The Housing Bubble

Psychics predict better days for community
http://www.democratandchronicle.com/article/20081005/NEWS01/810050314/1003/NEWS01

Looking ahead, three Rochester-area psychics say that this region’s prospects are looking up.

They foretell that 25 years from now, in the year 2033, the economy will be better, the city will be cleaner and the migration out of the community will have been reversed.

“It will be more prosperous here,” says Caroline Rock, 33, of Gates, who, like her mother, Charlene Hacker, 56, of Chili, is a psychic or clairvoyant, someone who predicts the future by using Tarot cards and other methods.

Hacker, who owns Psychic’s Thyme Book Store and Learning Center on Monroe Avenue in Rochester, also sees a relatively rosy future for this area.

“The next 10 years will be hard, but in 25 years it will have gotten better,” Hacker says.

Something to look forward to These guys do have about as much cred as Bush, Paulson, Congress, Jim Cramer and Krudlow who all have similar rosy outlooks. I can see the $700bn bailout originating from Bush, Paulson, BB and the gang sitting over a Ouija Board.

http://thechronicleherald.ca/Business/1082909.html

The hope is that the US$700-billion bailout package for the U.S. financial sector, which was passed on Friday, will be enough to calm fears of a major recession. But truthfully, nobody knows exactly what will happen over the next few weeks.

Despite the upset in the equity markets, Robert Wambolt of Port Hawkesbury, president of the Nova Scotia Association of Realtors, says Nova Scotia’s real estate market is still strong and stable.

Earlier this week the president of the Canadian Real Estate Association, Calvin Lindberg, issued a news release in which he said Canadians are asking a lot of questions about the real estate market, real estate price bubbles and the value of a home.

Lindberg reasons that the questions arise not only because of the financial meltdown in the U.S. but at a time when we’re coming to the end of an unusually active period in Canadian real estate activity: 2007 was a record year for the average home price in Canada.

Reading Canadian real estate stories is like a taking a trip back in time and reading US real estate stories from 2007. Instead of Yun saying all is well, you have Wambolt saying that things look fine and conditions are strong and stable. Unfortunately, a boondoggle $700bn bill won’t save the world from the wrath of unwinding, unrealistic real estate pricing.

I feel sort of deflated this morning.
Will Uncle Ben do anything for me?

Just like the bond market, the bullion market has seized up…

I talked to 3 coin dealers yesterday and none of them are selling physical anymore, because they can’t hedge it by replacing it on a wholesale basis. Demand killed supply.

I expected this to happen, but not so quickly.

Some of you might be able to find some physical @ smaller coin shops, but i’d guess the new barometer to figure out the real values vs. spot(paper metals) prices, will probably be eBay sales?

I now tell people to look at their take home pay, multiply by 0.6 and then determine if they can live on that amount…as they’ll soon have no choice (assuming they still have work). I suspect that most of the people on this blog can handle that reasonably well…and the country has been at that level (and, of course much lower), in the past. The difference now is that people have been spoiled with a life style they didn’t earn and will fight to try to keep it (i.e., not pretty).

The bottom line is that we (as a country) borrowed 5+ trillion from the future (due to this real estate bubble alone) and we’ll soon be expected to pay it back…either through inflation or through higher taxes, or both.

What I’d really watch for now is President Obama inserting a little clause into our income tax policy that removes indexing for inflation. Once they get rid of that last piece of Reagan legacy, they can then use massive inflation to push us all into higher tax brackets.

Honolulu real estate agent avoids prison for tax violations

http://www.bizjournals.com/pacific/stories/2008/09/29/daily66.html

A Honolulu real estate agent who made more than $700,000 in commissions but didn’t file state tax returns avoided jail time under a plea deal announced Friday.

Monalisa Sabo pleaded guilty to six counts of willfully failing to file returns for tax years 2000 through 2005, the Hawaii Department of Taxation said in a news release.

First Circuit Judge Leslie A. Hayashi granted Sabo’s request for a deferred acceptance of the guilty plea with Sabo’s agreement to pay $28,935 in restitution and a fine of $12,000, as well as court fees. Sabo agreed to make minimum monthly payments of $500 and to remain “tax compliant,” according to the department.

Am I reading this correctly? This slime ball made over $700k and only has to pay 40k to walk away? Does that $40k include all taxes due? If that’s the case, I may have found a new way to save money – don’t pay taxes!

