Bits Bucket For December 30, 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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Bring your own job or bring your own dough-
Yesterday BanteringBear made the sometimes obscured point about relocating. Seemingly random locations where the price and/or sales volume has collapsed make for tempting execution points. Locations are are personal preference of course but if you’re able to bring your own dollars and buy, how the hell does one subsist, no less thrive when these locations had no reasonable paying employment during the bubble years. Fastforward to current conditions, those slave wage jobs disappeared. The forecast for these areas seem very dark at best.
As in Cleveland?
FL and Oregon to name two.
All of Fl is not Cape Coral or Orlando, but your point is valid of course.
West coast of Fl is toast, some crispy, some just burnt toast.
South Fl (really SE) will fare much better long term.
Insert north Idaho here.
Of SE florida, maybe I be the first to say: Yecch.
Also, you must work in service industry (accountant, lawyer, stock broker, roofing contractor :lol:) to make any sort of money.
Oregon is still very bubbly - I wouldn’t consider it tempting at this point.
“Locations are personal preference of course but if you’re able to bring your own dollars and buy, how the hell does one subsist, no less thrive when these locations had no reasonable paying employment during the bubble years.”
It’s not only one’s own money and income that counts, the neighbor’s money and income counts as well. The entire neighborhood infrastructure - social and physical - will collapse when incomes disappear.
It’s all about money flow, IMO. When money flows into an area you get prosperity. When the money flow stops you get Cleveland.
However, a socialist that walks the walk will be happy to self-sacrifice and live in a deteriorating neighborhood. And I’m not needling you, combotechie, nor am I disaggreeing with you.
Bill,
If you have some form of gov. employment, that is always a possibility. But it’s definitely uphill if you’re in the private sector.
My broader question for this discussion is: With ALL that we’ve been through over the last several years ( tech wreck/RE boom/bust ) who has the energy to play hero waiting for a neighborhood to turn around!? ( “I” certainly don’t! ) Besides, my motto going forward is; “It’s not MY mess!”
combotechie,
We’re already seeing that very “fabric” threatened here in Marion County OR. The old model of Wife works for State/Dad is a contractor etc. is falling apart. Scores of homes in our “upscale” neighborhood are up for sale, many never having been occupied!
The builder down the hall from me ( otherwise very honest young family man ) has decided to chuck it and use his law degree for the immediate future.
“The old model of Wife works for State/Dad is a contractor etc. is falling apart.”
You just described half of our little town; a perfect t-square fit.
Down here in southern Oregon, we have the
Nile river running through town. Absolute
denial about the housing crash with two new
developments started up two months ago.
RE: You just described half of our little town; a perfect t-square fit.
Little town?
Take the whole Socialist Republic of New England with Barney Frank’s Mazzland at the epicenter.
Without the health insurance provided by the wife’s public sector job @ $1880.00 per month for family of 4; the entire socio-economic order here would competely collapse.
Try nation-wide.
“decided to chuck and use his law degree for the immediate future.”
And what a future that will be. The legal market is crashing in all but a few areas such as bankruptcy and possibly divorce. Everything else is getting hammered, especially fields that were in any way connected to RE.
Talk about jumping from the frying pan into the fire.
Too true, hd! It was always said you couldn’t live on those Massachusetts social worker salaries but with today’s health care costs, it seems some families can’t live without them.
Cost of living in Massachusetts is a complete joke. Damn but I miss the place, but earning $9/hr, no benefits and paying $550 rent+util in a drafty 3rd floor walkup with two roommates AND crazy jerk landlord plus $72 transit pass is pretty tough even when you’re 24. Oh yeah, the $72 transit pass was for that 55 minute commuter rail trip each way. (Strangely enough, I was able to save because I shopped at ethnic marts and cooked all my own meals. Cheapskate FTW. Also worked hard and ingratiated myself to (East) Indian boss, thus picking up lucrative overtime.)
I remember there was a lottery just to get a bus driving job and it was very competitive–despite incidents such as the one I heard the drivers gossiping about where a crazy passenger beat a driver about the head with wooden chock blocks.
I am paid much less to drive here in G’ville, but I got the job easily and pulled out of nights and weekends territory in less than a year, AND cost of living is hella cheaper. The first year I was paying $285/mo to share a large 2 bdrm apt and commuted to work by bicycle. I paid off all my student loans last year and my wife and I have massively increased our net worth since then. The only sucky thing is that anti-gay backlash legislation seems to put her on the verge of a nervous breakdown every two weeks or so. I seriously don’t even care any more except that it’s upsetting her so much.
The entire neighborhood infrastructure - social and physical - will collapse when incomes disappear.
It certainly seems true that one does not want to become a virtual island, a haven of prosperity in a sea of turmoil. That’s no way to live, IMO. I don’t think it’s always true that money=prosperity, but your overarching point is spot on — we are dependent, ultimately, on a larger community with some stability.
Perhaps the Buddists have the right idea. It’s easier to let go of your desieres than to achieve them.
I think you misunderstand Buddhism, my friend.
When money flows into an area you get prosperity. When the money flow stops you get Cleveland ??
Not just Cleveland but every little town also…Real Estate tax revenue is a big part of their budget…See; Rio Vista California…
There are minor trends, and there are major trends.
We may be witnessing a major trend - not the end of inflation or deflation, not stagflation, but the actual disintegration of the American economic system.
With each passing day, there are more unemployed, more convinced the economy is broken, more defaults and foreclosures, more broken mergers or business agreements, more companies cutting back or closing. With each passing day, there seem to be fewer catalysts available to spark a recovery from the economic decline. We seem to be on a course similar to the Soviet empire collapse; which resulted in a few politically connected gangs and powerful thugs exercising dominance over a bewildered and impoverished population, effectively confiscating its remaining resources. When it was said before on this blog that “this will not end well” - maybe so.
You might find the book “Reinventing Collapse: The Soviet Example and American Prospects” interesting. Although the author’s loathing for the US and Americans (although he has chosen to live here and married a US citizen) wears a little thin, it gives interesting food for thought.
Don’t they call that north dakota?
North Dakota will be under water this spring.
Retirees. I almost wonder whether we’re going to see the boomers retire in former industrial cities where the living is CHEAP.
The Buffalo model says no. Stay put maybe, but not move to.
Hey, Blue Skye - thanks for your response to me in the bits bucket yesterday (and to everyone who responded). Sorry about your friend/customer in Hatboro. Hatboro is one of the towns I’m looking in. I am so on the fence and you’re right, must be seasonal for me. Except this year I’m in better shape financially since I was promoted over the summer.
Still, I don’t want PITI to be much more than my current rent. If I can find a situation where that works, I’d catch the knife (and be willing to accept lower equity for years to come if need be). I afforded my current rental on my old salary, so if I needed to take a paycut, I would still be able to manage a mortgage that’s in line with my current rent.
There are a few factors driving my impatience relapse. One is that I’m sick of taking care of someone else’s property. My landlord is so hands off and I’m sick of it. The latest is I’m going to have to hire an exterminator because I just cannot get the ant under control and any day above 50 degrees, they start partying in my kitchen. Not to mention all the gutter cleanouts I’ve had to handle myself since the townhouse association doesn’t deem it a problem (it is, trust me). And a 25 year old refrigerator and stove where only 2 burners work and there’s only 1 oven rack. The list goes on and on.
Plus, my son starts kindergarten in September and I just feel like I want to settle in to a school district prior to that. I currently live in Upper Moreland Twp., but would consider Hatboro-Horsham as well.
I think I will look at a few and offer 80%. Take it or leave it. 80% of listing on the homes I’m looking at will put me in line with my current rent.
Thanks, again, for the advice.
“Plus, my son starts kindergarten in September and I just feel like I want to settle in to a school district prior to that.”
Why not rent in the best school district in the area that you like?
Good luck eastcoaster. 60% off would get me in line with rent where I am. We are still in the sales have dropped off stage, not in the prices should be much lower discovery stage. By the time I see that 60% off, the rent will probably be down as well.
On those ants, I’ve found that a few fresh ant traps every week knocked em back. You can’t tell when the traps (OK poison centers) are used up, so you have to keep putting out new ones.
“80% of listing on the homes I’m looking at will put me in line with my current rent.”
If buying doesn’t put you in a BETTER position than renting, why bother??
I still say if you’re going to go ahead, start offering below 80% of ask. If you start at 80%, everybody’s going to counter higher than that, and then you’re wasting your time.
Start lower, work your way up to 80%.
eastcoaster,
I solved bad ant problems in two apartments with powdered cinnamon. Lots and lots of powdered cinnamon. Poured/wedged into every crevice they might possibly come out of. They seem to hate the stuff.
If buying doesn’t put you in a BETTER position than renting, why bother??
Well in normal, non bubble times it doesn’t initially. But after a decade of inflation, the rents stand to have gone up significantly and with a 30yr FRM, you P&I won’t. People who own their own homes tend to be, on average, more settled and prosperous than renters. But it’s not that homeownership makes one prosperous, rather that only the reasonably settled and prosperous stand to benefit from homeownership.
Baby powder works great to get rid of ants if you want a totally safe method with a child around. They won’t cross it and I find a few shakes and blowing a little into any hole they’ve found works wonders. They will redirect a few times, but you can safely lay down a lot of powder even though you might have to deal with white footprints for awhile. Eventually they’ll give up and find a less annoying home to invade and you are poison free! (And smell like freshly diapered baby bottom to boot. :D)
On the other issue - the buying opportunity is going to be a lot better in one to two years. I know moving’s a hassle but can you think about a two-year rental in a neighborhood with great schools? That way you don’t catch the falling knife and you may find there are other things about the neighborhood that aren’t desirable and you’re not stuck there. Please you have plenty of leisure time to research and get the very best deal.
“I’d catch the knife…”
You’d be smart to hold-out through 2009; you won’t get cut as deep.
Assuming of course they can even retire.
