Bits Bucket For November 2, 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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Massive Effort to Save Mortgages…
The U.S. government has tackled problems in the banking system and credit markets, but thus far hasn’t succeeding in stanching the bleeding of failing homeowners. Economists and government officials agree that the economy and financial markets can’t fully revive until there’s a halt to the decline in housing prices, a phenomenon that is worsened by foreclosures.
“It doesn’t make sense for us to wait” to tackle the problem, said a J.P. Morgan executive, Charles Scharf. “We’ve heard loud and clear and are listening to what some of the thought leaders around the country are saying.” Mr. Scharf runs the retail division, which includes mortgages and branch banking, at J.P. Morgan, the largest U.S. bank in stock-market value.
http://online.wsj.com/article/SB122549543952589677.html?mod=googlenews_wsj
“hasn’t succeeding in stanching the bleeding of failing homeowners.”
If they were really “homeowners” they wouldn’t be failing. They are debtholders. But the government is so stupid and so corrupt they just can’t be honest a single time. But I guess that is why some on this blog like Bernanke. They love their dishonest public figures.
Mole Man,
I think this is your cue to jump in on this thread…
Massive Effort to Save Mortgages…
The linked video in the first minute: “Home sales have stopped.”
I assume this is not bullish. However, given the NYSE behavior lately, it should be good for a 10% rise.
corrupt, yes. stupid,no. they know what they are doing - getting more and more control of ‘the masses’.
“We’ve heard loud and clear and are listening to what some of the thought leaders around the country are saying.”
Did he really say “thought leaders?” WTF?
1984, the Housing Bubble Edition.
Economists and government officials agree that the economy and financial markets can’t fully revive until there’s a halt to the decline in housing prices, a phenomenon that is worsened by foreclosures.
A well defined problem is half solved. These idiots can’t even define the problem properly. Excuse me but I thought that the market participants such as the buyers decide what the house is worth. What some one is willing to pay for the house. I thought the banks were moving towards the old fashion way of lending with down payments, income verifications and affordability etc. So how in the world are they going to stop the price declines?
So how in the world are they going to stop the price declines?
By picking off marginal buyers one house at a time.
So how in the world are they going to stop the price declines?
By picking off marginal buyers one house at a time.
Yes, their magical ability comes from their power to print and borrow the means of exchange and payment of taxes. They can afford to hold onto the REOs as long as it takes, years or decade(s) if necessary. But when the yield curve steepens on their worthless treasury note lies, that power will vanish quickly. Poof! Global leader to banana republic overnight, and hope I get to live to see it. Wells Fargo jumbo rates (see patrick.com) almost at 10%, wait till they get to 15%…or more. You could see 20-80% further haircuts depending on location once the US dollar finally dies.
They don’t have to.
They’ll just keep pretending that their houses are “worth” a fortune and that the banks are solvent while we all end up in food lines as the dollar crashes. In the end, housing will be distributed by cronies based upon connections and one’s ability to return favors, not based upon one’s ability to pay back or loan or otherwise act responsibly.
Interesting. Yesterday, Redfin showed a big spike in the number of JP listed bank-listed REOs on the MLS for San Diego Cty. On every single one that I looked at the asking price was back to near-bubble pricing. For example: MLS #2925695. Looks like the trustee sale price was 597K. Listing price? 810K! I wonder if this really is the start of a massive effort to prop up home prices. Even in pricey coastal markets. Ultimately, it won’t work. But over the next year or two it might put in a temporary bottom (at still inflated prices). I can’t say how depressing this is. Of course, there’s no way the bank would be listing these places at bubble prices if not for the Gov’s ownership stake and backstop provided by TARP.
Yes, new listings often have bubble-like prices. Not sure what their point is, but there it is…
“The move also suggests that banks are realizing they can improve the value of their loan portfolios through mass modifications rather than foreclosures, which tend to produce larger losses. Until now, mortgage holders have been reluctant to renegotiate loans or have been doing so one-by-one, a time-consuming process.”
Allow me to translate: “We’re not going to bother with taking the time needed to determine if the debtor we’re bailing out is someone who might, arguably, be deserving of some help or a fool who extracted every penny of equity out of their house to fund their lavish lifestyle.”
Additionally, their “improvements” are likely temporary.
They lenders have shown an extreme aversion to reducing principal balances. They are modifying most of these loans back into “toxic” loans via 5-year hybrid ARMs…here we go again. Back to waiting these idiots out.
Until we actually get buyers who can PAY OFF their mortgages under the terms of their current loans, we will NOT see the bottom of this housing cycle.
Not sure why the PTB cannot understand this.
They can understand it just fine.
The goal is twofold: keep people trapped in debt, and keep their balance sheets looking good by showing plenty of “valuable” unaffordable houses.
Selling decent homes at affordable prices to people who can pay them off does not achieve debt-serfdom nor does it make the bankers rich, so it will never happen.
RE: “So then he sent me an appraisal with a picture of the same house but this time with the right number on it,” Ms. Cooper recalls. “I looked the address up in our system and could not find it. I called the appraiser and said, ‘Please investigate.’ ”
The appraiser came back, reporting that a visit to the California property had found everything in order and in agreement with the original appraisal. “I was so for sure that it was fraud I wanted to get on an airplane,” Ms. Cooper says.
The $800,000 loan was approved, but not by Ms. Cooper. Six months later, it defaulted, she says. “When they went to foreclose on the house, they found it was an empty lot,” she recalls. “I remember clear as day this manager comes over to me and asks, ‘Do you remember this loan?’ I knew just what she was talking about.”
LMFAO…Here’s an example of your National Appraisal Standards Board making sure state licensing enforcement agencies were keepin’ tabs on the quality of their applicants.
All rotten right to the core.
Multiple this case X hundreds of thousands.
Ain’t no solution to this horror show.
So multiply these practices by thousands of other banks and lending groups and what do you get? A steaming pile that these crooks are trying to pass off.
Was There a Loan It Didn’t Like?
“At WaMu it wasn’t about the quality of the loans; it was about the numbers,” Ms. Cooper says. “They didn’t care if we were giving loans to people that didn’t qualify. Instead, it was how many loans did you guys close and fund?”
Ms. Cooper, 35, was laid off a year ago and is still unemployed. She came forward to discuss her experiences at the bank in order to help shareholders recover money from WaMu executives.
http://www.nytimes.com/2008/11/02/business/02gret.html?ref=business
YUP got dat rite bee honest and you get written up so they can use it against you when applying for another job.
Hopefully someone would want an honest fraud detection loan officer.
Glad for the extra hour of sleep.
Hopefully the cutting away that extra one hour of sunlight each day might help solve the global warming problem.
I am afraid it is a zero sun game…
It also means this lousy presidential campaign got an hour longer.
Yuck.
Hours d’œuvre
It was awesome!
The bars kicked me out one hour later.
I feel awful now, though! I went to bed at 530 am after having breakfast/dinner.
My dog woke me up at 830, so I really had 3 hours of sleep two days in a row.
Ugh!!!
Livin’ the dream!
Haven’t done that in a long time… sigh… gettin’ old I guess.
Brett, you don’t live in a downtown condo, do you?
I live very close to downtown Austin, TX in a 1bd/1br condo in an upscale neighborhood.
But I was lucky enough to find a desperate California investor that leased me the unit for just 900 bucks a months.
He couldn’t sell it to anyone (he wanted $300/sq ft), so he needed someone to lease it and give him some money.
I live in a condo (1br/1ba) in an upscale neighborhood very close to downtown in Austin, TX.
A California investor couldn’t sell it (~$300/sq ft), so he needed someone to rent the unit desperately (just under 900 bucks a month)
Brett, do you live in San Diego?
By the way SFgal…Thanks for the San Mateo rent info…
You’re welcome scdave. The rents are slowly coming down.
Having to reset the clock was nice—probably not as satisfying as having one’s mortgage reset but I’ll take it.
Since everyone is de-leveraging, I decided to leverage up. I had purchased my house in 1993 (paid off in 1999) and never had any debt of any type, ever (always paid off my CC, always paid cash for cars, etc). 6 months ago I opened a HELOC on my house because at the time I was thinking of buying a laundromat, but the deal fell through. The HELOC is at Prime - 1%, which is 3% now. Last week I emptied out the HELOC to the tune of almost $400K. I went to couple of other banks and got CD’s paying a yield of 5%, for a spread of 2%, so now I am making $8,000 a year for doing nothing. And with US economy in the toilet for a few years to come, the Prime rate may go even lower, and with housing values still falling might as well let it make some money for you in the meantime. Also in case Shiela’s HELOC bailout plan becomes reality, maybe I will benefit in some way somehow. Maybe the bailout will be so generous that even though I have assets exceeding the amount owed, I can still qualify for a bailout.
If you can’t stop them, may as well join them, right? Why pay all the taxes to bailout other people all the time? Might as well jump into the pool and stick your hands out.
Maybe it’s just me, but…
I hate to read premature financial obituaries.
dude,
You had a paid-off house and were on easy street, what were you possibly thinking helocing $400 large out of it, with a max gain of $8k a year and a max pain of $400k?
What the “max pain” scenario? He still has the 400K in cash. He can just pay the MTG off again if he so desires. I think it’s an excellent idea, and something those of us on the board should do (and expose as per my post below) to show what a sham this bailout really is.
I dunno. With $400K invested in FDIC-insured accounts, I’m not so quick to find a flaw in his move.
Money-back guarantees are a dime a dozen nowadays…
RE: Money-back guarantees are a dime a dozen nowadays…
And shit happens when you least expect it.
I like it. I agree there is risk in a bank collapsing or something like that, but I think the risk is minimal with the govt gauranteeing everything.
So he gets an 8k kicker (which could go up as rates increase) and might get bailed out of some portion of the loan. Some risk is involved but if you got the cajones, I say go for it.
Nice move….Make sure the 400k is FDIC hedged and read the fine print on your HELOC for any call provisions…
I knew I was going to get a reaction out you faster than anyone else.
