Bits Bucket For July 18, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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Sorry about the delays. I’ve been unable to log in since about 3 this morning. I may have to take a day or two off to address this continuing instability with the software/servers.
since about 3 this morning
When do you sleep? Seriously, enquiring minds wanna know.
I go to bed early.
You must. I don’t see how you manage to et enough sleep to function.
It’s not hard to fall asleep when you get up at 3.
Sadly it is for me. My brain doesn’t want to stop even when my body does.
LOL
“Sorry about the delays. I’ve been unable to log in since about 3 this morning. I may have to take a day or two off to address this continuing instability with the software/servers.”
Whew. I thought the REIC/Military/Industrial/Pet Essay complex got you. I was about to start a memorial fund.
I’ll sleep when i’m dead.
Memorial fund?!?
How about a memorial blog?
My brain doesn’t want to stop even when my body does.
Ditto. Too much I want to do.
Trouble is–without the rest I need, I don’t have the energy to do the things I want to do.
I read this as…
“I go to bed yearly.”
http://www.youtube.com/watch?v=YZKr_e7C8eU
It’s not said often enough. Thanks for your work Ben!
What would our motley group of econoinsomniacs do w/o him?
Please send him a little something for the effort…
Take a day or two OFFFFFFFFFF?! Noooooooooooooooo!
Oh, very well. I can live. Why, I just went almost 2 weeks without any HBB when I went to the primitive wilds of Utarr and had no internet access. If you call that twitching festival of sunburned horse-riding and mule-kicked* delirium ‘living’.
*Not actually kicked. I’d have a busted leg if that mutant mule had connected. But she TRIED, for sure.
‘lympi, I am curious (Yellow).
Your remarks are so hilariously witty.
Are you SURE you’re the kind of girl that doesn’t have any “y” chromosomes?
You don’t understand country women, and probably not the men either. It’s different. And, the women are as feminine as any, they just dress and have the knowledge for living the country life. Also, they know if you don’t watch what you are doing, there are consequences as mother nature is a hard teacher.
Don’t worry about the delays - you’ve done a lot for all of us here… who knows how many people avoided making a serious financial blunder thanks to your work!
Paul Krugman says a few interesting things about the why the shape of this recession is likely to be different than previous ones in today’s column:
http://www.nytimes.com/2008/07/18/opinion/18krugman.html?hp
His conclusions as to what should be done because of this is a little less interesting.
His speculation that this makes the Messiah a shoo-in is rather a dubious conclusion too.
No, I think he’s right about that, though not about the stimulus package. It will take a long time to shake off the excesses.
The only question is how fast we get the next 30% down, how much of it will be nonmial vs. real, and whether or not we will overshoot. My view is that If a recession hits employment, pre-bubble prices will almost certainly be available by next year.
how fast? The US is proceeding at record speed relative to Europe, where there is nothing more than the first cracks in the bubble and the crazy lending that goes with it. For Europe I would not be surprised if the correction takes one generation. If the US can correct in a few years they are in an excellent position to compete.
I wouldn’t bet on it, we still have 3 months to go. I am sure things will be ‘orchestrated’ here and abroad to keep status quo.
It has to be real - not just nominal - wages continue to stagnate.
I think some places will be fast, some slow.
Inner Bay Area (Palo Alto, Menlo Park, Atherton, etc.) will be a slow slide.
Places like Stockton and the Inland Empire will be a fast correction.
Hi. Have not read or posted in a couple of months. Been busy working and traveling a bit. Pre bubble prices by next year ? You could be right. There was a NYT article the other day. Some Coops now requiring 25% down. And 7 years of tax returns. Bubble meltdown progressing quite rapidly.
in San Fran today headline of hard copy - SF Chronicle: Bay Area Home Prices Down 27%. Google shares also fell 9% for failing to make expected earnings. On all my many years of vistits to SF never saw 3 and 4 open house signs on a street corner the way you see other places. Saw several schools (like fish?) of signs on major intersections on Market Street - a major east west street this past weekend.
I think his analysis of the political landscape is pretty spot-on — and he also looks forward to the midterm election in 2010, which is a huge potential landmine for either candidate if a malaise / recession / depression deepens or the recovery that’s always “just around the corner” fails to materialize.
Richard Russell snippet
Dow Theory Letters
Extracted from the Jul 15, 2008 edition of Richard’s Remarks
“If or when the world ever sinks into depression, gold will be wealth when everything else is suspect. I said it three years ago, I said it two years ago, I said it a year ago, I said it six months ago, and I’ll say it again today. The Achilles Heel of the United States is the dollar. The reserve status of the US dollar is absolutely critical to the health of the USA. If the dollar begins to lose its reserve status, the US economy will be in shambles.
The gold market chart of 1978 closely resembles the gold market chart of 2008. The patterns, once a breakout above a previous multi-year high occurred, are nearly identical. If you compare the first seven months after the breakout to a new all time high occurred in 1978 to the first seven months after the breakout to a new all time high occurred in 2008 you will see nearly identical patterns. In 1978 gold rose from the breakout price of $192 to the ultimate high of $873. That was an increase of 450%. If the current gold breakout from the $850 high increases by 450% the ultimate high will be $3,825.00. However, we are living in more dangerous financial times than existed in the 1978 to 1980 period.
The daily chart below shows that gold is clearly overbought. The series of gaps as gold rises are called “runaway” gaps. Gold is moving into the beginning of what I call a potential buying stampede. Those who have traded out of gold (and there are a lot of them) are now being left behind. In a buying stampede, overbought conditions are traditionally ignored. The idea at this point is to get into the item (gold), and those who wait are left behind. We last experienced a buying stampede in gold during 1979-1980. It may be a bit early, but I suspect that if gold closes above 1000 we will be close to another buying stampede.”
who else uses charts to predict the future.. wtf do ya call them.. hmm.. damn my memory blows.. even more blows without adequate caffeine.. oh yeah. Astrologers.
Gold/dow ratio
In 1933, the Dow was around $36 with gold officically $35 an ounce.
In 1980, the Dow was around $850 with gold at about $850 an ounce.
Even if the Dow/gold ratio just goes to 2 to 1 or 3 to 1, it’s still a huge move down in stocks relative to gold.
Check out the gold/dow ratio on the web!
http://en.wikipedia.org/wiki/Gold_as_an_investment#Gold_versus_stocks
I coulda bought gold for $35 an ounce??
And now it’s near $1,000. Talk about being late to the party..
So effectively this chart is saying the price of stock in companies is roughly constant in terms of (people / GDP) * inflation and is also basically equivalent to the price of gold adjusted for inflation, with the exception that dividends are not accounted for in the chart. So over the past 120 years you could keep your money in gold or in stocks with (on average) consistent pricing, except you get a dividend from owning stock… My conclusion would be that unless that chart gets out of whack like in the 70s/80s most of your money should be in stocks, not gold…
math guy.. i got a question.
Which is easier: making a goldbug or an astrologer look foolish.
Going back a few years in each case:
In 1929 Dow was $300, Gold was $20 (15:1 ratio)
In 1970 Down was $700, Gold was $35 (20:1 ratio)
At those ratios gold is worth about $60-80. Even a 10:1 ratio would put gold currently valued at $115.
P.S. I own gold. My point is that attempts to justify investment in gold based on comparison with other markets - any other markets (except maybe other PMs perhaps) is meaningless. There are too many variables involved, most of which have changed dramatically, and permanently, over time.
It’s kind of like comparing GE vs. GM’s stock:
GE in 1980: $1 (adjusted)
GM in 1980: $20 (adjusted)
Ratio 1:20
GE now: $28
Thus GM should really be worth $560 per share.
Ummm…. no.
“If or when the world ever sinks into depression, gold will be wealth when everything else is suspect
I will sell you a pound of wheat for a pound of gold.
Listen food storage is where you should put your money. You cant eat gold,(though you can drink it Goldshlager but that will kill you ), but food is a necessity. I think that people are not thinking about how bad the depression was, and remember the government confiscated gold once, they can do it again.
peter,
Food hoarding became illegal too. Serious stuff.
“food shortage” is just a manufactured scare tactic
brought on by the likes of Monsanto that owns several world patents on seeds that they want to force the rest of the world to buy, and rebuy, and buy again. While they continue to cover up the Agent Orange and other toxic sites they originated and continue to wreak on our own towns/cities in the south etc.
I don’t for one second believe that there is a food shortage.
It goes along with investing in gold etc.
45,000 acres of food growing in Kern County has been left to die on the vine this summer, because of a lack of water.
