Bits Bucket For December 16, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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I’m going to be traveling for the next couple or three days, so I won’t be posting much. Be good and I’ll try to check in as much as I can. Some of you guys are really being childish with the political stuff, BTW.
I started it yesterday and I apologize for that.
Taxpayers, taxpayers, taxpayers!
my taxpayers can beat up your taxpayers.
The poor taxpayers!!!
Developers, Developers, Developers!
Word on the grapevine is that Microsoft will be shedding some folks come Jan 15. Hearing enough things to believe it is at least likely. If so, that will be a first for them and I wonder how this area will handle it. I’m seeing first hand how much this area has psychologically invested in MSFT. It could be a big blow to those out here still thinking “it’s different here”.
-DeepInTheHeartOfBellevue,Wa
Totally agree, DITHOB–I heard the same rumor. (didn’t realize you were in Bellevue now, btw! welcome to the PNW!)
The past year, many people countered my points with “but we have Boeing & Microsoft, good-paying jobs! We won’t be affected the way other places are.”
After the holidays, both BA & MSFT will likely be laying off folks. The psychological impact will be huge.
It no longer will be different here…
How certain are these rumors? This is huge…
‘The past year, many people countered my points with “but we have Boeing & Microsoft, good-paying jobs! We won’t be affected the way other places are.”’
I heard that time and again, too, primey. If layoffs do happen it will indeed be a great big nasty shock. Ooooh, I can’t wait! *breathes heavily *
Hey, Deepintheheart, I also didn’t know you were in the PNW. Look, everyone, look at all the cool and radiant HBBers we have HERE, huh huh huh? Thass right.
Nothing is certain until it’s publicly announced, but I would give very strong odds—-I’m confident in my sources.
The greater Seattle area is in for a huge economic smackdown. I see carnage on the horizon for the Emerald City. Look for skyrocketing unemployment, cratering rents, and steady out migration as many realize 9 months of drizzle and no job is more than their tortured mind can take.
NO KIDDING.
I think most people would be surprised to find out that except for upper management, M$ actually pays rather poorly for most positions. They seem to have an attitude like “we’re the great and almighty M$, you should be EVER so greatful to work here if we let you.”
And therefore be willing to take less money. I remember I went in for a fake interview there(the kind where they want to pick you brain for ideas, but don’t actually end up hiring anyone for), and some of the guys I met there remarked about how the food and drinks that used to be free for employees, were now being charged for.
I think the worst thing was getting looked at as a second class citizen, especially by women, because I was a renter.
Don’t get me wrong - SR still got da freak on aplenty, but it was very clear to me that owning a house around here equals much greater sex appeal around these parts.
That is until recently. Suddenly I look like a financial genius for renting and avoiding the “ownership trap.”
I think it’s worse than California when it comes to whoorishness in the dating game. It doesn’t seem that way on the surface though, and that’s what makes it worse - Cali girls are pretty up front about that stuff. Here, they act conscientious and upright, but their choices make clear their priorities.
Any other Seattle guys back me up on that?
I hope you’re cashing in, and doing lots and lots of “horizontal jogging” these days.
When I was in the great Seattle area in the late 70s, Boeing had laid off quite a few people because of the economy.
I worked with some of the survivors in the 1980s. ALl good peopel, including one who made enough to own a “yacht” via real estate after. I guess small apartment houses were rather cheap at that point in time.
So, keep your powder dry
Hey Seattle Renter,
I always figured that was a good defense mechanism: any woman who looked at me as “as a second class citizen [...] because I was a renter” was obviously the wrong one for me!
‘[...] because I was a renter” was obviously the wrong one for me!’
Yes, that.
Plus also the placard around the neck reading ‘I f–ck for money.’
It’s like a clue thingie. Like on Scoob*y Doo.
“Comment by Olympiagal
2008-12-16 19:49:37
‘[...] because I was a renter” was obviously the wrong one for me!’Yes, that.
Plus also the placard around the neck reading ‘I f–ck for money.’It’s like a clue thingie. Like on Scoob*y Doo.”
Sorry! Very sorry. No, really, I mean it.
Ben? I’ll try to do better. But seriously! There’s LOTS of good girls here in our world. Good girls who do not judge boys by their housing status. Yes, really. I know a bunch myself, and while they may not be glitzy and have tiaras and run around kicking up their boots, and they may be a bit over-earnest, they are still great girls.Very neat. If I was a boy I would love them, dearly.
“placard around the neck reading ‘I f–ck for money.’”
The placard approach would at least be honest and up-front; I would give partial credit for that…
(kidding!)
Sadly, Olygal, they can’t all be glitzy, wear tiaras, and run around kicking up their boots while licking frogs and harvesting mushrooms… Only a special few.
‘Sadly, Olygal, they can’t all be glitzy, wear tiaras, and run around kicking up their boots while licking frogs and harvesting mushrooms… Only a special few.’
What!* Spits out the frog*
Yes, they can!
If worse comes to shove they can always open another expresso stand with completely naked servers this time. hehehehehehe
a first? My co-worker was there during the DOJ antitrust case and his entire department was let go.
Monopoly department?
Ben, do you ever get hammered and run around naked?………..I didn’t think so. Give it a try my friend.
I’d pay to see that video especially if it features Ben holding up a placards like “Housing Bubbles Rock!” and “I ♥ the Federal Reserve”.
Wouldn’t that be fun?
Don’t forget the snow chains & shovel & ice scraper!
Right, spent the weekend in K’ Falls and had a real “blast”. This was kind of our “Katrina” b/c it was slated to hit late Friday afternoon and all the state workers… well, had other plans.
So instead of safe roads after a long predicted snowstorm, we got a quick “once over” by a scant handful of plows and a hasty dusting of gravel in the turns and on hills.
An absolute embarrassment for Oregon. We are truly on our own here. Chained up from Klamath Lake to White City on Hwy 140 for an avg. speed of maybe… 20 MPH. It was great to see Oregonians “pitching in” and pulling one another out of ditches and helping the elderly with their tire chains.
Mind you, this was all the way to Salem! The hill on I-5 was definitely “Enter At Your Own Risk” territory. Maybe we should just close the state down if it does anything more than rain.
‘Some of you guys are really being childish with the political stuff, BTW.’
Well, THEY started it! First!
Hahahaha!
Okay, we’ll be good. At least IIIII will, because I’m not childish, like some of these others. * assumes a responsible and mature expression *
Ben, have a good yet productive time, and stay cozy, and above all be a Safety Ben and drive carefully and watch out for idjits. Normally I don’t come down with the caution like that, but I’d really hate to lose you or have you out of commission. Besides, then you wouldn’t get the Christmas card I just put in the mailbox. I made it out of a beer can, that I first thoughtfully drank the beer out of.
I keep reminding Ben to duck if anyone tells him “Mr. Ben, you can’t say that __________(city he’s in) doesn’t love you” !
. . with all those disgruntled realtors, brokers, and new pole dancers about . . .
All I heard was the ‘pole-dancer’ part.
What was your point, again? Explain it to me simply, and please have a feather boa on ya, when you do.
Oh yeah! Well you’re being childish infinity times more!!! Just kidding.
There’s a whiff of another interest rate cut comming. Pretty soon the Feds are gonna run out of ammo. Then what? They’ll be fighting a global recession of epic proportions with a peashooter.
Quantitative easing = printing money to buy long-term debt.
And, this is going to turn out OK, right?
I mean, this nice deflation we are having, which brings me a real nice warm and fuzzy felling all day, it’s not going to turn around and become an ugly and nasty inflation, right?
I mean, please, lie to me if necessary.
It was at this time last year that bubblevision and Wall St. obsessed about every FFR cut. A year later they’re still all worked up about it. What will they do next year?
Japan printed money like no tomorrow. They went from being the second largest creditor in the word to the second largest debtor, and they still got a 18-year recession (going on 19, soon to be 20, 21, …)
It has as more to do with deflationary psychology than money printing.
Firstly, they don’t “print money”. They lower the cost of capital to below the free market rate. But if there’s nobody around to borrow that capital, then what? When the velocity collapses, and everyone (= businesses, consumers) are busy rebuilding their tattered balance sheets, the Fed is pushing on a string.
The boom isn’t coming back.
FPSS - Do you have any info on who holds the Japanese debt (internally and externally)? Just wondering how it compares to the U.S.
The Japanese had that luxury of going into debt since there were people willing to buy that debt. What happens when the U.S. tries the same but there’s no one to buy it? So far there’s no indication of that, but there’s a heck of a lot of new debt that needs to be bought over the next few years…
Thanks FPSS.
Don’t forget Muir, for every trillion digits the fed clicks and sends, a hedgie hog sends it to money heaven.
Just one morning, just once, I’d like to have my coffee without going on about “money printing” and gold.
Just once. Is that too much to ask?
There is a massive difference between:
[1] printing money,
[2] lowering the cost of capital to below the free-market rate, and
[3] “sterilized intervention” (= TARP.)
They have functional similarities (= all debase the currency) but they have very different characteristics, and calling all of them “printing money” does not advance the discussion. In fact, it’s really boring because it shows that people don’t really understand how inflation, etc. works.
Yea my epson works better.
Faster,
Japan can pay off its entire debt with reserves in gold, foreign currency and foreign stock and still have moneys left over. In fact it would not even have to sell an ounce of gold. (source CIA Worldfactbook) Can the US even have a chance of paying off its debts? No reasonable investor expects the US to pay off its debts.
I think you should look at Japanese monetary policy from What actually happened, not what was reported to have happened. A huge difference of Trillions of dollars.
Japan did the same thing the Federal Reserve did in the 1930s - they raised the interest rates. Do you really think the Mr. Bernanke Federal Reserve will raise interest rates? Lmao
For sources on Japan, try Mr. Posen’s book. It is the most detailed study of the period.
Restoring Japan’s Economic Growth
by Adam S. Posen
And what exactly are they going to do with their holdings?
Japan can sell its US debt to France or Peru but the sum total of foreign US debt holders cannot offload their debt. At the end of the day, they have to come and buy US goods and services with that money.
In any case, you’ve been dead wrong on your short T-bond trade, and you don’t understand how much monetary expansion took place in derivatives land. That money is going to money heaven, and that’s called deflation.
Got TIPS ?
11/28/08 4.17% 3.78% 2.60% 2.98%
12/15/08 2.09% 2.27% 2.43% 2.49%
Got Yen ?
11/28/2008 95.68
12/15/2008 89.89
LOL, the best trade of the year short US Treasuries, long Yen;
short Us treasuries long Tips, short US treasuries long FDIC bonds. And if I could find anybody to lend me more US treasuries to short (without risk of repo) I would keep doing it.
FPSS’s deflationary expectations can beat Hozzies inflationary expectations…until they cant.
Investing and trading are like s*x. Timing is everything.
lowering the cost of capital to below the free-market rate
How do they accomplish that? They do so in open market operations where they buy securities (either treasuries or bank securities) with “newly created” money, no? At least that’s my understanding of how they accomplish a lower fed funds rate, it’s not really a rate they “set”, it’s a target which is accomplished by increasing the money supply.
“Investing and trading are like s*x. Timing is everything.”
Now I know how to get a date!!!! Go to the female swap market. Thanks Faster, a great idea. Probably be the worst trade of my life. Oh well, nothing risked nothing gained.
FPSS & hoz
I got tired of having nothing to do so now I am back in school to finish what I started 1/4 century ago - gonna get my B.S.E.E. I am very good in math, but not so good in economics.
I was lucky enough to make a small fortune (starting with absolutely nothing - - just a job paying $6/hr) with long term investing in the stock market, but I will be the first one to admit that my practice (of common sense investing) did not make me a financial wizard, nor an economics wizard. It just made me a little bit richer than the average bear.
Could y’all provide me with a good reading list of books to read, books to avoid, and websites that can help me understand all of these economics subtleties? And no, I am not changing my major to economics. (I am having way too much fun with math/physics/etc…)
Thanx…
“female swap market”—-LOL….
They went from being the second largest creditor in the word to the second largest debtor
Wrong.
When we say [country X] is a creditor or debtor we mean its position with respect to the rest of the world. Japan is still the world’s largest creditor - its net credit position with respect to the world is larger than any other country.
Japan has the second highest government debt in the world (after you know who) but all of that debt is held inside Japan.
Japan remains world’s biggest creditor nation
Any books by Mr. Peter Lynch is a start.
and
Reminiscences of a Stock Operator
By Edwin Lefevre
This is a must.
If you could combine the two in your own habits, you would be a great investor. You would know; How to pick, When to buy and When to sell. Selling is the 2nd hardest part to learn.
Thanx hoz.
I have read Peter Lunch, he is my favorite investing author. When anybody has asked me, I always directed them towards Peter Lynch and Warren Buffett. Some of Buffett’s letters to shareholders are classics and worth reading, but I no longer hold Buffett in high esteem like I used to.
Never heard of Edwin Lefevre - thanx for this tip.
Still waiting on FPSS to check in…
Hoz, FPSS,
Speaking of not having a clue, wasn’t it just amazing to see the reactions from Bernie Madoff’s former clients!?
Frankly I was horrified that there were all these incredibly wealthy people that made it painfully obvious they don’t have the foggiest notion as to how wealth actually works!?
They “just want their money back”. Dude, are you kidding me? You really ARE that in the dark. Here you have ( rather “had” ) all this freaking money and really don’t have an idea what’s taken place here do you?
Sorry, was away this morning at my quarterly shopping trip at all the ethnic markets in Queens.
Wooooooo!!!! I’m stimulating the food part of the economy. I provided plenty of stimulus.
On a more serious note, what hozzie said. I love Lefevre’s book although I am a Graham & Dodd person myself. Over the years, I found a necessity to combine these two extreme views.
I am quite fond of Jeremy Grantham’s periodic missives too.
One of these days, you might find yourself actually talking to these people about money. You might get upset at the sheer level of cluelessness.
At that point, I strongly suggest you go “bullishly long” on the excellent alcohol that they inevitably provide at their parties.
Survival skills. There are many “jungles” out there.
“I am quite fond of Jeremy Grantham’s periodic missives too.”
150% agree! He does not hurt you. A lot of investment books can hurt you. e.g. Cramer, Taleb - there are a lot of ways to make money, there are more ways to lose it.
You should stock up on a years supply of food at these prices. Unless the price of grains rise at least 15%, the cost of production exceeds the current price. I have to make a decision in 6 weeks on how much and what to plant and if prices are this low, I will not even think about corn. Based on the price of milk (very high), I may just switch to grass and reduce the number of cows - same profit less work.
Amen!
A fact that is totally not obvious to a lot of people.
I second “Reminiscences of a Stock Operator”
By Edwin Lefevre
You can find it online for free.
“Unless the price of grains rise at least 15%, the cost of production exceeds the current price. ”
Hoz, is that using forward-looking or backward-looking energy costs? I would imagine that most of the costs of agricultural production have dropped rapidly over the past two months.
“Investing and trading are like s*x.”
What, like lots of trickily arranged numbers, creative positions, and incessant lying?
“Timing is everything”
Oh, NOW I gettcha.
I always though investing in America is not that much different from what Buffett had to say about it (paraphrasing):
‘The financial services industry in America exists primarily to separate people from their money.’
For this reason, I have always selected my own individual securities, performed my own due diligence, and always advised anybody who bothered to ask me to do the same. Nobody will look after your money as well as yourself. I never liked mutual funds (you give up investment control of your money), never liked personal debt, never liked corporate debt, never had a mortgage, and never liked the idea of being “invested” in aging buildings.
My friends tell me I am way too cynical. My response? I am a realist!
‘Sorry, was away this morning at my quarterly shopping trip at all the ethnic markets in Queens.’
Don’t tease us so, fasty. Tell us what yuh got! Did yer get a rutabaga? A duck? Pickled plums?
Well, it was more of a “top up” trip than a “need a cab to get back home” trip, if you know what I mean (don’t own a car.)
Here’s the more “exotic” stuff (who knows what’s exotic for whom but whatever):
fresh curry leaves
fresh long beans
fresh tamarind
dried shrimp
coconut vinegar
dried cowpeas
I wanted to hit the Korean fresh fish markets but I was totally loaded, and it looked like it would rain heavily (and it did.) Maybe a followup next week.
Lawd, I love that Woodside-Jackson Hts-Elmhurst food corridor. I could shop there all day long. I’d never get bored. LOL.
You must make some tasty viddles.
He has a food blog, even. Lemme find the link.
Fasty:
If you ever need a car to drive you and your stuff back home…it would be cool ta meet ya…..sunnyside queens
———————————————-
Sorry, was away this morning at my quarterly shopping trip at all the ethnic markets in Queens.
I try to. I pour all my borderline-OCD (ok, totally-OCD) energies into fun pursuits like finance and food and books and music.
I like ethic markets too. They’re the world markets of taste and smell. I wish I had your talent to mix flavors and smells. It’s a gift.
Thank you.
I don’t think people realize how cheap it is to eat sensational food.
I could do “survival” for $5/person per meal. For $10, I make you excellent restaurant food. For $15, I make you food that makes you wanna slap your mama, and for $20, the kinda food, you’d push your grandmother off a cliff for.
You do have to change your thoughts though. If only a slab of steak will do, it doesn’t work. (I love steak tartare BTW.)
