That Feeling Is Gone
The New Haven Register reports from Connecticut. “Sen. Christopher J. Dodd, D-Conn., met with state NAACP members Monday on the housing crisis, where he assured those in attendance he would seek greater ‘bottom-up’ assistance. Citing statistics showing African-Americans were targeted for subprime loans and were significantly more likely to enter into subprime loans, NAACP state conference President Scot X. Esdaile asked that lenders not be permitted to receive federal bailout funds until ending discriminatory lending practices.”
“‘My major concern is the ‘bottom-up.’ Main Street instead of Wall Street,’ he said.”
“Dodd acknowledged the abuse, but defended federal assistance to such institutions, equating the nation’s financial system to a blocked circulatory system in need of defibrillation. ‘Minority communities were abused disproportionately. No question,’ he said. But, ‘Your system has to be functioning. It’s not a bad idea to get equity to these institutions as long as you are also providing relief to the homeowners,’ Dodd said. ‘What’s been missing here, it’s been top-down, but there’s been no bottom-up.’”
The Wall Street Journal. “For years, immigrants to the U.S. have viewed buying a home as the ultimate benchmark of success. Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, according to the U.S. Census Bureau. Over that same period, homeownership nationally grew by 8%. In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%, according to the Federal Financial Institutions Examination Council.”
“An examination of that borrowing spree by The Wall Street Journal reveals that it wasn’t simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.”
“Gerardo Cadima, a Bolivian immigrant who works as an electrician, bought a home in suburban Virginia for $330,000, with no money down. ‘I said this is too good to be true,’ he recalls. ‘I’m 23 years old, with a family, buying my own house.’”
“When work slowed last year, Mr. Cadima ran into trouble on his adjustable-rate mortgage. ‘The payments were increasing, and the price of the house was starting to drop,’ he says. ‘I started to think, is this really worth it?’ He stopped making payments and his home was sold at auction for $180,000.”
“The National Association of Hispanic Real Estate Professionals…built a large membership to market loans to Latinos. By 2005, its ranks had grown to 16,000 agents and mortgage brokers. The association, called Nahrep, received funding from some of the same players that funded Hogar. Some 22 corporate sponsors, including Countrywide and Washington Mutual, together paid the association $2 million a year to attend conferences and forums where lenders could pitch their loan products to loan brokers.”
“While home prices were rising, the lending risk seemed minimal, says Tim Sandos, Narhep’s president. ‘We would say, ‘Is he breathing? OK, we’ll give him a mortgage,’ he recalls.”
The Daily Times from Delaware. “Given a constant tax rate, property taxes will drop for most of Ocean City’s property owners, as assessments mailed this week mirrored a statewide 3.4 percent decrease in property values from 2005, according to Worcester County assessment officials.”
“‘The market from 2001 to 2007 is gone,’ said Robert Smith, supervisor of assessments. ‘What we have to look at right now is not for the market to come back to 2003 or 2004, but to level off, to make sense of what’s going on.’”
“Smith noted that despite a three-year average drop, property values have nearly doubled over almost 20 years as the resort’s popularity has risen. From 1990-1992, property values spiked 40-42 percent. Prices then leveled off through 2001, when assessments jumped 60 percent during the housing bubble. Smith said for the sake of residents, he hopes home values will level off in the upcoming cycle and hold their value.”
“‘I wish I had a crystal ball to tell you how long that’s gong to last,’ he said. ‘Unfortunately, it doesn’t always work in 10-year cycles.’”
“Ocean City’s roughly 35,000 property owners — 91 percent of which don’t make their home here — comprises 53 percent of all Worcester County residences. Of those, approximately 23,000 are condominiums. In total, about 2,800 people make their principal residence in the resort. Most Maryland counties are 85-87 percent owner occupied, Smith said.”
The Gloucester County Times in New Jersey. “Even Gloucester County, which could tout having the ‘fastest-growing’ community in the Northeast earlier this decade, is hurting from the housing collapse. In late 2007, a new home in Gloucester County was selling for an average of $392,561. During the third quarter of 2008, that number plummeted to $334,617, a nearly 15 percent drop.”
“Woolwich, which was dubbed the fastest-growing municipality in the state and region earlier this decade, has seen a steady drop in new-home construction. ‘People will get to the very end, spending money to go through the planning process, and walk away from the project,’ said Woolwich Mayor Joe Chila. ‘They couldn’t afford to carry the development until the economy gets better.’”
The Star Ledger from New Jersey. “Reading about the economy these days is a lot like flipping through an old Batman comic book. You don’t have to go far before somebody takes a beating. Unemployment? Ka-Pow! At a 12-year high and climbing. Home prices? Thwack! Still dropping like a rock.”
“Housing prices, once a mighty economic engine, are likely to continue their free fall, at least through the middle of the year, said Jeffrey Otteau, president of Otteau Valuation Group in East Brunswick. Between September 2005 and September 2008, home prices fell about half a percent a month, or a total of 18 percent, Otteau said. Largely because of job losses and the fear of job losses, he said, that pace has since doubled to 1 percent a month, a trend Otteau said he expects to continue.”
“‘Ironically, the silver lining in all this is that it will get us to the point of housing affordability in New Jersey sooner than it would have occurred otherwise,’ he said.”
From CNN Money. “Home prices in Manhattan held up remarkably well in the fourth quarter, despite the economic crisis. Reports released Tuesday by four of the city’s biggest real estate agencies showed that the average price of condos and co-ops sold during the three months ended December 31 actually increased compared with a year ago.”
“But signs of weakness are beginning to emerge; sales volume was down a whopping 40% from the fourth quarter of 2008, according to New York brokerage the Corcoran Group. The median sale price of an apartment in Manhattan jumped 8% from a year ago, to $895,000, according to brokers Halstead and Brown Harris Stevens. Prudential Douglas Elliman pegged the increase at 5.9% to $900,000, while the Corcoran Group put it at 3%, to $937,000.”
“But according to Jonathan Miller, of Miller Samuels, which compiles the market analysis for Prudential Douglas Elliman, much of these increases reflected sales in new, high-priced developments. A more accurate gauge of the Manhattan real estate market’s health are sales of existing apartments. ‘The focus should be on resales,’ Miller said, ‘rather than new developments, which skewed the data higher.’”
