The Housing Bubble

HBBers, I would like your opinions on my family situation. My mother-in-law, a widow, lives in an 18-year-old condo building in Newark, CA. She paid $115k for her 1BR unit 10 years ago. After having read this blog for a year we practically begged her to sell in 2006 upon hearing that 1BR units in her complex were selling for 300k+. She refused, mainly due to everybody around her BUT us convincing her that RE was only going to go up. I even asked her at the time what she would do if her house subsequently lost half its value, and she told me with a smug look that that would never happen.

We recently heard that the exact same floorplan was sold in a foreclosure sale for 165k a few months ago. My wife and I are naturally very upset because we feel responsible for the well-being of our parents and now are faced with a much harder decision than we were 2+ years ago. The damn thing would have flown off the shelf at 300k and all tax-free to boot, *grumble*.

Recently there was a maintenance issue with the unit that has caused us all considerable grief and allowed us to bring up the option of selling again. This time, ironically, she is more amenable to the idea.

My mil’s RE agent is telling her to wait until March to list because she might get a better price and because there will be “more buyers” (she thinks the unit will fetch 177k max (and probably closer to 165k) if it is put on the market right now). My view, of course, is the standard HBB formula of listing it immediately a tad below the lowest comp. I just don’t see how values can increase from here in the near- to mid-term.

The agent is really good; when we backed out of an offer we made with her on a house (which got accepted) in 2006 (after many hours spent showing houses) she totally supported our decision. As an aside, that house according to zillow has lost 160k since that time.

What is the best option here? The unit is close to 800 sqft in size.

Film, Porn Shoots Sought by Los Angeles Homeowners Hit by Slump

http://www.bloomberg.com/apps/news?pid=20601109&sid=aYRTVXV1dnuE&refer=home

“Cosmetic changes are often required. Another client “almost had a heart attack” when he saw his living room had been painted DayGlo yellow, she said.”

“His four-bedroom house in suburban Burbank, which Mendoza built in 2006, didn’t sell for the $1.3 million he asked, and when renters left in November he began leasing it for filming. The most he received for a day was $1,300, he said. So he posted an Internet notice that the property, which has an eight-person hot tub, was available to the adult-film industry, which he had heard pays as much as $5,000 a day.”

A few months ago, “I probably would’ve said, ‘You want to do what in here?’” he said. “That’s reserved for me and the missus.”

ET Chicago,

Sorry to hear about the job in yesterday’s bits. Too bad it’s not May, but you’ll make the best of it I’m sure. Sounds like you made good preparations.

My BIL might have lost his when MOT cut 4k more the other day, I’m afraid to ask my sis, but that’s all he could talk about at Christmas.

It’s getting closer.

My family and I just moved back to South Florida (West Broward). We’re living in corporate housing while we look for a SFH to rent — we’re looking to pay around $2,000 a month.

Because of the mess down here, I won’t even look at a house until I check the public records on the home through the Broward County Clerk’s website. It’s amazing what I have been seeing.

At least two-thirds of the homes I see listed on Craigslist or on the MLS would see significant negative cash flow at the rental prices they’re offering — I’m talking $1,000 monthly losses or more. We’re simply not willing to take a risk on those homes.

Many of those listed already have received a foreclosure lis pendens. When I have seen this, I email the listing Realtor® who always explains that they had no idea (of course, they didn’t bother to check either). And, thus far, I have not seen one de-listed after I notified the Realtor®.

I think we’re going to be flooded by stories of first-last-and-security scams, where scumbag “landlords” take deposits and disappear while they allow their albatrosses to go into foreclosure. Hopefully, legistlators will do something about this practice shortly.

The few homes thar both reasonablly-price and cashflow-positive (or near breaking even) that we’ve looked at have a universal story. The owner would really prefer to sell. However, because of the market, the landlord have decided to rent out their homes for a couple of years until the market recovers. Of course, they’re living in the new homes they’ve already purchase.

Under the circumstances, it’s amazing that there are so many people out there that really believe that the market will “recover” in two years. Perhaps it will hit bottom, but it’s clearly not going to recover. It’s also amazing that so many people buy new homes before they sell their old one, especially in this environment. People’s clueless is endless.

Not so much basking in De Nile as wallowing in it in the UK

Housing minister Margaret Beckett has claimed there are signs of an “upturn” in the property market, despite record price falls.

