Bits Bucket For January 28, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Fannie Mae Foreclosure Sale at 50 Cents on $1 Shows Price Reset…
Jan. 28 (Bloomberg) — With a sharp nod, Robert Parkin bids $500,000 at the auction of a brick colonial house in Upper Marlboro, Maryland, that the builder once valued at $1.1 million.
Seconds later, a competitor counters at $510,000, and Parkin must decide whether to raise his limit on the unfinished, 4,878- square-foot property with a stop-work order taped to the window.
This auction, 19 miles (30.6 kilometers) southeast of Washington, is one of hundreds a day carried out on front lawns and in hotel ballrooms nationwide by liquidators such as Williams & Williams Marketing Services Inc. of Tulsa, Oklahoma. With 2.3 million residences in foreclosure, the sales are pushing down prices to early 2004 levels in the hunt for new buyers.
“If you’re looking for expediency to get people back in homes, un-board neighborhoods, clean up the rats, this is it,” says Pamela McKissick, 62, the president of closely held Williams & Williams. Banks, brokerages and government-sponsored mortgage finance companies such as Fannie Mae hire the company to sell houses one at a time or to liquidate entire portfolios.
Auctions are resetting real estate values at the neighborhood level, while President Barack Obama tries to find a way to limit foreclosures and revitalize the worst housing market since the Great Depression. Bargain hunters such as Parkin, a 50- year-old aerospace engineer who is shopping for a personal residence, and mom-and-pop investors on the prowl for rental properties, aren’t waiting for federal aid.
Catching falling knives.
Bring on more knifecatchers. The banks (and taxpayers) need the money.
Price discovery rocks!
Business plan for an entrepreneur who wants to try something new: Figure out how to make a living by translating price discovery into comps and disseminating the information to prospective buyers (think blog…).
That comes down to getting A.) enough data points, B.) accurate data points, C.) the attention of the prospective consumer, and D.) the trust of the prospective consumer.
Then, of course, one must figure out where and how in the process to monetize the thing …
RE: Figure out how to make a living by translating price discovery into comps and disseminating the information to prospective buyers (think blog…).
It use to be called real estate appraising, which evolved into a “punch the number the loan officer tells you to”, reconciling in a derelection of professional ethics encouraged by lender of all shapes and sizes.
However at the moment, the numbers are now so screwed up now, my surmize is that NOBODY has a clue to what current and/or future valuation are or will be.
You’d need a a major disclaimer to avoid litigation if things blow up for a subscriber, that’s for sure
I am not talking about appraisal, but merely providing the full suite of recent sales data (including foreclosures, auction sales, FSBOs, etc) in addition to whatever the standard data providers (e.g. DataQuick) provide. What the end user does with regard to interpreting the data is their business.
I can tell you future valuations: 2.5 to 3 times the median household income in the area…. which assumes that there IS an income in the area, of course!
Get a copy of your local county property appraiser’s database. Query to find a sample of homes that represent the median price point. Adjust to 2.5 times local household income. Adjust the rest of houses in the database by the same percentage.
Probably as close as you’ll get to accuracy as anything else you might do.
“…2.5 to 3 times the median household income in the area…. which assumes that there IS an income in the area”
No assumption is necessary, as 2.5 to 3 times 0 is 0.
And Jon, are you talking about sales data or estimates of appraised value? In the latter case, the estimates are too high. In the former case, doesn’t the quality of the homes selling matter in determining their value?
Business plan for an entrepreneur who wants to try something new: Figure out how to make a living by translating price discovery into comps and disseminating the information to prospective buyers (think blog…).
That goes to the quote I posted yesterday about bankers viewing information as a competetive advantage to be guarded. i.e. Knowing that AAA rated MBS are worth nothing gives them advantage against say suckers who believed the bribed rating agencies.
I think we have the solution.
How to avoid post-purchase dissonance?
Fed Adopts Program To Stem Foreclosures.
Mortgage Renegotiation to Focus On Reducing Amount of Principal Owed.
With its bailouts of Bear Stearns and American International Group, the Federal Reserve took a vast portfolio of mortgages onto its books. Now, it is trying to use its control of billions of dollars worth of home loans to help prevent foreclosures.
The Fed will seek to renegotiate mortgages it owns that might otherwise enter foreclosure, Chairman Ben S. Bernanke told congressional leaders in a letter yesterday. The decision won praise from congressional Democrats, who took it as a sign that the central bank’s leaders are cooperating with efforts to use government power to try to stem the number of foreclosures.
It is unclear how many homeowners stand to benefit. Under the program, the Fed can reduce what a homeowner owes on a mortgage, lower the interest rate, lengthen the term of a loan or take other steps to keep a loan from defaulting, if doing so would offer taxpayers a better long-term payoff than foreclosure. Individual borrowers are unlikely to know whether their mortgages are owned by the Fed, but if they qualify for a renegotiation, they would deal only with their mortgage servicer
NOT FAIR why should Homeownahz be given priority ..what about us credit card users i’ll take a zero rate for 5 years, and no principle reduction…..NOT FAIR!
———————————–
Fed Adopts Program To Stem Foreclosures.
Mortgage Renegotiation to Focus On Reducing Amount of Principal Owed.
You, I, and all the other “shmucks” who didn’t participate in the greed and fraud get the bill!
Great system, eh?
Our system seems like two wolves and a sheep deciding what to have for dinner.
Let’s say I owe $180K on a house now worth $130K, and still falling about 3-4% a month…. Let’s say a year from now I owe $172K (15 year loan, so $700 a month goes to principal reduction) and the house is worth less than $100K….