“New York’s economy is still reasonably strong, according to Pam Liebman, CEO of the Corcoran Group. For example, although the city’s unemployment rate has increased to 6.3%, it’s still lower than the national rate of 6.5%. ‘Fundamentals haven’t changed that much, but the psychology has,’ she said. ‘There’s more fear now, of price drops, of job losses, of bonus cutbacks and of losing money in investments.’”
“Stagnant prices alone can alter market psychology. During the boom, rising prices gave potential buyers a sense of urgency and confidence that’s lacking in today’s market. ‘The feeling was ‘Buy today and it will appreciate tomorrow,’ said Liebman. ‘That feeling is gone.’”
’signs of weakness are beginning to emerge; sales volume was down a whopping 40% from the fourth quarter of 2008, according to New York brokerage the Corcoran Group. The median sale price of an apartment in Manhattan jumped 8% from a year ago, to $895,000. ‘The focus should be on resales,’ Miller said, ‘rather than new developments, which skewed the data higher.’
Of course, this statistical situation played out in every single market in the US. But no fear Corcoran, you guys are unique!
Already, a no-free-brokerage (for rentals) has sprung up on the UWS.
To those familiar with Manhattan RE, try not to make too much sound when your jaw hits the floor.
Just put my jaw back into its proper position. Thanks for bringing this information to the blog. Is there a Web site for this no-fee apartment service? The way Irina, at the end of the first act
of “Three Sisters” intones, “Moscow! Moscow! Moscow!” I often
imitate here in Forest Hills with a little prayer that goes, “Manhattan! Manhattan! Manhattan!”
Naah, they’re just showing a handful of local buildings, and I suppose they are not paying commercial rents by having an office in one of the buildings they are showing but their “glossy photos” show that rents have dropped sharply.
I forgot to mention that this building was one of those legendary “condo conversions”.
They kicked all the tenants out, failed to sell much (if anything), had to get new tenants for the commercial spaces and are now trying to attract renters.
BWAHAHHAHAHAHHAHAHAHHAHHHHH!!!
From Forest Hills also, I can’t but think of Manhattan as the brain, or the head … kill the Manhattan and the body (or boros!) will die! Or at least decline. What an endless dragging wait. And still, even in the past couple of months, with the disaster right in our faces, suckers were ponying up enough to raise the median, supposedly.
YEEgawd what no 15% of the first years rent for the cutie little chickypoo for doing nothing but showing the apartment…and getting the landlord to sign the lease..
will wonders never cease.
Damn, I remember the broker for my first Brooklyn apartment. She refused to give me the keys, because she wanted a certified check.
So, while recovering from the flu, I had to take a bus and two subways to deliver the newly certified check. Then I asked if I could use the bathroom in the real estate office before my two hour ride back to Yonkers. And she said no.
“Cutie little chickypoo?” Maybe in Manhattan. I got a cranky old crone.
I’ll tell you what, apartments are getting a little easier to find online wihtout a broker. This was impossible a few months ago. There are landlords like http://www.rosenyc.com popping up all over the place and a no fee online service called http://www.skipbrokers.com even introduced me to landlords for free. I’m not saying that finding an apt in nyc is fun, but it is getting a little easier especially with lanldords giving away free month or two of rent!!!
First goes volume… which hits the low end harder than the high end, making it appear prices are still rising as the mix changes. Then the listings start piling up deep. The people that really need to sell, can’t. Then the foreclosures start. Then the bank liquidations start, and the while the owners may stand as a united block not allowing prices to fall, the banks take the oppertunity to undercut them and move thier inventory. Eventually the price declines can’t be denied, then everyone tries to get out, but finding no buyers, with foreclosures undercutting everyone…. Too late.
Signs of weakness??? Why can’t they just for once call the onset of a market crash for what it is?
Miller Samuel data adjusts for square footage, separates out luxury, etc. Articles relying on this source say prices are dropping, probably because (after the initial decline in sales as sellers held out) someone is capitulating (developers and newly unemployed?).
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7BgGyfp88dg&refer=home#
“Manhattan Apartment Sales Drop for Fourth Quarter in Recession”
“Jan. 6 (Bloomberg) — Manhattan apartment sales fell for the fourth straight quarter and prices for the most expensive apartments dropped for the first time since the recession began as the national housing slump hit the metropolitan area.”
“Fourth-quarter transactions dropped 9.4 percent to 2,282 units from a year earlier, New York property appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. While the overall median sales price rose 5.9 percent, luxury prices dropped 3.9 percent and the median for all resale apartments slid 3.6 percent. “
Too early for capitulation (as a whole). We’re still in panic.
Oh… the *next* investment emotion is capitulation… but we need to get through the dark days of winter first. Ghad is this getting scary…
Got Popcorn?
Neil
said Liebman. ‘That feeling is gone.’”
He’s lost that loving feeling
I’ve been waiting for the C word to play out in San Diego for a long time. I think you’ve been saying you’d wait out 2009 before you pull the trigger, correct? What do you think about May or June of this year?
The fellow in Covina, CA that killed 9 had just lost his job. Starting to notice more rage stories on the freeway. Sign of things to come in big L.A.
“Gerardo Cadima, a Bolivian immigrant who works as an electrician, bought a home in suburban Virginia for $330,000, with no money down. ‘I said this is too good to be true,’ he recalls. ‘I’m 23 years old, with a family, buying my own house.’”
And if he’d been putting his own money down maybe he would have paid attention to that little voice in his head. But with no money down, taking a gamble on home ownership was like a free lottery ticket.
Chris Dodd, you lying sack of $hit. Like there’s no filth from the subprime mess on your hands.
Anyone else notice there’s no further fuss over his preferential mortgages? Now if he’d been a Republican, the NYT would still remind its readers in every article on the housing crisis.
Dam dat dem dar librull new york tymes.
Evidently, “dat dem dar librull new york tymes” can’t BUY a reader
Everybody’s got their bogeymen. Like that “evil, reich-wing, neo-con Heritage Foundation”.
Some commenters on this board, both left-wing and right-wing, can’t seem to give it a rest.