Signs ‘o the Times

Took a long bus ride across town to do some carpentry work and cement patching at mom’s place. On a beautiful fall morning the “for sale” signs were plentiful - but perhaps more numerous were the “for rent” signs - tons of them. Looks like folks in the outer neighborhoods here are trying the accidental landlord route.

Then on the billboard tower that towers over my old hamburger stand was a brand new lime green flourescent billboard: “Foreclosures effect the whole neighborhood” “For foreclosure help call 1-800…”

They’re still building/converting condos along the whole route. Chicago really drank the condo kool aid with gusto. It sometimes seems as if the entire city gave up on ever owning a SFH.

What I did notice with all the “for rent” signs was that they appeared both in front of new(ish) condos and old run down multi-generational apartment buildings. A downward spiral in rents appears in the offing shortly.

An 11.3 pct quarterly rate of decline translates into an annualized rate of ((1-11.3/100)^4-1)*100 = -38 pct. It appears that Manhattan apartment prices are dropping faster than San Diego home prices, at least since last quarter.

October 3, 2008, 10:20 am
Manhattan Home Prices Falter
Christina Lewis reports:

After years of gravity-defying increases, the run-up in Manhattan real estate prices appears to have ended.

While year-over-year prices are still up, sale prices on average fell significantly in the third quarter while the number of apartment sales dropped sharply and inventory soared, according to a host of reports released today announcing Manhattan sales results in the third quarter.

The average price of an apartment was $1.48 million, up 8.1% from a year ago, but down a stark 11.3% from the previous quarter, according to Prudential Douglas Elliman’s report.

Meanwhile, the number of apartment sold dropped 24.1% to 2,650 in the third quarter, as compared to 3,500 apartments that sold in the same quarter last year; and inventory surged 35% to 7,000 units this quarter—a roughly 8 month supply, said appraiser Jonathan Miller, of Miller Samuel, who compiles Prudential’s report.

From the Cap Times….

WHEDA stops issuing new mortgages
The Capital Times — 10/03/2008 9:55 am

The financial meltdown on Wall Street is hitting the state’s biggest low-income mortgage lender.

Full story at http://www.madison.com/tct/mad/topstories/307692

Strangely, the rates on these non-existant loans has gone from 6 to 8%!!

Not to worry, though, as local lenders say loans are still available….you just need good credit. Oh, also the rates will be higher, too.

http://www.channel3000.com/money/17622023/detail.html

It seems to me that Paulson’s plan, which was originally 3 pages long, was to give the banks a quick fix of free liquidity and HOPE they start lending it out. Now since congress has made his previously clandestined plan open for public scrutiny, it will be impossible for him to follow through on his original “plan”. Bob pisani od CNBC said that WS Banks have sold these assets in the open market for anywhere from 24 to 55 cents on the dollar. if Paulson pays more than this range it will be obvious that he is purposely overpaying and there will be rioting in the streets. BUT if he pays less than 55 cents the banks are ah…. screwed.

Q. What is the best way to get home prices to stop falling?

A. Let them continuing falling until they reach levels that households can afford to purchase on local incomes with prudentially underwritten mortgage loans.

For bailout to work, housing market needs to mend
By STEVENSON JACOBS – 6 hours ago

NEW YORK (AP) — Washington’s financial bailout plan is now law. So the credit spigot will start flowing again, banks will resume lending, and an economic recovery can begin, right?

Wrong. Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it’s safe to start doling out money again.

Tough times for those tied to others’ fortunes
Wealthiest Americans choosing to postpone major purchases
By Geraldine Fabrikant
NEW YORK TIMES NEWS SERVICE

October 5, 2008

The jet set, too, feels the pain.
…
The turmoil on Wall Street has not only taken down once-solid companies, it has cut into the wealth of some Americans whose fortunes were tied to those companies. So the wealthy – and many still are that, by most measures – are postponing big purchases.

Suppliers of luxury goods like jets, jewelry, thousand-dollar bottles of wine and exotic vacations said demand is softening. While the middle class slowed its buying months ago, a decline in spending by the wealthy represents just one more drag on the economy.

“The superwealthy in America are in a state of shock,” said Ronald Winston, honorary chairman of Harry Winston, the jeweler. “They are not rushing out to buy expensive diamonds. The psychological mindset of the nation is keyed to the stock market, and in a downturn everybody is psychologically affected.”