Jim A,
As a former midwesterner my damn self, that’s awfully tempting! But the truth is it took me 20+ years to find acceptance here on the west coast. Would we be welcomed back with open arms in the midst of some -very- tough times?
The good news for a lot of us in consulting/financial svc. is that we wouldn’t have a sullied history with the locals. No called loans, no abandoned subdivisions etc. So in that regard, at least “I” have a distinct advantage.
What happened to your move to Kfalls?
Curious…..
Rancher,
I don’t think I could talk my wife into moving down there full time but we’d love to spend part of the year there! Seems there is plenty of reasonably priced land and much of it looks like our old home on acreage in Molalla, OR ( only without all that rain! )
Since she really liked the Running Y Resort ( which could get kinda’ spendy on a monthly basis? ) we’re doing a little research to see if the $200-$300 a month spent there wouldn’t be better applied ‘elsewhere’?
Running Y ranch? Don’t go near it, they’re in
big trouble with a lot of early buyers trying
to get out from what I’ve heard.
If you’re used to Portland, you’ll feel like
you’ve moved to outer Mongolia in Kfalls.
When we move from Marin county in the bay
area to our new ranch in western Colorado
years ago, my wife went through a horrendous culture shock…. 146 mile round trip to the stores, armed husbands helping their wives grocery shopping… It was home week for me but my wife just could never
adjust so we sold and bought a ranch her
in southern Oregon that had a much milder
climate and closer to civilization..
Rancher,
Yeah I talked with my shop supervisor ( great guy orig. from Chicago ) and he said not long ago those lots were selling for like 35k! He said he couldn’t believe it as they topped 200k! Just for the ‘lot’!? Where’s the house?
No, actually we just stayed at the lodge and my wife really enjoyed the area. I think in order to get some excellent pricing you’re probably looking at outer areas like Bly, Beatty etc. We’d be just fine being within 45 mins. or so from the base as that’s what I drove back in the 90’s.
Did you leave family when you left Marin Rancher ?? Thats the difficulty we are having….
Yes, her folks, and while living in CO her mom
took ill and she was on the plane almost constantly. She knew the first names of the
flight stewards. That was another reason
we moved to Oregon, closer for a shorter
commute.
Southern Oregon has given us everything we’ve ever wanted, we’ll never leave.
Prior to the CO move, we had looked at
AZ,NV, NM, CO, UT, ID, MT, WY, and OR.
CO was our first choice and also the best
rated by my corporate attorney and our
company accountants. After the move and with our subsequent relocate to OR, I
didn’t give a damn about taxes or anything else but what WE wanted.
Everything we have is free and clear and
I smile every morning when we wake up!
But the truth is it took me 20+ years to find acceptance here on the west coast.
Why should you care if you were not accepted anyway? If you worry about what “they” think, “they” (the ones who took very long to accept you) achieved a victory.
And it speaks less about them and more about you when you’re obsessed about winning or losing.
I was a patsy for my first 18 years. But I found out if I don’t look out for my own interests, I will be miserable.
So I assume you self-sacrifice. If so, I would not be surprised if you are addicted to prunes.
And still are no doubt.
It’s great to be a bitter renter. During times like these, mobility, excellent credit, and a good grasp of the economic environment are competitive advantages.
Also in apartment complexes I noticed especially in the last 3 years the quality of my neighbors has improved. They respect peace and quiet, for example. The cretins who lied about incomes got the greed bug and became Donald Trump wanna bes. They are still hanging onto homes they cannot afford or moved back in with mommy and daddy.
I’d have to say Detroit meets your criteria, and maybe most of Michigan. Perhaps upstate New York too???
Just came back from visiting in-laws in MI. On arrival, walked in the door and got “So, why does the rest of the country hate Michigan so much?”.
My impression from friends and family there (not a proper survey sample)are that they are terrified at the possibility of auto shutdowns and feeling attacked by the rest of the country. There are already closed store fronts everywhere.
Totally OT, we’re loving the gas prices, for anyone who cares we drove 850 miles to get there. We normally drive anyway because we like the flexibility and ease, but with gas under $2 a gallon…
Flying: $890
$810 for two tickets and baggage (when we looked in October)
$80 in overnight airport parking
11 hours of travel (flight+getting in and out of airport, both legs)
Driving: $205
$125 in gas (honda civic),
$60 dollars in fast food, coffees, etc,
$20 tolls,
26 hours of driving
Where in MI if I may ask??
Tecumseh. Near Adrian.
Ever check out Cabela’s in Dundee??
Always. That place amazes me. I had always thought LL Bean was the most fantastic store ever. Then I went to Cabela’s in Dundee. Awesome.
We hit the Jerky Outlet next door on our way home to load up on jerky and cheese kurds.
“26 hours of driving”
In a Honda Civic?
I’d rather be water-boarded than spend 26 hours driving in a Honda Civic.
Hey I love a road trip! I’ve often driven the 1280 miles to visit family in SoCal. Just need convenience stores & caffeine.
Just need convenience stores & caffeine ??
Can you say; “Flying J”
Yup. Aren’t they going BK??
Aren’t they going BK?? AFAIK, Flying J is restructuring & expects to stay in business. I’ve visited many over the last 2 weeks & all appear to be doing business as usual.
As someone who has a travel-driven job that allows me to live anywhere in the lower 48, I can say that I am far from tempted by $1 houses in Detroit or even $60,000 houses in Cape Coral. Life is too short.
If you bought a $1 house in Detroit, your life would probably be pretty short.
There are also probably $1 houses in this area in the communities of Compton, Norwalk, and Inglewood.
Very interesting article about Braddock, PA, here:
http://monthlyreview.org/081222straub.php
The mayor is trying to turn around a town that lost 90% of its population (!). Trying to attract artists - the high number of vacant buildings means plenty of cheap space for studios. Good luck to him, but I don’t see it working.
For one thing, no matter how cheap the rent, struggling arty types will have to have SOME KIND of day job to supplement their income, and if there’s no economy then there’s no jobs, if even the quickie marts have moved out. Hell, even Van Gogh only sold one painting in his lifetime. The mayor needs some company to move in there and offer some part-time work or something, so people can afford to run a space heater in their massive empty studio while they learn their craft.
For another thing, there would have to be a massive influx of artists/musicians to make the town “hip” enough for folks to want to move there, no matter how cheap it is. People are willing to live like paupers in NYC because there is always so much happening there that they are willing to pay for the privilege. I imagine being one of the first urban pioneers in Braddock is going to be a lonely undertaking.
Anyway, an interesting article. Like Detroit, that town looks like they had a war there. The US has managed to destroy its own industrial base rather than having to have some foreign enemy bomb it for us…
turn around a town that lost 90% of its population ??
Old little town America;
Rural ag. based with some manufacturing, small service industry and LOTS of volunteers including fire and police….
New little town America;
Real Estate Tax based with boutique coffee shops etc. and sales tax based on retirees and tourism during “Event Days”…Union based Police, Fire and Muni workers…
Again;…See…”Rio Vista Ca.”
2 thoughts:
1. Make Braddock very, very gay friendly.
2. Globalistas have done to America what Al Qaeda could never hope to do.
I imagine being one of the first urban pioneers in Braddock is going to be a lonely undertaking.
Perhaps, but it’s not like Braddock is in the middle of nowhere — it’s fairly close to Pittsburgh. Jobs can be had for the price of a commute.
I think the mayor’s attempt to rebuild is rather admirable. I’d certainly like to check out the town next time I’m in the vicinity (which, granted, may not be any time soon).
It was a good read, at any rate.
my comment got held up for about 30 min, apparently. I went to Braddock once to do a school report on the steel mill there. It was a pretty depressing place back then (late 80’s/early 90’s)… Haven’t been back since… It reminded me of some of the other hilly depressed pittsburgh-area neighborhoods, except even emptier. Actually, at the time I had not realized I had even left Pittsburgh city limits.
For some context, Braddock is about three miles from the Pittsburgh city limits. Pittsburgh already has a good bit of cheap and empty housing… I like the ambitious plans for Braddock and hope they succeed, but there is not exactly a shortage of super-cheap artist-friendly amenities in the Pittsburgh area… (Interestingly, the artist community in Pittsburgh has been growing lately…)
And working hard to destroy its own technological base as well (see: Bombay, offshoring).
Yeha - my grams lives a stones throw from Braddock, up the hill in Rankin.
In the sixty-seventy era, Braddock was fabulous. Fresh baked goods, butcher shop, local eateries, decent hospital, and of course bars baybe!
I’m afraid to drive through there now.
And don’t get me started on the Rankin bridge.
My dad thinks I’m nuts because I will not drive over the darn thing.
Wow - a Braddock post. Whoda thunk?
Leigh
There is just such a little town in the middle of nowhere in Virginia. I do not recall the name, but after once reading about its “old warehouses converted into discount furniture stores”, I took a detour once and drove through. I was mainly curious exactly about whether this supposed rebirth worked.
I tell y’all, this was the most desolate place ever. There was not even coffee on a weekday afternoon. What surprised me (that was in rural VA somewhere south of Charlottesville) that I did not see many houses for sale (early summer 08).
Newsletter of the year? Harry Schultz. Really.
Commentary: His prescient call of the ‘financial tsunami’ is the reason why.
Currently, Schultz is writing about a 20-year V pattern in markets and the economy — “buying power (etc.) for everyone will shrink for 10 years (with strong 1-year counter-trend rallies) and then rise for 10 years (with strong counter-trend 1-year declines), getting back to 2007-08 levels by approximately 2027-28.”
By that time, incidentally, Schultz will be well over 100.
In the short-term, Shultz sees deflation and has argued strongly that gold will not make a decisive move until it’s over.
Which could be soon.
He writes: “This deflation will demand increasing cash/credit transfusions from governments. This supposed “cure” will create its own collapse as public’s remaining confidence in currencies & government’s phony or failed fixes suddenly evaporates, perhaps overnight, and the world leaps not back into inflation, but probably to hyperinflation. You see, if this view is correct, normal inflation gets bypassed because all sense of value at that point is largely gone. The last chicken comes home to roost.