Jim A,
I don’t have anything against Bolivians in general or this guy in particular but I’ve talked to guys that have taken the electrician’s exam. At least in Oregon, it’s an extremely tough exam.
Now maybe the guy -did- have some formal training in his native country prior to coming here but my guess is that the bubble was SO generous just nailing junction boxes to wall studs and pulling wire was good enough. A licensed guy probably followed and made connections. ….Evidently the bubble was also generous enough for that to qualify for a 330k loan. All at the age of 23!
The article does not mention if he was or wasn’t licensed.
Unless I see a license, I’m comfortable with the assumption that this guy just carried the conduit and wire spools around for the real electricians.
“I don’t have anything against Bolivians in general or this guy in particular but I’ve talked to guys that have taken the electrician’s exam. At least in Oregon, it’s an extremely tough exam”
DinOR, you don’t need any funky electrican’s exam. Everybody knows that electricity, much like the housing boom, works on the tried and true “Laws of Basic Magic”.
If YOU believe and FLIP the right switches, THEY will be ENLIGHTENED
mikey,
LOL! Oh yes, I’d forgotten the principles of PFM ( Pure F#cking Magic! ) Like edgewaterjohn* I’m quite comfortable with my assessment.
What grinds me is in my old reserve squadron we had a guy in my avionics shop that knew the work inside out. When he took the exam he failed by (1) question. How many individual threads are on a Schedule 40 pipe ( or something equally trivial? ) He’d put so much into studying he was just crushed.
Oh well, during the bubble ‘anybody’ could be a rock star.
“How many individual threads are on a Schedule 40 pipe…?”
One, it just goes round!
DinOR
I once worked for a very large Mining operation as a ” Safety Engineer” around lots of dangerous stuff. Two things got my utmost attention…problems with our High Voltage mining toys and our twice daily massive Blasts.
Being the highly trained “professional” that I was, I immediately got my men WELL back and or down and Screamed like Hell on the radio for HELP from the real PRO’S (electrical or blast foremen and their crews)
It was kinda like NAM…lots of big sparks amd booms going on around there and I had no idea what in the Hell I was doing
Schedule 40 is plastic pipe - you glue fittings on the end. There aren’t any threads on sched 40 pipe. Did I get the right answer?
‘Did I get the right answer?’
Sure. And that’s ’cause you’re a ’sm*art-a*ss.’
Schedule 40 PVC can have threaded fittings, guys. I think the question was demonstrative not actual….
I’m no electrician, but I have done electrical work (as an electrician’s helper). And, trust me, being an electrician is not an easy gig. So, anyone who *truly* is an electrician has my respect.
Another 23 year dumbsh@t bites the dust.He should be held liable for the loss the bank took.They will give this loser another loan the next time around.
Anyone want to buy a house in carsbad for 20 million?It has ocean views.check out jim the realors site if interested.
Are you guys just laughing at the corruption behind this roland burris nomination?Thi just another sign of how corrupt our politicians are.
They turned the other way during the housing ponzi scheme and now give the banks money to make up for the losses.
Apparently given the fact that he’s walked away, realizing that he’s completely underwater, it tends to indicate to ‘me’ anyway that he had the level of sophistication to understand this was a housing “option”.
Absent evidence that he lied on his loan app, I think that the bank is and should be held responsible for being stupid enough to make the loan. Stupid irresponsible loans usually have idiots on both sides of the transactions. It behooves the party that ACTUALLY BRINGS MONEY to the table to exercise some dilligence on their own behalf. But of course they sold the loan to somebody else.
No. You’ve got it all wrong. this is clearly a case of “predatory lending”.
He could never afford the house, so he shouldn’t have been given the loan in the first place, so the lender is at fault.
However, if they refused to make a loan, then they are guilty of “discrimination” on the basis of race or ethnicity, so they had to make the loan.
Either way, the lender is to blame for whatever happened.
“Dodd acknowledged the abuse, but defended federal assistance to such institutions, equating the nation’s financial system to a blocked circulatory system in need of defibrillation. ‘Minority communities were abused disproportionately. No question,’ he said. But, ‘Your system has to be functioning. It’s not a bad idea to get equity to these institutions as long as you are also providing relief to the homeowners,’ Dodd said. ‘What’s been missing here, it’s been top-down, but there’s been no bottom-up.’
So Dodd and the other “Friends of Angelo” are now saying bottoms up.
Where’s Dodd’s data to support his claim that minority communities were abused disproportionately?
We all know dumbasz yuppies and such who were serial refinancers and are now in deep shite, if they even have been able to keep their house.
phillygal,
Thank you. It’s all part of the same brand of disinformation and spin we’ve gotten since the Great Unraveling began. Reuven did a great job de-bunking a lot of the Housing “Crisis” and Credit Crunch myths.
The annoying part is that no one is really buying it anyway. There’s a’ plenty of white folks out there that used these loans and they know who they are. They have friends and co-workers that got them too. The MSM is awash in human interest stories where the FB is white. It’s insulting on Dodd’s part.
The “minorities” always have a higher default rate, so clearly, they were taken advantage of to a greater extent than similar white buyers.
news.google.com
http://www.blackvoices.com/blogs/2008/12/12/subprime-lending-has-robbed-blacks-of-billions/
The nonprofit United for a Fair Economy in a study called Foreclosed: State of the Dream estimated people of color have lost between $164 billion and $213 billion during the past eight years as a result of subprime leanding.
[...]
Blacks are estimated to have lost between $71 billion and $92 billion in wealth as a direct result of the subprime crisis in the past eight years. Latinos are estimated to have lost between $75 and $98 billion of wealth during the same time period.
[...]
“There’s no doubt in looking at the data … these predatory loans were targeted at racial minorities,” said Austin King, a spokesman for Association of Community Organizations for Reform Now. “Even when you zero out all the other factors like income and credit scores, even then a high-income African American was still as likely to be sold a subprime loan as a low-income white person.”
Data from the Home Mortgage Disclosure Act shows that about 40 percent of black subprime borrowers could have qualified for cheaper mainstream loans. But they were steered into exotic, more expensive mortgages.
