Bits Bucket For August 6, 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
Location:Northern Arizona, United States
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Chicago Housing Bubble Meet&Greet - Postponed
We had a Meet&Greet for the Chicago HBBers scheduled for tomorrow. Unfortunately, I will NOT be able to make it thanks to the flight cancellations at O’hare the other day — my business trip today is now tomorrow, which means I’ll be overnighting through Friday. Sorry folks!
Please let me know if anyone is interested in rescheduling it for NEXT Thursday.
I am in town and would love to attend. I should be here in Chicago through next week. What are the new details?
Here’s another interesting article on Mortgage fraud. If all this is true then essentially we are talking massive criminal activity in the upper echelon of gov’t. If you have time, go back and read the earlier articles that are linked in the first para.
http://www.solari.com/blog/?p=1357&ref=patrick.net
I’m glad I read this article you posted because its been clear to me from day one that fraud was being off-loaded with all the rescue
bills . When government action don’t make sense ,you know something is done for different reasons than what is disclosed .
This collateral fraud story is a nice one, but how could one independently verify it? It sounds too outlandish for even hard core tinfoil hat types to believe…
“After I began researching HUD fraud in the last 1990s, I would be contacted by people with experience with HUD fraud. They insisted the same home was being used to create ten or more mortgages that were placed into different pools. They alleged that Chase as the lead HUD servicer and the other big banks were implementing such systems. This was why we would see the same house default two, three or four times in a year, they claimed. You needed to churn the FHA mortgages through multiple defaults to generate the cash to keep all these fraudulent pools afloat. This, they insisted, was all going to finance various secret government operations and private agendas.
This issue of collateral fraud was repeated in other markets. As I started to learn more about precious metals and the commodities markets I would hear story after story about precious metals arrangements in which investors really had a bank credit — there was no real bullion behind the arrangement.
I have come to believe that the allegations of mortgage collateral fraud are true - not just for FHA and Ginnie Mae at HUD, but across the board throughout the mortgage markets.
What this means is that Freddie and Fannie Mae must be converted to essentially government debt. Such conversion means that investors simply don’t care if the mortgages have a real lien on anything real or not (at least for the meanwhile). Otherwise there would need to be a process by which all the defaulted mortgages can be sorted through to determine which of the mortgages are legitimate and which are not.
Creating and managing such a process would indeed crash the global financial system. It is hard for a multi- trillion dollar financial system to maintain liquidity when contracts and laws are meaningless.
The challenge for Hank Paulson is that by increasing the national debt by $5 trillion — whether collateralized by real estate or phony paper — he can delay the day of reckoning, but he can not cancel it.”
If you’re not familiar with Catherine Austin Fitts, you might find time investigating her rewarding.
She was an undersec of HUD under Bush 1…..a committed Repub. As her knowledge of the actual workings of HUD grew, she fought it, lost, then started her own investment bank. (she’s a Wharton-trained investment banker by trade) The Boyz tried their level best to ruin her. They failed, partly due to her own integrity, and via that, her numerous supporters.
Brilliant woman. Courageous.
This dude is looking for a whipping
Plying the Foreclosure Market
Silver Portal to Buy Homes in San Diego,
Preferably Near Starbucks
Burl East is looking for a good deal on a foreclosed house. Make that a good deal on 1,500 foreclosed houses.
Mr. East, a managing principal of Silver Portal Capital LLC, a small real-estate investment bank, is raising $150 million to purchase foreclosed houses in and around the firm’s hometown of San Diego. He is scouring lender portfolios and real-estate listing services — as well as spots to get a cup of coffee — for houses that he can rent out and then resell in five years. That is when he bets that the local housing market will have recovered.
http://online.wsj.com/article/SB121798283797115363.html?mod=hps_us_inside_today
The article show a chart of SD foreclosure activity, if you need to understand what a e*x function looks like, take a peek
From the article - I thought these two tidbits were hilarious:
Wow - coincidentally those are the two things at the very top of my list. My top 3, in order, are:
1. Within 5 minutes of a Starbucks
2. No free-range pit bulls
3. Reasonable price
That’s assuming his location is not one of the 600+ Starbucks which are closing… BTW, this is probably just the first round of closings…
RE: 2. No free-range pit bulls
These animals have been raising havoc around here.
One one the ball babysitting grammie recently saved her two granddaughters by getting them immediately inside when she saw a pair of pits roar out of a neighbor’s yard up the street.
Unfortunately, the kid’s still got traumatized by watchin’ Gram’s toy poddle get ripped to pieces on the outside deck.
Then when the town selectmen ordered the dogs destroyed the owner went to court.
Another good reason for liberal gun carry laws.
Here’s a website that covers this topic in depth:
http://dogsbite.org/
Although I agree with you on the carry laws, it’s not that easy to stop a rampaging pit bull.
The problem with Pit Bulls and their ilk is that once their jaws lock, its almost impossible to get them to let go.
They were bred primarily for fighting cattle and other large livestock back in less enlightened days, so the ability to clamp down and hold on while the animal is bucking around is an ‘advantage’. Like alligators and crocodiles, they have formidable musculature in their jaws for closing, but not so much for opening.
They’re normally a fairly good-natured breed, but because of their fighting history, they can be trained as mean little ba$tards if their owners so choose.
Although responsible owners make a point of training them to be social, there’s always the possibility of these kinds of dogs wigging out and reverting to type.
The UK banned the import of purebreed Pit Bulls about a decade ago, and made it mandatory to spay/neuter halfbreeds, as there was a rash of sad cases of kids getting mauled by the family Pit Bull.
There was an article in my local rag back in the UK a few years ago about an English Bull Terrier (in the Pit Bull gene pool, the same breed as the ‘Target Dog’) that had the same problem. The owner noticed it was dragging a solid mahogany chest of drawers down the street, back towards his house. Apparently the dog had taken exception to the piece of furniture it had seen outside of a second-hand store half a mile away, and had bitten down on one of the legs.
As its jaws then locked, all it could do was drag the dresser home with it….
Anyway, I digress…
I know it’s late in the day, but for the record pits have been bred to be incredibly gentle towards humans. I know that any attacks are well-publicized, and recently (last 10 years or so) people have tried to turn them into more attack/guard dogs, but just because the pits went after granny’s toy poodle (I admit they were bred to fight dogs) doesn’t mean the kids were in any danger.
Don’t get me wrong - I’d pull the kids inside as well, but I would do that with any breed of dog that was charging down the street at me/them.
J
Very true drumminj. I don’t have much experience with Pit Bulls themselves - for obvious reasons as I said in my earlier thread.
But I’ve been around Staffys and Englishes a lot - even shared a house with some when I was younger - and on the whole they’re a sweet and soppy lot, much happier finding a sofa to snooze on than wanting to sink thier teeth into flesh. That being said, its better to wear chainmail mitts if you want to take their squeakytoys away…;-)
Buy low and sell high in a Starbuck kind of neighborhood. This is an easy pitch to convince anyone to part with their money. This guy will make money in the fees he collects. Remember the business model does necessarily have to work in reality. The business model has to sound well and work in the minds of investors and on paper.
It might be a legal scam to dupe investors. Some fools will part from their money
That graph looks more like a gamma function (roughly speaking,
f(x) = x!, but continuous and smooth at noninteger values…).
Amazing, this bet would only make sense to someone who absolutely believes this bust will not only be all neat and tidy, but also follow a schedule too!
In times like these a lot can happen in five years - so perhaps it might pay off. Then again, it is also pretty foolhardy to think an event as large as this bust will not have immense cultural and economic fallout.
Don’t forget that its not his money. If prices go up in 5 years he takes a cut of the profits, if they don’t he just starts a new fund.
“Silver Portal is raising money from pension-fund advisers and opportunity funds and has completed about 75% of its fund-raising process, Mr. East says.”
1500 houses for $150 Million says an average of $100K per house. Assume an average $15K fix up, can going-rate rents in SD make these cash-flow positive?
Also, we all know that parabolic or e to the x curves, like the foreclosure curve in the WSJ, go upwards forever.
What’s the old saying about buy when every one else is selling?
I don’t see everyone else in SD selling, yet.
“…can going-rate rents in SD make these cash-flow positive?”
It can also be difficult to find renters who can afford to pay your wishing rent during a recession.
It is not an average purchase of $100K, it is an average downpayment of $100K. A minor difference that could cause billions to change hands. It is just another fund with 20% management fees, etc. etc. etc.
“…it is an average downpayment of $100K.”
Stupid is as stupid does.
–Forrest Gump–
he won’t get any sfh in SD for 100k even if we go to adjusted 1930’s pricing
Japanese pricing wouldn’t work out to his favor, either…
“he won’t get any sfh in SD for 100k even if we go to adjusted 1930’s pricing”
Any sfh in that price range isn’t a “Starbucks” neighborhood. Maybe a “free-range pit bull” neighborhood, though.
I believe this dude and anyone else who ventures into the San Diego SFR market at this point are going to take a bath. The problem is that although foreclosures are high and climbing into the stratosphere, there is no sense of panic, no blood in the streets and no apparent effort for owners of myriad vacant properties to rush to the exits and dump their properties at fire sale prices, yet.
I can’t figure out what guys like this assume will happen when mortgage rates eventually revert to levels that properly price in an inflation risk premium. Don’t they realize that home prices are going to get demolished if we go through a similar effort to stamp out rampaging inflation expectations similar to 1980-82?
“demolished”? Shouldn’t you be saying that home prices will correct to where they should be?