Saturday Night Live -V.P. Debate

http://www.rightpundits.com/?p=2161
(scroll down for video)

For comparison, an average hourly wage of $21.91 assuming a 2000 hour work year translates into annual income of $43,820.

DEAN CALBREATH
What does ‘live within your means’ mean today?
October 5, 2008

…one thing that has gone unnoticed during our current debate over credit, debt and responsibility is that over the past few years, the buying power of Joe Sixpack and the hockey moms has not been keeping up with inflation, which has made it increasingly difficult for them to live without credit.
…
As of last December, the BLS reported, the average hourly wage in San Diego County stood at $21.91, just 0.6 percent ahead of where it was in December 2004.

Workers on an annual salary fared slightly better than the people who punch in an hourly timecard, which includes a large number of part-time workers. The average annual salary for full-time workers grew 3.9 percent during that three-year period, from $46,450 to $48,295.
…
the rate of growth for the average wage has been anemic. And bear in mind that this was during a time when the cost of living was rising at a pretty fast clip.

From the first half of 2007 to the first half of 2008 alone, consumer prices in San Diego grew by 4.8 percent, according to a BLS study released in August. Since the end of 2004, consumer prices have jumped 13 percent.
…
This type of middle-income wage stagnation reflects a nationwide trend. Between 2000 and 2007, income for working-class Americans has declined by an average of 1 percent, after adjusting for inflation, according to the Economic Policy Institute in Washington, D.C.

Over the past few decades, Americans have made up for their stagnating wages by relying increasingly on credit, whether through credit cards or home equity loans.

During the housing boom, some people used the skyrocketing value of their homes to refinance their mortgages and make extravagant purchases, such as flat-screen TVs or tricked-out SUVs. But that’s not where all the money went. (Anecdotally, I know of people who dipped into their equity because they lacked the money for necessary items, such as replacing faulty appliances, repairing their cars or patching their roofs.)

“In a way, it was like people were using the equity in their homes like income from a second job,” said Jean Ross, who heads the California Budget Project, an economic think tank in Sacramento. “But when the price of homes declined, it was as if they just got laid off.”

A “VICTIM” of the no money after i pay my bills syndrome!

———————————————————————
Meeting space for *Ecologically Consciousness*erudites/polyglot groups (Bedford @ North of Atlantic)
Date: 2008-10-05, 9:36AM EDT

A.M. and possible weekend P.M. space
Negating my failed efforts to promote a children’s athenaeum
as an unexampled alternative to afterschool, the space is pristine.
Handsomely renovated, with an area suitable to use as a coat check room.
(3)recently constructed bathrooms
partially carpeted for added comfort.
Am I earnestly seeking other means to use the space to offset cost?
Absolutely.
At this time, with the exception of the hours between 3-7, M-F
the space is available.
The space faces east for optimal natural light during the day.
We unplug applicances and equipment when we leave and
agressively recycle.
Here’s hoping barters or in-kind service relationships are built.
Su’ (347) 461.5114 Saturday and Sunday otherwise e-mail, thanks.

FHA = subprime central?

NATION’S HOUSING KENNETH HARNEY
Spike in business may be too much for FHA
October 5, 2008

WASHINGTON – In the current credit squeeze, if you have less than a 20 percent down payment, there’s pretty much only one major source of mortgage financing available: FHA, the Depression-era home loan insurance agency that still offers 3 percent down, 30-year fixed-rate mortgages with consumer-friendly credit standards, even on jumbo loans in high-cost areas of California and the East Coast.

But there is a potentially troublesome problem looming for FHA: New loan volume is exploding – tripling in the past 12 months alone – and Congress just handed the agency the responsibility for virtually all the government’s efforts to keep economically distressed homeowners out of foreclosure by refinancing their current, unaffordable loans.

“If you saw Atlas, the giant who holds the world on his shoulders, if you saw that he stood, blood running down his chest, his knees buckling, his arms trembling but still trying to hold the world aloft with the last of his strength, and the greater the effort the heavier the world bore down upon his shoulders — what would you tell him to do? I don’t know. What could he do? What would you tell him? To shrug.”

