I also always get a laugh out people saying we consume 25% of world’s resources yet we’re only 3% of the world’s population. Well again, we’re 25% of the world’s economy so it’s expected.
For as bad as “W” has been, Gore (the insane meglomaniac) or Kerry (the anti-patriot elitest) would have been outright disastrous. We got the “best” of all the terrible choices.
Funny, I would describe W as both an insane megalomaniac and an anti-patriotic elitist.
Frankly, if someone had intentionally set out from the beginning to utterly ruin this country in 8 years, they could not have done a better job than he has.
I thought it was hilarious.
Kinda underscores how he thinks of the “climate change” crowd - they are to be ignored and mocked - something with which I agree.
I recall that the housing bubble crowd, the acid rain crowd, oil at $100 a barrel crowd, the fresh water shortage crowd, the recession crowd, and the no WMD crowd were also mocked and scorned.
“It is more dangerous to be a great prophet or poet than to promote twenty companies for swindling simple folk out of their savings.”
George Bernard Shaw
From The Sunday Times
July 13, 2008
US Treasury rescue for Fannie Mae and Freddie Mac
Treasury secretary looks at $15 billion cash injection for crisis-hit mortgage lenders
Iain Dey and Dominic Rushe
US TREASURY secretary Hank Paulson is working on plans to inject up to $15 billion (£7.5 billion) of capital into Fannie Mae and Freddie Mac to stem the crisis at America’s biggest mortgage firms.
The two companies lost almost half their market value last week as rumours of a government bail-out swept the stock markets, hammering share prices around the world.
Together, the two stockholder-owned, government-sponsored companies own or guarantee almost half of America’s $12 trillion home-loan market and are vital to the functioning of the housing market.
The capital-injection plan is said to be high on a list of options being considered by regulators as a means of restoring confidence in the lenders. The move would protect the American housing market, but punish shareholders in both companies.
Under the terms of the proposed move, the US government would receive a new class of shares in exchange for the capital, which would be hugely dilutive to shareholders.
Wait a minute, i thought they just said they were well capitalized? How many times will they play this game?
I’m guessing the jig is up for the manipulators.
Would it be fitting if the whole enchilada fell apart tomorrow?
Bastille Day
viva la coup d’truth
Dan is right, might be Bastille Day for the banks.
I keep wanting to believe people, but know that I shouldn’t. One day, when no one believes them any more they are going to start telling the truth and everyone will assume that what they said was false.
So, who is going to pull some cash out of their bank on Monday just incase the other banks aren’t as “well capitalized” as they are letting on?
I for one will be pulling out my money, I have plans to spend it (on capital investments) and the last thing I need is for it to be tied up in FDIC for a few months. Forgoing 3% interest is far better “insurance” than FDIC insurance.
It is sad that you can put your money in the bank for safe keeping and the bank can “fail” and it is considered “just part of business” instead of Fraud! Particularly when said failed bank continued to open new accounts and take new deposits (that they knew they could not repay).
FDIC is just a confidence game that distorts the market and encourages trust to be placed on organizations that do not deserve it.
“One day, when no one believes them any more they are going to start telling the truth and everyone will assume that what they said was false.”
Sounds like the tale of the banker who cried ‘wolf!’
“The risk is that they’d be treated as equity, or partially
as equity,” Foux added. “That’s a big risk, but at 14 percent
you almost think that’s worth that risk.”
http://uk.reuters.com/article/governmentFilingsNews/idUKN1162046620080711
Ummmm, no.
The capital-injection plan is said to be high on a list of options being considered by regulators as a means of restoring confidence in the lenders. The move would protect the American housing market, but punish shareholders in both companies.
restoring confidence for whom, for homeowners who need to be reassured of all their entitlements? I guess the best way to damage confidence in the lenders forever is to stick it to the investors that put their money into these companies. I’m pretty sure the Paulson gang is again going to punish foreign investors (mostly pension funds etc., ultimately people you can’t blame for what is happening now) and protect the Wall Street gang. The USA is already financially and morally bankrupt, so why not …
“The USA is already financially and morally bankrupt, so why not …”
Where will tomorrow’s financing originate?
I guess from the few US citizens that still have some money left, and didn’t move it offshore in time
and probably from foreign pension funds, wealth funds etc. again - if Paulson and Bernanke spend enough on bribing the managers of these funds.
But I guess hyperinflation or some kind of Argentina-like scenario is the only option left if the FED wants to keep fighting the market. We are probably going to find out pretty soon about that.
And I am afraid no stockholder will invest in future sale of stocks in these two entities, because the stockholders’ value will be seriously diluted.
In effect, these entities’ future funding is now the US. So they are nationalized.
I have a tin hat like some of the others on this website, however, If I was W, I would want to get out of town as fast as I could, so that this mess does not occur on “my watch”!
Whatever the govt does (Fed and Treasury), its called kicking the can down the road!!!
What do you think those stimulus checks will do.
FDIC Venture Capitol fund $52 Billion
minus approx $5 Billion withdrawal from IndyMac =
$47 Billion left in the run on the piggybank.
I’m going to keep enough in the bank account to pay bills, the rest of the cash goes in a safe.
When did you decide this and how many others are making that same move? When does the next domino fall?
I have exposure to BoA (where I do my banking), Stellar One (for my business account) and my employer uses Wachovia.
I wonder how many businesses will be unable to make payroll because their business accounts were at IndyMac? How long until they can start getting their money from FDIC? How much coverage does a business account get? A company with 25 employees could easily have payroll from 50K to 100K each month.
I liken what’s going to happen, to what’s happening to glaciers melting in Greenland…
It’s gonna happen much quicker than we thought it would.
I’m already there.
VirginiaTechDan,
I have done the same. Significant dollars in a can in the back 40 under the third post from the left.
The remaining cash in my BofA business and personal accounts are for bills only.
This will not end politely!
Are you under the impression the FDIC will “buy out” Indymac? Do you think that’s how it operates?
Finance & Economics
American housing
The wrecking-ball response
Jul 10th 2008
From The Economist print edition
How to deal with a glut of empty homes
TUMBLING house prices in America, rising foreclosures and a glut of unsold homes have produced a variety of unusual, even desperate, responses from policymakers. Of the 129m housing units in America, 18.6m stand empty. At 2.9%, the home-owner vacancy rate, which measures the share of vacant homes for sale, has reached its highest point since measurement began in 1956. At the end of the first quarter there were 2.3m empty homes on the market, an increase of more than 160,000 from the end of 2007. There is a vicious circle: the huge number of houses on the market pushes home prices down, and as prices decrease, mortgages become harder to refinance, leading to more foreclosures, vacancies and so on. The more homes are on the market, the less chance that prices will stabilise.