The midwest flooding ruined many a crop as well…
Where do you think food comes from?
“…I suspect that if gold closes above a thousand we will be close to another buying stampede.”
Isn’t “buying stampede” just another name for “mania”?
Those of the cash is king persuasion keep watching their buying power erode on a daily basis, but still feel like it’s the cat’s meow, somehow?
My cash can buy more house and more stock with each passing day. Declining value? Lol. People are desperate for cash.
Yes,
Houses and stocks coming off of their artificial absurd highs is where i’d want to put my money… ha
My cash can even buy more gasoline. The nearby ARCO station lowered its price once again; its now $4.29, down from $4.45 a couple of weeks ago.
My gas costs me almost exactly the same ($1.60) as it has for the past 10 years, when you figure how much the Dollar has lost, as Gold has gained.
And so it goes for everything else, and the gap is only widening.
Have you ever used gold to buy gas or do you use cash?
Gold is very easy to convert into cash, but the opposite may no longer be true, very soon…
I know of 2 major gold wholesalers that have closed their businesses in the past month.
You have to keep a lot of cash in a bank account, in order to play the game of buying and selling precious metals, and they both feel the risk to reward ratio of keeping tens or hundreds of millions of dollars in the bank, doesn’t justify the risk anymore, with one major bank going tits up, and others sure to follow.
There were about a dozen major league Gold wholesalers across the land, what happens when the other 10 little indians go away?
“Have you ever used gold to buy gas or do you use cash?”
What a strange question. Do you undestand that gold is highly liquid and can be turned into fiat at any time? Have you ever used a fish to cut down a tree?
Freddie Mac needs to raise cash real bad. Ten billion dollars worth, according to today’s WSJ.
Funny, there was no mention of them needing gold.
Why dick around with something that requires 100% honesty, when you can create wealth by pressing a few buttons on a computer, like Ben & Hank have done?
“Gold is very easy to convert into cash…”
Does this “very easy” process require one to stand in line at the pawn shop behind the guy who wants to trade the gold fillings in his teeth for cash?
No, you can sell gold at a coin shop, or online, or through a private sale (place an ad, Craistlist etc.). It is quite easy, much more than stock, which must go through a broker, or real estate.
What always puzzles me is why people such as yourself defend fiat systems. They do nothing to benefit you; in fact they impoverish you, yet you slavishly carry water for the elite rentiers. Tell me why.
When I sell a 1 oz Krugerrand, I get immediate payment, but when you sell your stocks, it takes 5 working days to get the dough…
If stocks are solid, why the delay in payment?
I’m not going to buy a house or any equities soon.
Not even considering food and energy, the price of stuff that I buy keeps going up, month after month.
A kind of economic death by a thousand cuts.
<>
In many other countries banks will buy gold coins right on the spot (and sometimes sell them too).
You can go into most European banks and buy or sell Gold bullion, @ tight spreads…
“What always puzzles me is why people such as yourself defend fiat systems”
“Tell me why.”
Here’s why: “To every thing there is a season…”
The time for cash is at hand. Evidence of this can be seen all around, all one has to do is look. There will soon be a time to get out of cash and into something else. The “something else” that I prefer to get into is the stock market. When the time (and price) is right I will get out of cash and into stocks.
“The time for cash is at hand. Evidence of this can be seen all around, all one has to do is look.”
You sound like Gandalf, or Elrond. I like it.
Combo, you are confusing cash with a fiat system.
hmm.. cash to gold, and then back to cash with which one then purchases gasoline.
I detect 2 unnecessary middlemen who pocket their percentage in this otherwise clever scheme.
Question.
As a store of real value, what is better:
1. Buying land today, at current prices; or
2. Buy gold today, at current prices.
Without concern for liquidity, I vote #1.
“Combo, you are confusing cash with a fiat system.”
I never said fiat is king, I said cash is king. Cash offers liquidity. If that liquidity relates to a gold based system, then fine. If it relates to a fiat system, then that’s also fine. As long as I can trade my cash for the goods and services that I need I’m not all that particular what sort of system is used.
The dollar is readily accepted by everyone I do business with. Dollars are the ultimate tool for solving financial problems. I’ve never been turned down from a purchase because I offered cash.
Rental Watch, i agree. I am anxious to get some money out of the markets and into real estate… this bubble deflation is way slow.. but i’ll wait. Every dollar drop in RE price is a dollar in my pocket.
What should the price of gold be? How would you determine it?
If we were talking about the price of real estate one could use fundamental measurements such as comparative rents and prevailing incomes to determine a value.
The same goes for stocks: There’s earnings, book value, dividends, ROI, ROE, P/S, etc - a lot of fundamental information is available to determine a value for a company.
What are the fundamentals for gold?
What are the fundamentals for gold?
Thousands of years of being used as money, world-wide demand (as opposed to U.S. stocks or real estate) and portability.
It’s also fungible, meaning that an ounce pulled out of the ground in Alaska, Siberia, Papua New Guinea, et al, is worth exactly the same price.
So, again, what should the price of gold be?
What are the fundamentals for gold?
far as i can tell, there are none. Gold is more of a derivative than it is an investment.
It costs quite a bit to pull Gold out of the ground, a base-floor value of sorts. Add in the fact that it requires quite a bit of freshwater and electricity (South African mines have been shut down sporadically this year because of a lack of) and that only adds to the cost of recovery from the bowels below.
Stocks are valued @ multiples of earnings, but Gold isn’t.
It’s value is what the citizens of the world deem it to be worth, and the price doesn’t vary 1 iota, anywhere on the planet.
“It’s value is what the citizens of the world deem it to be worth, and the price doesn’t vary 1 ioata, anywhere on the planet.”
The value of Beanie Babies was what the citizens of the world deemed it to be worth too, but I don’t see as to how that counted for much.
If there are no fundamentals associated with price then the only way to determine price is with price. Isn’t that the thinking that got us into trouble with the real estate mania? Price increases begat price increases. Prices of real estate was going up because the price of real estate always goes up.
The price of gold is going up because the price of gold always goes up? Lol.
I really thought you’d bring more to the plate than a comparison of Beanie Babies & Gold.
Truly pathetic.
Then let’s compare gold with real estate. Real estate prices can be connected to fundamentals, such as wages and rents, but at times can become disconnected from these fundamentals, which is what we have witnessed the past few years. During those times of disconnect price becomes the criteria for determining prices.
But gold has no fundamental measurements to become disconnected from, does it? Thus the value of gold can only be determined by the price of gold?
Yes?
pathetic..
Of Gold and Beanie Babies
MAXfunds.com co-founder Jonas Ferris discusses this past week’s collapse in gold and other commodities. Feel free to ignore the other guests and be sure to watch the entire video for a fascinating comparison of gold to beanie babies.
http://www.maxfunds.com/?q=node/269
Beanie Babies are a much closer comparison to your beloved cash…
Both cost almost nothing to produce.
A $100 Banknote costs around 40 Cents to print, and for now, you receive the full added value of $99.60 when you spend it, as people aren’t cognizant that nothing whatsoever is backing it up.
Pulling an ounce of Gold out of the ground costs the mining companies anywhere from a few hundred Dollars to as much as $700 an ounce.
“…nothing whatsoever is backing it up.”
Wrong. What is backing the dollar up is what it can be exchanged for, which is exactly one dollar’s worth of goods and services.
So, what backs up gold?
As I said, “for now” you can spend it here in the USA. Many merchants in countries around the world are wary of taking Dollars, however.
Gold is backed up by genuine worldwide demand and a storied history of being wealth & money, and most importantly, it’s never failed at this task, EVER.
What more could you ask for?
“What more can you ask for?”
Well, I began by asking what the price of gold should be, so I”ll stick with that question.
Again, what should be the price of gold?
Gold is a hedge. Nothing more, nothing less.
But for those of you with faith in Uncle Buck, remember that there is NO limit to how much the Gubment can print since we have 100% fiat currency.
I hate the goldbug mentality but you have to strongly consider it since our dollar has nothing to back it anymore.
Hyperinflation can happen here. China currently could dump US treasuries and KILL the dollar. People say that won’t happen because they claim the Chinese can’t live without the lazy US consumer. I call BS on that. All the Chinese need to do is start consuming what they produce.
World-wide demand has placed the value @ $955 per troy oz., for now.
“World-wide demand has placed the value @ $955 per troy oz., for now.”
You mean world-wide demand has place the PRICE @ $955 per oz., for now, don’t you?
Or, does price equal value like it did for a while in real estate (and Beanie Babies)?