Francisco d’Anconia

If you read just one article today just check out Doug Noland @ “SafeHaven.com” http://www.safehaven.com/article-11456.htm .
If you have tracked Mr. Noland the last few years you would know more about this crisis than 90% of the so called experts the MSM trot out daily.
Check out this quote: ‘Alec Young, a… strategist at S&P’s. ‘It’s impossible to quantify how expensive this crisis is going to be for Corporate America; there’s unlimited downside.’ or how about this one: Bloomberg (David Wilson): “U.S. homeowners may end next year with the least amount of equity in their houses since 1984, according to Michael R. Widner, a Stifel Nicolaus & Co. analyst. Widner projected that home equity, as tracked by the Federal Reserve, will decline to $4.23 trillion in 2009, after adjusting for inflation. The estimate is less than half of the record $8.63 trillion in March 2007…”

There’s much more. I noted that outside of bonds, the US natural gas price has only declined 1.6% y.t.d., Maybe worth a small investment around this price, Ticker USG.

Interesting Edgewater. I am in the auction business and the the second home markets are weakening at a break neck speed. I’ve seen many of the “wife made me buy this albatross with a HELOC” second homes going under lately.

It’s obvious to me that Tina Fey and the SNL writers read this blog after last night.

Who would have known a rising comedic star could potentially change the course of history. Who weird is it that Fey’s path crossed Pailn’s at this very moment? What are the odds, seriously?

I think the most influential woman in politics right now is Tina Fey.

telegraph dot co dot UK
Financial crisis: Hypo Real Estate nears collapse after rescue plan is withdrawn

International property lender Hypo Real Estate is fighting for its life after German banks and insurers pulled out of a multi-billion pound state-led rescue plan after fresh financing shortfalls emerged this weekend.

By Richard Tyler
Last Updated: 2:53PM BST 05 Oct 2008

Executives at the bank, which is Germany’s second largest commercial property investor and has extensive holdings across Europe, are now locked in crisis talks with the German government and central bank in an attempt to deliver an alternative plan before the stock markets open on Monday.

The German Finance Ministry has urged the private sector consortium to rethink its decision.

The collapse of the €35 billion (£27.3 billion) bail-out will provide an immediate test to the pledge made on Saturday by leaders from the biggest European Union countries that they will ensure that no major European financial institution will be allowed to fail. It is a fresh blow for the global financial system struggling to master an unprecedented crisis of confidence.

Wall Street Journal

* OCTOBER 5, 2008, 10:13 A.M. ET

Germany Races to Save Hypo Real Estate After Government Deal Fails
Associated Press

German Chancellor Angela Merkel says her government is working hard to keep Hypo Real EstateAG afloat because it will not let the failure of any company disrupt Europe’s biggest economy.

“We will not allow the distress of one financial institution to distress the entire system. For that reason, we are working hard to secure Hypo Real Estate,” Ms. Merkel told reporters. The rescue plan would ensure that anyone who made reckless market decisions would be made to answer for their actions, she said.

Wall Street Journal
* OCTOBER 4, 2008
Broad Job Losses Augur Recession Despite Bailout

Tighter Credit Likely Will Exacerbate Unemployment in Coming Months as Businesses Have Trouble Securing Lending

By SUDEEP REDDY in Washington, KRIS MAHER in Pittsburgh and ILAN BRAT in Chicago

U.S. employers shed jobs last month at the fastest pace in five years, as weakness in the job market spread from the ailing manufacturing industry into services and even the public sector.
…
The employment report suggests the U.S. economy is in recession or headed into one.

“We’re going through the painful adjustment of clearing out enormous excesses in housing and in finance,” …

I don’t know if my post got munched or if I triggered a filter by mentioning a female running for VP.

Anyway, I was saying that it’s clear to me that Tina Fey and the writers of SNL read this blog after last night. I was also saying that it’s a bizarre coincidence that Tina and the woman she portrays both rose to stardom about the same time. Maybe there is an intelligent designer after all.

Also, Fey is clearly the only choice to replace Lorne when he retires.

Paulson Plan Is Still a Pig, Even With Lipstick: Caroline Baum
Commentary by Caroline Baum

When people are losing their minds and paying more for what things are worth, you should be selling. Borrow and sell if you must. Likewise, when people are losing their minds and selling things for a lot less than they are worth, you should be buying. Borrow and buy if you must.

PRESSURE AND TURMOIL
With No Plan B, House Reluctantly Passes Politically Risky Measure

Conservatives in the House felt they had no relationship with Treasury Secretary Henry M. Paulson Jr.