Now, let’s also assume that my wife and I have total combined income over $130K a year…. after 5% sent to 410(k)… more like $136K before 401(k).
Okay, let’s say I stop making my payments because I don’t feel like paying $172K on a house now worth under $100K.
Do I get principal reduction?
NO Darrell:
YOU lose …..unless you maxed out all your credit cards bought your plasma tv with no interest till 2001 from Circuit city
And of course you quit your $130K a year jobs, and go to work at wallmart….
We cant have you RICH people screwing up the system…can we?
BARF 2 Will pass today with little resistance, looks like the number will be 900 billion, not that it matters. It will just keep going up…
WASHINGTON (Reuters) - Major U.S. banks are still hemorrhaging red ink, despite massive taxpayer aid, and President Obama is under pressure to take a high-stakes political gamble — asking for another bailout. Whether he would get one from a skeptical Congress is unclear, given the wide dissatisfaction with the first bailout, known as the Troubled Asset Relief Program, or TARP, a $700 billion fund to stabilize the banks and Wall Street.
wmbz,
Yes. When I turned the TV off at the office yesterday it was $825 bil. By the time I got home ( all of half a block ) it was $900 bil. Thank God I don’t live any farther?
ROTFL!
Roidy
lol
TRAP I Shrub = No strings attached
TRAP II Opie = Some strings attached
TRAP III FED = Sir Greenisspent & Andrea… filling soup kitchen bowls
Shouldn’t the “T” at least stand for a trillion??
So many issues, I think they are getting confused…
First we had Stimulus 1.0. $120 billion + some pork, handed out as $300-600 checks per person.
Then we had TARP 0.5… $700 billion approved, but only $350 released, with the other $350 automatically released unless congress could override a veto.
TARP 1.0, the second half of the $700 billion is just being released… isn’t it this week? Maybe next. Of that, well over $100 billion has already been asked for, and I’m sure many, many more are in line.
Now they are working on Stimulus 2.0. $825 billion over 2 years.
I think this article isn’t talking about Stimulus 2.0. It is talking about another TARP… Another huge chunk of money to be used to plug holes in bank balance sheets.
Of course, they won’t call it TARP, and they won’t just hand the money over. This time we’ll get something more than worthless stock in exchange for the debt. We’ll get MBS that is worth half of what we’ll be paying for it.
It is called an aggrigator bank…. a “bad bank”. A bank that we know will lose money, but we won’t be told how much until it is too late. This “bad bank” will buy up several trillion dollars worth of bad assets, then eat a massive loss on it.
Just wondering. How does the Fed get all this money back out of the economy?
Hyperinflation is the answer!
But hey, it’s just money - not like it’s anything of value. Good thing we peons don’t get paid in money… oh, wait… nuts!
I wish they would stop calling it a “bad BANK”. There is no “bank” there.
Let’s just be honest and admit that the taxpayers are about to be raped by the large financial institutions. They got the profits and we get the losses.
There is nothing acceptable about this plan. Too bad those of us who have to pay for it have absolutely no say in the matter.
The Osavior is following the footsteps of Bush quite closely. Interesting.
I wasl thinking the same thing. Welcome to Bush II.
Well, you don’t slow down the train by making a sudden turn.
What surprised the PTB here is S.C. was that 39% of the jobless increase was in the white collar sector. They say 15% by years end.
Wednesday, Jan. 28, 2009
S.C. job losses spread; rate at 9.5 %
Most sectors of economy hit: Experts say unemployment to continue to soar.
By NOELLE PHILLIPS - nophillips@thestate.com
For the first time since South Carolina’s job slump began, the largest number of losses were reported in a broad category that includes everything from architects to paralegals to janitors.
It’s a sign the recession has bled deep into the economy, affecting businesses other than construction and manufacturers. And, economists predict the unemployment rate will continue climbing in 2009, reaching double digits sooner than expected.
In December, South Carolina lost 22,000 jobs with 39 percent — about 8,500 positions — of those cuts coming from those professions, the S.C. Employment Security Commission reported Tuesday. The cuts came as the unemployment rate jumped to 9.5 percent, its highest point since 1983.
Wmbz:
where is it worse? charleston columbia or Spartanburg areas. I worked for TV 19 and 25 in Columbia, TV 2 and 4 in Charleston and 13 in florence. many years ago.
So i didn’t expect SC to have such high unemployment. this time around
Check out my old dj partners website lots of Charleston tourist stuff and shes busy.
http://jettstarr.com
I wonder those ambitious, young turk middle managers feel now about unions and offshoring?
“Repairing financial markets and revitalizing lending will require governments to remove bad assets from banks and recapitalize them, Laura Tyson, an economic adviser to the Obama administration, said on Wednesday.
“The natural next step is, which is real simple, you take the bad assets out, the balance sheets are hit really hard, you recapitalize banks with different rules, and they go out again and lend,” Tyson said in a panel discussion at the annual meeting of the World Economic Forum.”
Lend to whom?????
We’ve already increased business and consumer debt from $7 trillion to $25 trillion over the last 15 years. How much is too much? If the problem is too much debt, how can more debt be the solution????
“you take the bad assets out” - How exactly do you do that when no one knows what the extent of the bad assets is now or will be in the coming months as the value of these assets continues to decline?
You mark to model based on whatever false assumptions you need to make to justify buying for whatever the banks need to sell for.
Bad bank, worst idea EVER!!!