“Nobody really expected (borrowers) to be able to pay at that higher level. It was a mechanism to generate refinance opportunities, and the borrowers were destined to inevitably end up in foreclosure in a downturn market,” said Paul Leonard, California director for the Center for Responsible Lending.
Paul Leonard missed the bit where “real estate always goes up” and “you can always refinance or sell for a profit.”
Remember on this blog all the examples of people being duped by people of their own color or nationality. Blacks were conned by someone from their church, Spanish-speakers by fellow Spanish speakers (even Spanish banks piled into this market!), etc.
“The nonprofit United for a Fair Economy in a study called Foreclosed: State of the Dream estimated people of color have lost between $164 billion and $213 billion during the past eight years as a result of subprime leanding.”
D@mn! Those investment bankers’ bonuses don’t come very cheap, do they? Somebody had to pay for them, right? Because money really doesn’t grow on trees, no matter what the Fed would like you to believe.
Weren’t lenders criticized for not lending enough to minorities before the bubble? Was subprime not pushed by politicians as a path to home ownership for minorities? This may be the best case of revisionist history that I’ve ever seen. I mean, just imagine if banks had denied subprime mortgages to minorities before the bubble burst. There would have been lawsuits demanding equal access to these products.
The bigger they are, the harder they fall. Particularly when the real estate is heavily reliant on an industry that has tanked.
And I don’t think the layoffs explain the whole extent of the problem. The financial industry is very dependent on bonuses. So if you stay employed but don’t have that usual big bonus, you might suddenly find you can’t pay all the bills.
The toys are going first, such as the fancy weekend retreats and yachts in Southampton.
The marketing to the Hispanic community was, and continues to be, very strong, associating homeownership with creating a safe, warm redoubt where a person fulfills his or her cultural obligation to provide for family. On Tampa’s Telemundo affiliate, a mortgage outfit calling itself “Latino Home Loans” frequently has advertised during prime-time novelas, and my MIL always seems to end up with various calendar magnets from a local Latina realtor on her refrigerator. But just because someone shares your ethnicity doesn’t make that person any less likely to cajole you into a transaction that shouldn’t be undertaken.
Most scam artists whether ethnic or religious or familial scam their own community first.
Case in point: the Madoff Ponzi scheme.
scam artists whether ethnic or religious
I am not prepared to call all of them scam artists but I have always found it very “tacky” to cultivate your prospects and “network” through your congregation…I would not do it…
‘I have always found it very “tacky” to cultivate your prospects and “network” through your congregation…I would not do it…’
Then stay outta Utarr*. Or if you must go, close your eyes whenever you see a Mormon.
* Also known as ‘Land of Zion’, home of the Saints, and…ranked #5 in the nation for mortgage fraud.
What?!
Thass right! Sweet Baby Jeebus!
I think it’s ALL tacky, hitting on your family and friends to sell cars, houses, Amway, Mary Kay or other MLM, whatever! Yet, that’s exactly what you’re ‘posed to do. Or you’re a friggin loser!
Not to say I hate all salespeople. Like the guys where I work who sell software systems to businesses. They know their stuff and they’re selling to strangers who have already expressed an interest at trade shows etc.
Many years ago, I had a friend who was a MLM junkie. And, during the course of our friendship, I noticed her turning into a bit of a pariah.
People got tired of dealing with her because she tended to view other people as potential MLM customers or downline recruits.
Eventually, I moved to another city and, true confession, I didn’t work very hard at staying in touch. I, too, had grown tired of the endless MLM sales pressure.
“Many years ago, I had a friend who was a MLM junkie. And, during the course of our friendship, I noticed her turning into a bit of a pariah.”
I’ve always disliked Pampered Chef and Tupperware (etc., etc., etc.) parties, because I believe when a friend invites you to their home, it shouldn’t be conditional upon you bringing your wallet.
Actually, in MLM … the first part is called FFR… people sell stuff to Friends, Family and Relatives. They are likely to take pity and purchase the junk. From then on the sales slow down rapidly and the MLM participant is likely to exit.
Another big tactic is getting the participant to turn against FFR, because the FFR are trying to keep them down, hold them back from wealth, etc.
“My” problem with MLM is that it addresses the symptoms of abuses in the workforce ( not the causes ) Rather than have the guts to confront our bosses about the way we’re being treated, you’re going to run out and sell Mangosteen or Amway or whatever.
How hard can it be to find an audience of people in America that thinks their job sucks to high heaven? As long as working here sucks ( there’ll be MLM’s ) What I do w/ friends that are going down that path is ask them what about their job sucks the worst and what do they think can be done about it?
Start from there and work your down the list. If it means changing your line of work, then do it! I advocate people find lucrative sidelines, just not MLM’s.
“I advocate people find lucrative sidelines, just not MLM’s.”
Isn’t that basically what a lot of people were trying to do with real estate?
So, if you were in sales, you wouldn’t sell your friends. Well, good luck selling your enemies.
Most dangerous place for your elderly parent to get scammed in not on the internet, not via random phone call or mailing, but through a respected member of their church.
I’d argue church in itself is a scam to begin with! So the location seems appropriate. We recently had some similar large ponzi schemes go bust, and the victims knew the guy through his church.
Churches are among the best and most long-lived scam operations on the planet. Members are offered a beautiful eternal existence in the afterlife if they willingly bestow temporal riches on the church hierarchy. I am not saying that church has no benefits, as true believers can enjoy a relatively stress-free and self-satisfied existence, a rich social network, the certitude that they are right and everyone else is wrong (or at least less right), freedom from having to ponder life’s big questions, and the knowledge that they will move on to the big country club in the sky in the afterlife if they jump through all the hoops in this one.
Society could potentially benefit from religion, if only the adherents did a better job of following their codes of conduct (refer to Olygal’s comments on Utarr mortgage scams for some contrary evidence) and if they avoided contact with rival tribes which practice other religions, which often leads to military conflicts.
Sounds like a good deal to me — where do I sign up?
+ ‘A zillion’ post, is all I can say.
Dear PB–deliver any more wisdom all in one afternoon and I’ll fall off my rickety chair and hit my head on the floor.
“Churches are among…”
PB, easily one of the best “wisdom” posts on the HBB. Kudos!