“But for those of you with faith in Uncle Buck, remember that there is NO limit to how much the Gubment can print since we have 100% fiat currency.”
If that were the case then there shouldn’t be a credit crisis, Fannie and Freddie shouldn’t be all that desperate for cash, all money troubles should just fade away.
But since that isn’t the case then perhaps there are some restrictions placed on the printing press?
You’ve been slamming gold but do you fully understand how the US financial system functions? The money multiplier? The Treasuries to dollars magic?
If you do then you must understand that the PTB must enforce the illusion of a functional system. If all broken systems (Fannie) were allowed full access to cash then what would your dollar really be worth? The illusion of a functional, just monetary system must be kept intact. See “The Creature from Jekyll Island” for more info.
Night!
Night? was that a drive-by parting shot?
If all broken systems (Fannie) were allowed full access to cash then what would your dollar really be worth?
If? Then? if, then? How about some reality?
so, FNM is not allowed full access to cash.. in fact nobody is allowed full access to cash. Might this mean they are not handing out cash to whoever wants it?
Does it mean that, although they’ve created untold amounts, that it’s not being distributed?
look.. the Fed is capable of providing whatever amount of cash they care to and there’s no need to print anything.
Fact is they don’t just dump cash into the economy wherever and whenever it is desired by some entity. Why not? Because there are limits. It’s no “illusion” that they do maintain control of the money supply.
It’s no illusion that the money supply has a relationship to the amount of wealth for sale. Therefore each dollar is fairly traded for some set amount of wealth.
If that’s not a stable enough system for you, then go buy some gold and hide it under the bed.
dude,
They are printing cash, they are typing cash.
stampede
mania
bubble
I found Krugman’s article disturbing, especially about the part about the “group think” of the people standing in line at IndyMac. Also, Krugman sums up by saying that part of the solution to our economic problems will be universal health care. How will that end up any different from the results of government getting behind housing with GSEs?
“How will that end up any different from the results of government getting behind housing with GSEs?”
The billions in profit raked in by HMO’s will insure how many people?
Couldn’t do any worse than the current system.
It won’t. It is not possible for the government to do anything better than the free market.
Yeah. Kind of like the “free market” education debacle called Edison Schools? Or how about how scandal ridden Correction Corp. of America provides govt. services….. lmao.
I think you are missing the success of when they de-regulate energy in CA. That is a great and shining exam….oh wait, enron came along and it was a complete bamboozle.
Or maybe the better example is how by not enforcing lots of lending guidelines, lenders managed to lower costs to the buyer and increase home ownership….whoops, nix that one too.
Gee, I’m stumped. Perhaps someone else can propose a good example.
It won’t. It is not possible for the government to do anything better than the free market.
Haw!
Is that a serious comment, or are you playing the straight man?
Like Blackwater?
used econo cars vlaue soaring
http://finance.yahoo.com/family-home/article/105411/Want-a-Used-‘Econobox’?-Better-Get-in-Line
i may be selling my car in 8 months woo hoo
i get 30mpg or better
.
Better hurry up… gas prices are going down now.
TB
timmy from southpark is that you?
oil slips to $130 and gas prices are going down?
don’t start drinking this early in the moring timmy
gas prices are not going down anytime soon
but by all means go buy a used hummer
Now, now. AAA reported average gas prices down a whole penny since the all time high.
Oh, you were referring to a meaningful reduction? Never mind.
If you have a little car you’d like to unload - eight months might be a little too long to wait. Sell now while the sheeple are stampeding.
Two weeks ago, Marge was broadsided while waiting at a stoplight by a turning car that spun out of control. Her car was totaled so we’ve been shopping to replace it. As an avowed “car hater” even I’ll have to admit that the prices for the slightly used cars we saw (mid size semi-luxury sedans, not at all big cars) were really good and the selection almost limitless.
As demand destruction continues here in the States it is hard to see how compact car prices will hold up when the mid-size stuff can’t even hold its value.
edge -
truth be told i am 99.9% sure i am giving the car to my mom
she needs it more then i need 5k
or so
If you have to have a car (and most people do) and if gas prices stay high (which they probably will), there should be greater demand for high mpg sub compacts than other models.
We took delivery of a Mini Cooper yesterday. We ordered it on Memorial Day. The dealer told us that the wait time has gone up even more, especially for the Clubman model. There is only one dealer in the whole state, and he essentially has no inventory, except for a few demos.
I’ll bet the other dealers down the street wished they had his problem. He also sells BMWs and Hondas, and he has those coming out of his ears (except for Civics and hybrids)
We have an 11 year-old Volvo wagon now, but considering a Cooper (Clubman) as our next vehicle, in a year or two.
Enjoy your new vehicle!
I’m hangin on to my motorcycle. 45mpg, 0-100 in 5 seconds, insurance $300/year, most maintenance I can do myself and save the $150/hr labor.
Plus, unlike a car where roughly 99% of the fuel’s energy is wasted (because of the inherent inefficiency of the engine plus the weight differential between vehicle and a single driver), the bike’s total energy efficiency is more like 35%.
My fiancee’s scooter is even better, it weighs only 245 lbs and gets 106 mpg. Haven’t done the math on total efficiency, but it’s gotta be pretty damn impressive.
That’s real economy. Wherever the weather is relatively amenable, you’re gonna see a lot of two-wheelers popping up.
OK, It’s Friday.
Which rules will they change this weekend? They’re behaving like a third-world country.
tin foil on/
the black boxes get shut off as a Dow theory buy program machinations set-up big time bear trap, levered trade of short financials/long energy is turned by PTB Policy mandate. Volume dries up. And lack of interest rally begins. The big show in China comes off in surreal fashion, and world celbrates coming together.
tin foil off/
in reality, nothings changed.
sorry, I cant stop projecting into the future…the weekend just isnt enough time.
oh yeah, volatility does not subside with volume, amplification of waves is underway.
No more smart-ass bloggers. Their cynicism is bringing down the economy…
SEC to ban all public cynicism related to financial stocks.
Remember Felix the cat and his bag of tricks which could take any shape he desired? Well, these guys manufacture those bags.
I knew that Master Cylinder was the perp~
who is the boss?
Well, thus far this week we’ve had:
- Phase 1 of the “Stock Market Only Goes Up! Act of 2008″ banning naked shorts on certain stocks that paid their protection money to the Pig Men.
- Continuation of the Bigger and Better Bailout For Amerika! plan, with various efforts to roll all of the housing bailouts into one huge bill that will make future tax forms easier to fill out since you’ll just list your income for the year and then send in that much money.
Lots of potential for silliness in the wings: Have we recently had a “strong dollar” speech? Or, maybe we can play games in Iran? So many choices!
iran.. yeah, that too..
the admin has decided to try some diplomacy .. think that had anything to do with yesterday’s falling oil prices?
I get the feeling they have to go through the charade of looking they they tried diplomacy, before Shock & Awe # 2 can get going…
yeah .. they’ll need a lot of things.. like putting together a coalition of nations.
I don’t know what goes on behind closed doors.. seems to be that in order for what’s left of the Bush admin to be the instigator, such a coalition has to already be in the works.
Then there’s UN inspections.. provoking and wading through layer upon layer of sanctions.. maybe more embargoes.. and pretty much everything else we went through with Saddam. Bush may not have time.
Who besides Israel would join our coalition?
I can wait all day for your answer…
who knows… There were something like 34 in the first coalition into Kuwait and around 40 for the current one. Troops or personell from about 20 countries are still there.
Don’t squirm and say nothing like ’ssshrubery would do.
Tell us which countries would willingly join us on our next missadventure?
how could anyone pick them ahead of time.. sorta depends on how things shake out.
If someone stuffs a little nuclear waste into one of the IEDs they engineer, and passes it over the Iraqi or Afghan border, or maybe get it into israel, and it can be proven to have come from Iranians, maybe nations we never even heard of will be climbing over eachother to join..
of course, such an occurance would just be meat for the conspiratorialists and surrender monkeys, and you can absolve your miscalculation by claiming it was all a setup.. again.
Spineless, aren’t you?
well, I just couldn’t live with myself knowing you think
i’m spinless.. so i predict the same countries that joined the coalition in this and the prior conflict with Iraq will do so in Iran.
there.. happy?
The main players in our debacle in Iraq have either left town, or are in the process of getting out of dodge.
I’m sure they’d be up for another round, though…
Surrender Monkeys of the Coalition of the wiling include:
Spain, Netherlands, Italy, Japan, Norway, Portugal, Hungary, Philippines, New Zealand, Thailand, Iceland, Nicaragua, Slovakia, Lithuania, Honduras & Dominican Republic.