I’m still trying to wokr out if we are going to have long term deflation or inflation.
There is so much variability in the system at this point. We are very close to nationalizing a lot of very toxic debt and then burning it down slowly a la Japan.
There is probably more of an urge to increase the default premium than the inflation premium.
“”Professor Bear, …..mortgage rates eventually revert to levels that properly price in an inflation risk premium.”"
When the mortgage interest rates hit 15% (like in the early 1980’s to properly price in an inflation risk premium) it will be time to buy CA homes for cash!
Average CA home prices ($150,000) will then be three times CA average family income.
You know what would be a really interesting and helpful educational tool for housing bulls? A blog that showcased ridiculous housing prices in various cities and detailing their sales histories, etc. People could post comments about these homes and chronicle the declines in real time. It would be a “Hall of Shame” that the MSM would probably publicize at some point and would generate a lot of traffic as well.
I wish I knew how to start and manage a website. I would be rich! But that’s why we have geniuses like Ben around…
Why bother? They’ll get a real education soon enough.
Sit back and have a whisky (or popcorn.)
Test the idea by starting a thread in the HBB forums.
I’m going to create a thread in HBB forums for book recommendations.
I have about 10 little slips of paper w/past faves in a folder but have missed some interesting books recommended lately and was thinking if we kept a running HBB list it would really help those helping to learn more. I’m hoping people won’t mind traveling over there and perhaps offer a little review to boot.
Thanks for support.
Here are my two top pics:
1. Amity Shlaes “The Forgotten Man: A New History of the Great Depression”
(Of course, this book’s title will have to be changed in 10 years to “A New History of the FIRST Great Depression”
2. Jean Johnson/Scott Bittle “Where Does the Money Go? Your Guide to the Federal Budget Crisis”
Cool, go post them on the forum when you have a minute.
Much appreciated!
It would be nice if you could edit your original post over there. That way as new suggestions flow in you could keep the lead post updated.
You can edit over there. Do you have a suggestion?
I’ve done that many times for san diego, specifically in and around downtown. The amount of money the lenders are losing is staggering for some of these places.
Wonderful results from Freddie:
http://tinyurl.com/6ovu65
$800M loss, dividend slashed 80%. Just your basic happy news for the market today.
Four of America’s 10 fastest-dying cities are in the Buckeye State, according to a list produced by Forbes magazine.
Canton, Cleveland, Dayton and Youngstown get the dubious distinction, based on their anemic population growth and their sluggish gains in overall economic activity.
http://www.dispatch.com/live/content/business/stories/2008/08/05/forbes.html?sid=101
That article failed to note the impact declining manufacturing centers has on far outer reaches and rural areas. Typical MSM tunnel vision.
You are calling Buffalo, Cleveland and Dayton far flung rural areas?
They were major cities at one point. With great social services.
No I wasn’t. You merely misunderstood.
Ohio tries to have it both ways: Attract dynamic new businesses, yet offer nothing new in the way of amenities for young families. All the growth industries involve young, hip urban types but Ohio clings to a conservative image that comes across as staid and intolerant.
RE: All the growth industries involve young, hip urban types
Perhaps someone can explain to me-exactly what these young hip urban types produce?
I can’t seem to grasp the concept despite the reams of tripe devoted to their existence by the Boston Glob.
They produce espressos and lattes, and they excrete Ipods.
LOL!
Seriously though, events are now revealing how deep in debt that crowd really is, and this is going to get mighty interesting. I live amongst them, and they don’t live cheap.
They produce nothing but electronic files and paper. Their workspace is a cube farm overflowing with the very junk they generate.
RE: They produce nothing but electronic files and paper. Their workspace is a cube farm overflowing with the very junk they generate.
Exeter-Lol, you always put so much into so little space!
I’ll be even more succint. They create “solutions.”
Not exact enough? They create “innovative solutions.”
Using their “new paradigm”
They produce more young hip urbanness, of course.
So clearly Ohio needs to give tax credits to Starbucks to open more stores there so they can be more hip, so more hip people will move in, producing a virtuous cycle of hipness.
I think it’s a “vacuous cycle” of hipness…
RE: So clearly Ohio needs to give tax credits to Starbucks to open more stores there so they can be more hip, so more hip people will move in, producing a virtuous cycle of hipness.
lol
Man, LVG that’s good enough for Leno!
BTW: I once (successfully) settled with “SGI” (are the still in Business?) because they ran an ad in the paper saying they wanted to hire people for a “young, dynamic team.”
They quickly settled with me on my “age discrimination” claims (one need not actually apply for the job, just provide reasonable proof that you were discouraged from applying), the details of which I signed an NDA not to reveal.
Wow… I still have a storage unit full of SGI (Silicon Graphics) hardware. Was a huge fanboy, but it died off. The company does still exist, but has changed direction.
Good grief, that was a whopper. There are so many other words that can be used instead of “young” that will communicate the same thing, but aren’t actionable.
New, High Engergy, Dynamic, etc. You can use them to attract young people to apply without ever making it clear that you aren’t interested in hiring anyone with experience who actually wants to get paid.
Use “the law of attraction” on the young Oprahphiles. Should be good for a snigger or two.
Reuvan:
This is where 90% of the discrimination is you can even apply at a law firm in America, because the ads state recent college grad…
Entry level means maybe an internship…and if you are not a student you cant even apply for an internship and work for FREE in America just to have a recent job on your resume.
Plus there are NO ADULTS in hr anymore i remember at 21 applying at a radio/tv station and the chief engineer was 67 and there almost 40 years, i had to convince him that i was responsible enough to sign on the transmitter at 530 am, and he should hire me and give me a set of keys.
RE: They quickly settled with me on my “age discrimination” claims (one need not actually apply for the job, just provide reasonable proof that you were discouraged from applying), the details of which I signed an NDA not to reveal
Geez, Reu get with the program.
You need to get your arms inked up; like with maybe a sketch of Britney or Paris (with underpants on-can’t be lewd!) for your right bicep and forearm!
This happened during DotCom 1.0, and I was very angry at the whole state-of-the-industry! Standards were being lowered. Every kid with a tongue piercing who could turn on a Macintosh was being hired as a “graphic designer.”
I would make the point that we should hire people with MFA degrees if we wanted artists, English or Marketing degrees if we wanted copywriters, but the Powers that Be decided that all the traditional rules should go out the window.)
So when I saw SGI blatently advertising for “young people” and myself, just having passed the age where courts generally agree you can make an age discrimination claim, I pounced on them.
(This is not sour grapes! Through a very unusual turn of events, the little startup I was working for got acquired by a Big Media Company with dirty-dotcom-dollars, so I ended up doing well during Dotcom 1.0)
Young families with employment opportunities & spare cash to spend are perfectly capable of creating their own amenities merely by existing as a market opportunity for amenity-mongers. If there is a lack of amenities as you see them in Ohio, I suggest it is due to lack of jobs.
Buffalo, NY made that list too.
Buffalo has made Forbes magazine’s list of what it calls the nation’s 10 fastest-dying cities.
According to an article in Forbes’ new issue, New York state’s second largest city qualifies for the publication’s list because of its declining population and slow economic growth. The article says old manufacturing cities such as Buffalo are in rougher shape than ever and still looking for something to replace their factories and mills.
http://www.syracuse.com/news/index.ssf/2008/08/buffalo_among_fastestdying_cit.html
I’m curious as to why Rottenchester and Syracuse didn’t make it on the list. Perhaps they are number 11 and 12?
The working poor from down state NY / NJ find it cheaper to live upstate. There seems to be a migration of this group moving to Syracuse NY.
It’s not just Syracuse…. It’s everywhere up there, although it has slowed dramatically in the last 12 months or so.
I had a conversation yesterday with a guy that owns a camp upstate. He told me his acquantances up there are getting laid off and are unable to find new work.
So the former reasons for moving there are/were “It’s cheap”…. Now they are getting a lesson on why it is cheap. The other lame excuse is “it’s beatiful”…. All the beauty in the world won’t help when you can’t afford to eat and stay warm.
Have a nice time upstate you fools.
LOL……the town I live in keeps bragging about being one of the “Ten most affordable cities” to buy a house.
The reason they are affordable is that no one wants to live here, the ratio of lawyers/government employees/ community activists to regular working stiffs is too high, and they have the option to live somewhere else.
Well we’ve discussed ad nauseum in the HBB how when you factor in the tax burden and high utility costs, it’s not really all that cheap.
I would have done much better financially staying in my Mass home.
Course that was living next to drug dealers in a town where they had a very active SWAT team and where a man was set on fire while still alive in the woods behind the mall . Not to mention the young child sexually abused on the bus that would have been ours.
Yeah, some things you just can’t put a price on.
Saving grace for Syracuse:
Latest Job Trends
For the 12-month period ending June 2008, the private sector job count in the Syracuse metro area rose 200, or 0.1 percent, to 268,400. Job growth was concentrated in educational and health services (+800) and natural resources, mining and construction (+300). Job losses occurred in manufacturing (-700). Government employment (+400) was also up over the year.
http://www.labor.state.ny.us/workforceindustrydata/index.asp?reg=cny
Syracuse may be benefitting from the closing of other upstate hospitals. I’m fuzzy on this but I think SU hospital is expanding their program. Plus you’ve probably heard we’ve been experiencing a surge of groups trying to tap the land for natural gas and other deposits. Isn’t that happening further downstate too?