It’s not hard even if you pay premium price for excellent ingredients (I assure you, I do.)
TCM Guy,
You should read your own book (or at least your own phrase that you are a long term investor - buy and hold). I doubt if luck was on your side as much as your common sense. Perhaps you bought when everyone was selling out of favor stocks?
My recent buys: PGH, PNW, TM, but at $130 or so worth apiece.
You can read Remenicences of a Stock Operator here free. You might look under Livermore as the author as well.
http://www.24hgold.com/news-gold-silver-Reminiscences-of-a-Stock-Operator-%20Jesse-Livermore%20.aspx?langue=en&articleId=170184
‘I mean, please, lie to me if necessary.’
Oh, very well, but only because I like you.
Muir? Muir!
*puts on my lying face, which evidently sucks, because no one is ever fooled by my lies. I should take a course. I WILL take a course, and learn how to lie sooper-dooper good, as a New Year Goal. *
Muir, I’m happy to tell you that there will be NO inflation. One of these days, as you sit basking in the sight of the Miami skyline all glittery and pretty, there will be a knock on your door and when you stagger out there, dropping your martini on the way, you will be greeted merrily by three (3) sloe-eyed darling maidens with golden ingots and a pot of geraniums, just for you.
Also that pesky rash is going to go away.
How’s that? Huh huh huh? There you go, baybee.
‘…because no one is ever fooled by my lies. I should take a course. I WILL take a course, and learn how to lie sooper-dooper good, as a New Year Goal.’
Offered by any one of you. And I’m not just being provocative here*, because I know Ben is on the road, behind a snowplow. I just bet you’re all a bunch of super good liars.
*Okay, I AM just being provocative here. I’m bored, cold, and I already taunted three people today but they wasn’t exciting enough in response. Also I know you can’t reach me and beat me for implying that you are all skilled liars, because the roads are bad out here, too.
Thank you
I’ll look below to see if you posted on my binoculars.
(knew I could count on you! Love you 2)
I desired to post, I did not ultimately post on your binoculars, because I was ashamed to admit that my three (3) pairs of binoculars were all acquired on one basis: ‘were they at an estate sale for super cheap?’
I don’t even know what brand any of them are. I’m not good with brands. I can barely recall what brand IIIII am. I’m pretty sure I’m a girl primate? Yes? And that’s gettin’ fancy and checking labels.
“Also that pesky rash is going to go away. ”
LOL…
Wish I could help you with that class, Olygal, but I suck at it too.
Oooo, unless _that_ was a big juicy one—-could you tell??
It’s that ol’ New York refrain:
Chlamydia for one, gonorrhea for two.
Love me my dear, adore me do do.
‘—-could you tell??’
Why, yes! I could! * snorts, almost falls off chair, barely recovers balance in time to avoid mashing girl-simian head*
*Nope. That was a lie. Actually, I suspect you suck at lying. In my experience, anyone who says they lie good; they don’t.
‘Chlamydia for one, gonorrhea for two.
Love me my dear, adore me do do.’
That’s pretty, it really is, and quite rhythmic. But I don’t want to kiss you any more.*
*Except I bet you have no germs, you liar.**
**Hey! Why don’t YOU teach ‘Lying 100′? I bet you’d be SUPER!
‘**Hey! Why don’t YOU teach ‘Lying 100′? I bet you’d be SUPER!’
And THAT was a lie. (Hey! I’m coming right along here. I may even be a natural. )
Yes, well, I bet you s*u*ck at lying. Serious. I bet you march in and put everything you got right on the table, all studious-like, one card after another, like a ticking clock.
You volunteer for inner-city math deficit chilluns, after all; how good at lying can you be? Hmmm?
* assumes wise and smug and irritating smiliness *
Look. I may growed up in the wilderness, but I know ‘hooey’ when I see it.
Hahahahaha!
I’m no good at lyin’.
How could we POSSIBLY tell that?
I ♥ chanterelles?
‘I’m no good at lyin’.’
I’m sorry, Faster; that was too brusque, my first response. *takes one of Fasters lyin’ lil’ paws and holds it gently, with a soothing sort of gesture *
It’s okay. Really it is, Faster. There is a place in the world for you.
* a mild pat-patting with my own milky white farm-girl paw.*
Just don’t kill anyone, is all we can ask of you.
Okay, then!
Make some good risotto instead!
With chanterelles!
If I killed someone, I’d serve his liver with some nice fava beans and a chianti. *sniff*
What do you take me for?
‘What do you take me for?’
Some sort of nasty census collector, is what.
Now, put that thing down, man! You don’t know where it’s been! Gettin’ all germy, somewhere in Queen’s.
You want a new, fresh, good liver? I’ma here, baybee, jus’ for you
“Lawd, I love that Woodside-Jackson Hts-Elmhurst food corridor. I could shop there all day long. I’d never get bored. LOL.”
In that part of town, I believe that the “ethnic” markets are just simply the markets. I never realized that people went from Manhattan to the outer boroughs for exotic foods. Live and learn.
Once the Fed no longer has room to maneuver, then they’ll sit helplessly on the sidelines just like Japan’s central bank did, while the economy enters a decidedly non-Keynesian self correction.
What will that correction be? IMHO, we’ll see deflation in the near-term while joblessness increases and our “service” economy shakes out a lot of dead weight related to poorly run, highly leveraged, vanity-related, and otherwise non-viable business models.
Aggregate inflation will occur in any industry model that benefits from fiat wealth creation i.e. financials, medicine and other forms of government spending. Once the government becomes the major consumer of these “commodities”, then depending on the philosophy of those in office. It will be inflationary (i.e. through cronyism like we’ve seen from Hank towards Wall St.) or deflationary if costs are cut across the board, assuming lawsuits don’t put an artificial floor into the costs of these services.
Have you read Bernanke’s speeches from 2002 and 2004 about deflation and near-zero mechanisms?
He certainly doesn’t plan to sit helplessly on the sidelines.
In that case why is the Nasdaq not back at 5,000?
What stopped them for the last six years?
Don’t confuse my comment that he won’t be sitting on the sidelines with a belief that he will be effective.
They will try like h*ll, and will fail to re-inflate.
Course, being prepared for the effects of their attempts is still worthwhile.
He’s got his playbook, and by g*d he’s gonna use it! Whether it helps or not…
If I knew your playbook, why would I not frontrun you, and render you ineffective?
Jes sayin’.
The Fed _wants_ people to front run them! Half they time they get the effect they want without taking any real action, just talking about taking action.
For example, they started talking about quantitative easing, and 10yr treasury yields tanked; they didn’t actually have to buy any to boost prices—-just convince everyone else to buy them on the theory they could sell to the Fed for more later.
Frontrunning is what the Fed loves.
Sounds good to me. I don’t have any problems separating fools from their money.
Very well thought out prognostication. IMO, wages are always the key to sustained inflation. In the past few years there was a lot of downward pressure from globalization, which was offset by MEW. I believe the Fed has been concerned about the declining paycheck, for a long time, which is why they allowed these bubbles to occur (just a theory). Lots of cheap labor on the open global market in the last 20 yrs., very deflationary. Ask Japan.
Agree, Kirisdad.
Wages are not going up in the near term, and I think we are definitely in a deflationary cycle.
Whether or not the Fed can offset the deflationary forces remains to be seen.
Fascinating times!
I just moved to Miami “The Fair White Goddess of Cities” (saying from 1925)
-
Rent for $1650 (brand new 2/2 granite/marble, 19th floor unobstructed views with 2 balconies (real ones, not just for plants) it’s a corner unit so I see the Bay and the airport just really nice…)
HOA is $750 and taxes work out at $600.
That means that $300 is the profit for the landlord.
Guess that at 7.5% CAP, the unit is worth = $48,000.
I was wondering how the move was going, Muir. What are you seeing on the ground there in the Magic City? Are they still putting up condo towers? Do you hear people talking about the bubble in everyday conversation?
Oh Palmetto!
receivership, management company … mess.
To the East I see the Grove, Key Biscayne, sailboats, Brickell, and the downtown skyline.
It’s beautiful.
To the North and West, I see the non-stop landing and takeoff at the Airport and Coral Gables from Miracle Mile North.
I just sit at night and watch.
Reminds me, binoculars?! Recommendations, anyone.
Or a telescope! Please recommend.
And, yes! There is still construction!
-
Now, once I take the elevator down….
You’ll love this Palmetto
The developer of my building went bankrupt in 2006 and the loan was called in by Lehman Brothers
The court froze sales in Oct (unnecessary as there were none in 08) Big outfit called Apogee runs the building, spoke to the guy who runs the entire show as the building was never turned over to the HOA (!), multiple high rises in Miami and Las Vegas in the same boat and he oversees all of them)
This guy, after continued petitioning, was granted by the court permission to rent (about 57 units never sold of a 150+ high rise)
I overheard when he told his staff that he didn’t care, to just rent them.
Building has been draining money but the court has to provide so it ends up that receivership has worked (so far.) But staff is worried.
They have scaled back, no valet, no heated pool (oh, the Humanity!)
Once I get to the restaurants, it’s gloomy. Waiter I’ve known for years tell me that he may return to his homeland (dual citizenship from Peru)
Palmetto, ALL the talk is of the recession and Real Estate collapse. Made friends yesterday with attorney in Penthouse and had coffee in his place (had quite a party the night before with a band playing, but luckily the sound really doesn’t travel) He was telling me how he was the first to buy and bought at $565K and at the height he could have gotten 1.3 but there was a no assign clause (he’s an attorney, oh, well)
…
Wow, thanks, Muir. Quite a story. I miss my afternoon cafecitas on Calle Ocho. BTW, what does Little Havana look like these days? Used to be the most interesting part of the city, as opposed to the more sterile areas.
8th Street is pretty run down now.
I still do coffee at Versailles in 8th and 34th Ave.
It’s a big city, having lived here before for so many years I have the advantage of knowing it well.
From the Amish in the South to the dominoes on 8th and 15 Ave (Yes, they do let me play) to the old redneck bar on Virginia Beach….
Oh, and I know real genuine “dives” not those sterile for the tourist bars!
I just moved back to SoCal after two years in Miami. I miss it in some ways, but have no desire to move back. Now, I content myself with watching “The First 48″ (murder reality show) and seeing crime scenes within walking distance from my old house.
All recent movers among the HBBers, a favorite pack-up-the-boxes song.
http://www.youtube.com/watch?v=JVX64woxu5k
Muir,
I’ve got a set of Leica Geovid’s and I am extremely pleased with them. They have a built-in range finder which you may or may not need (I use them for hunting).
You get what you pay for.
Mike
Celestron NextStar Telescopes All price ranges and user friendly.
Thx guys,
A terrestrial telescope may be the way to go.
The range finder is a bit too much, I mean I wont be doing any sniper thingy on my neighbors 1600 yards away.
I just want to see the skyline, freeways, metrorail and sailboats. Oh, and people watching is nice too, but not that spooky stalking stuff.
Seems that Celestron NextStar Telescope might work but it seems geared towards looking up at the sky.
Any telescopes for looking across or down?
If anyone has serious recommendations on “binoculars”, I will be in the market next year.
I really missed not having one earlier this year when I went to CA and saw the whales heading down to Mexico (super-early, I know!)
A lovely couple loaned me theirs for a few minutes and I was thankful. I’m willing to pay up for a serious pair though.
Try Celestron stuff, not too expensive, but are a lot better than the typical department store stuff…….cheap binoculars aren’t worth the hassle. If you are still seeing double images no matter how much you adjust them, move on to a better pair.
I have a Celestron telescope that I use for star-gazing, or put an “image erector” on it, to use as a spotting scope.
It’s amazing the things you can “spot” with a setup like this. (not that I would know anything about that kind of behavior…….)
‘just want to see the skyline, freeways, metrorail and sailboats. Oh, and people watching is nice too, but not that spooky stalking stuff.
Seems that Celestron NextStar Telescope might work but it seems geared towards looking up at the sky.’
Muir, it’s been bugging me.
I been trying to remember all afternoon why I don’t like Celestrons and why wanted to disrespect them, and I just can’t recall. It seems to me that they acted bad in the super cold, is the best I can come up with.
Of course, this was Utarr ’super cold’, and you won’t likely encounter that on your fancy terrace in Florida.
Muir…Did they require a minimum lease term ??
One year.
Actually, I tried to get a multi year contract.
No go.
Little to long for me…I would not mind hanging out in a place like the one you described for 3 months or so….
If either of you guys are still up and reading,
Nikon 7×20 7.1 still occasionally come up on Ebay. Small, exceptional optics and focus, highly durable sports binocs. I had one pair for thirty years, and when I finally dropped them one time too many, replaced the next day. Birding to bay-watching…my all-time faves.
Actually, that unit is soon to be worth 0 dollars as the foreclosures continue and the HOA goes through the roof to compensate for those who are not paying.
They will have to pay you to take it (for free) instead of renting it.
My house in PBC play out the same way, the monthly fees (before MTG) are over 60% of the rent. Add in the 1/2M dollar MTG, and the home is under about 2K a month. Unreal that the guy has been keeping it up this long, I expected the foreclosure notice last year! Anyway, I’m almost hoping for the notice now (given the new programs), I figure I’d have a few months in here at the bank’s expense, and be able to rent something cheaper (rental prices have fallen again) that’s nicer in the same area.
Miami will have to tear down condos; mark my words.
They won’t tear’em down. Section 8 coming to a condo near you. That way you can get hookers and crack without having to leave the building.
Exactly. “Community activists” (read: paroled criminals) will start breaking into vacant condos and turning them over to “the homeless victims of the economic downturn.” Local governments will display their usual impotence in dealing with criminality and vagrancy, meaning entire buildings will degenerate into squatters’ “paradises” complete with heroin shooting galleries and stairways used as urinals by lurking criminals.
How much for your condo now, knife-catcher?
Gives a new and unpleasant meaning to the term “knife catcher”….
During the 80s Brickell was overbuilt and condos were sold at pennies on the dollar.
It never became a slum.
-
Miami is a tale of two cities.
Miami proper, within municipal boundaries, is poor. (except Coconut Grove which is not incorporated and Brickell)
The rest of “Miami” “seceded” during the 80s and 90s each incorporating into it’s own municipality (Key Biscayne, Aventura, Pinecrest etc all told about 20+ cities were born) Coconut Grove wanted to incorporate but leave it’s “Bahamian” black area to the city. Miami declined.
-
Unless someone understands this, they cannot understand Miami.
Miami will recover. Its going to be a while….but they have been through this before but to the degree they are in right now. It is nuts and there is going to be a huge correction. If it corrects down far enough I am going to do may part and buy on the beach. My wife is from there and I still love the city.
Btw, I second the advice on the Leica. I have the trinovid… they are small 10×25 but a great product…its the one they took to the moon. The best $450 I have ever spent.
Lane
From an economy powered by selling each other overpriced houses and low paying service jobs to hookers and crack.
You’ve come a LONG way America
“From an economy powered by selling each other overpriced houses and low paying service jobs to hookers and crack.”
Free markets bemoan the nuts!
Re Sammy’s observation about “community activists”: I actually saw this happen back in the wake of the ‘81-82 recession. Developer coverted an apartment building into condos right down the street from Resorts Casino in Atlantic City, NJ. Unfortunately, the project was right next to the Institute for Human Development, a residential substance abuse rehab center. As soon as rehabbed criminals were discharged from the center, a live-in maintenance man in the condos would move them into unoccupied units, collecting rent, drugs, sex, etc. on the sly. Whole thing came crashing down (figuratively– it came crashing down literally later, c.2001) when developer was indicted for conspiring with maintenance man to burn down the place. I spent part of the most depressing Christmas Eve of my life in the place, trudging up and down urine-soaked steps around 8:45 p.m., looking to serve a subpoena on the maintenance man. I probably would have been jumped but for the fact it was Christmas Eve and all the squatters were seeing triple after partying all day.
Long Island, NY in the 70s. A beach resort, Long Beach (Long Island) had dozens of luxury apartment buildings. Or rather, they were luxury apartment buildings in the 1930s.
By 1970, they were all filled with Section 8, and/or used as halfway houses for mental patients.
Interestingly, the area recovered. In the 1980s these apartments once again became “luxury” and the area became gentrified. (God only knows where the mental patients went.)
I’m not sure how badly it will sink because of this latest bust.
But the lesson to be learned here is “luxury apartments” and hotels can and do become welfare apartments. And it took 30+ years for Long Beach, Long Island to turn around again after the G.D.
If you Google around you can find Newsday’s history of Long Island
Reynolds’ problems were minor compared to those of Mayor Louis Edwards. As Edwards was leaving his home in 1939, patrolman Alvin Dooley, who had been assigned to the booth in front of the mayor’s house, fatally shot him and seriously wounded his driver and bodyguard, patrolman James Walsh. Edwards had taken away Dooley’s motorcycle and backed Walsh over Dooley in an election for PBA president. Dooley spent 15 years in prison.
Long Beach’s heyday as a resort ended because of cheap air travel and the advent of air conditioning, city historian Roberta Fiore says. “With air conditioning, people didn’t have to escape the city in the summertime and the airplane got them farther away faster,” she says.