…
In prepared remarks for a speech earlier this year, Ben Bernanke, chairman of the Federal Reserve, praised programmes that seek to demolish the most ramshackle units in order to “mitigate safety hazards and reduce supply.” Unlike mortgage bail-outs, this policy does not encourage risky lending. However, it requires cities to spend money on demolition merely to lose money through reduced taxes.
“Of the 129m housing units in America, 18.6m stand empty.”
That’s astounding on a national basis, nearly 15 percent vacant. Has it ever been higher? How high will it go as the economy contracts and more people double up?
Wrecking-Ball Bernanke needs to be put on a chain-gang.
There are millions and millions of vacation/2nd homes in this country. How many people are going to give up on their winter florida home or summer cabin at the lake with todays gas prices and next winters higher airline prices; at the same time of recession and growing job losses.
“There are millions and millions of vacation/2nd homes in this country. How many people are going to give up on their winter florida home or summer cabin at the lake with todays gas prices and next winters higher airline prices; at the same time of recession and growing job losses.”
For those that move back and forth between two homes seasonally, I don’t think the higher transportation costs will have much impact. However, for those that have a lake home they like to use several weekends a year, gas costs could be a factor. But even if they’d want to sell, who’d be buying? The vacation housing market should get hammered far harder than the primary residence market.
Don’t forget utility costs.
The snowbirds will still have to heat their northern homes while relaxing in the sun. Natural gas/heating oil prices aren’t looking good for this winter.
“The snowbirds will still have to heat their northern homes while relaxing in the sun.”
Good point. Subfreezing does a number on plumbing.
Yeah these braggarts owning 2 or 3 homes, thinking they are financial geniuses are in a continuing big drain out of their pocketbooks. My buddy is still in denial. His Jamaica house is vacant 51 weeks out of the year. He rents out two Biscayne Bay condos in Florida (but the renter will probably find a less expensive place to rent at the end of the lease). He has 160 acres in flyover country. This is his retirement plan. And no, he did not study personal finance, which says real estate investing should never be a significant part of your retirement planning. My buddy says his real estate is doing great!
So, buying into a timeshare is NOT a good idea right now?
“So, buying into a timeshare is NOT a good idea right now?”
Many years ago I was dating a gorgeous woman. I thought it was going to be the real thing, silly me. It was a time share.
Depends on which timeshare. I like my timeshare. All but one of the resorts are in the U.S.A. It forces me to take a vacation and the amenities are great. I particlularly like its Hawaii locations (I have been to 2 out of 5 of the Hawaii resorts so far).
Prices may go down on these (especially overseas ones) though since the next few years people will probably not afford vacations. So I would not buy one if I had to do it over again.
“The British economy is braced for further turbulence this week as the fallout from the second largest bank failure in US history spreads across the Atlantic.”
http://tinyurl.com/5z86cy
“Terry Smith, an influential City commentator and chairman of stockbrokers Collins Stewart, said: ‘It is every bit as true today as it was in the Thirties that, if America sneezes, the rest of the world will catch a cold.’ Asked if he thought the crisis had reached its zenith, Smith said: ‘We are nearer the beginning than the end. I’m afraid there is going to be more pain - quite a lot, actually.’”
Maybe we whould have had a lot of articles about how Northern Rock was ruining our economy. Then it wouldn’t be our fault. It would be their fault.
‘In America, they have lent money to people with no proof of income to buy five-bedroom houses,’ she said. ‘That has not happened in Britain.’
I work with and am friends with many Brits, but they can be a bit holier-than-thou. The above statement is just a wee bit misleading: the British banking industry has been very loose with zero down mortgages, buy-to-let mortgages, equity loans, personal loans, etc. To infer that there is no home-grown problem in the UK is utter crap. Their bubble is the worst I have seen anywhere.
Whistling past a graveyard…
‘In America, they have lent money to people with no proof of income to buy five-bedroom houses,’ she said. ‘That has not happened in Britain.’
My sarcastic comment is that it didn’t happen because they don’t have any five bedroom houses. Even absent some of the overtly fraudulent activities that were common in the U.S., prices in Britain still bubbled higher than in America relative to incomes. Britain will have its crash too and, like the U.S., there’s much debt that may never be repaid.
sure, I have seen many examples on television of all the systematic fraud that has been going on in the UK for years. There where mortgage shops where for an additional fee they would provide a fake passport and job history to register the mortgage debt on. Of course their was loads of fraud, otherwise homeprices could never be what they are now.
Netherlands is a similar story, although there the unlimited homeowner subsidies are a major factor for the enormous price runups (around 1000% now over the last 15-20 years) and fraud is probably a bit less than in the UK. As long as prices go up nobody cares about fraud or lax lending standards, and in most of Europe that is still the situation.
Don’t think people have learned a bit from the US, the sheeple in Europe still think it is different there. There is a bit more gnashing of teeth though lately, because homes are refusing to sell at todays wishing prices. In Netherlands it now takes 4-5 months to sell the average home, probably a record just like all the other housing market records that were shattered over the last years. Some of the other speculator markets like the Spanish Costas seem to be dead too, nothing is selling. Sometime, price discovery will start.
My mom has had her place on the market in East Wales now for over a year. Two years ago the place would have sold in days with multiple offers.
Have to agree with you LL/MoC - the Brits can be a bit holier-than-thou about the Yanks, especially when you take in to consideration that the UK had a bad housing crunch itself back in the early 90’s.
Though, bear in mind, to the average Brit, a 5-bedroom house is almost a mansion…
I think they’re more appalled at the size of the houses we have over here (along with everything else), than the mortgage mess. Lots of people in the UK consider the US as the bastion of excess and overconsumption, so the line about 5-bed houses is probably more a double-take at the size, rather than the financing.
Word I’ve had from UK friends is that the housing market there is about 1 year to 18 months behind the US, so there’s still a lot of ‘who, me?‘ and ‘what has the US situation got to do with my mortgage?’ type of talk.
Although the more savvy amongst them are starting to see cracks. Housing prices are just starting their slippery slide over on that side of the pond, so the cheerleaders are still rah-rahing, albeit to a smaller crowd.
And, yes, the UK banks and lending institutions were as bad as the US ones when it came to giving money away on overpriced houses. I read a few months back that mortgages at 7 or even 10 times income were being issued, and I have personal experience of the price increases in London, at least.
I looked at an Estate Agent’s window while I was back there this spring, and was horrified to see places in my old ‘hood going for about the same as they would in Westside L.A. And this was in scraggy old Southeast London, not ‘toney’ by anyone’s criteria.