Olygal –
I have to thank the Good Lawd that we live in a day and age when otherwise-nice Christians cannot condemn me as a heretic and burn me at the stake for that post. Praise the Lawd! Hallelujah!
As long as I am on a roll with my religious rants, I would like to share a little of my recent reading material with y’all, from a little book called The Prince written by an Italian fellow named Nicholo Machiavelli about 500 years ago:
“Therefore it is unnecessary for a prince to have all the good qualities I have enumerated, but it is very necessary to appear to have them. And I shall dare to say this also, that to have them and always to observe them is injurious, and that to appear to have them is useful; to appear merciful, faithful, humane, religious, upright, and to be so, but with a mind so framed that should you require not to be so, you may be able and know how to change to the opposite.
…
For this reason a prince ought to take care that he never lets anything slip from his lips that is not replete with the above-named five qualities, that he may appear to him who sees and hears him altogether merciful, faithful, humane, upright, and religious. There is nothing more necessary to appear to have than this last quality, inasmuch as men judge generally more by the eye than by the hand, because it belongs to everybody to see you, to few to come in touch with you. Every one sees what you appear to be, few really know what you are, and those few dare not oppose themselves to the opinion of the many, who have the majesty of the state to defend them; and in the action of all men, and especially of princes, which it is not prudent to challenge, one judges by the result.”
Is this not the very fabric from which our current generation of politicians is sewn? There truly is nothing new under the sun.
“their own community”
I would say more generally that criminals in general tend to find their victims close to home. A life of crime is generally a high-payoff path of least resistance, and it is easier and safer to seek victims within the immediate vicinity than to incur the cost and risk of venturing far afield, whether geographically or socially.
“Between September 2005 and September 2008, home prices fell about half a percent a month, or a total of 18%”
!?
Huh? I thought things were going gangbusters in the fall of ‘05! Evidently be it New Brunswick, NJ or… wherever, things crested much sooner than most would care to admit. But they kept on lending…
When will these Morons (doood) finally get it..it wasn’t because they were black it was because they had no clue how to use a calculator and realize it was a bad deal…geez
——————————————–
Citing statistics showing African-Americans were targeted for subprime loans and were significantly more likely to enter into subprime loans,
A good article from the Star Ledger!
“Reading about the economy these days is a lot like flipping through an old Batman comic book. You don’t have to go far before somebody takes a beating.’
I LOVE comic books!
“‘Ironically, the silver lining in all this is that it will get us to the point of housing affordability in New Jersey sooner than it would have occurred otherwise,’ he said.”
I’m pretty fond of irony, too!
Bwahahahahahahaha!
Gosh, I’m feeling perky and pleased today. My whole life is going super, and, like a delicious layer of candy sprinkles atop it, just lookit all the lovely housing/credit carnage!
If you love comic books, you should see my house. Only a few thousand left after we sold the cream years ago. Some of the books go back to the 1940’s. A one point we had all of the early Marvel superhero books.
‘If you love comic books, you should see my house.’
Well, then, post some pictures, baybee. Don’t keep us hanging. I’ll go put on my cape right now, in preparation.
But before you come to think I know much about these things, and that I will know what you’re talking about, I must explain–I don’t, and I won’t.
I only had a few comic books, hoarded from my louche older uncles there in Provo, Utarr. They were careless of my delicate upbringing and willingly handed over exciting literature to a pig-tailed, tow-headed wee lass.
Wow, I read them a hundred times, in between the scriptures and old and faded National Geographics. You know, I sometimes wonder if the ADHD made me love comics, or if the comics made me have ADHD? The reason I’m thinking this is….hey, look! A moth! I gotta go administer a ‘Ka-POW’ to it!
‘…and old and faded National Geographics.’
We still have a ‘Siam’, right? Where the FOoK is Siam!?
I’ll have to figure out how to scan some of the covers. And I’ll have to actualy go through them. I don’t really know what we still have because they’re bagged and on shelves. We haven’t bought many in the last 10 or 15 years. They cost more than they are worth to us. We do have Captain America, a lot of Marvels and DCs in general, as well as random series. Our oldest daughter wants me to her my trade edition of Mage in my will since she doesn’t think I will part with it before them. Actually I would. But the black and white Steve Ditko my husband gave me for our nith anniversary is a diferent story entirely.
‘But the black and white Steve Ditko my husband gave me for our nith anniversary is a diferent story entirely.’
Well, of course, my good woman! Such is totally obvious!
* assumes the Olyface I use at public hearings, when I don’t know what I’m talking about at all, but won’t admit it, and also won’t shut up. *
Ditko says it all. Actually he’s favorite for both of us. The kids use to threaten to color it just to see me freak out.
wolfgirl,
I’ve been a reader and collector of comic books since the early 1960’s. More of a DC fan. I’ve got Superman, Batman, Wonder Woman, House of Secrets, House of Mystery, Star Trek etc… It was a great escape for me and still is today. I’ve got them wrapped in plastic sleeves with the acid free backing, filed in boxes specifically built to hold comic books. I stopped collecting in the 80s. Still will pick up a few to see what has been happening with my favs.
Wonder Woman was my favorite in the 60’s. Spiderman was my husband’s. I read any I could get my hands on though. My husband once told me that his mother said he would never find a who liked comic books.I must have been a surprise for her.
“My husband once told me that his mother said he would never find a who liked comic books.I must have been a surprise for her.”
You forgot to type ‘girl’. As in ‘ a ‘girl’ he would never find…
And, yeah, I just bet you were a surprise. I know I’m surprised, and hardly nothing surprises me.
Thanks for the correct. SC is just too far ahead of you. I got sleepy.
I find it interesting that even Dodd was savvy enough to hedge his response to this:
“Citing statistics showing African-Americans were targeted for subprime loans and were significantly more likely to enter into subprime loans,”
That’s probably true. While I think the ultimate responsibility lies with the person who signed the contract, sleazy lenders certainly took advantage of people’s ignorance or poverty.
But!
“NAACP state conference President Scot X. Esdaile asked that lenders not be permitted to receive federal bailout funds until ending discriminatory lending practices.”