“One investment conclusion: “This may be your last chance to get out of the U.S. dollar before it falls to historic lows. Note, if you own U.S. stocks, you own U.S. dollars! E.g., if you own U.S. oil, energy, food, resource stocks, you own U.S. dollars. You can sell such stocks and buy similar companies in Europe, Asia, Canada & Oz.”
Another cheerful point: Schultz predicts that the government will seize and nationalize private 401(k) plans.
He throws in this cheerful thought that he claims comes from Thomas Jefferson: “This country is headed toward a single and splendid government of an aristocracy founded on banking institutions and monied corporations, and if this tendency continues it will be the end of freedom and democracy; the few will be ruling and riding over the plundered plowman and the beggar.”
Schultz’s terse comment: “And it came to pass.”
http://custom.marketwatch.com/custom/earthlink-net/mw-news.asp?guid={03B23D71-21A4-4974-B442-ABE26C9DF2EA}
I like this:
“normal inflation gets bypassed because all sense of value at that point is largely gone.”
Sounds like a great big FIRE sale to me.
Sorry, predictions based on fanciful imagination don’t help me any more than astrology.
Yeah, I’m still trying to figure out who will be able to buy anything.
I’m pretty sure you can’t have inflation with nobody able to buy. Price it as high as you want, it ain’t gonna sell.
Yep, double-digit inflation before the end of Obama’s first term.
Pretty soon, “Got cash?” will be used derisively even here on this blog.
Cash with reasonable leverage is not a bad combo IMO….
I agree with the deflation scenario. The bubble pushed up demand for most goods, and suppliers (mostly overseas) ramped up production to meet that demand. That demand was ultimately unsustainable, so now the world is left with over-capacity. The Chinese, Indians, and others will continue to produce stuff (although they’ll cut corners on quality to lower their costs and prices) for purely domestic reasons. We just have too much stuff — and that includes houses.
We just have too much stuff ??
To much of everything for sale…
“One investment conclusion: “This may be your last chance to get out of the U.S. dollar before it falls to historic lows. Note, if you own U.S. stocks, you own U.S. dollars! E.g., if you own U.S. oil, energy, food, resource stocks, you own U.S. dollars. You can sell such stocks and buy similar companies in Europe, Asia, Canada & Oz.”
That only helps if you buy them in foreign currency. If you buy them in US dollars (which I think is what he’s proposing), then you’re no better off. That’s because in hyper-inflationary scenario, it’s not the value of US companies that’s declining relative to the rest of the world, but the value of the US dollar.
In the end - in a hyper-inflationary environment, geopolitical forces/changes will vastly outweigh normal investment strategies. Companies who may have a very sound business model, and be in a very good market segment, will go out of business because they’re in the wrong place at the wrong time.
On the contrary, I don’t think it matters whether you spend (pre-currency readjustment) dollars to buy foreign assets. But whether the companies whose assets you’re buying depend upon current, unsupportable dollar valuations matters. ALOT. Buying stock in a foreign business that depends on investment or sales in the U.S. will do little to protect you from an upcomming revaluation of the U.S. dollar.
How does that work, revaluing the reserve currency?
Does it rob the IRS of taxes on obscene capital gains that simple inflation provides?
Well it isn’t like back in the “Gresham’s law” days when the king woke up and said “From this day hence, we will mint 300 pennies from a (tower) pound of silver instead of 260.” Instead we have a change in the exchange rate, largely market driven. The problem is that we share alot of the problems that we have with our trading partners, so that we all go down together. OTOH, I suspect that the CHICOMs will have an increasingly difficult time trying to prop up the dollar.
But you should take everything that I (and everyone else here) says with a grain of salt. Certainly my Roth IRA was SAVAGED this year by the rise in the dollar.
NEW YORK (Reuters) - The auto sector is expected to be the most financially troubled industry in the United States next year, taking the top spot from the homebuilding group, according to a survey of restructuring and bankruptcy professionals released on Monday.
As the nation has slid into recession, auto and auto parts makers have been slammed by dropping sales, pushing industry stalwarts such as General Motors Corp (GM.N) and their suppliers to the brink of bankruptcy.
Homebuilding was named the most troubled industry for 2008 but fell to third for the coming year, according to the survey by Turnaround Management Association, taken during the first two weeks of December.
“The Detroit Big 3 (automakers) have been losing volumes for some period of time, but the volume reductions are now across the board,” Charles Moore, senior managing director with turnaround firm Conway MacKenzie & Dunleavy, said in an interview.
“Suppliers, being as capital intensive as they are, are finding it very hard to cut their cost structure,” he said.
In addition, consumers are finding it difficult to get the credit to buy new cars, said Moore, who is also president of the Detroit chapter of Turnaround Management Association.
Retail, hurt by sliding consumer spending and a drastic cut in credit availability, is seen as the second-most distressed industry for the coming year, according to the survey, up from 6th place last year.
The poll surveyed representatives from 213 companies with TMA membership.
NO BAILOUT
Those polled said a Chapter 11 bankruptcy filing was the most appropriate solution for beleaguered automakers.
“Simply infusing money into an industry will not solve the problem,” Steve Mischo, a member of the TMA board of directors and an adjunct professor of finance at Adelphi University’s School of Business, said in a statement.
Some 77 percent of those polled said bankruptcy was the best option, while 68 percent said the government should guarantee debtor-in-possession loans to help the companies operate while under creditor protection.
“Simply infusing money into an industry will not solve the problem,”
No kidding. But Barney Frank and Nancy Pelosi cannot seem to wrap their brains around this simple concept.
Fear not, yon taxpayers….thou art now in the car financing business.
And stepping to the plate in 2009??? An “auto industry focused TARP.”
http://www.detnews.com/apps/pbcs.dll/article?AID=/20081230/BIZ/812300362
On Yahoo Finance:
“Ford announces new self-parking technology”
“NEW YORK (AP) — Sit back, relax and let your car parallel park itself — without a single scratch or ding to your bumper….”
Can we please get these engineers on useful projects.
“Can we please get these engineers on useful projects.”
Amen.
Right, like spending countless hours figuring out how to re-position the cupholders on the new models?
The WORLD is “over-engineered”! And guess what? Those fancy electronic packages will be the first to betray on that “new” model!
There’s a luxury car (Lexus?) that already parallel parks itself — I saw the commercial and everything. And in other forward-looking news, the Cadillac Escalade Hybrid increases city milage from 12 mpg to 18 mpg — at $72K. And they are flaunting how “green” it is. Green? That’s an insult.
What we really need is a Corolla plug-in hybrid for $22K or so. Anything less is just PR.
ALL auto companies are in trouble. I call BS on the greenies claim, that US car companies made cars no one wants, as the reason for failure. The evaporation of easy credit will be the demise of ALL car companies, if they don’t start making affordable cars (or easy credit comes back). W/O easy credit, housing got too expensive and so did cars! I’m sorry if it doesn’t fit into environmentalists neat little dream world. The credit crunch punctured the housing bubble and then like dominoes, all the other overpriced industries fall. The housing bubble didn’t deflate until rates went up. The higher education system is next. The one thing I do agree with though; if two makes of comparable cars, are the same price, the foreign one sells.
Well the greenies DO have some point. A part of the problem WAS that Detroit has a huge infrastructure invested in making the products that consumers want when gas prices are low, and not when they are high. And the gas price spike this summer shifted demand MUCH faster than production could be shifted. Overall demand was down, but demand for SUVs was down even more. AND of course with the construction crunch, you don’t have contractors buying nearly as many F150s either.
I think the problem is a little different. The car companies borrowed a lot of money to meet demand when demand was abnormally inflated by the bubble. Now, demand has fallen to about 2/3 of where it was, but they’ve leveraged up to where they need the full 3/3 to be viable.
If they lowered their debt by about 1/3, they’d be okay. Bankruptcy does that for you.
I think the problem is a little different. The car companies borrowed a lot of money to meet demand when demand was abnormally inflated by the bubble
Or they borrowed a lot of money so that the CEO’s and workers could continue to take home large pay checks.
Measton, both statements are correct, but the long-term viabilty will depend on lower salaries and less expensive cars. Cheap and easy credit provides short-term relief and not a long-term sustainable business.
Part of my disbelief in housing always going up was; how are these blue collar families affording these 30-40 thousand dollar cars and SUV’s? I mean, I figured out the how, easy enough, but I knew this couldn’t last forever.
Easy credit IS>/b> back. As far as Treasury is concerned, GMAC is now a bank, and they are feasting at the trough. Somebody posted a link to the news story. Their criteria for car loans will drop from a FICO of 700 to 621.
But once this credit trench is all loaded up with new GM cars they can not afford, then what?
Maybe additional injections of billions to GMAC, so they can drop their criteria from 621 to 571. And so on.
But at some point, the used car market gets flooded with 1 or 2 year old repos, lowering the prices of all cars, new and used, and all makes and models.
At some point, somebody in CONgress will figure out the problem can be solved if all of these repos are purchased by the Treasury, to be processed through a smelter.
New GM vehicles for everybody! Yeah!
(And all other car companies take it in the shorts!)
sorry for the bold…..
Easy credit IS back. As far as Treasury is concerned, GMAC is now a bank, and they are feasting at the trough. Somebody posted a link to the news story. Their criteria for car loans will drop from a FICO of 700 to 621.
But once this credit trench is all loaded up with new GM cars they can not afford, then what?
Maybe additional injections of billions to GMAC, so they can drop their criteria from 621 to 571. And so on.
But at some point, the used car market gets flooded with 1 or 2 year old repos, lowering the prices of all cars, new and used, and all makes and models.
At some point, somebody in CONgress will figure out the problem can be solved if all of these repos are purchased by the Treasury, to be processed through a smelter.