Totally agree, Darrell. An RTC-like approach would be far better: FDIC takeover, wipe out shareholders, re-structure and remove bad assets, sell of now-solvent bank.
At least that way there is no direct cash hand-outs to shareholders based on bogus valuations.
Details…details…just stay focused on the fact that banks will soon be able to unload their toxic assets on somebody who was not responsible for the mess they created, and forget about details…
Yesterday my work got cancelled for ice (well, not really ice, just the possibility of ice). I was watching CNBC and someone at some point made the comment concerning Citibank, I’m paraphrasing:
“They fundamentally have a good business they just have some bad assets they need to get rid of…”
My question, if their business is fundamentally so sound then how is it they generated so many bad or toxic assets it put them in jeopardy of going bankrupt?
bluprint,
And George Soros just said as much in an interview w/ Maria B. in Davos. He’s blathering on about “good” banks and “bad” banks when they ALL look like sh!t to me?
More shell games, oh and btw he didn’t seem all that convinced that B.O’s stimulus package would prevent “further deterioration” in the financials.
If they’re going to form a “bad bank” with all of these “bad assets”, are the individuals not paying on their homes which are the bad assets absolved as well?
which are the bad assets
The bad assets being referred to are the loans not the houses. From the perspective of a creditor a loan given is an asset.
Yes, that’s a given. I should have said “not paying the loans on their homes”, though I don’t think that even matters. My question was rhetorical as to whether or not the individuals would be absolved, like the banks have been. The answer is of clear.
“…the answer is
ofclear.”The answer is clear.
Statism rarely benefits the little guy. It’s for those who are “connected”, that’s the way it works.
I have the distinct feeling the FB’s debts will be forgiven. That is why the taxpayers are buying their debt, we will have the power to forgive debt and just let the taxpayers take the hit. Can’t have the banks take the losses, now can we? That would be downright un-American!
Nice system, huh?
it is clear that those in power are interested in only one thing: rebooting the game for a new round. Game over is not in their dictionary.
I don’t see why they bother with all this silliness. Just pass a few laws, such as:
- Housing prices must go up 15% per year
- The minimum price you can pay for a house is 5x your gross annual salary.
- Everyone must commit at least one case of mortgage fraud in a 5 year penalty or be forced to buy mortgage backed securities as punishment.
That way, we can return to the surreal, corrupt environment of which they dream!
This article seems to ignore the question of whether or not the taxpayers could or should be stuck with the worthless paper, assuming that it’s our obligation to buy or guarantee such trash.
Whenever the Messiah and his court are struggling with serious matters of state, we faithful peons need only concern ourselves with being silent and following instructions.
Did you clear that statement with Central Planning?
They better hurry up before D.C.entral planning outlaws these plans…
Minnesota State Sen. Geoff Michel(r) and state Rep. Laura Brod(r) are working on a bill to sell the Minneapolis-St. Paul International Airport to private firms. The current budget deficit in Minnesota is $6 billion, and that happens to be about what they estimate they can get for selling off the airport and other state property and programs including roads, parks, prisons, rest stops and the naming rights to public transit systems.
The proposal would lease the entire airport and its operations for 99 years. The idea is catching on. Chicago is in the process of privatizing Midway Airport. Many foreign airports are already privately operated.
Well, why not? Recall the heyday of railroads? Did the taxpayers have to operate the local train stations? No - they were the responsibility of the railroad companies.
Ever since the privatization of the Chicago Skyway, this city has been all about selling itself off. Ah, but this is akin to burning the furniture. It only works if spending is pared and responsibly managed (maybe not even then). What’s happening is the windfall is being used to maintain current spending levels.
Obviously there must be some hope circulating amongst many mayors that the Feds will step in with massive and permanent assistance to cities at some future point.
Bottom line, one now should factor this new reality in when buying property in some of these cities. Would it really be wise to tie one’s fate to such policies?
RE: Ah, but this is akin to burning the furniture
LOL-Great analogy, EJ!
The rubber tires off the soon to be repo’ed minivan are next!
According to someone I know who’s privy to City Hall gossip, the windfall from selloffs is not only being used to bandage current shortfalls, the mayor is also hoarding money for the 2016 Olympic bid.
All the projects (potentially) contained within the bid constitute a huge expenditure, but I’m guessing Daley is plotting some cosmetic projects in the next few years to wow the Oylmpic committee.
He only has until October 2, 2009 to wow anyone.
So between the potholes and the guv’s traveling circus we’ll see what he can conjure up in eight months.
Maybe he should just take the I.O.C. to a Cubs’ game and get them drunk. That’s how most people fall in love with Chicago - at least part of it anyway.
He only has until October 2, 2009 to wow anyone.
True — I guess I should’ve said the plan appears to be spend now and spend later. They seem to feel like they have a pretty good shot, and they’re working pretty darn hard right now.
The way I see it, the Midway Airport privatization was a strategic move. Midway can’t handle many planes larger than a 737 and has a less than ideal runway configuration that cannot be changed. Don’t get me wrong, I prefer flying out of Midway over O’Hare - the mid-1990’s renovation created the huge entry corridor that is now used very nicely to make getting through security so very quick and painless (probably the best setup I’ve seen in a post-9/11 airport).
The problem is that the Gary Airport is going to become the Newark of the Chicago area. It’s more or less surrounded by open brownfields; the north end is bounded by the Amtrak line that runs from Chicago to Detroit, the south end is bounded by the Indiana toll road and the South Shore commuter rail line that runs from downtown Chicago to South Bend Indiana. The airport has an FAA-approved expansion plan and the local population is enthusiastically in favor of the expansion. The planned terminal will incorporate a rail station for both Amtrak and the South Shore line. As for driving, there’s a reason that most of the private jet fleet for downtown businesses is based in Gary - it’s a faster drive during rush hour.