This is what’s called a guaranteed positive carry “trade” and if you don’t think FDIC will just print all the dollars it can to make sure banks don’t fail, then this is the trade for you. Typically consumer loans should never cost less than yields on savings and CDs, after all that’s how banks make money, pay less and loan more. But in this crazy and sometimes upside down environment, that isn’t always true. The 2 years CD will get me $16K before taxes and if FDIC does fail for some reason, that means doomsday for the US financial system and I will just stop paying the HELOC altogether and by the time they come to take my house in such a doomsday scenario, I am probably dead by then anyways.
I’ll send flowers for the wake, just inform me of your address…
Your idea strikes me as perhaps the dumbest investment scheme i’ve ever heard of.
All for a crummy 2% return…
>Your idea strikes me as perhaps the dumbest investment scheme i’ve ever heard of.
Really? Even dumber than buying several condos in Miami in 2005-2006 for “investment purpose”? Even dumber than buying a house with optional ARM because of tired of “throwing away money” on rent?
My idea is “at most” as dumb as buying gold bars & coins and taking them to a 3rd world country for under-ground burial.
Every man has his price @ which his common sense can be bought off, and 2% appears to be what it took, to take you to the cleaners…
I think this is a good idea as long as the early withdrawal penalties on the CD’s are not more than the interest you can possibly earn. But the one thing to consider is the tax implications that will eat part of your return.
You can write off $100,000 of the HELOC (in this case 25%) on your schedule A. The law allows the interest on up to $1,000,000 in acquisition debt to be deductible, but only the interest up to $100,000 on money pulled out of the house UNLESS you put the money back into the house, i.e. a new second story that costs $250,000 in which case it is all deductible.
So you will get an approximately $3,000 write off (which only helps if you do itemized deductions) to offset $20,000 in income. At a 25% Fed rate and an 8% (guessing on the percentages here) you get $990 back but pay $6,600 in additional taxes, so $5,610 of your “gain” is lost. If you are in a higher tax bracket you lose more and in a lower less. Also, be aware of AMT because you may lose all benefit if your deductibles are too high and disallowed.
I’m not saying don’t do it, just make sure you are keeping track of the true benefits and when it tips against you (because I can’t imagine the 3% will last too long) you get out. Best of luck!
Thanks San Diego RE Bear. Actually I will just deduct the HELOC interest expense to offset my CD income under “Investment interest expense” on 1040. After all I used the HELOC to get the CD to produce taxable interest income.
> if you don’t think FDIC
Sorry I mean to say “if you think FDIC”.
I was wondering about that very sentence. Thanks - that makes sense now.
I guess I would be in a position to give this a go too, but I’m a chicken. Even so, your actions will help force events - and that’s ok by me.
Sign me up…Sounds like a “No Brainer”…
Me Too! And, part if not all of the interest on the HELOC could be used to offset any income tax on the $8000
per aladinsane…
—Every man has his price @ which his common sense can be bought off, and 2% appears to be what it took, to take you to the cleaners…
No.
This is, rather, brilliant. He was not taken to any cleaners.
This is NOT the “take a HELOC on paid-off house, and go on vacation, then be screwed having to pay back HELOC with non-existent cash.
Rather, he took 400k in cash (let’s imagine his salary is 40k) and put it in FDIC account, earning money on a lump sum 10x his salary, giving 8k of net income or boosting his salary 20% (or less if he earns more). Either ay 8k per year to play with for NO risk.
If bank calls in the HELOC (if it can even do that), he cashes his bank accounts and pays off.
-evild.
Cougar, you are an astute man and a tough thinker, and I get a lot out of reading your posts. The only potential flaw I can see in your position is that prime is not fixed and static. What goes down, could go up. I do not remember prime being locked to Fed rate, and even if it were, Berspanky could reverse course if it helps his pals. I’ll keep my fingers crossed for you, and I don’t mean that in a snide way. Wish I had the 400 option to consider doing the same!
I won’t be surprised if he can put the money in the same bank that gave him the HELOC, at 5%. That way, even the risk is mitigated.
Move to money offshore (so it can’t be found) then apply for the bailout. After you get it, call every big news station and offer to tell your story (and give back the money). You’ll do us all a HUGE favor by exposing this bailout for what it really is, a money drop on the stupid.
But they may throw my behind in jail for hiding $$$ off shore… pretty sure Shiela will make me sign some document saying I don’t have any $$$ left thus truly deserving of a bailout.
You have to declare off-shore accounts every year as part of your 1040 if you have over $1500 of interest or dividend income. See here (pdf file):
http://www.irs.gov/pub/irs-pdf/f1040sab.pdf
Then you may have to fill out form TD F 90-22.1 See here (also a PDF):
http://www.irs.gov/pub/irs-pdf/f90221.pdf
Please note that no one cares much if you don’t know what the rules are or if the H&R Block preparers forgot about them.
As for the loan thing? I bet it trashes your credit rating. I hope you don’t have to buy car insurance or anything like that while you play your arbitrage game.
IRS, Justice Target Undisclosed Assets In Swiss Accounts
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/31/AR2008103103727.html?hpid=sec-business
It will lower my credit somewhat, but I am not planning to take out any loan anyways. Besides, with paying off the HELOC overtime it will actually get my credit even higher, which is close to 800 before I undertook this.
couger91 …I don’t know if you know that the FDIC increase to 250K on insurance is only good until the end of 2009 . At the end of Dec. 2009 the Powers are going to make a decision on keeping the 250k increase on FDIC or not . The original purpose of the measure was to stop Bank runs that were starting to happen . I wouldn’t put more than 100k in any bank if you plan to go beyond
December 31,2009 with your term .
I know, that’s why I have joint accounts.
I was thinking of similar arbitrage. How did you manage to insure your money through FDIC? Did you have to divide the money to 100K chunks.
Get a joint account with POD benefits. That will extend your coverage by a lot per FDIC rules.
Why don’t I see the word “taxes” anywhere in this thread? Have you thought your cunning plan all the way through? I suppose we’d need to know your yearly income/taxes to truly figure it out.
Perhaps he needs to go see Joe the Accountant?
With how quickly the rules are being changed he may soon need to visit Joe the Bail Bondsman.
>Why don’t I see the word “taxes” anywhere in this thread? Have you thought your cunning plan all the way through? I suppose we’d need to know your yearly income/taxes to truly figure it out.
Interested paid on HELOC for the purpose of CD investment is 100% deductible under both 1040 and AMT under “Investment interest expense” line.
No risk no rewards.
This strategy does not appear to have any flaws. Like Suzy ANNOYING Orman would say “You have been approved.” I like it
The only flaw I can see is a 1998 mindset, that doesn’t realize we are in the midst of financial tumult, here in late 2008, and old rules of safe investing are turning into not-so-well-thought-out new rules, fraught with danger.
You are on the money. I did not see it that way. Good point
>that doesn’t realize we are in the midst of financial tumult, here in late 2008
Oh I am fully aware, I just chose not to believe that US Treasury for some reason would just chose to let the entire banking system go without printing $$$ like there is no tomorrow.
If you believe that is going to be the case, perhaps you can explain why US Treasury would let FDIC fail instead of printing more $$$ to cover any shortfall?
Can I ask what bank gave you a 3% HELOC?
“Can I ask what bank gave you a 3% HELOC?”
Ditto.
How long are you locked into the CD’s? Did you read the fine print? What happens when interest rates go to 14% in eight months?
Lad is so right on this. You’re playing two-dimensional chess on a four-dimensional board. YIKES.
>What happens when interest rates go to 14% in eight months?
Yeah my bet is that they leave the Fed Funds rate at 1% or lower for an extended period of time, even longer than the 2 years from 2002-2004, because this time the economy will be in the toilet for years to come.
But in any case, I have some $250K CDs coming in maturity in the next 9-12 months anyways, plus I have more cash parked in MM. Don’t think this is an issue even by some miracle Fed Funds rate shot up by more than 2% in a few months of time.
Ever heard of risk-to-reward ratios?
>Ever heard of risk-to-reward ratios?
Yes, after all I did get 3.94 GPA in my Finance MS. Your assertion that I am only earning a 2% return on $400K and thus a measly return on investment is wrong. It is only 2% return if I was using my own money and thus not earning return on that $400K in other ways. I am making 2% return on someone else’s money while all of my money are invested in other things unrelated to the 2% return. The 2% return is earned using someone else’s money collaterallized by a currently depreciating asset (my house). Imagine this, you “put” your house to someone else while earning a positive carry spread.
Sovereign Bank. Now that type of deal probably will be hard to find, given now bank is ever more stingy.
I think those rates no longer exist. If a dumb ass bank lets you borrow at that 3% and another dumb ass bank gives you 5% I say more power to you. Short of a total meltdown if conditions change you will be able to pay off your HELOC before it bites you.
Cougar,
Your plan is excellent. Good luck to you!
As you correctly state, if all hell breaks loose, it doesn’t matter what the FDIC covers because NOBODY will be expected to pay off their debts if FDIC fails, IMHO. It will be utter chaos, and a free-for-all.
You win.
The collapsing bubble’s footprint is clearly visible in the graphs that accompany this article.
History holds few clues to recovery timing
By Roger Showley
STAFF WRITER
November 2, 2008
If the past is prologue, today’s three-year housing slump should have one year to go before prices flatten out and begin to move up smartly once again.
That would match the duration of the 1990s housing slump, when San Diego County’s median home price peaked at $170,000 in mid-1991 and took a little over four years to fall to a low of $158,000 at the end of 1995. This time, the region is almost three years into a slump that followed a market peak at $515,000 in late 2005, according to MDA DataQuick.
But the 2000s aren’t behaving like the 1990s – or the 1970s, ’50s or ’20s, for that matter.
Instead, the current slump reminds historians of the 1880s when a huge railroad-propelled boom was followed by an equally dramatic bust that left housing languishing for more than a decade.
“People could not leave fast enough,” wrote the late historian Elizabeth MacPhail. “Many lost everything. Others sold just enough to get out of town.”
If one wants a peek into the darker side of American history - then the robber baron/railroad era is a great place to start. Those robber barons wrote the playbook for today’s hucksters and that episode offers a great primer on how to cope with/understand today’s events.
Seriously, they’d come to town, promise a railroad, get the farmers and businesses to front the money, then take that money back east where they all too frequently lost it all in some totally unrelated venture/scheme.
