Bits Bucket For July 25, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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What goes up must come down. Here’s a positive brought about by deflating housing prices. This will give States an opportunity to cut the fat. Do away with many non-essential services and cut make work positions. Our local City Council just pulled a referendum to increase sales tax by 1%. They were bombarded by us folks who know you can’t tax your way out of everything. Just like you can’t borrow your way out of debt. This will be good in the long run.
States Slammed by Tax Shortfalls
By CONOR DOUGHERTY, AMY MERRICK and ANTON TROIANOVSKI
The Primary Culprit
The housing slump, now well into its second year, is the primary culprit. The decline in home sales has cut into real-estate transfer taxes. Construction spending and employment have declined. Fewer home sales have resulted in lower sales of home furnishings and washing machines, eating into sales taxes.
Of course, for many states, today’s budget woes stem at least partly from expanding their services during the good times and not planning enough for the inevitable downturn.
http://online.wsj.com/article/SB121682740001077489.html?mod=hps_us_whats_news
Another case made that deflation, not inflation, is the primary driver of this economy.
I think what we’re seeing is different than stark inflation or deflation. What we’re seeing is devaluation of owned assets and increased prices of things we need. I can’t see deflation when consumer staples and commodities are rising (don’t let the recent two week oil retreat fool you… the value of the dollar is going down, therefore oil will go up). If it were just deflation, prices of commodities would quickly sink; but instead even though we’re forced to do less and use less and consume less, there’s a level demand for commodities (probably a result of home price skyrocketing, which allowed two phenomina: increased exurb living and increased vehicle size, both which contributed to net INCREASE in oil use over the last ten years)
Just like stagflation was brand new in the 1970s, and theorized not to be possible, now we have a new type of economic environment created by the cheap credit and bad investment boom of the last ten years.
Deflation prevails. Wages are being cut, tax revenues are declining, houses, cars, boats ,motorcycles … all are declining in price ands sales volume.
Money is destroyed every time there is a writeoff, and these writeoffs are destined to continue. Money destroyed adds to the scaricity of money that remains.
Combo, for the average family the cost of day-to-day living is going up. Can you really say that you’re spending less each month for necessities than you did last year? I mean things like food, utilities, transportation, medical services. The local college announced a 5.5% tuition increase this fall. The govt announced higher PPI and CPI numbers. Just because asset values are declining doesn’t mean we’re in a deflationary period.
I think I have to agree with Ed G.
You cannot get something for nothing in this world. That means that we must export and equal amount of “value” for the “value” we import. This means that our nation is fundamentally poor (very little “value” to export). When people are “poor” the necessities of life become a much larger percentage of their spending and they have to sell the non-necessities to buy necessities.
So regardless of inflation/deflation what we will see is that the cost of food/energy/rent as a percentage of your income will grow.
If deflation, then wages/unemployment will exceed the fall in food/energy prices. If inflation, then wages will not keep up.
Another factor conveniently ignored by most deflationists is that for every $1 destroyed in the US, $2 are flowing back here from overseas as they are dumping the dollar. The fall in demand for the dollar can be much faster than the fall in supply. Also, look at how much money is being printed up for these bailouts. The “stimulus” package alone would counter most of the “write downs”.
combotechie, as fast as money is being destroyed via writeoffs, it is being printed by the treasury/fed. In fact, I would argue that the losses aren’t really even happening yet at banks. Most have kept their assets off-balance sheet… most banks are continuing to pretend that the assets will appreciate at some point so they’re not marking them to their market value. And they don’t have to since they can continue to borrow money from the Fed to keep their operations going. Its a combination of consumer asset deflation and consumer price increases. Money isn’t scarce because the fed’s actions continue to pump liquidity into the economy.
However, there may be a period in the next few years where we *could* undergo a massive deflation across the board, and it will be because we spent so long trying to prop up the system. But that’s not what’s happening now.
Virginia tech,
We deflationistas are aware of the money flowing back. The money flowing back is inflation that you hadn’t felt yet.
Don’t worry, prices eventually align with fundamentals.
Oil will crash as big SUVs get off the road or sit in the driveway.
I would like to see an “oil bubble blog”.
I do not think that oil prices can “crash” because oil is the very foundation of our modern society. It will always be in high demand for its use in production and the quality of living improvements it brings.
The only speculation that can increase the price of oil is to stockpile physical reserves. It can only get “out of hand” like housing if people start borrowing money and then stockpiling physical reserves. Futures can be driven by speculation, but today’s price is always driven by real supply and demand plus stockpiling.
The only thing high gas prices will do is re-allocate the limited supply to where it is needed most. People will drive less because food will cost more. Food costs more because oil is going higher. So, the economy will re-allocate oil from gas to food.
What the deflationists are looking at is over priced bubbles bursting, not deflation. Stocks, bonds, houses are all in bubbles and are all bursting.
To get value deflation, the Federal Reserve will need to raise interest rates similar to the 1930s. Aint gonna happen. Mr. Bernanke knows more about the depression than most any economist alive. He will talk tough about inflation, but will not raise rates. Out of 19 20th century recessions only 2 resulted in deflation, those 2 raised rates in the middle of the recession - US in the 1930s, Japan in the 1990s. Japans worse deflation was -1.5% with an average deflation of -0.6%.
Hoz,
Also, I beleive it was you who posted that banks did not have to post to market and put the link to FED chages that allowed this.
Seems this fact is crucial to this conversation.
What we’re seeing is a permanent decline in our standards of living. Look around at the rest of the world and realize that we are, sadly, going to have a lot more in common with them. Things that people said “couldn’t happen” now are happening and will continue to happen.
While deflation would reward the savers, I am fully convinced that the Fed and others will take the savers and those with money down with the ship; in their twisted minds, there is nothing more wrong than to not believe their lies and to not fork over one’s money to line their pockets. If the debtors and scammers go down, they’ll be sure everyone else goes down with them.
Pondering the Mess …..I view the situation a lot like you do .
The debtors and scammers and market- makers and money- changers take no responsibility for their acts that created this
crisis . The dis-information and PR campaigns that have
come out since this mess started is unacceptable . The powers had a chance in 2005 to do a little damage control ,but no ,they had to make even more faulty and fraudulent loans into 2007
to try to keep the party going .
I have no faith in the right moves being made and you would think that the powers would see that the only thing that will work is job creation from productive activity with the fall of real estate being the big job creation mechanism .IMHO .
Sometimes I feel exactly the way your expressed,those bastards are going to take us all done with them .I hope it doesn’t turn out that way .
There’s deflation for most things that practically can’t be shipped and sold overseas, but inflation for most things that are compete for world wide, like oil and food. The only plus side I see, is that if we become more like the second world, housing may be cheap enough to buy with cash and there could be a return to manufacturing. If you have a paid for home and live close enough to work, then you need much less income.
It would be VERY interesting if they broke inflation measures into two camps:
1. Items where a significant portion of the cost of a product is made from components where there is an active futures market; and
2. Items where very little of the cost of a product is made from components that don’t have an active futures market.
Food and fuel seem to be the big headline grabbers today, both of which have active futures markets, and very inelastic demand. So, you can have big increases in these prices, and fairly little, or slow reaction on the demand side of things.
Most everything else is more elastic. Without income growth (held down by poor housing market, poor credit markets, and globalization), I don’t see how you can have a big inflationary spiral. What we may see is that people are spending more money on food and fuel, and companies that are selling less necessary goods will have their margins squeezed, squeezed, and squeezed some more. Honestly, who needs a new iPod (even if they don’t own one), etc. etc. etc.? Same with computers, cars, clothes, furniture, etc. etc. etc.
The modern age of Craigslist and eBay create a far greater supply of “used” goods than ever before, which will be retailer’s worst nightmare when people are looking for alternatives to buying something new.
I’ve seen very convincing arguments on both sides (inflation vs. deflation). What concerns me is that what we are seeing is eerily like what Japan went through–banking excesses followed by an unwillingness and/or inability to “mark to market” quickly, which led to prolonged asset deflation.
On balance, I’m in the deflation camp, but I continue to listen to the inflation camp to see what I’m missing (Jim Rogers included). What would turn my head is someone explaining to me how the masses can buy goods OTHER than food/fuel/medicine at higher prices. I just don’t see how.
Indeed Ed G.
This deflation will do NO one any good. Assets are already declining in price. Wages are declining or vanishing. General prices will keep going up though. That will be the difference this time.
Decreasing money supply, increasing price of stuff.
They figured out how to give us the worst of all possible scenarios.
Do you think benefits for today’s seniors (not future benefits for those who will be seniors) will be touched at all?
How about public employee pensions — not for new hires, for existing retirees? And will retired public employees be asked to pay something for their health insurance?
How about debt service? Can we spend less on that (lots of other people are)?
I write from a state where retirement income is exempt from tax, and which accounts for a huge share of the nation’s Medicaid spending on home health and personal care for senior citizens, not all of whom (needless to say) were poor before they needed to be to qualify.
By the way, don’t tell me about the $100 hammer. There are those, but they don’t add up to the big bucks.
The big bucks, and the big spending increases, are where I just said — income and health care for senior citizens and NON-working public employees, and federal, state and local debts.
And the way things are going, that’s all that will be left someday soon.
“By the way, don’t tell me about the $100 hammer. There are those, but they don’t add up to the big bucks.”
OK! How about $12 BILLION dollars a month and millions in VA rehab for injured soldiers for a war that has lasted 6 years. Our poor seniors eat dog food, and Haliburton and the Saudi’s eat Filet Mignon. 28% still think this goof ball is doin a god job…….. “28%”
Have you priced dog food lately??
I doubt seniors can afford that today.
“Have you priced dog food lately??”
“I doubt seniors can afford that today.”
They could if they had the money.
How many dog-food eatin’ grandpas and grandmas voted for the present administration . Twice.
And would do so again if they could.
The deserve their Alpo, but they have unfairly dragged the virtuous down with them.
I have been thinking about that… Once the funds are gone, they are gone, and that includes pension funds. The NE has a dearth of new people, and huge ossified pensioners. Same goes for California and NY.
I am starting to feel as if I am part of a lucky generation, a generation that might not have Social Security, but what we do have is time. I have about 30 years to save, so If you sidestepped buying a McMansion, and are able to save 20-30% of your take home pay, you could have a nice private retirement fund that is not managed by intellectual midgets.
Now as for actual pensions, what would stop, lets say, Mass, or California from defaulting, as they do not have the money to cover? What would they save, their current employees, cops, fireman or teachers, or their pensioners… And what would the current employees think once they see that the pensioners are taken out back and shot financially?
pitch-a-penny .Depending on how the powers resolve the losses ,I think your right about being lucky that you have time . The government has already raised the age to retire fully ,but I wonder when they are going to need to raise it again to 69 or 70 year old and what age cut off dates they will decide . But anyway you look at it ,not being able to trust what will happen should tell people to start looking out for themselves regarding retirement .
If the government raises the retirement age ,but employers don’t want to keep these older people employed ,I wonder how that will turn out and what about the older employees not retiring keeping
a younger person from moving into that employment spot . The whole system was set up to take people out of the work force at 65 .But the whole darn system was designed years ago when conditions were different ,(life spans increased , inflation,etc. ) .
Millions of Baby Boomers that didn’t save that expect to live on
Social Security ,would have a challenge ,and you think “living on
dog food “. But I know people who did save and did have pension plans ,but inflation is still eating away at their buying power .
Anyway ,”time “can have more value than gold .
I have about 30 years to save, so If you sidestepped buying a McMansion, and are able to save 20-30% of your take home pay, you could have a nice private retirement fund that is not managed by intellectual midgets.