I’m pretty sure that Chicago officials know that in 15 years Midway is going to be the #3 airport in the region (it might even be #4 if planned rail expansion to Milwaukee Mitchell go through). They’re cashing in the chips ASAP while the getting is good. Midway will never be worth as much as it was last year. Ever.
Oh my…I dont think this will end well.
Right - the airport can be bought by an investment bank using its bailout funds. I don’t see any investors rushing in to buy up devalued American assets.
just ask the English how well privatisation of the railroads works out …
Yeah, and remember that English ferry that sank during the Thatcher years? That ferry called The Herald of Free Enterprise?
Ask Californians how well energy deregulation worked out, especially once Enron took over…
Why stop there? Let’s privatize the government and military as well.
Um, that’s was done. That’s what got us in this mess…
Correct.
Fact: There are now more employees of Federal contractors than Federal employees.
Oh dear
This has been looked into before. Some of the issues that have stopped it in the past are:
1. Police, court, and security, control and liabilities
2. Past Bond issues that have real or implied government backing
3. Past Bond issues with some tax free component
4. The Feds put lots of money (thru passenger fees) into airports, they will have issues
5. Airlines have a big say at airports, in some cases co-guaranting develoment bonds. The Airlines can beat up a gov airport authority much easier than a private company. They will not like going private.
6. Rates and charges that an airport assesses the Airlines and other tenants are set to show a mid size positive cash flow, not a true measure of profit that a private company would want to see.
7. A large portion of costs at major airports is paying off development bonds and security. These can not be reduced by any significant amounts.
8. Coming up with the financing, even in good times, would be very difficult.
This is just the usual noise from politicians.
Airlines only care about the cost of operating, not who owns the operation.
The city will lose out as the new airport authority raises fees to maximize profits and the airlines lower flights to minimize costs.
End result will be less flights. This will result in less tourists, less business men, less people renting rental cars, less people renting hotel rooms, less people visiting the house they filmed Mary Tyler Moore show, etc.
In fact, due to these correlative effects, some cities pay airlines to fly.
Throw in the Delta/NWA merger and Minneapolis-St. Paul airport will shrink by a huge amount.
“…Did the taxpayers have to operate the local train stations? No”
Ha, and your proposal from the imminent replacement of air travel?
The banks are sitting on freely Gov’t distributed monies $$$$$$$$$$$$$$ without strings attached…the banks are waiting for the bones to pile up so they can use even more free monies $$$$$$$$$$$$$$$$$ to go bone picking…airports on the cheap sounds like a good… “Long Term Capital” investment.
Note that it does not say “debt”. You sell the airport to cover this year’s shortfall. What do you sell next year?
Study your history and look what happened to the average citizen that was beholden to the privately owned rails in the United States.
“One month-to-month increase in sales, percentage-wise, from a huge drop the previous month, means absolutely nothing. I have been to the neighborhoods, I have spoken to more experts than you can imagine, and I am looking for the good news here, but I’m not finding it.
Housing is going to get worse before it gets better, and until someone in the Obama administration really and truly gets that fact, I don’t care what city or town you live in or how far you are from the wreckage of California, Florida, Nevada and Arizona, you will feel it.”
Still don’t get it, or atleast pretned to not get it.
If the solution involves stopping prices from falling, stopping foreclosures, or stopping builder bankrupcies, then there IS NO SOLUTION!
The bubble has to run its course.
If you can’t, or don’t want to pay back your oversized mortgage, then let it go into foreclosure. Plain and simple!
“If the solution involves stopping prices from falling, stopping foreclosures, or stopping builder bankrupcies, then there IS NO SOLUTION”!
Yes but job #1 for team Obama is to ‘fix housing first’ and ‘everyone’ wants him to succeed, or at least that’s what I have read. Of course B.O. cant ’stop’ prices from correcting, but as far as I am concerned it’s going to be fun to watch.
I don’t get you wmbz.
Why is it going to be fun watching the economy spiral down into depression?
I don’t get why you constantlycall Obama the Missiah. What is up with that?
He seems like a smart guy that is more interested in building than tearing down. Yes, some supporters have yet to realize that thisis an unfixable problem, so hold out false hope he’ll be able to fix it.
What I like best about Obama is that he appears to not have any faith or dogma, making decision on fact vs. what he knows to be true in his gut even if the data doesn’t support that.
IMO, Bush Jr. was the worst president ever, and Obama is the opposite of what made Bush suck so badly.
“I don’t get why you constantlycall Obama the Missiah. What is up with that”? Why is it going to be fun watching the economy spiral down into depression?
It’s going to fun to watch the gubmintal responses(already is), they are guaranteed to screw it up.
Sorry, I don’t refer to B.O. as the Messiah, he is far,far from that IMO, just another gas bag politician, but of course I have never hung my success or failure on who was in the oval office, as so many apparently do.
G.W.B was just another in a long list of poor presidents.
I would rate the worst president ever as Woodrow Wilson, by far.
I agree, Wilson was the worst, though he does have some pretty strong competition from Hoover, FDR, and Clinton.
“I have never hung… my…. success or failure on who was in the oval office’
And the difference between an American and someone who just resides in America is…?