By Jonathan Weisman, David Cho and Paul Kane
Washington Post Staff Writers
Saturday, October 4, 2008; Page A01

Henry M. Paulson Jr. was in his corner office in the Treasury Department on Monday afternoon, too nervous to turn on his television, when his chief of staff poked his head into the Treasury secretary’s office to tell him the stunning news playing out on Capitol Hill: The House had just defeated the Wall Street rescue plan that Paulson had helped craft.

Meet the Press managed to avoid the oncoming economic trainwreck, by devoting an entire hour to mostly talk about the last frontier of neo-con 2nd fiddles…

Some “refreshing” news from abroad, for those of you who think the US is facing the ice age while the rest of the world still have sunshine and will go about its merry ways while the US withers alone, thus making the US dollar completely worthless vs. world’s currency basket:

Iceland faces unprecedented credit squeeze:

Oct. 3 (Bloomberg) — Arni Einarsson looks out over the Atlantic Ocean from his Room With A View Hotel in Reykjavik and offers a gloomy outlook for Iceland after the government bailed out Glitnir Bank hf.

“Nobody trusts anyone any more, and in banking trust is everything,” says Einarsson, 49, who’s managed the hotel for seven years. “As long as people trust you, you can build a very long domino chain. But once that trust is gone things start falling.”

That’s a common concern on the island the size of Cuba that’s home to 320,000 people. Iceland spent a decade punching above its weight as the three biggest banks amassed assets valued last year at nine times the country’s $19 billion gross domestic product. The demise of Iceland’s third-biggest bank has shaken the economy. Stodir hf, an investment firm that owns 32 percent of Glitnir, has filed for protection from creditors.

The government bailed out Glitnir after the bank was unable to secure short-term funding. Glitnir had a deposit-to-loan ratio of about 30 percent, the lowest among Iceland’s biggest banks, meaning it had to rely on money markets for financing.

————————————————————————

Germany makes last ditch effort to save RE holdings company:

Oct. 5 (Bloomberg) — The German government led talks to salvage a 35 billion-euro ($49 billion) bailout plan for Hypo Real Estate Holding AG today after the ailing property lender said commercial banks withdrew their support.

“We will see how we can clean up the mess that has been presented to us,” Finance Ministry spokesman Torsten Albig said in a phone interview in Berlin. “Everyone involved in this is hopefully aware of their responsibilities.”

The government and the Bundesbank have said that Hypo Real Estate, the nation’s second-biggest property lender, is too big to fail. The negotiations to save it occur as the Belgian government today is attempting rescue Fortis, that nation’s largest financial-services company, after a previous bailout also went awry amid the intensifying global credit crunch.

—————————————————————————–

Belgium tries rescue of Fortis bank

Oct. 5 (Bloomberg) — Belgium won’t be forced into a “fire sale” of Fortis assets as it scrambles to rescue the country’s largest financial-services company, Prime Minister Yves Leterme said.

Leterme huddled with key lieutenants today to keep Fortis’ Belgian activities from going under after the failure of an earlier rescue plan forced the Dutch government on Oct. 3 to buy the bank’s Dutch arm for 16.8 billion euros ($23 billion).

“We’re not going to sell Fortis at fire sale prices tonight,” Leterme told VRT television today. “There are other options than selling it to a private partner, even as we will consider any serious bid that can advance Fortis’ future prospects.”

Fortis became a casualty of the global financial turmoil after pouring 24.2 billion euros into the acquisition of ABN Amro Holding NV assets last year just as the U.S. subprime-mortgage market collapsed and credit markets froze.

I’m hearing a local radio ad that I’m wondering if its just local. Its basically a please-buy-a-car-now ad. I’ve NEVER heard a car ad like this. No mention of any specific brand names, car models, or dealers. It sounds like one of those NAR ads…”There has never been a better time to buy a car, prices are down, inventory is plentiful.” It might be a national dealer association ad.

Anybody else hearing this ad?

http://www.hyscience.com/archives/2008/09/bret_baer_on_th.php

(includes video)

Bret Baer on the Freedie Fannie warnings unheeded by the democrats

Oh, btw, the LA County sales data from DQ is in the dead tree edition of the LATimes today. We’re finally starting to see some prices come down in the coastal areas.

susan greene
McCain forum a real bash
By Susan Greene
Denver Post Columnist
Article Last Updated: 10/05/2008 12:59:01 AM MDT

There was a moment during John McCain’s women’s forum Thursday when the crowd went crazy.