Better find a place to hide that away. I have the feeling that means testing will be added in the future. Those that were fiscally prudent and saved their entire lives will be ineligible for social security/medicare/prescription plans/pensions/etc in favor of those that blew it all away.
I was on another blog and someone was telling the story of how his brother has been drug addict/spendthrift/lazy/uneducated/unemployable louse. He on the other hand went to college and worked hard to get a decent job and remain debt free.
His parents inform him that they are writing their will out and that everything will go to the brother and he will receive nothing. Their reasoning is that he will always be ok in the future but the brother will need help.
I see this same reasoning being applied in a few years.
Precisely.
Assuming they don’t just take everyone’s 401k money outright - once the debt-people have p*ssed it away, they can take what remains from the savers by accusing us of being “hoarders” - that lie worked when they took our gold, so may as well use it again.
From each according to his abilties (savers and workers, who will be given the shaft) and to each according to his needs (drug bums, spenders, useless parasites.)
His parents inform him that they are writing their will out and that everything will go to the brother and he will receive nothing. Their reasoning is that he will always be ok in the future but the brother will need help.
The world owes us nothing. The sooner we accept that, the sooner we can move on to something more productive than self-pity. All the story above shows is that this person’s parents are fools. Fools seem to be in abundance, so I’m not really surprised that there are people who think in these terms…
“The world owes us nothing. The sooner we accept that, the sooner we can move on to something more productive than self-pity.”
I almost agree with that. Really love the second sentence. Now, the “world” owes us nothing, but if people are going to be having children then there are responsibilities they must accept, which if they don’t all of society ends up footing the ultimate costs. Parents have to be a nurturing, supportive, and guiding presence for their children.
I was thinking if they gave the inheritance to the fiscally responsible sibling he could probably make that nugget produce in a way that could help both of them.
They know for sure the irresponsible one will just blow it, helping no one.
“The world owes us nothing. The sooner we accept that, the sooner we can move on to something more productive than self-pity.”
Conversely, it seems as though it could be argued that we owe the world nothing.
I agree with Skip that means testing has a high probability of coming in at some point, along with removal of the income cap for the non-medicare part of the FICA taxes. The percentage increase in the covered salary over the last 5 years has far exceeded my salary percentage increases.
Well, Skip, your friend’s parents are assholes.
And they pretty much personify the wrong-headedness of today’s oldsters.
What’s the worst that could happen to their bum of a son? That he sleep in gutters and rots away? He’s already done that most of his life - so what’s the difference?
Perhaps the parents actually want their loser son to blow his own brains out, at last. Because that’s precisely what they are giving him the ammunition to do.
Some changes starting to take place in Ohio. My wife just became a full-time employee of a (state) University (faculty position) and has healthcare available to her. I have always had family coverage from my employer, but at higher rates than the she would pay.
However, for new hires starting this year, the University will no longer cover a spouse on a family plan if that spouse has health insurance available from another employer. So my wife can sign up for health insurance thru the state university, and it would cover her and the children, but not me! I would still need to carry health coverage from my employer just for me.
(she was part-time faculty for the past 3 years, but since it was always on 1 year contract, she is considered a new employee each school year.)
My employer actually has better coverage, but as I said, at a higher price. When we considered everything, we decided it was better to maintain family coverage from my employer.
I think the health care industry will be the next to collapse. As the economy faulters, more and more people will be told by their employers that they can either keep their jobs or keep their health care coverage.
I think the US airline industry will collapse before health care, but I agree in the inevitable.
What about the higher education industry?
Sorry to burst the university husband’s happiness about his wife getting a job there. But I think on-line learning and on-line degrees are going to replace at least the market for older people returning to get a second degree in a new field.
Eventually people will go to college on line and if trust is an issue, they could take exams or quizzes in a designated place with a hired “teacher’s aide” to make sure there is no cheating.
Sure a lot of the nice college experiencess of socializing will disappear. But paying $300,000 for an Ivy League education when you can get the same education for $3000 will make it well worth skipping the social aspects of traditional college education.
The establishment thinks that house prices falling severely is a bad thing. But we bloggers know it’s a good thing! More people will be able to afford a house the more the prices fall. Same thing for on-line degrees.
Falling prices are good things. Computer power increases while prices fall. It all means that consumers have the ability to have more money to spend on other things.
For us who have been sitting on fence (and have a deep groove of the fence wire on our backsides by now), higher oil prices are not killing us. We sat out the bubble or sold our real estate for profits before the peak.
I tend to be a pessimist. Keeps me out of economic trouble these days. But I’m prospering from it (dang it!). It’s not logical to say that If you have a risk neutral asset allocation then you don’t give a rat’s a$$ about inflation or deflation. Also I don’t want to hear about the latest 2nd amendment decision by the Supreme court. That news is too good for this pessimist.
Does Costa Rica have stricter gun control? Australia? I think so (oh oh). New Zealand? Amsterdam?
The higher education industry collapsed years ago…not for the schools or their employs, mind you, but for the students. The bang for the buck has been decreasing exponentially for years now.
Frankly, I’d very much welcome a collapse in the insurance-end of the health care industry. One of the biggest mistakes that private and public employers ever made was to assume the task of providing health “benefits” to workers.
If every individual insured himself or herself without “aid” from their employer, prices would decline.
I think the time to buy homes (with cash) will be when the mortgage interest rates hit 15% plus (like in the early 1980″s).
The cost of borrowing money at the Fed Funds 2% rate serves as a benchmark. If one uses the official Consumer Price Inflation index, then something close to a 5% CPI is the prevailing figure. The ‘Real Cost of Money’ is Minus 3% but only if one resorts to a bogus CPI figure posted. But wait! The USGovt reported CPI is a joke. Its purpose is to minimize Social Security annual increases, to limit federal pensions, to offer low phony inflation adjustments to many other statistics like economic growth (GDP), and to maintain a charade for selling USGovt debt at low yield.
The divergence of the CPI from reality is a story in itself. The ‘Shadow Govt Statistics’ website removes the hedonic adjustments. The true Consumer Price Inflation is shown as raging near 10%, as its divergence from the baseline false statistic is widening steadily. This means the cost of borrowing money at the Fed Funds 2% rate is over 8% lower than the CPI. So money really costs MINUS 8%.
These negative interest rates are killing both the banks and the US bond market. The mortgage interest rates and the long term US bond yield must rise to reflect inflation to save the banks.
When the Treasury/Fed team moves to rescue the major banks and Fannie Mae/Freddy Mac, the $5 trillion-plus burden of risk will be transferred to the American citizens with the magic of monetization of US bond debt. The US Treasury will sell billions/trillions of dollars of bonds to the Fed. Res. System to raise the money.
How else could the Treasury raise the money? Hope is not a plan.
How would this monetization of US bond debt effect inflation and long term interest rates (bond and mortgage)?
If I’m reading the bailout tea leaves correctly the treasury agreed to give some assistance to FNM/FRE but didn’t say it backed every bit of bad debt.
There are plenty of points for them to walk away from this or slow burn it.
Also only expecting 600B in defaults not all 5T. A lot of those loans are prime and probability of failure is low.
Additionally the dollar falling is attracting business already. In a couple of years expect even more.
I’m admitting Ben was right in all of this. Things will get ugly but there are going to be buying opportunities soon.
james, “Also only expecting 600B in defaults not all 5T. A lot of those loans are prime and probability of failure is low.”
I see that hope is your plan.
Henry Paulson (US Treasury Sec.) is about to be given an $800 Billon dollar blank check in the form of an increased Federal Debt Ceiling which he can spend on Fannie Mae and Freddie Mac. A huge percentage of the debt issued by Freddie and Fannie - about $1.5 trillion worth - is held by foreign central banks. Also Paulson is proposing to bail out the Chinese and Japanese governments with our tax money!
This is only the beginning of the multi trillion dollar bail out!
When the Treasury/Fed team moves to rescue the major banks and Fannie Mae/Freddy Mac, the burden of risk will be transferred to the American citizens with the magic of monetization of US bond debt. The US Treasury will sell billions/trillions of dollars of bonds to the Fed. Res. System to raise the money.
How else could the Treasury raise the money?
“Things will get ugly but there will buying opportunities soon.”
A Goldilocks market is a seller’s market. An ugly market is for the buyers.
Of course, there’s a huge bias in the reporting here, even though they’re trying to make a good point.
1. “the housing slump”
What “slump”? It’s a much-needed correction!
2. “the good times”
Bubbles aren’t good times!
etc.
Any Mike Morgan fans out there? Here’s a hair raiser for ya!
http://realestateandhousing2.blogspot.com/2008/07/back-half-of-500-year-hurricane-gets.html
Did anyone ever seriously believe Bush or anyone in D.C. was honestly for a ‘free market’ system? No way.
Paulson’s Fannie-Freddie Deal Scraps Bush’s Free-Market Push…
The final concession on this week’s deal came when Paulson persuaded the president to drop a veto threat over $3.9 billion in housing grants to communities pushed by Democrats.
“Congress knew it had the Bush administration over a barrel,” said Peter Wallison, a Washington-based former Treasury general counsel and an author of a book on Fannie Mae and Freddie Mac. “Paulson has had to make the best of a bad job.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=a4xF4LngVHRU&refer=us
If Bush was ever for something I supported I would have to seriously re-examine my position given his success record. I did like the following quote in the article, however:
“A lame-duck White House is struggling to revive the economy and prevent a further meltdown in the housing market that would demolish the centerpiece of President George W. Bush’s “ownership society.””
If an “ownership society” doesnt include housing at price points at which the average buyer has a realistic chance to actually pay off the mortgage at some reasonable point of time, or at which at least give them a reasonable expectation for meaningful appreciation, what exactly does it mean? I am so confused.
If the question was: If the goal is an “ownership society,” what facts would be most favorable to the attainment of that goal if the average person in such society made $50,000: (i) average home prices at $100k or (ii) average home prices at $1 million?; the article suggests Bush seems to think (ii) is the correct answer. I cant tell if the the view is one of complete incompetence or whether under his “ownership society” vision, the goal is a world in which the wealthy few own all the debt slaves. Since he always has been a such selfish little bastard, it may just be the later, but come to think of it he also rates very high on the incompetence scale. Decisions. Decisions.
I vote choice 2 - wealthy own all the debt-serfs.
Because, you know, being rich isn’t any fun if there aren’t any poor people to run over in your limo.
The “ownership society” never did specify who exactly owned what… or who…
For example, I think Robert Novack didn’t “see” the pedestrian he hit with his black Corvette (ugh, what a vision) because he was a homeless guy.
The purpose of the “ownership society” is to make people who primarily depend on the value of their labor to create wealth to *think* like the people who primarily depend on their capital to create wealth. That was the idea behind privatizing social security, the idea behind wanting everyone to own a house, one of many reasons for moving the semi-invisible security of pensions to the visible (and lendable) flash of a 401(k), all of it. If you think like a person who depends on capital, then you might be OK with lower real wages because you are keeping your eye on the stock market, not your pay stub.
Problem is, when people who aren’t rich think about their capital/equity more then their salary, they try to find ways to spend that money. Enter HELOCs, serial refinancers, etc. Result? No equity and the cooling economy means even the poorly paid jobs are going away.
Ironically, there’s a great many people on this very board (born from 1938 to 1954 or so) who can’t wrap their head around the fact that average household income is about $50K.
They may own houses outright that they THINK are worth $400K - $2M. Just who do they think they’re going to sell these properties to in 10-20 years? Those households making $50K a year AND paying for their Medicare? Good luck with that.