And here’s where I slap my head. On the one hand, they say that overzealous lending has caused problems in African American communities, and then they go on to say that they should make it easier for groups the NAACP represents to get loans. Of course, discrimination is wrong, but during the go-go bubble years, I don’t think it was a problem at all. The problem was that everyone got a loan!
Holding the groups the NAACP represents to the same standards as everybody else is discriminatory, at least as far as the NAACP is concerned. Best to put these idiots on ignore.
NAACP isn’t saying “Make it easier for them to get loans”. They are saying, stop the bad loans.
What they need to realize is that bad loans are the only loans most will be offered. NAACP wants their members given “good loans”, like those people with good incomes, down payments, good credit scores, and better neighborhoods get.
What they want is $300,000 houses for the $500 per month “teaser” rate that the new-fangled mortgages allowed. The problem is the rate going up.
Therefore, they were cheated. The payments should stay at $500 per month.
Why is the lender allowed to raise their payment??
They were cheated.
i think you got it right, they wanted their housing subsidized with the low teaser rates for 30 years. now they can apply for HUD housing! maybe some of these people should have taken a course in finance or finished high school. the problem was greed followed by lack of education. of course the banks, wallstreet and the gov’t all knew what they were doing! Thats what happens when you let 2 million people come to the USA legally every year with no concern for skills, education. We should shut down the immigration tsunami too! seems our immigration policy is just about numbers to fill apartments, condos and houses! more consumers without regard to quality of life for Americans!
RE: What they want is $300,000 houses for the $500 per month “teaser” rate that the new-fangled mortgages allowed.
Bingo, Dio!
Exactly why the Democrats’s are pushin’ for the CRAM DOWN legislation to allow bankruptcy judges to overturn previous purchase contracts so as to allow a “politically correct” re-setting of a payment which the petitioner can afford, irregardless of the cost basis of the realty. Any margin discrepancy will be born by the taxpayer.
Same was done for white urbanites in the 1930’s. Some of your ancestors.
Gov’t also propped up agri prices during same period (and forever after). The rest of your ancestors.
Gov’t even built hospitals and power plants out of the kindness of its heart in deliverance country. Some of them were meant for black people, too, but at soon as the feds left the blacks were kicked out. (source: Hard Times, Studs Terkel)
“They are saying, stop the bad loans.”
That was my interpretation. Mr. Esdaile’s statement brought to mind a housing bubble blog haiku:
Barn door left open
Horses all have run away
Hurry, shut the door!
Here’s my interpretation:
Liar, liar
Pants on fire
Oh, I like your translation. Very nice. Very simple, and very nice.
That’s probably true. While I think the ultimate responsibility lies with the person who signed the contract, sleazy lenders certainly took advantage of people’s ignorance or poverty. Of course there are two (or more) parties to the contract. It’s not really about playing the blame game. In alot of cases, the borrower NEVER had any realistic chance to fulfill the terms of the contract UNLESS runaway appreciation allowed them to refinance. You can’t get blood from a stone, or half a million dollars out of some poor schlub making 35k/yr.
You can’t really refinance your way to affordability! A lot of these people who could only afford an I/O teaser wouldn’t even be able to afford a 0% 30-year mortgage.
The only thing ever-increasing house prices would do would let someone walk away from the house without the bank losing any money (because they can sell it easily.) The net effect for the buyer is the same.
The refinance affordability is really a fringe case. If you can’t afford a 8% mortgage but could afford a 6% mortgage, and if you had more equity you could qualify for the better mortgage, then a rising house price would make your house affordable after you refinance. How many times do you think this actually happened?
I never meant to imply that appreciation meant that these people could afford to pay the agreed upon price for these homes. But it often did give people the illusion that they could afford them. And as far as the bank is concerned, a loan that is paid off via a cashout refi IS a successful loan,* regardless of whether the borrower is deeper in debt at the end of the process or not. Ultimately, it is bankruptcy protection that tends to limit ability of borrowers to keep digging themselves into deeper holes, and lenders propensity to keep handing them shovels to do it with.
*especially if they have to pay preypayment penalties.
I think what happened there was that REIC idiots actually believed that -ever- rising home prices ( and why shouldn’t they? ) coupled with -ever- DEcreasing int. rates meant for and endless supply of “move up” buyers.
And an endless supply of commissions and fees. They ‘had’ to believe it, hence the term: Kool-Aid. From ‘that’ mindset, your entry point is unimportant, the terms of the loan are unimportant. Only your signature was important.
But of course rates for 30yr fixed ammortizing mortgages reached their nadir in the Summer of 2003. From then until 2006 appreciation was based uppon ever crappier underwriting and ever crazier (teaser rate etc.) mortgage terms.
Jim A,
I’m sure I’m not the only guy around here that needs reminding of that once in awhile? Perfectly accurate. I think because the OR Bubble started in the mid/late 90’s ( and didn’t look back! ) I have a tendency to gloss over that.
While the Fed stopped easing much earlier, the 1/4 point hikes that followed were like beating the mortgage broker/securitization model with a wet noodle.
New poster here. Longtime lurker. Big fan of Ben and the eclectic commentators here. (Where else would a left-leaning libertarian learn about the merits of various handguns as hard currency?)
I’m a Canadian who bought her first house in the NYC area in 2000 with 20 percent down, 30-year term, which we refinanced once (no HELOC, just reduced rate), and sold in 2004 for an insane profit (having paid off less than $5,000 in principal, even though we dutifully paid our mortage every two weeks), then moved to Canada.
As an outsider, I was struck by how obvious it was that the only people making any real money off real-estate transactions were the banks and the title insurance folks. They got cash up front in closing costs, whether it was a first timer or a refi. They were the “winners.” We were the saps. But it was the American way, and the only reason you seemed to be okay with all of this was the celebrated mortgage interest deduction. Me, I’d rather just pay the damn thing off as fast as possible and call it a day. Or rent. (See, I’m paying attention.)
When we bought our next house in Canada, my American husband asked the bank’s mortgage rep, “What are the closing costs?”
She said, “I don’t understand.”
He said, “How much more do we have to pay you for giving us the loan.”
She said, “Nothing. You pay us the interest.”