In an interview with The Sunday Times, she even expressed concern about the dangers of a new inflationary bubble in house prices once the economy picks up again and mortgage lending resumes.

http://www.google.com/hostednews/ukpress/article/ALeqM5go9SK_O9LcL0i_c5blmZTEoORNZg

Other sage advice from the minister

Beckett tells first-time buyers: don’t delay

http://www.timesonline.co.uk/tol/news/uk/article5537031.ece

Three months into the housing bust in NYC, the NY Times says brave people think it’s a great time to buy.

http://www.nytimes.com/2009/01/18/realestate/18cov.html

“Many of these buyers have never received a fat bonus check, so they don’t miss it now. They did not suffer huge stock market losses, because they didn’t have huge stock market investments. They aren’t mourning the loss of value in their existing co-ops or condos, because they have never owned one.”

“They have jobs and good credit ratings, and they are looking to buy.”

“And now, brokers say, these mostly first-time homeowners are taking advantage of reduced apartment prices and interest rates that have fallen to the lowest levels in a generation. They’re making deals — sometimes far below asking price — on apartments marketed for under $1 million, and especially under $500,000.”

How long is a generation anyway? I don’t think the lowest prices in a generation can yet be had. Not even close

This comment sums up the Housing Bubble, from the comment section of the following times article.

http://www.timesonline.co.uk/tol/news/uk/article5537245.ece

I am an estate agent, and for thousands of us, we need the market to go up again to make a good living. I also have lots of friends who are massively invested in the property market and they all need that market to rise again to be able to make the books balance.The only possible way is up!!

A triumph of hope over experience.

Yesterday MarketMaven said:
“[T]rying to stimulate the economy without fixing the trade deficit is like trying to pump up a tire without fixing the leak…. THE STIMULUS PACKAGE WON’T WORK UNLESS TRADE IS BROUGHT TOWARD BALANCE AT THE SAME TIME!”

ABSOLUTELY!!!!

The only way we can run a trade deficit without adjustments to the exchange rate is to go further and further into debt.

Yesterday our local paper ran an article with investment advice. #1 save more. Spend less than you make. The rest of his advice was the typical stock broker drival.

My comment:
Comment #1 about saving dooms our economy. We’ve been spending 110% of our income. We buy from China and then they lend the money back to us. Now our debt load is so huge, most can’t make the payments without the ability to constantly roll over the debt.

If we slow our spending to, say, 90% of our income to make room for savings, that is a 20% decline in consumer spending, which will feedback into unemployment, which will feed back into more reductions in spending….

Oh, wait… Don’t need to talk if’s. It is already happening.

Savings are for nations with a trade surplus. Nations with a trade deficit have to have a negative savings rate, so that they can reabsorb the trade deficit as debt to prevent exchange rates from adjusting. OF course, long term the nation with a net negative trade deficit is doomed to financial trouble as the debt gets too big, then collapses. Oh, again, don’t need to talk theoretical, since that too is happening right here, right now.

DON’T BANK ON IT!
FHLBS FALL; LOOK FOR $$…

Two-thirds of the Federal Home Loan Banks, their balance sheets weakened by investments in toxic mortgage securities, could be forced to turn to the federal government for a rescue that could reach as high as $13.5 billion.

Already, several of the crippled FHLBs, the largest source of mortgage credit in the country, have stopped paying dividends to member banks, which are smaller banks and thrifts, which could lead to an increase in mortgage rates or in a noticeable decrease mortgage availability.

On Friday, FHLB Pittsburgh, one of the largest of the 12 regional bank-owned FHL Banks with $99 billion in assets, told its member banks that it is on the brink of falling below regulatory capital levels.

Paul Miller, a banking analyst with Friedman Billings Ramsey, told The Post it was likely an Obama Treasury Dept. would provide TARP money to prop up the FHLBs because having a chain of mortgage banks fail would automatically make mortgage rates go up.

The problems of eight of the 12 FHL Banks falling below the 4 percent regulatory loan loss provision level is the result of a move made a decade ago to invest in riskier, but higher yielding, private mortgage-backed securities and not those mortgages backed by Fannie and Freddie.

FHLB Pittsburgh admitted Friday that at least one-third of their $8.8 billion in mortgage-backed securities are trading at 65 cents on the dollar.

The federal government created the 12 FHLBs in 1932, during the Great Depression, to provide mortgage liquidity. The 12 regional FHLBs across the country are owned by roughly 8,100 banks.