I hope that lots of HBBers here that fall into this category are saving cash like mad so they have some sort of liquidity. They’re going to need it (and lots of it) more than they might recognize.
Let’s face it, his “ownership society” failed. Miserably. The increase in homeownership was around 5%. Is it possible that the decrease via foreclosures, etc. will be greater than 5%? I think maybe.
I think “definitely.” While renters were buying homes, homeowners were buying homes too, in the form of cash-out helocs, or stretching too far when they traded up. They essentially traded equity for cruises, Escalades, and granite countertops. It didn’t LOOK like they traded equity away because ‘prices always go up,’ but once housing finds its true bottom (2000 prices + 10-15% or so), we’ll all see the equity that disappeared.
And this is true for people who can still afford their payments. This doesn’t even take the foreclosures into account…
Wow, your hopeful with a prediction of housing prices only retreating back to 2000 levels plus 10-15%. From my point I’m betting they drop to 1999 levels or so and stay there for a decade or so. This housing bust will be the biggest in history by far. The Reverse Wealth Effect is in high gear. Assest deflation has only just begun. Cash is King.
Let’s face it, the so-called Ownership Society was (is?) a big shell game designed to maximize profits for the corporate buccaneers who would enable us to “own” stuff on their terms. The Ownership Society was never meant to benefit the citizenry.
The ownership society idea started out okay, but was corrupted. It makes sense to experiment with lending variations and allow those that have low default rates. The game didn’t fall apart until the bubble hit and all standards went out the window. Even a strict and standard situation with 20% down and only the one loan becomes completely unstable if pay is not verified, if people who can’t hold a job for more than a year are given loans, if several months of reserves aren’t demonstrable, and on and on. None of that has to do with the ownership society idea, it is just that bubbles become pervasive and corrupt everything.
Astute regulators might have stepped in, but those were all flushed away long ago. The failure mode we ended up with is related to the daddy knows best concept of government our leadership has, but very similar things would have happend with a mommy knows best government in place.
Mole Man, I wasn’t talking about ownership per se, which I’m all for if the fundamentals make sense.
I was talking about the Bushian concept of the Ownership Society, which I contend is a fundamentally unsound operation with a rotten core. You may remember that the concept was supposed to extend to healthcare and retirement funds, too, but both of those ideas failed to gain much traction outside the administration’s inner circle.
The lack of regulation was simply part of the equation, though I’m not arguing that a complete implosion in the marketplace was the desired outcome.
yo, the welfare society is coming hard
09 NEW DEAL 3
only this time there will be a World Tax etc
You are amusingly consistent in your focus.
like some small terrier intent on a tennis ball
Hey, that WORLD TAX idea might have some merits . Start adding a World Tax to all paychecks around the world to bail out the Housing debt . Just kidding ,the World is already paying a tax in other ways .
But , I agree with Mole Man that the problem with the ownership of real estate started when it moved into the mania stage and the
faulty loan /fraudulent loan ,do anything to keep the party going stage of the boom.
I have no doubts that the worst loans were written from 2004 to mid 2007 and the fraud increased 10-fold .
I remember being shocked when Florida announced a 39% overall increase in their median price of homes in 2005 ,in one year .
The cheerleaders at the time were saying that it was because everybody and their brother was moving to Florida .Turns out speculation was driving the price up with a whole lot of funny money being given out with hit the mark appraisals. At that point the cheer-leading just got worst and Arizona and California
was going up in a similar fashion. Than the MSM was urging people to go to the next big investment spot which was suppose to be Texas ,and the locust was off and running . Short term speculation isn’t exactly the same as as regular home ownership goals .
I suspect you are more correct than you realize, taxmeup.
The U.S. Federal Government taking a cut of foreign workers paycheck? I can see them at least propose such a thing, provided the workers are employed by U.S.-based companies.
Many folks here may think me insane, but considering the willingness of our government to rape its own citizenry in its quest to increase its power, I don’t think it’s all that far-fetched.
Why else is Obama coursing his way through Europe right now? Who gives a shit about what Germans think about our candidates in advance of a U.S. election? Obama might as well make platitudinous oratories in Zimbabwe.
Funny how would-be European leaders don’t come to the United States to perform to the masses in advance of elections over there. Why is that exactly?
I think the mortgage companies–in the very early stages of this bubble–thought that they could start offering 40 and 50 year mortgages and people would simply think paying off a house in 50 years was “normal”.
The 30 year mortgage is relatively recent! Until after WW-II, 15 year mortgages were more common
wmbz
I wish I knew Bush was gonna drop that veto threat the other day, would have saved me a big argument.
You and me both, I kept my fingers crossed for the veto, but nooo ended up just another screw job. Someone wrote that, “When No One Is Allowed To Fail, Failure Becomes The Standard”.
I don’t like it either, but passing it off as “No One Is Allowed To Fail” is a major distortion. The best current estimate is that 400k applicants might be qualified for guarantees on renegotiated loans. The actual numbers are much less. “A Few Hundred Thousand Of The Least Hurt Will Be Given Limited Support” would be much more accurate.
Perspective is also needed in that this at most costs a few hundred billion which at current rates translates into a few months of battlefield activity so this is still very small potatoes compared to the money we spend on our global cop role.
I disagree. It’s not a major distortion.
Don’t get me wrong - in pure monetary terms, I agree with you 100%. However, that’s not how the average Joe6 dolts are going to view this. Instead, they will be further encouraged to think “No One Is Allowed to Fail” as an entitlement.
Every socialist in our government knows that this bailout means little monetarily. They also know it means something a great deal more important: the continued warping of the Pro-Individual American Constitutional model into the Pro-Government European model.
Bush sold out IMO. In exchange for backing the bill, he gets all credit card transactions reported to the government. He is into that kind of stuff.
“Bush sold out IMO. In exchange for backing the bill, he gets all credit card transactions reported to the government. He is into that kind of stuff.”
With Bush, if there’s a bad option and a worse option, we get the worse option. This might be one of the worst pieces of legislation he’s signed and considering some of what he’s signed that’s saying a lot.
Does anyone know which House member inserted to the CC reporting provision?
Rumor from the congressional staff of R. Paul says it was Hank Paulson himself.
The thing that kills me is that they will allow the stock to keep paying dividends and the current management to stay in place. Fn Amazing.
The rich get richer, the poor get poorer…
The Bush administration has been zealous sycophants of the University of Chicago’s Economics department. Things like the “shocking” response to hurricane Katrina are simply run-of-the-mill plays. Stretching the US military to the breaking point so we can pump billions of dollars into contractors and military supply operations is another perfect example. Rumsfeld’s “Army of the Future” was simply a ruse to ensure that private corporations would be necessary to any future war effort.
I recommend “The Shock Doctrine” by Naomi Campbell. As a non-American writer freed from our sometimes inane vocabulary, she refers to Bush et al. as “neo-liberals”, correctly identifying their characteristic expansion of Federal authority over every American citizen.
Sending the US lending and housing market into a nosedive is the perfect shock, making anyone and everyone happy to endure greater Federal control of our markets and lives - buyout Fannie Mae, Freddie Mac, save Bear Sterns, etc. etc. When the dust clears, these entities (and their formally Federal authority) will be sold to private industry for pennies. It’s tried-and-true School of Chicago exploitation.
~The above is purely truthful, but for those who see it as biased, I am not a Democrat. I fully support conservative Federal authority in all things, but neither major political party supports that any longer.
‘Naomi Klein’ and yes, it’s an outstanding book that EVERYONE should read. And then go out and buy some torches and pitchforks. Every chapter just make me angrier and angrier.
haha thanks for that correction. Naomi Klein, an author, presumably not a supermodel.
The book made me angry as well, but it finally provided, through excellent journalism, a framework for understanding the Bush administration. They aren’t incompetent, but they are deliberately obtuse. I’m no longer baffled by their decisions. They are simply working to fulfill the rapacious policies of the School of Chicago.
Did anyone ever seriously believe Bush or anyone in D.C. was honestly for a ‘free market’ system?
In November 2004 I did…(blush). However I am now back to being a radical Libertarian, just like I was from 1979 to 2001.
Something for everyone
http://www.nytimes.com/2008/07/25/business/25money.html
If you are ignoring the housing bailout bill because you think it benefits only troubled homeowners, you may miss out on a windfall.
“Lenders, however, are not required to give you a better deal under the new law, even if you do meet the qualifications.”
What is a bill that lenders don’t have to follow if they don’t want to?
“What is a bill that lenders don’t have to follow if they don’t want to?”
It’s a ray of hope extended to FBs encouraging them to keep up with their house payments.
“It’s a ray of hope extended to FBs encouraging them to keep up with their house payments.”
BINGO. Bleed’em dry to keep the banksters and fraudsters solvent, fat, tanned and rested. The ownership society requires owners and the owned.
It’s lipstick for this pig. They parade the lipstick covered pig infront of Congress and get them to vote for this POS.
Any thoughts on why any lender would agree to rewrite the mortgage amount down to ** 90% ** of the current value. Would it really be so much better than just foreclosing? What do people think?
Usually they would lose a *lot* more by foreclosing. If lenders take advantage of this program, what does that tell us? It tells us that you and me, the taxpayers, are responsible for trash that the lenders don’t want on their books.
Usually they would lose a *lot* more by foreclosing.
In addition to the portion already lost? Assuming the appraisals are correct, this only really helps if either the house continues to lose value after the loan mod or if the costs above the loss in value for the foreclosure proceeding exceeds 15%.
So, if you have a house with a 450k loan, now worth 200k, assuming it’s FMV doesn’t decline any more, are the other costs/fees for the bank going to exceed 30k if they foreclose?
Nothing for renter and those with paid-off homes. We just pay for it.
Whenever the government charges people with the same income different taxes, it is making a statement about their relative value. Kind of like high taxes on cigarettes, gambling and alcohol.
So what, exactly, is wrong with us?
What about when government charges those with the same abilities different taxes? If you and I are both capable of making the same amount, and I just choose to not go to school or not be as dedicated to learning or spend the same amount of time learning a trade as you, should I get a tax break later?
If government can do the above then why can’t it change the tax rate based on other things, like whether you spend your money or save it, how many times you have reproduced, number of animals, whether you eat honey-nut cheerios or the crappy kind, etc.
That bailout bill is looking more symbolic than of something I really feared — a bailout for the $200K underwater humvee owning, boat towing jerk.
Correct, the submarine crowd won’t get subsidized loans.
Of course. the followup bill may address that.
I do believe there will be a new $500 to $1000 property tax deduction for outright owners that do not itemize.
Not that that makes me want to invest anything more in real estate in this country (or at least those environs with which I am familiar). No matter, in the meantime there’s plenty of other places/things for me to invest in besides American real estate.
We are not Obeying, Conforming, and Consuming.
We are not in debt, thus we are harder to control.
Pain will be applied until control is established.
“We are not in debt, thus we are harder to control.”
BINGO.
I suggest exercising the 2nd amendment while we can.
Umm. Growth stocks - buy and hold until the revolution for small government wins (2016 is the year). Buy precious metals for cash, hedge them with municipal bonds and savings bonds (just in case). Throw away the receipts for the metals purchases and buy periodically. Buy a house in one of the 20 Case-Shiller cities when the index is below 100 and renting costs more than buying.
And yes, buy lots o’ ammo.
Get my drift?
But it also includes many handouts to first-time homebuyers, longtime homeowners, returning veterans and senior citizens seeking to tap their home equity without getting hit with big fees. Millions of people have the potential to benefit in some way.