New GM vehicles for everybody! Yeah!
(And all other car companies take it in the shorts!)
Surprised not to see more outrage here about this. I wanted to hurl.
U.S. taxpayer = subprime lender w/o consent
“I call BS on the greenies claim, that US car companies made cars no one wants, as the reason for failure.”
I’ll second that. There are U.S. cars out there that are just as green as foreign cars, for the most part. The only exception possibly is the Prius - but the actual sales of those are so low as to be insignificant with respect to the earnings of the company.
The real problem is quality. But the root of the quality problem is - the expense vs. revenue equation. American auto companies’ expenses are so high relative to foreign counterparts, that any quality-equivalent models would be 10% more expensive, and thus simply just not sell.
And why is the expense vs. revenue equation so bad for U.S. companies? In a word - the unions. It all gets back to that. And, contrary to popular belief, the problem with the unions isn’t benefits or even salary, in large part - it’s pensions. U.S. pension costs are about 3 times foreign pension costs.
My local paper ran an AP story about coming retailer closings on their web site. There was lots of chatter about this recession. Someone asked how long recessions last. My response was that post-Great Depression, there have been 6… 3 lasted 1 year and 2 lasted 2 years. But, this is not a recession, it is a debt collapse.
I was asked, What is the difference?
Well, they rhyme, but one starts with an “r” and the other starts with a “d”.
And, it may not be the scale of the Great Depression, which saw a 50% decline in GDP, but it could easily top 25%.
Our GDP number (and other national stats) is so fictitious that is basically worthless as a barometer of true economic health.
The barometers I prefer using are the number of employement ads and other local stats.
The number of employment adds used to be reported. However internet employment sites have greatly reduced print add numbers.
Wow,
A Laurel, MD comment here on HBB! I grew up in Laurel - Laurel Elementary, LJHS, LHS and fled in the early eighties when Laurel went straight downhill. At one time I had nearly a dozen friends and relatives underwater on Laurel Lakes related homes condos and TH’s as prices cratered by 30%.
My fingers are crossed on an upcoming sale of my late FIL’s home in Montpelier. If you are in Laurel - good luck. What a great place to grow up back in the 70’s…soon to be a gang-bangers paradise.
We live in Montpelier. We are content here..for 25 years now.
Laurel,
Montpelier is a truly unique and wonderful community. In the fast-paced high turnover DC commuter communities Montpelier stands out as a gem.
What is most impressive is the number of folks who have lived there for twenty-five years plus, as did my FIL - raised their children…and stayed. The homes and lawns are always well kept. I don’t see that many kids running the neighborhood, as it appears so many who bought in the 60’s and 70’s still call Montpelier home.
When listing the Montpelier home I was checking the MD Tax site and was amazed by the number of “original” families that still lived there. Many of the names of the parents in my High School yearbook are still there.
And I was not suggesting that Montpelier was over-run by gang-bangers. As a matter of fact, I’m comfortable to have my ten year old ride his bike and walk the neighborhood as so many of the folks in the community do. I still consider it a safe and relaxing neighborhood.
Yet, I feel Montpelier is becoming an island and have some uncertanties regarding its’ future over the long haul. No harm meant.
Did you see the article last night on the new guestimate for Nipponese economic growth next year?
-14%
whew, glad I resisted the urge to plunge “all in” the Nikkei while it was “cheap”.
Too bad there wasn’t an E-Z way to buy yen-denominated bonds last year, though. That yen rally was ferocious.
Too bad there wasn’t an E-Z way to buy yen-denominated bonds last year, though. That yen rally was ferocious.
————————
You can say that again! I was trying to buy Swiss and Japanese treasuries, and got the Swiss, but the bond traders wouldn’t touch the Japanese bonds because there wasn’t enough profit in them (at least for someone buying on my scale).
Bummer!
Employment ads can be a deceptive barometer though, because many firms run such ads on a regular basis simply to collect and sort resumes so that they can accumulate a “bank” of qualified candidates–they may or may not have a position available at the time an ad is actually run. They might be a good barometer of business planning and expectations, i.e., we assume we will be hiring at some point.
I advertise for a wife frequently with the same intentions. I just like doing the interviews.
“Our GDP number (and other national stats) is so fictitious that is basically worthless as a barometer of true economic health.”
It is amusing (to me) and somewhat amazing, but the manner in which GDP is calculated could result in a positive GDP for the 4th Q over the 3rd Q! The market is expecting a negative 5%; but the market fails to take into account the real growth in personal expenditure of 1% (BLS Dec 24) with a deflator of 0.5% the probability of a positive GDP is .33 - the probability of a negative 5% is 0.20
It is not fictitious, you just have to understand the minor items that make up GDP. Pay increased greater than inflation and productivity increased.
gov spending as an example
why is this part of gdp ?
The barometers I prefer using are ??
I like using real time information we receive on this blog…
One of the best aspects of this blog!
Depression = recession + deleveraging.
This is disgusting. Every dollar we throw into non-performing companies hurts solvent ones. With every passing day the situation becomes more absurd–and yet most people continue to live life as if nothing is wrong. The financial ignorance of the masses is stunning. We’re on a crash course into a huge depression.
In my area nothing is being built (and I’m plugged into the local builder’s community) and new cars are sitting–even with offers of 40-50% off.
I keep thinking that consumers need to boycott companies that accept gov’t money so that we can force them into bk ASAP. But the companies are already there…
It doesn’t help that so many have cried wolf for so long either. As long as I can remember, every issue to speak of has been presented by some group as “the most important issue in the world”. This must desensitize the public to real problems. I think that it will require the actual experience of depression-like life to catch the attention of the masses. I’ve stopped wishing that society will someday “get it”. That’s no more productive than an FBs wishing for 2006 prices on their over-inflated tinder boxes.
And now a bailout for GMAC. GMAC will now fund loans for those
with credit scores at 621.
http://www.bloomberg.com/apps/news?pid=20601087&sid=asJGlr5r3Uf0&refer=home
So lets review: free money for houses, free money for cars.
Whats next? Free money to shop at Nordstrom’s?
“The majority of GMAC’s auto financing has been in the prime arena,” GMAC President Bill Muir said in the statement. “Therefore, opening access to credit for those with CB scores of 621 or better will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the U.S. auto industry.”
“More normal levels of financing volume”….he’s all but admitting that they need subprime borrowers to survive.
I can’t see how this will end well either.
That’s it! this country exists as long as good, moral, financial behavior does not exist. I think we all have, regretfully, understood this for a long time. Then we can wait for the destruction.
Can I buy a Toyota with that money.
But never anything for those of us with good credit. How about an additional $5,000 auto rebate for people with credit over 750? I’ll go buy a new american car, today, if they give me that. Why should I pay the same price and interest rate as someone likely to have the car reposessed?
How about a 3% mortgage, with no fees, for us?
So tired of them spending my tax money to help the slugs, while I get nothing for being responsible.
Wait and see how much interest the 621 crowd will have to pay.
Check out the new rules for FICO ratings. It’ll make you sick.
Me thinks this financing may be a part of a bigger plan…There is no question that the current “Three” cannot make it independently…To much capacity…The cheap financing could be a way for these company’s to unwind current inventory thereby making it a little easier to restructure into one or possibly two company’s…
There is only one party, the inner party. Once you accept this truth, you can arbitrage the difference between the truth and untruth. Go long windmills!
Re: your windmill comment from last night. Where did you “lift” that from?? Thanks.
It’s not a circus. It’s a farm, an animal farm. The pig-men are in charge. They’ve milked the housing cash cow. Now, there is no more MEW. Without MEW, the other animals become restless and uneasy. So, they are given jobs building roads, bridges, and windmills too.
http://www.online-literature.com/orwell/animalfarm/
And easy credit so the animals can continue buying stuff and be happy. Then they will elect the same pigs/animals, who will continue to feed from the same trough refilled by all the other animals…
Windmills in 2009 will be the ethanol of 2008.
It’s no surprise I am cranking up the reggae music eating cookies and flirting like it’s the 1980’s.
I got thru that period and my eardrums recovered.
My way of dealing is to live like it’s a big disco party, but I am too crabby to go out late.
Where’s my toyboy?
You taking applications for the position???
U rang?
Too funny you two
She asked!!!
Never hurts to ask back….you never know.
follow up on my silly comment above:
I was invited to a reggae gig in downtown last week, and uh, I was probably asleep at home before my buddy walked out on stage.
Silly or not, still applying for the boytoy spot.
Ann…here you go!!!
^^^^
Good luck, Blano!
Paul,
I have a feeling that you are so right about this.
Just saw several gas stations that sell E85, where it was priced the same as regular unleaded ($.145).
This tells me that several ethanol plants are about to close, if the price of oil continues with its collapse; even after the conflict going on right.
By “ethanol,” do you mean corn ethanol? Ethanol by itself is not a bad thing. Ethanol is bad when you make it by fermenting only the kernels of fertilizer-intensive and water-intensive corn. Ethanol from other sources (sugar cane, grasses) is more efficient.
With wind, I hope we can get some domestic companies involved. most wind is European.
Windmills in 2009 will be the ethanol of 2008.
unlikely
Windmills actually make economic sense and decrease the use of fossil fuels. Corn based ethanol is marginal on both fronts.
Disagree, Paul. Agreed, meatson. Ethanol is a bad idea even intuitively (i.e. w/o an energy life-cycle assessment): burn fossil fuels directly or essentially dump it onto fields in the form of synthetic fertilizer, grow stuff, convert it to ethanol and then burn it? Duh.
Wind is part of a long term answer. Check out the monster 7MW German tower:
http://www.metaefficient.com/news/new-record-worlds-largest-wind-turbine-7-megawatts.html
And Clipper in the UK is going for a 7.5 MW tower. And yes, you could put it on my land (if I owned any)…
Vestas has had 35 competitors come out of CHina in the last 18 months and 0 (zero) from the US. Go FIRe e-CON-o-me!