1-2 montsh ago a BBC TV program about the housing market had one of the big UK property tycoons explaining that London prices were already down by 20-30%, and not 1-2% like the government claimed then. This guy had sold a large chunk of his property (valued more than 1 billion pound) 1-2 years ago, because he thought the UK market was seriously overvalued.
UK is far behind the US, and the Netherlands again seems to be at least 1 year behind the UK; 10x income loans are still fairly normal here (although the central bank now suggests banks should not go over 6.5x income). You would guess the Dutch can learn something from the fallout in the US and UK, but up to now they don’t seem interested in taking any economy classes.
http://www.nypost.com/seven/07132008/news/regionalnews/anguish_of_stock_splits_119728.htm
And Cindy simply turned to Tom and said, “Fix it.”
Any my friends wonder why I have avoided marriage all these years…
I read that to my girlfriend - she thinks it’s made up - because it is so chock full of juicy dramatic goodness.
As for me, I don’t care if it’s made up or not, the take away point is that stories like this will now percolate through society’s layers and the “crisis” will further embed itself into our popular culture.
It is that more complex social digestion of these events that will keep people out of the stores.
Sounds like your typical high priced call girl who saw a big wallet and married it.
Posh rediecoration, Hampton homes, expensive summercamp and divorce in 3 months?
This just pisses me off so much i am contatcing the mans lawyers and see if we can do something to stop these low class wimmin from getting any money….damn my gf and i have money problems and we are watching everything we spend, but we know splitting up is not the answer…..maybe i got a good woman….ya think?
Sounds that way to me.
Conversely, I know of several extremely unhappily married couples who are struggling financially and stay together only for the dual income. I get so sick of hearing them continually complain about each other. Oh, and, then there are all the affairs that this situation breeds. What a mess.
Even among us more ordinary types, it happens.
“Women, typically, if they’ve lived one particular lifestyle, assume that their husband should just solve the problem.”
We’re nothing special, but my (almost ex-ed) wife has not worked in well over a decade, and she never was a primary earner or worker when she did. Her best year for earnings was $14k working for her parents, Mine was 10 times that working for MegaCorp. (20x if you count stock cash ins). And she only worked erratically the first few years of our marriage. I’ve worked continuously since leaving school.
When I took a job in Austin, in large part because I couldn’t find anything at that level in DF/W, she couldn’t get her head around the fact that is was tough to find to job that paid at the level we were consuming at.
I will never forget a surreal conversation we had where I realized that she truly sincerely believed that the reason I was still unemployed (it had been a couple months at that point) was that I just wasn’t interested or trying very hard to find work. And that surely there were $100K+ jobs to be had just down the road in our small town/’burb, and it must be that I wasn’t interested enough in changing my occupation to get them. The idea that there were very few high-paying jobs for which I was qualified for, or that there was fierce competition for them completely escaped her.
She had been very fortunate that I had taken care of her financially for so long, such that she never never had to worry or wonder, and that the magic green Amex card always ‘just worked’. And considering that I had met her when she was in college, she never really had to survive by herself economically, and thus lacks the personal experience of it.
As a result, she built up her world-view out of being fortunate and made it her baseline. Not having to concern herself with economic details led to her having a Disney-esque vision of how things work. It was easy for her to spend the money she didn’t have to make, and to not care about much things cost. It became hard for her to understand that just because we had it (money) yesterday, there is no ‘right’ or ‘entitlement’ or ‘guarentee’ that says we will magically have money tomorrow.
Interesting. More fuel for us confirmed singles. However, either she would never listen to you or you did not effectivly communicate to her the situation. The problem we see is how someone interprets what another person says. Comprehension level from her perspective seemed like it could use a lot of improvement. Then you get to the point asking yourself “is it my fault that she does not understand high paying jobs in my line of work are very difficult to come by?”
‘Comprehension level from her perspective seemed like it could use a lot of improvement.’
Possibly a good b*tch-slap would help with ‘comprehension levels’. Jeeze. People are blind and/or iggerant a whole lot of the time. Women AND men. I wouldn’t wish my childhood on anyone, but it sure did make me grateful for what I have now. And which I obtained by myself, for myself. You know, the house with running water, warm clothes for winter, shoes, food…little things like that.
i dunno guys, i was always upfront with women, i pay for me you pay for you…
The true test of a keeper is when she gets paid on friday she takes you out to dinner and movies, dancing and pays for it…
And #1 on my list is the landlord always gets paid FIRST, ON TIME and IN FULL……….all others you can stall.
The last thing i want is for the landlord to know we barely made the rent this month.
Congrats on the pending divorce. Sounds like you will be well-served to be shut of her. Are you still in Austin? Many fine drinking establishments there, where you can hoist a beer in celebration of your newly won freedom (purchased, no doubt, with a large chunk of your past and future earnings…).
Actually no divorce is pending.
We’ve worked out a pretty good arrangement for right now, basically a happy separation. She lives in Rockwall, I live in Austin. We get together about 25% of the time. It’s a far better situation for our kids, and a little better moneywise than a divorce in Texas would be.
We might eventually split, or we might not. To her and my credit, we’re working this out without any drama or hard feelings. Compared to the things I read on some of the Divorced Dad’s forums, I have it pretty easy.
I sincerely hope you work things out.
It’s one thing for the “singles” to cheer-on your divorce, but divorce is a sucky thing for the kids and family unity (divorced kid of a divorced kid, married to a divorced kid here).
Being single is wonderful if you never plan to have kids, but it IS important to marry — and stay married for LIFE — if you plan to have a family. Not everyone can do it because of abuse, infidelity, etc., but it sounds like your problems can be worked out.
I wish your family the very best!
Northern Rock taking aggressive action against borrowers in default:
http://tinyurl.com/5g2mlg
“Debt advice experts warned yesterday that, despite the Chancellor’s calls for leniency from lenders, Northern Rock was now aggressively pursuing defaulting borrowers as part of its efforts to repay the £25bn rescue package it received from the government. Chris Jary, director of Action for Debt in Durham, said: ‘There used to be a small group of sub-prime lenders who you knew would always go straight to court. But recently it’s Northern Rock who have become more aggressive, taking legal action as soon as they can.’”
“House repossessions at Northern Rock are running at twice the rate they were before the bank was nationalised in February.”
Also (not related to Northern Rock):
“Homeowners struggling to meet their mortgage payments would be able to sell their homes to the local authority and rent them back as tenants under radical proposals being considered by the government to prevent the misery of repossession.”
“Asked to confirm that she was considering rent-back schemes, enabling homeowners to become council tenants in their original houses rather than be repossessed, she said: ‘We are looking at that. I have to be certain that the choices I make do actually help to limit the damage; and, importantly, is it a short-term fix or a long-term impact?’”