Well, F**K YOU, New York Times! I’m guess I’m not “nearly everyone” because I’m not a first time homeowner, I’m not a returning veteran, and I wouldn’t think of taking out a loan against a paid-up house! Why risk a house I have 100% ownership of, and is judgement-resistant, by taking out a loan against it so I can buy crap. Besides, I’ve been a frugal saver all my life, have no debt, and want to keep it that way.
Why do “liberals” like the NY Times think the debt-slave society is just fine?
Because they are a key component in the state’s control apparatus. Their stand on trendy issues shouldn’t fool anyone anymore - they aboslutely need the status quo.
After all, how many starving artist twentysomethings will vote for the new kid this fall while simultaneously cashing rent checks provided by parents who will certainly be voting for the hothead?
Because they are a key component in the state’s control apparatus. Their stand on trendy issues shouldn’t fool anyone anymore - they aboslutely need the status quo.
They are the status quo.
The supposition that the NYT or any other large publicly traded media organ is “liberal” is misinformed.
They are a paper of record. There are left/right shifts within that paradigm, of course; e.g., the WSJ’s editorial content usually stands to the right of the NYT — but it’s a fairly narrow window of difference despite myth-making to the contrary.
“Why do “liberals” like the NY Times think the debt-slave society is just fine?”
Maybe they aren’t librulls?
Hah, you said it.
No, they aren’t liberals. They are socialists.
You get a $500-$1000 extra deduction unless you already itemize. Since you’re home is paid off, if you’re itemizing thanks (the major other way to get there is through large charity deductions).
Because of AMT, I don’t get most deductions.
Because I don’t have any kids, I don’t get deductions.
“Why do “liberals” like the NY Times think the debt-slave society is just fine?”
Uhh, I’m confused by your statement. It would seem to me that it’s the Wall Street Thugs and Bush’s own directive to the Americans telling them to go SHOPPING after 9/11 and then pushing home ownership on to people that had no business buying a house.
It sure seems to me the powers to be are the ones that not only encouraged Americans to be debt-slaves but they’re the ones that engineered it.
um.. as i recall, a quarter million jobs evaporated within 2 months of 9-11, loss of a million more was predicted in the coming months, people were afraid of traveling, afraid and preparing for a continuing string of similar (and worse) attacks, and the economy was paralyzed in general.
So, lets elect you President, post-9-11.. and lets hear your idea of what, if anything, should have been done.
JoeinCalif,
I’ve gots of ideas about what we as a nation should have done after 9/11. First and foremost we should have banned together to kick Al Quades ass and not been sidetrack to an illegal, ill conceived war in Iraq, 2nd we should have vowed to free ourselves of Saudi Oil; remember know the majority of the highjackers that very sad day were from SAUDI ARAB not Iraq. We should have banned together to move forward with engergy independence which would have created a HUGE surge in job creation and spurred manufacturing jobs right here in the US.
The last thing I would have advocated is that Americans rush off to Walmart to buy products from Chindia. That recommendation would have been valid if we actually manufactured those goods. But as we all know we Americans manufacture virtually nothing today. Even Ford and GM are doomed. Americans better wake up.
It does appear however that the FEAR mongering that went on after 9/11 suckered in lots more sheeple into the group think mentality. SHOP TILL YOU DROP SOCIETY, good grief, what fools.
W’s great words of wisdom, “Go Shopping”, has work out all that well, has it. That’s why we’re in this mess.
I was an executive at the Walt Disney Company when W. told Americans to “go to Disney World”. I couldn’t have been more pleased!
Presidential candidate Bestwishes would have attacked Saudi Arabia.. searched for alternative energy to replace oil, thereby instantly and miraculously reverting the USA into a manufacturing giant, like in the good old days..
Lets see.. No fear mongering in this admin (that’s certainly a plus!).. and otherwise seems to expect the economy would have returned to normal on it’s own.
Thanks.. err.. that’s one impressive platform. You’ve got my vote
Hi JoeinCalif,
Why you’ve put words into my mouth is beyond me. I never advocated attacking Saudi Arab, I just pointed out that the highjackers on 9/11 were from Saudi Arab, NOT Iraq, obviously some Americans still believe this. You can’t fix stupid.
W’s “Go Shopping” wisdom after that horrible day was the most dishearting and embarassing moment in American history, IMHO. We and the world needed a strong and wise leader more than ever and all we got was W’s “Go Shopping”. I knew on that moment that we were in real trouble. Unfortunately I was right for look at the mess we’re in. But, I gather from your comments you think W did a great job. Hope your still shopping!!!!!
dam dar dem no good limbrulls
Regarding the tax rebate in the Housing Bill to first time home buyers of $7,500.00 ,I think this is a major incentive designed to get
first timers off the fence . The real estate community will make hay with that one . Problem is that sellers just raise prices when incentives are baked into the deal .So that part of the
Bill is a stimulus to get foreclosures sold and prop up the market
because people are not buying .
Also ,the part about limits on loans fees regarding the reverse mortgage loans is interesting because that was the biggest flaw
with those type loans . The lenders and mortgage brokers aren’t going to like that clause in the Bill because those loans were becoming big money generators for the industry (in terms of fees and loan costs ).
But ,I really don’t see much in the form of reform regarding the aspects of the bubble that have to do with prevention of fraud ,
such as the appraisal set up and check and balances on underwriting .
I still get flyers from some RE developments at my Phoenix apartment encouraging us renters to buy - “Why are you still renting?”…”Bad credit no problem.”
That last line got me wondering why I would want to buy in a community where my next door neighbors have no credit or bad credit.
I have higher class people in corporate apartments for rent than I would have as neighbors in those communities.
That’s what I look for. I crave quiet neighbors. Here in Maryland and there in Phoenix my neighbors are quiet. My aim is to increase my net worth and continue focusing on my career - not to party. If I wanted to party I would rent by a university.
Why do “liberals” like the NY Times think the debt-slave society is just fine?
Because it’s a debt-slave society. Your answer was within your question.
NAB will shock Wall Street
The National Australia Bank’s decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a “meltdown”.
We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.
http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=sph
“Where will the equity come from to cover these bad loans?”
Uh, maybe from those who have cash?
Not mine at these interest rates and divided rates.
Nor mine, at least not this year. Perhaps next year?
May I ask where your investing or should I say hiding your cash these days? We too are cash rich and debt free. We’re hoping for skyrocketing interest rates so we can finally be rewarded. I feel those of us that lived BELOW are means, we’re thrift spends and saved, saved and saved should be rewarded.
I have been lamenting the fact to my husband that the reponsible in our society are never rewarded or “bailed out”. But that’s probably because we never get ourselves into positions that require a bailout.
Where is the provision in this new bill for $7.5K tax credit to anyone who was smart enough to not purchase a home they could not afford, save, and live within their means? Nope! Instead I get to help people stay in homes they never should have bought in the first place and help backstop Fan and Fred. I tell you, it’s awful discouraging at times.
So when is the liquidity really going to dry up?
Locals on economic development site are all celebrating the new mall expansion and trading gossip on all the shiny new retailers they can enlighten their lives with by buying up useless trinkets. You can practically see the sparkle in their eye when reading their posts. The money (credit) is burning a hole in their pockets.
So I have to ask the question…where is that expansion money coming from? And why are the retailers still willing to commit to some pretty hefty rental rates to come here?
“So I have to ask the question…where is that expansion money coming from?”
New York City.
“So when is the liquidity really going to dry up?”
When New York City is destroyed by the rest of the state.
Oh please go on w/that explanation, WT. I really do need more clarification for my own fuzzy concepts of how the state works. I don’t want to get drawn into an upstate/downstate argument as you know I have no position and really enjoy hearing both sides positions.
Plus I want info for my own selfish purposes.
When you talk about the Mall, I assume you are talking about that big one up in Syracuse? I’ll bet there is some state EDC money involved, and money, net comes from downstate.
Now I don’t mind investment in Upstate NY, but that isn’t the investment I would have had in mind.
Same with that chip plant over in the Capital District that is going to be subsidized a few $hundred thousands per job.
“When NY City is destroyed by the rest of the state.”
This is the statement I was hoping you’d expound on. R U just saying upstate is taking all the tax dollars? Up above you posted that NYC schools needed the rest of the state to increase their taxes to fund NYC schools (per NYS teacher’s union) So which is it?
I have no dog in this game. My heart belongs to another.(state) I was just looking for clarity that never seems to appear. Welcome to NY, right?
Yes Carrie, You must certainly understand that NYC carries the whole state. Projects like the aforementioned mall and AMD complex are paid for directly out of NYC funds. The rest of the state’s taxpayers pay 0% tax and didn’t fund any of that. We’ve certainly never been forced to bail out NYC’s schools and road projects from our toll moneys..
I can’t remember who said NYC pays something like 25% of all of NYS tax money. Oh wait, they carry around 50% of the population… Never mind..
Uugh..
So where exactly do these retailers think their customers have been getting all their cash? It wasn’t coming from wage growth, that’s for sure. And, it won’t be coming from HELOC for a long time to come.
Credit card roulette is the new national pastime right now.
“Credit card roulette is the new national pastime right now”.
Boy oh boy is that correct, that snowball is just starting to roll. Our national nanny’s have a field of little fires popping up. How are they going to Nationalize credit card debt?
Boy oh boy is that correct, that snowball is just starting to roll.
Hasn’t that snowball been a-rollin’ for a while now?
Still, you make a good point — it’ll be interesting to see what happens when the “snowball” starts to resemble an avalanche.
Hasn’t that snowball been a-rollin’ for a while now?
You are right, I should have written gaining momentum…Big time.
did anyone in the nyc area get their latest con ed(electric) bill?
the highest one i ever had was $127
the bill i got yesterday was $182
they raised their rates 22%
i would like to raise my rates 22%
i have a 3 bedroom apt these local mcmanisons must be getting bills in the $600-$1000 a month range
ouch!
I live in a 2 bedroom apt in San Diego. Try $513 for a month (Electric Bill) . OK, I run a computer biz out of my home, and puters do take quite a bit of juice, but still …
“and puters do take quite a bit of juice”
The term “puters” is reserved for those of us who live in the South.
Ummmm San Diego is almost in Mexico. Can’t get much southern hun.
Mexico’s in San Diego.
umm… the words spelt hon’, ‘though most people drop the apostrophe. ‘Cause it’s short for honey.
That was the Southern equivalent of “puters.” When posters attack spelling and grammar, especially when the choice of spelling and grammar was intentional, one can only draw one conclusion. They want to contribute and feel special, but mentally that is all they can add.
I find you very special hun!!!!!
Lighten up Sarah. It was an attempt at humor, perhaps poorly done. Definetely not an attack by any means.
The Mexican Peso is at a six year high.
The US dollar is near an all time low.
Listen up honey buns.
San Diego ain’t “The South”
When someone refers to “The South” they mean the “Old South”. Remember the Civil War? It was a significant event in US history and creates a clear delineation.
Just saying, since you decided to get so snarky.
Butch how was my dry humor snarky? I only got pissy when people attacked my spelling because I find it an intellectually weak argument. I could dumb my humor down, but I don’t think I should change my style because a certain percentage of people get lost. It’s Friday people, lighten up.
“They want to contribute and feel special, but mentally that is all they can add.
I find you very special hun!!!!!”
Honey buns….that’s snarky.
Have a nice day.
That is just me being truthful. I never have been impressed with people attacking other people on the basis of grammar and typos, especially since many type on blackberrys and other devices that dont allow for easy proofing and/or correction.