MrBubble
Effects of Housing Crisis on Divorce
With nearly one in six homes worth less than the mortgage owed on it, according to Moody’s Economy.com, divorce lawyers and financial advisers around the country say the logistics of divorce have been turned around. “We used to fight about who gets to keep the house,” said Gary Nickelson, president of the American Academy of Matrimonial Lawyers. “Now we fight about who gets stuck with the dead cow.”
http://www.nytimes.com/2008/12/30/us/30divorce.html
There are no words.
Found this hilarious video titled “Fred Thompson on the economy.”
If already posted, my bad.
Could have been written by FPPS, Prof, hoz, or Olympiagal (or all 4)
Never a fan, that is, until today.
-
http://www.youtube.com/watch?v=RKc4XFK0iVY
-
First words “Doom and gloom about the economy….”
He said this earlier, “This business will get out of control. It will get out of control and we’ll be lucky to live through it.”
And apparently Paulson does take a dump without a plan.
Yep. Not a fan of Thompson personally, but this video perfectly skewers the idiocy that is Keynesian economics - the idea that you can get something for nothing.
Not a fan of Thompson personally ??
Me neither but I thought it was very funny…
The comments are seriously scarier than the satire.
GMAC lowers credit score to 621 for 60 month 0% financing.
Should be a lot of 1yr. old used GM products for sale in late 09.
Came to believe that we were powerless over debt- and our lives had become unmanageable.
The first of the twelve steps.
Be careful. Most of these used cars will be repo’d with their original factory engine oil.
Don`t want one, just think at this point it`s almost comical that the answer to loads of bad loans is more bad loans.
Check with a black light. Most “factory oil” nowadays contains lots of UV dye so the dealer can tell (and therefore void the warranty) if you have never changed the oil.
At least for GM engines, I can tell you that this is NOT true.
Even if they did, the dye degrades in a matter of hours (running time.) If it was in there, by 3000 miles you would probably not be able to detect it.
Don’t ask how I know this to be fact. But it is.
Probably true, but the 3000 mile oil change is largely a holdover from the days of straight 40 weight with no filter. Cars with less than 15000 miles are probably fine, and they will be cheap.
This might collapse the used car market down the road just in time for me to consider buying again.
I’d love to pick up a 2010 Camaro SS in 2012 for 1/2 or 1/3 price!
So did GMAC get the TARP money at a cost of 5% and now loaning it out at 0% fixed?
nice business model
Actually, they’re making 100% as they’re not going to pay any of it back.
Dec 30, 11:07 AM EST
GMAC receives $5B in bailout funds
By CHRISTOPHER S. RUGABER
AP Economics Writer
WASHINGTON (AP) — The Treasury Department said that it will provide $5 billion to GMAC Financial Services LLC, the ailing financing arm of General Motors Corp., in a move that’s expected to stave off a bankruptcy protection filing at the company but also severely limit GM’s control over it.
In exchange for the slice of the $700 billion bank rescue package, the government will receive preferred shares that pay an 8 percent dividend and warrants to purchase additional shares in return for the money, the department said.
Treasury also said it will lend up to $1 billion to General Motors so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital
$5 billion, that is a lot of Malibus.
The good news is the average American will own 4-5 cars.
I am opening a new school, Repo U
We will steal the nick name “Rambling Wreck”
and we will play our home games at University of Phoenix Stadium because they don`t have a football team anyway.
I’m pissed because I bought an older house with a 1.75 car garage. Now I’m going to have to spend some of my stimulus on more cement so I can park 2 Smart Cars in the garage and 2 Hummers in the driveway.
GMAC lowers credit score to 621 for 60 month 0% financing ??
And likely only for new inventory…Think about what impact that will have on the GM used cars when you must pay full freight if you can get financing at all….
That’s not what I read (the 0% interest for 621s).
–
California Case-Shiller Price Change from the Peak:
L.A. -34.4%
S.D. -36.4%
S.F. -36.1%
This data has 2-3 months of delay due to windowing. For the past two months the prices in CA have been falling at 3-4% monthly rate. Therefore, Case-Shiller, the most accurate housing price data, confirms a 40% decline, statewide, as of the end of November 2008. Most other data series confirm this.
Californicators have lost between $2.0-2.5 Trillion over the past 18 months in residential RE. That is close to the annual GDP of California. Add to this the money lost in the Scam market by Californicators and you have the makings of a depression. Losing the “wealth” that wasn’t in the first place!
No state, or country, breeds dopes better than California and the best of them are to be found in Silly.con Valley.
Jas
Carl Case on Bloomberg right now, he’s blaming the atrocious C/S index numbers on the stock market crash in October!
dude,
Yeah I’ve heard several… people try to make that stick over the last few weeks. It gets more annoying -each- time. “Strike that, reverse it!”
Amazing, isn’t it, how utterly clueless about economic reality some big name economists are!
They were reporting this data this morning as the decline in the value of people’s houses.
Funny — the value of my paid off house has remained rock steady since I bought it nearly 15 years ago. It is the value I get from living in it each day. I expect no change in the forseeable future.
+1
It’s a wonderful feeling, owning a paid-for house. It matters not at all to me how much it is “worth” because we are not planning to sell it. Our financial planner does not even include it in our net-worth statements (the ones I can’t stand to look at any more, LOL!).
When will the masses start looking at home as the place where they live, rather than an “investment”?
But at some level it has ALWAYS been an investment. And the dividend that it returns is HOUSING. It’s speculating-on-appreciation/worrying-about-being-priced-out-forever that is the problem IMHO.
Yeah, so glad I stupidly paid ours off. I’m just not financially savvy enough to keep the mortgage and leverage the rest into fabulous wealth.
When will the masses start looking at home as the place where they live, rather than an “investment”?
Except for rental houses near the best schools in any given area and except for the strip of land within 1 mile of ocean or at the wealthy ski areas in the mountains, I would not consider any home an investment.
Seriously, before 2004 or so, I didn’t even know people thought single family homes could be considered investments compared to the potential payout of stock mutual funds.
I guess I was naive. Maybe that’s one of the things that saved me from being bitten by the Donald Trump Wannabe virus that turns perfectly rational people into idiots.
+2
Certain localities still have high prices. Malibu, Manhattan Beach, Rancho Palos Verdes, Hermosa Beach, Santa Monica, Montecito, Santa Barbara, and on up the coast into Marin County of course. Meditteranean climates and ocean breezes.
Those prices have yet to fall substantially. I will be happy to see them fall!
Jas, could you zero in on encinitas, carlsbad and del mar? So far I am not getting too excited about picking up a great deal in the coastal region. change my mind.
great deal in the coastal region ??
IMO, just rent it…
Ann,
It’s starting to crack. Not sure how closely you are watching it, but slowly it is creeping up through the tiers.
Saw a 4/3 SFH with over 2,000 sf in Encinitas listed for $360K today. No doubt it will be sold today (or tomorrow) and well over the list price, but there are many other houses up for sale, or coming up soon…and this will be a comp.
Keep your hopes up!
Here it is:
http://www.realtor.com/search/listingdetail.aspx?loc=92024&bd=5&bth=4&sby=1&sid=ec05bdd0a2ac44fba79e91793709b13e&lid=1105643171&lsn=2&srcnt=133
The wife and I ventured out to the mall this weekend to survey the post-Christmas sales. We were spurred by a report we saw on the evening news that touted “incredible discounts” being offered by the retailers.
After a few hours we returned home empty-handed. My wife described a blouse she saw in Nordstrom: list price $200, discounted to $100. Sounds good, but it was a cheap Made-in-China piece, and in her opinion it was only worth $40-50. Like her, I was more impressed by the outrageous markup on the original list prices than the discounted prices. And I was also disappointed in the overall low quality.
Prices for just about everything have a long way to fall before I’ll buy almost anything. I has to be something I absolutely need before I’ll spend.
I did the exact same thing just before Christmas. I prefer to exchange tasty food and booze for the holidays, but my immediate family really prefers to have their love bought with baubles and doodads.
I went out to the stores with big discount sales, and found the junk was still to expensive. An 80% off cashmere sweater was still $90. The purchase I was happiest with: I got a fine wool sweater for pops for $30.
i got price shock when i walked into macy’s to find some cozy casual wear. I drove right over to target and picked up hanes sweatpants for 5.99. the only color was pink but i bought them anyway. Oh and being petite i shopped in the girls section. as in twelve year olds.
Our observation as well about the local Macy’s. The “deals” were mediocre at best.
I don’t even bother with Macy’s anymore. To me it looks like they have the same merchandise as other retailers but at a much higher price.
“After a few hours we returned home empty-handed. My wife described a blouse she saw in Nordstrom: list price $200, discounted to $100. Sounds good, but it was a cheap Made-in-China piece, and in her opinion it was only worth $40-50.”
$40 -$50 for a blouse is still a joke.
The ONE and ONLY exception in over-spending on “clothes for looks” IMO is for JOB INTERVIEWS and WORK.
The rest is all “hey, look at me” bulls**t.
DOC
Hm, I would pay $40 if I knew the blouse would last 20 years plus.
I still wear some of my GRANDMOTHER’s old clothes, usually perm press from the 70’s, probably bought at Sears. Some items (wool) are even older.
What ticks me off is that even “nice” clothes today do not hold up through multiple washings and wrinkle/pucker/shrink like the dickens. What I really hate are garments that wrinkle and then refuse to straighten out under the iron.
Thank goodness I wear a uniform 90% of the time. Cheap hanes underwear, and new socks once a year.
“The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.
Both indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.
Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.”
Wall Stret Journal
* DECEMBER 30, 2008, 9:51 A.M. ET
Case-Shiller Index Shows Sharpest Home-Price Declines in Sun Belt
…
Once again, none of the regions was able to stave off a decline from September to October.