The 12 FHLB heads wrote a letter last week to the accounting standards board asking for a change in the rules that will allow them to keep from marking the mortgage bonds to their actual value.

Some troubled FHL Banks are also asking their regulator to drop the ratio. But sources inside the Federal Housing Finance Agency say that is unlikely to happen because the regulator’s first goal is to preserve capital - not to Band-Aid failed balance sheets.

The FHLB Banks are not automatically qualified for TARP money and will need their regulator, James Lockhart, to lobby Washington.

Reading some comments from people at the Detroit auto show. Appears to be a good turn out. The majority interviewed while interested in the ‘green’ autos had no plans to buy them. Instead looking at traditional horse power, with more interest in larger cars/SUV’s etc.

So with the D.C. gang breathing down their neck more than ever looks like their focus on ‘green’ will be ill timed, as far as consumers are concerned.

Walking away: The wide and lasting impact of quitting a mortgage

By ALEJANDRO LAZO

The Washington Post

Sunday, January 18, 2009

WASHINGTON — Benjamin McNelley said he loathed the idea of walking away from the mortgage on his four-bedroom, two-bath house in Fauquier County, Va.

The former prison guard said he worried about what the decision might mean for his credit rating and whether he might still be on the hook for any outstanding debt.

But when both his father and his stepfather fell ill last summer in South Carolina, McNelley said, he had no choice but to quit his job and move. By then, the new house he had bought for $214,000 in 2003 and then refinanced twice during the boom years was worth far less than his mortgage, which exceeded $400,000. Selling the property proved difficult. He grew anxious.

With property values plummeting, real estate experts say American mortgage holders are increasingly walking away from properties - effectively choosing to have their lenders foreclose on them as a way out of the obligation - particularly when they owe more than their homes are worth. The practice is known simply as walking away or as “jingle mail,” referring to when a homeowner mails the keys back to a lender.

While there is no precise way to know how many foreclosures are due to people walking away, experts said the practice has become more common as more homeowners owe more on their mortgage than the home is worth. In some cases, homeowners can afford to keep paying but decide not to because they have little invested in the property or owe so much that they no longer see the value in continuing to pay.

“The prevailing sentiment over the last five to six years has been that a home is primarily an investment and secondarily a place to live,” said Guy Cecala, the publisher of Inside Mortgage Finance in Bethesda, Md. “If that is in fact your thinking, it makes it very difficult to make a decision to continue paying your mortgage if you don’t think that investment is going to increase over the next five years.”

Was down in Augusta Ga. on Sat. Tagged along on a trip to Circuit City and Best Buy. C. City was a mob scene folks looking for close out bargains. I didn’t see what I would call huge price cuts though. B.Buy packed also, many big screen flat panels being bought.Along with gadgets.

I rarely go shopping and was surprised at the huge volume of people packing the shopping centers, may just be a normal Sat. for the great American consumer as far as I know.

Signs everywhere, EZ credit, 90 days same as cash, no credit check etc…

Three words that strike dread into the heart of someone looking for a decent rental: “Section 8 OK”.

This truly must be Henry Kissinger’s finest hour. He arrived in the US hellbent on its destruction and the time is almost near. Only Peter Jennings had the courage to ask him publicly how it felt to be a war criminal.

I’ve never understood how this guy is still around, behind the scenes, advising and destroying. “Schtay da coarze”. LOL! I’m sure he’s wormed his way into the Obama camp as well. Why do people even tolerate the toad?

If only there was a comments section:

http://www.palmbeachpost.com/localnews/content/business/epaper/2009/01/18/sunbiz_walkaway_0118.html

The wide and lasting effects of walking away on a MTG. Pretty good information, but they neglect to tell most of the pluses for walking away. Those who bought close to the peak will NEVER recoup their losses, and the losses are so big that they will live their entire lives less well then they would if they hadn’t made one bad decision.

The thought that the middle class American (who bought at the top of the boom) can just take a 100-200-300K loss on the chin is.. Well, it’s just insane. They need to get out of these terrible transaction, take the credit hit, and buy again in 5-7 years.

interesting news, I am hear in Japan not far away from the city of Toyota. The people there are not happy, there is talk of work sharing.

The other day I went by the public housing in Nagoya, the they remind me of old soviet style apartment blocks. The rent is cheap and the most common people living there are Brazilians, most Japanese dont want to live among them.

The Brazilians are going home, there is no work. The housing office is now offering to rent, and hook you up with a bank that will loan you the down payment and six months worth of rent, and they will roll it over into a nice 10 year loan.