And that, my American cyber friends, is the hot air that kept the bubble kept inflating.
Being poor isn’t about the lack of money.
Here’s some rent news closer to home — falling rents!
http://www.brownstoner.com/brownstoner/archives/2009/01/residential_ren.php
I get the feeling that one thing that will hold rents up for a while is that NYers have no concept of rent declines, and are too cowed to get off their knees and negotiate.
Even with the number of condo projects comming on line, I don’t think that NYC has the oversupply of housing that, say Miami does. I suspect that rent declines will be moderate compared to some of the super bubblicious markets.
“‘My major concern is the ‘bottom-up.’ Main Street instead of Wall Street,’ he said.”
Chris Dodd’s got some real nadz to say that when his campaign coffers are indebted to Wall Street! Dodd contributors, from opensecrets.org:
Top 5 Industries, 2003-2008
Securities & Investment $4,169,096
Lawyers/Law Firms $1,974,853
Insurance $1,422,472
Real Estate $1,277,641
Commercial Banks $898,544
That c@cks#cker should be impeached.
It’s tough to be a Democratic pol, with the need keep friends on Wall Street happy to funnel monies into your campaign war chest while also keeping your downtrodden constituency (the ones who were most likely to be victimized by Wall Street-sponsored predatory subprime lending) happy enough to show up at the polling center on election day.
Eh, Dem pols are just a hedge buy, a contrarian option, for the big guys, right? Gotta cover yer assets, one way or another.
well, that was true in 2000, when the big boyz paid for R’s over D’s two-to-one, but let’s be honest here, Dodd is a whore many times over. he’s Jesse Helms slimey.
Didn’t Dodd get a Sweet Deal&tm; from Tangelo? He should have been investigated for that! Harry Reid is a hawk on Blago but won’t touch Dodd. Hmm.
“An examination of that borrowing spree by The Wall Street Journal reveals that it wasn’t simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.”
Perhaps this will put to rest the myth that the “rights industry” didn’t play a role in this whole debacle.
A chicken in every pot.
A deed in everyone’s pocket, regardless of their ability to pay.
Amen, to that!! I would also say that these last 7-8 bubble years were good to the wealthy, well-off and not well-off at all. IOW, the honest, very middle-class type of people didn’t get to eat that much of the pie.
“Dodd acknowledged the abuse, but defended federal assistance to such institutions, equating the nation’s financial system to a blocked circulatory system in need of defibrillation. ‘Minority communities were abused disproportionately. No question,’ he said. But, ‘Your system has to be functioning. It’s not a bad idea to get equity to these institutions as long as you are also providing relief to the homeowners,’ Dodd said. ‘What’s been missing here, it’s been top-down, but there’s been no bottom-up.’”
So Dodd supports giving federal assistance to financial institutions that practiced predatory lending against minorities??? COOL!
“‘Ironically, the silver lining in all this is that it will get us to the point of housing affordability in New Jersey sooner than it would have occurred otherwise,’ he said.”
Every dark cloud indeed has a silver lining, as the collapse of the GSEs ironically appears to be helping them to achieve their affordable housing mission in a way they never could when they were flying high.
PB,
That struck me as being awfully conflicted too. So when home ownership was your ticket out of the workforce, runaway appreciation was a ‘good’ thing. Now that it’s been scuttled and employment is utterly drying up, affordability ( read affordability=run down ) is a ‘good’ thing.
Hey, whatever it takes to get them to see the light?
The great housing CON game
1. Identify or create some problem = the “You don’t own a house crisis” (and you deserve at least one.)
2. Spin or progandize the phony problem = NAR, the MSM, FIRE and the gang of thieves from wall Street and your Gov’t. (Create a phony need and demand.)
3. Offer THE solution = “Hi, my name is Suzanne and me and my little friends are here to help you.” ( that sounds like the kinda like the MOB/CIA and you should have been scared with that offer)
4. Grab your 6%, lender kickbacks, extortionist rates or whaterever and move out quickly before someone( the marks) catches on or the American Pie…disappears.
…and the beat goes on
“While home prices were rising, the lending risk seemed minimal, says Tim Sandos, Narhep’s president. ‘We would say, ‘Is he breathing? OK, we’ll give him a mortgage,’ he recalls.”
The above quote is what is wrong with the way these companies have been operating during the housing boom. Greed and illegal activity at it’s very best in this quote!
That’s the quote that pissed me off the most as well. He fancies himself a “professional”? We should be thankful these jackass realtor types never got into a trade or “profession” where their utter cluelessness could do real damage. Thank goodness we have the profession of realtor for nitwits that I wouldn’t even trust bagging my groceries.
Yes, bag boy is a more noble profession than a Narhep realtor.
I love irony.
BULLETIN
U.S. STOCKS FINISH WITH GAINS; NASDAQ PACES ADVANCE, UP 1%
PAUL B. FARRELL
Don’t buy Wall Street’s latest con
Here are 15 reminders of how happy talk misled us a decade ago
By Paul B. Farrell, MarketWatch
Last update: 7:14 p.m. EST Jan. 5, 2009
ARROYO GRANDE, Calif. (MarketWatch) — “Recession-Plagued Nation Demands New Bubble to Invest In:” Yes, and that gets my vote as the best faux news story, from The Onion last summer.
That was an AWESOME read. Thanks Prof Bear for posting that!!!
“Expect more of the same today, because “BS” is still Wall Street’s official language. In both bear and bull markets the lure is the same, to get you to drink the Kool-Aid, to feed a new bubble and to make them (not you) rich. “
Reminds me of that book title, Where Are The Customers’ Yachts?
One of my favorite books.
Not a lot of books that can talk about investing and be hilarious at the same time.
One of my favorite parts:
Americans find margin trading a particularly attractive little invention. It parallels the American principle that the first thing a man should do with his home, even before moving in, is to put it in hock. The idea is that he only has to pay six per cent or so on the mortgage and if he can’t wangle something better than a measly six per cent out of a round lot of money, he ought not to be in business. This is another argument I am unable and unwilling to discuss further.
Sound familiar, amigos?
‘Sound familiar, amigos?’
It sure does. Is your name ‘Paul B. Farrel’, by any chance?