Future Surrender Monkeys include:
United Kingdom: 45,000 invasion—4,000 current (4/08)
Poland: 194 invasion—2,500 peak—900 current (2/07)
Australia: 2,000 invasion—~300 current (07/08
I’m sure they’d be up for another round, though…
ok.. Wait a minute..
I’m on the side that says a coalition might be reformed. You are on the side that opposes.
Try to remember that or this discussion will make absolutely no sense to our audience.
Citigroup posts a $2.5 billion loss in the second quarter.
But the chief executive, Vikram Pandit, positioned the $2.5 billion loss as progress. Last quarter, the financial conglomerate lost $5.1 billion.
Yeah, that’s progress alright.
When I stop banging my head against the wall, it feels so good.
LOL
Or in the case of C, only banging it against the wall half as much.
AtroCiti keeps bleeding money like a haemophiliac with a thousand cuts…
but their stock is up 10% in early trading
go figure
Yesterday I posted the article from this issue regarding how the pigmen in the Hamptons are weathering the housing downturn. Now, check this one out. And especially note the moves of that absolute waste of flesh Hanky. I find it VERY interesting that he actually scuttled the first Bear Stearns deal, in which they would have had 28 days to pull a rabbit out of their hats. After scuttling it and pretty much handing the company to Morgan, he signs something committing the taxpayer to support the deal. Seriously. This guy’s ripe for a little French Revolution action.
http://www.vanityfair.com/politics/features/2008/08/bear_stearns200808
Palmetto- I think that rabbit would have to be pulled out of a place a bit lower than a hat.
OK HBB’ers…. just try to get your head around this as a news story. Perhaps the most blatant RE add disguised as news that I’ve ever seen.
http://www.gainesville.com/article/20080718/NEWS/289041838/1002&title=Experts__Renters_hold_key_to_saving_economy
Unreal.
I agree. Renters do hold the key to the economy. They are the only ones who can move to new jobs, go out to dinner, afford a vacation..
Yes, but we renters who are very mobile and responsible savers also enjoy being like the cat who plays with a mouse before killing it. We will continue to squirrel away $ in the form of gold bullion, T-bills, and the like while we are employed and earning the big bucks.
I heard a saying “Save in the good times so you can spend in the bad times.”
The bad times for me will be when I cannot find an engineering contract paying more than $60 per hour anywhere in the U.S. I would be in Hawaii drinking Mai Tais in such bad times for several months.
Re: Engineering
I was thinking about side effects from the bubble the other day and this was one of them.
Lets say 40 years is the working span of a generation. The last 4-8 years has seen an inordinate number of yutes going for financial and real estate careers as their primary training and experience.
That’s 10-20% of the generation of workers making skewed decisions at a crucial time in their career. I’d say those of us outside that group with degrees in sciences will do very well going forward due to this.
My sister is in charge of thousands of people @ a upper-middle-class-welfare weapon manufacturing company…
Imagine if she was in charge of thousands of engineers trying to find an answer to our energy crisis, instead?
“Imagine if she was in charge of thousands of engineers trying to find an answer to our energy crisis, instead?”
Then it would still be upper-middle-class-welfare. People work best individually, or in small groups, not as part of a cast-of-thousands bureaucracy.
The only difference being, that most everything her company makes, we never use.
Yes, you can call it welfare. But last time I checked the U.S. constitution, the government of our nation must provide for the common defense. How does it provide? It has to have weapons and such. Either by contracting out or doing it in-house (been in both areas). It don’t matter from which direction the green goes into my wallet (feral employee or contractor). Green is green.
From that article:
“Consider the math: Based on the Federal Housing Administration recommended debt-to-income ratio of 42 percent, that couple could afford a $150,000 house with a 6.5 percent 30-year loan, according to Doering.”
Someone please tell me this isn’t what FHA is trying to sell as a prudent DTI?
The frackin world has gone mad!
Ick!
That article doesn’t do much for my impression of FLA.
At least the comments are calling out this BS.
I have to remind myself that these things can’t hurt me. I get so worked up thinking about how ridiculous RE shills can be, but they are powerless when banks won’t give loans. It’s like somebody turned the lights on and the boogeyman has lost all his powers.
“I have to remind myself that these things can’t hurt me.”
Right on. All the nattering from local RE believers, NARscum and the rest of the REIC can and will play mind games if I/you/we let it. It all goes to prove that manias cause people to believe their own lies and instill fear in the rest of us(again, if we allow it to). To see things clearly requires stepping away and and laying up actual market conditions to historical markets, i.e., 1990’s housing bust and tech bubble/bust. I see many parallels with housing and the tech bubble. There is very much the same psychology in both events. I recall the churn in the NASDAQ in 2000-2001 where there was tons of trading with the price action trending down. In housing, we see the same psychology with the realtor swaps, sign swaps, stubborn sellers, etc.
From the article:
“Based on the Federal Housing Administration recommended debt-to-income ratio of 42 percent”
WTF?!?!
This is just an idiot reporter in cahoots with shills from the RE industry. FHA does *NOT* recommend 42% d-to-i. Attention cretin reporters, here’s what the FHA does say, right from their website:
29% limit for mortage payment as percentage of gross income. That includes property taxes, insurance, and HOA as well!
41% limit with *ALL* credit payments. This include the house (see above) and cars, credit cars, student loans.
See http://www.fha.com/debt_to_income_ratios.cfm
Oops, looks like that probably nails the affordability of that $150k house down to about $85k. Sorry ’bout that, guys.
One of the comments from the article:
‘It’s always a great time to buy or sell real estate. Real estate has reached a permanently high plateau because housing only goes up. Renting is just throwing money away so buy now or be priced out forever!
Suzanne told me this.’
LOL!
Whoa! Whoa! Prices will go up as rates also go up? Hello! McFly, as rates go up affordability goes down!
First this
“that couple could afford a $150,000 house with a 6.5 percent 30-year loan, according to Doering”
then this
“Home prices are bound to start rising again and mortgage rates are expected to go up as well.”
then this
“With a 7.5 percent 30-year-loan, that same couple could afford only a $135,000 house.”
Who writes this stuff?
It should be :
“Home prices are bound to KEEP FALLING as mortgage rates are expected to go up as well.”
I must be chincy. My wife and I both make a good deal more than $11.50 an hour (what’s that, just over 20k/yr each?) and 150k is more than I would feel comfortable with (assuming the 6.5%).
“Home prices are bound to start rising again and mortgage rates are expected to go up as well.”
I expected that there were people out there who still believed this. Does this guy expect lenders to recover quickly from their billions (or is it trillions) in losses and start lending money with abandon again? Also, won’t rising mortgage rates just put more downward pressure on housing prices?
I am patiently waiting on the sidelines for as long as it takes.
buy now or be priced out forever. Rising home prices AND rising mortgage rates is impossible in the long run, but maybe for a short time the central banks can engineer something like that (before inflation kicks into highest gear and the endgame begins).
We hear the same story from realtors over and over again in Netherlands, where homeprices are at a 300-year high relative to incomes (and about 1000% higher in some areas than 15 years ago).
FYI… this is Chris Doering, the former UF and then NFL wide receiver turned mortgage broker. He’s always touting his UF history on local tv commercials.
LOL! Check out the title:
“Experts: Renters hold key to saving economy”
So now they’ve come crawling back to the dregs of society known as renters to blow smoke up our collective a$$ in order to turn the economy around. Brilliant.
What the?!
Hahahaha… oh, that is wonderful tripe!
Yes, renters with money do hold the keys to the economy: we’re not in debt over our heads so we can still buy things (and, you know, actually pay for them), and we move to new jobs as needed.
Ah, but they talk about how we “need” to buy a $150,000 house. That’s nice - know of any $150,000 houses that are worth buying that are: in an area with jobs, not in a crime-filled inner-city slum, don’t require all the renters to move to Nowhereville? Oh, that’s right - there aren’t any places like that. Try moving the price up to $250,000 for a falling-apart, Post War shoebox, and then slap an extra $50,000 in repairs on to since the previous flipper didn’t bother to spend money on stupid things like a new roof, etc. and then tell me how “affordable” it all is? Hahaha! Wow!