After reading that stuff one wonders why anyone would trust total strangers on Wall Street with anything more than a day trading account.
If one wants a peek into the darker side of American history There never was a time when everyone was trustworthy, loyal, courteous, kind, etc. Scamsters & cunning evaders have always been with us & will always be with us. That’s one reason for government regulations.
I found a gem of a story in a book about the history of US currency. In Michigan’s early days, the state regulated the operation of its banks, since the feds didn’t. Banks issued notes backed by gold reserves, which amounted to a stash of gold coins in a box. Banknotes so issued varied in size, value (discounts were applied for doubtful banks, and periodicals were circulated to quote banknote prices), and the color of their ink (hence the term “look at the color of his money.”) It was theoretically possible to show up at a bank, present one of its notes, and receive gold money in exchange for the note. Travel in those days was very difficult, especially inland, and notes circulated far from the bank’s locations. Michigan would send bank regulators from one state bank to the next, to inspect the books, and to verify that the bank had sufficient gold coins on hand to back up the notes it had issued. Scheduled visits by regulators to state banks were known to the bankers. The solution over-leveraged banks made up was ingenious although obvious: they simply moved the box of gold coins from one bank to the next on the regulator’s schedule, just a day ahead of his arrival. The same small supply of gold was counted again and again and again as the reserve of many Michigan state banks.
Here’s an O. Henry story along those very lines…
Written about 100 years ago~
http://www.literaturecollection.com/a/o_henry/108/
Enjoy!
I don’t live in California, nor have I ever lived there.
Additionally, I’ve never owned property in California.
What jumps out at me is the citation that SD housing prices in 1991 topped out in 1991 at $170,000 and four years later, the average home was worth $158,000.
That’s what - a 7% loss? THAT’S the big early 1990s housing bust that Californians frequently cite as being indicative of some sort of past Armageddon?! What a joke. That’s hardly some catastrophe.
If that notion is true statewide, the La La land mindset effects everyone living out there, not just those with rose-colored glasses.
This is the big one, once in a lifetime. We don’t have the income to pay the debt. It’s all crashing down, down, down. For a while, people used debt to pay debt thinking it was income. We need to create more income. The model is broken. It was a debt-trap.
“The model is broken.”
No high level policy makers have noted this, so far as I am aware. In fact, all the hair-of-the-dog stimulus programs seem narrowly focused on respiking the bubble punch bowl, hardly an acknowledgment that there was anything wrong in recent years.
That’s why they are doomed to fail.
And that’s why prices go back to 1983 (plus all wage-inflation) in this cycle.
The debt model of rolling debt into more debt from 18% to 1% is over. The gig is up.
Why do you say 1983? What’s the significance of that year in particular?
i think i get it now.
thanks.
One thing, if the two sources of inflation are the Fed and fractional lending and the lending portion is unwinding, then why don’t prices go back to a point starting at 1983 adjusted for the inflation created by the fed creating new money which is not going to unwind?
Eudemon, don’t believe the numbers. That 7% is voodoo economics. I had a friend down south that lived in California during that time. He said he lost $40,000 on a house he bought and held for about 4 years. I know he didn’t pay over $200,000 for the house.
Remember how malleable statistics are. One of the current measures of home price drops came in at 5% recently. That is a farce. I’m seeing 30 percent drops in my hometown where some people say there was no housing bubble. Liars quote statistics. Honest men quote real events. My buddy losing $40,000 is what I believe, not some silly 7% number pulled from thin air.
I remember the late 1980’s-early 1990’s real estate bubble in L.A., just from my memories of it, it seemed like homes in the SFV went up 50% in just a few years.
Houses were pretty much unsalable from 1991-93.
Dead.
late-2008 = late-1990 (in previous cycle.)
You aren’t going to be able to get rid of them now.
Sure you are. You just won’t get the price you want. The speed at which prices of Foreclosures are going down in my hometown is almost mind boggling. They have gone from a drip to a flood. The rest of the “owners” surely don’t want to face that fact. Twenty percent of listings are foreclosures.
Anything can be sold, at the right price. The sheep won’t like how much wool they are going to have to throw into the deal to make it happen.
Because there are no incomes to support it at that level.
Ultimately incomes determine rents, and rents determine prices.
That is so 1970s.
Just yesterday, someone (friend of friend) complained that he’s started seeing busted car windows in Queens and he hasn’t seen that since the 70’s.
Messiah to City: “Drop Dead”?
Most of the rest of the country wishes Wall Street would drop dead, but all the powers that be heard was:
Drop debt.
Faster:
Note to myself…don’t leave any boxes in cars …..
Note to all you Noo Yorkaz GET FULL GLASS COVERAGE on your car….it will be the best insurance money you ever spent.
———————————————-
Just yesterday, someone (friend of friend) complained that he’s started seeing busted car windows in Queens and he hasn’t seen that since the 70’s.
Messiah to City: “Drop Dead”?
A friend just had the catalytic converter sawed out from under his car that was parked on the street in front of his townhouse. Presumably it was taken for the platinum. This was in a nice area of Santa Clara, CA.
Both Santa Clara and San Mateo counties have a serious date with destiny with the imploding bubble.
Too many people betting on gentrification of extraordinarily marginal neighborhoods.
This cycle is gonna be vicious and sink all those “hopes” and “dreams”.
Assuming 9% closing costs selling, you lose 40K on a 260k house after a 7% price drop.
What aladinsane said…
My parents’ ranch-style house on 1/3 acre with swimming pool, good neighborhood, etc. lost about 40% from peak in LA (SFV).
The drops in the late 80s/early90s bubble ran around 30-50%+, depending on the area.
This bubble is much, much worse.
Agree with FPSS on the 1983 levels (though I’ve always said 1982). Look at any credit chart and asset price chart over the decades. Everything has a pretty regular rhythm (lots of ups and downs, many flats) until 1982 when credit just busts out (technical term there). IMO, what we saw from 2001-2007 was the hyperbolic, blow-off top of the credit bubble that began in 1982.
I did a significant development that I completed in 1989 just in time to miss the 1991 recession….I did nothing until 2004 when again I started and completed a fairly large development..I thought the timming was right given three years had passed since we started into the 1991 recession….It came to market in the fall of 04…It took me a full year to get out…I did not lose my a$$ but it was not a productive venture and it was very stressful…Point is; you never know how long these cycles will take to play out…My timming was wrong in 1994…Give me good timming over good smarts any day…Good timming can make you look awfully smart
“Good timming can make you look awfully smart”
So can good spelling.
LOL
Yeah….Sentence structure and spelling are not the strong suit of this 70’s “High School Grad” even though I usually go to the word processor/spell check before I post just to limit the damage…With that said, I don’t get paid for my accurate spelling
Aaah, the fatal mistake of ignoring what you can’t observe as irrelevant (cue Bastiat or Henry Hazlitt!)
You don’t know how many people you turn off professionally by that, and you can’t measure it either.
Sloppy resumes always stand out, for example.
The War Prayer, by Mark Twain
It was a time of great exulting and excitement. The country was up in arms, the war was on, in every breast burned the holy fire of patriotism; the drums were beating, the bands playing, the toy pistols popping, the bunched firecrackers hissing and sputtering; on every hand and far down the receding and fading spread of roofs and balconies a fluttering wilderness of flags flashed in the sun; daily the young volunteers marched down the wide avenue gay and fine in their new uniforms, the proud fathers and mothers and sisters and sweethearts cheering them with voices choked with happy emotion as they swung by; nightly the packed mass meetings listened, panting, to patriot oratory which stirred the deepest depths of their hearts, and which they interrupted at briefest intervals with cyclones of applause, the tears running down their cheeks the while; in the churches the pastors preached devotion to flag and country, and invoked the God of Battles, beseeching His aid in our good cause in outpourings of fervid eloquence which moved every listener. It was indeed a glad and gracious time, and the half dozen rash spirits that ventured to disapprove of the war and cast doubt upon its righteousness straight way got such a stern and angry warning that for their personal safety’s sake they quickly shrank out of sight and offended no more in that way.
Sunday morning came – next day the battalions would leave for the front; the church was filled; the volunteers were there, their young faces alight with martial dreams – visions of the stern advance, the gathering momentum, the rushing charge, the flashing sabers, the flight of the foe, the tumult, the enveloping smoke, the fierce pursuit, the surrender! – then home from the war, bronzed heroes, welcomed, adored, submerged in golden seas of glory! With the volunteers sat their dear ones, proud, happy, and envied by the neighbors and friends who had no sons and brothers to send forth to the field of honor, there to win for the flag, or failing, die the noblest of noble deaths. The service proceeded; a war chapter from the Old Testament was read; the first prayer was said; it was followed by an organ burst that shook the building, and with one impulse the house rose, with glowing eyes and beating hearts, and poured out that tremendous invocation:
“God the all-terrible! Thou who ordainest, Thunder thy clarion and lightning thy sword!”
Then came the “long” prayer. None could remember the like of it for passionate pleading and moving and beautiful language. The burden of its supplication was, that an ever-merciful and benignant Father of us all would watch over our noble young soldiers, and aid, comfort, and encourage them in their patriotic work; bless them, shield them in the day of battle and the hour of peril, bear them in His mighty hand, make them strong and confident, invincible in the bloody onset; help them to crush the foe, grant to them and to their flag and country imperishable honor and glory – An aged stranger entered and moved with slow and noiseless step up the main aisle, his eyes fixed upon the minister, his long body clothed in a robe that reached to his feet, his head bare, his white hair descending in a frothy cataract to his shoulders, his seamy face unnaturally pale, pale even to ghastliness. With all eyes following and wondering, he made his silent way; without pausing, he ascended to the preacher’s side and stood there, waiting. With shut lids the preacher, unconscious of his presence, continued his moving prayer, and at last finished it with the words, uttered in fervent appeal, “Bless our arms, grant us victory, O Lord our God, Father and Protector of our land and flag!”
The stranger touched his arm, motioned him to step aside – which the startled minister did – and took his place. During some moments he surveyed the spellbound audience with solemn eyes, in which burned an uncanny light; then in a deep voice he said:
“I come from the Throne – bearing a message from Almighty God!” The words smote the house with a shock; if the stranger perceived it he gave no attention. “He has heard the prayer of His servant your shepherd, and will grant it if such be your desire after I, His messenger, shall have explained to you its import – that is to say, its full import. For it is like unto many of the prayers of men, in that it asks for more than he who utters it is aware of – except he pause and think.