No, and I’m not that old and wrinkled either, I’ll have you know.
And you missed an ‘l’ in his last name.
No, and I am not that old and wrinkled either, I’ll have you know.
Well, jeeze! I knowed that! I can keep track of numbers, when it suits me. I was saying the thing for illustrative purposes.
Does anyone here besides me think that beer and dark chocolate cordial cherries go good together? I hope not, because then I’d have to suspect your day-trading ideas and general smartness.
And that reminds me, WHERE is NYCitybo*y? I am missing some cruelty in my visual diet lately, since I got back from Utarr into Rainy Land.
How about cognac and dark chocolate?
Oooh, dark chocolate. Sorry, can’t talk now.
I’ll take dark chocolate but pass on the beer.
‘Sorry, can’t talk now.’
Well, hurry up and swallow! And then tell us all about it, in slow detail.
I’m not sharing my dark chocolate with you.
Get away, get away I say.
Mmmmmmmmm, dark chocolate.
‘I’m not sharing my dark chocolate with you.
Get away, get away I say.’
How about if I profer you some poetry and some music? Would you then, Sam I Am?
‘Would you then, Sam I Am?’
Not in a tree, not in a car, not on a cliff, and not that far, and now I say, I say to you, I want to hear your plans, I do:
Never thought to try them together, Olygal, but now that you mention it, I shall have to. What kind of beer do you recommend? I’m guessing medium-to-dark…
Sure. Dark and complex and with a bitter edge. Like you.
Hahahahah!
But with a soft and sugary center.
Hahahahahah. Gosh, I’m sorry. I just have to laugh so much, and I cannot even explain why. But, it seems like a good night to laugh. Right before my house falls in. Golly, it’s windy out here!
Hey Faster:
Liked that excerpt.
You’re welcome.
The book is highly recommended. It’s hilarious.
The last two chapters pretty much mirror what we’ve been yackin’ about endlessly. He’s extraordinarily concise so it’s not always obvious that something he dismisses in a sentence or two, or even as a passing thought, is actually a rather carefully considered idea.
Oh,yeah? Is that one you, too? Man, you’re full of words, arencha?
… eeekies!…
Goshy, a half a tree just hit my roof just now, right as I typed! If I suddenly break out in the middle of a thought, please blame the current storm.
Bailouts for everyone!
IRWIN KELLNER
The long and short of it
Commentary: What’s good for economy now may be disaster in future
By Irwin Kellner, MarketWatch
Last update: 11:41 p.m. EST Jan. 5, 2009
…
Getting to the government, what started out as help for the commercial banks has become a series of bailouts for sectors ranging from investment banks, to insurance companies, to finance companies, to automobiles to people who bought houses that shouldn’t have.
On deck waiting their turn to be bailed out are firms in the construction business, retailers and transportation, just to name a few.
All well and good for the near term, but in the long run, it smacks of socialism. And with socialism comes more government involvement in business decisions — in other words, these bailouts are putting us on the road to serfdom.
They are also blowing up Washington’s budget deficit. Once again, this is a helpful development in the short term, but it could have dire consequences for the longer run, if investors both here and abroad lose confidence in the dollar.
Putting us on the Road to Serfdom? Listen Irwin, we’re halfway across the I-80 of serfdom.
Yeah but who cares. Hopey McHope will be the Prez soon, and the Superbowl is just around the corner. Don’t worry be happy! Tra la la la la…
Ron Asheton RIP.
He isn’t referring to the top economic leaders in the U.S. government here, is he? Because so far as I can tell, the near-term plan is to pull out the stops to respike the punchbowl, rather than to carefully look ahead in the road and try to avoid a worse wreck than the one we just experienced.
Choices made in 2009 will shape the globe’s destiny
By Martin Wolf
Published: January 6 2009 19:27 | Last updated: January 6 2009 19:27
Welcome to 2009. This is a year in which the fate of the world economy will be determined, maybe for generations. Some entertain hopes that we can restore the globally unbalanced economic growth of the middle years of this decade. They are wrong. Our choice is only over what will replace it. It is between a better balanced world economy and disintegration. That choice cannot be postponed. It must be made this year.
We are in the grip of the most significant global financial crisis for seven decades. As a result, the world has run out of creditworthy, large-scale, willing private borrowers. The alternative of relying on vast US fiscal deficits and expansion of central bank credit is a temporary – albeit necessary – expedient. But it will not deliver a durable return to growth. Fundamental changes are needed.
Already it must be clear even to the most obtuse and complacent that this crisis matches the most serious to have affected advanced countries in the postwar era. In a recent update of a seminal paper, released a year ago, Carmen Reinhart of Maryland University and Kenneth Rogoff of Harvard spell out what this means.* They note the similarities among big financial crises in advanced and emerging countries and, by combining a number of severe cases, reach disturbing conclusions.
Banking crises are protracted, they note, with output declining, on average, for two years. Asset market collapses are deep, with real house prices falling, again on average, by 35 per cent over six years and equity prices declining by 55 per cent over 3½ years. The rate of unemployment rises, on average, by 7 percentage points over four years, while output falls by 9 per cent.
Not least, the real value of government debt jumps, on average, by 86 per cent (see chart). This is only in small part because of the cost of recapitalising banks. It is far more because of collapses in tax revenues.
So sad that the past several years have revealed crimes of opportunity. More insulting to humanity is when these have been crimes of affinity - Bernie Madoff against fellow Jews, many Brokers/agents in the Inland Empire/LA and Orange County pouncing on fellow Latinos, documented and otherwise.
Is there even a trace of self-hatred, or is it singularly a motivation of greed?
During the boom, rising prices gave potential buyers a sense of urgency and confidence that’s lacking in today’s market.
As if the urgency is a good thing? Urgency is what led people to buy houses they couldn’t afford because they thought that prices would keep rising to a level that they could never reach. We know now the folly of this sort of “urgency”; it won’t work again considering the aftermath of the bubble.
What are we going to say now? “Buy now before the housing price bubble inflates again and then collapses again”?
2002: “You be racisis fo not gibin me a loan fo a home”
2009: “You be racisis fo gibin me a loan fo a home”
tst
colt