The Bo Trivett guy replied in the comments area:
“My name is Bo Trivett and I am the person that was quoted in this article. Unfortunately due to space restrictions everything that I said was not printed. Let me clarify exactly what it was that I said. First off, there is no doubt that we are certainly in a tough real estate market. But the point that I was making was this. If you took a young couple that was making $450.00 per week each without a whole lot of additional debt they would qualify for the mortgage that was quoted of $150,000. With taxes and interest the payment on that mortgage at a current rate of 6.5% would be close to $1200.00 in PITI. However, if you make the assumption that the value of the $150,000 home actually DECREASES by another 5% in the first year and then only increases by the last 30 years average of only 3% per year for an additional 4 years, the value of that home would be just over $160,000. Now it is hard to dispute a home going up in value only $10,000 in the next 5 YEARS!!. If that same 6.5% mortgage is paid for that 5 year period on a normally ammortized loan, the payoff would be right at $140,500 (do the math). that means the equity built in that 5 year period would be close to $20,000. I didn’t say it should be used to buy cars, boats or anyhting else. I said it should be used as a retirement investment for the long term. the way buying your primary residence was always meant to be. if you factor in the interest deduction on your income tax for the same income category mentioned, the additional savings would be about $1500 per year. if you add that to the equity built it would mean that a young couple currently renting would have approximately $28,000 in equity over the next 5 years. Now if anyone thinks that that same young couple could save that much in cash on the same income over the same time frame while renting a home I am open for the debate. My point in the interview was this. The run up in housing was absolutley uncalled for and poor lending (by the way we did not do any sub-prime mortgages when they were in vogue because I thought it was terrible business). It is going to take a stabilization of the housing market to turn the economy around. I certainly was not advocating a return to the crazy lending pricatices of a few years ago but ask anyone from the last generation where the bulk of their retirement savings came from and they will most likely tell you their home. It is going to take someone telling the other side of the story which is that the world is not coming to an end, to turn this thing around. My point was and still is that renting is most likely not the fastest way to save money. it puts money into the landlords pocket and builds equity for them but it does not help the renters. Once that side of the story gets told and it is not a complete doomsday scenario, the real estate market will turn around thereby stabilizing financial firms balance sheets and ending a least a large portion of the negativity in the economic outlook right now. And by the way, as is the case with everything that goes up must go down, please don’t forget that over the long haul real property does return to a normalized level.”
“if you factor in the interest deduction on your income tax for the same income category mentioned, the additional savings would be about $1500 per year.”
Only if they itemize, which only something like 20% of tax payers do.
The interest in the first year would be less than 10k assuming a 100% loan. That’s doesn’t even match the std deduction, let alone exceed it. A couple in that income range is unlikely to have very many itemizable expenses, and if they do have much more they almost certainly shouldn’t be buying that house.
So you can knock off the nonexistant “tax savings” in his calculation.
“However, if you make the assumption that the value of the $150,000 home actually DECREASES by another 5% in the first year and then only increases by the last 30 years average of only 3% per year for an additional 4 years, the value of that home would be just over $160,000″
1) 5% decrease/3% increase seems a bit optimistic. However..
2) Inflation is more than 3%. Your just over $160k aint worth what it was 5 years ago.. (do the math)
Using an online inflation calculator and the years 2002-2007 yield me this:
$150000 in 2002 would adjust to $176158.35 in 2007. Judging by the last 5 years of inflation, you’ll come up about $15k short.
Yesterday I took a drive to my bank (small operation, perhaps a dozen branches in the Central Valley) to make a small deposit(subterfuge is the best ruse), and do some brain picking @ the same time…
I asked my teller how people were reacting to the goings on, down south?
She told me that encountered 4 people coming in to get their money out of the bank, but none of them did anything, she related
I asked why?
She said that she was was able to persuade them that their money was safe.
Imagine this?
Bank tellers giving advice is like asking for stock tips from the shoeshine boy.
Round 1 goes to the bank tellers…
Another bank/credit union moment is when a teller tells you the financial statements are on the wall for “review” (more like a cursory glance). “What are footnotes?”, she asked. I was behind the gentleman and cracked a smile.
“Bank tellers giving advice is like asking for stock tips from the shoeshine boy.”
That’s just it, if the shoeshine boy were spiffed up in a great suit sitting behind a desk with a bank of computers, the WSJ out and open and sound halfway convincing - sheeple would buy it. The teller was trained what to say, was then accepted as being a financial “expert” and ahhhhh warm and fuzzies all over.
Not much different than a properly trained UHS or mortgage jockey IMO.
The bottom line is, a bank teller makes about $2 more per hour than a fry cook…
Yeah, but fry cooks eat for free. Bank tellers have to buy food with after tax dollars.
Then they get promoted to “Bank Offier” and are allowed to work unpaid overtime?
Don’t Go for the Housing Report ‘Head Fake’
http://www.usnews.com/blogs/the-home-front/2008/07/17/dont-go-for-the-housing-report-head-fake.html
Although a government report on new residential construction may look optimistic, it’s really just more depressing news.
The Commerce Department today reported that housing starts in June surged by more than 9 percent from May. Permits, meanwhile, increased even more so, rising nearly 12 percent from the previous month.
But don’t break out the funnel cake just yet, as the report is in fact what economists and basketball analysts refer to as a “head fake.”
From David Resler, chief economist at Nomura Securities:
The Census Bureau noted that most of this increase came from New York City where builders rushed to file permits (and start new buildings) ahead of the July 1 imposition of a tougher building code. Thus, builders had a strong incentive to seek building permits well ahead of their normal schedule. Starts of single family homes, which provide a more accurate picture of the national housing market, fell 5.3% to an annual rate of 643,000. Since the trough of the deep 1981-82 recession, only the single-family starts volume of January 1991 was lower than this latest reading. Single-family starts fell in all four regions, led by a 9.2% drop in the Northeast. A 3.5% drop in permits for single-family homes make the prospects for a revival of home-building this year look bleak, especially with mortgage rates near their highest levels since last October.
“Schwarzenegger said 80 percent of the U.S. fire resources for firefighting are deployed in California.”
http://apnews.myway.com/article/20080718/D91VUQ0O0.html
_____________________________________________________________
The usual fire season in California happens during the fall. but not this year…
We’ve got most of the country’s able-bodied firefighters, but what if other major fires break out elsewhere?
Bring back our troops from the middle-east and let them make us proud of them fighting fires, not boogeymen.
Win-Win for all concerned.
Hey we could use the National Guard for that…oh, wait.
Housing slump overcomes home sellers’ creativity
http://www.signonsandiego.com/news/business/20080717-0837-homeessaycontest.html
Just…lower…the…price.
Nationwide, home sellers are using a range of incentives to get skittish buyers through the door during the worst housing slump since the Great Depression. Most are offering traditional perks like a car, a free vacation or the home’s furniture, but others have gone to greater extremes to hawk their homes.
Deven Trabosh, a 42-year-old single mother, is offering her South Florida home and a shot at marrying her on the Internet. In Wisconsin, Bob Fanning, 69, will make the buyer of his home the beneficiary of a 10-year, $500,000 life insurance policy.
And Ricki and Bob Husick gained international interest after advertising that the buyer of their two-story colonial home in Wexford, Pa., would receive the full purchase price back after the couple dies. The Husicks, who had list their home for $399,999, sold the property for $377,000 in early June, according to county records.
Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors Inc. in Miami, waives off such crazy incentives. What ultimately motivates a buyer, he says, is price.
Hahahaha - I love this nonsense!
Choices include:
- Marrying some used-up hag who, judging by the single mother title, bled some other sucker out years ago and is now looking for a new host.
- Getting some guy’s life insurance policy… and I bet he never even considered what happens when a house flipper with “loose ethics” decides to whack him for the insurance money to then pay for the house - D’OH!
- Oh, geez… another group promising great riches to the house buyer after “something unfortunate” happens to them…
These things sound like something out of a poorly-written Hollywood movie, complete with suspense of disbelief about the main plot elements because “nobody would be that stupid.”
Again with the “its always the woman who marry to bleed the men dry$” bullshit. I can point to many women and children
who have been thoroughly ruined by men.
So stop it.
Agree, DD. I’ve seen many more women ruined by divorce than men.
Colony Collapse Disorder solved; they’re squatting like everyone else!
http://www.tampabay.com/news/publicsafety/article704815.ece
If you get stung, do not pull the stinger out because that can release more venom. Gently scrape it out with a blunt object.
I’m convinced this is a wives tale at best. The “scraping” thing doesn’t work well, you might get it out quick but usually spend 3 minutes scraping away wondering why it don’t come out. Better to just pull it out.
This advice only applies to honey bee stings, in which the stinger is supplied with a sac of venom that pumps like a heart. Amazing technology! If you squeeze that pumper you will regret it. Use your fingernail to get under it and lift. The actual stinger is just a barbed hose fitting.