“God’s servant and yours has prayed his prayer. Has he paused and taken thought? Is it one prayer? No, it is two – one uttered, the other not. Both have reached the ear of Him Who heareth all supplications, the spoken and the unspoken. Ponder this – keep it in mind. If you would beseech a blessing upon yourself, beware! lest without intent you invoke a curse upon a neighbor at the same time. If you pray for the blessing of rain upon your crop which needs it, by that act you are possibly praying for a curse upon some neighbor’s crop which may not need rain and can be injured by it.
“You have heard your servant’s prayer – the uttered part of it. I am commissioned of God to put into words the other part of it – that part which the pastor – and also you in your hearts – fervently prayed silently. And ignorantly and unthinkingly? God grant that it was so! You heard these words: ‘Grant us victory, O Lord our God!’ That is sufficient. The whole of the uttered prayer is compact into those pregnant words. Elaborations were not necessary. When you have prayed for victory you have prayed for many unmentioned results which follow victory – must follow it, cannot help but follow it. Upon the listening spirit of God the Father fell also the unspoken part of the prayer. He commandeth me to put it into words. Listen!
“O Lord our Father, our young patriots, idols of our hearts, go forth to battle – be Thou near them! With them – in spirit – we also go forth from the sweet peace of our beloved firesides to smite the foe. O Lord our God, help us to tear their soldiers to bloody shreds with our shells; help us to cover their smiling fields with the pale forms of their patriot dead; help us to drown the thunder of the guns with shrieks of their wounded, writhing in pain; help us to lay waste their humble homes with hurricanes of fire; help us to wring the hearts of their unoffending widows with unavailing grief; help us to turn them out roofless with their little children to wander unfriended the wastes of their desolated land in rags and hunger and thirst, sports of the sun flames of summer and the icy winds of winter, broken in spirit, worn with travail, imploring Thee for the refuge of the grave and denied it – for our sakes who adore Thee, Lord, blast their hopes, blight their lives, protract their bitter pilgrimage, make heavy their steps, water their way with tears, stain the white snow with the blood of their wounded feet! We ask it, in the spirit of love, of Him Who is the Source of Love, and Who is the ever-faithful refuge and friend of all that are sore beset and seek His aid with humble and contrite hearts. Amen.”
[After a pause.] “Ye have prayed it; if ye still desire it, speak! The messenger of the Most High waits.”
It was believed afterward that the man was a lunatic, because there was no sense in what he said.
–
Goldman Sachs takes $12B Bailout, Hands out $14B Bonuses
http://www.dailymail.co.uk/news/worldnews/article-1081624/Goldman-Sachs-ready-hand-7BILLION-salary-bonus-package–6bn-bail-out.html#fuck_mccain_obama
From a Swiss friend who visits frequently and brings chocolate (In a world full of financiers — In 2005 he worked in Simi Valley and see lot of people with Countrywide badges during lunch; then he moved to Zurich and would see lot of people during lunch with UBS badges): “Good investment ! Now the money can trickle down to the poor people and jumpstart the economy!”
You got America all wrong. Trickle Up Poverty of GW Bush replaced the Trickle Down Prosperity of Reagan, without any fanfare. It will take few more years for the poverty to trickle up to the level just below the Goldchains & Silverknives of America. That is where it is supposed to stop, by design.
Nothing in American finance and wealth concentration is accidental. It is all premeditated. Crooks of Wall Street knew exactly what they were doing and to whom. And the proof is in the pudding.
Jumpstarting Wall Street Crooks is not going to jumpstart the US economy. It is going to drain the batteries! Think about the USG and the Fed with dead batteries!!
Jas
PS: His reply: “Even I still like America I know what’s going on behind the scenes and I am not at all surprised like other people I know. Jas, you opened my eyes of being critical what people say and think, I see propaganda everywhere now… BTW, we had 1 feet of snow some days ago within one night, highest now fall in October since 1938.”
Exactly right, Jas.
Anyone looking forward to paying higher state and local taxes in the face of collapsing public services to pay for bubble-era deals that traded saving (and popular politicians and happy interest groups) in the short run for disaster today?
http://www.nytimes.com/2008/11/02/business/02global.html?_r=1&hp&oref=slogin
Looks like the big hit in this economic cycle will happen in next year’s first quarter.
my county has a dept of wymin’s affairs , plants trees etc
they need some collapsing
Yeah! Get rid of them women and trees! Shucks, who needs them, anyway? Huh? Thass right!
Yep WT….The terminator and the lemmings in Sac. have “no clue” how bad the 08-09 budget deficit is going to be…I don’t think they want to know….
Higher state and local taxes? No problem. Savings bond interest and other treasuries are not taxable at the state level.
If I was a permanent resident of California I’d only have a Roth IRA in equities, treasuries, savings bonds, gold, and perhaps AAA California municipal bonds. Then I’d earn a modest income selling books at Barnes and Noble…
“… and perhaps AAA California municipal bonds.”
You have a great sense of humor.
What’s the difference between AAA California municipal bonds and money market funds…
Confidence?
One’s nearly risk free and the other isn’t.
Risk…
What an interesting word, it used to be quantifiable.
One’s risk free and the other is free risk.
SNORT.
ROTFLMAO!!!
Apparently, even I just lost $8 through some puny sweep account being in a “break the buck” MMA (paying $0.93/$) at the wrong time.
Talk about adding insult to injury. The amount of crap I will have to page past to find out when I get my $8 back (brokerage company pledged $33M to pay back the 3 cents) will be fairly large, judging from the first 3 breathless communiques.
Now I can’t afford that hotdog I was going to buy while watching the crisis unfold from the cheap seats
Why on earth would a resident of CA put money in a Roth IRA (tax protected) in CA munis, the primary appeal of which is that they are free of local, state and federal taxes (and pay a lower return because of it)? That is totally dumb.
thx WT
-
This is insane!
-
The article that WT posted is very, VERY good.
It was good. I enjoyed how the CEO bailed with $150 million to his farm in Spain.
So Cal update from Redondo Beach
-I work for the largest custom cabinet company here in the beach area (Manhattan Bch, Hermosa Bch & Redondo Bch). We do a lot of work in the Palos Verdes area, Pacific Palisades, Malibu etc.
- Work has generally been slow. However, I finally picked up one of Donald Trumps houses. It is in Beverly Hills and I am scheduled to meet with him next Saturday morning at the job site to review the final designs. I never take Saturday appointments, but I figured that I would take a chance on this one.
I was at his personal home about a month ago to inspect the cabinet stlye that he wanted at the new project. It was nicely furnished and not over the top.
Since I am now a subcontractor for him - I will simply refer to him as Mr Trump (following the lead of his employees).
cool- congats
Helpful hint: Don’t stare at his hair.
‘Helpful hint: Don’t stare at his hair.’
That’s a good hint. But you might not be able to help yourself, that pelt thingie is so fascinating. Well, if you do accidentally stare at his hair, don’t let your face contort into a rictus of horror and pain.
The rule for dealing with the original J. P. Morgan a century ago was, “Don’t stare at his nose.”
Whatever you do, don’t try to free the dying squirrel stapled to his head. Feeding it is ok.
Got Popcorn?
Neil
“Helpful hint: Don’t stare at his hair.”
I would also be very careful about smoking around it. He must use an amazing amount of flammable chemicals to keep it in that position.
Have you heard of the concept of: Please pay in cash!
“I’m Donald “Pucker Lips” Trump and I’m a financial genius…buy my books & condo’s and live like me”
Make sure you have an ironclad contract with Trump. I would worry about getting paid. Good luck. Bang him pretty hard on the price.
RE: Make sure you have an ironclad contract with Trump. I would worry about getting paid.
Yup-Recent WSJ article said he’s curently $400mil to the down side on whatever tower thing he’s doin’ in Chi-Town at the moment.
I would prefer to be paid in cash upfront, never mind the iron clad contracts. Contracts are being broken right and left these days.
“Bang him pretty hard on the price.”
I agree. Fleece him like there’s no tomorrow.
If you would like to see some of SoBay’s work, just pull up a few of the neighborhoods he mentions on Redfin and look at the kithens in some of these multi-million $ properties. Oooohhh, nice work SoBay, very nice. Wait a minute, why are these properties sitting on the market for 90+ days with steadily decreasing prices?? Everyone wants to live here, I don’t understand…LOL. Good luck SoBay (from Hollywood Riviera).
- Judicious1
One thing I have learned from working with the overly rich is that they ALWAYS…ALWAYS find a problem at the end of the job so they can try not to pay the final bill. Be careful with this pig Trump. It is a game with them and use it to get an extra discount.
The debt-trap economy is broken. The days of borrowing from and refinancing your house to pay for everyday needs are gone. Rate cuts and quantitative easing will not work. It’s time for a new model. How do we escape the debt-trap economy?
“How do we escape the debt-trap economy?”
By going to a cash economy?
Significantly raise margin requirements.
It’s harder to lose phantom *money* that can’t be borrowed then leveraged so easily.
By going to a cash economy?
2 year notes, 5 year notes, TIPS, gold.
“How do we escape the debt-trap economy?”
A Obama win with a imeadiate selection of Paul Volker as the Fed Chair…That should do it….Buckle up and hold onto your a$$….No I mean your cash..:)
I’m a GOPer but that would be worth it, if he put Volcker back at Fed. 14% CD rates - yessss!
14% yields would delay any house buying plans for me.
Wow, I hadn’t thought of that (Volcker) — I’m always thinking of Obama as connected with Summers and Rubin — Volcker would be my dream. Wow. High CD rates would suit me just fine.
In a very unpopular way… You work and save.
Blasphemy!
Impossible! The economy will totally collapse if we only spend money we have!
You have pointed out an all too important distinction.
The money we have is the money we earn - stagnant wages aren’t close to being enough to put Humpty-Dumpty back together again.
There will be no meaningful wage inflation in this cycle!
67,000 people applied for 500 jobs in a new Vegas hotel/casino recently…
That’s 66,500 more people than there were jobs.