Of course you need to be on unemployment insurance to get the deal.

“In his 1988 book, The Collapse of Complex Societies, Joseph Tainter argued that all societies - like all organisms - are doomed. Tainter studied ancient Rome as well as the Mayan civilization. He noticed that problems always blaze up. Each one - whether climatic, political or economic - rings the firehall bell. And each solution - and readers may substitute the word “bailout” for solution - brings more challenges and takes more resources. Finally, the available resources are worn out.

“Tainter observes that when the costs become high enough, people seem to give up. By the end of Roman era, for example, the burdens of empire were so heavy that people sold themselves into slavery to get free of them. So many people did so at one point that the authorities had to come up with another solution; they outlawed the practice. Henceforth, Roman citizens were required by law to remain free!”

Credit Where Credit is Due…

Peter Schiff
Jan 19, 2009

In a recent speech before the London School of Economics, Fed Chairman Ben Bernanke offered a perverse economic theory in his quest to gather support for never-ending Wall Street bailouts; “This disparate treatment, unappealing as it is, appears unavoidable. Our economic system is critically dependent on the free flow of credit, and the consequences for the broader economy of financial instability are thus powerful and quickly felt.” In other words, credit is the lifeblood of our economy, and the continued operation of credit providers is an issue of national security.

In truth, not all economies run on credit. But over the last decade, the United States became a bubble economy that needed unlimited credit to keep from collapsing. In a legitimate economy, it is not credit that fuels spending and investment, but simply income and savings. It’s too bad our Fed chairman does not understand the difference.

That American families now routinely rely on credit to make every-day purchases is a habit that needs to be broken and not encouraged. What we need in America is more restraint and less indulgence. For example, Americans in the current economy should not go into debt to buy new cars. Given the level of debt that weighs down the typical family, Americans should defer such purchases until they have paid down existing debt, or replenished their savings to the point where they can afford to pay cash. Until that time, Americans should continue driving their old cars. In the meantime, the untapped savings could be made available to local businesses that would use it to finance badly needed capital investments.

But such a drastic reversal in financial culture represents the kind of change that no one in the outgoing or incoming Administrations appears willing to consider. By providing perpetual support to lenders who have bankrupted themselves through bad loans, the government merely guarantees that bad economic behavior will continue.

Credit is indeed vital to an economy, but it does not constitute an economy within itself. The important thing to remember is that credit is scarce, and is limited by the stock of savings. Savings loaned to one individual is not available to be loaned to another until it is repaid. If it is never repaid, the savings are lost. Loans to consumers not only crowd out more productive loans that might have been made to business, but they have a far greater likelihood of ending in default. In addition, while business loans increase our capital stock and lead to greater productivity, loans made to consumers are merely spent, and do not create conditions that will make repayment easier. When businesses borrow to fund capital investments, the extra cash flows that result are used to repay the loans. When individuals borrow to spend, loans can only be repaid out of reduced future consumption.

One of the reasons we are in such dire straits is that consumers have already borrowed and spent too much. Many did so based on the false belief that ever-appreciating real estate would ultimately provide the means to repay their debts and finance their lifestyles. Now that reality has finally set in, why should the spending spree continue? The fact that a GDP comprised of 70 percent of consumption is currently contracting should not surprise anyone. In fact, such a contraction is long overdue and the government should not do anything to interfere.

In trying to perpetuate the illusion, the government wants to revive the spending spree that has led us to this disaster. But how can such actions possibly help? How will more debt improve the economy? Wouldn’t our circumstances be vastly improved if we paid off some of our debts and replenished our savings? Wouldn’t we be in better shape if instead of buying more stuff we concentrated on producing it?

The unpleasant reality is that years of bad monetary and fiscal policy have over encumbered our economy with debt and undermined our industrial capacity. The sooner we can begin to repair the damages, the sooner we can right the ship. If instead we merely administer more of the same, the ship will sink in a sea of inflation.

Now here is an address.