Not about something the candidate said. Rather, it was a question from a high-heeled real estate executive that drove the audience to its feet, roaring:

“What do we do about the media?” asked Katie Everett of Greenwood Village.

Attacking the news media is nothing new in politics, especially by those lagging in the polls. Disgraced Nixon VP Spiro Agnew described news gatherers as “nattering nabobs of negativism” and “hopeless, hysterical hypochondriacs of history,” whatever those mean.

The difference this year is that it’s not just campaigns, but also voters throwing spitballs.

“Everyone in my peer group is disgusted with the news media,” Everett told me.

Her own outrage stems from news stories about the sagging housing market that she says have hurt her business. She has pulled hundreds of thousands of dollars in newspaper advertising partly because she says our coverage of declining home values has failed to mention the few neighborhoods that “are doing really great.”

The Republican Party deserves to fade to obscurity - not because it is evil, but because it saw this subprime mess early on and made only feeble attempts to stop it. Back as early as April 2001 the Republicans were concerned about lack of oversight in Fannie Mae and Freddie Mac could cause enormous economic problems ahead.

I wish a quick end to the wussy Republican Party for not being strong enough to attack Barney Frank, Christopher Dodd, Chuck Schumer, et al.

http://www.nypost.com/seven/09262008/postopinion/opedcolumnists/alarms__denial_130763.htm

And although McCain tried to stop the mess before it got worse, he voted for this bailout. He deserves to lose this election.

Is there some hidden agenda within the Republican Party to allow the socialists to win and hasten the economic depression?

sltrib dot com

Utah cities bracing for economic shortfall
The Salt Lake Tribune

Wall Street’s tremors are starting to be felt in city halls along the Wasatch Front.
So city officials, seeing some slowdown in sales tax revenue from the previous year, are taking a hard look at their budgets.
“You’re not going to find any place in the country that hasn’t been affected,” said Roger Tew, a tax analyst with the Utah League of Cities and Towns (ULCT). “This comes on the heels of a period of unprecedented growth in Utah.”

old Bond 007: 60’s secret agent

new Bond 007: High bid of 7 Cents on the Dollar

“Oct. 3 (Bloomberg) — The European Union threatened to re-impose tariffs on shoes from China and Vietnam over the objections of EU consumers, seeking to protect Italian, Spanish and Portuguese producers.”

Here we go!

Anyone hear about any lowball bid acceptance stories recently? Prices in my area (Philly burbs) are still stuck (very little downward movement). There are a couple of homes I’ve been watching to see A) if they sell and B) if they drop their price (no and no). I was thinking of an amount that I would offer were I to be silly enough to play that game (I don’t think I am - just tossing it around in my mind).

Anyway, my offers would be about 75% of asking. Personally, I feel that if someone is desperate to sell, 75% is better than nothing. But I’m not sure what’s actually going on out there in seller/buyer negotiation land.

these kind of articles are probably all over the country now, or will soon be:

gjsentinel dot com (Grand Junction, CO)

Cracked: Grand Valley residents keep close eye on nest eggs

“Saturday Night Live” may not seem like a source for financial advice, but Bill Haggerty said a comedy skit he saw on the NBC show several years ago offered a tip that would help many Americans during today’s economic uncertainty.

In the skit, actor Steve Martin is in an infomercial touting a book titled “Don’t Buy What You Can’t Afford.”

That advice still holds true.

“As a nation, we have forgotten to live within our means,” said Haggerty, an independent financial analyst with Primerica Financial Services in Grand Junction.

In recent days, Haggerty has spoken to Grand Valley retirees and poised-to-retire residents concerned about the state of their retirement funds.

The economic flux has possibly postponed retirement for some residents who have watched the value of their assets shrink. Other residents think there is nothing they can do but hold steady and see what happens.

“The hardest-hit group is people in retirement now who are spending their retirement funds to live,” Haggerty said.

Ralph D’Andrea, 58, planned to retire fully next year.

The full-time geologist and occasional election and computer consultant has saved money in a Simplified Employee Pension Plan (SEPP) for 15 years and has invested and saved for retirement since he started working full time at 22, he said.

But given the current economic situation, his retirement date may have to change.

“Maybe I can pick up a few more consulting jobs and work part-time,” D’Andrea said.