“The scheme would be expensive. Councils would need central government funds to buy the houses. But it could save on the long-term costs of rehousing homeless families and allow councils to increase their housing stock at relatively low prices.”
“…repossessions…running at twice the rate they were before the bank was nationalised in February.”
Ha, ha, now that the British FBs are into the state - the state isn’t so benevolent anymore! Now, are our FBs really sure it wouldn’t be easier to just walk and avoid getting similarly “helped”?
The irony, of course, is that a large percentage of this housing was once Council owned, 20-25 years ago.
Maggie Thatcher (hawk, spit) had the ‘brilliant’ idea back in the 80’s of ‘privatising’ council housing stock, to allow renters to buy their own houses at discount. ‘Homeownership Society’ a little early and a little east….
Of course, many of the owners sold on as quick and as profitably as they could, leading to a massive over-appreciation in house prices, and the inevitable crash in the early 90’s.
Leaving low income people and renters with a greatly depleted housing stock, stuck between renting recently privatised council houses at whatever rents the owners asked, or joining Housing Associations where the rent was set at ‘market rate’ (ie several times higher than the Council itself would have demanded, had housing stayed in the hands of the council).
So - LOL - what comes around goes around.
Whodathink council housing would have made a comeback for ‘Thatcher’s Children?’
“High-profile Australian property investor and author Michael Yardney warns New Zealanders they could be ripped off by Australian property marketers.”
“Some marketers are taking advantage of “many” investors turning to Australian property because they recognize the New Zealand market is in a slump. They are selling “off the plan” properties with extravagant capital growth promises of 20 or 30 per cent.”
http://www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10521245
_______________________________________________________________
The Kiwis are so hungry to gamble on real estate, and just across the Tasman is their last chance casino.
IIt’s easy to under-estimate just how much the housing bubble mania took hold over virtually every industrialized country, and then some…
OT, more bad news for the Florida and Las Vegas tourism industries:
“Both places are facing alarming reductions in commercial air service as airlines whack away at markets where fares are traditionally cheap. According to OAG, the airline-schedule data company, the number of flights scheduled for this fall is down nearly 13 percent for both Las Vegas and Orlando, versus the same period last year.”
http://tinyurl.com/5f95mq
Can I borrow a cup of irony?
“Whatever happens in Vegas, stays in Vegas.”
“With airlines parking hundreds of unwanted aircraft, he said, “there are an awful lot of airplanes sitting around and available to someone who is thinking about maybe running charter flights in partnerships with specific destinations.””
They still have to be run profitably or subsidized. Those aircraft being parked are the least fuel efficient and hence have the highest operating costs. Would casino-subsidized charter flights necessarily add capacity? Might the remaining carriers just cut more flights? Airlines are trying to reduce supply enough so they can raise fares high enough to cover their operating costs.
Whatever approach the casinos take, they’re likely looking at fewer visitors and higher operating costs.
the silence of the lenders
“it puts the check in the mail”
http://www.nytimes.com/2008/07/13/business/13mail.html?_r=1&ref=business&oref=slogin
Hahahaha! Good funniness!
Mr. Bailey (Dan, not George) was no friend of Angelo.
Mr. Bailey, 41, promised in his e-mail message that he would pay every nickel he owed if Countrywide would modify his mortgage in a way that allowed him to keep his home. He sent the message to a grab bag of Countrywide e-mail addresses, which he had received from http://www.LoanSafe.org, an online forum for borrowers.
Among the recipients of his e-mail was someone he had never heard of before: Angelo R. Mozilo, Countrywide’s co-founder and chief executive. Lo and behold, Mr. Mozilo replied — inadvertently, as it turned out.
“This is unbelievable,” Mr. Mozilo said in his message. “Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting.”
bankers and finance types need not apply to nyc coop boards
http://www.nytimes.com/2008/07/13/realestate/13cover.html?ref=realestate
so bankers and finance types are the new pariahs…
The Silence of the Lenders
http://www.nytimes.com/2008/07/13/business/13mail.html?pagewanted=3&_r=1&ref=business
According to an April report by the State Foreclosure Prevention Working Group, a unit of the Conference of State Bank Supervisors, a regulatory alliance, about 70 percent of delinquent borrowers weren’t getting help in renegotiating their mortgages.
“Based on our analysis,” the working group reported, “the collective efforts of servicers and government officials to date have not translated into meaningful improvement in foreclosure prevention outcomes.”
Could it be that there is little reason for the banks to modify mortgages since they realize that if that the fed will eventually bailout the FB and the banks?
Outside of the outstanding mortgages, banks are sitting on taxes, liens, decaying assets and potential neighborhood lawsuits and backlash.
This stuff is piling up fast.
I’m not really sure what banks can do, other than get them off their books, fast, which means taking huge losses or insolvency. Maybe sitting like deer in the headlights is the best option. At least your paycheck still comes every two weeks.
Overseas crews coming to battle Calif. wildfires
“As hundreds of blazes continue to char California, additional National Guard troops and overseas crews are being called in to assist exhausted firefighters, and President Bush has scheduled a visit to the state.”
“Gov. Arnold Schwarzenegger on Friday ordered 2,000 more National Guard troops to join the 400 already on firefighting duty. Australia, Canada, Greece, Mexico and New Zealand are also sending firefighters and equipment, federal officials said.”
“We are stretched thin, and our firefighters are exhausted,” Schwarzenegger said. “The fire season as we’ve known it is pretty much over. … Now we have fire season all year round.”
http://apnews.myway.com/article/20080712/D91S9QL80.html
_____________________________________________________________
Kill 2 birds with one stoned, idea:
We need a reason to pull our troops out of harm’s way on a failed mission, and by virtue of living in a 115 degree Iraq-Tijuana-adjacent rathole where people are shooting at you, or planting bombs underfoot…
They are used to Hades, in other words~
They are also some of the most fit Americans around.
They would make the best firefighters imaginable~
Have any of you Googled the year 2012 lately. The volume of new material about the end of time which is supposed to be 2012 is staggering. The end therefore is only a little over 4 years away.
Wildfires, hurricanes, all sorts of natural disasters are suppose to increase as they are doing. World War III and atomic disasters
will finish it off. In 4 years we may not have to worry about
housing problems.
My oldest daughter believed in Santa Claus until she was 7.
What ARE you talking about? Of course she ‘believed’ in Santa! How could she not believe in the Big S?
Are you implying something or other here? No, no–don’t answer, because I can’t hear you. Not one little bit.
Nah, we won’t get off so lucky. Mayan calendar que loco.