“Job growth was concentrated in educational and health services (+800)”
*****
In the past year I had a relative in Vermont trumpeting the state’s positive job growth, using “education” and “healthcare” as the examples.
“You’ve got to be kidding me!”
What a bunch of baloney.
If “education” and “health care” are not government, or at least quasi-government jobs - then I do not know what jobs are!
Where is the real private sector job growth?
In Vermont… or in Syracuse in this situation?
It’s simple - there are hardly any to be found.
The exception for Syracuse, apparently, are “mining” and “construction”, the former of which is headed for long term doldrums - and rather quickly, too.
Should read:
“the latter of which…” (construction)
There is no growth in Vermont. Only shrinkage as IBM prepares to leave the state. Also many small employers are collapsing under the states tax burden. This state is proped up by housing valuations from NYC/Boston/NJ expats. That’s it.
Buffalo and Syracuse should export their snow. No shortage of that. Hey, why not? In winter, the cross-country trucks can haul lettuce and tomatoes to the East, and haul snow/water back to California.
We didn’t get that much snow this year. I was worried about being snowed in out at the farm high up in the hills to the south of Syr. We had to wait until our plow guy did all his other accounts as we were getting a freebie.
My minivan never had a problem getting out of the driveway and sometimes the plow didn’t show up till the afternoon after the snow.
It’s not global warming as I watched storms track to the north to Canada and south to PA all winter. We were just in a nice little weather hole. Same thing w/thunderstorms tracking east this summer. A lot of the nasty stuff Rochester gets falls apart when it hits the hills here. Too bad it doesn’t always work that way.
Nasty and Rottenchester go together. I was there for the ice storm in 90-91. An inch of ice on everything, no heat for a week.
Loved it during the summer though. Is Nick Tahoe’s still there? Late-night after party welfare food. Yum!
From the Forbes article:
None of these cities now face the huge declines in real estate prices seen by Phoenix, Miami or Las Vegas, where the Case-Shiller Home Price Index shows nearly 30% declines from a year ago.
Many of those who left the Midwest and upstate NY over the last few years may have found a worse situation in their newly adopted no-snow havens. I guess even those fastest living cities, while not dying a fast death, may be on life support for some time to come.
“Four of America’s 10 fastest-dying cities are in the Buckeye State,…”
If you were a candidate, however, Ohio counts; lots of campaign money is spent there.
Who was the last president elected that did not win Ohio?
From Lincoln to George W. Bush (150+ years), no Republican has been elected president without carrying Ohio.
But Clinton won twice without carrying Ohio.
So there you go.
Should’ve said “150-ish years” not 150+ years.
But you get the point.
I do.
IMO as the dollar continues to weaken these cities will begin to gain new life again, as manufacturing starts returning to the U.S. This will be exacerbated by the current Olympic-sized revelations of China’s horrendous human rights and pollution policies.
I think rust-belt real estate is a really good long-term investment right now.
Packman, We’ve been hearing about the renaissance of the rust belt for decades now. Even after billions spent in “economic development” through insane tax policy, it’s been a flop. I hope you’re right but reality dictates on this one. The latest outrageous economic development scam is “technology centers”. And you guessed it, funded with state revenues and none of it appears to be working.
I think there have been several contributing factors to the decline of American manufacturing, many of which (though not all) are in the process of reversing:
1. Liberal trade policies. Hard to say how this will go in the future, but as I mention I think it might tighten some due to exposure of Chinese problems.
2. Wide difference in American salaries vs. foreign. This is changing as we speak, from what I hear at least - Chinese workers are generally getting 8-10% raises, and I hear much of the same in India. The salary gap is decreasing, making it less worthwhile to outsource.
3. Union strength. Over time the unions appear to be weakening - in part simply because companies with no unions or weak unions are taking market share. This also is helping to reduce the salary and benefits gap.
4. Shipping costs. During the “commodities crash” of the late 80’s and 90’s when oil was super-cheap, so was shipping. That’s now dramatically changing, make it again less worthwhile to outsource manufacturing.
5. Economic bubbles. The tech and housing bubbles took a lot of U.S. economic energy, if you will, away from manufacturing and into tech and housing. Now that tech has popped and housing is in the process of doing so, I think more money and jobs will be put back into manufacturing. Simply put - the coming deep recession/depression will make people desperate for jobs - including low-paying manufacturing jobs. This will again make it less worthwhile to outsource.
I may be wrong, but I think over the next 20 years, we’ll see some significant reversal of the outsourcing trend. Not a complete reversal by any stretch, but some.
It will eventually completely reverse as soon as those overpaid Americans learn to live like Chinese peasants. Once we become competitive economically, we will have plenty of manufacturing work. I for one am doing my best to do hard physical labor for 12 hours a day on just a handful of rice. Sleeping under a bridge in the cold kind of sucks, but you don’t feel it after awhile too much, your body gets kind of numb.
I keep telling my employer to cut my pay to $1 a day, but they say they have to comply with those socialist minimum wage laws. If we all do our part, work longer and harder for far less income, think how great this country can be again!
I for one am doing my best to do hard physical labor for 12 hours a day on just a handful of rice.
Actually, they eat pretty well, and work about 8 hours a day (8 to 6, with a 2 hour lunch break, typically so they can have lunch at home). But most of their food is cooked at home. Eating out is maybe a once a month phenomenon - unless you consider the meager employer-provided two veggies and one slice of fatty pork 3-4 yuan lunch for dormitory dwellers eating out.
I keep telling my employer to cut my pay to $1 a day, but they say they have to comply with those socialist minimum wage laws.
Chinese workers in the skilled trades earn about $20 a day. But their American counterparts make $200 a day (including bennies).
IMO as the dollar continues to weaken these cities will begin to gain new life again, as manufacturing starts returning to the U.S.
I certainly hope you’re right — several of these “dying” cities, Buffalo included, have traditionally been nice, affordable places to grow up and raise a family.
Though I wouldn’t want to live in them, either … yet.
“I think rust-belt real estate is a really good long-term investment right now.”
How much have you bought up?
I am considering investment purchases there. However, Michigan and Ohio are filled with labor democrats that don’t look at the wider markets.
They (LDs) have plenty of good points but much of the structure drives business away.
At some point they need to be realistic about regulation or the deflation will continue.
Snapped up, edgewater, snapped up.
“IMO as the dollar continues to weaken these cities will begin to gain new life again, as manufacturing starts returning to the U.S. This will be exacerbated by the current Olympic-sized revelations of China’s horrendous human rights and pollution policies.”
It may be higher energy prices snapping the global supply chain rather than the value of the dollar that drives this change.
That too.
Its funny you mentioned about manufacturing jobs coming back as the dollar weakens. I found out that one of our divisions here in Michigan is now comptetive with Mexico. Of course the Philippines are another story!
Which is why manfacturing will never return to America if it based totally upon cost of labor since we’d have to be “competitive” with people living in mud huts eating 1 meal a day. Not happening!
Well, not in our generation, but hopefully in our children’s.
Jon, our future is bright and exciting! Especially for our offspring!!! Better days are coming promise the wall streeters!!!! I can’t wait!!!
Sorry, still won’t happen. By the time we get to the finish line in the race to the bottom (Zimbabwe?), every other country would have to have industrialized up to the standad of living of at least, say, Argentina. We don’t have the oil or the arable land to support that.
Which is why manfacturing will never return to America if it based totally upon cost of labor since we’d have to be “competitive” with people living in mud huts eating 1 meal a day. Not happening!
People assembling electronics and toys in China are living in four story brick homes and eating way too much red meat, three meals a day. Don’t kid yourself about conditions in Third World countries. The people assembling toys and shoes are radically improving their living standards. Most companies producing items for export pay better than companies producing items for domestic consumption, simply because foreigners tend to buy superior quality stuff with better margins for the manufacturer, thus requiring higher quality workers (and better pay to get those workers).
Morgan Stanley to freeze home-equity credit lines: report
http://biz.yahoo.com/rb/080806/morganstanley.html
Wednesday August 6, 1:24 am ET
(Reuters) - Morgan Stanley (NYSE:MS - News) told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, Bloomberg News reported Wednesday, citing a person familiar with the situation.
Several hundred days late, and a couple hundred million dollars short.
Looks like Morgan Stanley is applying a tourniquet to stop the blood loss from a nearly severed limb, while ignoring the traumatic internal injuries that will ultimately prove fatal.
“… they will not be allowed to withdraw money on their home-equity credit lines …”
More tightening = less cash going into the economy.
In line with what combo has been pushing,
I went to the mall yesterday and the first store I went in a sale price on every rack. $8.95. Still overprice by a couple of bucks if you consider all the clothes were made in sweat shops, but less than the 29.95 they normally charge. I think this is one of the stores going BK.
Then when I went into Sears they also had a sign on every rack. Everything was on sale. Everything.
Over course you now need to buy 2 boxes of cereal to have it last more than 1 days breakfast. How small can they make the boxes before the sheeple notice they are being ripped off.
Food price inflation has surged to a record 9.5 per cent in the year to July as supermarkets pass on higher energy and transport costs to their customers.
http://business.timesonline.co.uk/tol/business/economics/article4469846.ece
that ethanol thing is really saving the planet - NOT
Extrapolating out - in the end we’re going to have a very green planet full of dead people.
Good. Time to thin the herd.
(Spare me the “okay, you first” comments)
Better to thin the herd by hunting than by starvation.
“okay, you first” — so there
NEW YORK (CNNMoney.com) — It’s been a bumpy road for Detroit’s Big Three automakers for the past few years. But it may get worse.