Employers can pick and choose, one out of 134 people making the employment cut.
Now we are getting somewhere…
Except for dark matter financial products, and military hardware that we can use against scattered tribes in far away places, what else do we actually make? What jobs can we do as americans that can’t be done cheaper if not necessarily better in other parts of the world?
It seems to me that R&D has been dead except for hiring PhD’s to run mortgage models for a while.
Where are the new innovations? What are we doing to get ahead?
Why do we even listen to Wall Street?
What does America make that others buy?
1. Instruments for chemical laboratories (detectors, analyzers, etc.)
2. Manufacturing equipment for semiconductors, disk drives, and LED’s
3. Aircraft
4. Chemicals
5. Pharmaceuticals
6. Software
In general, there are foreign competitors in each of these industries. So, we don’t “own” any of these markets.
The one counterexample I know of is light scattering detectors for molecular weight analysis of polymers. All of the dominant manufacturers of these specialized instruments are in the US. It is a very very tiny business.
But, US manufacturing certainly can rise once massive foreign exchange rate distortions are suppressed (e.g., the dollar crashes like it should have 10 years ago).
How many of the dejected 66,500 job-seekers mentioned above would qualify to work in any of the industries you’ve noted?
How many of these dejected 66,500 will go to their local libraries to learn something after being dejected?
My bet is that 66,400 of them will head home to watch cable television and play on their kids’ X-boxes.
Yes, many domestic industries remain healthy and they help support a sizeable professional class.
At the same time that’s also true of many third world economies - a sizeable professional class exists to help support the elites and run the country. The rest are interchangeable labor units.
Interchangable labor units really don’t need $400k condos or $800k McMansions.
the professional class is now also working on interchangable robotic labor units…
“What does America make that others buy?”
MBSs, Treasury Securities, CDSs….see, we make lots of things…what is there to worry about?
long island.
US is buying Chinese airplanes…. dont fly you chickens before they crash.
US is buying Chinese airplanes That is a sensible move. When US airlines go out of business, at the very least they will have saved some money.
Hows the mfg. from mellamine to lead painted toys working out so far?
Im sure the planes are “dialled in”.
I wouldnt eat a tater tot coming out of China, much less fly on a Puking Duck.
US is buying Chinese airplanes That is a sensible move. When US airlines go out of business, at the very least they will have saved some money.
I believe it is a PR stunt funded by the Chinese. They want to increase domestic confidence in the ARJ-21 by claiming their planes are ‘good enough’ for the US market.
However, this will mean certification by US rules.
There plane also competes head to head with Mitsubishi’s new MRJ. The MRJ is lighter (better engine placement where the drag is, the wing, CFRP and a more appropriate cross section for the size) and has far more efficient engines. Both have excellent short field performance. (China is building a huge number of short runways to service their smaller cities.)
Most likely, this plane will be bought by a company funded by the Chinese. Who? I’m not sure, but Mesa is my first guess. It will be interesting to see it go through FAA certification…
Got Popcorn?
Neil
ps: I’m an aviation nut.
im just a wingnut.
I wonder what the lav in the back of those planes would look and smell like. Mayhaps a squatter’s hole? And don’t forget your own tissue…
You bring up a great point! I’ve been thinking lately that without a strong American dynamo to power the world, there would have been little innovation in many areas such as computers, mobile phones etc. Growth(both technology growth and industry growth) took place because of American demand stimulated by, amongst other things, the willingness of the entire country to borrow against the future.
I think things started to go wrong about 20 years ago. Greed took over and then it became a matter of undermining American long-term interest for short term selfish gain. Case in point was the shift of manufacturing out of the country. On the other hand, the upliftment of a billion people in Asia (give or take) from poverty can be argued as a happy outcome.
If things hadn’t gone horribly wrong, and if people’s greed had been contained, I think Pax Americana could have held on for a long time. In that sense, I think the economy might have held on from collapsing for a long time even with a slowly expanding trade deficit.
I just don’t get why China can’t start selling products to their own people by raising their wages . Look at how big the markets would be for China if they just started giving their own people better wages .
By the same token American Corporations should think in terms of not killing the Country that they want to purchase their
products by taking away jobs and manufacturing . We need to bring back jobs to America . I agree that Unions can no longer
break the backs of the Corporations ,but a happy compromise
could be reached I believe . We cannot depend on the government to be the sole provider of jobs ,even if they kick that up to stimulate the economy .
Because Chinese save 50%+ of their income, if they have any. We spend 50%+ more than we make.
RE: We need to bring back jobs to America .
Paper making, shoes, apparel, lumber milling, timber harvesting, lobstering, fishing et. el,, were for years the mainstay of a modest but honest domestic manufacturing economy in Maine.
Most of these industries were located in small self-sufficent towns with the related skills handed down from generation to generation.
However, with an insidious 2 decades long onslaught of blistering government over-regulation, taxation, and offshoring, these industries are mere ghosts of their former selves.
8 of 10 major paper mills have shuttered and their vast timber land holdings sold off to developers and speculators.
The paper machines, shoe & textile machinery dismantled and either sold for scrap, or sent off to foreign plants.
Subsequently, the inter-generation skill system attendant to using them has now been irretrievably broken.
With a new lobster boat now costing $250k to construct and a next generation unable to pay the entry fee all the baby-boomer aged boatbuilders are closing up shop.
Even the veterans are cashin’ in their chips with overhead fees runnin’ roughly $1700 per week.
Fishing is an unmitigaged disaster, with government million dollar boat buy-out’s for pennies on the dollar, pretty much severing all opportunities for future generations to inherit much of anything related to that industry.
So how you start from scratch to rebuild a completely lost manufacturing infrastrucure in a bankrupt country of unskilled entitlement check dolts with a lotto ticket work mentality is beyond me.
China also has millions & millions of males they need to get rid of. Massive human assault waves combined with stolen western technology ie a very advanced navy/air force aimed at Taiwan, Russia and USA, yep this should end well!
“However, with an insidious 2 decades long onslaught of blistering government over-regulation, taxation, and offshoring, these industries are mere ghosts of their former selves.”
But that’s what politicians do best.
The Golden Goose of American Industry and manufacturing was thrown into the grinder to make some politicians and their buddies easy money over the years.
Maybe they thought the Fed itself would create unending wealth, employment opportunities, and innovative R&D on
its own and save the economy.
Naw, I think most of our politicians over the past 40 years have been corrupted by lobbies, money and power, and unless they did hard time, COULDN’T CARE LESS ABOUT THE DAMAGE.
HOUSING SCENE LEW SICHELMAN
Tax credit for first-time home buyers failed to deliver
November 2, 2008
WASHINGTON – The $7,500 tax credit for first-time home buyers that was put into place by Congress this summer to goose the moribund housing market has so far failed to live up to its billing as the carrot that would draw people back into the market.
“I have no data, no stats, but I have not talked to one person who says it’s helped,” says Robert Rivinius, president of the California Building Industry Association. “I can’t find anybody who’s sold a home because of the credit.”
it was so big I forgot about it
heheheh
big gov in action
“I have no data, no stats, but I have not talked to one person who says it’s helped,” says Robert Rivinius, president of the California Building Industry Association. “I can’t find anybody who’s sold a home because of the credit.”
What a surprise. The same Congress, the same Fed, the same total failure of “leadership” to even grasp the nature of the problems, the same policy rush to pour the taxpayer’s money down the toilet, the same result: the inmates running a bankrupt asylum.
“The $7,500 tax credit for first-time home buyers that was put into place by Congress this summer to goose the moribund housing market has so far failed to live up to its billing as the carrot that would draw people back into the market.”
I guess that borrowing 7,500 bucks from the IRS to buy a rapidly declining asset was not such an attractive option.
Exactly. If it were a REAL tax credit rather than a loan, I would’ve considered using it myself. Not saying I’d have used it necessarily, but would’ve given it some thought.
It’s a tax-free loan. Whoop-dee-doodle-doo!
And it’s $7,500. Houses are falling at 10x that rate yearly. Just wait for two months and you won’t even need to pay anything back.
BWAHAHAHHAHAHAHHAHAHAHAHHAHAHHHHHHHHHHHHH!!!
DEAN CALBREATH
Plan in works would help homeowners, lenders alike
November 2, 2008
The government has gotten a lot of practice this year coming up with halfway measures to edge us out of the Great American Mortgage Crisis.
–
Govt plans to help people, an idea that escaped the Founding Fathers. They must not have been very bright and caring.
Jas
I havent posted for a very long time, but Jas’s comment is interesting:
[Govt plans to help people, an idea that escaped the Founding Fathers. They must not have been very bright and caring.
Jas]
People have become accustomed to govt wiping their arse most of the time. this mentality is disgusting. I see where Jas is coming from calling people dopes(I call them goats myself).
Having lived in a third world country, The USA is going down a dangerous slope where govt destroys businesses, too much control and corruption, very small wealthy class, everyone else in the shitter.
“Details of the plan are sketchy, but the basic thrust is to use $50 billion to insure up to 3 million faulty home mortgages, protecting the lenders if the borrowers can no longer pay their loans. In return, the lenders would agree to modify the loans to stay at a relatively low fixed rate over the next five years, at which time they will be shifted back into adjustable rates.”
“In addition, Morici said, the loans are predicated on the idea that by the time they are restructured five years from now, the real estate market and the financial system will be vibrant enough for the borrowers to avoid going into default as their interest rates adjust upward.”
This is the major flaw in this plan. Values could well be significantly lower in 5 years than the loan amount and interest rates could be much higher then as well. A borrower using this plan could tread water in stormy seas for five years only to be confronted with much worse conditions than those now being faced.
I still consider it better to let values fall fairly quickly in a semi-controlled matter to a sustainable level. This plan will not do that.
Exactly.
This is the very same thing we’ve been dealing with all these years…more “toxic” products that are not sustainable over the long run. These are hybrid-ARMs.
We’ve been waiting out these ARMs for the past five years. Now, they want us to wait another five years until these reset, too? At this rate, we will have no reason to buy a house, as the main reason is to give our kids a home that can be tailored to our needs. If we continue having to wait this out, we will seriously consider living elsewhere. A foreign country would be nice, but they are all in the same boat as we are.