RE: Sorry, I don’t refer to B.O. as the Messiah, he is far,far from that IMO, just another gas bag politician…
From a Londoner’s perspective…
http://boston.craigslist.org/gbs/rnr/1009920130.html
Harding, Andrew Johnson, and Bush II were by far the worst.
Obama may not be the Messiah, but neither is Ron Paul.
I call him the Messiah to mock the mockers.
Obama is thinking long-term, and makes no secret of it. Biden came right out and said “there is no such thing as short term.” The days of immediate gains are over.
From a Londoner’s perspective…
“I really don’t see how the Obama devotees can ever in future mock the Moonies, the Scientologists or people who claim to have been abducted in flying saucers. This is a cult like the one which grew up around Princess Diana, bereft of reason and hostile to facts”.
I know several folks across the pond that would agree.
“Obama is thinking long-term, and makes no secret of it.”
Difference between Obama and Shrub: Obama has the long-term interest of the nation at heart. Shrub had the interest of ‘his base’* at heart.
*Members of upper Richistan
I don’t get you wmbz.
Why is it going to be fun watching the economy spiral down into depression?
“I don’t get why you constantlycall Obama the Missiah. What is up with that”?
It’s going to be fun watching the gubermental response (already is). They will screw up a much needed, natural correction.
I don’t refer to B.O. as the messiah, he is far,far from that IMO, just another gas bag politician. I don’t hang my success or failure on who is in the oval office as so many do.
GWB was just another in a long line of poor presidents. The worst by far was Woodrow Wilson IMO.
IMO, the bushies must call Obama the messiah because they are very religious, righteous and they were badly mislead by their previous Fraud Prophet, George W Bush
I’m cornfused…which burning bush/Shrub was the “Compassionate Conservative?
I think they call him the messiah are hoping for the rapture to solve this financial crisis.
Darrell - IMO, your key words are ¨he seems¨and ¨he appears¨. Just as Bush 43 is reviled for not seeming smart (BTW, I rate Carter, Bush 41, and Clinton as worse or equally-bad presidents), Obama is glorified for seeming smart.
Personally, I´m not impressed, and I don´t trust either his objectives or his decision-making ability. My guess is he understands virtually nothing of history, science, or economics. I´d take the top 10% of the undergrad class at MIT or Cal Tech over the top 10% of Harvard Law School (Obama´s academic claim to fame) grads if I wanted intelligence.
Having said that, I don´t hate or even dislike Obama but consider his election a symptom of the state of our culture and economy. What I do hate is the fawning and glorification, which is simply the reverse of the Bush hatred.
RE: My guess is he understands virtually nothing of history,
Anybody ramping up for a brawl in Afghanistan, ain’t got a fookin’ clue.
The Turks, Brits, Russians, historically, all run out of town with their tails between their legs with lives and monies squandered for what?
To lord over a country with squat; run by a bunch of opium drug-lords who ally themselves with whoever pays them the bribe money?
Incredible!
Hd74,
I think Obama seems OK. Don’t think he is very bright though. Charming and all though.
Problem with Afganistan is what you said. No economy besides drugs.
The only “winning” choices sound like the “ultimate solution” or sitting there and getting your guys shot at all the time.
I think we are doing better that Russia did there.
What most people don’t know is that the purpose of 9/11 was to get us to send our military into area. The terrorists won the day we did that.
Thats almost right - one of the three goals given by bin Laden was to get our troops out of Saudi. Mission Accomplished!
RE: I think we are doing better that Russia did there.
Which is sayin’ what, James?
Dead is dead in a wasted, corrupt country whether you’re a Russian conscript or US Army Ranger.
It doesn’t take a rocket scientist to understand the history of military adventurism in Afghanistan.
This is a complete no-brainer.
Obama’s nicer, smarter, and a better speaker. But will he be better? I hope so, but I’ll have a “Plan B” just in case.
“…I hope so, but I’ll have a “Plan B” just in case.”
“Plan C”: 52 weeks of extended unemployment & then join an Amish community.
It would be fun to watch if it weren’t my money that is being pissed away in the repeated failed stabilization attempts!
Besides, the PTB’s efforts to control the descent virtually ensure walkers of at least six months of free living - more like a year by the sound of it. Why pay interest on an object of plummeting value? Why, because that’s WWJD?
Unless they buy again, before trashing their credit. Then the place just sits empty for the 6-9 months.
Yes, but the shift is already on to rapidly rehabilitate individual credit ratings. Not that I’m happy about it, but the signs are there. Hyper-consumerism/housing bubble is the only idea the PTB have right now. It may take decades, or some large catastrophic economic event (hint, hint) to shake them from that.
I thought credit scam operations had gone out of fashion. But perhaps that only applies to the major credit rating agencies, whose AAA ratings recently fell into ill repute…
Credit repair scams are the next bubble.
No joking. It’s already started.
If you had been following what I have seen in the foreclosure scene on the forum, you would have known that people have been in default for over a year for a long time. I kinda laugh when you guys go on about how free and easy these FBs are living. First of all, the houses are almost always vacant. Either they never lived there in the first place or they leave because of the eviction notices or the utilities are off. Second, these peoples lives are turned upside down. It usually looks like they exhausted themselves financially trying to make it work (bills all over the place, collection notices). You know who really suffers? The neighbors.
But go ahead and convince yourself that you are somehow paying for this if it makes you feel better….
Ben,
$700 billion TARP. $800 billion stimulus. $1 trillion deficits as far as the eye can see. Now this bunk about a bad bank model to buy up the debt.
This is all debt on the U.S. government, that we’ll be paying the interest on though taxes.