8743 Uranus Ter Lake Park, FL 33403$89,900 $392 per month | Personalize this estimate | Check local mortgage rates 2 Bed, 2 Bath | 1,032 Sq Ft | MLS ID #R2987081 | Refreshed 2 hours ago

–
http://www.politico.com/news/stories/0109/17422.html

PR push may save Geithner
By: John Bresnahan and Martin Kady II
January 14, 2009 11:09 AM EST

Democratic and Republican senators say a full-court press by Barack Obama’s transition team is likely to keep ethical questions from sinking the nomination of Treasury Secretary-designee Timothy Geithner.
As Obama pressed senators on his economic recovery plan Tuesday, The Wall Street Journal reported that Geithner had failed to pay $42,000 in taxes and had employed a housekeeper whose work permit had expired…

Comment by Lando: “One of the godfathers (with Rubin and Summers) of the subprime mess, a confessed tax evader that contracted a illegal immigrant, a person like Geithner that have lived from the tits of the State much of his live, that part of his education was founded with tax payers money, will be accepted by the Senate when what the Senate should do is to prosecute him! He didn’t comply the tax declaration well and will be Secretary of Treasury?! This man was President of the Federal Reserve of New York since 2003 and one of the “reformers” with Rubin and Summers of the Financial Regulation, so he is one of the morons if not delinquents that permitted the Global financial mess in which we are in. WR.”

Unstated qualifications to be nominated and confirmed as Governor of the Federal Reserve is that one must be a liar, a manipulator, a misleader of the public and, most importantly, an agent of the Bankrupters and Fraudsters of New York City (BFNYC). Since 2003 I have been warning about the American econo-political system as being: A system of the Crooks, by the Crooks and for the Crooks.

And the evidence just keeps on pouring in. There is no way to dislodge the Crooks and America as people have known is finished. Crooks will push it into a failed state juts like many top dogs in the past. NO, AMERICA IS NOT AN EXCEPTION EXCEPT FOR THE EXCEPTIONAL LEVEL OF ARROGANCE AND DENIAL OF THE REALITY.
Jas

Sorry if this if this is a double post.

Walking away: The wide and lasting impact of quitting a mortgage

By ALEJANDRO LAZO

The Washington Post

Sunday, January 18, 2009

WASHINGTON — Benjamin McNelley said he loathed the idea of walking away from the mortgage on his four-bedroom, two-bath house in Fauquier County, Va.

The former prison guard said he worried about what the decision might mean for his credit rating and whether he might still be on the hook for any outstanding debt.

But when both his father and his stepfather fell ill last summer in South Carolina, McNelley said, he had no choice but to quit his job and move. By then, the new house he had bought for $214,000 in 2003 and then refinanced twice during the boom years was worth far less than his mortgage, which exceeded $400,000. Selling the property proved difficult. He grew anxious.

With property values plummeting, real estate experts say American mortgage holders are increasingly walking away from properties - effectively choosing to have their lenders foreclose on them as a way out of the obligation - particularly when they owe more than their homes are worth. The practice is known simply as walking away or as “jingle mail,” referring to when a homeowner mails the keys back to a lender.

While there is no precise way to know how many foreclosures are due to people walking away, experts said the practice has become more common as more homeowners owe more on their mortgage than the home is worth. In some cases, homeowners can afford to keep paying but decide not to because they have little invested in the property or owe so much that they no longer see the value in continuing to pay.

“The prevailing sentiment over the last five to six years has been that a home is primarily an investment and secondarily a place to live,” said Guy Cecala, the publisher of Inside Mortgage Finance in Bethesda, Md. “If that is in fact your thinking, it makes it very difficult to make a decision to continue paying your mortgage if you don’t think that investment is going to increase over the next five years.”

Most of these “Brazilians” are of Japanese descent. About 100 years ago the Japanese Government subsidised their emigation to Brazil because there wasn’t enough land for them in Japan and Brazil needed workers for the coffee plantations. The descendants of these Japanese are one of the most successful groups in Brazil . They are hard working and studious and law-abiding. Many Brazilians of Japanese descent have told me that in Japan they are discriminated against by people of their own race just because they were born in Brazil. The fact that the Japanese don’t want to mix with the Brazilian Japanese is more evidence of their own prejudices than anything else.

Many companies are stoping all 401K matches and I have noticed many employees are asking why should I contribute if I don’t even get a match anymore ( Answer tax deferred income ) , Now if my hunch is right and many folks quit the 401K program thats less cash flow for the stock market. Another big negative for stocks always go up.

Darn it, blog ate my post.

http://www.palmbeachpost.com/localnews/content/business/epaper/2009/01/18/sunbiz_walkaway_0118.html

The wide and lasting impacts of walking away. No ink given to the financial harm that people will do themselves by paying several 100K more then necessary on a home for the next 25 years though. Frankly, if you’re not rich, the thought of losing 200K+ on one single transaction is just out of the question. Although some will hang on, those people will also damage themselves financially for the rest of their lives.