Jim is OK in my book, however, because I didnt know that was his humor style. Now we are on the same page. The verdict is still out on you, however. My original post was posted for pure humor value.
I’ll take Sarah’s side on this. fwiw.
lol
Uhhhh, lighten up y-all
What the heck? I live in a one-bedroom apartment in flyover country. My electric bill is about $20 a month + another $15 or so for gas (my water heater is gas). Add another $40 a month in winter for gas heat.
Then again, I almost never use the A/C…and my e- company burns coal.
I live in a 2 bedroom apt in San Diego. Try $513 for a month (Electric Bill) . OK, I run a computer biz out of my home, and puters do take quite a bit of juice, but still …
Welcome to San Diego, owned and operated by SDG&E
For non San Diegans: SDG&E’s motto used to be “San Diego Owned and Operated”
My Electric bill last month in lovely Loveland, CO was about $130 to keep my 3000 sq ft house AC’d.
Welcome to San Diego, owned and operated by SDG&E
I remember in the late ’70’s, in response to the energy crisis, SDG&E urged consumers to cut back on usage to “conserve”. They mounted a full-on billboard/TV/radio campaign to get the word across.
A year later, people had done such a great job on “cutting back” that SDG&E was forced to raise rates to make up the shortfall in revenue.
Sigh.
I live in 1600 sf house in SD, family of 3, our last bill was $97. We rarely use A/C, ceiling fans do the job.
Ours in Southeastern Virginia just went up a good chunk. My last bill was right over $200 for a 2bd apartment. I too happen to have a 42 space rack with a good number of servers, which I’m consolidating into a single machine with virtual machines (Xen).
I pin a bunch of it on inefficient air conditioning (central unit but the company doesn’t maintain them at all). I know people with 2500sqft homes that pay less (before the rate hike).
My bills for 2300 sq ft house has been about $270/month. My last home was about the same size and we paid $140/mo for the budget plan!
My husband was downstairs trying to change the sump pump level so it didn’t turn on every 3 minutes. We didn’t have a sump pump in the last home. We have an extra dehumidifier in our present basement due to less storage in the house and nicer items being left in the basement. We now live at a lower elevation which can sometimes mean a difference of 10*F in temp from our last location. In my last home the breeze usually kept the house cool. So we’ve had the AC on much more here. I should do better in the cold months w/ lower need for sump, no A/C, no dehumidifier’s going 24/7 and no cold winds slamming the back of my home.
I’m really tired of these NYS bills.
This evildoc lives in Willows Apts on 7th North Street. Free Utilities. Of course, my rent has gone up $10 each year.
But, cannot complain about 1300 sq ft 3/2 for $850/mo with all water, gas, electric (AC) included. Of course at St Joes they keep asking why i don’t buy…
Hey evildoc!
I didn’t realize there was another HBBer currently living in Syracuse (lots of ex’s on here)
In 15 years of renting in a few different places, I was only in one apt building in a building that was originally built for cheap condos. I only lasted there for one year. (Some idiot in the next building kept setting the building on fire. For some reason they could’t evict him) I guess being a single woman I ran into a lot of security issues and felt much better when strangers didn’t have a reason to be hanging outside my door/car. I always rented in subdivided Victorians.
In Syr, I’ve required some medical attention that has put me in quite a few different medical facilities. I loved how I was treated at St. Joe’s. A really lovely staff every single time.
You have AC? I thought you lived upstate?
Here’s a few suggestions. Ceiling fan blowing down from overhead makes it feel 10 degrees cooler. Put one over your bed. We have four — kids room, our room, kitchen, living room.
Get a powerful exhaust window fan or two.
During the day, close all the windows and blinds, and remove the window fans. At night, put the window fans back in and suck in all that cool night air.
We’re unconfortable at night probably one or two nights per year. From heat that is — my problem is the fan is right over me and some nights I wake up cold.
And this is in NYC. The difference in average annual temperature between NYC and Albany equals the difference between NYC and Charleston, SC.
LOL WT. It does get hot and humid upstate.
Thanks for the tips though. We were doing those things in the home we owned. I think the real difference in the 2 locations is elevation and the shade of trees.
When I say AC I’m talking 2 small window units in 2 rooms. One is only on at night. The rest of the house is sweltering even w/the windows wide open. Probably due to no trees over our house at all—the front of the house really bakes between 3-7 pm. I am looking to pick up some insulated drapes.
We noticed the higher bill before we installed the AC units. I think the real problems are the sump pump and the dehumidifiers which are compressor pumps running all day.
By just installing those new flourescent bulbs in several strategic places (where folks tend to forget to turn off the lights) I’ve noticed at least $15/$20 savings per month.
You need to put one of these in the back yard.
http://www.stirlingenergy.com/technology/suncatcher.asp
My wife and I plan to put one in when we build, $100,000 a piece is not small change, and it big but pay off is in three years. It will also piss off the new development next to me.
Check these solar roof tiles out. Thank you for that link,peter a.
http://www.openenergycorp.com/suncone/suncone.php
I LOVE it! I can only imagine how that would totally piss off the neighborhood in my former town. Despite being primarily rural, they blocked someone who wanted to install his own private windmill. Views, ya know! LOL For some reason ugly metal warehouse buildings for boat storage blocking lake views aren’t considered distasteful.
Thanks to all the energy saving ideas posted here. I save them in my favorites in case we go the build-our-own route.
Wow,those solar tiles are so great ,I’m really impressed . I wonder how expensive they are ?
Ah the memories, I remember as a child having a sump pump and a dingy basement, always creeped me out. Haven’t seen a basement since I left flyover country.
I’ve always lived on the New England Coast (until last home) and always had a basement.
Check this out….use the highest rates for nyc…..
It adds up usng 2-3 computers 12-16 hours a day with a reg CRT monitor then add in 2 ac’s ….its scary MG……I would never leave this apartment without 1 ac on at say 80 degrees just for my cats….
At these rates the payback in saving electricty and changing to a LCD monitor is probably less then 2 years…
Here is something really bad Con Ed charges $13 to read the gas meter but i use only $5 in gas a month …..talk about throwing away money each month. They are supposed to lower the monthly fee by having everyone get a remote meter reader… little led readouts on the side of the building….they say the meter readers can read at least twice as many homes in a day if they never have to wait for people to let them inside.
http://michaelbluejay.com/electricity/howmuch.html
I do several of the “tips” they give. I do most laundry in cold water, hang about 50% of my clothes (1/2 the amount to dry), use ceiling fans rather than crank up the AC, not just sleep my PC but turn it completely off every night (and during the week, it only gets turned on after I get home from work).
To get my electric meter read, after the meter reader’s second failure I had to put a paper plate with a note stuck on the gate spike: “The gate is NOT locked. To open, lift latch (arrow) and push gate forward or pull backward.”
Fortunately we only use 12 kwh per day.
But I was looking into putting solar panels on the roof, and the installers won’t even bother with residential jobs in NYC right now — they have all the big commercial jobs they can handle.
I have PECO here outside of Philly. Summer bill (w/AC) usually ~$75-80. Latest bill is $111. Winter bill will be even worse.
“i have a 3 bedroom apt these local mcmanisons must be getting bills in the $600-$1000 a month range ”
Indeed. Their McMansions truly have become money-sucking prisons from which there is no escape.
You might want to try the “Kill-a-Watt” product that helps you monitor usage, identify phantom loads, etc. I have heard good things about it.
Kill-a-Watt
Two of those have been on my Amazon shopping list for over a month now.. just can’t decided whether or not to shell out over $200 for a boxed set of DVDs..
That can’t be! Combotechie says we’re in a deflationary period. Utility rates should be going down!
Coal, oil and natural gas prices are soaring, so it is only natural that utility rates would be soaring.
Con Ed dividend is over 6 percent.
Here in “Marry” land my one bedroom apartment bill by BGE is $159. However in February it was $114. Okay it’s cheaper to cool a place 12 degrees than to heat by 40 degrees. So yeah, the bill increased about 33%.
If I’m still here in November I would expect $200 BGE bills for this one bedroom.
Foreclosure rates accelerating. In such a scenario, how can any say its a good time to buy?
http://biz.yahoo.com/cnnm/080725/072508_foreclosure_figures_up_again.html
foreclosures soar 121%
http://biz.yahoo.com/cnnm/080725/072508_foreclosure_figures_up_again.html
from the article:
“One of the sponsors of the bill, Rep. Barney Frank, D-Mass., said in a statement Thursday that he encourages lenders and mortgage servicers to delay taking action against delinquent borrowers before the new law takes effect.”
“I am urging the mortgage servicers to hold off on foreclosures in applicable cases,” he said, “so borrowers can take advantage of the program.”
he should have said, please i urge you not to forclose on any more deadbeats until this law passes so they can take advantage of responsible taxpayors that did not participate in this sceme!
Falling house prices are NOT the problem. Falling house prices are the symptom. The problem is that prices are too high. No solution to the mess that we’re currenty in that doesn’t recognize this basic fact is doomed to failure.
I agree.
Problem with the Fed Policy of inflation in the hopes of inflateing away the debts is that Wage Inflation is clearly not rising near what the other costs of living are. Wages Inflation appears to be the only Inflation the Fed is keeping low.
I argue that as we go forward, once this mess settles out years from now, that our multiple of incomes to houseing prices will actually be lower than ever before. Not just temporarily either, as the Food and Energy prices remain higher due to globalization.
The National Historic number on Income to Houseing has been 2.7X. Give another .2 or so to Food and Energy and were down to 2.5X. Am I completely off-base here?
My nickname for the Housing Bill going to the Senate,
“End Hope Now”.
That is all totally off base. The Fed is trying to avoid an economic implosion. There is pretty broad agreement that cranking interest rates would push a lot of organizations off the edge from banks to manufacturers. If all you want is a correction as soon as possible so that you can have your savings and your house and all, then that seems good. When you look at the implications of a severe downturn on the labor market, and in turn the implications of a severe labor blowout on society then things are less clear. The Fed isn’t “inflating” so much as trying to leave a skid mark instead of a splat.
You skirted around the edges of what I am trying to discuss. I agree the Fed is trying to avoid a splat and the way they are doing that is allow what they hope is a low level of inflation so that they can get inflation in wages. Currently it is not working in that wages are not gaining even near historic averages and they seem to have let the inflation Genie out of the Bottle.
Could this lead to a lower multiple of wages to Houseing values in the future was my question.
Reading your comments again what you stated was not what I am discussing.
Ah, so what you’re saying is that our savings should be taken from us in an effort to “save the system” of crooks that are very rich from their scams. Yes, yes - takings things away from the producers to save the useless. Marx and Lenin would like their talking points back from you…
Also, Moleman, you miss the point that lowering rates has saved NOBODY. You speak of high unemployment with high rates. True, but at least our money could still buy things. With the Fed’s “solution” we all have jobs and can’t afford anything because the dollar-pesos are worthless. That really isn’t any better than higher unemployment with a strong dollar.
Oh don’t get me wrong I think the whole thing is a big frick’n mess. I am not for it.
Upon review and taking the current economic mess to it’s conclusion, what I am really asking is:
If they are really attempting to monetize enough of this huge bubble, will it cause a decline in the quality of life to Americans?
Houseing price multipliers in relationship to incomes being reduced below historic trends would simply be one of the consequences. As they monitize, inflation increases, at least so far in this case.
Trying to solve the problems without new job creation to stimulate economy ,which in turn in theory would stimulate
wage increases ,or at least wage spending ,is being short sited .