Month-to-month decliners were led by Detroit, which fell 4.5%, and San Francisco, which dropped 4.2%. Atlanta, Charlotte, Detroit, Minneapolis, Tampa and Washington had their largest monthly declines on record.
For the seventh-straight month, no region was able to avoid a year-over-year price drop. Phoenix and Las Vegas were again the worst performers, with drops of 33% and 32%, respectively, from a year ago. San Francisco, Miami, Los Angeles and San Diego followed, with declines between 27% and 31%.
Year-over-year, Dallas and Charlotte again had the best relative performance, with declines of 3% and 4.4%, respectively.
Three new markets joined the group of areas posting double-digit declines from a year ago - Atlanta, Seattle and Portland showed drops of 11%, 10% and 10%, respectively.
We’re #1…. WE’RE #1…. All you pretenders think you’re the bomb, but no one can keep up with us. WE’RE #1!!!
Woot, woot!! Woot, Woot!!!!
Brevard County, Florida.
Median home sale price at the end of 2005: $275K.
Median home sale price for Nov. 2008: $127K.
And this is a high income area for Florida. Home to NASA, Harris Corp., lots of Aerospace & defense. Lots of well paid engineers & technicians.
Still nothing is selling. NASA planning on massive layoffs at the end of 2010 to start work on the shuttle replacement. Obama will make big cuts in defense.
11,000 empty houses on the market. People moving out. Local government will be laying off hundreds as property taxes collapse. Capitulation setting in.
The bear is hungry here. And getting hungrier.
Bawn and bred in Brevard County…
Can’t wait to see how Yun and the NAR spin this one.
Anyone have the data on NY?
-.9% MoM, -7.5% YoY
People are still addressing this crisis as if there is a tenable solution in the framework of the World as We Know It. There is not.
Right. Sure, Bernanke is the world’s leading expert on The Great Depression, so knows what did not work. However, knowing what does not work does not make you an expert on what does work…. And the truth is, probably nothing will work.
Something will “work,” but it is not in the framework of currently mentionable solutions, since it inexorably alters the World as We Know It. This will change in 2009.
Had they bought products instead of debt and shown some respect for our patents, copyrights, and other forms of intellectual capital, we might have had a chance. It was all shortsighted inner party dealings. Who would have thought falling wages and evermore asset price increases would lead to an epic disaster?
But that’s part of the problem. Patent law is completely out of control. What should be reserved for monumental breakthroughs like the flying machine or incandescent light bulb, is now being handed out like candy for such things as “method of locomotion using a swing apparatus”(yes, they granted a patent for the action of swinging in a swing) or the combover(look them up these are real patents).
So now if you want to make something and one of the big companies doesn’t like that idea, they tie you up in multi-million dollar patent suits - whether they really have a case or not - because this effectively shuts you down.
I’ve seen it first hand, and it happens all the time. Our patent and copyright system in it’s current state is an abomination, and we would simply be better off without it.
I understand the idea of offering the incentive of having exclusive rights to something you create as a way of stimulating innovation.
Unfortunately, at this point, it’s having exactly the opposite effect.
Something has to be done so that the “little guy” doesn’t have to fear being obliterated by any large monied interest that feels threatened by them.
We’ll never create the new viable industries we so desperately are going to need if we don’t.
You mean the Donald got a patent for the combover?? Is this where his money really comes from, and building these towers is just a distraction ?
+1
BULLETIN
U.S. CONSUMER CONFIDENCE HITS RECORD LOW IN DECEMBER
Consumer confidence at record low on business, job worries
By Ruth Mantell
Last update: 10:01 a.m. EST Dec. 30, 2008
WASHINGTON (MarketWatch) — Consumer confidence hit a record low in December, according to the monthly Conference Board index reported Tuesday, as worries increased about current business and labor market conditions. The December consumer confidence index fell to 38 from a downwardly revised 44.7 in November. Economists surveyed by MarketWatch had expected a December reading of 45.8.
Professor: I saw your post regarding little bear’s challenge. The reason I am so curious about this is because this was one of the test questions in an exam this past semester in math class. (I got that one correct).
Pullthetrigger? thought the answer was 8. Where did that come from?
Math rocks!
Maybe you are destined to become an actuary.
You can buy CME San Diego housing futures Feb 2009 for 151 or May 2009 for 140. Current quotes.
Can one infer that futures traders are expecting a Feb-May (3-month) decline in SD home prices on the order of
(140/151-1)*100 = 7.3 pct?
(Annualized rate of change = ((140/151)^4-1)*100 = -26 pct).
If so, at least futures traders are not expecting the price crash to accelerate from its recent rate.
Baybee…eerrr - Sir Hoz.
Best Always,
Leigh
“Norma Thayer found paradise on the shores of Lake Tahoe three decades ago. …
Now Thayer is one of some 30 remaining residents of the Tahoe Shores Mobile Home Park who are about to be forced out to make way for the Tahoe Beach Club, 143 condominiums that will sell for more than $1 million each. …
The $200 million to $250 million project will feature resident-owned condos selling for $1.5 million to $4 million in buildings resembling traditional Tahoe estate homes and historic stone-and-wood lodges with lofts and porches.
Many of the residents (many in their eighties) own their mobile homes, but none own the property beneath them.
The approved plan requires the developers to provide 15 moderate-income housing units at a yet-to-be determined site and 39 units of affordable housing at an apartment building next to the trailer park.” (please note, it is a “155-unit trailer park”).
The buyout options include a $5,000 payment, reimbursing all costs to move to another trailer park within 100 miles or the fair appraised value of the trailer. In many cases the trailers are so old they can’t be moved, and often the appraised value doesn’t cover demolition costs.
The developers have offered displaced residents first rights to the apartments, but some said the units are run down…”
http://www.google.com/hostednews/ap/article/ALeqM5h_lb3lgS2MHU9Wfqya8hxZAg1xYQD95CHN0O0
Breaking Up Is Harder to Do After Housing Fall …
Chalk up another victim for the crashing real estate market: the easy divorce.
With nearly one in six homes worth less than the mortgage owed on it, according to Moody’s Economy.com, divorce lawyers and financial advisers around the country say the logistics of divorce have been turned around. “We used to fight about who gets to keep the house,” said Gary Nickelson, president of the American Academy of Matrimonial Lawyers. “Now we fight about who gets stuck with the dead cow.”
Heh.
I thank my lucky stars I got the divorce and sold the condo in 2005, when the escaping to greener pastures was good …
Bernake IS one of the world’s greatest experts on the Great Depression, and after careful analysis he saw that it had flaws, and he now knows how to create a better one.
“…how to create a better one.”
In all fairness, the work had already been done by the time he stepped into the Fed Chairmanship. Apparently one of the the best ways to create deflationary pressures is to first create an unsustainable price bubble.
+1
It all gets back to Sir G. Heli-Ben is just the delivery boy - Greenspan ran the actual presses.
Very true.
Every news organization endless refers to Bernanke as an expert on the GD, but not one has revealed his supposedly unique credentials. There are lots of posters on this blog who have studied the GD at great length, and who could probably clobber Bernanke in a debate, but they don’t pretend to be experts, let alone THE world’s greatest authority on the subject. From all the bloopers, bungles, and freakish mistakes he’s made over the past three or four years, I’d say the only thing he knows about depressions is how to create them.
“…his supposedly unique credentials.”
You might check his academic publication record before you push this point much further.
Do you know how many scholars have published articles and books on the Great Depression? Bernanke’s publishing record pales by comparison to many others.
I know a man who received a doctorate in magic (as in sorcery) from a state university before the state jumped in and ruled that such subjects were inappropriate. I know a famous psychologist who has published dozens of books on psychology, especially child psychology, and has headed up the psychology departments of two leading universities, but all of his kids are goofy as hell, and he is too. Bernanke’s publishing record and his idiotic decisions do not suggest unique wisdom, but unique hubris.
This is so different from the GD that there is no valid comparison.
From Mr. Casey Mulligan
* There is not downward pressure on wages.
* This recession is fundamentally different than previous ones.
* This recession is the opposite of a real business cycle.
* “Flight to quality” is a symptom, not a cause of this recession.
* This recession comes from a reduced willingness to work, or a labor market distortion, rather than a reduction in demand.
* Labor demand shifts explain no more than 10 percent of what has happened in this recession.
* A fiscal stimulus will be even less potent now than it would have been in previous recessions.
from RGE Monitor
“…The most important one should be clear to anybody familiar with the important work of Friedman and Schwartz (1963).[1] Friedman and Schwartz convincingly demonstrate that during the great depression the Fed behaved largely as a private bank. Instead of pumping liquidity into the financial system in order to prevent the transformation of liquidity shortages into insolvency problems, it often withdrew funds from problematic banks in order to shield its balance sheet from further losses. This policy precipitated many marginal banks into default, accelerated the downfall of others and contributed to further declines in the already dwindling supply of credit. By contrast, during the last four months the Fed has poured huge amounts of liquidity into the banking system.[2] It is clear that the lesson of the monumental mistake made by the Fed during the thirties has been strongly internalized by current policymakers at the Fed.[3]…”
The Federal Reserve caused the deflation in the 1930s by raising rates as Japan did in the 1990s. There are so many differences between this economic disaster and the 1930s that most comparisons are a joke. We aren’t even half way as bad as the 1980-1982 recession. Look it up.
Hmmm. Interesting. Thanks.
Nice find.
* There is not downward pressure on wages.
====================
FWIW, this is not at all what I am seeing on the street.
Also, not sure about the recession/depression being due to “people who don’t want to work.” I’ve not seen that either. Most people I know really want to work, but cannot find a job.
Agree with CA renter. I’m seeing the same thing myself.
Have mobility, Chairman’s flight fund status on US Airways (13 blackout dates in 2009 in lower 48) and willing to work anywhere except midwest. What recession?
what, in the midwest they don’t put up with your s***?
The “It’s Different Here” argument, redux?
Hasn’t that line of thinking long overshot its expiration date?