With their sales plunging as fewer consumers are willing to buy gas-guzzling pickups and SUVs, some experts fear that GM, Ford or Chrysler could be forced to head for bankruptcy.
http://money.cnn.com/2008/08/06/news/companies/big_three_woes/index.htm?source=yahoo_quote
I wonder in some bizzare way, if merging them all together would work out a lot of the problems and duplications.
RE: But it may get worse.
As a lifetime Big3 mfg. auto owner; car rag reader; and Sunday dealership lot wanderer,the Big3 have virtually no daily driver I’d want to purchase.
It’s truely pathetic…
There are a few I’d recommend-
-Took a 2005 Impala (from Enterprise rental) on an extended business trip a couple of years back. Nice road trip car, quiet interior,and the base radio/CD player (I thought) sounded excellent (I’m pretty picky about my car’s sound systems)…..the thing got amazing mileage on the highway (30mpg running at 75-80mph)
-The Saturn Aura is kinda neat, especially some of the styling details
But…..
-Ford? I look at their product line now (other than the Mustang), vs. what they had in the early 90s (had a Taurus SHO at the time, awesome car…….other than the clutch…..),
and I have to ask…..What happened??
-Chrysler….I’ve always been a Dodge/Plymouth guy……Next year, I’m buying the Challenger R/T I’ve been wanting for 30 years.
Otherwise, the looks of most of the cars and trucks they currently build make me want to vomit.
RE: The Saturn Aura is kinda neat, especially some of the styling details
I agree…Interestingly it’s really an Opel from GM’s Euro division. I saw a lot of them in $8.50 per gallon USD England.
Not much power though…138bhp/240flbs torque.
RE: Dodge Challenger R/T…a 5 speed AUTO in a performance car?
Plus the dealers will be price gouging to beat the band due to the newness and limited availability.
I think you’d do way better price-wise with a used C5 or 6 ‘Vette.
Haven’t check the market for awhile, but I’ll bet it’s flooded.
They will have a 6 speed manual in the R/Ts, with the 5.7 liter Hemi when the 2009s come out in a few months.
The 09’s will have the 6.2 with auto or six speed, the R/Ts will have the 5.7 with auto or six speed (with variable engine displacement in the automatics), and a base car with the 3.5 V-6. Haven’t seen one yet, but supposedly they are significantly bigger than the Mustang, with a back seat that is useable by adults
As cool as the SRT8 is, I’d rather sacrifice a little acceleration and a few toys, to get significantly better highway miles per gallon.
If the dealers try the price gouging business, I have developed enough patience to wait
I’d kinda like a C4 thru C6 Vette, but, interior-wise, they seem to be designing them more to accomodate skinny-ass trophy wifes, rather than a gone-to-seed offensive tackle-sized guy like myself.
As much as I need a Vette to “compensate for my other inadequacies”
I drove a Ford Escape I rented for a week. I actually kind of liked it, drives smooth, decent interior, with a hybrid version not so foolish. I usuall try out crossovers when I rent. Interestingly enough you can get them at airports cheaper than the subcompacts, must be the price of gas.
Also liked the Santa Fe, hated the Suzuki SL-7, liked the Jeep liberty but found it noisy as hell.
In doing some service work on my Toyota the other week, we always take a spin through all the showroom vehicles on display.
The only 3 in there were a race car (not for sale—-perhaps a retired sponsor vehicle), a Land Cruiser and a 4-dr Tundra. The sales people said all the other cars, the Yaris, the Camry, Corolla, Rav 4 were all sold. They can’t keep them in stock.
But I thought all those cars were “deathboxes.” People are lame.
They are…….I wouldn’t be caught dead driving one.
But that’s just me……..
The Toyota people tend to get snitty when I mention the V-6 Camry is not recommended by Consumer Reports. And a few other models. It’s like finding out Santa Claus isn’t real for these Kool-aid drinkers. Nothing good lasts forever…except Honda by the look of it.
I heard Toyota’s been having some recent trouble on a few models. The Land Cruisers seem to be having some trouble too. I find that really sad as I put about $500 tops into my ‘95 Camry and put 120k on it. The guy I sold it to was really happy to get it.
Same thing happened when I drove my former Mazda to 140k (ski trip miles). Very little maintenance outside breaks, muffler, heat shield fell off. Sold it to a guy who drove it for years. My uncle’s friend, I heard he was always happy to have it.
Now my 4 year old Sienna has had its list of minor non-mechanical problems. The good news is they always fix them for free! I really like that. So far I’ve done routine maintenance and bought myself some new tires and windshield wiper blades. That’s it.
Oh yeah, brakes too.
There’s an awful lot of benefits for them if they go BK soon. Finish wiping the slate clean “over here” - and consolidate their growing positions “over there” for the recovery that will someday come along. Time flies, so it’s best not to dilly dally.
Oh no, they have several rounds of bailouts and bad loans left. Just need the gobermint to give another 75B or so.
Unfortunatly the big three will funnel the money to plants in mexico. No jobs for you!
Meanwhile, Toyota is putting up plants in the US and Canada.
Maybe Toyota should buy all the old Big 3 plants and re-tool them for Toyotas. I’m sure at least the buildings are salvagable.
Don’t worry, oil will be about $80/barrel by the end of the year and people will be back to buying SUVs.
I don’t think people will ever rush back into gas guzzlers. This $4.50 per gallon gas has been a rude awakening, and people won’t forget it.
This $4.50 per gallon gas has been a rude awakening, and people won’t forget it.
Hah.
BanteringBear, this The ’70s calling: It’s deja vu all over again.
(Hat tip to the incomparable linguist Mr. Yogi Berra.)
They’ll forget soon enough if gas seems affordable again.
We’ll agree to disagree. If anything, I don’t see gas hogs in the future product of the big 3 automakers. These high prices stirred up a hornets nest like never before.
For the past few years, Weyerhaeuser has been downsizing itself from a manufacturing powerhouse with global ambitions to a smaller company more closely tied to its vast landholdings.
On Tuesday, the human cost of that transformation came home, as Weyerhaeuser said it would cut 1,000 of the 2,500 jobs at its Federal Way headquarters and 500 more corporate-support jobs across the country.
http://seattletimes.nwsource.com/html/nationworld/2008094543_weyco06.html
Some of this is not surprising. It’s just Ricardo in action.
They were trying to do everything rather than focus on their strength.
Of course, they rode the housing boom hard too. Now, cometh the payback.
Their strength is flipping real property?
Their strength is the fact that they are rentiers.
They own land on which timber grows. They sell the timber, and plant some more.
Of course, during this bubble everyone thought they could be rentiers. Unfortunately, that is not possible.
“They own land on which timber grows. They sell the timber, and plant some more.”
They clear cut vast expanses of land including logging off steep slopes which should never be touched, encouraging lightning quick runoff and massive landslides which leads to flooding of epic proportions. They got called on the carpet after the horrific damage from the fall 2007 floods in western WA. Not surprisingly, they didn’t have much of a defense. They’re evil.
Mr. John Hempton wrote an interesting analysis of the mortgage default scenario as applied to financial institutions. He breaks the defaultees to 4 different groups; fraud to maintain a better life style, fraud to speculate, 1st time home buyers with some down payment, predatory lending victims. (Obviously these are simple break downs.)
“…My point: the fraudulent loans here (stated income, predatory) have fast defaults. The non-fraudulent loans here (typical first home buyer, middle American aspirant family) have slow defaults if they default. One group can’t or won’t hold on. The other group tries desperately to hold on and might succeed….
Arguing from the stereotypes – if it is fraud is the dominant problem in the mortgage industry then extending these loss curves is wrong – and the losses will drop sharply once the “pig is through the python”. Many institutions that look difficult will turn out OK.
By contrast: if the problems spread to non fraudulent loans then extending the loss curve for many years is the correct analysis – and all sorts of institutions (including the GSEs) are insolvent.
You see why I am looking for comments. This is the Sixty Four billion dollar question – or – more accurately – the trillion dollar question….”
http://brontecapital.blogspot.com/
I don’t buy his overly simplistic analysis. I fervently believe the (non-fraudulent) Alt-A and prime buyers will be a huge factor at the high end of the CA and other pricey coastal markets over the next three years. This group was (unwittingly) gambling on unsustainable rates of home price appreciation which would have been necessary for their bets to pencil out. They got stucco with loans which will reset to monthly payments far in excess of what a new buyer would have to pay to get into the same quality of housing over the next few years. Some of these folks will make the rational decision to walk away from their obligations, even if they could continue stretching to meet them. Others will simply not be able to make the reset against the backdrop of stagnant wage inflation and high personal consumption expenditure inflation.
I confess that I have no data to back up this analysis, but a lack of data does not necessarily render a prediction invalid when the situation is this obvious.
I have less information than you.
I do not see thousands of houses lining streets “for sale”. I see vacation homes sitting empty. In some ways this is good, it gives me an unbiased view of the market based on economics; but in others it is lacking the magnitude of the collapse.
The key to both Augur-inn’s and your analysis is the walk away problem with another 10% decline. I agree with you and think the problem will be huge, I see the layoff numbers and the loss of jobs data.
“I see vacation homes sitting empty.”
My perspective is heavily biased by the thousands of new (built since 1998) SFRs that I pass on my daily commute, and my knowledge that there are 131 ‘new home communities’ around SD County which similarly have added a large number of new units to the housing stock here in the past ten years. Judging from the dearth of traffic (I almost never have to hit the brakes), many of these non-vacation homes sit vacant. I don’t know who owns them, but whoever does own them is losing a fortune by letting them sit unoccupied and crumbling into desuetude.