Talking heads today were discussing the merits of another stimulus
rebate check ,to bridge the gap to keep the economy from falling down more . Borrow from the future to keep the now going . How about something that will really be productive like productive jobs that are doing something that is needed rather than artificial rebate checks ,that end up being paid by the taxpayers one day in the future .
The way the government and people in general are conducting themselves is no different than a sub-prime loan mentality . Give me the money today and I will pay it back in the future , if real estate goes up .
If they are really attempting to monetize enough of this huge bubble, will it cause a decline in the quality of life to Americans?
I don’t give a $ hit anymore. Nor should you. Many of those you are concerned with HELOCed to buy like someone with 3 times their incomes so they could get some snobbery points. “Hail” with them, you know!
I’m laughing at them. I am flexible enough to keep my income tax rate low and take advantage of all the tax loopholes I can find.
I’m laughing because I minimize my sanction of this socialist state.
You’re laughing because you’re loaded. Tax loopholes, you mean like Bermuda?
These that I use are legal. Loopholes, by definition are legal. Tax avoidance is legal - the more patriotic a person is (to the spirit of our Republic’s founders), the less money they give to the current regime, which has been in power in different forms since Hoover.
Tax evasion is illegal. I don’t do that.
More on foreclosures
http://www.bloomberg.com/apps/news?pid=20601087&sid=adFFhHtUhCLY&refer=home
“I believe a big part of the problem we’re facing in the market right now is uncertainty,” Sharga said. “Buyers aren’t sure if this is the right time to get in, lenders aren’t sure where to lend, investors aren’t sure where to put their money in an environment of depreciating assets. The psychology of the market is as responsible as the financial part of the market.”
Actually, home prices might stop falling when we get back to uncertainty. A big part of the problem is certainty.
Just as all those zero down, option-ARM mortgages were not “risky.” A risk is when something bad might happen. This was a straight trade of something today for disaster tomorrow, willingly made by all parties.
#17 on the Cheney-Shrub Legacy list: “We believe in “Free Markets”…even in Iraq”
“The Bush administration says its policy has been to discourage the deals, but suggests it has no plans to interfere.
“The United States government has stayed absolutely out of the matter of the awarding of Iraqi oil contracts,” Rice said in June. “It’s a private sector matter.”
State Department investigating Iraqi oil contracts:
http://news.yahoo.com/s/ap/20080725/ap_on_go_ca_st_pe/iraq_oil
So, when the US soldiers leave…every citizen in Iraq gets an equal share of all the oil revenue right…just like in Saudi Arabia, right… just like in democratic Kuwait right?
Hey Condi, how’s that “Middle East Peace Between Friends” diplomacy progressing? Cheney-Shrub have mastered …the “Lame Duck Limbo”
I’d keep Basrah, they owe us that
btw: new deal 3 is on the way, just hang in there
FDR was 1, Barack Messiah will be 3,
Which New Deal was 2? Mr. Morning in America Oh looky I can used a plastic thingy instead of these green and white pieces of paper.?
An ethical question:
I’ve a friend at work who bought in 2005 at the height of the market, a house in Temecula at ~450k. We’ve talked for years about housing and the probable collapse, and my predictions that values would plummet. Finally, after a long while of, “Well, at least I can afford my house,” some signs of stress have crept through.
My friend refinanced her Option-ARM a year ago, recognizing that it was a bad deal. She got a fixed rate, even paid the $13,000 pre-payment penalty. She’s a very moral person. She played the game fairly–putting 10% down on her house and has been making payments no problem. She can actually afford the payment on a 450k house.
However, current market value is 270k, and as I’ve long predicted, at some point she’d have to have running through her head, “All these new buyers around me are paying half the monthly nut.” Moreover, she’s got enough savings to put 20% down on a brand new house right next door. Even if she defaulted she could probably buy right away. It’s got to be eating her up, month after month. Ultimately the pressure’s got to blow.
Yesterday I think was the come to Jesus moment. We had a good discussion about whether it would be ethical to walk. She wondered what the consequences were–could the bank garnish wages to make up the loss? Could they come after her (sizable) savings? I explained that most purchase money loans in CA were non-recourse, and since she hadn’t refinanced and pulled cash out, she would likely not need to worry about those outcomes, although she should probably invest $500 and talk to a real estate attorney.
So, my question is, “Should someone who just wanted a house to live in, not speculate, was shocked by the rising values and moved to a less expensive area to get into something he or she could legitimately afford, put 10% down and makes the monthly nut while everything else around them is collapsing — should this person suffer the rest of their working lives to make good on an obligation that’s been shown to be flat out unreasonable? Should this person suffer for the good of the banks, who made fraud easy, who recognized the moral hazard of securitization but still maximized their fees?”
Or should this person just walk? Because one more house is a drop in the foreclosure bucket and won’t make a dime’s worth of difference to the already browned-over neighborhood.
I also introduced her to the HR3221 housing legislation and believe that if taxpayer money is going to help anyone, she’s the type of person who I’d be happy to “insure.” The bank faces a giant loss or an even “gianter” loss, so they should be willing to write down the mortgage - 10% - 3% fee. She can afford the nut on 33% terms (she stretched before, a little). She thought that was a good idea, and would be happy with that outcome, even knowing the prices would further slide.
“My friend refinanced her Option-ARM a year ago,
Could they come after her (sizable) savings? I explained that most purchase money loans in CA were non-recourse, and since she hadn’t refinanced and pulled cash out.”
Um, the above sentences are contradictory. If your friend refinanced, (regardless of pulling or not pulling out cash), it is no longer purchase money financing. When you re-fi, you refi from non-recourse debt to recourse debt. Your friend is on the hook, and the lender can come after assets, and will probably sell the defaulted debt to someone who will.
This entertainment just keeps getting better and better. Nice to see intelligence finally prevail over stupidity.
Yes, that struck me as well. You mention that she re-financed, so I don’t see how she’d be in a non-recourse situation.
Wouldn’t she be okay so long as she refinanced her entire primary mortgage? I can understand seconds/HELOCS being recourse, but she didn’t have that.
Not sure about California law.
Captain:
I would advise her to walk. 270K debt slavery is bad enough, but 450K is insane. Over the life of a 30 year at 450K the cost would be 1.5M. That should scare anyone back to reality.
After walking away, wouldn’t she be better off renting than buying? The next house she buys would also be at risk for depreciation - at least for next 2-3 years.
That’s what I don’t understand most, after getting burned by a massive housing price decrease, many people want to turn right around and risk repeating the fiasco by BUYING AGAIN! Don’t people learn by their own mistakes?
good luck her credit is ruined then. I think the idea is buy then bail. Thats what they did back in 1995.
Look, all moralizing aside, just walk. I know it isn’t ethical or moral. What she is involved in is bigger than she is - a economic meltdown. From my point of view the issue is limiting exposure to risk.
With that said, I am not in anyway in that type of situation. I owe 30k on my house and no other debt - period.
When I have people talk with me about this stuff, I have one thing I say, “Limit your risk, because you can bet that every lying lender, the WS criminals, corporate CEO thugs, sub-prime NINJA, and preening Washington-types, are doing the same. They will run over you and ruin you if it suits their interests. So, limit your risk. Everyone else is - and will - do the same at your expense.”
I really miss civilization.
Roidy
Temecula is still dropping faster than Monica in the Oval office. It would be goofy for her to go from one depreciating asset to another. She should stop making payments, let the bank do a short sale. Then she should rent for 2 more years.
I wouldn’t touch Temecula with an ugly stick. And I challenge anyone who says they HAD to move there because it was more affordable. It was all about square footage. Most of the houses built there in 2005/2006 are 5 bedroom behemoths squeezed onto tiny lots.
Temecula is still dropping faster than Monica in the Oval office.
That goes like this: “Temecula is still dropping faster than Monica’s panties in the Oval office in the 1990s…”
“She’s a very moral person” YUP! A moral person wouldn’t even be thinking or talking about not honoring a signed contract if she can afford it. I guess money changes everything. Maybe pat Robertson can weigh in on the 2008 definition of ‘morality”
Well I don’t want to disparage your friend when I point out that I couldn’t help but notice that the contempt for people in this situation changes drastically once there is a face attached. Perhaps a good time for all of us to move beyond the black and white?
I don’t have an opinion myself. My initial reaction is that one has to honor their contracts or the loss of faith will collapse the whole system. However, once you realize guilt is what the banking system is hoping for to keep extracting the fraudulently derived cash from you……should someone be responsible when the appraisers and lenders were presenting fraudulent information?….. This was the very concept explored in Atlas Shrugged (underline).
Pat Robertson would say that the Bible tells you it is immoral to charge interest. Paying interest might be considered immoral as well.
Breaking the contract might be the most moral thing your friend could do.
Pat Robertson would say that yes, just after he leg pressed 1200 lbs. What a loon that bastadge is!
What about going after the appraiser?
She also has to consider that current and future employers may look at her credit record in hiring/promoting decisions. If she has a good job that can afford that level of home as an employer I’d want to know why she’d walked away from it. Not sure how much sympathy I’d have in her decision making as I would never walk away from a debt I could afford. (Although I knew enough to avoid buying a declining asset.)
Also, what happens when the new home she bought is down? She won’t have the credit to buy another one. Maybe she should wait a few more months to see how much futher they drop.
I guess my biggest problem is that she had warnings from you about the coming meltdown and choose to ignore them. Unlike so many clueless people out there she had a bear to lean on and could have done a little research to verify your data. So morally she was warned and decided to gamble. All the same, I’m glad I’m not in her position.
The problem is the lender has a recourse loan on her because she refinanced . The problem I feel with giving the unqualified loan
borrowers a “deal ” ,is that it will make people like your friend ,who
can afford her payment ,who paid the price of a expensive refinance,
feel like they are getting shafted .Your friend has to pay back the full loan amount ,yet the neighbor next door gets to slide .
So with the government practicing this level of discrimination in giving the most irresponsible a deal ,yet saying to another you have to pay the full tab ,it’s a outrage .Does the government really think that people are going to just sit back and be s-rewed because they are responsible ? The government should never of started any of this discrimination of bailing out this one who is really bad and a loan liar, but this other borrower gets to watch the discrimination .
This is the moral hazard of kooky ideas and unfair bail-outs .
I was reading last night somewhere that the polls show that 2 to 1 are against bail-outs . Could it be that a lot of homeowners know that the worst of worst are the ones getting the cream and that just ain’t right . Look , I’m telling you these people in power are a bunch of goofs that don’t understand human nature .
Nah, we met after the purchase.
So it’s all your fault for not meeting her soon enough and warning her. I think you should pay the balance!
Ok, I’m a little more sympathetic if she was totally naive. Still a tough decision.
The current housing and economic bottleneck reminds me of the years I lived and commuted in the Atlanta, GA area. All it took was a minor rush hour fender-bender on the expressway to snarl traffic for miles. A major accident on a rainy morning would make you wish you packed a lunch. It appears that the housing, jobs, credit, and overall economic gridlock will force many to creep along and stare at the brake lights in front until the economic wreck is finally cleared and the road to prosperity opens up again. Hopefully, our financial engines won’t overheat along the way.
“Hopefully, our financial engines won’t overheat along the way.”
It’s not looking to good for that in Atlanta. We’ve gone beyond over heated engines to cars being fire bombed with Molotov cocktails. Seriously–3 cars were fired bombed last night in two different in upscale North Fulton County subdivisions !!!
Good news - I finally moved out of Atlanta. Bad news - I moved to Florida!
I’d move to Florida too, except the only job I would be qualified for there would be making shell necklaces !