Banks to TARP donors (aka American public): “Thanks very much for donating all this money to us, but we feel no obligation whatever to loan it back to you.”

Banks buoyed by bailouts are still reluctant to lend
By Mike McIntire
NEW YORK TIMES NEWS SERVICE
2:00 a.m. January 18, 2009

As the incoming Obama administration decides how to fix the economy, the troubles of the banking system have become particularly vexing.

Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy, and many lawmakers want to know how the first half of that money has been spent before approving the second half. But many banks that have received bailout money so far are reluctant to lend, worrying that if new loans go bad, they will be in worse shape if the economy deteriorates.

Indeed, as mounting losses at major banks such as Citigroup and Bank of America in the past week have underscored, regulators are still searching for ways to stabilize the banking system. The Obama administration could be forced early on to come up with a systemic solution, getting bad loans off balance sheets as a way to encourage banks to begin lending, which most economists say is essential to get businesses and consumers spending again.

Individually, banks that received some of the first $350 billion from the Treasury’s Troubled Asset Relief Program, or TARP, have offered few details about how they plan to spend the money, and they are not required to disclose what they do with it. But in conversations behind closed doors with investment analysts, some bankers have been candid about their intentions.

At the Palm Beach Ritz-Carlton in November, John Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

“Make more loans?” Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.

–Mark Twain–

We are all Keynesians again.

Dean Calbreath: Roundtable squares off over future of economy
2:00 a.m. January 18, 2009

When San Diego County launched its annual Economic Roundtable 25 years ago, it was during the Reagan era, when “big government” was deemed the enemy of economic growth. Deregulation, tax cuts and government downsizing were the order of the day.

But when the county staged its 25th roundtable Friday, the consensus was that the only thing that can stave off economic collapse is massive government intervention, combined with re-regulation and perhaps even (at least according to one speaker) a bit more taxation.

Here’s an article from today’s Charlotte Observer.

What happens when the lights go out
Hathaway Hills can’t afford to keep the streetlights on. In the dark, there have been more break-ins. Now a neighbor is dead.

http://www.charlotteobserver.com/local/story/480205.html

So, I do many things, but one of them is audio/music production. I decided to try out some free apps for my work PC, so I can mess around on the road. I cannot believe the quality and quantity of free plugins and whatnot for all of this stuff. If you can navigate the spyware minefield, you can download some serious audio tools.

When I was a teen, this stuff cost hundreds of thousands of dollars, and well trained people to operate. A kid with a junk PC and internet connection can crank out genius tunes.

Kinda crazy…

My dream lastnight about me in a builder’s office.
I ordered a two bedroom condo and I looked out the window and the entire county of san diego was filled in with condo towers from mexico to orange county.

If they put people to work in LA what will they knock down to put up more buildings and bridges. There is no room for change.

Just curious that how come all these consultants working for Accenture, Bearing Point, E&Y, Deloitte etc. are getting huge salaries? They are still working on projects and claiming average $150K salary.

These companies have ripped off the Govt. by charging like $400-$500 per hour for services of these consultants in the past 7-8 years. And a lot of consultants have been imported from outside, trained in India for 4 weeks and placed on projects.
They get all good benefits, hotels, and travel.

I’m not sure how come this lavish sub-contracting has been going on for years and years. Under Bush it rose to $400 billion as compared to $15 billion under Reagan.

What is the future of these consultants on L-1/H-1 visas?

http://tinyurl.com/8bfle3

from the wa-po

The Growing Foreclosure Crisis

One oft-repeated assertion no longer holds true. Those in trouble are not, primarily, lower-income borrowers. The foreclosure crisis has become a wave, afflicting neighborhoods of every stripe

But interviews and a Washington Post analysis of available data show that the foreclosure crisis knows no class or income boundaries. Many borrowers ensnared in the evolving mortgage mess do not fit neatly into the stereotypes that surfaced by early 2007 when delinquency rates shot up. They don’t have subprime loans, the lending industry’s jargon for the higher-rate mortgages made to borrowers with shaky credit or without enough cash for a down payment.

The wave of subprime delinquencies appears to have crested. But in October, for the first time, the number of prime mortgages in delinquency exceeded the subprime loans in danger of default, according to The Post’s analysis.

There a lot of good stuff in this article.