Here is another “must read” article that lays out the problem rather well. Guaranteed to amuse and enrage all at the same time!
http://news.goldseek.com/LewRockwell/1218027600.php
For moving images, any scene by Groucho Marx will work fine. But I recommend the scene in The Coconuts, where he is selling Florida real estate. Chico asks what the houses are made of. Groucho answers, “You can get them in wood. You can get them in stucco. Boy, can you get stucco!”
Its a pretty slow effect. Business take time to move to lower cost locations. There is also a negative second derivative in there.
As more business leave an area, the lower costs go… unless you get too many government services that increase the tax burden too high. That seems to be the democrats BIG problem. You see a city like detroit in a protracted spiral down.
Taxes are too high so companies relocate out of the city. People lose jobs. Rather than people following the jobs; the city increases taxes on the survivors to keep the people from relocating. Increased costs for remaining workers and people on the margins leave or go on assistance. So, the margin creeps further up the food chain.
So, the spiral continues.
Sometimes the social actions need to be at a national level. You also have to take into account the international market as well. Generally all of the socialist beifits perscribed by the LDs take a while before they backfire.
On a less polarized level: it is often the problem that building new infastructure is far cheaper than upgrading and maintaning old infastructure. So… as I put in an earlier post… some of the cities are just not viable at all and its easier to build new ones. Or perhaps expand at the edges.
I suspect that many were not gambling to make money, but gambling to get into a house before they could no longer afford it. The realtors and lenders would pump them with buy now or you’ll be a renter forever.
Hey Hoz, One of the potential problems I see is outlined in this article. I think it lends itself to your basic question.
http://news.bbc.co.uk/2/hi/business/7529277.stm
Obviously all housing is going to be revalued lower. Should the “walk-away” option become popular with those that can actually afford to keep their homes then all bets are off.
BTW, I think all the lenders are already insolvent given the leverage applied. I don’t have the link but Mike Morgan just put out a very dire forecast in this regard.
‘Should the “walk-away” option become popular with those that can actually afford to keep their homes then all bets are off.’
My guess is that we are in completely uncharted territory with respect to the number of American households for whom walking away from their debt would be a rational decision, regardless of potential credit rating consequences. This unprecedented circumstance renders analysis based on historical data somewhat irrelevant, but it bodes quite well for the Gedank experiments which some bloggers enjoy conducting
:-) 
.
“Should the “walk-away” option become popular with those that can actually afford to keep their homes then all bets are off.”
Is it at all possible for non-recourse states to change their status on that before walk-aways do become a critical situation?
RE: and all sorts of institutions (including the GSEs) are insolvent.
The Massachusetts governor just signed legislation (with a great big smirky smile) relative to borrowing $16 billion for deferred infrastrature maintenance and to cover a host of other neglected budgetary problems.
The state highway department is paying staff with borrowed monies.
In the background lies the $22 billion tag for the Big Dig; a bankrupt and crumbling Massport transport system; billions in unfunded pension and healthcare liabilites for public employees and pensioners.
The list goes on and on.
Mass residents already are the highest per capita debtors in the country.
So it’s just more of pass the buck to future generations.
The financial problems are now demographically driven.
It’s 80 million baby boomers on the verge of leaving the workforce vs. 34 mllion baby busters to pay the bills.
Which means there are no solutions except to run the printing presses at the FED.
Glenn Beck had a guest on last night that represents some sort of taxpayers union. Anyway, they got a voters amendment onto the ballot in November to do away with the income tax in Mass. The resulting deficit of 12B that would result if passed is going to be dealt with by CUTTING SPENDING. Here you go congress of Mass, deal with it! The gal talked about bloated pensions, etc. I think it has a chance if the voters don’t get a bunch of scare tactics, save the children stuff, thrown at them. This is going to be fun to watch!
I tend to only watch Glen Beck when I’m stuck in a hotel room traveling on business (probably about 12 days/month), so I missed this show.
I would love to see MA revolt against taxes.
Here in California state, they’re talking about:
1. Raising state income taxes (well, the highest marginal rate, not raising them for EVERYONE, which IMHO is the only just way to raise taxes)
2. Raising State sales tax (an AWFUL idea because lower-income people spend a higher % of their money, so sales tax is regressive. And higher-income people can easily beat it!)
3. Collecting sales tax on “services.” This would put me out of business! I doubt if I could raise my consulting fees by 8.25% to cover it, so I’d probably be forced to lower my rate to make the net the same.
Let’s do some math here. If BHO gets his way, here’s the amount I’d get to keep on each additional dollar I earn
39.9% Fed Income Tax + 13% (uncapped SS tax) + 11% CA state income tax (the new proposed highest bracket) + 8.25% sales tax = 72.15%. In other words, if CA and BHO get their way, I’d get to keep 27 cents of every dollar I earn
Again Reuven
You’ve been getting taxed with inflation. If you make your living sitting on your but collecting dividends or capital gains then maybe you’ve faired OK, but if you get a salary the purchasing power of that salary has fallen. IF McCain continues w GW’s policies your current salary might purchase a loaf of bread or two in 10 years.
IN regards to your tax calculation - Do you really spend every dollar you make, if not you can’t just add the sales tax to your total tax burden. Your state taxes are deducted before you pay Federal taxes and I suspect you have one or two tax breaks.
But remember…..the state tax is deductible from your Federal Return
But really……welcome to our wage slave world !!!
Unlike independent businessmen, however, us W-2 guys don’t have NEAR as much opportunity to be “‘creative” with our deductions/expenses/income reporting.
I cannot deduct state tax from my fed return because of AMT!
Also, I’m 100% honest/within-the-law on my taxes. Apparently you’re implying that you wouldn’t be, if only you had the opportunity?
Your state taxes are deducted before you pay Federal taxes and I suspect you have one or two tax breaks.
No, they’re not, because of AMT. And I have NO tax “breaks!” None. Zip. Zero.
However, your typical FB who walks away owing 200K on his mortgage doesn’t have to pay income tax on his forgiven debt! He’s getting a $70,000 tax break.
There’s your problem, reuven…..you are thinking about what the government is giving away to someone else.
That’s what the government does…..unfortunately, as long as your payments keep showing up, they won’t have to care. I’ve managed over time to put it out of my mind.
I would recommend finding an accountant that can recommend some strategies to limit your tax exposure.
As I said, an independent business person can exercise more of these strategies, than us W-2 wage slaves.
Not to be the bearer of bad news, but the inflation which Measton speaks of is directly caused by a monetary system supported by both parties. I would immediately disabuse myself of any notion that this will get better, regardless of which of the two contestants running for office gets elected.
One thing must be made clear, all in my opinion of course but really quite logical if one is to look at all the accrued debt and obligations of the US gov’t. We are way past the point of taxing our way out of this mess and rapidly approaching the time when deficits WILL matter. Even with 100% taxes we could not do it. With that in mind, I’m for sustaining the current tax cuts or passing more tax cuts. Hopefully folks would use that extra money to buy items necessary to sustain themselves during the depression years rapidly approaching (yeah, sure).
but the inflation which Measton speaks of is directly caused by a monetary system supported by both parties.
WHAAAAT?!!!???
Just when measton pursuaded me that a vote for the red team….er, I mean blue team (I get those confused, sorry) would cure all socities ills, you go and tell me THIS? I thought GWB was to blame for everything and his departure from the one-six-hundred would make it all better.
If what you are saying is true, then a dollar just before GWB would have been worth less than a dollar in 1913, and we all know that is crap.
Nope, I don’t believe it. We just need to vote out the dubya and those dang republicrats…I mean demopublicans…I mean…well, you know what I mean.
Now, where’s my lunch? TMZ-early edition is coming on in a few minutes.
RE: they got a voters amendment onto the ballot in November to do away with the income tax in Mass.
The 38YO Boston firefighter who applied for a $68k tax free disability pension (the system is currently being investigated by the FBI for fraud) while placing 9th in a recent national bodybuilding contest has got the Mazz ant colony all stirred up!
I understand the frustration about pensions, but is it really a good thing to take people that have already retired or about to retire and tell them tough luck - we changed our minds. They held up their part of the bargain and put in their years. What happens to them now? Just what we need - more oldsters who can’t afford to take care of themselves.
Sale History
06/11/2008: $568,000
03/31/2008: $484,500 *
05/26/2004: $649,000
05/27/1999: $287,000
439 Highview St Thousand Oaks CA 91320
looks like a flip. 484K not a bad price. HA I wonder what happened to the 649K Guy ?
from Zillow
As I look around I’ve seen many examples of fraud #1 foreclosed upon whereupon the bank sells it as REO to fraud #2. The fraud is just now finally (maybe) being worked out of the system since the down payment assistance programs are going away.
As for non-fraud, is it not really still fraud in essence when the only thing keeping a spendthrift family in a house is serial refinance? These people won’t hold up under the pressure of reset. There just have been to few in the last few years who have genuinely qualified for loans with traditional standards. Everyone else is fraudulent in my opinion, even if the lender participated knowingly.