Dennis - you can blame those horrendous Atlanta travel times on the narrow, 9-foot wide beltway lanes that encircle the entire city. Narrow lanes result in mucho traffic accidents. Standard lanes are 11-feet wide.
“WAMU CDS are currently quoted 16 1/2 / 17 1/2 plus 500 basis points running. The last quote I had seen (which came from a reader) was 13/14.
So the market reflects an additional level of stress this morning.”
Mr. John Jansen
What does this mean, hoz? Is this the extra % premium the secondary market for CDs are demanding?
CDS = credit default swap.
market thinks wamu is teetering closer to the edge than yesterday.
Rumor is that WAMU will be bought out/merged. I would expect to hear about this before trading opens next Monday.
Rumor also has it that there may be bank regulatory action in AZ this evening. (Unrelated to WAMU.)
It seems like bankers are dumber than rodents, and did not learn a thing from the troubles they got into in the early 1990s. Every time a banker tries to circumvent conservative lending practices in pursuit of higher profits it turns into a disaster. Soon we will probably all be forced—through lack of choice –to bank at some place with a very original name like “One Bank America”. Sigh.
No problemo, as long as they are ‘ruined in a conventional way.’ That’s SOP for bankers.
“It seems like bankers are dumber than rodents”
I’m still shaking my head about the banking industry acquaintance that was looking to buy in CT last fall after being transferred to the Big Apple. They didn’t seem to be aware of any changes in the industry at all.
On July 25, 2008, the FDIC was named as receiver for First National Bank of Nevada, Reno, Nevada by the Office of the Comptroller of the Currency (OCC). All deposits were transferred to the acquiring institution; for further information, please visit the FDIC web site: First National Bank of Nevada (www.fdic.gov). On June 30, 2008, First National Bank of Arizona, Scottsdale, Arizona, merged with First National Bank of Nevada and was included in this action.
Heh.
Ok
A 16.5/17.5 is upfront points that have to be paid. 16.5 bid/17.5 offer.
500 basis points (bps) is the amount over the 10yr Treasury bond.
Todays total cost to sell a WAMU Credit default swap is 22.5 points.
This is screaming bank insolvency.
Did any HHBers in the DC Metro area attend or hear about the big NACA (Neighborhood Assistance something Association) event? I haven’t heard it being mentioned in the news.
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/23/AR2008072303382.htmlngton Post:
Washington Post link didn’t work:
http://www.wusa9.com/news/local/story.aspx?storyid=74143&catid=187
Fannie’s and Freddie’s free lunch
By Joseph Stiglitz
“…A basic law of economics holds that there is no such thing as a free lunch. Those in the financial market have had a sumptuous feast and the administration is now asking the taxpayer to pick up a part of the tab. We should simply say No.”
http://www.ft.com/cms/s/0/c6999a06-5994-11dd-90f8-000077b07658.html
Too late. The Taxpayers got smacked with indeterminate bills.
There’s more to this housing bill than people realize, I think. I wish I could find the link, but I believe the “housing bill” contains a provision that all credit card transactions now have to be reported to the IRS. This is the provision that bothers me. The Capitol Hill turds like to slip this sort of thing into bills like this.
So, why would the IRS want to know about all the credit card transactions? The DHS has had access to that years - to say nothing of the FBI, NSA, etc. - for reasons of national security.
One would think the revenuers would be much more concerned with money that is not spent - credit card users (shoppers) are the minutemen of the consumer age.
Now, they wouldn’t be contemplating some sort of consumption tax would they?
Or states could access these for use tax records (internet purchases, etc.), now that revenues are declining.
The IRS has been trying to get access to Mastercard/Visa credit cards issued on banks located offshore (Bermuda/Bahamas/Lichtenstein).
This allow US Citizens to spend that untaxed (maybe) money in the US without the IRS finding out.
You can’t bring in over $10k in cash, but you can bring in a wallet full of credit cards without filing any paper work.
Once you have your money parked in an offshore account, you use a Mastercard/Visa to buy things in the US and pay it off every month with that same offshore account.
Want to buy a car - put it on the Bank of Bahamas Mastercard and pay it off with money in the same bank account. No one is the wiser.
Can somebody PLeASE explain why this is a bad thing? I don’t mean it’s a good thing. I mean, what is Big Brother looking for this time? Buying gold on the Visa and then skipping the country?
“what is Big Brother looking for this time?”
Methinks they are officially looking for tax evaders and unofficially fishing for terrorists.
And Liberty is continually eroded by the “what have you got to hide crowd”.
“If you can keep it” I believe Mr Adams said or was it Franklin?
From my quick reading of it, they want MERCHANT’s records, not consumers. They’re looking for merchants underreporting income. For now.
BTW: Buying gold with a credit card is stupid. My local dealer can legally sell me Krugerrands in an amount between $1000 and $9999.99 with no sales tax, and no reporting! But for cash only….
Seems like every bill they pass nowadays has a provision to “lock the doors” in it. This bill does have the credit card provision. They couch everything with the “fight terrorism” or “money laundering” theme when in essence it is really an IRS enforcement scheme and a way to further control or track the population.
The last bill, I think it was a military spending bill, had a provision that taxes the bejesus out of folks moving out of the US and renouncing their citizenship. Basically saying that even though you THINK you own your assets, in fact you own only 60% of world-wide assets at current valuation and please pay us at the door.
This essentially confirms the theory that individuals are looked upon as income streams and they (gov’t officials charged with carrying out the mandates of the BIS) are not going to let you just walk away without paying up for that freedom from US taxation on worldwide income. This is the first of many capital controls we as americans can look forward to seeing in the next few years.
Anyone still thinking the US is some sort of beacon of freedom?
auger-inn,
Very well stated. And while we are talking about Congress, how on God’s green earth can they pass a 300-600+ page bill (generalities here) in a few days, when no one took the time, or had a staff member read the da*n thing. Stamp it, off to the prez… next…
“Hello Mr. Lobbyist, you want what added to the bill? Ok, I’ll add it to the bill. No one will even notice.”
And then we have how many Signing Statements by W?
“Moral Hazard” is an understatement.
Thank God for Judicial Watch and other organizations who actually read the bills and inform us citizens.
Here is the link
Speaking of the pain from the housing bubble/bust being visited on the thrifty via government action, Bloomberg reports that the town of East Hampton on the south fork of Long Island — yes that East Hampton — is facing a budget crisis and has had its debt level cut.
http://www.bloomberg.com/apps/news?pid=20601109&sid=abSnNUZwDblU&refer=home
“The Long Island sanctuary for the rich, where lobster salad sells for $85 a pound, has been hit by a double whammy: a tripling in workers’ health costs since 2003, which officials failed to anticipate, and a 43 percent drop in revenue from mortgage taxes related to real estate sales in the first half of the year from 2007. Town officials for the first time plan to reduce the deficit by borrowing, after winning state approval for a $15 million bond sale.”
The head of the New York State United Teachers, a union representing teachers outside NYC, said that if taxes aren’t allowed to go up more than 4% per year or 120% of the inflation rate, New York City’s share of state school aid will have to be slashed to make up the difference — as it was in prior recessions.
Spending per student in the East Hampton Schools? The total revenue per student in FY 2006 according to the U.S. Census Bureau was $23,748.
“…if taxes aren’t allowed to go up more than 4% per year…”
Nice, they should be asked if a society/economy populated entirely by civil servants seems like a good idea to them. I bet they’d have to think about it before answering.
They would say no immediately. Without people earning the minimum wage with no pension or health insurance, their cost of living would be too high.
Ending leaf collections “would be ridiculous,” said Trace Duryea, 65, a Republican whose late husband, Perry, served in the state Assembly for 18 years.
“To have to collect them and use those awful bags, I don’t think the town would stand for it.
WTF? When they say “leaf collections”, I would assume they mean a truck drives around and collects bags (or cans) of leaves. But it sounds like they don’t even put them in a container. Do they at least make a pile near the road or do they just sit on their ass and not even rake them into a pile?
Here is a must-watch video of a 2006 detailed description of the bursting bubble. The last 2:30 of this video is VERY interesting with regards to how the CDO’s actually work (worked?).
http://www.youtube.com/watch?v=xNKs8lBnd2U&feature=related
Playing with cash
Was talking to a friend/client yesterday about the current credit crunch. He’s a wealthy individual who has most of his assets in 3 businesses that are all doing well (one is surprising since it is in construction and his business is up 30% YOY and next year will be even better).
He has a few investments outside of his own businesses that are relatively flat (I think he said he’s about 1% up this year there). I did a quick calculation and said “You probably made $3m last year.” He confirmed that was a close figure. “What did you do with the cash?”
He pulled it out of the banks. In cash. Over a period of time, but still, pulling out $10k a day is sure to raise eyes somewhere. “Where’d you put it?” I asked.
He’s stuck it all over the place: safes at his homes, left some with family he trusts (in case they have emergencies), and some is stashed in bank vaults (ugh). “What are you going to do with it?” Play with it. His words.
He has no desire to give it to banks anymore. On his “safe” accounts, he makes nothing. On his risky accounts, he’s lost money. I have no idea how much money he has sitting around, but even if it is $2m in cash, it’s a lot of cash just doing nothing.
So I explained to him: “Your money IS doing something. It is killing the banking cartel, who wants your money so they can use it as reserves to make more.” He knows this. It made him smile. Never saw so many teeth on a human in years.
“Let them pay me 10% again and I’ll toss it back in.” That’ll be the day.
Hording cash! Pieces of paper falling in value each day! Unbelievable.
So that’s what the 2% federal funds rate has done.
Geeze, yeah. I am no goldbug, but if I was going to have that much cash just laying around, most of it would be in gold bars, not paper.
I’m with Kim, I would think that 3m in cash is a bit excessive. Plus, buying physical gold isn’t what the bankers like to see either!
http://www.goldensextant.com/commentary30.html
Maybe he wasn’t telling you 100% of the story, like every time he goes overseas, he takes $9,999.99 and opens a new foreign bank account
In a delationary environment these pieces of paper grow in value as time goes by. They can buy more house, more stock, more cars, more boats, etc.
They can buy more bling, as pawnshop owners and even liquor store owners can attest to. They can rent motels cheaper because people are now taking staycations to save money. These staycations have contributed to declining national gasoline consumption since people don’t have the CASH to travel as they used to do in previous years.
Restaurants are hurting, nail shops and beauty parlors are hurting, pirate stores are closing… because people don’t have MONEY to spend on these things anymore.
Oh yeah, Combo - that liquor store I posted about the other day - I was able to get a better look at the sign.
It says: “we buy AND SELL” - not just “buy” as I first reported.
So that answers my questions - they want the cash alright.
Actually hoarding cash does not fall in value as fast as sticking cash in a bank.
If you have $100 and put it in the bank, you will be the reason, the secondary individual at moral fault, for up to an additional $900 being created via the money multiplier effect. Based just on the fact that you deposit your money, the end result is a 90% depreciation in the value of your money within just the market of money. Nice going, depositing idiots.
If you take $100 out of a bank, you cause a mini-bankruptcy. The bank must now shore up the reserves you were backing, looking for some new immoral agent of counterfeiting to make a deposit. By holding your $100, you are not part of the inflationary cycle created by our lovely banking cartels.
I love withdrawing money in cash. It’s fun when a few friends get together at a bank and have a withdrawing party. Let’s all have “Close my account, pay me in cash” parties at Chase and Citibank today!
You and I have all the power in the world to bankrupt these vultures. They want to pay me 3%? I’ll happily take my money and save myself tons against inflationary causes when others start doing the same.