Yeah, I’ve got 5 hives, I was referring to honey bees. It sounds ok in theory, but like I said, by the time you scrape it out (which never works because of the barb grabbing), all the venom has pumped anyway. It happens pretty quick. In contrast, you can grab it (squeezing the sack) and you get the stinger out right away…so either way it’s about the same result.
Maybe if you carry around some tweezers and are able to quickly grab the stinger below the sack right away…but you would have to be constantly walking around with tweezers in your hand.
I think i’ll just keep buying honey @ the store, instead of getting it way fresh from the source.
Random questions for the peanut gallery:
What effect will fannie/freddy bailout have on housing prices?
Buying SKF on friday and selling on monday to catch a possible spike due to bank failures over the weekend: Good or bad idea?
Is the oil bubble about to pop?
Your guess is just as good as mine:)
To know what’s coming is sheer suicide.. death by boredom.
holding skf over the weekend could be risky
from 210 to 135 in a few days
Yeah, but it also went from 140 to 200 in a few days.
keep in mind the shorting restrictions placed on 19 financial institutions, they come into effect on monday.
I dont think SKF uses naked shorts, but I am not sure.
I’m guessing they are HEAVILY into naked shorting. It’s not a coincidence that the priced dropped like a rock at the same time they initiated the ban.
Speaking as someone who got caught long SKF…
How long can oil be stored before it goes bad?
Idefinitely unless you get shale in it.
I have some 2 yr old oil in my pantry, is it the same thing?
When will oil go bad.
hehe
Is this a serious question?
The oil has been under the earth already for thousands upon thousands of years. A little while on the earth’s surface won’t make a difference.
I suppose none of you have ever tried to use gasoline that’s a year or 2 old, stored in a 5 gallon can?
I’m sorry, I though you were being facetious.
Oil as delivered to refineries will last longer than our lifetimes by far as long as it is stored in a closed container.
Gasoline goes bad because it is highly volatile and chemical reactions can take place within it’s volume and the interface with any air in contact with it. Water condensation can also make it “bad”. There are additive one can use to cure bad gas.
Diesel fuel goes bad mainly due to bacterial growth in the diesel or water accumulation.
Crude oil won’t go bad, you just run out of containers eventually.
Alad,
My father’s car sat for a couple of years and we had to have the oil and gas completely drained from the car among other work. Auto mechanic said the gas turns into a shellac consistency.
The oil (supply) bubble has already popped.
about four months ago I got this email from citibank
I want you to be among the first to know about the bold steps we are taking at Citi to be the premier, global, fully integrated financial services firm.
Our objective is to create for our customers an experience in which services are seamless, payments and transfers effortless, and distances meaningless. My commitment - and the commitment of everyone at Citi - is to work tirelessly around the world and around the clock to deliver outstanding value and service as we continue to earn your trust.
We are proud of our enduring strength as a global financial institution, striving to successfully meet the needs of clients like you in more than 100 countries. As always, we look forward to continuing to serve you - wherever you are and wherever you need to be.
Sincerely,
Vikram Pandit
CEO, Citi
I asked my local branch if everything was alright since i never got a email from the ceo before.
the answer “oh dont worry we are very big out size protects us”
their large size does provide some resistance. They were talking about selling off almost half a trillion dollars worth of assets. Citi’s ability to do that means they can raise enormous capital, and raising cash is the big problem with many banks these days.
Generally, large sized companies of all sorts can just wait out a recessionary freeze, while small companies have no stored fat to survive on.
Sell it to whom?
i might buy some, depending on what it is and what it’s gonna cost me..
joey saves the world!
nah.. you afford me far too much credit. My motive is pure selfishness.
Joey takes advantage of blood in the streets..
How about that 1.1 trillion in dog poo assets they are hiding off the books? How’s that working out for ya?
Blast from the past
http://www.youtube.com/watch?v=Ubsd-tWYmZw
I don’t know if I’d rather choke the sea hag of a wife or the spineless jellyfish husband. And maybe smash the answering machine to smithereenies.
Do any of you have a link handy to the Robert Schiller graph of home prices corrected for wage inflation over the last century? Last night I was trying to talk a friend of a friend out of becoming a knife catcher this year. I wanted to show her that graph to drive my point home about what “affordable” really means.
Not sure if this will show up right - but here’s a NYT article, and link directly to the graph.
http://www.nytimes.com/2006/08/27/weekinreview/27leonhardt.html?_r=1&ref=weekinreview&oref=slogin
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
That’s from 2006 though - it’d be nice to see an updated version from 2008, if anyone has one.
i dont know if this is what your looking for but the link below has some good maps of the entire US.
http://online.wsj.com/public/resources/documents/retro-MORTGAGE0807.html
Here ya go…
http://www.safehaven.com/article-6472.htm
for historical perspective, here is a graph for Dutch homeprices corrected for inflation over the last FOUR centuries (Shiller based some of this books on this data):
http://www.nrc.nl/achtergrond/article816285.ece
(yes, we have a new all time high here from the year the records start, 1650; buy now and feel very lucky …).
thanks everybody! this has been helpful.
Consumption in China only goes up
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQIczfMl3LQk
..Automakers were competing in capacity expansion,” Cheng said…
Is the phrase “expansion bubble” redundant?
No real surprise that vehicle inventory is piling up. Gasoline costs are a far higher percentage of the Chinese household budget (1/10 US levels) than in the US. Except for the upper middle-class, most Chinese families with cars are weekend drivers. The daily commute is typically accomplished with a gas-sipping scooter. Because Chinese cities are about as spread out as American ones (i.e. not like NYC), bus commutes are a nightmare. Nonetheless, more and more Chinese are having to opt for the daily bus commute because the central government appears to have ordered provincial governors - all of whom are out-of-province carpetbaggers appointed by Beijing for party loyalty - to gradually ban scooters and motorcycles from city streets.
The official claim is that scooters and motorcycles generate too much air pollution, but I suspect the real reason is central government officials in Beijing officials have this fetish about looking good to foreigners - that means more cars and fewer motorcycles.
Yesterday I talked to a long-time renter who has been frustrated by the ridiculously high prices in Zilker neighborhood for several years. She is especially frustrated because she wanted to buy a fixer-upper here in the late 80s for $40,000 and her ex-husband didn’t want to.
She is a sensible and prudent person on the whole and has managed her life and work and parenting well. But she mentioned that one of her clients had bought a condo somewhere around here, and almost had her persuaded to buy one. The argument was that if you bought a $400,000 condo, it would be worth $600,000 a few months later, you could sell it if you decided you wanted a house.
She thinks that this was around fall of 2006.
On the Ivy Zelman mortgage reset chart if I’m not mistaken we are in month 19, significantly fewer resets at this point than the short term peak in month 11 (Nov. ‘07).
NODs in my area are not slacking, we had another record month in June.
Is this proof of the negative equity walk away effect?
Or early Alt-A resets as negative equity rolls in.
Reset —–> no pay of mortgage for 3 months ——> NOD
Perhaps a lag and in 3-6 mos it will fall off or its a lead, as WT suggests, with people deciding to fold early on the coming Alt-A resets.
I’d really like to see an update to that chart.
The house I’m offering on today has been foreclosed on twice in the last year.
The worst loans aren’t even on that chart.
China has to be all smiley face and not criticize absurd American moves financially, until a little over a month from now, when their coming out party is over.
Do they lower the boom on us, at that point?
China’s Olympics remind me way too much of the 1936 games in Germany… Everyone welcome the wonderful new power to the world… ignore the oppression, tyranny, and weapons aimed at you…
Yes the similarity struck me as well. Though as far as I know China hasn’t been building quite the military machine that Germany had been in 1936; at least not with such a rapid recent ramp. Difference though may be military vs. economics. I think there’s a very good chance China will start to flex it’s economic muscle after the Olympics - e.g. taking advantage of all the U.S. debt to demand increasing trade advantages.
America is so far out in the middle of B.F.E.*, it can’t see the forest for the trees…
*Blind Faith Economics
One homebuilder’s solution: Pay early, pay often
Amid the housing crisis, this North Carolina builder found a new way to win in real estate
http://money.cnn.com/2008/07/10/smallbusiness/slump_pay_early.fsb/index.htm?source=yahoo_quote
Ben, is there a server problem? All of weekend topic entries look at week old.
interesting post.
I know I have fallen into this mental trap as well…sometimes I repeat myself on multiple days to really set it in for those who read here … but Im a crackpot. who mostly watches and has difficulty interacting in the format.
you are in information overload, and its good to step away for a day or two….the moves just dont happen that fast.