There has been a lot of talk about entitlement spending. I have an idea that just may work. First we should take away the spending caps on Social Security - it is not fair that some people stop paying that tax with their first paycheck of the year. Then we could probably lower the tax rate on Social Security to 6% or under.

What do you think?

History channel has a special on now about Bonnie and Clyde and Machine Gun Kelly. Their heyday was during the GD. The narrator was mentioning that wealthy people were scared. Some words to the effect that displaying wealth made you a good target for folks like Machine Gun Kelly.

I’ll keep my economy car, apartment, and blue jeans!

Say, what’s going on in Iceland? Are they all out fishing now that no one wants their colored paper stuff and their banks went bust? Eating each other? I haven’t heard much about that situation lately.

Datum: Country with out-of-control government spending achieves 31% inflation for 2008 despite declining output.

http://www.cnbc.com/id/28699639

Hey Guys,

For those involved in my ‘Uncle Story’ from yesterday, me reposes to your questions posted late last night, in yesterday’s bits bucket.

I wouldn’t mind continuing the discussion here, if anyone has anything else to add, or any advice.

ahansen - you asked me to contact you off the blog, but I am not sure how to reach you. I have photos from our LA hbb get together last summer, by the way. I have never posted them anywhere.

Jan. 19 (Bloomberg) — Four years after Ukraine embraced the West with the election of President Viktor Yushchenko in the Orange Revolution, the former Soviet nation’s economy is collapsing and investors expect the country to default.
…
Yields on Ukraine’s $105 billion of government and company bonds are the highest of any country with dollar-denominated debt except Ecuador, which defaulted in December. The currency, the hryvnia, weakened 40 percent in the past 12 months against the dollar. The benchmark stock index lost 85 percent, the biggest drop in the world after Iceland….

Now the curse of the NY Giants can be lifted and the stock market in the US can rally.

(See S&P500 when the NY Giants when the Super Bowl, 1987, 1991 and 2008)

I know what happens when the Steelers win, but what happens if the Cardinals win? The last time the Cardinals won the country was in WWII.

lol

Financial burden of homeownership spread unequally

By ALAN ZIBEL
AP Real Estate Writer

WASHINGTON (AP) — When it comes to homeownership, Hispanics in New Jersey, single parents in California and senior citizens in Rhode Island all have something in common: More than a third have an unaffordable mortgage.

Inequality in America has traditionally followed familiar patterns of race, age and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust, according to an Associated Press analysis of 2007 Census Bureau data.

While minorities have made significant gains in wealth and home ownership since 1990, “things are going into reverse gear,” and now the homeownership rate for blacks and Hispanics is falling, said Edward Wolff, a New York University economist who studies income and wealth distribution.

“AP
Report: New York to lead US cities in job losses”

Couldn’t happen to a more deserving bunch.

I don’t know about everybody else, but I’ve grown really sick and tired of the NYC financial “experts” running their freeloading games at everyone else’s expense.

Dragging these idiots out of their skyscraper offices, heels first, down the emergency stairs and into the street for an extremely prejudiced and speedy trial by their victims - that sounds good about right now.

But I suppose just knowing they have no more “job” is an O.K. consolation prize.

Maybe I’m just getting crabby.

The real price of oil. Cushing (NYMEX) may be saturated, but LA crude is trading at $54.

Some prices from around the world

http://www.upstreamonline.com/market_data/?id=markets_crude

While watching positions and reading news caught this typical item.

“…Kawasaki Kisen Kaisha Ltd. (9107) is likely to see its profit slide 32% to about 85 billion yen, a bigger drop than forecast. It will be the first pretax decline since fiscal 2002 for Mitsui O.S.K. Lines and the first since fiscal 2006 for Nippon Yusen and Kawasaki Kisen Kaisha….

However, the stock prices of these companies have already taken a beating, with P/E multiples (uncertainty about the “E” nothwithstanding) trading between 3X and 5X+ forward earnings, and PBRs below 1.0X, while ROE is between 18% and 31%…”

Buying stock in profitable companies with no debt or buy in the US stock market?

40% of all Japanese fund investors closed their account last year as of last week “deposits are now JPY190.7 trillion for Japanese banks” about JPY180T in Japan Post and about JPY300T in Foreign banks in Japan. That is a lot of money sitting on the side. a 1yr CD in Japan yields 0.10%.

I don’t care about the US market, but this is setting the stage for the largest bull market in decades in Japan.