See my post below about the 93552 zipcode. We may very well end up with more NODs than there are households! How can this happen? Two or more loans per property is part of it, but the more important part is that when the first round of fraudsters got flushed in late ‘05 they were replaced by a second round who got flushed in ‘06, who were replaced by a third round who got flushed in ‘07. Will it end? I’ve seen comments by Mrincomestream that suggest he doesn’t thing it’s ended even at this late stage.
dynamic maps of nonprime mortgage conditions:
http://www.newyorkfed.org/mortgagemaps75/index.cfm
to look at that map kinda tells you why the FED dosent want to raise interest rates. the only question is how long can they keep this up?
Hmmm…my former town is black. No info. What does that mean?
I’m amazed at the number of ARMs that are out there. Almost every state had share of ARMs over 50%. No wonder the end of this crises is nowhere to be seen.
Thanks for the link! The Montana numbers are worse than I expected:
62.9% of housing loans are ARMs
43% of ARMs will reset in 12 months
44% of ARMs have already had one late payment in the last 12 mos
I initially thought the same thing but I believe people are misreading this chart.
I believe that it states that 62% of subprime loans in Montana are ARMS, NOT 62% of all Montana loans are subprime.
Dang nab it…should read:
“I believe that it states that 62% of subprime loans in Montana are ARMS, NOT that 62% of all Montana loans are ARMS.”
You’re right! What a relief.
0.93% of MT loans are subprime
of those, 62% are ARMs
43% of the ARM swill reset within the year
0.75% of MT loans are Alt-A
of those, 27% are ARMs
72% were made with little or no documentation
The Majority of U.S. Homeowners Thinks Their Home is Insulated From the Housing Crisis
http://tinyurl.com/6p3jd4
According to Zillow Q2 Homeowner Confidence Survey 62% of homeowners believe their home’s value has increased or stayed the same in the past year yet 77% of U.S. homes actually declined in value
Damn. And I thought we were past denial.
The delusion continues.
LIBOR - no change oops
BBA LIBOR REVIEW
“…In conclusion, all contributing banks are confident that their submissions reflect their perception of their true costs of borrowing, at the time at which they submitted their rates. They are therefore prepared to continue with their individual quotes being published with the day’s LIBOR rates. As there was no real support for any of the proposals to limit stigmatisation, the FX & MM Committee has therefore decided to retain the existing process.”
Aug 5, 2008
http://www.bba.org.uk/content/1/c6/01/43/81/BBA%20LIBOR%20Review%20Consultation%20Feedback%20Statement.pdf
(caution 14 pg pdf.)
They waited sufficiently long for the memory of the LIBOR rate reporting flap to fade before quietly posting a decision to do nothing to fix the problems reported in the WSJ earlier this year.
just as expected … avoid price discovery at all cost.
FLORIDA folks
I need to set my mom up in a furnished rental ,but need to avoid foreclosure or soon to be screwed landlords- do you have the link to the owner/ tax rolls etc ?
tia
How about asking a landlord for his credit report????
That should put FEAR in his eyes if he’s not solvent!
Check with the public records in the county…they will show if a foreclosure proceeding has been filed with the courts..
There is no centralized web site for the whole state. However, each county has clerk of court web site with public records search available. Similarly each county has a property appraiser web site available.
So what I would do is:
1.Just google whatever county prop appraiser
2. On the resulting county prop apparaiser web site search by the address of the potential rental property. You will get sales history, current owner name and address and some tax info
3. Google the whatever county clerk of court
4. Now that you have name and address of owner/potential landlord, you can search official public records for any Liens or Judgments on said person or property.
Alternatively, you could spend $20 to $50 on various web sites like intellius, etc… for various background, bankruptcy, criminal records, etc… searches on the potential landlord.
“Citigroup Inc. is in negotiations with state and federal regulators to resolve allegations of wrongdoing in the auction-rate-securities market that could result in its buying back several billion dollars of the illiquid securities from investors and paying a sizable fine, according to people familiar with the matter….”
WSJ
Oh bugger. It looks like Wall Street’s one-day dash of euphoria has been abruptly terminated by further housing market woes.
August 6, 2008 9:33 A.M.ET
BULLETIN
Freddie’s $821 million loss
Dividend slashed as No. 2 U.S. mortgage buyer hemorrhages much more red ink than had been anticipated. Collateral damage for Fannie.
While the numbers from Freddie Mac were a tiny bit better than expected, they were not good enough to give any indication that the worst of the housing crisis or its impact on FRE earnings are improving at all. As a matter for fact, most of the news about housing which has come out since Freddie Mac closed its quarter June 30 has been disheartening. Foreclosures and delinquencies are rising.
Freddie Mac’s third quarter could well be worse than the one just past.
Estimates that the government will have to put $25 billion into Freddie Mac and Fannie Mae (FNM) still seem plausible. Paulson and his associates can do the math and know that home prices will decline well into 2009.
“…tiny bit better than expected…”
This “better than expected” trick abounding in the financial MSM is getting dangerously close to overkill. Besides, a couple mouse clicks quickly yield a half dozen headlines that contradict one another.
This morning the talking heads on Bloomberg said the loss was three times the amount expected.
Doesn’t sound smaller to me.
They reported that on CNBC this morning too.
“”Comment by Professor Bear
2008-08-05 06:34:27
I am starting to think about buying some gold, though it might still be quite early. Any thoughts about the best way to do this without physically owning the metal?”"
Professor,
Been thinking about the changing buying power of gold during the Great Depression. The US government revalued gold from $20 per oz. to $35 per oz. in 1933. Also in the Great Depression the general price levels in the US fell by 40%.
$35 divided by $20 = 1.75 - 1 = 75% rise in dollar value of gold
$1 divided by $0.60 = 1.66 - 1 = 66% rise in buying power per dollar
1.75 x 1.66 = 2.9 - 1 = 190% rise in the buying power of gold per oz.
The buying power of gold rose by 190% during the Great Depression!
For investing check out CEF, VGPMX and VGELX.
Best Wishes!
It’s good that gold increased its buying power. It’s too bad people weren’t allowed to own the stuff.
Details, details…no time for details.
People aren’t allowed to drive over the speed limit either.
Largecap gold and silver mining stocks did very well in the Great Depression!
There are 20+ largecap metals funds (gold and silver mining) that can be bought in your US brokerage account.
Best Wishes!
… and people weren’t allowed to drink during prohibition.
Thanks. I also recall the gubmint made life difficult for individual gold owners during the Great Depression — can’t recall the details, except to note that it might take some special effort to maintain one’s rights of private ownership if the gubmint decides to get serious about stamping out competition for Uncle Buck. I am simply too lazy and unmotivated to pursue offshore physical metal ownership strategies like some posters here suggest.
Professor,
There are 20+ metals funds that can be held in any brokerage account in the USA. These metals funds can be sold for dollars on any business day of the year.
The point of my post was that metals fund investments (gold/silver) can protect the buying power of one’s savings in both inflationary and deflationary times!
Best Wishes!
Got cha. I am still trying to get my brain around the question of what is special about metals, though. Isn’t it potentially foolish to get overly fixated on one asset class (similar to the mistake that housing investors made circa 2005)?
Professor,
The housing market became over priced because people bought houses with a small or no down payment at low interest rates. Buying metals funds with say 25% of savings could be seen as an inflation/deflation hedge.
See Dow/Gold ratio at Wikipedia.
The Dow/Gold the ratio still has only three peaks (when it takes more ounces of gold to buy the Dow Jones index, since gold is so relatively cheap) since 1900: the first was August 30, 1929 at a ratio of 18.47. You remember what happened next.
The second was January 29, 1966 at the ratio of 28.1, at the beginning of a long, grinding bear market in stocks.
And the last peak of the ratio was on July 16, 1999 at a record 43.85, as the run of “gold down and stocks up” reversed for only the third time of the century.
This brings up the important part of the whole thing, which is that soon after the peak of the ratio, it always fell, and fell, and fell until, it took about only one ounce of gold to buy the whole Dow index!
Best Wishes!
This is nothing more than very long credit cycles in disguise.
When credit is expanding furiously, you are best off in leveraged bets. Most stocks are implicitly leveraged.
Gold, unsurprisingly, is not leveraged at all (not talking about gold mining stocks here.)
Kondratieff lives!!!
My suggestion then would be to buy physical, just not offshore. It’s extremely easy - just visit your local coin shop. Check out a few if possible and compare - there are big differences between them w/regards to their handling of bullion. Some don’t handle it so much, some do.
Physical silver coins are great to have at home but gold coins are just to large in buying power to be used in an emergency.
Best Wishes!
RE: Physical silver coins are great to have at home but gold coins are just to large in buying power to be used in an emergency.
A Silver Dollar in the hand sure trumps the feel of a miniscule $5 gold piece.
Plus-whatta are you going to get for change after buying that bushel of potatoes to feed your family because the petrol driven food supply system has collapsed.
Check in with the IRS first - coins may be “collectables” and suffer a different cap gains rate vs. bullion. I don’t remember the exact details.
28% cap gains rate for collectibles, unless its changed in the last year.
“”Comment by Professor Bear
2008-08-05 06:34:27
I am starting to think about buying some gold, though it might still be quite early. Any thoughts about the best way to do this without physically owning the metal?””
When buying gold stocks or funds that supposedly hold gold one has to have a leap of faith that things are on the up and up. Just how leveraged are these funds or their holdings?
Buying gold and silver remind me of the gold rush days where most of the miners spent days working claims while the saloon owners, grocery store owners, etc spent their days in comfort while collecting their wealth at the miners expense. Yes, I do own some gold and silver(silver dollars that I saved dollar for dollar) that I put away for a rainy day but I would have been further ahead had I put that same money in Microsoft stock. For me gold and silver are way too high; if I thought things were going the way of ‘29 I’d buy company stock that represented items that people still needed to buy or use or a quality piece of RE after the bottom has truly been defined.