By the ’60s and ’70s, “Long Beach got very depressed,” said Alexandra Karafinas, head of the Long Beach Historical Society. “The hotels had mental patients in them and welfare recipients. The property values were way down. There were some race riots here.”
“Actually, that unit is soon to be worth 0 dollars”
It’ll be worth even less! Let us not forget liens and whatnot. A one dollar house is a guaranteed liability.
How do you guys keep track of the mortgage status of your current Fl Rentals? I don’t wanna be surprised when the Sheriff shows up at my door (I actually want to take the doors with me j/k)
“How do you guys keep track of the mortgage status of your current Fl Rentals?”
Public records
Taxes @ $600/month seems on the low end. Did you check the county records?
http://gisims2.co.miami-dade.fl.us/MyNeighborhood/SalesMap.asp
select “search by address” and you can eventually click your way to the exact tax bill for your unit. My girl friend used to live in a 2/2 in Bal Harbour. Taxes alone were about $1000/month.
What about the neighbors? Are there any? Owners or renters? If you’ve met any yet.
Asparagus and Palmetto
Yes, nice people.
Some families.
Some young people who are sharing (unapproved) and going to UM.
I’ve been fortunate to live in very nice and safe areas in Florida.
Very beautiful also.
In the last 4 years I’ve lived in Mt Dora, lakes, open country, rode my motorcycle up and down winding pine tree lined hills,locals were friendly (Northern transplants were an abomination) I lived on the tip of Jupiter Island and watched Jupiter lighthouse every morning, saw turtle hatchlings making their way to the waves, walked the beach for 8 miles and did not meet a soul.
I have not locked my door in these past 4 years.
And, no, I do not always lock my doors now (I pick my living spaces carefully)
I’ve lived here before, last time in the Gables. I never, ever locked my doors in 5 years I lived there ( a condo.)
-
I’ve never talked about these things with Muggy or Palmetto,but really and honestly, Florida has some beautiful and safe areas.
“I’ve never talked about these things with Muggy or Palmetto,but really and honestly, Florida has some beautiful and safe areas.”
I bash Florida a lot, but I am aware of some of the nice areas. I love Pass-A-Grille in Pinellas… o.k., that’s it, I can’t think of any other nice, safe place. Please share.
Some days I like to pretend that Weeki Wachee is nice, because I fantasize about having a little shack on the river and chilling with Manatees in my backyard.
When I lived in Pinellas County some of my favorite places were Ft. DeSoto Park, the Pinellas Trail, and Lake Seminole Park. There was a paved loop in the back of Lake Seminole Park that was great for rollerblading.
I have a soft spot in my heart for Florida. With all its faults, there truly are some great areas and lovely country. One of my biggest beefs with the bubble is seeing parts of the state get all chewed up.
As soon as I get laid off, I’m going to take a week or two and hit up some Florida diving! I love my job, but if I get laid off I’m going to love that trip down there! (Was there for Thanksgiving but visiting family).
Northern transplants that go to Florida,and then move half-back to the beautiful Carolinas,are purely animals,in looks & action.In the business I’m in I won’t deal with them at all if I can help it.Lucky they can’t sell their houses now,so there’s less of them coming.
And then the genuine Florida Crackers are such wonderful folk.Are there any left in Fl or have most natives been driven out ?
Jess, we have tolerated the monstrous metro pukes in and out of VT for a while now. Watching them flounder is sweet vindication.
“And then the genuine Florida Crackers are such wonderful folk.Are there any left in Fl or have most natives been driven out ?”
they are a hardy species.
Yes
Panhandle, Martin County Highlands and Polk of course.
Lake and even Martin.
But you do find them all over the place, even in Dade.
Don’t forget North Central … but for UF it’s the ‘land that time forgot.’
Hmm, of course some of the towns are “scenic” and snowbirds have settled there, opening “gift shops” and similar rot…
Wait a minute. Hills? In Florida?
Jeez, Bill, in all the time you lived here, you never took a trip up to Hernando County and points north? Yes, there are hills in Northern Florida. Nice, hilly hills. Heck, even Pinellas County has some hills.
Many, many hills.
The remnants of an ancient reef.
Cuts across the the spine of Fl North-South.
Sugarloaf Mountain (It’s Florida Cracker speak for a really tall hill) is gorgeous on a Motorcycle (just watch out for the downhill skaters laying flat and going at 60 mph+ while they give me the thumbs up for not wearing a helmet)
Really green hills, perfect for parasailing.
“Heck, even Pinellas County has some hills.”
I live on one of the few, and it’s deliberate. Another benefit of renting: you can move when you discover you live in a turd/flood zone.
Muir. What you riding? Me, a bmw boxercup 2005. I have had a couple of gs`s but I love sport bikes and never going back. Although a gs is I guess adventure touring. Rode yesterday for a little bit…can`t get enough.
Be safe,
Lane
“while they give me the thumbs up for not wearing a helmet”
Muir, take it from someone who rode his whole life (since childhood) and considered himself a very safe & conservative rider: they are out there, and they are trying to kill you.
It only takes ONE TIME of bouncing your helmet super-hard on pavement to realize all the discomfort and lack of wind in your hair over the years was WELL, WELL WORTH IT. Seriously.
Of course, if you don’t have a helmet on at the time, you will probably never have that thought about how lucky you feel to have survived the assassination attempt.
It’s not a matter of “if”; it’s a matter of “when”.
EMTs have a nickname for helmetless riders: organ donors.
Prime, great point. A lot of my harley buddies ride w/o and give me a hard time for wearing. Like I tell everyone, do the tap test…get a hammer… tap your leg then keep coming up taping you stomach and chest. Now tap your head. You should see the look in their eyes. I have riden w/o but a few years ago I was in a very bad ski crash… I wear my helmut now.
Lane
Good call, Lane! Glad to hear it…
Just FYI, motorcyclists who don’t wear helmets are known to ER docs and nurses as “organ donors”.
Drive a suki 805
You are all correct.
Helmet is the way.
-
And yes, I’ve gone down and my first point of impact was my helmet.
Then wife (many years ago) said she hoped I’d crash as I was walking out the door. Made it 3 miles.
‘Then wife (many years ago) said she hoped I’d crash as I was walking out the door. Made it 3 miles.’
Hmmm. Upon reading this post I had many thoughts on helmets and bikes, and all of it was washed away in one single thought, when I read this:
Muir? Get a new wife. ‘Cause that is not your lucky wife. Believe it. Jeeze, man!
Are you sure the taxes are only $600 a month? What did the unit go for? Taxes there are usually 2 percent of the sales price.
No sale. Developer never sold unit.
Never lived in either.
From the County:
Amounts due if paid by 12/31/2008 in U.S. funds
2008 Taxes $ 7225.18
To pay by e-check please carefully read the following before clicking on the PAY NOW button below. Funds must be available for immediate withdrawal….
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Assessment Information:
Year: 2008
Land Value: $0
Building Value: $0
Market Value: $329,060
Assessed Value: $329,060
2008
Taxable Value Information:
Year: 2008
Taxing Authority: Applied Exemption/
Taxable Value: Applied Exemption/
Taxable Value:
Regional: $0/$329,060
County: $0/$329,060
City: $0/$329,060
School Board: $0/$329,060
They tax the crap out off housing in Florida, dont they.
Only the non-residents, newcomers and sno-birds. Taxes are very affordable for long-time residents. Good or bad FL is toast.
$750 hoa on a new building ? does it have it’s own airport
Is it me or does $1650 seem ridiculously high for a 2 bedroom condo, especially in a bubble city? I’d think $750 sounds more realistic.
For a top notch corner unit overlooking the ocean and bay, it sounds great to me.
This is bound to work out well for GM. They bitch and moan about unfair Government regulations, and then flip back the sheets and invite them into bed. Band aids on bullets wounds over and over…
Dec. 16 (Bloomberg) — The U.S. Treasury may adopt a plan that would let a car czar or the Treasury Secretary force General Motors Corp. and Chrysler LLC into bankruptcy if the automakers don’t show they can survive without government aid, a U.S. senator said.
South Carolina Governor Mark Sanford, a Republican, asked Bush in a letter yesterday not to consider the bank bailout fund for automakers because it would open the “floodgates” for other troubled industries.
“We are at a tipping point in moving from a market-based economy to a politically based economy,” Sanford said.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aSMxlDwj_ZIo&refer=news
Well the public seems to be against the bailout. For once, I am on their side.
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/15/AR2008121502727.html
I called, Fax’d, e-mailed all the players (and prayed to baby Jesus); specifically stating WHY bailing out the 3 are a Really. Bad. Idea.
Communication on the blog is short for me - not so with the gang of thiefs.
Signed my real name and family members who also agree, complete with address, and tele.
United we stand!
Leigh
P.S. A looooooooooong time ago, Critters used my name on TeeVee and cited the letter from Ms. Leigh against (whatever) I protested at the time. Your voice does matter!
test
The public seems to be against the bailout. Count me on their side at least for once.
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/15/AR2008121502727.html
Too late. The floodgates opened for AIG. If they had allowed AIG to fail, this would have been over much quicker.
I think AIG would have brought down all the investment bankers and hedge funds. I think bailing out AIG just bought us some time.
Those AIG HookerFests for $500k/yr cubicle pukes are more important than hourly wage slaves on the assembly line.
LOL
oxide,
So true. Again, we’ll look back ( from some point in our anguished future ) and readily be able to determine that the causes of our now unshakable woes were cemented by errors in judgement from the very early hours of this “event”.
Especially as the political will to continue to fund BO after BO dissipates.
What I find amusing is that they have discoverd that borrowing from Mom and Dad (the Federal Government) is DIFFERENT than borrowing from banks. Yes, in the end they WILL bail out the prodigal sons. But they are concerned with lifestyle issues (executive pay and perks) in ways that banks and bondholders never were.
Car czar = dumbest idea with the dumbest name ever.
Who gets the credit for this dead-on-arrival concept?
Yeah, and silly me I thought we lived in a democracy. Where’s the Energy King and the Prince of Housing?
And why don’t they come up with a shoe czar? With Obama in office in January, and undoubtedly a basketball fan, perhaps he will have a new cabinet office of shoe czar. That way he will drive down the price of the best Nike basketball shoes - you know, the ones that young thugs kill for. They want to be the next Michael Jordan.
Why don’t they call a spade a spade? How about “5-year auto industry planner?” I understand there are lots of folks in Russia with many years of experience who can step right in.
Not to worry the government will be passing out picks and shovels soon.
States worry about slumping retail sales revenues…
SAN FRANCISCO (Reuters) - Todd Gerardo’s layoff means work for someone else in Arizona, where state officials this month will have more than doubled their staff with new employees for processing unemployment benefits.
Gerardo, of Gilbert, Arizona, said he knew his days were numbered as a car salesman when he managed to make only minimum wage last month. His dealership let him go on December 3.
“The economy is just so bad that for the first time in my life I just wasn’t selling any cars,” Gerardo, 42, told Reuters while waiting for a skills assessment at a state office that helps job seekers. “The business is just not there anymore.”
Some 37,000 others in Arizona who filed first-time claims for jobless benefits last month would agree business is bad and state officials say hard times are spreading quickly from the state’s battered homes market.
“It’s no longer related to housing woes but has become a broad-based decline,” said a Dennis Doby, a labor market specialist at the Arizona Department of Commerce.
http://www.reuters.com/article/ousiv/idUSTRE4BE6G620081215
Everything is related to the housing woes. Cars were purchased with MEW’s, it’s the only way people could afford a new car.
Its amazing how few people are aware of this (cars purchased with home loans).
Actually, it wasn’t the only way people could afford a new car, it was the only way they could afford a BMW, etc.
My cat purchased me with her MEW.
Classic! I gotta hand it to this guy, at least he’s not pretending. It is in lis pendens, though, since June.
http://tampa.craigslist.org/hil/apa/958697241.html
Nice catch palmy. Great sentiment indicator.
“Three bedroom house to rent month to month.”
I wonder if he would consider renting it out by the hour.
HBB Kegger!!!
What a hoot!
“We’re going to strip this mother!”
That would be a lot of fun.
How can you be sure he’s not pretending: pretending to own the place. Get access to some keys to something like that and rent it as if it’s your own.
I looked it up in public records. He owns it right now, but there’s lis pendens on it and I have a feeling the foreclosure will move faster than he thinks it will. Otherwise, I might have considered taking the deal.
However, there are some Nigerian scams on Craigslist where people are picking a house out of the phone book or whatever and advertising it for rent as if it were their own. I ran into one of those.
What is that black stuff in the bath? TAR??
Mold…
Liquified remains of the previous tenant (shhhh, it’s a secret)…
Sometimes you disturb me.
But then other times I think: ‘I bet this person is really handy to have around.’
THAT would be the ultimate disgusting final act of this bubble.
And after 100,000 SFH are demolished because of black mold and vandalism
————————————————————-
Miami will have to tear down condos; mark my words.
NYC,
This will go down as the greatest waste of resources in recorded history. Again had there been a boom in building drug re-hab centers or senior assisted care facilities… I guess I could live with it.
But it wasn’t was it? This was about feeding our vanity and of course the notion that everyone ‘deserves’ to live in a $600,000 estate. Or “manse” id you prefer.
Hm, like those perfume factories in Eastern Europe under Soviet rule.
Nobody wanted to buy it, so they dumped it all out and refilled them, day after day.
People like to moan at how bad gov is at allocating resources. I’d say take a look at what the free market did. 5 Year supply of homes that people can’t afford.
It’s surprising where I come across effects of the housing bubble. I belong to the NB Genealogical Society. We publish a quarterly magazine. There has been a series of articles on the group of mostly German-extraction immigrants who came from the Philadelphia area to Moncton NB in the 1760’s. The leader, John Hall, owned the Wheatsheaf Inn in the Phila area. Fast forward 240 years - the author found that this building was still around. However it was bought by an infestor group, and depite an attempt to get protected historical status, it was torn down. In the latest copy of our magazine, the last article in the series mentions that the infestor group hasn’t been able to get funding to build anything and the vacant land is now up for sale…
Thanks for bringing this up. It’s the sort of thing that makes me sick to my stomach. I hate seeing great old buildings go under the wrecking ball. Many of them last far longer than their replacements will, if the replacements even get built.
The other day I was in a faux-quaint little strip mall all done up to look like Key West and wanted to lose my lunch. They tear down the real thing and replace it will faux crap. I’m tired of strip malls and that sort of thing. Give me a nice little town with a main street and side streets, where I can walk around and wander in and out of shops and stores.
It depends on location. You could have every headache ball on the planet running round the clock knocking down buildings in the northeast and still have a glut of 100 year old brick structures to admire.
You don’t even need a little town. There are parts of Washington and Baltimore exactly like that. A main drag with a few legendary shops and restaurants and side streets full of old solid brick rowhomes. Much of it is within walking distance of downtown offices.
True… but you have to dodge bullets at night.
Those rowhouses aren’t much fun anyway–you can hear your neighbors raising cain and they can’t get evicted. Also, no lawn to speak of and passersby through trash in it!
Better to have a little bit of land so you can grow some food. Community gardens are nice but you always have these drifters trying to steal what they didn’t work for. (Moral: grow obscure and/or poisonous plants.)
I know what you mean… however, these are the areas that are gentrifying…slowly…That land is just too valuable to downtown workers who don’t want to commute. Most of these row houses do have a sizable yard, especially in back. You can grow a great deal even in a 4 x 8 plot.
Can’t help the thin walls.
We will be lucky if many of the buildings slapped together during the boom make it 50 years, let alone a few hundred. My house (rental, last sale 500K) is a perfect example, windows installed poorly (water leaking down a few walls), knockdown starting to crack, plumbing problems. This house is 3 years old, and need serious work to make it “perfect” as a brand new house should be. There’s just ton’s of examples, shoddy workmanship throughout the entire home.
Not what you’d expect at 300/sq/ft in Palm Beach Gardens, that’s for sure!
Well we do have some survival bias here. Plenty of buildings were made cheaply and not to last 100 years ago. For the most part, they’re the ones that aren’t around anymore.
You also forget that a building that has been around for 200 years has had the advantage of people dealing with all those problems for the past 200 years. It isn’t necessarily that things were made better 200 years ago, it is just that they’ve had the advantage of getting fixed for the past 200 years. A three year old building might have windows that leak, but you’ll fix it and if it is still around in two centuries no one will remember the fix done 197 years prior.
Were windows installed by illegal aliens with ZERO experience 200 years ago? ‘Cause that’s who built these houses in Florida.
Good point, but that still doesn’t explain why your 1920’s school buildings run fine with few problems while 1970’s and 1980’s school buildings are prone to mold disasters. (There is a reason: the old buildings were designed for passive heating and cooling, while the HVAC revolution brought us bizarre ductwork that led to still water pockets and critter explosion. But the upshot is that the new guys with the new methods never learned why the old guys were doing it that way… and the kids paid the price for it.)
Sure, there were plenty of crummy buildings built back then–hell, most of them have probably burned down because they sure as heck weren’t fire retardant. Some still burn down today. And if they’re still standing, renovating them just to get some proper wiring and such inside is often cost-prohibitive. I’d say in the US mid-century buildings are some of the best built, before they started coming up with ways to continually cheapen.