Let’s start our own nation!
If I deposit $35,000 cash with California’s DMV, I can drive legally without an insurance policy. Hmmm… Also, I have a new Toyota, so I’ll buy about $3,000 worth of original equipment replacement parts & store them around my apartment as conversation pieces.
.
Good luck getting your $35,000 back after CA goes bankrupt.
I predict that CA will have it’s credit rating cut soon & it’s bonds will drop in value. CA will soon default after new bonds (to replace old ones) will have a market rate in the 15-25% junk bond rate.
Tootles….
Good point. Well. Since I live in North OC, I guess I’ll have to deposit the 35K with my local gang chieftain. Anyone have his website?
Bank of America agrees to halt 2,000 foreclosures in the Valley
A large number of Phoenix-area homeowners facing foreclosure have received a reprieve.
Bank of America, which last summer bought the nation’s largest subprime lender, Countrywide, has suspended foreclosure notices pending agLast month, BofA agreed to modify loans for struggling borrowers if attorneys general from Arizona, Texas, Ohio, Iowa and Washington halted legal action against Countrywide. That action is based on the lender’s “alleged use of deceptive practices” in its mortgage-lending business, according to Goddard.
The deal requires BofA to place a temporary hold on foreclosures on loans made up until the end of 2007 and work with buyers to make their mortgage payments more affordable so they have the option of staying in their homes.
This explains the noticeable drop in NOD filings recently.
Nov 1
http://www.azcentral.com/realestate/articles/2008/11/01/20081101foreclosures1101.html
Be sure and sell any coal stocks you may have if B.O. gets in…
http://ca.youtube.com/watch?v=Hdi4onAQBWQ
Unless you are a long term investor. 4 years is all he’s going to get anyway, and that’s still short term.
4 years is all he’s going to get anyway ??
Assuming he fails to deliver to the middle class as he has promised…IMO, If he succeeds, which is a big if given the economic headwinds and the structural problems we have with entitlements he will rein for eight years easily and may end the GOP as we know it today….
Logically it is impossible for a self-admitted wealth redistributor from the productive to the non-productive to have a second term, particularly when there is no gridlock.
The only reason Bill Clinton got his second term is because the Congress was majority Republican from 1995 to 2000. The road to serfdom was a slow road those years because of Congress. Redistributing wealth produced by others is not the same as creation of wealth. That means no growth but just parasitic feeding for awhile.
Ayn Rand and her inner circle always proposed to vote for the greater of two evils to hasten the parasitic disease of socialism so that we can overthrow it sooner. I don’t subscribe to that idea because I do not want to ever sanction evil. Write in Ron Paul for POTUS.
No thank you Bill.
I forgot my tin foil hat.
I’ll vote Obama.
Parasitic disease of socialism ??
Just look at all forms of government….Are we not already there ???
As far as Ron Paul, I am with you but until this group of Ideologues running the GOP get squashed a true constitutional republican like Ron Paul can never get elected…The Independent party is still to weak…
I don’t subscribe to that idea because I do not want to ever sanction evil. Write in Ron Paul for POTUS.
Same effect.
If redistributing all the tax wealth to the public is considered to be socialism, what is it called when government contracts, military intervention and tax breaks are distributed to the favored children of one political party for 8 years?
That’s different! Sure.
NoSingleOne,
That’s called capitalism. Heaven forbid that would be called socialism, communism or any other bogeyman name.
“If redistributing all the tax wealth to the public is considered to be socialism, what is it called when government contracts, military intervention and tax breaks are distributed to the favored children of one political party for 8 years?”
Communism
wmbz,
“Be sure and sell any coal stocks you may have if B.O. gets in…”
Looks like you fell hook, line and sinker. Here’s the real story
Lies, Half Truths and Contradictions: Chronicle ”Hidden” Audio on Obama
http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=14&entry_id=32228
“Assuming he fails to deliver to the middle class as he has promised…IMO, If he succeeds”
It would kind of be fitting that BO becomes a failed one-termer due to the mess ahead if he wins the Presidency primarily by laying this bubble fallout at the feet of JM.
President Obama realizes that coal is one of the leading contributors to climate change, and is prepared to act on the basis of his convictions, not your stock holdings…
Rolling blackouts are not a winner politically.
Getting off of coal for electricity generation is going to take a lot longer then four years. It could take more than ten years to get the first new nuke on line. And we will need hundreds of them if we’re going to shut down the coal generators. It could take several generations to accomplish (pun intended).
Southern California Edison used coal to generate 32% of their energy in 2007, and it’s down to 8% currently.
There’s not enough natural gas available for the whole country to do that. That’s just kicking the can down the road, and you’re still burning hydrocarbons. If you radically increase natgas usage, you run out that much faster while continuing the CO2 output into the atmosphere. I though you were worried about global warming.
Big Deal! Califunia imports electrons being pushed by energy derived from burning coal in other states; should obamma succeed, La would go dark.
I think we have we have to kick the can down the road a piece, until we can figure out other methodology…
It only took us a few years to master atomic energy, and a few years longer to send men to the moon and back, so I know what we are capable of…
if the US gets of its a** and stops the lazy thinking, they can run the whole country without any coal or nuclear plants within 10-15 years from now.
B.S.
What’s all this endless anti-United States - America sucks - vitriole, nhz?
Did you bet wrong and lose your shirt? Did the lemmings throughout Europe follow the American credit-mess model and screw themselves over? The fact that Europeans followed our flawed thinking and imitated our crooks isn’t OUR fault. It’s yours.
Stupidity and short-sightedness knows no bounds. It appears that you Europeans have proven every bit as greedy and mindless as we Americans.
C’est la vie.
Not to worry. We’re rapidly switching gears to imitate the European model of government heavy-handedness and dismal productivity. In ten years, we’ll be blaming YOU for all the world’s problems. Better get your hard helmet on. The world is going to detest Europeans by 2020.
nhz is correct.
Low Energy Nuclear Reaction (ambient temperature super conductor,) is a reality. US needs to develop the technology with the same “vigor” we used to get to the moon. Too bad we spent the R&D USDs on Georgie’s little war….
if a country like Germany (which has far from ideal conditions for profiting from wind and sun) can go from 2 to 15% alternative energy in a few years, and target far higher in the next ten years, I’m sure the US can do even better if they want.
to Eudemon:
I’m not anti-american, if you read my posts on the blog you will see that I believe America CAN still have the edge if they reinvent themselves. But NOT if it stays on its current course, which combines the bad of EU socialism with some other bad political choices.
no, I didn’t loose my shirt - I’m in cash but not happy about the destruction that is going on in the world, and which was for 99% engineered in the US (yes, the EU politicians and banksters are suckers that played along, but the root of this evil comes from the US and London City).
In regards to climate change, do you belive the earth is warming or cooling?
Also, please let me know what temperature that the earth should be at?
Hank Paulson makes billion dollar gifts to his former employer with your tax dollars. Who cares? He’s the expert, you’re not, and you need to focus on the election:
http://www.thenation.com/doc/20081110/greider2
“…and you need to focus on the election:”
Man, the MSM really humped the “early voter” story to death this year. The PTB seems to be going out of its way to legitimize the electoral process - and it seems like a C.Y.A. of epic proportions for the PTB.
Given that we don’t have much of a choice for POTUS, it makes sense that the PTB have work to do to maintain the illusion thereof.
I’m actually glad to see it, because a large turnout *could* result in some turnover in the Congress. Which IMHO is sorely needed.
My son turned 18 shortly before the second election of W.
We’ve voted as a family in every election from that day on - even the local ones.
He works long hours M-Th, so we voted early on Friday.
I rather glad we did, as the lines are predicted to be long on Tuesday.
Leigh
Banks borrow record amount from Fed
Friday October 31, 10:21 am ET
By David Goldman, CNNMoney.com staff writer
http://biz.yahoo.com/cnnm/081031/103008_fed_borrowing.html
‘The Fed reported that commercial banks borrowed a record $111.9 billion a day, on average, from the Federal Reserve’s emergency lending window over the past week. That’s up $6.1 billion from the $105.8 billion they borrowed in the previous week.
“Banks literally have an open checkbook to acquire cheap liquidity,” said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Council. “Borrowing will continue until morale improves.”‘
If the banks need to borrow that much AND they need the capital injection via stock purchases from the US gov’t AND they need the US gov’t to buy up the bad debt… Sorry, but something’s gotta give.
–
Banks have become part of the govt, a govt arm for lending under “provate” label. What a scam!
Govt is becoming bigger and BIGGER part of the economy everywhere. So much for the benefits of the free markets and the private economy. The private economy, like the American middle-class, will shrink like crazy. And, yes, there is a cause-and-effect between these two.
America is in the reverse gear and the gearbox is going to remain stuck until there is an accident that wrecks the car. Happy ride!
Jas
I prefer the metaphor of America being on a roll, going downhill & heading for the edge of a cliff. Those at the controls are stepping on the gas. Most of the passengers are saying, “Faster, please”
–
You are out-jassing Jas!
Jas
That’s jas impossible!
If you ain’t got nothing, you got nothing to lose!
Forget about making a killing on declining assets. We will all suffer from this global collapse!
Invest your remaining assets in education and survival. They can not take away from what you have learned to survive and prosper in bankruptcy. even if the payoff is not immediate. No one knows what the future opportunities may be.
Good luck, everyone.
Mike Murphy
Chino, CA 91710
I remember in 1979 when survivalists had the same words as you. Move to the hills, invest in ammo, and all. The difference is we are 4 years away from morning in America. We will have thugs from one party controlling the Congress and executive branches for at least two years to spread the wealth around. But I’m going to fight for the free market during these years as much as I can and profit at the same time. I don’t care if some of you prefer to run and hide as long as I will be a thorn in the sides of the gulftream socialists.
B.i.L.A. bong,
What role did China & Russia play in global economics in 1979, compared to 2008?
Bill, your more ignorant than a hillbilly than has never seen an outhouse.
For your info, in the past 40 years we have seen more wealth collected in the upper 1% than in any other group.
I’m not for welfare for the very rich.
No you are just a “mere” thinker compared to me doofus.
He’s after you Bill…. Get your shotgun ready.
They are all after you.