We ARE paying.
Don’t you expect the debt to get inflated down to size going forward?
Some of the Keynesian Maniacs out there argue the tarp and stimulus are too small. I’m starting to agree. We should have another bubble like free for all — a bubble to end all bubbles.
The only thing that brings euphoric mania to an end is suffering. Crash the dollar. Loot the Treasury. Spread the pain. Suffer the people like never before. The mania will end.
Like I said, if you want to feel like a victim, go for it. But my bank balance hasn’t changed. And I hear the government is sending me more money.
Why didn’t you get so excited when DC ran up the first $50 trillion? Personally, what I am most concerned with is the fact that I can’t count on social security, etc. But that has been baked in the cake for almost 30 years, so I am over that anyway.
As for interest, why don’t you get out your checkbook and start paying down the principle on the goodies the govt has bought on your behalf? Oh that’s right, there is now way you could ever pay that off. So who’s the deadbeat?
“We should have another bubble like free for all — a bubble to end all bubbles.”
Uh… didn’t we just have that? I am beginning to feel like I am living in Bill Murray’s movie ‘Groudhog Day’…
“Don’t you expect the debt to get inflated down to size going forward?”
And anyone with money in the bank pays with lost purchasing power.
“Why didn’t you get so excited when DC ran up the first $50 trillion? ”
I DID!!!! I’ve been yelling about government deficits, the Social Security Ponzi, failure to address rising healthcare costs, and the rest of this crud for 20 years.
Yes, we can’t pay back the national debt, but we will have to pay the interest on it.
“I can’t count on social security, etc.”
Retirement security is a growing pile of turds, put off by our elected “leaders”, administration after administration. We’ll see what shakes out wit Mr. Obama but unless people DEMAND what they’re owed, nothing will get addressed. We paid into it, we’re OWED the principal plus ROI. Pay me now, pay me later but you’re gonna pay me. SS is far from an entitlement.
“Uh… didn’t we just have that?”
There is one bubble left to prick — the invincibility bubble — the dollar bubble. After that crashes, game over. Like Icelanders, the proles will be cheering government in the streets for a job well done.
‘Yes, we can’t pay back the national debt, but we will have to pay the interest on it.’
A casual look at the budget shows we are borrowing the interest too. And meanwhile, you can go drive on your government roads past government schools and watch the US military drop expensive bombs out of expensive jets tonight on TV.
“Like I said, if you want to feel like a victim, go for it. But my bank balance hasn’t changed. ”
And that doesn’t bother you? Normally one would expect one’s bank balance to increase over the course of your life - so that you can eventually retire on the accumulated savings. Instead most people - including prudent savers, have very much seen their savings decrease greatly lately.
Sorry, but I can’t be so apathetic about this mess. Being that this is your blog - I’m surprised that you are.
(at the risk of being banned)
‘I can’t be so apathetic about this mess. I’m surprised that you are.’
I’m not apathetic. I volunteered for many years (that’s a long time BTW) for political candidates that actually could have stopped this from happening. Wrote letters to the editor, called in to radio shows, went to protests. I even formed several protests. But just look at how many politicians got reelected recently, when we are told their approval ratings are so low.
The time to do something about this mess was 20 years ago, and I tried. But getting angry about it now is a waste of energy, IMO.
I’ll tell you what is still an option. I am free to start a business, move my cash where I see fit. I can opt out of the corporate state or even leave the country if I want and never look back. I say this is the world we live in; place your bets.
Fair enough. We appreciate the forum you’ve provided here. I didn’t mean to imply that you haven’t done tons.
Chances are I’ll go down in history as a bitter old coot always complaining about the system. I’ve done plenty of writing and calling congressmen (and agree that it doesn’t do much good), though I’m too selfish (mostly for my family) to invest tons of time getting involved politically as it sounds like you have - so I have no room to throw stones.
That being said - I don’t think that changes the fact that most people now *are* victims of this mess. We can react to our victimhood however we choose - accept it and move on, try to fight it, or whatever. Accepting victimhood though doesn’t make one not a victim.
“I say this is the world we live in; place your bets.”
Ben, spot on. You can be bitter about it all, or you can evaluation what you see around you and place your bets & expend your energies appropriately.
I sure hope 2009 rewards the way 2008 did!
Just for the record, 20yrs ago I too was angry & bitter about SS, eternal-deficit-spending, etc etc . But eventually I concluded that I should not expect a penny from SS and moved on with preparing to take care of myself. Now I just hedge my bets and don’t expend emotional energy on it. Oh, and hopefully benefit from all of this on the way down rather than stressing about it.
“I say this is the world we live in; place your bets.”
All you can do now is take care of yourself and your family responsibly, plan on taking care of your own future needs (instead of expecting someone else to), contribute what you can to your community, and vote for those who represent your views.
“Don’t you expect the debt to get inflated down to size going forward?”
Sure, but how will that help us? Does anyone really think our salaries will double if the dollar is cut in half to prop up housing and other debt bubbles?
Yes, we ARE paying for this, Ben: we will be paying via higher taxes, runaway inflation, lost jobs, and watching our hopes of a decent job with a modest house in a decent neighborhood go up in smoke as every last cent is sucked out of the system to reward the people who got us to this point.
Yes, we ARE paying for this, Ben: we will be paying via higher taxes, runaway inflation, lost jobs, and watching our hopes of a decent job with a modest house in a decent neighborhood go up in smoke as every last cent is sucked out of the system to reward the people who got us to this point.