Mexican cartel hit squad impersonating SWAT
“Late on the night of June 22, a residence in Phoenix was approached by a heavily armed tactical team preparing to serve a warrant. The members of the team were wearing the typical gear for members of their profession: black boots, black BDU pants, Kevlar helmets and Phoenix Police Department (PPD) raid shirts pulled over their body armor. The team members carried AR-15 rifles equipped with Aimpoint sights to help them during the low-light operation and, like most cops on a tactical team, in addition to their long guns, the members of this team carried secondary weapons -pistols strapped to their thighs. But the raid took a strange turn when one element of the team began directing suppressive fire on the residence windows while the second element entered - a tactic not normally employed by the PPD. This breach of departmental protocol did not stem from a mistake on the part of the team’s commander. It occurred because the eight men on the assault team were not from the PPD at all. These men were not cops serving a legal search or arrest warrant signed by a judge; they were cartel hit men serving a death warrant signed by a Mexican drug lord.”
http://www.fightingarts.com/ubbthreads/showthreaded.php?Number=16006020
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My buddy who is a heavy duty Federal Law Enforcement Officer, told me about this story yesterday, and the Feds panties are in a bunch, because the narcos (neo-Visigoths?) have made their way into our country, and are doing hit jobs, dressed as law enforcement officers…
How hard would it be for our government to setup a “rouge” police force to carry out their unconstitutional agenda?
Seems like a perfect excuse for more big government where they control both sides.
How is this any different than the ‘legitimate’ cops who kick in doors, shoot people, shock people, and terrorize people in the name of War on Drugs, War on this or that, War on you and me? Dead is dead.
http://www.newsobserver.com/news/crime_safety/strickland/story/971022.html
On Dec. 1, 2006, a county deputy shot Strickland with an automatic submachine gun as officers stormed his house in search of a stolen PlayStation 3 video machine. Then-deputy Christopher Long fired through a closed door after mistaking the sound of a battering ram for gunshots.
I was thinking the same thing.
The way to defeat this whole SWAT team mix up is for no one to be authorized to go kicking down doors, then it’ll be obvious it is a hit when it does occur.
Cops can stake out places and take the guy down when he leaves for more beer, it’s just not as fun for them.
If anything, the gangsters are more accurate. They only shoot other gangsters; real cops with machine guns are much less predictable.
I for one, am not comfortable with these later-day Al Capones having run roughshod all over the southwest, largely on the back of prohibition.
We got rid of bootleggers very easily in 1933, by legalizing something that people wanted.
Why not do the same, now?
Agree.
Though I have no intentions of smoking pot, it’s amazing to me that they refuse to legalize it. Tremendous amounts of money are wasted on law enforcement/legal expenses…all for something people can grow in their yards. On top of that, it creates the black market for drugs that puts all the wrong people in power (gangs/drug lords), like you said.
Here’s an idea, just came to me
Let’s legalize the drugs and take away all their profit.
Agreed. Can we also take away the cops’ deadly toys; machine guns, battering rams, electrocution devices?
Not sure what you mean by that exactly, but it sounds like it would still create a similar situation as now, which is to create a blackmarket for the purpose of making profit.
No one is gonna sell/produce it if they can’t make money. And if they can’t sell it and make money that way, they’re going to operate underground, just like now.
All that you would have to do is legalize it, regulate it and tax it.
If the public can buy a regulated version of a formerly banned substance at a store then what would cause them to buy it illegally from a street dealer? This would solve a lot of problems. People are going to do it whether it was illegal or not. With legalization there will be a new inflow of tax dollars and lowered defense and police expenditures.
This would take away the crime element. Not only that but then think of how much cheaper education and public assistance programs are as opposed to eduaction, public assistance, foreign govt. assistance, intelligence, military and police costs.
Seems like a no-brainer to me but what do I know?
Hearing more and more talk on financial TV shows that no matter who becomes president in January 2009, taxes are going to go up significantly for the type of people who live in “The Hamptons.”
Actually, this includes households with incomes in the $250,000 range.
Every responsible person who is sickened about the unconstitutional spending by our leaders should do their greatest to avoid taxes. Money going to government is mostly wasted and given to the irresponsible.
I am focused on this tax angle. So I’m going for growth stocks, savings bonds, and a municipal bond fund. None of those gains are taxable until you cash out (munis are usually tax free). I won’t cash out until we get a President who declares it’s “Morning in America” and signs into law the permanent income tax elimination and capital gains tax elimination. We will get a sales tax at that time.
I expect that time to be far away but anticipate being alive when that law is signed.
Far better to start a cash based business.
I agree, avoiding taxes is simply self defense from the mob.
I would like to see an insurance company setup whereby you can pay 50% of your normal tax burden to the insurance company along with 1000’s of others. This company would then defend anyone who was attacked by the IRS and then pay the taxes to keep you out of jail if you lose a long and lengthy trial. Imagine if the IRS had to spend big bucks to go after any 1000’s of individuals who would, under normal circumstances, be unable to defend themselves. This would raise the cost of going after tax money so high that there is very little the government could do (because it would cost them more to collect it than they would collect).
After several years (when the IRS cannot come after you anymore) the insurance company would start crediting the surplus proceeds back to you.
You also get the benefits of economy of scale in the legal defense and eventually get the income tax overthrown as unconstitutional.
Note, this is not a tax shelter, this is pre-paid legal/insurance. The insurance company would obey the “law” to the T.
Swiss variable annuity. Place funds where you want them. No taxes until withdrawal regardless of what you buy or sell in the interim. Inpenetrable by creditors or IRS. Offshore so one can scram without having to worry about capital controls. Downside: about 2%/year fees, tax rate is at income rate at the time, not cap gains rate.
This is hilarious. Go 1 minute in and start watching. About 1:30 in it starts to get funny. I call it Bush vs Bernanke LOL.
http://youtube.com/watch?v=nqWJoVUEV1Y
A few days ago a few of us got into a discussion of why the Destiny megamall expansion for Carousel Mall was still moving forward.
It appears that owners of a nearby plaza see the light:
ShoppingTown renovation on hold
A souring retail economy has pulled the plug on latte machines and mall renovations today in Central New York.
It’s a corporatewide pullback, according to Macerich.
“We’re seen the same thing at our portfolios across the country,” said Carbone.
http://www.syracuse.com/news/index.ssf/2008/07/shoppingtown_renovation_on_hol.html
***************
Gee, ya mean it’s NOT different here?
peter schiff:
http://www.safehaven.com/article-10773.htm
This sizes up the situation nicely…
“In theory, Fannie and Freddie were originally created to help provide affordable housing. In reality, like all government programs, they achieved the opposite. Rather than making houses more affordable, they merely enabled buyers to overpay for them. The result is that American homeowners are now saddled with staggering amounts of debt, as easy credit made it possible for buyers to bid prices to dazzling heights. So while a record number of Americans now own homes, they have bankrupted themselves in the process.”
phil gramm UBS problem:
An unintentionally hilarious interview with Gramm on the Wall Street Journal editorial page last week asserted that Gramm has “been a key instigator of some of the biggest money-making UBS deals of recent years.” The interview was noteworthy not just for first-class butt-kissing, but for deliberately gliding over the avalanche of disasters in the past year that has turned UBS from a respected Swiss titan of discretion and risk management into a laughing stock.
http://www.slate.com/id/2194933/
I’m thinking the Gnomes of Zurich wish they had never got hooked on a Gramm of bad drugs.
OFHEO RISK-BASED CAPITAL STRESS TEST
FOR FANNIE MAE AND FREDDIE MAC
In the interest of public disclosure and regulatory transparency, last month, OFHEO released the results of the risk-based capital test using the first quarter 2002 enterprise financial data.
Attached to my testimony is the press release announcing the results.
Both enterprises passed the stress test, due to effective risk management, including extensive interest rate hedging and the first quarter’s economic environment. Interest rates are low; home values are rising; and borrower defaults are minimal. An enterprises risk-based capital requirements will vary from quarter to quarter, depending on the enterprises risk management decisions and market conditions.
I have taken a very open approach to the implementation of these stress tests. I decided to release the actual stress test computer model or source code to the public. In addition, I rejected an interpretation of the one-year implementation period, which would have precluded the release of any results during that time period.
And when I announced the stress results for the first quarter of this year, I did not just issue a pass-fail notice. I released the full results for both upright and downright scenarios.
However, that openness must be balanced with some caution to ensure that no misleading information enters the public domain. That is why OFHEO will not be releasing to the public any stress test results other than the official quarterly announcements. That, of course, does not override this subcommittee’s right to information.