Can we please keep the crazies off this blog? I’d just as soon this blog not turn into another Y2K website.
Mayan calendar? Their numbering system was base 12, not base 10 (decimal) like ours, so 2012 in base 12 is, um, somebody help me out here. I just know it’s a bigger decimal number.
Oh what the heck.
2 x 12 raised to the third power = 3456
0 x 12 raised to the second power = 0
1 x 12 raised to the first power = 12
2 x 12 raised to the zero power = 2
——
3470
I think we’ve got some breathing room.
The dates are already converted to our calendar, and IIRC the Mayans used a base-20 number system (and a less used base-60 for astrological calculations, just like the Babylonians), not base-12.
Anyway, the point being that the supposed ‘end’ of the Mayan calendar is actually just a big shift - an end of one Grand Cycle and the beginning of the next one.
Its only in Western thought that its ‘the end of the world’ - the Mayans recognised that it would be a big change, but not the end of everything.
I’m sure I’m not the only one who senses a ramping up of craziness, both human and natural, but I doubt very much that the entire world is going to stop like a wound-down clock on exactly 21/12/2012.
The mayan computers will all crash, I suppose…
Base 20. You’re right. My bad.
Can we please keep the crazies off this blog? I’d just as soon this blog not turn into another Y2K website.
I agree with this request (offended atheist).
That better include the “global warming” crazies!
“…. In 4 years we may not have to worry about housing problems.”
Thanks for the chuckle!
Oh no. Not the end of the world, again.
Bank Debt Dead Pool ‘08
1. IndyMac
2.?
2: National City Corp. http://finance.yahoo.com/q/bc?s=NCC
The highway to HELL chart
3: Lehman Brothers http://finance.yahoo.com/q/bc?s=LEH
Actually, Indy is the 5th bank … see the list at the FDIC website.
It’s still happening. Meanwhile, you wouldn’t believe the number of abandoned construction sites around here.
http://www.gainesville.com/article/20080713/NEWS/807130327/1002&title=Unique_project_in_works
The year 2012 is the end of time according to the Mayan calendar.
Google 2012 and read all of the information. No more housing
problems.
The end of time - about the only way to clear the books of bad debt.
I have a better formula. Take the year you were born; add 85. Thats the end of time.
This is going to be even worse than January 1, 2000 (Y2K), which brought about the end of modern civilization.
My favorite Y2K story came from a friend in a small town, that had a church of evangs/tax-evaders/militia (they hit the trifecta!)
A few hours before sundown on December 31st 1999, the faithful blocked the street, guns at the ready, in case somebody was going to take over their little piece of nothing, on just the other side of nowhere.
They brought sleeping bags and stayed on constant vigil, until noon the next day.
LOL.
And I once new a guy who lived between a golf course and a prison. I asked him how he liked it. He told me it had its pros and cons.
I wish I could create as good a story, maybe come up with the end of days in the Menominee calendar. Nah, my friends don’t even know the day let alone the date.
I hope to be completely worn out from having too much fun, with about 10 cents to my name, when my end of days comes along.
Oops, posted in last night’s thread by mistake…
Anyone else read the insufferable Jeff Opdyke columns in the WSJ? He writes navel-gazing thumbsuckers about his family and if they’re typical, we’re fooked. I can’t link to today’s column, but basically the story is he left a real good job in NYC and moved the wife and kids back to her home in Baton Rouge so she could work as a hospital administrator and be close to her family. Well, she lasted a couple of months at the hosp, and now they realize they’re not happy where they are. So they’re going to up and leave to follow their dream to live abroad, in Hong Kong.
Meanwhile they’ve been doing the usual over-the-top remodeling of the house they bought in La., including a quirky Asian-themed bathroom. He pondered if it would hurt eventual resale value, but decided it was more important to follow your dream of the moment then worry about that crass calculation. This is from an older column that ended up at a real estate site.
So recently he’s been writing about (1) how hard it is to sell their home in this market (2) how expensive rents are in HK. LOL! And now (3) that Asian bathroom remodel wasn’t such a great idea after all, especially since you never know when you might want to follow your dream somewhere else.
It’s petty stuff, but his musings reek of so much serious self-indulgence that I wonder where the adults are in this family. And this is a guy who apparently writes financial advice books.
Gah.
two finds from the Sarasota Herald
short sales
http://www.heraldtribune.com/article/20080713/REALESTATE/807130327/1661
and the supposed “recovery” in home sales
http://www.heraldtribune.com/article/20080712/NEWS/807120337/1661
Downturn affects the traditionally self-sufficient.
http://www.heraldtribune.com/article/20080713/NEWS/807130338/1661
I expect to see increasing evidence like this of victory in the Fed’s War on Savers over the next several years.
I love Utarr, I love Utarrr.
Ahhh, the Sabbath Day in Utarr, Land of Righteous Saints…say, speaking of righteous thingies, do you guys want to hear about a precious, wonderful miracle? You do? Okay!
I’ll tell you all about it. See, I pawed through my old stuff, and after enjoying the comical yearbook photos of me in olden times, I opened the closet in my old room and looked wistfully at the beer brewing supplies stowed in there. I used to homebrew quite a bit. I wondered if I could possible get a few keg cannisters, a CO2 cannister and a couple giant enamel pots back on the airplane to Washington, and I picked up a keg and gave it a sentimental shake and lo, it sloshed! What could this be? I distinctly recall drinking alllllll the contents before leaving for the real promised land, which is of course, Thurston county, WA, and so there should be nothing in there. But there was! I gingerly cracked it, and it was clearly an oatmeal stout. I hollered for my brother, Alan, who is known in Santaquin as ‘Big Al’, I hollered to him to quickly come and observe this miracle, which was clearly like unto the loaves and fishes miracle performed by Sweet Baby Jesus on the mountain, you know the one, refreshments unending for those who stayed to hear all He had to discuss. Only THIS miracle was even better, because I can get fish and bread at any old supermarket around here, but I can’t get any beer worth drinking. (Utarr has terrible, empty beer. That’s why I started homebrewing so long ago, when I was 8 or 9 or so.) And here was a keg full of the precious fluid! Sweet Baby Jesus had perceived my lack and had generously helped me out. For verily, does not scripture say, ‘…He will satisfy thy needs in a sun-scorched land..?’ (Isaiah 58:11) And baybee, if Utarr is not verily a ’sun-scorched land’, then there ain’t no such thing, nohow.
So I shouted for Al and he came and agreed it was indeed a miracle, and I invited him to partake of this miracle, even though he’s not very righteous, for does not scripture say ’show charity and you won’t get in as much trouble as you deserve to be in’? (1 Peter 4:8) And verily we did partake of the miracle, yea, with gratitude.