He recently moved half his retirement fund from the volatile stock market into bank certificates of deposit, or CDs, with an interest rate of 3.5 percent.

The move was too late to preserve his entire retirement fund, but “the last thing I wanted to do is lose what I started with,” he said.

He left the other half of his retirement fund in the stock market, which is more lucrative, but higher-risk.

D’Andrea has grown tired of the “roller coaster” ride owning stocks can offer.

“Of course, you do have concerns when you lose $1,000 a day, but it’s not really money, anyway,” said Bob Wilson, 75, who retired in 1993 as a pharmaceutical salesman for Pfizer.

It’s paper until you sell it, he said.

Wilson has retirement from Pfizer — “it’s not extravagant” — and an IRA (Individual Retirement Account). The valuation on the IRA has gone down quite a bit, but Wilson said he’s not worried about it. It’s in the market long term.

“I may make some changes with it when the market stabilizes … I think it will come back,” Wilson said.

Those people who jump at every market point every day, “they are wasting their time,” he said. Now is the time to “hold steady” not yank assets around.

“I’d like to see things stabilize … we could go into a severe depression. But you know it was greed that got us there,” Wilson said.

“I just kind of get angry that there weren’t more rules and regulations against those mortgage bankers,” he said of sub-prime lending.

People were given loans and “they knew they couldn’t pay them back,” Wilson said.

Irresponsible lending and spending has other people of retirement age angered.

“I’ve got no sympathy for people who charge more than they can afford,” said Greg Gnesios, 61, of Grand Junction.

When Gnesios was given shares of Bank of America stock as a gift from his father several years ago, they were worth $10,000.

Their worth has since fallen as low as $4,000 and rebounded to $6,000 a share, last he checked.

“If it had been my money, I would have been apoplectic, but it was a gift,” Gnesios said.

Watching those three shares tumble is as close as Gnesios has come to the stock market in recent years.

Gnesios retired four years ago after a combined 32 years with the National Park Service and the Bureau of Land Management.

He receives a monthly pension check from the U.S. government. His family lives on that pension and the checks his wife, Amy Gibbs, brings home from her part-time job with School District 51.

Gnesios has a mortgage. He is saving for his daughter Lindsay’s college education, but he has not touched the retirement fund he set aside while working with the National Park Service. He hasn’t had to and doesn’t want to.

“We don’t buy a lot of stuff we don’t need,” Gnesios said. “You have to look at your life and ask, ‘What do you need?’ I need to hike and go out and enjoy myself.”

The family’s computer is old. They don’t own flat-screen televisions or iPods. When Gnesios’ car was vandalized, the family adjusted their monthly budget to pay $300 to replace the windshield.

Gnesios has friends who aren’t as fortunate. He has a childhood friend his same age without a retirement fund. He’s got a friend in Pagosa Springs of similar age working a full-time job to make ends meet.

“When I was young I got a job and ended up staying with it and ended up with good benefits,” Gnesios said. “There are a lot of people I worked with who are aging baby boomers making it more difficult than it needed to be.”

It goes back to the point Haggerty saw in the “Saturday Night Live” skit.

“Don’t buy things you can’t afford,” Haggerty said. “It’s so simple and no one does it.”

But for those who want to retire soon, time is not on their side when the market goes down.

“They really need to consult their financial advisers and see where their money is invested,” Haggerty said.

D’Andrea talked to his financial adviser Tuesday afternoon about lower-risk options for half his retirement fund.

“If something changes between now and the end of the year, I’m back in (the stock market),” D’Andrea said. “I’m riding it out with half my money still at risk and some safe.”

Haggerty said the healthiest retirement fund is a diversified one where individual investors aren’t counting on one stock to succeed.

Central banks switching to buying gold. Comments, Professor Bear?

http://www.globeinvestor.com/servlet/story/RTGAM.20081003.wcentbanks1004/GIStory/

There’s like 5 Dyson vacuum cleaners for sale on craigslist in my area.

“Must Sell ASAP! Cash Only!”

Lost In Utah,

have you decided on the motorhome/truck swap yet? Sounded good to me although I personally wouldn’t want to share such a small space with two dogs…

Maricopa County (Phoenix Metro) Notice of Trustee’s Sales

Sep 05 669
Sep 06 1114
Sep 07 2834
Sep 08 7540

Breathtaking…

Students of Gold may want to check out Professor Fekete’s site. He’s posted part 2 of 2:

The Gold Standard Strikes Back. . .
. . .With A 36-Year Lag

http://www.professorfekete.com/

The dollar continues to strengthen, which bodes ill for PMs near term. But I think this may represent one final push up for the US Dollar before it collapses. Right now we are in deflation mode, which I was laughed at for suggesting 1 year ago. While this would normally be bearish for PMs, I see no way out of massive inflation given the actions of governments throughout the world.