“Yes, I do own some gold and silver but I would have been further ahead had I put that same money in Microsoft stock… For me gold and silver are way too high;”
Contradictory?
I’m guessing that purchasing gold would be a far better bet than trying to pick the next Microsoft.
Dissolving villages idea floated as a way to reign in local gov spending:
http://www.syracuse.com/news/index.ssf/2008/08/is_it_time_for_fabius_tully_to.html
“Onondaga County Legislator Bob DeMore wants the rural village of Fabius and its bigger sister up the road, Tully, to consider a weighty question: To be or not to be?
DeMore is asking village officials to authorize to a study to determine if dissolving their governments would save money and improve efficiency.
Fabius, population 337, and Tully, 875, are the smallest municipalities in Onondaga County. They lie along Route 80.”
Note one local reaction:
Posted by lakerman1 on 08/06/08 at 7:16AM
“LEAVE FABIUS ALONE! I used to go fishing there all the time, as well as deer hunting. I stopped at that little general store, purchased lunch, enjoyed my visits there. Consolidation might mess up the atmosphere of the village.”
Nice fiscal argument there, Lakerman. (Lakerman is probably from Cazenovia or Skaneateles as those schools sport the Laker team names so there’s a good chance he’s better educated than his emotional statement implies.)
For WT:
“There’s about $58,000 in state money in hand to pay for the study, he said. It’s a grant obtained several years ago by the Onondaga County Supervisors Association when DeMore headed that group and was still Fabius town supervisor. The town of Fabius administers the grant.”
I thought of you when reading $58,000 was issued from Albany to study how 337 people might best receive local services. Well maybe they’ll share the money w/the 875 people in Tully.
That is an idea that should have been instituted a long time ago in NY! Unfortunately, the sheeple revere their monstrous bureaucracies and will have nothing of that combining services blasphemy.
Besides NY, I’ve only lived in the New England ministates which didn’t have all these momentum killing gov levels to weed through. Is it like this in all the larger states?
Te hee…
Morgan Stanley to analyze Fannie, Freddie reforms
U.S. Treasury hires outside firm as ‘prudent step’
By Greg Robb, MarketWatch
Last update: 5:33 p.m. EDT Aug. 5, 2008
WASHINGTON (MarketWatch) — The Treasury Department announced Tuesday that it has hired Morgan Stanley to provide market analysis about Fannie Mae and Freddie Mac.
In a short statement, the department said Morgan’s services would include “a sensitivity analysis on the financial profile of selected financial services firms, and assessment of appropriate capital structures.”
Morgan will not have access to the books of the two mortgage giants.
The firm will also conduct a broader examination of relationship of Fannie (FNM 12.15, -1.45, -10.7%) and Freddie (FRE 6.95, -1.09, -13.6%) with the broader capital markets.
A Treasury spokeswoman said the agency sought Morgan’s expertise because the agency is in uncharted territory regarding the two firms.
Heh. Calling in the fox to examine the chicken coop’s security system.
Heh.
Socialite Paris Hilton has made a spoof advertisement in response to a jibe by US presidential hopeful John McCain.
In a spoof recording placed on the comedy website Funny or Die, Hilton referred to Mr McCain as “that wrinkly, white-haired guy”.
She claimed being used in his ad meant she was now “running for president”.
Reclining on a chair in a swimming costume and gold stilettos, she said: “Thanks for the endorsement, white-haired dude.
“I want America to know that I’m, like, totally ready to lead.”
At the beginning of the star’s film, an announcer called Mr McCain “the oldest celebrity in the world, like super-old; old enough to remember when dancing was a sin and beer was served in a bucket”.
Hilton’s spoof also intersperses images of Mr McCain and Yoda from Star Wars and the cast of TV show The Golden Girls.
http://news.bbc.co.uk/2/hi/entertainment/7544754.stm
That should go over really well with older viewers. The girl is a spoiled brat, and looks much older than her age (and she certainly is not beautiful).
Remember that during her three seconds in jail, she claimed to have found God and was going to become more spiritual? I cannot wait to see her in twenty years, when nobody, even in hell, will cross the street to see her or have any interest whatever in anything she does. She and her revolting parents are so ridiculous, they should be in a Ripley’s museum.
Paris is harmless, and McSame started it. Only he could manage to be made to look foolish by Paris Hilton.
RE: Socialite Paris Hilton has made a spoof advertisement in response to a jibe by US presidential hopeful John McCain.
Millions of men like the poster noted in the comment section of the attached link, “who is not getting any” will be voting for John McCain.
http://blogs.abcnews.com/politicalradar/2008/08/mccain-voluntee.html
Man, the quality of those comments (or lack thereof) really makes me appreciate everyone here.
Nice to see that you actually like Paris, a parody of a human being.
Since I’m gay, I have no interest in getting any . . .
I’m not voting for either candidate.
The jibe by McCain was well-deserved; she’s the one who for years has hired publicity agents to make her famous for absolutely nothing (much like Obama). Ridiculing McCain for his age is like spitting in her own future meal.
Wow, you really don’t like Paris. You miss the point. McCain looks ridiculous beating up on celebutaunts who are not running for Prez. Is this the behavior we expect from a man who would lead the free world? Who will he bash next, Perez Hilton? Star Jones?
He’t not beating up on THEM, he’s going after Obama for mimicking them.
McCain constantly makes fun of himself; Obama constantly praises himself. There is a significant difference.
She reads off a teleprompter much better than the Wrinkly Guy.
And her spoof has more policy detail than Lil’ Johnny Maverick’s famously substance-free ads.
Is it the candidate’s fault, or are his minions to blame?
Her energy policy is better than either of the candidates. I am not kidding.
Well it’s easy to come up with a viable energy policy when you’re not beholden to corporate interests.
Chinese real estate boom over, says official media
By Michael Kitchen, MarketWatch
Last update: 8:00 a.m. EDT Aug. 6, 2008
NEW YORK (MarketWatch) — The huge profits experienced by China’s real estate market in the past decade have come to an end, according to National Bureau of Statistics findings cited by state-run Xinhua News Agency in a report Wednesday.
The NBS said an easing economy and shrinking housing demand had started to drive down the growth of house prices.
…
“Now, growth of housing prices has started lowering, but only by a small margin,” NBS analysts said.
The report said the average growth rate for housing prices in January was 11.3% on year, but had shrunk to 8.2% in June.
http://tinyurl.com/6b7abp
“Loudoun Building Boom Buckles Under Economic Strain, for Now”
“If there were any doubt that Loudoun County’s long-standing reputation for rapid growth and affluence is changing, consider this: During the first six months of the year, the number of foreclosures in Loudoun almost matched the number of new homes permitted.”
“…the most recent figures show home values in Prince William and Loudoun creeping higher, suggesting that the housing market might have hit bottom there.”
Um - no. “the most recent figures” in this case is just the last two months (May and June) - reflecting the usual spring uptick in prices that is in fact way below normal - only about 2-3%. The same thing happened last spring in fact - when prices rose about 5% from January to August, then proceeded to plummet by 22% from August to this past April.
In reality prices are about 18% down YoY, with the YoY trend showing now signs of relenting yet. Prices will fall again this winter, you can rest assured. Foreclosures are still skyrocketing in Loudoun county - the trend has not reversed in the least. This will continue to cause prices to fall, along with a still large inventory of non-foreclosure homes for sale (not including the shadow inventory).
P.S. I am a homeowner in Loudoun. Thus I say all this despite having a vested interest in prices not falling.
The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street’s latest scheme.
http://www.businessweek.com/magazine/content/08_33/b4096000769608.htm?chan=topnews_topnewsindex_topstory
This was reassuring;
If Wall Street gambles with those pension assets and loses, U.S. taxpayers would probably foot the bill. When a company with a pension goes belly up today, the Pension Benefit Guaranty Corp., under federal law, has to take on the fund’s obligations and dole out money to its beneficiaries. It’s a costly burden: The PBGC currently runs a $14.1 billion deficit.
I wonder when the proverbial US taxpayer will finally take its corporatist, capitalism for the poor and socialism for the rich government to task and say no mas!
“It’s a costly burden: The PBGC currently runs a $14.1 billion deficit.”
What’ll they invest in to make up for THAT?
Editorial in “Forbes” that discusses, among other things, how “fair lending laws” contributed to the start of the Mortgage crisis:
http://www.forbes.com/opinions/2008/07/18/fannie-freddie-regulation-oped-cx_yb_0718brook.html
The CRA forces banks to make loans in poor communities, loans that banks may otherwise reject as financially unsound. Under the CRA, banks must convince a set of bureaucracies that they are not engaging in discrimination, a charge that the act encourages any CRA-recognized community group to bring forward. Otherwise, any merger or expansion the banks attempt will likely be denied. But what counts as discrimination?
According to one enforcement agency, “discrimination exists when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.” Note that these “arbitrary or outdated criteria” include most of the essentials of responsible lending: income level, income verification, credit history and savings history–the very factors lenders are now being criticized for ignoring.
Oil fluctuates after US inventory report show big drop in gas supplies
http://biz.yahoo.com/ap/080806/oil_prices.html
The Energy Information Administration says gasoline stockpiles fell by 4.4 million barrels last week. That compared to the 1.4 million drop expected by analysts surveyed by energy research firm Platts.