The sale of state and US assetts is another variable. Soon some Hedge Fund will be charging you every time you drive on their highway (A highway they purchased using your tax dollars). Your national park will be gone, instead Exxon will have purchased it to mine. Your military will be outsourced to Halliburton and Black Rock.
Like I was saying
MARKETWATCH FIRST TAKE
Bad banks, bad retailers, bad airlines
Commentary: We’ve seen big fixes before, they take time
By MarketWatch
Last update: 12:07 p.m. EST Jan. 28, 2009
NEW YORK (MarketWatch) -. It feels like Groundhog Day.
There’s another plan to save the faltering banking system. There’s another stock market rally. Good vibes are spreading. Bank stocks are leading the charge. Gordon Charlop, a managing director at Rosenblatt Securities summed up the zeitgeist:
“We’re looking for one of those powerful days to get people to buy into what’s happening,” Mr. Charlop said. “People seem to be working on the problems — Davos, the new administration — but there’s no confidence yet.” See full story.
Do not hold your breath — or rather, do. It will not be long before the bad bank will be created, Sheila Bair, chairman of the Federal Deposit Insurance Corp. will take control and the criticism will begin:
The FDIC isn’t helping struggling homeowners, they will say. The banks still aren’t lending because there’s no one who’s creditworthy out there. Then, other industries will complain. Why not dispose of Circuit City’s debts in a government-run bad retailer? Why can’t the government create a bad airplane-maker to ease the slowdown at Boeing Co.?
Poof, the confidence Charlop was hoping for will be gone again, vanished into the ether.
Groundhog Day. “It’s Punxtatawny Phil…”
Wall Street Journal
* JANUARY 29, 2009
New Bank Bailout Could Cost $2 Trillion
By DEBORAH SOLOMON, DAVID ENRICH and JON HILSENRATH
WASHINGTON — Government officials seeking to revamp the U.S. financial bailout have discussed spending another $1 trillion to $2 trillion to help restore banks to health, according to people familiar with the matter.
President Barack Obama’s new administration is wrestling with how to stem the continuing loss of confidence in the financial system, as it divides up the remaining $350 billion from the $700 billion Troubled Asset Relief Program launched last fall. The potential size of rescue efforts being discussed suggests the administration may need to ask Congress for more funds. Some of the remaining $350 billion of TARP funds has already been earmarked for other efforts, including aid to auto makers and to homeowners facing foreclosure.
TARP Participants
The administration, which could announce its plans within days, hasn’t yet made a determination on the final shape of its new proposal, and the exact details could change. Among the issues officials are wrestling with: How to fix damaged financial institutions without ending up owning them.
The aim is to encourage banks to begin lending again and investors to put private capital back into financial institutions. The administration is expected to take a series of steps, including relieving banks of bad loans and distressed securities. The so-called “bad bank” that would buy these assets could be seeded with $100 billion to $200 billion from the TARP funds, with the rest of the money — as much as $1 trillion to $2 trillion — raised by selling government-backed debt or borrowing from the Federal Reserve.
Nice point Ben. I used to get shot down all the time talking about having compassion for the mistaken buyers. You should have seen the conversations I had in the faculty lounge when I was selling in 2005. “Listen, you’ll never be able to buy in California again.” “Well, if L.A. doesn’t hold out, Henderson, Nevada is selling for 350. How could I lose there?” EVERYBODY drank the koolaid.
“You know who really suffers? The neighbors”
…and Americans have lots and lots of neighbors and they are also called taxpayers
one could include ‘the foreigners’ with the neighbours, although up to now mostly in a financial sense.
“The only thing that brings euphoric mania to an end is suffering.”
Bugs: “Eh, Foghorn…why’s Daffy walking around in circles carrying a sign that says: 14+ %”?
Foghorn: “I tell ya son, the duck is short some lead in his #2 pencil”
Most of the proposed “solutions” to the housing crisis amount to attempts to jury rig the lending market so that it can’t revert to normalcy. How’s that working out so far?
Don’t say there is no solution. This is a “solution”, it’s just worse then the problem itself. The government can inflate this problem away with a wave of the magic wand. Suddenly the hard assets (like houses) start to appreciate like nuts, and the value of the dollar falls through the floor.
Now, I don’t think that this will happen, or that it should. But it is absolutely a way out of this debt disaster that we have brought upon ourselves. That 500K isn’t so bad when you make 150K a year working at MCD!
There are only two ways out. Hyperinflate the debt away or default. If anyone thinks there’s a third way, I’d like to hear it.
3. The middle way: Inflate the debt away enough to avoid default, but not so much as to spark a hyperinflationary spiral. In the latter case, go to
4. The Volcker nukular option (refer to “Secrets of the Temple” by William Greider for details…)
“4. The Volcker nukular option” lol
The “Fallout” lasted… what 2 years?
Perhaps, Opie should forget about Afghanistan/Pakistan “Sha-Zam-Islam-is-now-Democracy” Shrub Doctrine and send the troops to a Caribbean Island like…Grenada.
The other alternative would be to pay the debt and trim expenses, live conservatively, improve efficiencies, and be chasened by your own greed.
That would be the least likely path taken by corporate America, but the most likely path for many private citizens.
Let’s say the federal deficit is $15 trillion when all this is done. That is $50,000/citizen. Maybe 1/3 of the country is actually working, so that’s $150,000 in debt per productive American. Paid out over 30 years is $5,000 per year per productive American.
I say it’s doable to pay it off. Just need to raise taxes by quite a bit. I personally paid close to $24,000 in taxes last year. Another $5K would be painful but wouldn’t kill me.