Let’s not forget that some of those prewar skyscrapers in New York City have been hit by airplanes–some more than once!–and are still standing, while the WTC experienced a catastrophic structural collapse–oh, and also caught on fire despite the fire retardant measures. (And the engineering firm hasn’t been sued–why?) The old sky scrapers had 6 foot thick walls at base. The more you stretch your materials, the less you ‘over-engineer’, the shorter your building lifespan.
not a gator,
Excellent points. Out local grade school I’m told was fine until they retro-fitted it w/ HVAC. Now all it needs is a match! Another reason more buildings aren’t salvaged is b/c of the asbestos, lead etc.
Preserve what you can ( within economic reason ) and move on.
I suspect it’s also possible that there’s an itsy bitsy difference between being hit by a cessna, and a 727.
just a feeling, you know…
A B-25 Bomber is hardly a Cessna. Empire State building,
1945, 79th floor. Google it.
Interesting discussion. But please, WTC is not a good example. Jet fuel cannot burn hot enough to melt steel, and that is the claimed cause of the collapse. Seismographs in New York detected a tremor just before the collapse. The collapse occurred at freefall speed, in contradiction to what would happen if the reason was failing steel at the top. Girders in the basement are snapped in exactly the way explosives experts design for planned demolition. The third skyscraper had minimal damage, mostly cosmetic, yet somehow, hours later, collapsed. Mysteriously, the crime scene was immediately established, and all materials were hauled away before any independent analysis was possible — not that there was any rush to restore the towers, for the spot still sits empty over 7 years later. Finally, many respected engineers have claimed the planes could not have brought down the building.
So, please, the WTC event is not evidence of poor workmanship. There has still never been a collapse of a modern skyscraper owing to fire.
IAT
Itsabouttime,
You are a complete fool. And willfully misinformed. Turn the page.
shuzilla,
An object lesson in the old playground adage — if you can’t beat ‘em on th facts, distract ‘em with name-calling.
I stand by the facts. I guess you seem to think the material wasn’t carted away without an investigation. I guess you really believe the Empire State Building is stronger than the World Trade Center. Geez! Now I know how this whole housing bubble got started and kept going– people like shuzilla will believe whatever the PTB tell them to believe. And I mean that regardless of which party holds the White House or Congress.
Freedom isn’t free.
IAT
The people who bought houses for a quick flip most likely didn’t care about construction quality, defects, and mistakes/omissions. So if there are leaky windows, etc, they don’t know and care. A couple of seasons of that in Florida, and the house is worthless.
For one thing, insurance companies won’t insure you if they think they’re mold. Even if your one of those people who doesn’t blame mold for all the world’s problems, the insurer has been burned so many mold claims (”My children are ADHD/stupid/autistic! It’s the Mold!” or “I have headaches! It’s the Mold!”) that if there’s mold you won’t get insurance.
With a ready supply of empty houses, why bother with a moldy one?
Don’t mess with black mold, dude. It will f— you up.
That said, my strategy is to avoid that little bug in the first place. Oh, and never use quikcrete for anything!
“never use quikcrete for anything”
Care to elaborate?
The people who bought houses for a quick flip most likely didn’t care about construction quality, defects, and mistakes/omissions. So if there are leaky windows, etc, they don’t know and care. A couple of seasons of that in Florida, and the house is worthless.
For one thing, insurance companies won’t insure you if they think there’s mold. Even if your one of those people who doesn’t blame mold for all the world’s problems, the insurer has been burned so many mold claims (”My children are ADHD/stupid/autistic! It’s the Mold!” or “I have headaches! It’s the Mold!”) that if there’s mold you won’t get insurance.
With a ready supply of empty houses, why bother with a moldy one?
And now, here in Cali, insurance claims are part of the disclosure process…
“There’s just ton’s of examples, shoddy workmanship throughout the entire home.
Not what you’d expect at 300/sq/ft in Palm Beach Gardens, that’s for sure!”
-
I would, and have told people.
The old cracker and post WW2 houses are indestructible.
Solid concrete interior walls!
The early 20s and early 30s houses in South Fl do have settling problems, but they figured that they had to do things differently here than in the North East.
-
Now the house I built for myself (which I ended up selling) that one will be around after I’m long gone.
-
But really, in the flipper mentality, who cared what grade lumber the trusses were, or the compaction for the dirt (and quality of the dirt, not too much clay) being at over 100% or who did the masonry?
After all, why would you.
The City of Palm Bay, Florida couldn’t keep up with building inspections during the boom. Let me restate: they didn’t want to pay market wages for knowledgeable construction folks to inspect new construction. What to do… what to do?
Ah. What any free marketeer would do. They let the developers hire their own inspectors. Fortunately, no problems were found.
Never, ever, buy a house in Palm Bay, Florida.
I hate seeing great old buildings go under the wrecking ball. Many of them last far longer than their replacements will, if the replacements even get built.
It is a shame to see, not just for the buildings themselves, but the way buildings fit together, interact, and form a whole.
For example: building McMansions that tower over humbler post-war houses and encroach on the lot lines destroys the balance and proportion of a neighborhood street. It’s not just the individual edifices that’re ugly and wrong, in other words, it’s also how the buildings — and trees and plants and landscaping — work together as a whole.
+1
+2
I hate seeing great old buildings go under the wrecking ball.
Why? Who defines “great?” One man’s definitiion of “great” is obviously another man’s definition of “lack of progress.” I shop at IKEA and not at Ethan Alan. I like now. I don’t like 1760.
But you have plenty of opportunities to buy/move into new, stucco boxes, Bill.
Those of us who like older buildings do not. When they tear down a well-built, older building…it cannot be replaced.
I have heard posters here mention this fund, but never knew what it was. Now I know. Wealthy investors who get swindled get a little help from a slush fund. I could start over again with half a million, couldn’t you?
http://www.iht.com/articles/ap/2008/12/16/business/NA-US-Wall-Street-Arrest-Assets.php
So I say to my wife this morning, “I don’t understand why this Bernard Madoff thing is such a big deal, I mean, the banks have been doing this sort of thing for years.” To which she replied, “Yeah, but the banks could pay back the depositors’ money.” Ha, ha!
Am I wrong about Madoff as compared to the banks? How many people with money in the bank believe that their money is safe because the bank can only lend what it has, and wouldn’t the whole thing come a tumblin’ down if all the depositors panicked and demanded their money?
Alex, I’ll take Financial Blowups for $800.
What is Northern Rock?
That’s a good one. If he only skimmed off just 3% “reserves” for his own use, I’d be surprised and he’ll get off for insanity. Even with a prodigious spending rate, it would be hard to imagine that any bank would have more available before a run than the swindler.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aT7hj9yaIYcw&refer=home
Take THAT, NAR permabulls. Housing starts down 18.9%; housing downturn to extend into a fourth year with no relief in sight.
Actually that is good news the housing market in the longer term as new supply diminishes. In fact it would help the market to bottom much faster if all the builders go BK tomorrow and no one builds another house for 3-5 years, and then maybe we will start to work off this high housing inventory.
Yes.
Well - after the foreclosures also start to really decline as well. There are two major sets of inventory - unsold new homes, and foreclosures. We have to work through both to get back to a normal market.
I expect it’ll take about 10 years.
Cougar,
Totally with you there. The thing that nobody seems to think about is that there’s probably NO DEMAND to build a single new home in this country for the next 5 years. I said it before (and got both positive and negative feedback), but it’s very likely that every single HB in the country should just close up shop and come back in 5 years; they should all go BK. There’s simply NO demand for the product that they are making, they robbed 10 years of demand in 5 years, but built enough for 15.
Yes, it would help if they would all stop building. But they won’t, which is even better for us. They keep adding inventory to a totally glutted market; further pushing down prices for us vultures sitting on the sideline.
That degree of overbuilding might be true of the real bubble markets, like much of FL and Las Vegas. I hate to say that “It’s different here,” but there are plenty of bubble markets where they’ve probably only built a few extra years worth of supply. Of course the recently foreclosed uppon won’t be in the market to purchase housing for much of a decade, so demand will be smaller.
Once properties fall to a price where they actually cashflow for landlords, there will be money to be made renting out to former homeowners. IMHO it is landlords that will stabilize the housing market and that won’t happen until prices are low enough compared to rents for the cap rate to be competetive. The only silver lining is that in a severe recession, competing investments will be cr@p too.
Jim A,
Not… entirely on board. At the very least this scenario playing out would require super savvy and seasoned LL’s w/ horsepower, financing and expertise.
( We’re not getting that ) I understand Redbrick Partners ( early knife catchers ) are -already- in trouble, as I’m sure are many others.
I’ll look again when everyone tells me RE is the worst investment in the world. There’s just too much of the wrong kind of pent up speculatory demand right now. I certainly don’t look toward the LL’s to right this issue.
Or a slew of dead knife-catchers and some survivors. Alot of people will jump in early and be slain. Once prices are low enough, the new knife catchers will stop dying. It doesn’t require especially perspecatious investors, just a large number of desprate ones.
Jim A,
LOL! Now… ‘that’ I can get on board with! Right, it’s the process of “filling the moat” ( with dead bodies ) to a point where the “real knights” can galantly arrive at the castle walls for a proper storming.
The reason the Redbrick thing stood out in my mind is that just a few months earlier a friend pointed their business model out to me and I was understandably skeptical. Fast forward a few months and they’re already on the ropes. I think to make that rental portfolio model work ( you’d have to run it like Walmart ) Cheap and plenty of it!
Well, more like bottom feeders will come in after all the knives landed on the ground. Still sharp, but you at least know where to pick it up.
And I’m not sure I agree that we have 15 years worth of desireable housing, if all that housing counts condos which are too squished, McMcansions which are too big, and houses in general which will be too decrepit.
This is the same for the car manufacturers…
Very true.
I think we are in a period where they is a lot of excess capacity. With demand down like it is, and industry falling off a cliff, I think we’ll see a sever shortage of goods sometime in the future.
It’s at that point — when the economy has bottomed, debt has been destroyed, supply is constrained, and the demand reappears — that all the “printed” money might have a severe inflationary effect…but it remains to be seen.
And in related news - homebuilders’ stock prices are up big.
Go figure.
I’m amazed at how everyone’s so fixated on the FF rate - as if that’s going to magically fix everything.
This kills me. I have a lot of friends who throw out the phrase:
“The market has already priced in the bad news”.
However, each data point that comes out is “worse than expected”. Now, logically, if something is unexpected, how can it be priced in already? If it is priced in, doesn’t that mean you expected it to be that bad, then why is the data “worse than expected”?
blah, blah, blah …
Deflation at work???
Consumer Prices Take Another Record Plunge
Reuters | 16 Dec 2008 | 08:35 AM ET
U.S. consumer prices plunged at a record rate for a second straight month during November, according to a government report on Tuesday that is likely to fan fears that economic recession is rapidly heightening risks of deflation.
The Labor Department said its closely watched Consumer Price Index dropped 1.7 percent after falling 1 percent in October–back-to-back record drops since the department started keeping monthly data in 1947. Core prices that exclude food and energy items were flat in November after declining 0.1 percent in October.
–
Must be bad data manipulated by govt. No way prices can fall when Fed is Printing Money like never before.
Jas
LOL
The money is not getting to potential buyers of products, so while the money is being printed, it is not necessarily inflationary. Average Americans have not had real earned money available to buy stuff in several years, just a stack of plastic as necessities rise at 10 - 20% a year and wages are stuck due to massive offshoring.
GH,
Interesting angle. The consumer didn’t mind consuming ( as long as the purchases were connected to MEW ) which ultimately meant that ’someone else’ would be paying off your consumption!
I rented a modest older home in 2004 ( when rentals in Oregon were scarce ) and witnessed the “perfect MEW play” unfold across the street. Younger couple bought a light fixer, did all the eye candy improvements, had it appraised higher, bought toys, vehicles etc. and sold 2 years later to the day ( no cap gains )
This is the couple everyone wanted to be. And they wanted it to continue until not only their necessities were being met but they could retire comfortably ( and early ) as well. I have no doubt this couple ( emboldened by their early success ) impaled themselves on their very next infestment and are now divorced. There’s just no way to follow up on the success of anything that sweet.
Alt-A. This sucker’s going down!
http://seekingalpha.com/article/110919-alt-a-loans-spiraling-downward
Mauldin’s latest newsletter is a good read, IMO. It features the views and predictions of Gary Shilling, one of my favorite gurus.
FWIW.
oh yeah, my yuri geller spoon can beat up leased office space at the ballpark in arlington.
FWIW
“It is not you who bends the spoon; it is the spoon who bends you.”
I learned that from ‘The Matrix’.
Or else I learned that from a serious party, in the summer, after ruining a whole bunch of spoons with various experiments.
I can’t remember.
There is no spoon. And that money never really existed.
Yes - it is very thorough and I think an excellent piece.
Talk about delusion.
From Mauldin’s latest newsletter:
“Curiously, a survey found that in the second quarter, 62% of homeowners believed their houses had appreciated in the last year even though 77% had fallen over that time and only 19% had risen, according to Zillow. Another survey found that 91% believe that a house is the best long-term investment. A third poll revealed that 32% think this is a good time to buy stocks, but 51% believe it’s a good time to invest in a home.”
“Talk about delusion”
I’m telling you, Florida is leading the way and I still think we’re only at denial in the Kübler-Ross model. Some people are at anger and possibly acceptance, but most people are still in denial; call any FSBO, you’ll see.
CPI data out - down 1.7%. Steepest drop since 1932! Wow.
Dang - realestateskeptic beat me to it.
Man, that’s so…..hot?
Housing starts set a new record low - by far. Down to 625,000 annual rate (previous record low was 791,000 last month).
Ouch.
P.S. that was far lower than the 740,000 expected.
http://www.marketwatch.com/news/story/Housing-starts-drop-189-plumb/story.aspx?guid={E21F7EFD-5EFF-445E-87C8-8AE300767217}
OK guess I’m slow on the draw this morning - SS beat me to this stat above.
Just ignore me today - I’m redundant.
To the Department of Redundancy Department with you
No, it is the “Department of Tautological Pleonasms and Redundancies Department”.
‘Just ignore me today - I’m redundant.’
Okay, I’m ignoring you twice as much. Or even three times as much.
Hey! Where’s my spoon?!
N.Y.,…Good Morning!
Goldman Sachs Cuts Jobs, Slashes Average Pay 45% to $363,654:
“We think the industry is in the process of repricing its labor pool,”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQjVhGLMflj8&refer=home
This could be a very hopeful sign for the future. It may mean that banks have decided they can’t “make it up in volume” by making even more bad loans. Someone deserves the Nobel prize for this ground breaking analysis of markets.
zillow dings my house 2k a week
doesn’t pick up on additions , even old construction very well
My late parents’ house in Fresno, CA. was zillowed at $274,000 at the peak and is now zillowed at $150,000. I noticed from the bird’s eye picture that the new owners have done a lot of renovation of the property, and figure they are still ahead. I think they put $25,000 worth into the exterior, landscaping, and so on. I sold it at $75,000 in the year 2000. I think the annual gain in the house value by the year 2012 will be 3%. That will be a loss for the new owners.
Should’a bought Series I savings bonds instead of my parents’ house in 2000.
–
6-Month Annualized Inflation in the US Falling at the Fastest Rate Since the End of the Great Depression
6-Month Annualized Inflation Rate = -3.85%
The last time that this rate was lower was in early 1949, a period of severe recession towards the end of the Great Depression. There are shameless people who were jumping up and down shouting INFLATION, INFLATION, and are now giving excuses for the falling prices. Amazing people these “Printing Money” inflationists. They are clueless, to put it politely, as to how the US economic system functions. The cling to moronic myth of Printing Money for what is borrowed money that is paid back, or rolled up. There is no money available for spending, by the USG or anyone else, that is simply printed. The paper currency serves no other purpose than convenience in the modern money system. The rest is all debt-based money that is borrowed or exchanged for assets. Yes, the Fed and the USG are engaged in the illegal act of exchanging money for bad assets but that money is borrowed in the open market with competitive bidding.
3-Month Annualized Inflation Rate = -11.62%
Proud Deflationist,
Jas
“…Annualized Inflation in the US Falling at the Fastest Rate…”
Isn’t there a more succinct way to say “…annualized inflation … falling at the fastest rate…”?
Oh yeah: DEFLATION!
–
Disgusting and naked display of dishonesty by removing the important qualifier “6-Month” from the quote.
No surprise, though.
Jas
Great catch -
Best,
Leigh
?
What’s disgusting is they didn’t report the 3 month annualized figure instead
let’s see how well the borrowing from foreigners goes after today. All foreigners who purchased treasuries over the last months (again) fully lost their expected ROI in a few days time; do you think they will be back for more of this US crap where a loss is 150% guaranteed?
give Heliben a couple more weeks and the dollar will go so low that the BLS has to find new tricks to docter the CPI statistics.
Give ‘em hell, Jas.
Ive been posting the dollar index on a lot of your posts for the last few days, and they dont go through….have I been banned?
I hail from Norfolk, Virginia. As I understand the US Gov’t upped the BAH (Housing Allowance) for military. This has a big effect on local rents, as the slumlords generally move to match those allowances.