Yea, and a little while later we raised a joyful noise unto the Lord (Psalms 98:4) and my mom shouted downstairs to us to stop that infernal racket and to get out in the fresh hot air and so we did, and there was the setting of left-over fireworks and also a nice bonfire of old apple crates and orchard prunings and I was much pleased, as were the mutant mule and the horses, as they always seem to enjoy a good bonfire, although not the firecrackers so much.
You may have been a Lutheran in a former life. (Unlike LDS adherents, Lutherans enjoy their lagers, not to mention their dark roasts, without fear of divine retribution.)
“Lutherans are not allowed to enjoy anything” (Lars, a great drinking friend and Lutheran) . A tremendous guilt complex over enjoyment doesn’t stop the drinking.
Au contraire — guilt has driven many a fine Lutheran to alcoholism.
I love being old line Episcopal - We don’t have the guilt of the Catholics or the restrictions of the Baptists. We actually have FUN in church (not to mention the beer at our shrimp boils)…
Brought tears to my eyes… such a sweet story. So blest art thou fair lady.
‘They that sow in tears shall reap in joy.’
(Psalms 116:8)
Is your crying like that, Hoz? Or maybe you just got allergies.
You made my Sunday. And I didn’t even have to go to church, or watch a service on TV!
Yeah, I know. I’m like super spiritual and stuff like that. It’s my way.
Semi-related…
I was at a dinner with my wife’s family…her parents and sisters and one sister’s boyfriend.
So we were talking about wine-making I guess (I like to make my own) and I pointed out how that made me like Jesus (he made wine, I make wine…). There was a moment of silence and then my sil and her bf start laughing and my wife is reprimanding me (”Marc!…”). Clearly that particular observation isn’t acceptable…
Clearly the Mormon Jesus turned water into … water.
Speaking as a man on the loin cloth, I can vouch for the miracle which Olympiagal has experienced today. It is not so much the beer, but the ability of such a story to bring a believer back from the depths of hell that signifies the miracle. In layman’s terms, what we encounter is a resurrection of a lost article, a treasure that hath been buried, but has risen from the sublimated depths of Ogal’s mind. So today, let us rejoice and give praise, for the choicest of beers has found its rightful owner and the angels weep for joy!
Yar! Xactly what I was saying!
(Burrrp)
You absolutely must write a collection of short stories!!!! I’ll be first in line to buy it!
Thanks for all the great writing, O’gal!
The headline I look forward to reading within the next quarter-century: “Global Warming Creates a Solution for California Water Shortage”
Warming ocean appears to help glaciers grow on Mount Shasta
By Samantha Young
ASSOCIATED PRESS
July 13, 2008
…
Scientists say a warming Pacific Ocean means more moist air is sweeping over far Northern California. Because of Shasta’s location and 14,162-foot elevation, the precipitation is falling as snow, adding to the mass of the mountain’s glaciers.
“It’s a bit of an anomaly that they are growing, but it’s not to be unexpected,” said Ed Josberger, a glaciologist at the U.S. Geological Survey in Tacoma, Wash., who is studying retreating glaciers in Alaska and the northern Cascades of Washington.
Could be, if the jet stream shifts a bit south. Climate models are split on the issue, but favor slightly a northward shift. Bummer, dude.
I thought CA was all going to be drowned by rising sea levels. That would certainly create a solution (though desalinization could be an issue).
Not all, just Sacramento. Don’t panic - those saxophone-shaped houses on Malibu cliffs will be high and dry.
..just thinking,
The profusion of houses that popped up like Spring flowers over our country the past decade were typically built far out from shopping/recreation/medical/employer locations where land was cheaper for developers, but they turned out not to be the “away from the maddening crowd” deal they were before cheap gasoline/diesel. Those who bought before the housing bubble into walking communities/neighborhoods with good access to public transportation/shopping/recreation/medical/employer locations nearby are looking pretty wise in these $4-5 dollar a gallon times. The trend of young people relocating to urban areas is no anomaly, they have already learned a valuable lesson from the mistakes of others.
Good point and I hammer away at that issue when it comes to the modern survivalists. There are no reasonable paying jobs in the burbs. North Dakota or South Dakota (I forget which) has been losing young people for years as they go elsewhere to college and then stay in the large cities out of state where the good pay is.
You can grow your own food on 5 acres but you still may want to have emergency surgery (oops, nearest hospital 100 miles away). Or gang of theives comes on your property and outguns you (oops, county sherrif is 50 miles away, or oops, you are nearsighted like me and have a bad aim). You may be wanting to trade food for some good quality furniture at some point (oops! delivery of a $500 sofa costs $500!).
‘…you are nearsighted like me and have a bad aim..’
Well, jeezily, man! Practice! Or, and this is also a good idea for a fun weekend activity; just mine the perimeter.
And as for the $500 sofa, you could try making it out of pallets, because that’s funner anyway. I love pallets. In fact, I’m making a pallet table right now, and it’s painted pink and white with leftover house paints. When that’s dried I’m going to paint a giant oyster on the top, and little darling barnacles on the side, also with leftover house paints.
Or gang of theives comes on your property and outguns you (oops, county sherrif is 50 miles away
I don’t know if this is historically measurable..but I would imagine riots like in LA in the early 90’s where roaming gangs actually DO outgun others (and/or pull you out of a vehicle and beat you near to death) is a lot more likely than the same or similar happening in a rural area.
Anyway, generally cops don’t do much good with regard to preventing crime or stopping ongoing crime. Heck, that guy in the big rig in the LA riots got beat like hell on national TV and still no one showed up. Having a cop near doesn’t help if they just decide not to show. I’d much rather have some of my friends/neighbors near rather than some cop I don’t know, if something like that happened.
And a shotgun (or a scope for the longer shot) helps the near-sighted thing. As do good dogs.
“..but they turned out not to be the “away from the maddening crowd” deal they were before cheap gasoline/diesel.”
correction:
“..but they turned out not to be the “away from the maddening crowd” deal they were when gasoline/diesel was cheaper.
Correction:
“Far from the Madding Crowd”, a novel by Thomas Hardy.
Death of globalisation consensus
By Dani Rodrik on 7/13/2008
Emirates Business 24/7
“The world economy has seen globalisation collapse once already. The gold standard era – with its free capital mobility and open trade – came to an abrupt end in 1914 and could not be resuscitated after the First World War. Are we about to witness a similar global economic breakdown?…
Recent events have heightened the urgency with which these issues are discussed. The presidential electoral campaign in the United States has highlighted the frailty of the support for open trade in the world’s most powerful nation. The sub-prime mortgage crisis has shown how lack of international coordination and regulation can exacerbate the inherent fragility of financial markets. The rise in food prices has exposed the downside of economic interdependence without global transfer and compensation schemes.