Theys’ asa gonna tax yous to deth!
The hobgoblins are gunna getchya bill…. look out! gitch yer gun!!
Oh, Muir.
You made me spit out my fake teeth laffing. Thanks, I needed that. I had my “I’m NRA and I Vote” sign planted right next to my ObamaBiden sign all month. The redneck whitetrash didn’t know WHAT to think. I can’t wait to fly my American flag on Wednesday. That’ll REALLY freak ‘em out.
Poor Bill inLA…. He’s in for a looonnng eight years.
“Bill, your more ignorant than a hillbilly than has never seen an outhouse”
Say what? LOL
The only welfare for the rich is in the form of subsidies. I never had a big company put a gun to my head and shake me down for money. OTOH, this gunpoint shakedown is exactly what the Demopublican mainstream is doing in the name of “fairness.”
This “fairness” was the same justification that brought about such enlightened figures as Mao (60 million people he ordered killed), Joe Stalin (20 million people he ordered killed) and the Pol Pot.
Actually the greatest good has come from those seeking honestly earned profit. The computer revolution would not be here if the “spread the wealth around” messiah was able to back in the 1970s convince people to tax upper middle class people and entrepreneurs. Bill Gates would not have any significant amount of money to give away to left wing causes if he was discouraged from making profits in the 1980s.
Take your meds
[b]now[/b]
Filed under: “Just trust us!…we know what we’re doing”
Cheney-Shrub Legacy List item # 99: “How we improved the Grand Canyon and almost every state & federal park for the American Citizens & all the little critters too!”
“…John Kostyack of the National Wildlife Federation, which joined Lehrer’s group to call for a ban on these last-minute rules, said citizens are cut out of the process, allowing changes in U.S. law that the public opposes, such as rolling back protections under the Endangered Species Act.”
“…The Bush team has urged that these regulations be issued no later than Saturday, so they can be put in effect by the time President George W. Bush leaves office on January 20.”
In Bush’s end-game, lots of changes on environment:
http://www.reuters.com/article/politicsNews/idUSTRE4A117D20081102?sp=true
The whole ’ssshrubery gang is endangered feces, their time’s almost up.
snort.
I was reading other state’s Ballot Initiatives and saw Oklahoma has an odd one: Eliminate Property Tax for disabled veterans!
Now, I like Disabled Veterans as much as anyone else, but this is silly. It means that Disabled Vets who don’t own houses won’t get squat, and ones who severely overpaid for their houses will get the most!
I don’t get it.
Sentimentality. The electorate’s Achilles’ heel.
It starts with veterans…then it will be first responders…then teachers…then all civil servants…then all elected officials…they won’t be able to leave anyone out of the “hero loop”.
Some of the nationwide homebuilders have hit upon the idea of a “heroes discount” of 3% if you are a nurse, doctor, teacher, policeman, fireman or in the military.
the “krill discount” is down at pay-day loans.
My favorite pay-day loan store was in Hurricane, Utah.
They proudly had a SLC newspaper clipping in their window that showed they had the lowest interest rates in Utah, for such an operation…
Just 365% apr
The worst case scenario was 812%, in SLC.
Here in Ohio, we’re voting on an issue to limit payday loans to 28 %/year interest; are they moaning!
“Here in Ohio, we’re voting on an issue to limit payday loans to 28%/year interest.”
Not trying to defend these payday loan places, however…
Now’s not the time to pressure these guys out of business, not with the need for cash so intense for so many people.
If not for these payday loan places where can desperate people go for cash?
Desperate people will head to the banks with a six shooter and kindly ask the teller to make a deposit into their homemade money bag
‘If not for these payday loan places where can desperate people go for cash?’
The pawn store? Or else their mom, or maybe they can become lap-dancers? Hey! With their mom! Then they can know how exactly much they can borrow from their mom, even.
This reminds me, I wrote a good Hallowe’en story. It was about a mummy. I must go find where I put it, and then tell you all it.
‘If not for these payday loan places where can desperate people go for cash?’
If it wasn’t for those payday loan places, they might have some.
I wrote a good Hallowe’en story. It was about a mummy. I must go find where I put it, and then tell you all it.
——————–
We’ll be waiting for it!!!
To some extent or another all those groups represent an extension of “state” power. It’s an extension of state power that extends deeply thoroughout the entire community and serves as a subtle day to day reminder of the state’s influence and control.
An exponential version of Tammany Hall.
“I’m strongly opposed to.. proposition, uh, 305.”
“You’re against discount bus fares for war widows?”
RE: I was reading other state’s Ballot Initiatives and saw Oklahoma has an odd one: Eliminate Property Tax for disabled veterans!
Maine State Democratic Platform is espousing a new federal energy assistance programs for “deserving residents”, (spelled scratch lotto ticket and cigarette crowd), not only for heating oil, but for gasoline to FUEL their vehicles.
This new program will be paid for by a windfall profits tax on BIG OIL.
LMAO…now it’s ok to have someone else pay for your gasoline because car ownership is a constitutional right!
More of this to come, lol.
You should do some research, homes in Oklahoma, for the most part did not increase exponentially in value.
Unlinke the GOLD RUSH ideals of idiots in Florida and both the
l(east) and left coasts.
Oklahoma learned the lessons in the early 1980’s with the oil bust. I have property in Oklahoma and it has had an average increase of ~ 7% yoy. It is in a decent part of the Oklahoma City area.
Prices are increasing and I have raised my rents.
Not everywhere is like CA, NV and AZ.
I currently live in Green Valley, Henderson, NV and am renting and will be waiting to watch the market drop even more in this area.
You do realize that 7% YOY is unrealistically high, and is faster than wages have increased?
Prices conitinue and will continue to increase, however the increase may slow down some. Oil and Gas are big in Texas and OK even with oil at $65.00 barrel.
Property in Oklahoma is also cheap compaired to many many other areas.
–
The End of Prosperity
The Worst Is Yet to Come
by Stephen Lendman
Global Research, October 31, 2008
From too much of a good thing. From the 1980s and 1990s excesses. From the longest ever US bull market. Heavily manipulated to keep it levitating. From August 1982 to January 2000. An illusory reprieve from October 2002 to October 2007. Fluctuations aside, all lost in the past 12 months. The wages of sin are now due, and payment is being painfully extracted. From all nations globally. Affecting ordinary people the most who had nothing to do with creating booms and busts. They got little on the upside but are paying dearly for the down.
Even “free-market” champions are unnerved. Arthur Laffer for one in his October 27 Wall Street Journal op-ed headlined: “The Age of Prosperity Is Over.” He states that “This administration and Congress will be remembered like Herbert Hoover,” but not for the right reasons. He continued: “what this administration and Congress have done will be viewed in much the same light as what Herbert Hoover did in the years 1929 through 1932. Whenever people make decisions when they are panicked, the consequences are rarely pretty. We are now witnessing the end of prosperity.”
Readers will remember Laffer from the Reagan era. The “supply side trickle down” guru. More popularly called “Reaganomics.” GHW Bush’s “voodoo economics.” The faux theory that tax cuts for the rich grow the economy and benefit everyone. By encouraging well-off recipients to earn more money. For more tax revenue. For the greater good of everyone.
What Reagan’s budget director, David Stockman, called a “Trojan Horse.” To con Congress into accepting “Republican orthodoxy (and pave the way for) the greed level, the level of opportunism, (to get) out of control.” From tax cuts for the rich. Loopholes for special interests. Tax increases on low and middle-income households. Taking from the many for the few. What Laffer and others championed and still do. Along with believing markets work best so let them. Government is the problem, not the solution.
…
http://www.globalresearch.ca/index.php?context=va&aid=10771
Jas
Established economic terrorist and Hooverite Art Laffer appeared on Bill Maher a week ago and backpedalled furiously from the economic lie that is his namesake, the Laffer curve. Apparently and according to the liar himself, it is flawed.
Imagine that.
McCain’s chief economic adviser, Douglas Holtz-Eakin, actually reached the same conclusion when he was head of the Congressional Budget Office. Of course, now that McCain is running for office, he’s seemed to have forgotten that tax cuts for the wealthy do NOT increase economic output and tax revenues.
Holtz-Eakin is the only member of the McCain economic team whose knowledge I respect, but like McCain his maverick credentials were thrown out the window to woo the neocons back into the fold.
Holtz- eeking……. everybody eeking out a living for another 4 years? 27 years of wage slavery is more than enough.
Buyouts & possible layoffs set for Michigan Indian casino
But gambling is recession proof…
ROTFLMAO. (Yes, I know Capone shut down his Casinos in the depression.)
Got Popcorn?
Neil
Couldnt happen to a nicer den of thieves. Hope it spreads until LV goes dark.
Are you a Bible Thumper?
Vegas is a bastion of gaming, service providers and limitless booze.
Vegas!!
James (son of John) Kenneth Galbraith on the failure of economists to predict the current credit disaster: “It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.” And that’s from an economist.
Economists are no different than folks on here that think old ways of investing have an iron-clad guarantee of success, based upon previous data that was always faithful.
They always looked to the past for confirmation of their beliefs, but seldom to the future…
No kidding. I’m hearing analysis and predictions of the current crisis that depend upon past crises. I also know that this is unprecedented. So which is it? I just can’t bring myself to trust anything or anybody right now with the exception of someone who says they really don’t know what is going to happen. The people who say “buy now or miss the bottom” - housing, stock, etc- can’t be on the right track. The markets are still over-valued.
I just can’t forget Mr. Magoo (Al Greenspan) going on about the “conundrum” of raising interest rates by the Fed and a subsequent drop in long term mortgage rates. It means they didn’t understand what they were doing and still don’t understand. It also means that what little control the central banks, gov’ts, and corporations had over their own future is gone and has been gone for years.
I’m also pretty sure not many people or organizations really understand this fact.
That is just in the economic sphere. Wait’ll the wars start to heat up again.
Roidy
from “Only Yesterday-an informal history of the 1920’s”,
by Frederick Lewis Allen…
from the chapter entitled “Crash!”
“in view of what was about to happen, it is enlightening to recall how things looked at this juncture to the financial prophets, those gentlemen whose wizardly reputations were based upon their supposed ability to examine a set of graphs brought to them by a statistician and discover, from the relation of curve to curve and index to index, whether things were going to get better or worse.”