I haven’t seen a huge amount in the way of rents dropping. People still asking for high home values. I could almost say we aren’t affected that much, but I can hear co-workers packing their boxes from layoff yesterday (then again, that isn’t really due to the downturn).
You gotta hate this when it happens, my heart goes out to these poor employees…
Goldman Sachs Cuts Jobs, Slashes Average Pay 45% to $363,654
By Christine Harper
Dec. 16 (Bloomberg) — Goldman Sachs Group Inc. eliminated 2,500 jobs in the fourth quarter and slashed average pay per worker 45 percent to $363,654 as the firm posted the first quarterly loss since going public almost a decade ago.
Expenses for compensation and benefits fell 46 percent to $10.9 billion from a record $20.2 billion in 2007, the New York- based company said in a statement today. That provides an average $363,654 for each of the firm’s 30,067 employees, down from $661,490 for each of the 30,522 people employed last year.
Goldman Sachs Chief Executive Officer Lloyd Blankfein and six deputies agreed to forgo their year-end bonuses after the firm converted to a bank-holding company and accepted $10 billion from the government to help it survive a financial crisis that eliminated three smaller rivals. The firm’s bonus pool, estimated at 60 percent of total compensation, dropped to $6.56 billion or an average $218,193 per employee this year.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQjVhGLMflj8&refer=home
Good news (depending on your perspective) in Philly ‘burbs. A house in a new McMansion development near me just closed in October at less than $150/sf, which is a good 25% less than the earlier sales in the development and much of the higher end house sales here in the past few years. And this particular house was fitted with many features designated as upgrades by the builder, even more seo than the other houses in the development.
Significantly, this general area consists of mostly mature neighborhoods, and this new development was squeezed in on one of the few open spaces left, so there is not huge inventory here.
No wonder the builder’s agent has been hounding me with calls since I expressed interest in one of the lots.
Dec. 16 (Bloomberg) — The rally in U.S. stocks will falter as President-elect Barack Obama’s infrastructure spending plan disappoints investors, said short seller Jim Chanos, who’s adding to bets against construction, cement and steel companies.
…
“It’s a bear-market rally,” Chanos….
They’re clinging to the promise of this infrastructure program like torpedoed sailors to a life raft.
Do they even realize how corrupt and inefficient public works projects have become? Enough with the romantized notions of the G.D. already!
Seriously, who thinks J6P unemployed contractor will leave home to work on some modern version of the TVA? It’s a different world. I ought to know, I’m from the “City that Works”!
If you put people to work on infrastructure, they will have more cash and will likely feel better about spending it. Thus it is not only construction jobs that will be created. Manufacturing and design companies will also make money. I don’t know if it will work, but I know it’s a much better idea than TARP. Yes public works projects are often corrupt, but no more so than Wallstreet.
Besides the corruption issue, extensive infrastructure rebuilding should simply not take place until this country gets on the same page with regards to weening itself from foreign oil.
For instance, would simply rebuilding existing roads really produce an infrastructure that helps the country become more globally competitive?
Right now the pols just want to throw dollars in every direction. They haven’t come close to formulating a cohesive plan. In light of these factors, I would rather see more deliberation behind any such spending.
Besides the corruption issue, extensive infrastructure rebuilding should simply not take place until this country gets on the same page with regards to weening itself from foreign oil.
From my perspective, additional spending on mass transit and energy efficiency (not necessarily alternative fuel-focused, but increasing efficiencies in existing systems) is almost always a good thing — but your point is well-taken regarding new automotive infrastructure initiatives.
Any money I spend on whisky is money that is not spent on going to the opera.
Any money spent on infrastructure is money that is not spent on TARP, War, ect.
I’ll take infrastructure.
I agree with the idea that reducing oil consumption should be a primary goal of the spending.
Agree again, measton.
Any money I spend on whisky is money that is not spent on going to the opera.
The government is no different. Any money spent on infrastructure is money that is not spend on “something else”.
Seen v. unseen. Bastiat lives forever!
Not a good analogy. You don’t have the ability to vote for yourself additional revenue like the government does. If you did, then you could indeed spend money both on whiskey and opera.
Fair enough about not having control but it doesn’t change the point.
It still works the same way if you take the control away from my decision making (as in force one over the other.)
‘Any money I spend on whisky is money that is not spent on going to the opera.’
I don’t understand why you can’t spend money on both and then drink the whiskey and go to the Opera all at once. Like a multi-tasking sort of thing.
And, while you’re there, steal a set of those opera glasses and then play with them at home, later, while you sing schreechily.
I do, and I do.
It was a theoretical gedankenexperiment to illustrate a point.
BS. Infrastrure building no longer employs armies of people with shovels. They require specialized people and entry barriers for new companies are high. You need Civil Engineers to run them not any old mortgage broker off the street.
This bridge engineered by Coldwell Banker - you wouldn’t drive over it?
If you put enough construction/engineering/resource people to work they will likely need a banker, a cook, an insurance adgent, a dentist ect.
We have an army of people in the construction field that could immediately start with building highways and mass transit.
One area I hope they focus on is distributive generation. Placing generating facility on, or next to building that uses energy. It’s over 2x as efficient as transmitting electricity to the building and close to 3x if you use the heat generated to heat/cool the building. This could employ a large # of tradesmen and dramatically reduce energy consumption.
A 5.7 percent drop in the San Diego median over one month’s time occurs at an annualized rate of
((1-5.7/100)^12-1)*100 = -50.6 percent.
If this pace continues for another 12 months, the bottom callers will be right, and San Diego prices will bottom out at fifty percent off their current levels by this time next year.
Median home price tumbles to 6½-year low
Foreclosures drive steady rise in sales across the county
By Roger Showley, Staff Writer
2:00 a.m. December 16, 2008
San Diego’s median home price fell sharply again last month to $305,000, and foreclosures outnumbered nondistressed home sales for the first time, MDA DataQuick reported yesterday.
A 5.7 percent drop in the median price from October brought prices to their lowest level since April 2002. Since the peak of $517,500 in November 2005, the median has dropped 41.1 percent.
Of the 2,411 resales that closed escrow, 52.1 percent had gone through foreclosure in the previous 12 months. Overall sales were down 25.7 percent from October, the highest October-November drop in 20 years of DataQuick monitoring.
Paging Lionel and Prime_is_contained!
re: your last Bits Bucket comments.
Shall we start a meetup group for Seattle? I’d be happy to do the registration & fork out the $36 bucks to get us up on meetup.com for the first six months.
You can e-mail me at eli (at) eligoldberg (dot) com. Note that I’ll be on vacation 12/18-12/25.
Hey Eli,
I’d be up for an unofficial Seattle HBB meet-n-greet. I don’t see the need to fork out $36, though. We can easily just post a date/time/location in the BitsBucket; that has seemed to work fine for other locations.
I’ll drop you a line…
BanteringBear, are you interested? Anyone else?
I heart the cheapskates. LOL
$36 = lots of beers.
‘$36 = lots of beers.’
$36 bucks IS a lot of beers, as poured in the Best Dive Bar in the Whole Universe, which I will not tell you at this time, in case thirsty pretentious yuppies are looking online at us. At the Best Dive Bar in the Whole Universe, beers after 4 p.m., and this is a glass, not a pint, are…are you ready?…ready…2 bucks. Yes.
Plus there’s pool, on a steady table, and hardened hippies drowsing in the corner.
You already told us the name. Possibly you were drunk but you blurted it out, and many noted it.
DOH!!!
And great music! Ian always plays great music on the jukebox. He just knows, somehow, with magic-like bar-tender skills, exactly what to play, no matter what, or when.
Oh, and BTW, why do you think that I’m not one of those thirsty pretentious yuppies?
I ♥ whisky and chanterelles. Isn’t that like, yuppie-central?
By the way, my family is going to Miami Beach in 48 hours for a week-long vacation.
Naturally, I’m really excited to see the bubble in ground zero. Anyone got recommendations for fun Bubbly things to do? e.g. foreclosed condo tower neighborhoods?
(Better yet, my mom’s a realtor. A rare specimen - an actual honest realtor. So it’ll be double-fun)
I am going on Dec 27th. I am not going to book any hotel rooms. I am going to bring my air mattress, go to condo ground-zero, and just walk in on any number of them empty units and save $$$ on hotels.
ROTFLMAO
Heh. I suggested that to my mom but she wanted a real hotel.
It floored me that people wanted $4,000-$5000 rent for a 2 BR apartment for a month there with 55K units foreclosed in just hte past 9 months. (!)
I assume that a large number of banks/lenders, if not most, have financial years that close 12/31. If that assumption is correct, how many of you think that there will be a spike in REO price-cutting after New Year’s?
I base the question on another assumption - that these lenders didn’t want to take too big loss in 2008 due to writedowns of loans that are short-paid, but they see so much more price deterioration coming in 2009 that they might as well get on with the bloodletting as soon as the new financial year begins. Does this hold water?
good thought. Time will tell.
WaPo is running a series on the current solvency crisis.
The Crash: What Went Wrong?
The Washington Post examines the origins of the economic crisis.
“…In February and March 2007 alone, one of the world’s biggest CDO dealers, Merrill Lynch, sold nearly $29 billion of the securities, 60 percent more than in any previous two-month period, according to data from Thomson Reuters. Goldman Sachs sold $10 billion that March, more than double any previous month. Citigroup sold $9 billion, one-third more than in February, itself a record month.
Deals were flying out so fast that the Wall Street firms sometimes could not tell investors what specific collateral was going into which CDO, making a mockery of anyone who tried to do a fundamental analysis of the assets backing the bonds before agreeing to buy.
“There was enough of a feeding frenzy that you didn’t want to lose your place in line,” Mann said, speaking as an investor who passed up many such deals. “A lot of people knew this was bogus, but the money was too good.” …”
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/15/AR2008121503561.html
The money aint gonna be to good for Merrill et al in the future.
Not to mention the significantly reduced leverage.
Well I guess these folks will have to get along the best they can. I’ll say a little pray for them…
Goldman Sachs Cuts Jobs, Slashes Average Pay 45% to $363,654
By Christine Harper
Dec. 16 (Bloomberg) — Goldman Sachs Group Inc. eliminated 2,500 jobs in the fourth quarter and slashed average pay per worker 45 percent to $363,654 as the firm posted the first quarterly loss since going public almost a decade ago.
Expenses for compensation and benefits fell 46 percent to $10.9 billion from a record $20.2 billion in 2007, the New York- based company said in a statement today. That provides an average $363,654 for each of the firm’s 30,067 employees, down from $661,490 for each of the 30,522 people employed last year.
Goldman Sachs Chief Executive Officer Lloyd Blankfein and six deputies agreed to forgo their year-end bonuses after the firm converted to a bank-holding company and accepted $10 billion from the government to help it survive a financial crisis that eliminated three smaller rivals. The firm’s bonus pool, estimated at 60 percent of total compensation, dropped to $6.56 billion or an average $218,193 per employee this year.
Average pay at GS is $363,654? And we are bailing them out? What is it exactly that they make again?
Well I guess its ok. At least they don’t have overpaid union workers.
Send that to Lou Dobbs. He’ll run it fo sho.
You got to be kidding me. The average worker at GS makes $660,000??!!!
Wow.
I realize this is offset a lot by executives’ pay, but still. That number was (and still is) staggering.
45% is not enough.
Get a job there if you think the pay is unfair.
These are means not medians or even modes.
It never works like that. It’s extraordinarily skewed towards the top. The “average” number is not made by the “average” employee, I assure you.
Yes, median would be a far more interesting number.
Yes I realize all that - obviously the worker bees will be making much less; I was actually referring mostly to how much the execs get paid in fact.
By comparison with another industry:
Cisco’s revenue is $800,000 per employee. Their operating expenses (including salaries, buildings, labs, etc) are about $320,000 per employee. I would venture out of that lets say you’re looking at $200k per employee for salary/benefits/bonuses etc. (I haven’t seen a breakout, but that matches exactly what I’ve also seen in the telecom industry - $200k per employee loaded)
We’re not talking about a firm that does mostly manufacturing like GM or the like. Cisco has very little blue collar workers. They have mostly engineers, including lots Phd’s and such. People probably every bit as smart on average if not smarter than the average person at Goldman Sachs.
My point is that the difference is that Goldman Sachs (and their financial counterparts) have the innate advantage of actually managing our money, along with deep political ties, so they have the ability to get paid a lot more for the same level of expertise - much in the same way a grocer gets access to prime meats and produce and such. I just didn’t realize how much more it was. It’s sickening. I’m in the wrong business apparently!
Yep…it’s all about who controls the money flows.
IMHO, wealth has very little to do with how productive one is. If it were, all the illegal aliens would be rich while the bankers would be living in encampments hidden in the brush.
I would imagine that Christmas sales of those foreign erotic cars has dropped way off.
I would imagine that Christmas sales of both cars and other foreign erotic rides has dropped way off.
I want an erotic car. I wanna one! Otherwise I will accept an erotic woman.
WTF, they took 10 bil in TARP money and their still giving bonuses?
their=they’re
Here’s a prayer
I SAY A LITTLE PRAYER (Dionne Warwick)
The moment I wake up
Before I put on my makeup
I say a little prayer for you
While combing my hair, now
And wondering what dress to wear, now
I say a little prayer for you
Forever, forever, you’ll stay in my heart
And I will love you
Forever, forever, we never will part
Oh, how I’ll love you
Together, together, that’s how it must be
To live without you
Would only be heartbreak for me
I run for the bus, dear
While riding I think of us, dear
I say a little prayer for you
At work, I just take time
And all through my coffee break-time
I say a little prayer for you
Forever, forever, you’ll stay in my heart
And I will love you
Forever, forever we never will part
Oh, how I’ll love you
Together, together, that’s how it must be
To live without you
Would only be heartbreak for me
I say a little prayer for you
I say a little prayer for you
Forever, forever, you’ll stay in my heart
And I will love you
Forever, forever we never will part
Oh, how I’ll love you
Together, together, that’s how it must be
To live without you
Would only be heartbreak for me
My darling, believe me
For me there is no one
But you ….
Thanks for taking up alad’s slack. I mean that.
Let’s talk about auctions: is anyone seeing REAL auctions yet?
I mean no bogus-starting-bids, no hidden-reserve-values, real honest-to-god, highest bidder gets it.
We had our first auction in Seattle recently, but it was definitely NOT real. I didn’t attend, just read about it in the newspaper. But it reminded me of what I was reading about in Cali a year or more ago: marketing gimmick auctions, where the highest bid is an offer that the seller will “consider”.
Are the leading-edge states starting to see real auctions yet? I believe that real market-clearing-price auctions will be one of the signs that the crash is nearing completion in a given area…
Anyone?
I dunno, but I was driving down one of the main drags in town Saturday and saw a hand-scrawled sign saying “HOME ACTION” with an arrow. Could have meant damn near anything, LOL.
Here in Virginia Beach there was an auction of some left over condos. They closed much lower than previous asking prices, but still above what I would consider a good deal. Actually, I think only part of them actually sold … perhaps 6. I didn’t post the info because I don’t believe many locals read the HBB. They are all still in denial.
I lived in Texas in the late 80s and early 90s.
I went to several HUD auctions. Those were real high bidder gets it type auctions, but I am pretty sure that the real deals occured before the property made it to the auction block.
Just bogus ones here in FL. In a few years we can go to some real ones, just wait.