New York, New York: America’s Resilient City
The comment section is pretty interesting …
Every “it is different here” statement just proves that it is no different.
No kidding…. the comments section is down right morbid.
And while I choose not to live in the city, I work there and I still cannot see how anyone can afford to live in the city itself. I have employees who manage to rent here but even that must leave them broke at the end of the month.
Well, a few of them are in former grandparents’ rent-controlled apartments cheating the system, but that is another story altogether.
I just ordered the “Weekender” from the times…I am looking forward to giving it a read…
The mess is just arriving here later. We’ll get ours in 2009. It has already (finally) begun.
Street crime comes to Cupertino!
The area that has been traditionally called Silicon Valley (the SF peninsula, from Sunnyvale to Atherton) has generally been a safe area. Neighborhoods like Cupertino and Sunnyvale, especially so.
I’m one of those kooky people that listens to police calls on the radio during the day; so it was a surprise to me when I heard a police call about a purse snatching in Cupertino!
It was in front of the PW Supermarket, in Homestead Road. The police said it was the third call this week. The police actually caught one of the perps this time (it was two HMJs), after chase, at an apartment building on Hollenbeck Avenue (1400 Hollenbeck to be exact).
This bubble collapse will bring about a huge increase in crime for several reasons:
1. People don’t have a source of EZ money anymore
2. Folks with the biggest decline of free EZ money are likely the ones who lied the most on their mortgage applications; so they’re predisposed to crime already.
3.We all know what someone who has to return a house that he can’t possibly afford to the bank does: he trashes the house, like a little baby having a temper tantrum (and never gets charged with a crime, either!). The jump from this to general property crime is a small one.
4. The government will probably fill empty houses and condos with Section 8ers. The link between section 8 housing and an increase in crime is well established.
traditionally called Silicon Valley (the SF peninsula, from Sunnyvale to Atherton ??
Isn’t Santa Clara included ??
At one time fruit orchards. Sure miss them
Feeling left out scdave? They should include Santa Clara in the Silly Valley and also parts of San Jose. I currently live in Santa Clara, too, BTW. A month from now I’ll be moving to AZ for a change of scenery.
My biggest fear, in regard to this economic crisis, is uncontrollable crime.
What’s the difference between
1. the neighborhood drug pusher who sells folks heroin or crack that he knows his clients can’t afford and have to steal in order to pay for it
2. the real estate agent who sells folks “lifestyles” they can’t afford (HELOC’d hummers and plasma TVs) that he knows his clients can’t afford and have to steal in order to pay for it (by lying on mortgage applications, for example)
I don’t see any difference. But our elected officials do. That’s one big problem we have.
The E-Z solution: McMansions –> McPrisons
I think we need explosive collars. If you move too far from the spa, kaboom. This should work until the first brownout. Then they can fix the system and try again.
UPDATE 2-US home prices drop record 18 pct on year in Oct
Tue Dec 30, 2008 12:47pm EST
By Julie Haviv
NEW YORK, Dec 30 (Reuters) - Prices of U.S. single-family homes plunged a record 18.0 percent in October from a year earlier, Standard & Poor’s said on Tuesday, with the drop in prices accelerating as the broader economy deteriorates.
Prices fell at the fastest monthly pace since March, an indication that government steps, such as encouraging lenders to modify delinquent loans, have not cushioned the housing bust, which continues to weigh on the economy.
“So far all of the government efforts to help the housing market have not worked and the situation will probably worsen until there is an improvement in the jobs market,” said Peter Morici, economist and professor of business at the University of Maryland in College Park, Maryland.
“The housing market should continue to tumble for a while and there is no reason to believe that home prices will stop falling unless more is more done to stem the foreclosures and boost the jobs market,” he said.
The Standard and Poor’s S&P/Case-Shiller Home Price Index for 20 metropolitan areas fell 2.2 percent in October from September, accelerating for the fourth straight month.
The price drops, both on a year-over-year and month-over-month basis, were more severe than analysts had expected, based on a Reuters survey of economists.
Statement from wannabe divorcée: “And we’re both eating out more, because it’s no fun to eat alone.”
My only response would start with an “F” and a “Y” in a raised voice. Just wait until people really start having to sacrifice. Good gravy, we are soft like butter.
http://www.nytimes.com/2008/12/30/us/30divorce.html?pagewanted=2&_r=1&ref=patrick.net
Sorry for the naked antipathy this morning (PST), but this comment just rankles me. Happy New Year! Off to Monterey with the extendo-family. Enjoy your holiday…
MrBubble
Ummm… So if you don’t pay your gas bill, would they reposssess your country?
Bloomberg:
Ukraine agreed to pay as much as $2 billion to settle arrears for natural-gas imports from Russia, potentially averting a threat by OAO Gazprom to halt supplies and clearing the way for a deal on gas shipments in 2009.
Airlines next in line for bailout???
http://www.cnbc.com/id/28432378
“International airlines saw a huge 13.5 percent fall in cargo traffic in November and a drop of 4.6 percent in passengers as business shrank across the industry, the carriers’ grouping IATA said on Tuesday.”
Fed to start buying mortgage securities in early January
By Wallace Witkowski
Last update: 4:43 p.m. EST Dec. 30, 2008
SAN FRANCISCO (MarketWatch) — The Federal Reserve said late Tuesday it will begin buying mortgage securities backed by Fannie Mae (FNM 0.69, -0.04, -5.5%) , Freddie Mac (FRE 0.69, -0.02, -2.8%) , and Ginnie Mae in early January. The Fed said it “has selected private investment managers to act as its agents in implementing the program,” which is “separate and distinct from the U.S. Treasury’s program.” The purchases will be financed through the creation of additional bank reserves, the Fed said.
Take-home lessons from the collapsing bubble:
1) All the smart guys who assumed unlimited bailouts would occur proved correct.
2) The smart guys were wrong on their assumption that the bailouts would work as advertised.
3) Too many smart guys positioning themselves to capitalize on bailouts render bailouts ineffective.
RE:
2) - Any bonuses cancelled?
3) - The smart money was not long stocks, but they were long corporate bonds that were paid in full (exception is WaMu debt - which may be retroactively paid in full). Why do you think the government took over AIG?
Naturally the smartest of the smart guys were able to position themselves to cash in on economic disaster. That is what disaster capitalism is all about, after all…
“Why do you think the government took over AIG?”
I guess what you are saying is that Uncle Sam is making good on insurance claims which AIG could not pay, and those in turn are going straight to those who are long corporate bonds whose value would otherwise be toast? Meanwhile, J6P’s 401(k) stock fund is off 50 pct or so for the year…
Blackrock, PIMCo et al will do very nicely. Half a trillion here , half a trillion there - It would have been a lot cheaper if the government had put a moratorium on building new houses and bought the unsold inventory. Oh well
“…put a moratorium on building new houses…”
It seems a reversion to prudent lending standards would get you to the same place, w/o govt intervention. But it also seems like countervailing policies are afoot to subsidize subprime lending (see GMAC news, for instance).
“prudent lending standards” would mean no lucrative “fees.”
ex: did know that your average bank was making more money on overdraft fees than most of their other services?
This chart says you’re absolutely right…
http://research.stlouisfed.org/fred2/series/HOUST
Though I think in addition to the effect of prudent lending standards is also the effect of overbuild, and the effect of housing being exposed as a risky investment.
Moratoriums on anything in reaction to economic conditions are lip-service political pandering, nothing less. They are totally artificial and ineffectual.
A 13.2 pct yoy decline doesn’t look so bad compared to today’s S&P/CS data release.
Financial Times
US home sales slow despite price falls
By Alan Rappeport in New York
Published: December 23 2008 15:55 | Last updated: December 24 2008 01:04
The pace of sales of existing homes in the US slowed by 8.6 per cent last month, as buyers retreated from the market in spite of falling prices.
Home resales fell to an annual rate of 4.49m in November, down 10.6 per cent year-on-year, the National Association of Realtors (NAR) said on Tuesday. The median price of an existing home plummeted 13.2 per cent year-on-year to $181,000 (£123,000), the sharpest decline since record-keeping began in 1968.
“The quickly deteriorating conditions in the job market, stock market and consumer confidence in October and November have knocked down home sales to another level,” said Lawrence Yun, NAR’s chief economist.
Falling home prices would lead to faster contraction in consumer spending and further deterioration in bank balance sheets, Mr Yun said. “More importantly, falling home values would lead to higher loan defaults.”
This is the first news story I have seen which explicitly mentions lenders unloading houses. Is this a harbinger of the red hot spring foreclosure auction sales season, perhaps?
Phoenix Leads U.S. Home Price Decline as Lenders Unload Houses
By Kathleen M. Howley
Dec. 30 (Bloomberg) — Phoenix, the desert city that three years ago led the U.S. in home price growth, had the nation’s worst housing market during October as sales of foreclosed properties depressed prices.
The cost of a single-family home plunged 33 percent from a year earlier, according to an S&P/Case Shiller index. The decline was worse than Las Vegas, where prices fell 32 percent, and San Francisco, where they dropped 31 percent. U.S. house prices fell 18 percent in October, a record in eight years of data.
Arizona had 11,000 notices in October of so-called trustee sales, or foreclosure auctions, according to RealtyTrac Inc., a real estate data firm in Irvine, California. Foreclosure sales reduce the value of similar properties in the same area as sellers who aren’t in distress are forced to drop their prices to compete.
“This was a case of the higher they climb, the faster and harder they fell,” said David Blitzer, chairman of the index committee at S&P. Phoenix home prices at their 2006 peak had almost tripled within nine years, he said.
“Foreclosures have been increasing very sharply, especially in the worst-hit states of Florida, Arizona, Nevada and California, and foreclosure sales typically come in with lower prices,” Blitzer said.