Meanwhile, rising oil prices have increased transport costs, leading analysts to wonder whether the outsourcing era is coming to an end. And there is always the looming disaster of climate change, which may well be the most serious threat the world has ever faced….”
http://www.business24-7.ae/Articles/2008/7/Pages/07132008_0e2fdaac2526432cad20a95916ed4bc4.aspx
Mr. Gregory Mankiw has an article in today’s NYT with the exact opposite view. Lets put these Harvard economists in a ring and let ‘em duke it out.
most of the economists I have known could not fight their way out of a ring of posey’s, Roses would have been a bloodbath.
Now if they were arm wrestling for the last glass of a Pinot…. that would be a sight to see.
Roses have thorns!
http://www.larouchepub.com/pr_lar/2008/lar_pac/080710gspan_bubble.html
Frannie/Freddie Mac Unraveling is the Collapse of the Greenspan Bubble.
http://www.larouchepub.com/pr/2008/080711dane_no_rock.html
Global financial contagion spreading…big Danish bank the next Northern Rock? Thirty other banks in trouble.
http://www.larouchepub.com/other/2008/3527bis_says_crash.html
Bank of International Settlements (BIS): “It’s Time to Drag Out the Chopping Block.”
who’s first, Greenspam or B-52 Ben?
Bring out your debt!
I’m not in debt yet!
Yes you are!
I’m not.
Well, you will be soon, the economy is very ill.
The economy’s getting better!!
No its not, it will be stone dead in a moment.
I cannot foreclose on him yet, its against regulations.
You’re not fooling anyone, you know.
Look. Isn’t there something you can do?
… enter Obama, McCain, Bernanke
Sure, we will just lower interest rates, bail out the economy, and push his food and energy prices through the roof until he cannot pay his mortgage any more. Then you can take him away.
http://www.larouchepub.com/other/2008/3525soros_takeover_dems.html
George Soro’s latest hostile takeover: The Democratic Party.
Do you follow any other publications besides Larouche’s?
Professor Bear,
As the self-appointed censor on this blog you’ve asked me that question before, and I’ve answered it before. I follow a wide range of publications, as do many others on this blog. However, I’ve subscribed to EIR for twelve plus years and despite the high cost ($360 a year) it has been worth every penny in terms of the quality of the writing and analysis. While I don’t agree with many of LaRouche’s prescriptions for how to fix what ails us, EIR is a unique and valuable resource with many analyses that are of interest to those in here who seek a deeper understanding of the global financial crisis in general and the housing bubble collapse in particular.
If you have a problem with reading anything from a “LaRouchie” point of view, kindly skip my posts and continue to get your information from those beacons of truth and wisdom, Murdoch-controlled media outlets like the WSJ and similar MSN propaganda.
I am not a sensor — that is Ben’s role if he chooses.
I was just commenting on the extremely homogeneous nature of your source
s. Feel free to post on, and quote the Moonies and the Branch Davidians if you wish as well.Professor Bear,
My guiding principle is the same as Thomas Jefferson’s: “”There is no truth existing which I fear, or would wish unknown to the whole world.” I seek out the truth where I can find it, even in “extremely homogeneous” sources, and share what seems relevant or helpful to others in illuminating the uncharted territory ahead. I repeat: If you’re bothered by the source, kindly skip my posts, but let others in here judge them on their own merit.
OK, I will offer no further comments on your sources. And thanks for the Thomas Jefferson quote, which is a breath of fresh air on the day the SEC has announced a crackdown on “false rumors.”
February 5, 2008
Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International
Historical Comparison*
Carmen M. Reinhart
University of Maryland and the NBER
and
Kenneth S. Rogoff
Harvard University and the NBER
“….At this juncture, the book is still open on the how the current dislocations in the United States will play out. The precedent found in the aftermath of other episodes suggests that the strains can be quite severe, depending especially on the initial degree of trauma to the financial system (and to some extent, the policy response). The average drop in (real per capita) output growth is over 2 percent, and it typically takes two years to return to trend….
The huge run-up in equity prices was similarly argued to be sustainable thanks to a surge in U.S. productivity growth a fall in risk that accompanied the “Great Moderation” in macroeconomic volatility. As for the extraordinary string of outsized U.S. current account deficits, which at their peak accounted for more than twothirds of all the world’s current account surpluses, many analysts argued that these, too, could be justified by new elements of the global economy….”
http://www.economics.harvard.edu/faculty/rogoff/files/Is_The_US_Subprime_Crisis_So_Different.pdf
And from the pdf “…Once again, the United States looks like the archetypical crisis country, only more so. The Big Five crisis countries tended to experience equity price falls earlier on than the U.S. has, perhaps because the U.S. Federal Reserve pumped in an extraordinary amount of stimulus in the early part of the most recent episode….”
The graph on pg 6 of housing price declines current drop (Jan ,2007) vs average decline is worth a long look, especially for prospective buyers.
“The average drop in (real per capita) output growth is over 2 percent, and it typically takes two years to return to trend….”
Would a two percent drop in output growth imply a slowdown, but not a recession?
T-4 = US, 2003 = 100
T = US, 2007 = 133
(This is what the graph Hoz referenced appears to suggest.)
The data for U.S. home prices is the Case-Shiller Index, and appears in the graph to end at a level of 127 in 2007, down by six points or 4.5 percent (6/133*100 = 4.5).
But we already have heard the Case-Shiller Index was recently down by 15.3 percent YOY, which suggests that the next data point (for 2008, not shown on the graph) might come in around
127*(100-15.3)/100 = 107.5,
compared to the “Average for the Big 5 Crises” T+1 level of around 117.
The above supports my conjecture that a bigger-than-average bubble results in a faster and deeper correction.
R.O.I.
By BRETT ARENDS
Why It’s a Great Time to Be an Investor
WSJ headline
Now its time to really get short when The Journal starts parroting the Real Estate slogans.
I find it fascinating when I come here to reflect on things I just read, and I get a strong pingback on the mental machinations going forward….
Interesting notions of you going long the China this week. Based on my anecdotal investor group apathy, depsondency, and capitulation behaviors, I would say…that must have some merit.
I did the unthinkable on Friday…. bought a tiny slice of a bank in what apperars to be systemic lack of confidence in the GSE’s, but thats gonna get wrapped up in an announcement tonight or tomorrow morning.
keep em comin hozzie, ya crazy ole coot.