UPDATED: List Of Victims Of Madoff’s Alleged Ponzi Scheme
December 16, 2008
This is a partial list of Bernard Madoff’s investors who have reportedly lost money in Madoff’s alleged investment scam. Total losses are estimated to be about $50 billion, which would make it the largest Ponzi scheme in history. Where available, the amount estimated to be lost by each investor is included. This table will be updated as new information becomes available. (Last Updated 3am ET)
Madoff investor investor type potential exposure source
Fairfield Greenwich Group alternatives firm $7.5 billion firm statement
Banco Santander bank $3.5 billion El Pais
Rye Investment Management (Tremont Group) hedge fund $3.1 billion Bloomerg News
Kingate Management alternatives firm $2.8 billion Bloomerg
Ascot Partners (GMAC Financial Services Chiarman Ezra Merkin’s hedge fund, managed by Madoff) hedge fund $1.8 billion Wall Street Journal
Access International Advisors hedge fund $1.4 billion Bloomberg
Fortis Bank Nederland bank $1.35 billion firm statement
HSBC bank $1 billion firm statement
Benbassat & Cie bank $935 million Le Temps
Union Bancaire Privee bank $846 million Le Temps
Natixis bank $600 million Bloomberg
Royal Bank of Scotland bank $600 million published reports
Sterling Equities investment firm $500 million New York Post
BNP Paribas bank $475.3 million Bloomberg
Fix Asset Management alternatives firm $400 million firm statement
BBVA bank $404 million Reuters
RMF (Man Group) alternatives firm $360 million firm statement
Pioneer Alternative Investments alternatives firm $280 million Bloomberg
Maxam Capital Management fund of hedge funds $280 million WSJ
EIM Group bank $230 million Le Temps
Tremont Capital Management (Tremont Group) fund of hedge funds $190 million firm statement
M&B Capital Partners money manager $187.9 million El Mundo
Carl and Ruth Shapiro Family Foundation charity $145 million Boston Globe
Aozora Bank bank $137 million firm statement
AXA insurer less than $135 million Reuters
Dexia bank $106.9 million firm statement
UniCredit financial firm $100 million Bloomberg
Nordea bank $65 million Reuters
Vincent Tchenguiz individual $61 million The Telegraph
Hyposwiss bank $50 million Reuters
Korea Life Insurance Co. insurer $50 million Yonhap News
Banque Benedict Hentsch bank $47.5 million firm statement
Town of Fairfield, Conn. pension fund $42 million Associated Press
Royal Bank of Canada bank $40.4 million Globe and Mail
Reichmuth Matterhorn bank $33 million Le Temps
Bramdean Asset Management alternatives firm $31 million WSJ
family of Sarah Chew family office $30 million Time
Mortimer B. Zuckerman Charitable Remainder Trust (New York Daily News owner’s charity) charity $30 million CNBC
Madoff Family Foundation charity $19 million WSJ
Los Angeles Jewish Community Foundation charity $18 million Jewish Journal
The Phoenix Holdings insurer $15 million firm statement
Harel Insurance Investments and Financial Services insurer $14.2 million firm statement
Groupama insurer $13.6 million firm statement
Societe General financial institution less than $13.5 million Reuters
Baloise insurer $13 million Reuters
Massachusetts Pension Reserves Investment Management pension $12 million Reuters
Richard Spring individual $11 million WSJ
Hampshire County Council pension $10.6 million IPE
RAB Capital hedge fund $10 million Reuters
Richard Roth individual $10 million FINalternatives
United Jewish Endowment Fund cahrity less than $10 million JTA
Korea Teachers Pension pension $9.1 million statement
Robert I. Lappin Charitable Foundation charity $8 million Washington Post
Michael Roth individual $7.5 million FINalternatives
Chais Family Foundation charity $7 million WSJ
Technion-Israel Institute of Technology university $6.4 million Globes
Irwin Kellner (named plaintiff on first lawsuit against Madoff) individual $6 million lawsuit
Julian J. Levitt Foundation charity $6 million WSJ
David Berger individual $5 million FINalternatives
Neue Privat Bank bank $5 million Bloomberg
North Shore-Long Island Jewish Health System pension fund $5 million statement
CNP Assurances insurer $4.1 million firm statement
Robert and Sarah Chew individual $1.2 million Time
Harold Roitenberg individual $1 million Minneapolis Star-Tribune
Ira Roth individual $1 million WSJ
Arnold and Joan Sinkin individuals $1 million The Guardian
Steven Abbott individual less than $1 million WSJ
Allegretto Fund hedge fund $790,000 firm statement
Clal Insurance insurer $778,800 firm statement
Mediobanca bank $671,000 firm statement
Austin Capital Management fund of hedge funds n/a Reuters
Banco Popolare bank n/a MarketWatch
Banesto bank n/a Reuters
Ed Blumenthal (Long Island real estate developer) individual n/a Long Island Business News
Norman Braman (former Philadelphia Eagles owner) individual n/a WSJ
Engelbardt family family office n/a Variety
Stephen Fine individual n/a Reuters
Barbara Flood individual n/a National Public Radio
Foundation for Humanity (Elie Wiesel’s charity) charity n/a WSJ
Avram and Carol Goldberg (Stop n Shop founders) individuals n/a Reuters
JEFT Foundation charity n/a statement
KBC bank n/a firm statement
Lautenberg Family Foundation charity n/a AP
Leonard Litwin individual n/a Bloomberg
Loeb family family office n/a CNBC
Mirabaud & Cie bank n/a Le Temps
Nomura bank n/a WSJ
Notz, Stucki & Cie bank n/a Le Temps
Optimal Investment Services (Grupo Santander) alternatives firm n/a Bloomerg
Palm Beach Country Club country club n/a CNBC
Jeff Tucker (Stone Bridge horse farm owner, Fairfield Greenwich Group founding partner) individual n/a WNYT television
Thyssen family family office n/a Clusterstock.com
UBS bank n/a Reuters
Lawrence Velvel (dean, Massachusetts Law School) individual n/a WSJ
Wilpon family (New York Mets owner) family office n/a WSJ
Wunderkinder Foundation (Steven Spielberg’s charity) charity n/a WSJ
Yeshiva University university endowment n/a WSJ
They’ll turn Madoff’s little scam into a bank and bail them out with TARP dough….praise the free money system!
Swindlers List
That is good. LOL!
WTF!
If I had to choose one of the shrinking three, it would be Ford, but noooooo.
Care to explain, Muggy??
If I had to pick joe average fleet, it would be Ford (cops cars, delivery trucks, ambulances, etc.)
What does Chrysler make that is worth bailing out? And GM should be punished for selling not one, not two, but three civie versions of the Hummer.
Not to second-guess them or anything, but hasn’t the Fed been pulling out all the stops at least since last September with no apparent effect?
latest news
Obama: not good policy to second-guess Federal Reserve
THE FED
Pulling out all the stops
Markets will be reading FOMC statement closely
By Greg Robb, MarketWatch
Last update: 9:10 a.m. EST Dec. 16, 2008
WASHINGTON (MarketWatch) — The Federal Reserve is going to do whatever it takes to help offset the economic downturn, analysts said Tuesday.
Economists believe the Fed may cut the federal funds rate as low as it can go at this week’s meeting, without adopting a zero-interest policy, and to begin shifting its focus to nontraditional policies.
“The bottom line is that we are likely to come away from today’s FOMC statement believing that policymakers will pull out all of the stops, without being too specific, in attempting to stabilize financial markets and economic activity,” wrote Joseph LaVorgna, chief U.S. economist at Deutsche Bank.
I’d argue from a trading point of view you were paid extraordinarily well in 2008 to second-guess the Fed, front run them, and then bet on failure.
Do you have any idea of how much liquidity the Fed pumps into the stock market on FOMC meeting days to make sure the markets are rising on Bernanke’s announcement? I am guessing they pump in quite a bit — otherwise the plethora of bad news would overwhelm the bulls. The real economy doesn’t matter in their minds — it is all a confidence game.
Nobody in their right mind trades before the meeting.
The markets are almost unnaturally illiquid on the day before the meeting. Just look at the volumes. You don’t need a PPT when fear will do the trick.
At 2:15 (after the announcement), the volumes will explode.
(My comment above was not about trading on the day of the meeting, but “days leading in to” and “weeks leading out of afterwards”.)
There’s nothing left except doom and gloom.
And if Iran has a longer launch capability…Kaboom!
Housing supply is not likely to decrease with a foreclosure crisis, a recession, and wave upon wave of prime and alt-A resets to work through. Nice wishful thinking, Tony.
ECONOMIC REPORT
Housing
startsstops plunge 18.9% to record lowSingle-family building permits fall 12.3% in November, setting 27-year low
By Rex Nutting, MarketWatch
Last update: 9:54 a.m. EST Dec. 16, 2008
WASHINGTON (MarketWatch) — U.S. home builders threw in the towel in November, slashing construction of new dwellings far below the worst levels seen in 50 years, according to Commerce Department data released Tuesday.
New starts dropped an eye-popping 18.9% to a seasonally adjusted annual rate of 625,000, the lowest since the Commerce Department began keeping records in 1959. According to similar records kept elsewhere, it’s the slowest pace of construction in the post-World War II period.
Starts were far lower than the 740,000 that economists surveyed by MarketWatch had been looking for. The monthly percentage drop was the most since a 26% decline in March 1984.
“This is bad news for the economy, of course, but it is best viewed as good news because what is sorely needed in the housing market is a decrease in supply, which now looks extremely likely in 2009>,” wrote Tony Crescenzi, chief bond market strategist for Miller Tabak & Co.
Yep.
Given that housing starts have been plunging for three years now (peaked in January 2006), and yet we still have this…
http://www.census.gov/hhes/www/housing/hvs/qtr308/q308tab1.html
… and that’s before the Q4 ‘08 market crash and rapid unemployment increase*.
I don’t think so.
* I was going to say “spike”, but that implies that it’ll be going back down quickly sometime soon.
The $US bubble is going the way of the recently-deflated oil price bubble. Any guesses on the next asset class to bubble?
IMHO, This is a bear market rally that the Federal Reserve and Treasury were trying to maintain until they sold the treasuries needed for this years deficit.
The next asset bubble might be the Yen. Purchasing power parity is approximately 85 sd 2. If it turns into a bubble the Yen could go to 50. Currently there are more American traders short the Yen than long, so the rally could last for a long time.
Poor AT&T ;-(
Can you find the silver lining in this article?
“Prosecutors said Dreier, 58, a graduate of Harvard Law School and Yale College, convinced two unidentified hedge funds to give him more than $100 million by claiming, falsely, that he was selling at a discount notes issued by New York developer Sheldon Solow. At a court hearing on Dec. 11, prosecutors said they’d discovered additional losses for a total of $380 million.”
“Dreier, who was arrested on Dec. 7 as he returned to New York from Toronto, hasn’t yet responded to the charges.”
“The lawyer, the New York firm’s only equity partner, has put 250 attorneys out of jobs. His arrest had a “devastating effect” on the firm, partner Joel Chernov said in affidavit in Dec. 8 court papers. The December rent is overdue, the month’s health-insurance premium hasn’t been paid and AT&T Inc. will shut down Blackberry service, Chernov said.”
Dreier’s Firm Will Seek Protection, Receiver Says:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDe.UAveb1j8&refer=home
Late reply to Rick’s thread yesterday, on how we’re too hard on RE investors:
————————-
Rick, great post, and I agree with you in many ways. There is nothing wrong with real-estate investing, if you do it in a sufficiently well-thought-out, conservative manner.
I do think you should reconsider your statement “what does it matter if the rent covers my payment?”
Don’t forget, you also need to run a surplus to cover maintenance/damage, vacancies between tenants, etc. The rule of thumb I have always heard is that you want 11/12ths of your annual rent to cover PITI. In other words, assume 1 month of vacancy per year, or the equivalent amount escrowed for future maintenance/re-roofing/etc.
Other things to consider: PITI in lines with rents assume that rents will not decline, and I cannot see how they can avoid dropping. This will be a historic downturn, with higher job-losses than we have seen in a couple of generations (e.g. demand destruction), combined with the highest vacant inventory of housing ever. That combination will push rents down, guaranteed.
Also, don’t discount the overshoot on the way down. The change in psychology regarding RE will be like a psychological depression (in addition to the economic one), and will affect attitudes towards buying. Don’t ignore either the rational move by lenders to tighten lending, which will also impact volume and pricing.
But eventually, I’m in the same boat as you: I will consider investing in RE when it makes sense financially. That time is not now, and not even close in my view. In 2-3yrs, I will re-evaluate. The bottom will not be short, nor will the recovery be sharp, so there is really no rush to get in.
Til then, don’t be a knife-catcher.
‘I do think you should reconsider your statement “what does it matter if the rent covers my payment?”’
Stupid is as stupid does. I will be the first to say that anyone who doesn’t think it matters if rent covers the payment is a moron.
Ooooh, fighting words from the professor who is otherwise unerringly polite.
Give it to him, show absolutely no mercy.
It’s always a good idea to keep your powder dry until a suitable target is in sight.
Foggy Mountain Smackdown!!!
Prime - nice post.
Thanks, Chip!
If I ever have a premature moment of weakness, I hope of you will talk me down off the ledge.
Don’t worry. We’ll be givin’ you the ol’ smackdown were that to happen.
We’ll probably even enjoy it.
Phew! That’s a relief…
“Make sure the rent covers the house payment, you don’t want to be like my landlord and supplement your tenants housing!!” is one of my favorite things to say when people make the idiotic statement they are thinking of buying a house here in Hillsboro, OR.
An acquaintance, who bought a $400k house last year, made the idiotic statement the other day to me and another guy who knows where I stand on this home purchasing idea. Needless to say, he didn’t seem to appreciate my response at the time, but I haven’t heard him say lately that he and his wife are thinking of buying an additional boat anchor. I doubt he would even get funding for a 2nd house in that I am sure most of the equity of his current home is gone. I think he put 20% down from the sale of his home, but the rapid decline in sales here in Hillsboro is taking its toll on things here. I’m starting to see that it really “isn’t different here after all.” Our neighbor is having their home appraised in hopes of refinancing out of their interest-only loan. I doubt they will get the number they need to re-finance, but I don’t say anything to them. I don’t need to in that they didn’t listen to me over a year ago when they got a solid offer on their house only 20K of what they were asking and didn’t accept it. They didn’t want to give it away.
Oh well, what do I know anyway? I am just an idiot, low-life renter who was fortunate enough to sell in a declining AZ market in June of 2006 after continually cutting the price to ensure it sold.
I just don’t want to get started on the cuts in interest rates the past couple of years….
$700 Billion Bailout Celebrated With Lavish $800 Billion Executive Party
http://www.theonion.com/content/news/700_billion_bailout_celebrated
Gotta love The Onion. They’re really getting into the spirit.
LOL!! That’s awesome!
“Three thousand guests were reportedly flown on 750 separate private jets to the Caribbean, where they commemorated the last-minute financial aid package—which saved their companies from the subprime mortgage crisis that has left thousands of Americans without homes—with 4-tons of Beluga caviar, $250,000 bottles of vintage Dom Pérignon served over precious gems, a 36-hour fireworks display, an additional loan of $200 billion to cover the costs of the gala, and a private concert for each attendee with rock legend Rod Stewart.”
Beautiful!
Talk about a hard sell in this environment:
http://www.nypost.com/seven/12162008/news/regionalnews/boat_show_a_no_show_144457.htm
“The thousand boats spread out across Manhattan’s massive Jacob Javits Center for the New York National Boat Show were dwarfed yesterday by the vast emptiness where buyers would normally be seen.”
My company does a big catalog (800+ pages) and some other print work for a huge boating supply company. They’re not doing well, to put it mildly.
PJ Hurting
From IBI News: Palmer Johnson has cut its Sturgeon Bay, Wisconsin workforce, citing postponed yacht orders. The company said in a statement sent to local news sources on Friday that it had reduced its workforce but did not specify how many people were being laid off.
Seven yachts had been ordered for 2009, according to a story in the Green Bay Press Gazette, but two orders were delayed to 2010. The newspaper reported that no orders had been canceled, and according to the statement, Palmer Johnson expects to start recalling workers in the spring or summer of 2009.
Palmer Johnson is Door County, Wisconsin’s third-largest employer. The statement noted that it has 375 employees and 126 subcontractors working in Sturgeon Bay.
The statement did not specify whether the stalled orders would impact Palmer Johnson’s plans to develop the previously announced Southampton manufacturing facility in the UK.
12/16/08
Dreams dry up for homeowners in Lancaster’s Westview Estates
The first sign of trouble came almost immediately after Kurt and Michelle Dahlin moved into Lancaster’s new Westview Estates in March 2007.
The water slowed to a trickle midway through showering. The toilet tank took two hours to refill. The family often was forced to bathe at 4 a.m. — before the neighbors awoke and the water flow became a dribble. Some days, there was no water at all.
Photos: Westview Estates MapThings only got worse as more homeowners moved into the gated community on the outskirts of Lancaster. Complaints to New Jersey-based developer K. Hovnanian Homes, Los Angeles County water officials and Lancaster city representatives were met with excuses and finger-pointing, residents said in interviews.
http://www.latimes.com/news/local/la-me-westview15-2008dec15,0,4511640.story
Thanks for the link. It hit all my buttons just as neat as you please.
As it happens, right now purt’ near most of the words on most of theseyer’ papers piled in shaky towers and mounds here on the Olydesk have to do with water issues of one kind or another.
Ah, yes…water water water…
Where to start? Well, for one–look at the photo that comes with the article. I boldly announce, with the benefit of great wisdom thingies, that that subdivision was built in the F–CKING DESERT.
Desert! It’s DRY. There’s NOT ENOUGH WATER.
You know what, my forehead veins are pulsing unattractively. Back in a minute.
Hmm. Well? Could you connect a booster pump to the supply line to draw more water? Throw up a storage tank in your abode and an embedded system (mmm PLC) to keep the storage tank full at all times?
That only works, as Olygal points out above, if in aggregate there is enough water and the issue is flow rate. If there isn’t enough water, then your remedy fails when too many people adopt it.
It’s a close analogy to the difference between a liquidity problem and a solvency problem.
Damn it man, not Canada also! I thought it was different there.
Prime Minister Stephen Harper delivered a grim forecast for the Canadian economy, saying in an interview with broadcaster CTV a depression is possible.
“The truth is, I’ve never seen such uncertainty in terms of looking forward to the future,” Harper told CTV. “I’m very worried about the Canadian economy.”
Asked whether a depression was possible, he answered: “It could be, but I think we’ve learned enough about depression; we’ve learned enough from the 1930s to avoid some of the mistakes that caused a recession in 1929 to become a depression in the 1930s.”
A depression is often described as a prolonged economic slump in which output drops more than 10 percent.
Unemployment in Canada hit 27 percent at the peak of the Great Depression in 1933 and between 1929 and 1933 Canada’s gross national product fell 43 percent.
In the interview, Harper also said his finance minister’s budget on January 27 would include billions of dollars in stimulus spending, ending more than a decade of back-to-back balanced budgets in Canada.