The EIA also says crude supplies rose by 1.7 million barrels; analysts expected supplies to fall by 1.2 million barrels.
Let’s see… gas is now about 30 cents a gallon cheaper, so we can drive more! Too bad US car manufacturers can’t seem to make an electric car in less than 10 years.
Mini electric cars to hit US roads next summer
http://www.businessweek.com/ap/financialnews/D92305IG0.htm
BMW’s Mini brand plans to have electric cars on U.S. roads by next summer.
I’m not so sure that Paris Hilton is that dumb. She’s banking some serious coin on her limited talents.
Anatomy of a construction loan default:
http://www.avpress.com/n/06/0806_s2.hts
And some (relatively) old money goes, “poof”.
The lawyers should have some bountiful years ahead sorting all this out.
396 NODs for Palmdale 93552 in July, and that count may still rise.
Now, to use some extrapolation ala PB…
396 NOD for July/25359 pop est for 93552=
Over 1.5% of households got NOD in July!
12 months of this means that in the next 12 months almost 1 in 5 household will get NOD in the zipcode, and 60% of NODs are now going to trustee sale, so fully 11% of homes in the zip will be foreclosed on in the next year!
The scary part? OK, that was A scary part, but the real scary part? The 3 and 12 month trendlines are still looking somewhat parabolic.
Is anyone without a fully paid mortgage in the AV going to keep their home?
Whoa nelly! I did a dufus thing.
There are only 7497 household in 93552 per census.
That means my math is way wrong in a bad way.
396 NOD/7497 households= 5.2% of households got NODed in July.
Extrapolated this means that 63.3% of households will be NODed in the next 12 months, and again I emphasize, the 3 and 12 month trends in the NOD chart are still growing to the sky!
Ouch!
Last night at a Rod Stewart concert at the end of one of Rod’s songs, Rod had thanked the audience for coming out to the show “with the recession going on and money being scarce”. It caught me my surprise. I was at the concert bc I didn’t think that we were in a recession (per Greenspan et al). I was feeling good that night up to that point…..NOT! Hurray for Rod, who is English, must already know something about the American economy and it’ll take another year or so before things really sink in for most Americans.
It was a great concert. He and Bryan Adams were worthy of me parting with my money.
Opened up the thick new IKEA catalog yesterday, a collection of modern-styled but inexpensive furnishings. In the introduction was a paragraph acknowledging the urge to decorate one’s surroundings, even in ‘difficult times.’ No other mention or description as to what those difficult times might be. Because of course, reality cannot be acknowledged until it is OFFICIALLY acknowledged, with the imprimatur of officialdom.
US banks urge sweeping credit market reform
By Aline van Duyn in New York
Published: August 6 2008 16:39 | Last updated: August 6 2008 16:39
The world’s largest banks are proposing dramatic revisions to the securitisation and derivatives industries, which will bring large swathes of these markets into regulators’ sights and could limit the size of the future investor base for complex financial products.
The proposals are the result of a study of the financial crisis, headed by Gerald Corrigan, former head of the Federal Reserve Bank of New York and managing director at Goldman Sachs, and published on Wednesday.
Its conclusions – backed by banks and investment banks including JPMorgan, Merrill Lynch, Citigroup, HSBC, Lehman Brothers and Morgan Stanley – are further evidence that the credit crisis could have lasting effects on the financing methods that were at the heart of the credit bubble.
Writedowns at financial institutions following the slide in house prices and surge in foreclosures on subprime and other mortgages have already reached close to $500bn.
“The fact that financial excesses fundamentally grow out of human behaviour is a sobering reality, especially in an environment of intense competition between large integrated financial intermediaries which, on the upside of the cycle, fosters risk taking and on the downside, fosters risk aversion,” says the 170-page report, which is titled Containing Systemic Risk: The Road to Reform.
It contains numerous recommendations aimed at curbing excessive risk-taking at financial institutions, including support for accounting reforms aimed at bringing off-balance sheet exposures on to balance sheets and devising new criteria for “sophisticated investors”, which would probably result in a smaller investor base.
For example, under the new criteria, auction-rate securities – a $330bn structured bond market widely used by municipalities and student loan providers to raise funds – would not probably be marketed to retail investors.
As well as signalling unprecedented support from the biggest financial institutions for rules governing their behaviour, the Corrigan report does much to dispel the previously widely-held views that financial risks could be quantified, measured and controlled.
“Risk management is more of an art than a science,” Mr Corrigan says.
Jim Cramer is buying a house, who is in?
Seriously I did NOT know he had been renting in NJ for the last 3 years?
Ooops I accidently put the link into my handle / name.. click on it and see the story for yourself.
I keep a thorough track of local RE rates (VT) and have noticed that the most prominent local bank has been starting to raise mortgage rates independent of 10 year T-bill movement. Finally a disconnect? This could be huge. Anyone else notice this?
That seems to be the general case. Mortgage rates bottomed in very early Feb. and have been rising since - about 5.4% to now about 6.4% (bankrate.com). 10 year bills bottomed in late march at about 3.4% and are now about 4.0%. Over the last month though they seem to be pretty much in-line - with big curve peaking around July 22, then back down until Aug. 1, then rising since then.
Corporate Fraud + Government Intervention = Bailout Nation
by: James Quinn posted on: August 06, 2008
The U.S. financial system appears to be crumbling. Politicians and Washington bureaucrats are scrambling to make it appear like they are actually doing something. When politicians and Washington bureaucrats scramble, that means that taxpayers will be getting screwed again. They are throwing our money at mismanaged corporations and providing handouts to people who thought they were going to get rich buying and selling houses.
The people who are getting screwed are the citizens who have lived within their means, those who did not take unreasonable risks and senior citizens who are now stuck with 1.5% interest rates on their savings while inflation exceeds 8%.
…
Ron Paul, in his common sense rational way, explains the situation:
“The net effect of all this new funding has been to pump hundreds of billions of dollars into the financial system and bail out banks whose poor decision making should have caused them to go out of business. Instead of being forced to learn their lesson, these poor-performing banks are being rewarded for their financial mismanagement, and the ultimate cost of this bailout will fall on the American taxpayers. Already this new money flowing into the system is spurring talk of the next speculative bubble, possibly this time in commodities.
Worst of all, the Treasury Department has recently proposed that the Federal Reserve, which was responsible for the housing bubble and subprime crisis in the first place, be rewarded for all its intervention by being turned into a super-regulator. The Treasury foresees the Fed as the guarantor of market stability, with oversight over any financial institution that could pose a threat to the financial system. Rewarding poor-performing financial institutions is bad enough, but rewarding the institution that enabled the current economic crisis is unconscionable.”
Don’t worry. Your next rebate check will be in the mail shortly.
Yeah I don’t understand all this talk about the taxpayers paying for this stuff. I keep getting checks from the IRS!
(scratches head)
I think the author of this piece is Lawrence Summers, though his name does not appear anywhere I can find it.
The BIg Freeze part 4: How to build a US recovery
Published: August 6 2008 20:17 | Last updated: August 6 2008 20:17
Macroeconomists, like medical scientists, use case studies to teach their students about the maladies to which the system is susceptible. For supply shocks and stagflation, the example is the 1970s. The financial dislocations that occur when bubbles burst are illustrated by the Great Depression and Japan’s problems in the 1990s. The importance of central bank credibility in resisting inflation emerges from discussion of the experience of the late 1960s and the 1970s.
What is most remarkable and troubling about our current difficulties is that all these elements – supply shocks, financial dislocations and concern about rising underlying inflation – are present at once. Moreover, the crisis is global in scope. Concerns about recession are spreading from the US to much of the industrialised world. Significant slowdowns appear more likely in a number of emerging markets, with inflation concerns worldwide at their highest level in more than a decade. There is a growing consensus that the west is facing the most serious financial crisis since the second world war.
At the bottom of the article, it says:
“The writer is Charles W. Eliot university professor at Harvard and a managing director of D.E. Shaw & Co”
Many university professors seem to have night lives as prostitutes these days.
Mole Man, you seem to be missing in action today, but in case you are lurking, you went to great lengths a couple of days ago to discredit my point that the GSE debt guarantee is now explicit. Would you care to exercise the opportunity to retract your error?
“Within the past month, the Treasury has made explicit the implicit guarantee on the $5,000bn (£2,500bn, €3,250bn) balance sheet of Fannie Mae and Freddie Mac in order to prevent a run on the government-sponsored enterprises while imposing no penalties on shareholders or forcing any changes on management – not even the cessation of dividends.”
The writer is Charles W. Eliot university professor at Harvard and a managing director of D.E. Shaw & Co
Thank God there are a few honest, non-delusional reporters still left out there.
CHEAPSKATE
By NEAL TEMPLIN
We Managed to Sell Our Home
And Keep Our Marriage Intact
August 7, 2008
When we put our Dallas house on the market for $490,000 in February, we thought it would sell in weeks with little discounting.
Talk about being delusional.
We ended up lowering the price of our house five times before it finally sold last month. We didn’t get our first offer until late June, and it was $102,000 below where we had started.
All the uncertainty made us delay buying a new home near New York City, and we’ve been scrambling to find a place before the school year starts. During my 28 years as a journalist, I’ve moved 11 times for my job. This was in some ways the hardest one.
The whole experience made me a tiny part of a huge story — the collapse in housing prices — affecting millions of Americans. It was humbling for me, your typical know-it-all reporter, to find myself caught up in a situation where I had no ready answers.