The notice of trustee sale is our version of the notice of default. Then, a couple months later, you see the trust deed… the deed cut at the actual trustee sale, which shows who actually bought the house and for how much. Almost always the lender for the owed amount. Then, MONTHS after that the place may actually be liquidated into the market as an actual counted sale.
Couple post-foreclsoures have been liquidated in my area recently. $130K
http://www.zillow.com/homedetails/5549-W-Hearn-Rd-Glendale-AZ-85306/8098416_zpid/
and $140K.
http://www.zillow.com/homedetails/14601-N-55th-Ave-Glendale-AZ-85306/8097577_zpid/
And, Zillow refuses to count either of these as comps, listing both as having a market value $50K above their actual transaction price… it ignores post foreclsoures.
Okay, but when the post-foreclsoures ARE the market, they ARE the comps.
And this one that Zillow says is for sale for $250K??? ignore that. It is my house, and has not been listed for sale for well over a year and a half since I could not get my wife to come down from the $250K so we could actually sell it. Such is life.
http://www.zillow.com/homedetails/5552-W-Redfield-Rd-Glendale-AZ-85306/8098415_zpid/
“Okay, but when the post-foreclsoures ARE the market, they ARE the comps.”
Important question: Are the post-foreclosures of comparable quality to similar homes that would be sold under non-stress conditions? If post-foreclosure homes are of comparable quality to homes of similar general description (SqFt/#brs/#baths/zip code, etc), then they ARE the comps. On the other hand, if post-foreclosure homes of similar description are of lower average quality (say, due to the former owner unleashing pigs inside to trash the interior), then one should discount the price of post-foreclosures as comps for similar housing.
To take this point a bit farther, the kind of data on which comps are based includes certain readily-apparent categorical and quantitative variables. Categorical (discrete) variables include the numbers of bedrooms and baths, whether the home is a condo, and the zip code in which the home is located. Quantitative (continuous) variables include the square footage of floor space and the history of sale prices for the home in question and comparable homes. Specifying a vector of discrete and continuous variables for a given home defines a partition of all the homes in the broad market in question — e.g., if I specify a SFR 2000 SqFt home with 3 brs and 2 baths in the 92128 zip code, I have considerably limited the scope of the comparison group to a distinct subset of homes of similar characteristics in the same area within San Diego County.
Now consider further dividing (partitioning) the subset of homes described above into those that are not for sale, those which are for sale (or recently sold) post-foreclosure and those which are non-foreclosure sales (or sales candidates). The question of interest is whether the non-foreclosure homes within the restricted subset (3br, 2ba, 2000 SqFt SFRs in 92128) of homes for sale, recently sold or not on the market are qualitatively superior to the post-foreclosure homes of similar description. If so, the post-foreclosure homes are not suitable comps for all homes of similar description; if not, they are suitable comps.
Wow, sorry to hear that, dude. I had no idea you were going through that.
I turned my wife onto this blog and now she has actual antipathy for the idea of house-buying, ever, even though she fantasizes about farming or at least having a vegetable garden. (Probably because she has never grown a green plant in her life–ha! I did warn her about the propensity of cute fuzzy animals to eat your produce.)
What’s the zip of Lincoln Blvd in Phoenix? It’s along the southern edge of Camelback Mtn. An upscale area. Would like to see prices at 40% off their peak, and maybe I will be interested.
Faulty economic logic: The root cause of the economy’s troubles is the trouble in the housing market. Hence propping up the housing market through demand-side stimulus measures will suffice to fix everything.
Market Scan
Sky Is Falling In Housing Market
Lisa LaMotta, 12.30.08, 11:50 AM EST
U.S. home prices plunged a record 18.0% in October, and numbers are expected to worsen.
The U.S. economy remains on shaky ground as the housing sector reports another wave of dismal data.
…
The current recession began with the troubled housing market and many analysts predict the economy won’t improve until it rebounds. During October, President Bush signed a bill that granted the government access to $700.0 billion in relief funds, intended to help rescue companies and jump-start the economy. The U.S. Treasury has since lowered interest rates and prompted some buyers to re-enter the market.
Gottch, media! I spotted a rare type on the FT web site…
FromWorld11:55PM
Fed pushes on with mortgage bond plan
Purchase of up to $500bn Fannie and Ferddie bonds
(Scroll down to the sixth story on the FT home page…)
Remember a year or so ago when a story floated about rich guys having their own separate version of the stock market? How did that plan pan out?
Financial Times
Money flows out of hedge funds at record rate
By Deborah Brewster in New York
Published: December 30 2008 23:35 | Last updated: December 30 2008 23:35
Investors pulled a net $32bn from hedge funds last month, making 2008 the first year in their recorded history that the funds have had significant outflows and ending the industry’s 18 years of asset growth.
Money has been taken out of funds following every strategy, even those – such as macro funds – which were showing returns, according to data from fund trackers Hedge Fund Research.
The funds enjoyed net inflows for the first part of the year, even as the financial crisis hit and traditional mutual funds began to show outflows.
However, in September a tide of redemptions began, according to TrimTabs, another fund tracker.
Conrad Gann, chief operating officer of TrimTabs, said: “We estimate outflows in November were $32bn, and there is an additional pipeline of redemptions that have not been filled, there could be $80bn [of redemptions] in December.
“There are $57bn of redemptions that we know are in, that are not reflected yet,” he said.
Having all the right tools will only make the frequency of crises (and Megabank, Inc’s ability to cash in on them) increase. Better to rewrite the rules of the game so crises are less likely to occur and less frequently.
Step #1: Remember what William McChesney-Martin said about taking away the punch bowl before the party gets out of control.
Financial Times
US lacked the tools to tackle crisis
By Krishna Guha in Washington
Published: December 30 2008 23:35 | Last updated: December 30 2008 23:35
The US government has had to battle the financial crisis without all the tools it required to do so effectively, Hank Paulson, the outgoing US Treasury Secretary has told the Financial Times.
In one of his last interviews before leaving office, Mr Paulson said “we’ve done all this without all of the authorities that a major nation like the US needs”.
He said that even after Congress in October approved the $700bn (€496bn) troubled asset relief program, the US still lacked tools such as an adequate special bankruptcy regime for non-bank financial firms.
“We’re dealing with something that is really historic and we haven’t had a playbook,” he said. “The reason it has been difficult is first of all, these excesses have been building up for many, many years. Secondly, we had a hopelessly outdated global architecture and regulatory authorities . . . in the US.”
“We lacked the tools” is simply code for “We need more socialism”.
“California will form the nucleus of what he calls “The Californian Republic,” and will be part of China or under Chinese influence.”
Russian academic Mr. Igor Panarin
from the article
DECEMBER 29, 2008
As if Things Weren’t Bad Enough, Russian Professor Predicts End of U.S.
In Moscow, Igor Panarin’s Forecasts Are All the Rage; America ‘Disintegrates’ in 2010
http://online.wsj.com/article/SB123051100709638419.html
Happy New Year
ROTFLMFAO! Let’s see. Countries originating from philosophies based on force predicting the demise of a nation based on Renaissance, Enlightenment, and Age of Reason ideals! What other jokes to the Russkie bears and Chinese have?
…or demise of part of the nation.
Won’t work. Silly Bears!
“For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument — that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. — very seriously. Now he’s found an eager audience: Russian state media.”
If he sticks with that prediction for a few more centuries, the stopped clock effect may eventually prove him right. But for the moment, we have a severe shortage of interregional conflicts, regional concentrations of nationalistic factions, and an apparent absence of any other deep divisions across different parts of the country which could provide the impetus for a civil war. Further, we have a strong sense of national identity, and though I occasionally beef about religion, it provides a social bond which is generally missing in a country that worshiped the likes of Lenin, Stalin, Kruschev and Breshnev for decades on end.
In short, although I can understand why the Russian state would embrace his thesis, it holds no water.
Caveat: The social rifts that could result due to the ongoing disappearance of the middle class could eventually undermine our national stability. I believe the next president will be more attuned to this issue than the current one.
Turning foreclosure homes with (preferably) kidney-shaped swimming pools in Fresno to skateboard parks.
A win win situation. Skateboarders have fun and they clean the pools of stagnant water that could attract mosquitos bearing the West Nile virus…(just seen of FBN “Happy Hour” and lots of googled links). Here’s one link:
http://www.thenewstribune.com/news/nationworld/story/579508.html
Wall Street Journal
* REAL ESTATE
* DECEMBER 31, 2008
New York, Boston Prices Expected to Fall Further
By JUSTIN LAHART and CONOR DOUGHERTY
Although New York has been at the epicenter of the financial crisis, housing prices in the city haven’t dropped nearly as fast as cities elsewhere. The same is true of the financial hubs of Boston and Charlotte, N.C.
But that doesn’t mean these cities are skirting the worst of the housing bust. Rather, markets where price declines have been slightest may be in worse shape, because prices still have further to fall before enough buyers step in to bring housing activity to normal. Meanwhile, heavy foreclosure activity in hard-hit areas like Phoenix, Las Vegas and San Diego are bringing prices into equilibrium. Those cities may be closer to a turnaround.
The year in markets (marketwatch dot com)
U.S. indexes
Dow Jones Industrial Average -35%
S&P 500 -39%
Nasdaq -42%
Dow Jones Financials -55%
Amex Oil Index -38%
International indexes
Germany DAX -40%
FTSE 100 -32%
Japan Nikkei 225 -42%
China Shanghai Composite -65%
Mexico IPC -24%
Brazil Bovespa -41%
Currencies/commodities
Gold +4%
Crude -64%
Dollar index +5%
Pound vs. dollar -27%
Dollar vs. yen +19%
Best investments for 2008:
- Dollars
- Gold
All that arguing w/ Aladinsane looks a bit silly in retrospect, as both dollar and gold bulls appeared correct viewed through the lens of the rear view mirror.
Yen
Thanks to all the friggin’ house speculators who ruined the economy, I can no longer see touring productions of Broadway shows in San Jose.
http://www.amtsj.org/other/importantannouncement.html