I think it would be much better if people listen to historians instead of economists, or start reading some history books themselves. Economist have proven again and again to be totally clueless about what is happening in the real world.
I just watched a nice TV series about the Dutch Republic during the Golden Age (the age of countless inventions and discoveries, with advances like multinational companies, the stock/futures exchange, and some unfortunate sidesteps like tulipomania and WallStreet). For a bit less then a century the Netherlands was on top of the world, a liberal society with a real free market economy. All that changed rather quickly, when power and wealth became concentrated in a few families and greed took over. The whole story should sound extremely familiar to anyone living in the current USA, especially after this years episode.
History repeats, although with some variations.
ya.. their scientific/ intellectual contributions went downhill when they started paying more attention to financial engineering..
I don’t like to make fun of these because I love cooking but this one here’s a howler.
Go for it folks, show no mercy: A Chef Sells Customers on Providing Him Capital.
$10K cards. You’d have to be demented even if you went there once a week.
BWAHAHAHHAHAHAHHAHAHAHHAHAHHHHHHHHHHHHHHHHHHHH!!!
They can eat all they want for $10,000 at both locattions or untill he shuts up shop.
I am wary of pay once for a lifetime or deals where you pay large lump sums in advance especially to eat food at a resturant?
A former associate is offering shares in the company formed to pay his house payment
Gordo Brown went to Qatar with tin-cup in hand:
Terms
Barclays said it’s issuing 3 billion pounds of notes that carry a 14% coupon to Qatar Holding, a state-backed investment vehicle, and Sheikh Mansour Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family. The notes will carry options for the issue of up to 3 billion pounds at a price of 197.775 pence a share.
—–
oh yeah, the oil prince, et all… are gonna kick down cash to the IMF as well….
everybody keeps dancing the same tunes.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a2df9V.O__gc&refer=news
Oil rich peasants demand bailout,
the actual headline: Gulf Citizens Beg for Bailout as Stock Rout Signals End of Boom
By Glen Carey and Matthew Brown
—————————————-
but cutter just went long tea and crumpets…. the demand for free lunches is unsustainable.
I had no idea the ME was already at this stage.
Is **anybody** out there not drowning in debt? I thought the ME was rich beyond our wildest dreams. How can they possibly justify having debt???
Hey, everyone! Michelle Obama just called me. Now that I’ve got that out of the way, I won’t have to hear from her ever again.
Darn. I wanted her phone number.
–
“Counterparties”
http://real-estate-and-urban.blogspot.com/2008/11/counterparties.html
Who were supporting the derivatives (what Buffett called Financial Weapons of Mass Destruction) and who ere against them?
We know that Greenspan and Bernanke were big cheerleaders under the guise of “financial innovations.” How about other economists?
Packaging risk? What an idea! Rather than contain harmful germs why don’t we spread them as widely as we can?
Do economists take any blame for their bad theories and really bad ideas?
Jas
Snippets from article.
http://biz.yahoo.com/ap/081102/as_china_canton_fair.html
China’s biggest trade show, Canton Fair, suffers plunging attendance amid financial crisis
GUANGZHOU, China (AP) — China opened the final session of the Canton Fair — the country’s biggest trade show — on Sunday amid complaints that attendance has been dismal because of the financial crisis clobbering the nation’s biggest export markets in the U.S. and Europe.
Final attendance figures will not be ready until the fair ends on Nov. 6. But exhibitors and buyers said they have noticed a sharp drop in attendance at the event in Guangzhou, also called Canton.
“It is amazing how empty is. It’s frightening,” said Christopher Devereux, a British businessman who has been attending the fair for more than a decade.
Devereux said the aisles are usually blocked with people. But at the fair’s second five-day session late last month, attendees were able to stroll up and down corridors virtually unimpeded, said Devereux
By the end of the second session that closed Oct. 28, many exhibitors said their nightmares had come true.
“I haven’t had any orders so far at this fair. This is all I have,” he said, reaching into a tattered shoe box and grabbing four business cards left by prospective buyers. “All I can do is go back to the factory and give them a follow-up call. It’s going to be hard to survive.”
Report from Urban Northern Ohio. Drove into my old neighborhood in Cleveland to take a friend out for some Chinese. Many more boarded up businesses than last time. Main drag was devoid of auto traffic at 9:30 pm; usually jumping as bars now outnumber any other enterprise. What surprised us was that many adults were out riding around on bikes in the business district. Chinese restaurant ( one of the best in Cleveland) that we came from was more than half empty. Zero wait, reservations usually required. Many, many people lined up for takeout which was unusual. Very large RE developer whom friend works for has just canceled one of the city’s only major re development that was just weeks ago bull dowzing buildings acquired by eminent domain. Waiting for Bogot.
Takeout = no need to pay tips.
Standard way of cutting your costs without giving up on going out.
Seeing the same thing in NYC. Also, more pickup and less delivery. Same reason, no need to pay tips.
Also, the cheap good restaurants with great food and good service are hanging in there (although with fewer customers.) Marginal establishments with surly service are being taken behind the woodshed and getting crowbarred as patronage dries up.
Most surprisingly, I have actually found that there are a few excellent local chains that are expanding. They have a great business model (amazing food, low costs, low overhead, mostly takeout) and they are going completely gangbusters making money hand over fist. Shows you that there is opportunity just about anywhere if you look for it.
Many companies want the rules changed for funding pensions. I see this as very dangerous.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aelzwwntb45g&refer=home
——————————————————————————–
“While we support the Pension Protection Act and improved funding for corporate pension plans, we are very concerned about the immediate impact to the overall economy if massive cash contributions are required due to the recent stock market declines,” FedEx Corp. CFO Alan B. Graf Jr. said yesterday. “In the current liquidity crisis, that money would be better used to support immediate working capital needs, make capital investments and protect American jobs.”
snip
The Pension Protection Act of 2006 compels companies to cover 94 percent of retirement-plan liabilities to be considered fully funded in 2009. The legislation was passed after funding dropped following the technology sector collapse in 2001. Plans covered 104 percent of obligations and posted a $60 billion surplus at the end of 2007, Mercer said.
Companies must cut benefits if assets fall below 80 percent of liabilities and eliminate lump-sum payments below 60 percent, according to the law. At that level, companies must also freeze their plans and prevent participation by new hires.
The law “was unnecessarily conservative in its funding requirements and unnecessarily punitive in cases where companies make an unwise decision relative to plan funding,” said North Dakota Representative Earl Pomeroy, a member of the House Ways and Means Committee, which will hold hearings on pensions and economic-recovery plans today.
`Squeeze on Cash’
“Any stimulus package needs to address the pension issue,” said Pomeroy, a Democrat and sponsor of legislation that would delay the pension act’s “draconian” funding provisions. “The squeeze on cash may not happen tomorrow, but I can assure Congress that if it fails to act, this will be upon us before we know it.”
The first deadline most companies will need to meet is Dec. 31, when they will have to calculate their funding ratio and develop budgets for contributions beginning in the second half of 2009.
“Companies will be facing quite significant cash calls in 2009 and 2010 and more than a few will find it difficult to meet these,” Hartshorn said.
The impact of rising pension expense is making companies cut spending in areas including dividends, said Howard Silverblatt, an S&P analyst in New York. Dividends will fall 10 percent this quarter the worst year-over-year decline since 1958, he said.
“The cash-flow hit is killer,” Silverblatt said. “You look in your pocket and there is a hole all the way through to your socks.”
Too late. That ship was sinking two years ago.
Now it has already sunk. This is all lipstick on a pig.
Sit back and watch the carnage.
I’m really surprised at this pension underfunding issue raising its ugly head so close to the elections.
Waaaahhh!
The baby boomers who bankrupted the country with their tax breaks, lack of savings, and housing/stock market Ponzi schemes will have to take a cut in the entitlements funded by their children?
I’m so upset! How will I ever sleep?
Did anyone catch the Suze Orman show last night? Someone wrote in a letter saying they were angry to have to pay for housing bailouts for those who bought McMansions and were too irresponsible during the boom times. Suze chastised the author, saying it wasn’t the fault of individual buyers rather it was the fault of banks and loan brokers. She said that we need to have compassion for those losing “their” homes. Sounds like she subscribes to the same logic as Sheila Bair. They are all victims and didn’t know what they were doing. Yeah right.
Suze is just playing to her “base” of financial illiterates who are largely facing foreclosure. It wouldn’t be smart business to alienate them all, so she tells them what they want to hear.
Yes, I heard her say that, it was disappointing to have her parse blame like that: it smells like class-warfare tactics. I like her show well enough, but there’s no confusion– she’s solidly behind the Democratic party. Wikipedia gives you an idea where she’s coming from.
Had a discussion with two close friends. Both made comments about being careful where they were on Wednesday, pending the outcome of the election. If the Republicans try and rig it again, the thought is they don’t want to be in Los Angeles.
banana,
No one can rig Los Angeles, the Democrats have have too big a margin. It’s only possible to rig elections in places where the margin is close.
Well, maybe Chicago. They have always been “exceptional”. Of course, that would be Democrats doing the rigging, so that would not count, right?
Seriously, I’m getting concerned about this windup to accusations of rigging. If we get a place where the loser’s fallback position is to cry “it was rigged, we wuz robbed”, it undermines confidence in the process, and creates the sort of dangers that your friends were hinting about.
Whoever loses should concede gracefully and start working on their 2012 campaign. The country doesn’t need another scene like the 2000 election right now, we have enough problems to solve.
Another thing the MSM has avoided like the plague, is BO really a U.S. citizen?
The Devvy column raises the questions:
http://newswithviews.com/Devvy/kidd408.htm
That’s about as stupid as they come. He was born to an American mother, and hence, is an American.
Next thing you know they’re going to tell me that McCain isn’t American because he was born in Panama.
Is McCain a US Citizen? Last time I checked Panama wasn’t one of the 50 states, but Hawaii is.
Don’t worry the Dems are rigging it this time with Aunt Obamas money!
You have to ask the question, how many other illegal aliens are contributing to the Obama campain and or the McCain campain for that mater. However I would venture to guess that it is mostly being given to Obama.
LOL