“Obviously, we’re going to have to run a deficit,” Harper said. “We’re talking about spending billions of dollars that was not planned.”
http://www.breitbart.com/article.php?id=081216172250.0akwkvz7&show_article=1
75 bps cut.
ZIRP, ZIRP, ZIRP!!!
that wraps up this edition of FED cuts rates.
What gets me is why does anyone really care? The effective funds rates has been very close to zero for some time. What does it matter what they say the nominal rate is? This cut is just window-dressing.
I REALLY care becuase this reduces my 100k student loan interest rate to about 2.5%. I hope they cut to 0 and stay there for a decade.
Did you see Santelli? He shouted after about 15 seconds: “Woah! Look at the EURO!!” LOL. Also the smugness of Bill Gross was nauseating.
smugness of Bill Gross was nauseating
I kind of sensed that also…Not sure why…I try to listen when he speaks…Maybe it is because he is on the right side of the bet…
Yipee, now my HELOC is down to 2.25% and my investment CDs of 5% now has an arbitrage return of 2.75% on borrowed funds, for yearly risk-free income of $10K pre-tax.
Sweet!
Nice work, coug!
I would argue that it’s not completely “risk-free”, because the FDIC could be under stress when it seizes your bank, and might not return funds in a timely manner—-in which case, if you didn’t have other assets available to pay off the HELOC with, you could run into a liquidity pinch.
But nearly risk-free I would grant you, assuming you have plenty of other liquidity.
But I would only have to pay off the HELOC if the Prime Rate (tied directly to Fed Funds Rate) start rising above my CD rate and that’s 2.75% away… not likely in the next 2 years which is the maturity of my CDs, based on the Fed statement today of “long period of low rate” being foreseen.
I wouldn’t play the “borrow at variable, invest at fixed” game.
That’s what got the banks into trouble in the first freakin’ place.
If you can lock in your HELOC rate, then go for the arb.
That will be 3k net after Obamma’s tax increase for the investor class to 70%. hehehehehehe
Stocks are to the moon, Alice! It’s all good and we’re saved, right?
Exactly. No need for a $1T deficit next year… whew that was a close one.
Dang, they’re really skyrocketing! What do people think is a good entry point to short the S&P?
The stock market always goes up. Buy now or get priced out forever.
Since you say the stock market always goes up, I better not short. I better go long since I don’t want to be priced out forever! Thanks for the valuable advice.
I bought a few more SPX puts today… YMMV.
they are setting up for hyperinflation, Weimar style.
enjoy the surge as long as it lasts.
Don’t you think stock prices will hyperinflate if they try this quantitative easing thing — kind of like they did from 1987-1999?
I just can’t wait for the next FED meeting. Imagine that: FED meeting and nobody cares. It will be quite refreshing actually.
the next meeting will be the one where Ben starts with the interesting stuff, like negative rates (e.g. the monthly punishment for people with savings accounts that he has been writing about, and probably other acts of desperation). Could be fun
On the next meeting Ben might ask Congress to ban savings account and make saving illegal. That will show them! Stupid stinking savers!
DOW up ~100 points in expectation of a rate cut. Rate is cut, DOW rockets up another 130 for a roughly 230 point gain. Irrational.
just wait till the auto bailout is announced…..you aint seen nuthin yet.
Came across this last night.
Fed Readies for Balance Sheet as Main Tool as Rate Nears Zero
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCrmnf9nR.6A&refer=home
Foreign holders of both long-term U.S. debt and equity have lost money so far today.
Dollar touches 1.40/euro. Dollar has gone from 1.30 to 1.40 per euro in four days. Through the old lows by the end of the year?
funny, dollar gold has been surging but my euro gold holdings are slightly lower than last week …
the dollar is toast IMHO, and the US Treasury market should be done as well after this (but you never know how many stupid foreigners are left to buy into this FED ponzi scheme).
According to Tic data, the foreign dollar holders are only buying 1 month to 2 yr treasuries. Nobody wants to be a bag holder.
Is that public data, and if so can you give a link? And if so - is there historical comparison?
Thanks.
http://www.treas.gov/tic/
you can go to monthly or quarterly or yearly
A small sample from the data
Net Foreign Acquisition of Long-Term Securities
(lines 19 and 20):
2006 717.7
2007 556.5
Oct 2006 - Oct 2007 499.6
Oct 2007 - Oct 2008 492.1
Jul-08 3.9
Aug-08 1.9
Sep-08 51.9
Oct-08 -13.3
Increase in Foreign Holdings of Dollar-denominated Short-term U.S. Securities and Other Custody Liabilities:
You will have to look up…lol but for Oct 2008 92.4B
This is less than the monthly rollover from our current account deficit.
The 10-to-30 year has only one set of buyers, but it’s a good one - the Fed, and the traders trying to front run them.
Thanks!
$US continues to rally against Zimbabwe dollar…
LOL - good one.
For a while I couldn’t open the link - is it me is the Bloomberg website down way more than it should be, for a major information source? I think it’s been down about 5 times or so in the last two weeks.
I’m having the same problem this evening - can’t get into a bloomberg article for the past half hour. It’s 10:30 EDT.
Bloomberg - retail sales down 0.4% vs. last year, in the week ending Dec. 13th. This is despite the Christmas season being almost a week shorter than last year.
Link:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axDr8yMdU6Sk
P-man,
I don’t see that anywhere on Bloomberg.com, do you have a link?
I’m wondering if this decrease is a dollar value or some volume measure as well? With the amount of discounting happening right now, I could see # of units sold being up with dollars/unit being down.
Yeah I posted it, but posts with links take forever to show up. Just do a news search on “sales” and it’s the second article, last I looked.
“I could see # of units sold being up with dollars/unit being down.”
Sure, they’ll make it up in volume, that’s the ticket!
LOL - good one.
Though I can’t open the link - is it me is the Bloomberg website down way more than it should be, for a major information source? I think it’s been down about 5 times or so in the last two weeks.
Oops - thought I posted this in response to PB’s Zimbabwe dollar link.
Here is a book to add to your Christmas wish list, if you enjoy the economic fantasy genre.
“Principles of Economics,” N. Gregory Mankiw. Mankiw was chairman of George W. Bush’s Council of Economic Advisors, now teaching at Harvard. He’s the chief propagandist of the same ideology that drove Reaganomics. His textbooks are still being used to indoctrinate college students with an ideology discredited by the current meltdown and bailouts. His core assumption — that as consumers, workers and investors, humans act rationally — has also been discredited, by Nobel economist Daniel Kahneman, a psychologist.
LOL.
How will you ever teach your classes after this, PB?
Maybe you don’t teach macro though.
Yesterday, I had the good fortune of telling an econ academic that macro textbooks don’t contain budget constraints. His head exploded while I munched my lovely Indonesian lunch.
Ain’t I the lucky one?
SRS is about 19 minutes away from puting in a 52 week low.
From WSJ:
http://blogs.wsj.com/developments/2008/12/16/people-more-hesitant-to-buy-foreclosed-homes/
December 16, 2008, 1:37 pm
People More Hesitant To Buy Foreclosed Homes
Kevin Kingsbury and Dawn Wotapka report:
Foreclosures have long been labeled a bargain hunter’s dream and reducing the swelling count is a key part of housing’s recovery. But a new Harris Interactive survey released Tuesday shows decreased enthusiasm for buying foreclosed properties amid concerns about aspects ranging from hidden costs to falling home values, delivering yet another blow to a crippled sector.
“What’s significant about our findings is that just as the market is being flooded with more foreclosures, homebuyers are more hesitant to buy them,” said Pete Flint, co-founder and chief executive of Trulia.com, a real-estate search engine that released the study with foreclosure tracker RealtyTrac.
That’s why we need to support the NAR. The NAR will help create a market for houses.
It’s better for people to buy houses than have them go back to the banks.
I’d rather support the NRA!!!
I’m noticing a lot fewer posts from those who used to skewer Aladinsane…
hmmm, cat got your tongue???????
Well, since he’s gone now it’s no fun.
Just for kicks, I’ll be a proxy aladinsane punching bag. Have your fun folks.
Gold is king. It will be all that’s left to survive the armageddon.
Ayn Rand is yo mama.
Bush sucks; Obama will save us.
Religion is the opiate of the people.
(since I think you might still be watching - did I miss any alad?
)
You simply don’t have it in you.
Plus, I doubt you’re a gold-dealer.
(hangs head in shame)
Yeah I know. Some things just can’t be duplicated.
No, no–we appreciate the effort, my good man. Keep trying, please do. You oughtta add that you love big giant woodies*, like alad did/does.
*Sequoias. What’d you THINK I meant? Per*verts!
I came from northern CA - so my woodies were taller than his. World’s record, in fact.
“If you’ve seen one redwood, you’ve seen them all.”
“If you’ve seen one redwood, you’ve seen them all.”
Oh, yeah? * meditates interestedly for a bit *
Well, is YOUR redwood wreathed about with stately green garlands, and a home to spotted-owls, and also fire-retardant?
Because if it is, then I’ll go ahead and believe you, Mr. Aphorism.
combo,
Reagan did not say that. It was Pat Brown (father of Jerry Brown) that shortened what Reagan actually said.
Here’s the link:
http://www.snopes.com/quotes/reagan/redwoods.asp
He’s probably too busy with gold trades to post at the moment…
Unfortunately he picked a very bad time to short. I believe it’s up 10% since he said he was doing that a couple of weeks ago.
He was full of it, and he was a liar, and he was a gold shill.
The forum has changed for the better in case you didn’t notice. All conversations aren’t monopolized by gold. There are other interesting things to talk about, you know.
I’m sure if he came back he’d claim that he covered and went long BEFORE the rally.
Failure is simply not an option.
Sheesh, when the menfolk get together it’s just gossip, gossip, gossip
C’mon, won’t you let Alad back in your croquet game?
We would but he’d want all four primary colors to be golden.
Ha! That would be a confusing game to follow, but it would be quite funny to watch…also quite pretty, actually.
‘C’mon, won’t you let Alad back in your croquet game?’
No one kicked him out. He FLOUNCED out, in a snit.
Oh, and I know this is a non sequitur, even for me, which is saying something, but I LOVE croquet. Or I would, if my lawn wasn’t so lumpy. It’s hideous lumpy-like. It’s scratchily growing atop kapowsin silt, and there’s frost buckle, and it was logged 20 years ago, and vastly disturbed. Oh, and it’s in a shady forest.
Actually, there’s three (3) blades of grass, and that’s ‘the lawn’: the rest is moss and twigs and lurking creatures.
That’s why everyone hits each other before the game is over.
Oh, I missed the drama! (sniff). Also, I think I missed some childishness? Oh well.
Lumpy lawn croquet sounds fantastic! I played croquet on the side of a hill once. No one got anywhere but it was fun and people fell down a lot, so there was much more excitement and tension than you expect to find. Also, we were so excited if anyone managed to get through the wicket that it felt like a victory for all and was good for our community spirit. The trick to this was a lot of falling down, as I said, so we had very little energy to hit each other. You might wait until after a good rainfall to play, or put down one of those slip n’ slide mats. Don’t play with lawyers, though.
Other things you could do with a lumpy lawn: lump-themed miniature golf, try-not-to-trip badminton and random easter egg hunts. I’m jealous.
‘Don’t play with lawyers, though.’
You are wise. Obviously.
‘You might wait until after a good rainfall to play, or put down one of those slip n’ slide mats.’
Yar! SUPER wise!
I for one really miss alladinsane. I actually think the things FPSS said to Alladin were much worse than anything alladin said. The HBB is a lot less interesting without alladin, and I will probably read it less often.
FPSS you said your insults, you got him to leave, and now you are bragging about it. Real classy.
“I’m noticing a lot fewer posts from those who used to skewer Aladinsane…”
Well, Alad’s not posting anymore, duh.
where did Alad go? I didn’t catch that part….
Self-imposed exile. He’s off carressing his gold bars somewhere, probably in New Zealand…
My cousin who sells coins told me a little bit about the man, Lad.
I asked him if he had a hot wife and he said he never met her. Cuz was more interested in what Lad’s posting name was…it was kind of funny ’cause when I told him Aladinsane he knew who it was.
Come back Lad, just change your poster name.
You forgot to add preciousssssss.
“He’s off carressing his preciousssssss gold bars…”
I just hope they lick him back like a good lover.
Ann Gogh is holding out on us!
C’mon, spill the beans!
Goldman Sachs’s Tax Rate Drops to 1%, or $14 Million, for 2008
Paulson: “Quick!…LOOK OVER THERE!
“…The tax-rate decline may raise some eyebrows because of the support the U.S. government has provided to Goldman Sachs and other companies this year, Willens said.”
“It’s not very good public relations,”
Goldman Sachs’s Tax Rate Drops to 1%, or $14 Million, for 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aznONFlyupOI&refer=home
So what is the 4th qtr tax credit about and why didn’t they know about it earlier? Do they get a tax credit just for losing profitability?
good thing nobody bought the 6 dollar december calls on UYG.
Good call, clue.
Looks like you doubled your money on that one (based on current prices).
I was looking at that after you mentioned it, but I don’t trade options that close. Wish I did!
Enjoy!
As of 4:15 Eastern the US Dollar has tanked about 4.5% in 24 hours.
An amazing drop. With 0% interest and this trend why would anyone
want to own dollars ?
http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax&w=1&t=l&a=0
Timber, Im fallin in love.
Today’s SF Chronicle had an article about people being forced to move quickly, and left homeless, because their landlord’s homes were foreclosed:
“It is not so much people who are homeowners,” Mangano said. “It is people in a rental situation who were literally oblivious to the fact that their landlord was going to be foreclosed upon. They suddenly get notice that they have 30 days to quit the property. And you know they are not getting their security deposit or last month’s rent back.”
No wonder the Bay Area, hammered by both job loss and foreclosures, has seen such a jump in homeless families.
Didn’t most of these mortgages stipulate that the buyer live in the home?
If so, then this is fraud, and our Goverment (if it were Just) would force these failed real-estate investors to liquidate their possessions to make their tennants whole again (cover lost deposit, etc). And while they’re at it, make them pay taxes on their stated income.
Surely, existing fraud laws should let a just be able to issue such an order. Too bad our lawmakers paint these folks who tried to get-rich-quick and failed as victims instead of just small-scale versions of Bernie Madoff.
Personally, I think they ought to give renters a right of first refusal on the foreclosure.
Why do we lament the “homelessness” of the “owners” when decent renters are being turned out. If they want to “keep people in their homes” I’d say renters count more than the fraudsters with their neg-am, no-doc loans.
Treasury Yields Drop to Record Lows as Fed Cuts Target to Zero
By Dakin Campbell and Cordell Eddings
Dec. 16 (Bloomberg) — Treasuries surged, pushing yields to record lows, after the Federal Reserve cut the main U.S. interest rate to near zero percent and said central bankers will buy debt to ease the longest recession in a quarter-century.
The difference in yields between two- and 10-year notes narrowed to the least since September as policy makers said they continue to weigh “the potential benefits” of purchasing longer-term Treasuries. Yields on two-, five-, 10- and 30-year U.S. government debt touched the lowest level since the Treasury began regular sales of the securities as the Fed signaled they will keep interest rates low for “some time.”
Perhaps the fastest dollar plunge over 5% ever?:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax
The market went haywire with this rate cut. Hmm, some points:
1) Do people rally think the housing market will be what it was in 2005? NINJA loans and all?
2) The FED will have to undo all of this when the inevitable inflation starts. What effect will that have? Another recession?
3) The FED wants to buy MBS’s to inflate the asset side. I have news for Wall Street, those crappy securities will be on the books permanently. This junk will always be a drag on our society and economy.
4) How are people going to go back to a 70% Consumer Economy?
Inflation here we come.
This is such total stupidity. IMHO, I don’t think that any of this will work.
Roidy
Hear Hear!
4) How are people going to go back to a 70% Consumer Economy?
Core question and nobody making policy gets it.
Why should a 70% Consumer Economy Make any sense to begin with?
Every plan of desperation has a “Point Of No Return”. Like when you pull the ski masks on, pull the guns out of the backpack, and enter the bank lobby. At that point it’s too late to turn around.
Well, today Bernanke entered the bank lobby wearing a mask and holding an Uzi. He declared he would use all means available to him to prevent the market from doing what it intended to do. The datapoint in history has now been recorded on the lobby cameras, and they cannot be erased. King Capitalism is dead! Long live King Kapitalism!!!
There ain’t no turning back now…
Going back to the primary issue - despite all these desperate moves I still ain’t buying no house!
Seriously though, the broader, and as yet unseen, disruptions that will be caused by these haphazard policies will almost certainly not be conducive to building stable communities. People will still lose their jobs, there will be much malinvestment, etc. Therefore, what incentive exists to further tie one’s self to this mess?
Exactly! What’s the unemployment rate in Zimbabwe? If America adopts the monetary system of a Third World country, that’s how we’ll wind up. Note to the powers that be: peasants tend not to own real estate.
How are people going to go back to a 70% Consumer Economy?
When inflation is running 20+% people will spend every cent they get as soon as they get in on things they may never need. Wallah Consumer economy is reborn, for a very brief period of time.