What I am watching, and what I EXPECT to see is the following:

Strengthening in the dollar, and weakening in PMs and other commodities near term. This will serve to wash out the weak hands holding gold and silver.

Then a basic feeling that the government attempts to solve the crisis are failing. When this happens the dollar will make a sharp move down, with the PMs shooting up. This should signal the start of a massive move in PMs.

This phase will combine FEAR and GREED as there is a global rush to get out of currencies of just about any flavor. I fully expect countries to ban / confiscate gold/silver, which is why a swiss vault (or deep hole) is a good idea.

So in conclusion, I am watching for a trigger event that sends the dollar sharply lower, combined with a major move in gold/silver.

JMHO

Apologies if this was already posted, but this video is too awesome not to share with you guys. SoCal growth industries…

“Trash Out contractors”
“lawn spray-painter”
“Pool Pumpers”

http://tinyurl.com/4mc8jo

James Grant is on now on 60 minutes. He’s been bullish on gold a long time. He’s commenting on the credit crisis - manufactured on Wall street, a once in 100 to 150 year crisis is ongoing now…Tune in.

credit default swaps =$50-60 Trillion according to Grant….we’re done.

Here’s something that ticks me off, but the ideal solution would be impossible to implement:

http://www.forbes.com/topstories/feeds/ap/2008/10/06/ap5510756.html

State Attorneys General have apparently forced BoFA to renegotiate loans for people who have “mortgages they can’t afford.”

A much fairer thing for the Attorney Generals to want would be to get cramdowns for people who paid too much for their houses–because of inflated prices caused by unqualified borrowers getting financing–and are NOT behind on their mortgages!

We don’t live in a just world.

“BofA in $8.6 billion deal over Countrywide loans: report”

And the part of the story that leads me to believe it will not be a depression, as the tin foil hats would have you believe.

“For borrowers with option adjustable-rate mortgages, the bank will lower loan amounts so that borrowers have as much equity, if not more, than when they took out the option ARM, a spokesman told the paper.”

These people are the main over stimulated consumers that CANNOT help themselves. They will spend this gift as fast as they get it. They are the people that will take a million dollar lottery win and spend every last dime in less than a year.

By the way, the investors of the securities will take part of the cost of this program. You know them, the responsible people that saved and put their money into supposed safe investments.

But the upside to these gamblers that win the equity write down game just add to the lowering of house prices because now they will be able to sell for less than non-equity write down loanmoaners.

Eventually the clowns in charge will learn, There ain’t a dam thing you can do to stop house prices from falling. Every attemp to fix the problem will just lead to house prices falling …and falling…and falling.

Hey Paulson and Heli-Ben, this is for you…ITS THE INCOME STUPID and ITS THE INVENTORY STUPID’r.

http://www.reuters.com/article/ousiv/idUSTRE4950MQ20081006

Um…yeah.
I’m gonna have to go ahead and disagree with you on that gut thing.
You don’t need finely tuned analytical skills to see bizarro reality.
One year, you can buy a decent house close to your present rent because the lower interest rates have put them all above water…
And the next year people are in bidding wars at two and three times for what they used to be worth.
You can see that it is crazy.
You have to trust what your gut is telling you in a situation like that.
What your mom n dad taught you was real.
Not what some professional hack with a vested interest is telling you.

If you agree with me, um, that would be great.

Good Monday morning,

So Paulson nominates Mr. Neel Kashari to head the “Fired and Failed Wall Street Employees Full Employment Plan”.

Leigh, this is the MLEC except this time the taxpayers got stuck with the future losses. lol Oh well, people are stupid. A stupid idea last year and the only plan Mr. Paulson could fathom.

Voz, I would not short any Asian Governments. I short the 2 yr and 10 yr US Treasuries for funding. But I may be like a man jumping off a high rise screaming, “So far so good.”

20 years ago I screamed loudly that the US corporate governance policies were wrong and that we had created a negative incentive for future investment. Now we pay the price.

I need to get some sleep. Night