I agree with you 100% except for one detail…
You make more individually by taking the 3% but do more for society by holding the cash. The value you “save” by stopping the FRL is distributed among all dollar holders.
Privatize the profits, socialize the losses.
At this point 3% is a “rounding error” in calculating inflation. Might as well take the cash and suffer the inflation. At least you don’t have to worry about the bank failing.
“I love withdrawing money in cash. It’s fun when a few friends get together at a bank and have a withdrawing party.”
Comments for A. B. Dada:
#1 If banks are so evil . . . why do you even use one?
#2 If that is your idea of fun, you need to seriously get a life, and
#3 When you know you are going to work VT Dan up in a frenzy like that, spare us all and just get a room.
I can just smell it now: future victim of a house fire or even worse: home invasion robbery.
As an aside, please suggest to him that he photocopy his withdrawal receipts. Keep a copy with the actual cash and keep the original in a fireproof safe somewhere separate from the cash. The presence of large amounts of cash give enforcement agents carte blanche to seize and keep these bundles of cash unless the owner can produce clear evidence the source of funds were not drug dealings, etc. Even then it is an uphill fight because I think that the actual agencies that seize the funds get some of the money so there is incentive to find stashes of money and keep it.
you are 100% right on that. my brother had over $4k in his apt. when the cops came knocking on his door due to him arguing with his neighbors, they saw the money and arrested him for drug dealing. their was no evidence other than the cash and it took him months to get it back.
The police get to keep most of this money to buy new equipment, cars, sting operations at strip clubs, etc. This is a huge incentive to confiscate as much as possible.
Your friend can get in trouble for keeping cash in a bank vault, oddly enough. It looks like tax evasion.
CLAYTON COUNTY, Ga. — An Extreme Home Makeover may be going bust. The first metro family who got a new home is facing foreclosure.
Channel 2 followed the progress as an army of volunteers swarmed a Clayton County neighborhood to build a new home for a deserving family on “Extreme Makeover: Home Edition” in 2005. When the show came to town, no one could have predicted what would happen less than four years later — foreclosure.
A foreclosure notice appeared last Friday, a $450,000 second mortgage they took out less than 15 months ago was in default.
Patricia Harper, the homeowner, told Channel 2 she and her husband had struck a deal with Chase Home Finance to rescue their “extreme” home. Chase said they couldn’t confirm that claim.
“I didn’t really know what the circumstances were, I was kind of surprised. I was really surprised to read that,” said neighbor Doris Rhodenizer.
Lake City mayor Willie Oswalt was among the 1,800 volunteers helping “Extreme Makeover: Home Edition” build the Harper’s new home 3 ½ years ago. Beazer Homes of Atlanta was the main sponsor. The mayor said he is baffled.
“Beazer gave them $100,000 cash, paid their mortgage off and they still can’t make it,” said Oswalt.
Harper told Channel 2 they invested the loan proceeds in a construction business and the business hasn’t been good. She didn’t say how much of the money is left.
“What’s going to happen is instead of keep paying my mortgage, I’m going to take my money and not pay my mortgage because I’m being harassed,” said Harper.
Atlanta law firm McCalla Raymer represents Chase. They wouldn’t talk about it except to say federal law bars Chase from talking without Harper’s permission. Harper said that if Channel 2 wanted proof the foreclosure is off, we should show up at the courthouse next month to watch it not happen.
http://www.wsbtv.com/news/16980412/detail.html
Wow. Just wow.
Can’t hold on to a free house. These clowns deserve foreclosure.
Taxpayers to the rescue!
I know we’ve all worked hard to save our money, but it’s time to hand it over for the good of the nation to help the greedy idiots keep houses they don’t deserve!
“What’s going to happen is instead of keep paying my mortgage, I’m going to take my money and not pay my mortgage because I’m being harassed,” said Harper. ”
Throws that in to make it seem like they have a right not to pay their mortgage because “They are being harassed”
Yeh dumbazz, harassed to pay your fri(cking bills and to quit living off of others.
I have to admit to also pulling cash out of the bank last week. Sure the accounts are FDIC insured, but how many months or years will it take to get your money returned in the event of a failure? I was looking to move more money overseas but inflation and systemic risk now seem to extend deeply into the 3rd world as well.
As posted before I had a $50K CD with IndyMac. My money was available to me the next business day (Monday). What foreign country are you thinking of moving your money to? What kind of legal protection do they offer for bank accounts held by foreigners? Is there a history of corruption in those countries?
Those are hard questions to ask before ditching FDIC.
it’s kinda funny how foreign investors view the USA as one of, if not the safest place in the world to invest while many Americans are looking for safety outside the country.
The Titanic was the safest ship ever built.
The Titanic didn’t have much of a track record, now did it..
Those are hard questions to ask before ditching FDIC.
The problems with FDIC have been discussed here before… They don’t have enough funds to cover all insured deposits. Like any insurance, it relies upon a statistical model of default to keep the fund solvent. Do you have faith in their statistical model? Does it matter to you if it takes weeks/months/years to get all your insured deposits back? What will that money be worth given inflation/devaluation of the dollar?
They don’t have enough funds to cover all insured deposits.
ok.. well, name me any inusrance company that has the funds to cover 100% losses on everything they insure.. how about 50% .. 25%?
how about 6.4T in insured deposits and around $30B to cover after Indymac is paid out. lol
“You puts your moneys down, you takes your chances”
and if every car crashed into every other car, the auto insurance co’s couldn’t cover and almost nobody would recover their losses.. and if all the houses burn down, same difference..
but these sorts of hypotheticals don’t exactly address my question..
ING Direct - good rates, VERY Safe and FDIC
I have to admit to also pulling cash out of the bank last week.
Hah Hah! No worry - I’m not laughing with you, just laughing at you!
Does anyone has any information about some study from either Moody’s or S&P showing home prices vs. income has actually came back to historical averages? It was shown on CNBC this morning for like 5 seconds and I didn’t catch all of it. I want to see the detail of this study because it doesn’t match all the other numbers I have been tracking, which at best shows another 15% decline nation-wide before coming back to historical averages.
Be careful about using income to price ratios. Keep in mind that house affordability is also influenced by all the other costs of owning: electric, gas, insurance, cost of money, maintenance, etc. All of those costs are going up significantly. Food and energy costs are going up.
A better analysis for housing affordabilty should be income after spending for essentials to housing price. And there is a long way to go for housing prices when that is factored in. It could come down that many many properties are unaffordable at any price!
Look out below.
Rumor has it that Wamu is this weeks’ Indymac, and may be taken over this weekend. I have no idea if this is true but the CFO has left the company.
While we wait for the next bank failure, let me state that I would not be surprised to see the Fed fail before this is all over. And finally, what about the Treasury? Too big to fail? Before you says yes consider; The fact that the Treasury will now be replacing GSE debt with Treasuries just devalues the Treasuries. Moreover, it completely exposes how fraudulent the whole system is. What is the basis of the value of the Treasuries? It is the ability of the govt to tax it’s citizens. However if it’s citizens can’t even pay their debts, how will they pay their taxes and hence, how will they service the additional govt debt that was issued to replace the defaults of the taxpayers?
which is first, Wamu or wachovia? If wachovia is shut down and FDIC takes a while to pay up then I will be unemployed for a while because my employer uses Wachovia.
Wamu is circling the drain. I’d yank my money now.
IndyMac suffered a run on the bank .. $1.3 Billion in customer withdrawls within 10 days of Chuck Schumer’s comments. I doubt Chuck’s next target is WaMu, but who knows..
let me state that I would not be surprised to see the Fed fail before this is all over
If that happens what will happen to the dollar? Will it cease to exist? Will we become a banana republic where another country’s currency becomes the de-facto standard?
The Custom McMansion
Mass-Market Builders Woo Upscale Home Buyers
With Deals on One-of-a-Kind Houses
http://online.wsj.com/article/SB121684142408678123.html?mod=yahoo_hs&ru=yahoo
ive got to go lay down now, i’m starting to feel sick!
This is a very good thing. I’m not sure why you feel sick. Speculation is at the root of the boom. Changing to custom construction makes a lot of sense, and they note the greatly reduced risk. Speculation has a role to play in markets, but it needs to be carefully controlled because of the high risk involved.
Fannie, Freddie shares sink despite gov’t rescue
http://biz.yahoo.com/ap/080725/fannie_freddie_mover.html
Hi. Hope everyone is well and enjoying the summer. Quick ? A credit card (AmEX) is offering two free dometic air ticket for openning an account and spending $500 by 31 of August. 1st year of card annual fee is waved. If the tickets have no blackout it would interest me. It’s possible I might buy real estate in next 1 - 3 years. Don’t know my credit score - would assume it’s very high. My only other credit card is Visa $50K credit limit and AmEx corporate card for work. Pay them both off each month. Have paid off a car loan early about 15 years ago. Sold house and paid off mortgage about 2 years ago. Does not closing an account have negative impact on credit score ? Would it be substantial ? Thanks for any advice.
Closing an account has negative impact. Especially if it is one you have had for a long time. Accounts opened a long time ago are aged and give you a higher score.
Not closing it and continuing to pay it off monthly is the way to go. Just dont use it much.
A picture is worth a thousand words…actually I have two for you…
Non-Borrowed Reserves of Depository Institutions
Total Borrowings of Depository Institutions from the Federal Reserve
Wow. Just wow.
‘extreme makeover’ house is in foreclosure
http://www.accessatlanta.com/news/content/entertainment/tv/stories/2008/07/25/foreclose_0726_web.html?cxntlid=homepage_tab_newstab
This is exactly why…not one $1.00… not one f#7king US taxpayer dollar for anything related to banks…real estate…wall street. I can’t believe it…people in the community helped remodel their home…geez, think I’ll have to follow their mentality and go out an buy the Glenlivet “1972″ single malt scotch at BevMo for $678.00.
Let’s see: $450,000 - $678.00
Heck, I’d be afraid to put in even x1 ice cube
Evangs like Robertson like to pick and choose what they believe out of the Bible(bacon fine, gays bad), so I’m not sure he would side with the Rabbis on this one. BTW, yall seen the obnoxious global warming ads with Sharpton and Robertson? Made me want to vomit. I was sure the apocalypse was upon us; matter and anti-matter existing in the same place at the same time as it was. Frightening.
Oops, that was supposed to be a reply to Skip earlier.
Update: My house has been on the market for 35 days and not a single RealTard, RealTurd nor RealtWhore has called on it. We dropped the price 3% today or about $15k. I don’t think it will help as the handful of buyers out there all want screaming deals and foreclosures. I can’t sell it for less than what it pencils out to break even at with 20% down if you rented it, so… I will give it 4 more weeks than I can go back to messing up the garage on weekends and working on my rat bike. Nothing new, same story all across the country. Luckily I dont have to move and can easily afford the PITI of $1500 a mo. Maybe a 52″ big screen will cheer me up–gotta spend the BushBate of $1800 on something to keep the US alive.
So you could rent it for 5k a month? Must be a pretty sweet house! 5 bedrooms? On an acre?
you don’t have to move? .. don’t have to sell? .. so wtf do you have it on the market for.
Conventional wisdom around here says that if you plan to hold a property, realize it’s losing some amount of money by the day.. $2,000 a day in Marin Co, Calif from May-June, for instance.
That same HBB wisdom predicts that, after the market bottoms, many and various economic forces will guarantee a stagnant RE market extending for perhaps a decade or more.
So, ya may not even even need a pencil. The wise thing to do if you foresee selling in the next ten years or so, might be to drop the price until it attracts a qualified buyer, and get out asap.. The banks with their hundreds of thousands of REOs are your competition.