And so, I have promptly, ahead of schedule, supplied the subcommittee with all of the information it has requested. My only request was that the subcommittee respect the confidentiality of the information.
OFHEO considers this information confidential for a variety of legal reasons. But superior to all those considerations is concern about releasing misleading information about the enterprises financial condition that could disrupt the markets.
The question I had—I know you have had a lot of wrangling at yourself by others for a delay of a risk-based capital standard. But it was written in 1992. It was conceived on the heels of the savings and loan and really was constructed to look at a financial collapse of the like we have never seen. And I think that, you know, was part of it.
The model measures depression-like credit risk fluctuations and then adds another I think it is 30 percent for operational risk.
Are any other financial service companies subjected to a risk-based capital test comparable to what GSEs now face?
Mr. FALCON. Thank you, Congressman. That is a good question. This is unique among capital standards for any regulator. It is one that was mandated by Congress.
Other financial institutions like banks and thrifts have a risk-based capital standard, but that is more of a risk-weighted leverage type standard. This is unique because it places the enterprises’ balance sheets under severe economic stress and requires, through a financial simulation model, that they hold enough stress over that 10-year period, every quarter in that period such that they never become under-capitalized at any point during the 10-year period.
This is unique. It has not been done by any other regulator up to now. I am proud of what the agency has accomplished.
http://commdocs.house.gov/committees/bank/hba82684.000/hba82684_0f.htm
does anyone think they knew what the end of this mess would look like?
I have just got to tell you that I am not comforted either by the written or oral explanations of how we are where we are. Something has to be done about this.
Now, I am not faulting you, individually. I may be faulting the process. I may be faulting the structure of OFHEO. It is, after all, the only regulatory body in the financial world that is funded by congressional appropriation instead of fees on the regulated enterprises.
There may be other regulatory powers you need you do not have.
But I have just got to tell you, this is unacceptable that—I do not know where we go from here. But there has got to be another place to land that can give the taxpayer of this country an accurate honest assessment of the true risk exposure they face in the indirect support of two enterprises which have over $3 trillion of exposure to this economy. That is enormous.
And in light of the financial conditions of the market we face today, giving all the allegations that are floating—thank goodness we are not hearing any of that about Fannie or Freddie. I can only imagine the consequences if one of these two corporations were to report a financial irregularity.
and now here we are in the same situation but now we are looking at a $5 trillion dollar problem! and the band just keeps on playing!
seek and ye shall find all the culprits!
H.R. 3755—ZERO DOWNPAYMENT ACT OF 2004
Wednesday, March 24, 2004
U.S. House of Representatives,
Subcommittee on Housing and Community Opportunity,
Committee on Financial Services,
Washington, D.C.
http://commdocs.house.gov/committees/bank/hba95010.000/hba95010_0f.htm
from the link:
Mr. TIBERI. Thank you, Mr. Chairman. I appreciate the opportunity to talk a little bit about the Zero Downpayment Bill which I recently introduced with 32 other individuals who are co-sponsoring the bill, including Congressman Scott.
But I am going to ask if I can submit my comments for the record, but just say, as a former realtor, I have personally witnessed what homeownership can do to a person, to a family. Homeownership has the incredible ability to not only build wealth for a family, but have a positive impact on a neighborhood.
And I look forward to working with not just this Subcommittee, but the full Committee in the Congress and the folks at HUD. Commissioner, I look forward to working with you. I hope my experience in working with you on this is better than our previous experience. I will leave it at that.
FYI before you cast your votes this fall, please make sure the candidate does not have a realtors licence!
From the I guess it is not just Sub Prime blowing up, the following report from JP Morgan’s recent conference call:
However, J.P. Morgan Chief Executive Jamie Dimon warned on a conference call with analysts that even top-quality “prime” mortgages have begun to deteriorate rapidly.
The bank had $104 million in charge-offs on its $47 billion portfolio of prime home loans. That’s a loss ratio of 0.91%, up from 0.48% three months earlier.
That was “very high and up dramatically,” Dimon said.
If the deteriorating trends continue at the same pace, J.P. Morgan could see quarterly losses as high as $300 million from this portfolio sometime in 2009, he added.
Falling house prices in California, Florida and Arizona and high loan-to-value ratios are partly to blame. In addition, some mortgages were originated as stated-income loans, with borrowers not documenting their income, Dimon explained, according to a transcript of the conference call.
“Those losses can triple from here. We’re prepared for that and we will reserve for that appropriately,” he said.
Meanwhile, J.P. Morgan’s home equity portfolio, which includes home equity lines of credit, showed some improvement during the second quarter.
Morgan’s CFO, Mike Cavanaugh, told listeners that home equity losses were coming in at about $700 million, rather than an expected $900 million.
“A lot of people could argue there’s some seasonality in that. It’s a little Ray of sunshine which it’s okay to grab onto for now,” Dimon said.
That prompted one analyst to ask if the bank could reconcile the two diverging trends of home equity and prime mortgage loans.
“We can’t,” Dimon said.
Even lolcats have mortgage problems.
Here’s a link for those who still believe their neighbors will be helpful if things get really bad:
http://www.wsbtv.com/news/16913641/detail.htm
To summarize: A lady was renting a nice house on Atlanta’s Southside. She went on vacation with her children. Six hours before she returned from vacation, all of her possessions were removed from the house and dumped in the front yard under an eviction notice. Her landlord had been foreclosed upon, and did not tell her. (We’ve heard this one before).
However, her kind neighbors helped themselves to all of her belongings. Including her food. Neighborhood children were riding her kids’ bikes on the street. There is a lesson here about the supposed kindness of others, when there is “free” stuff to be had.
And a note about the landlord : This lady had been renting since January. It takes 6 months from the last payment until a foreclosure happens here, plus 30 days for the eviction. So this means her landlord pocketed all of her rent.
Today is as good a day as any to go meet your neighbors, if you haven’t done so already.
When the shat has hit the fan already, might be a bit on the late side…
F’ selling! time to go shopping for a fire sale! I live in my house for less than rent, best school in the state, in the 2nd most popular destination in the US (per conde naste) and the fishing has been great! Looks like my equity is “stuck,” but we all gotta live somewhere and my place is nice.
Lowering the price until you “create ” a buyer is for fools. If there are no buyers out there you are going to be forcing a market that does not exist, stay put, go hit the links or rivers and keep your cash safe so you can buy some rentals that pencil out. that’s what i am doing.
i dunno.. from what i read and hear, prices are still falling, and how.
Should I buy anyway? Is this my last chance to get into the big money?
no mo So Cal:
I remember brave talk like yours when Silver was $31 an ounce in 1980, on the way to $4 an oz. almost 20 years later.
Enjoy the ride…
Watch out lad, that sounded like a bearish comment on PMs. They only go up, ya know!
I got quite the education watching silver flounder around like a limp fish version of Rip Van Winkle, after it’s bubbly performance, that was based upon nothing, other than the Hunt brothers and a few Saudi wastrels cornering the market.
Hey, if you like your house and it works for you and you owe more than it’s worth and all that, don’t sell.
Looks like my equity is “stuck,”
No, it’s gone. Which is fine, can’t cry over spilt milk and all that.
Ben,
Was this the fresh meat I was asking for in one of my past posts?
Uh oh LOL….
Equity gone? LOL!! I have over $300k in equity STILL. I own for less than it cost to rent it and I have to live somewhere. Sure I could save every penny and rent some POS and save a little, but there is more to life than saving every penny. I like having a yard to work in and no neighbors. I just wanted to cash out in my area that holds up better than Calif. (did in the 90’s anyway) and head back to the central coast of CA where prices are really crashing. My area of 2900 homes has 5 foreclosures and only 91 on the market. I guess we all hunkered down and ya got to pay to play (live out here in God’s country, no traffic, clean air, 300+ days of sun)
Ha, I am no newbie, I dumped my rental in Nov 05. I’m in gold, just sold SKF at $176 before it dumped, went long in (ING). I am a true HBB and doing very well. I just happen to STILL own my house, sorry to you apt dwellers and squatters. It doesn’t make sense for EVERYONE to sell at any price. All though, go for it, I am ready to snatch the deals.
Peace.
You said you could have sold it 2 years ago, why’d you procrastinate?
alad - silver and houses, not a great comparison. What does joe do with silver? What does joe do with a house?
I was only comparing bubbles…
Your house will be worth demonstrably less in the future than you perceive it to be worth now, but you “don’t want to give it away” now, do you?