Hi voz,
Me crazy? I did not buy any bank stock. Buying any bank stock is worse odds than a crap shoot, that is crazy. You just aren’t a typical ex-Cal to Oregon-transplant-commie are you? LOL
hozzie baby… somtimes you gotta go with a longshot. They havent started burying survivors just yet.
Sure hope I didnt offend you with the crazy ole coot snark, its just my way.No offense intended. Ive been watchin and waitin since last August to get a piece of this nugget, but I needed two other entities to make an equity power grab, and sir, Im here to tell ya. They both moved on it, and that was my signal. We all have our favorite horses.
other anecdotal indications:
massive Friday postings/viewership across a broad spectrum of blogoshphere. Also, a heightened sense of awareness by the give-a-shitters, apathy, capitulation, and despondency amongst array of monied friends regarding the banks. Its just a game, sometimes you’re right and sometimes you are wrong, but I buys my tickets and I take my chances.
50’s beat’ generation: open to all avenues of thought
00’s debtbeat generation: foreclosed on by the sheriff
Ah the joys of having more money to spend than one can use reasonably.
“UAE to farm its own caviar
By Simeon Kerr
In the comic novel Salmon Fishing in the Yemen, a western fish expert teams up with a sheikh to bring salmon fishing to the mountains of the south-western Arabian peninsula.
On the other side of Arabia, life is not quite imitating art – but a United Arab Emirates-German joint venture is building a vast sturgeon fish farm in Abu Dhabi.
While the novel’s madcap idea ended in disaster, the Abu Dhabi initiative aims to provide a lucrative export opportunity for the UAE as it seeks to diversify away from oil production, while also helping safeguard the future of the endangered species.
Bin Salem Group and United Food Technologies, its German partner, are investing $80m in the project, centred around a climate-controlled facility in an industrial park on the outskirts of the capital. Here 64 swimming-pool-sized basins will house thousands of sturgeon, ultimately providing up to 40 tons a year of caviar and 710 tons of smoked and sliced sturgeon meat. …”
Financial Times
That’s a nice pop in 3 months.
“DSL said Sunday that its nonperforming assets hit 14.33% of its total assets in May, up from 10.75% at the end of February. A year ago, Downey’s nonperforming assets were 1.3%.”
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7b764132AD-6C6E-438D-A8BA-1A59DE86C66B%7d&siteid=yhoof2
Student ensures econ is no longer the ‘dismal science’
“It was a classic case of supply and demand.
Entering his senior year at Pittsburgh Allderdice High School, Seth Weidman felt there was demand for an Advanced Placement economics class.
So he decided to supply one.
At least one night a week for nine months, Seth taught college-level economics to a group of his fellow Allderdice students, traveling from living room to living room with his dry-erase board in tow.
Fueled by Doritos, pretzels and the occasional homemade tiramisu, Seth’s students in the “Weidman School of Economics” numbered 18, with nine of them eventually taking at least one of the two AP economics tests offered.
Thus far, the results have been spectacular. The students took 12 total tests, and of the eight scores that have come in this month, six are 5’s — the highest possible on a scale of 1 to 5 — and two are 4’s. Depending on what colleges the students attend, those scores likely will qualify them for course credits or advanced standing.
Nationally, fewer than 15 percent of students who took the tests in 2007 scored a 5 and just more than 25 percent scored a 4….”
http://www.post-gazette.com/pg/08192/896035-298.stm?cmpid=news.xml
Put the kid on the White House Economics committee! Or maybe he can teach Mssrs. McCain, Gramm and Obama and a few hundred other politicians some sense.
Took a drive into the Central Valley and the number of people selling their car/rv/5th wheel/his & hers jetskis/suv/boat/atv’s on the side of the road, is somewhat amazing.
Easily twice as many vehicles for sale, vs. this time last year.
When the FDIC has to issue a statement on a Sunday, out of fear of Monday, it means we are getting very close to push meeting shove…
_______________________________________________________________
“FDIC Chairman Sheila C. Bair said, “Over the past weekend, I have seen news reports which have fairly and accurately reported on the conversion of Indy Mac Bank into a conservatorship operated by the FDIC. I have also seen inaccurate and inflammatory reporting which could well cause needless, unnecessary worry and angst among bank depositors throughout the country.”
http://www.fdic.gov/news/news/press/2008/pr08057.html
Let the stampede begin
I think I’ll go to BofA for fun tomorrow and take out about $5K in cash just for the hell of it. If they ask why, I’ll say I like to carry a knot in my pocket weighin’ at least five grand and the general feeling of wealth that comes with it.
Please do this and report back.
Will do Captain Monterey Jack! Should I show up 5 minutes before they open and start banging on the window asking for my money?
Make sure you tell people nearby that BofA is going under, lol.
Nonexistent elephants in the room warrant no comment.
US spells out Fannie-Freddie backstop plan
Sunday July 13, 8:14 pm ET
By Jeannine Aversa, AP Economics Writer
Fed offers to lend to mortgage companies, Treasury plans possible equity investment
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies “should such lending prove necessary.” They would pay 2.25 percent for any borrowed funds — the same rate given to commercial banks and Big Wall Street firms.
The Fed said this should help the companies’ ability to “promote the availability of home mortgage credit during a period of stress in financial markets.”
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies should they need to tap it and to make an equity investment in the companies — if needed.
http://biz.yahoo.com/ap/080713/mortgage_giants_crisis.html
when was this announced? i just got back from a weekend trip to the coast. can anyone forsee what kind of trouble this is going to cause? thanks for any answers, i have trouble putting the pieces together sometimes! LOL is that slow whitted or just dumb whitted?
Market seems to like it, s&p up 11 on Globex.
Why suggest there is no elephant in the room if there is obviously no elephant in the room?
OPINION
There Is No Reason to Panic
By PETER J. WALLISON
July 14, 2008
If Fannie Mae and Freddie Mac were ordinary corporations, the sudden collapse of investor confidence last week would have set them to work on their bankruptcy applications. But they are not ordinary corporations — and they are likely to survive because their debt securities have been viewed for decades as ultimately backed by the U.S. government. Barring the unlikely event of a credit market loss of confidence in the U.S. government itself, they should be able to attract the necessary financing for continued operations.
Fannie Mayhem
A history.
“Thus, because the U.S. government will not allow Fannie and Freddie to default, they should be able to survive. If housing prices turn up again and their losses are stanched (or if they can raise more capital to cover the losses they will suffer in the future), these two companies will get through this period. This is by far the most likely outcome of the current period of stress.”
—
And thus (paraphrasing), the worlds financial system won’t become insolvent due to bad GSE debt. Why even bothe rto use “or” there?
This is a sideshow. The rest of the article is very interesting. Moral hazard, moral hazard,and everywhere a dollar to drink.