Most banks are set to see their deposit insurance premiums double next year, after the Federal Deposit Insurance Corp. announced Tuesday it had voted to adopt a final rule increasing risk-based assessment rates uniformly by 7 basis points (7 cents for every $100 of deposits), on an annual basis, for the first quarter of 2009.
Well, that should spread cheer among the banks.
I guess they won’t be able to pay such high interest rates on their passbook accounts any more?
That would be a bummer……..I love it when tellers from my bank call me to tell me how great it is that I’m automaticlly qualified for a special, high yielding savings account that will pay me one percent if I hand over $2500.
“Well, that should spread cheer among the banks.”
Or force them to act sober in their dealings.
Only the ones that aren’t deemed “too big to fail”. For the others it’ll be business-as-usual, minus a minor additional inconvenience fee.
‘Helicopter Ben’ confronts the challenge of a lifetime
By Martin Wolf
Published: December 16 2008 20:01 | Last updated: December 16 2008 20:01
Central banks may soon resort to their most powerful weapons against deflation: the printing press and the “helicopter drop” of money. It is a time for which Ben Bernanke, chairman of the Federal Reserve, has long prepared. Will this weaponry work? Unquestionably, yes: used ruthlessly, it will eliminate deflation. But returning to normality thereafter will prove far more elusive.
Mr Bernanke delivered a celebrated speech on the topic in November 2002, when still a governor.* He spoke quite soon after the US stock market bubble burst in 2000. Policymakers then feared the US might soon follow Japan into deflation – sustained declines in the general price level.
Yet Mr Bernanke then insisted “that the chance of significant deflation in the US in the foreseeable future is extremely small”. He pointed to “the strength of our financial system: despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape”. The words “pride” and “fall” come to mind. Six years and a housing-cum- credit bubble later, chairman Bernanke must be sadder and wiser.
No matter how much money Ben Bernake prints the helicopter drops will mostly fall on certain pockets of the economy. Middle class is going away because outsourcing using the internet is very deflationary.
Maybe the future is some werid social engineered economy were the black market thrives and many government controlled bail out products are junky. Hope not.
Martin Wolf is quite the voice of reassurance:
‘Already, the Fed has adopted a host of unconventional actions to keep the economy afloat. By December 10 the Federal Reserve’s balance sheet had reached $2,245bn (€1,663bn, £1,490bn), a jump of $124bn over a week and $1,378bn over a year. It held a wide range of government and private paper, including $476bn in Treasury securities, $448bn in “term auction credit”, $312bn in commercial paper and $233bn in “other loans”, which includes $57bn of credit to AIG alone. If it keeps going, the Fed may become the largest bank in the world.
Does it face any constraint? Not really. As Robert Mugabe has shown, anybody can run a printing press successfully. Once the interest rate hits zero, the Fed can perform much further easing. Indeed, it can create money without limit. Imagine what would happen if an alchemist could transform lead into gold, at no cost. Gold would not be worth much. Central banks can create infinite quantities of money, at no cost. So they can reduce its value to nothing without difficulty. Curing deflation is child’s play in a “fiat money” – a man-made money – system.’
“The Fed is all in.”
Mr. Mohamed El-Erian
Unintended consequences per Mr. El-Erian: a decline in the value of the dollar.
Problems per Mr. El-Erian: How do we extricate ourselves from this at the end game?
The Federal Reserve has known for quite some time that the dollar would decline. The dollar should decline about 30% over the next 2 years to achieve purchasing power parity. Countries that will benefit from the dollar decline are China, Korea and Malaysia. Other countries in Asia may peg to the dollar, if so, trade wars.
I suppose a devaluation of the dollar is not the same as inflation, but it will sure feel like it.
If this dollar devaluation vs. Asian currency scenario is correct, what happens to the dollar vs. European currencies?
And who is the arbiter of “purchasing parity” in Mr. El-Erian’s view?
Only if competitive devaluation doesn’t become the order of the day which I’m betting it will.
This is a classic hallmark of deflationary times along with trade barriers.
Smooch me, O Hawley, here we go again!
Will one of you just tell me please, should I hold steady or start rampaging through the streets for rice?
If you’re gonna be rampaging through the streets of Rochester this winter, you better dress real warm.
“you better dress real warm.”
If you would like to loose $ faster than a Florida FB, bet me $20 that I won’t get buck in the snow.
You ought to immediately rampage.
Oh, and please make sure that the revolution is televised on yout*be!
Smoot-Hawley and Protectionism…
In the last Great Depression, the U.S. fared extremely poorly, because of the protectionism. At that time I believe the U.S. was more like China, was it not? Making and exporting all manner of dry goods as well as food products to the rest of the world? So the shutdown of international trade was extremely unkind, was it not?
This time around, the shoe appears to be on the other foot…
Glad someone noticed the functional equivalency.
Was there a very large debtor nation during the GD, that exported very little, and would make a good analogy for what the US can expect in another depression?
Serious question—-does anyone know what the trade balance in, say, Great Britain was like during the GD? And how did they fare?
Ok, answered part of my question with Wikipedia: no, GB was a significant exporter during the GD.
We may truly be in uncharted waters, in which it is hard to find a good analogy from history for what we will encounter.
Probably we need to go all the way back to Roman times to find such analogy. USA today looks a lot like late Rome.
Was there a very large debtor nation during the GD, that exported very little, and would make a good analogy for what the US can expect in another depression?
====================
Aside from being a net importer, we also happen to have plentiful natural resources. I believe we have enough resources to provide for ourselves.
I do not believe protectionism is a bad thing in our current environment. Fair trade (with countries who have equivalent wages/benefits and quality control), not free trade, is the answer, IMHO.
Despite all the monetarist’s efforts, markets are still not behaving the way the monetarist’s commands. He has to buy GSE debt b/c FCBs stopped buying that junk. FCBs are rolling into government debt instead.
Now, the monetarist threatens to show free marketers how to take risks. Well, he didn’t have to earn any of the money he promises to risk. This is silly and desperate. If the Fed usurps the free market, what’s left to save? The Fed got America into this housing bubble mess and it has no idea how to get us out.
I think I heard some nostalgia for trolls on the bits bucket a few days ago?
Well, if you are in the mood to be annoyed you can listen to this:
http://www.onpointradio.org/shows/2008/12/bailing-out-homeowners/
for a discussion with Karl Case (from Case-Shiller) and many calls from homeowners who want the government to intervene and make the banks give them a lower interest rate. Sidenote: Karl Case is slightly boring.
I’m not as a tough a customer as many around here, and I am actually a fan of socialized medicine and government getting into things like that, and I still had some sort of rage-induced breakdown listening to these people moan about how mean their banks are and then, with a straight face, admit borrowing against “equity” to buy extra homes on spec. Do they seriously feel oppressed by The Man because they have to borrow at a colossal 4.5% rate? Apparently.
The government is really about necessity: food & drug safety, natural disaster, warfare, fire, crime, famine and not the apple-pickin’ pride of ownership. But, the host never mentioned that owning a home is not a necessity.
Ella,
This isn’t a right vs. left thing.
I also believe in a system where the basic necessities and national resources are controlled or regulated by the government (”We the People” not bureaucrats).
FBs wanting a free handout is something entirely different.
Let the FBs and the banks fail, as there are stronger hands waiting to take their place.
“This isn’t a right vs. left thing.”
I agree absolutely.
must have…the PRECIOUS!!!!
I crave the PRECIOUS!!!!
Does anybody know what happened to Aladinsane?
He should be strutting his stuff right now….
Didn’t have to wait for long before gold started to KICK SOME A**!!!!!!!!!!!!!!!!!!!!
Yawn. As nhz posted above, gold didn’t have much of a day against a non-U.S. basket of currencies. In fact, nothing did. The good news is we’ll be able to grow our way into our new minimum wage quickly and compete with, oh, I don’t know, Vietnam, in the shirt-manufacturing business.
Too early, even Alad would say that.
‘Does anybody know what happened to Aladinsane? ‘
Jeeze, have you not been paying attention? Do you not obsessively hover over the HBB to glean every least little kernel of jabber?
Alad made a bold announcement only a few days ago that he was; lessee if I can paraphrase: ‘Ascairt of all the gun buying, and he hoped we all enjoyed his thoughts and got smarter from his quotes, and he would be ‘watching from afar, Ben, hopefully, but not that hopefully”.
Is what I gathered. Did I get that pretty correct, others of you?
All I know is, an addiction is not that easy to break.
Hahahahaha! Hi alad! I bet you see this! hahahaahah!
He must have gone back to Perth and liquidated all his gold at $790 spot + 5%. And now perhaps enjoys living under the Australian constitution (oops - no Bill of Rights, no right to keep and bear arms…).
Did you guys hear that the “Empty Pockets Bandit” in Orange County California is actually an X mortgage broker? His wife thought he was going to work each day. He didn’t want to tell her about the layoff, and he had to keep that income coming in.
From anecdotal evidence, it was fairly common behavior in the Great Depression for men to dress every day as usual, and head out the door as if they were going to work. And they were really going to deperately try to find work, unbeknownst to their wives.
Eventually, they have to come clean when there really wasn’t any money for groceries.
This guy is taking it to a whole new level, though… “I can keep fooling her as long as I can steal enough by payday!”
Oh, I forgot: some of them didn’t eventually come clean; some just didn’t come home when the charade couldn’t be hidden any longer.
Pride is a strange animal.
That reminds me of an Arthur Conan Doyle Sherlock Holmes Story.
“X mortgage”? What is that, as in Xtreme sports? I guess in the OC that would be about right.
Wading into uncharted waters can bring unanticipated consequences.
Financial Times
Ultra-low US rates undermine repo market
By Michael Mackenzie in New York
Published: December 16 2008 23:33 | Last updated: December 16 2008 23:33
Extremely low short-term interest rates in the US are sharply eroding the functioning of the government repurchase or repo market, a foundation stone for the financial system and trading Treasury debt.
While the Federal Reserve reduced its benchmark interest rate from 1 per cent to a new range of zero to 0.25 per cent on Tuesday, short-term market rates have been trading at close to zero per cent in recent weeks. Driven by a flight to safety by investors and expectations of rate cuts, such conditions are creating problems in the repo market, where investors borrow Treasuries in return for short-term cash loans.
Any number of such things are going to happen when the reserve currency hits ZIRP.
The gold lease stuff is well known. Same thing is going to happen for other commodities. I expect more than a few spectacular explosions due to “unexpected consequences”.
Academia and reality clashing generally turns out to be a wipeout. No prizes for guessing which way.
“Academia and reality clashing generally turns out to be a wipeout. ”
I like that.
Kind of like “In theory - practice and theory are the same. In practice - they are not.”
Yeah, I can think of a few right away. But I expect some really weird “edge cases”, and I will be really upset at myself for not getting them right.
So BB has been out of touch with reality?
He’s been out of touch with Realty(TM)
FPSS, can you elaborate: what “gold lease stuff is well known”?
Thanks…
Now we all get to look forward to becoming puppets at the end of puppetmaster Ben’s puppet strings. Enjoy the puppet play, America!
This nonsense about the “invisible hand” really makes me want to heave. Nothing could be farther from Adam Smith’s free market ideal than top down manipulation of the sheeple by all the available tools at the central planning agency.
BTW, a good way to guarantee market failure is for the Fed to undercut all participants.
THE FED
Fed promises explained
By Greg Robb, MarketWatch
Last update: 6:50 p.m. EST Dec. 16, 2008
WASHINGTON (MarketWatch) — The Federal Reserve made a few promises on Tuesday that are important to the ultimate recovery of the economy and financial markets.
First, the Fed cut its target for short term rates to just above zero and pledged to keep its target for short-term rates low “for some time.”
This should give banks assurance that they will have access to cheap funds, economists said. This could help spur bank lending.
“Bank confidence in its ability to finance itself today and in the future is an essential for making loans,” noted Stephen Gallagher, chief economist at Societe Generale.
Secondly, the Fed promised to employ “all available tools” to help the economy and financial markets.
In essence, the Fed intends to be “the invisible hand” in all financial markets, according to Joel Naroff, president of Naroff Economic Advisors.
“Wherever market failures exist, the Fed will be the market maker,” Naroff said.
LOL. I wouldn’t believe anything written by CBS Marketwatch.
C’mon, man! Did you believe them on the way up?
Ber-spanky knows the drill. You assume they speak the truth.
I don’t assume they speak the truth. I assume they are somebody’s propaganda mouthpiece. That doesn’t make their blather any less irritating or fun to ridicule, though, does it?
The Law of Gravity is harder to break than the The Law of Unintended Consequences. The latter has been invoked in spades lately. One would think we would learn. It appears that the parasites are now fully intent on killing the host.
God help us all.
Yeah, that’s kinda my sentiment, too, right now.
Ditto.
bits bucket #422
Dude, where’s my seedcorn?
Those two holed corn pickers are stuffing the money in the fireplace…I wont list the MMF’s that are negative returns…good thing they are backstopped now that they cost you money.
Are they massagin’ your nubbin’ real good?
Comment by Ben Jones
2008-12-07 04:57:48
Some of the regular posters have been resorting to personal insults and foul language that is just not acceptable. Clean up your acts or I will ban you
Comment by Faster Pussycat, Sell Sell
2008-12-06 20:24:48
…………………./´¯/)
………………..,/¯../
………………./…./
…………./´¯/’…’/´¯¯`·¸
………./’/…/…./……./¨¯\
……..(’(…´…´…. ¯~/’…’)
………\……………..’…../
……….”…\………. _.·´
…………\…………..(
…………..\………….\…
Comment by SanFranciscoBayAreaGal
2008-12-06 19:09:45
That was a good one FPSS. My problem is when I go to tell the joke I sometimes forget the punch line.
—
now its all good…..
Damn, I got punk’d good.
you and hozzie are the big nuts on this hyere bloggo.
if I cant call you out, and irritate you… nobody will..
almost polar opposite.
A gay man in New York and well moneyed rancher in the upper midwest Wisconsin Region… a classic battle of monster egos….
LUVIN IT !!!!!
—not meant to be inflamatory in any way, I enjoy this…
I think you both are good characters. Its tough to punk hozzie baby, but I try…..FPSS…you never post any, lets say…..ideas of money manipulations.
Hey,
How the heck did I get drawn into this? Speaking of drawing, well done clue.
not well done clue, well done FPSS…
ye see, I read this a lot.
I may not talk much to you.
I have a really bad tendency to talk AT you…its not by design, but as I sit in my office and read….I come in here and occasionaly say something smart. very rare, me saying something smart.
‘…but as I sit in my office and read….I come in here and occasionaly say something smart. very rare, me saying something smart.’
Nonsense. You’re full of smartness. Like a tick in the southern Utarr wilderness.
Don’t you have a Santa hat, after all? Also, if you recall, Faster said you made him some money; he said that just the other day. So you must be full of smartness.
Don’t let the fact that a tankful of guppies wearing tiny Santa hats defeated you that one time, don’t let that inform your future, man!
Be strong! We believe in you.
clue,
I stand corrected. Well done FPSS, well done.
I think I see the “invisible hand ” of Adam smith’s economy ?
Comment by hoz
2008-12-16 11:18:07
…..
I will not even think about corn. Based on the price of milk (very high), I may just switch to grass and reduce the number of cows - same profit less work.
—
just tying it together…
Are you trying to say “buy corn” in English?
“First, the Fed cut its target for short term rates to just above zero and pledged to keep its target for short-term rates low “for some time.”
This should give banks assurance that they will have access to cheap funds, economists said. This could help spur bank lending.”
Ha and banks will probably lend money to ? I thought it would be the fast growing countries of the third world but after Ecuador decided their debt was illegal…..
Banks may borrow money for free from the FED and lend it to their friends who then can buy real companies and then break them up and sell the pieces to Chindia who will view it as an easy way to get technology. Like whats happening to Freescale.
Or they could just buy the companies as a way to get power, free corporate jets rides, get on TV ? whatever.. Its free money.
I wnt their money,. I want it to buy stuff with that will inflate, so I can pay them back later with newbucks.
Sorry. Fingers are frozen and the promised hot chocolate hasn’t magically appeared yet.
At the end of last year, we forecast that the dollar would end its seven-year slump and rally later in the year against most currencies, but not the yen. And it did, starting in July. It was obvious a year ago that far too many were negative on the greenback. As with commodities, many institutional and individual investors considered foreign currencies as an asset class, worthy of a certain percentage of their portfolio.
Much more importantly, we were forecasting a major global recession and reasoned that, as usual in times of trouble, the dollar would be the global safe haven. We didn’t expect the U.S. economy to improve but that the rest of the world would join America in the tank. The greenback would be the best of a universally bad lot. We expect the dollar to keep rising for the next 5 to 7 years, continuing the long- run pattern.
Gary shilling
Mauldin’s latest newsletter is a good read, IMO. It features the views and predictions of Gary Shilling, one of my favorite gurus.
FWIW.
Reply to this comment
Comment by clue
2008-12-16 08:11:59
oh yeah, my yuri geller spoon can beat up leased office space at the ballpark in arlington.
FWIW
andImdone.
night all.
(polite applause)
Night, clue.
Morning!
Just stumbled onto this article:
http://www.nytimes.com/2008/12/16/business/16oil.html?_r=2&ref=business
A gas station in La Jolla charges an extra $1.70 PER GALLON to put it into your tank for you.