We voted for tax cuts, deficits & wars over the last 30 years. We should live up to our obligations.
The third way might be to repudiate. I never voted for this debt. Get it from those who did.
Again with the assumptions that salaries will increase at the same rate the dollar is destroyed.
How’s that worked out thus far? Let’s see: a couple of generations ago, one salary at a stable job was enough. Then, we needed two salaries at unstable jobs. Now, we need two salaries and a “third job” consisting of a house ever-increasing in value to maintain the Ponzi-economy. Somehow, I doubt any “solution” will include more real money for the masses vs. more looting for the fat cats.
Yep. They still don’t seem to understand that in our 75% consumption driven economy that they’ve killed, roasted and eaten the golden goose. (the consumer)
The problem with this is that a couple generations ago, the “dream” probably consisted of a 1200ft2 3/1.5 house and a single Chevy Bel-Air that you’d keep for 10 years, and maybe a washing machine and dog, by the time you are in your early 30s.
Today it seems to be a 2500ft2 w/pool, leased Tahoe, 3-series or Prius (take your pick based on which image you are trying to project), several LCD/plasma TV’s, granite counters (to put the hot pockets on to cool), Apple laptop(s), $400/mo in cable/internet/cellphone, eat out 4x a week, etc, etc, and all just after you get your first “real” job at 25 or 27. Of course this is extreme but there are folks who live like this.
I’m a pretty frugal guy but I know that I have much more “stuff” than either of my grandads did at my age.
Wells Fargo posts revenue $2 billion below expected. Posts loss when it was expected to post a profit. Stock up 10%.
Oh, no worries… They’ll be able to dump $100s of billions of bad debt onto the taxpayer through the new “bad bank”.
Welcome to the Farm. All animals are equal, but some animals are more equal than others.
Animal Farm
“Welcome to the Farm. All animals are equal, but some animals are more equal than others.”
Animal Farm
I had to laugh when I read that Maven. I was listening to “Sheep” by Pink Floyd at the time.
Mike
Que in Temple Grandin…..
Ordered her book, Ann. Thanx for the head’s up.
The fact that we compare this to animal farm shows how close fascism and communism are when they reach extremes. One group of people subjugating the masses for their own benefit using the power of rhetoric and the government.
+1
That album is so apropos to this whole mess. Especially “Pigs (Three Different Ones)”. “Sheep” and “Dogs” are too though definitely.
One of my favorite all-time albums. Worth even just a read through the lyrics, and noting how they apply in spades these days.
Now that the bad bank plan is in play, I guess bank earnings don’t matter any more? Those toxic assets will soon be somebody else’s problem, not the shareholders’…
I think the bonuses for the Bad Bank management will depend on having the absolutely biggest losses, worst earnings and most negative balance sheet of any company
Spot on! Bigger bonuses translate into bigger losses to dump onto the Bad Bank plate…
“…Those toxic assets will soon be somebody else’s problem, not the shareholders’”
Sometimes the fun of discovery is finding out about things that are created by…accident.
Local AZ builder Fulton Homes filed chapter 11. Reader comments on AZ Republic site about the story contained a post about how the socialists in government intentionally created the crisis as a way of killing private business so the government can take over the economy.
The site has the ability to vote thumbs up/down on comments you agree with/disagree with. vote running 28 thumbs up to 16 down.
The sheeple are MORONS!!!!
What do you expect for a herd of farmyard animals? Intelligent analysis?
“how the socialists in government intentionally created the crisis as a way of killing private business so the government can take over the economy.”
ok I’m a wingnut and all but even I don’t go that far. LOL
Forbes shows he deosn’t get it. On CNBC flapping his pie whole about needing to use Freddie and Fannie to start pushing mortgages with looser lending standards…. Standards have tightened too much and banks aren’t lending.
WRONG. They are lending to people that can pay it back. They AREN’T lending to people that can’t pay it back. Oh, the horror!
Forbes has NEVER gotten it. His psychopathic delusion falls to the depths of the fallacy that he is presidential material.
“His psychopathic delusion falls to the depths of the fallacy…” lol
Perhaps he end up like Dupont,…driving around his estate in an Abram’s tank.
Serious dude. He looks like the freak of nature offspring the grinch and MitchMConnell and his ideas are even wackier.
The implication is that unless lending standards soon revert to 2005 levels of debauchery, the housing market will come out at the tail end of this financial hurricane looking much more affordable to new entrants. I guess we will have to thank the PTB at that point if they stay on course with the accidental affordable housing program that is currently in play, or at least fail in their efforts to derail it.
“…the accidental affordable housing program that is currently in play”
To soon be followed by: $300,000+ homes for sale @ 16.9% interest rates
“accidental affordable housing program” LOL! ( Is ‘that’ what we’re calling it now? )
I’m not sure that what a guy like Forbes wants is a “Mulligan” to re-live the “glory days” of 2005, I think he may be implying that without looser standards there’s no hope to even install a “floor” on home prices.
similar in Europe. In Netherlands some politicians have started to argue that the current ‘clampdown’ on lending is causing trouble in the housing market. Dutch banks were suggested by financial authorities to loan at most 8x income lately (only a suggestion, not compulsory and they still say that in some cases 8-10x income is OK). Also, still no problem getting 100-120% loans over here, although you have to search a bit now that the big foreign debt pushers like GMAC have disappeared from the market.
8x income? That is so incredibly outrageous that I have a hard time understanding how someone could even so much as suggest that while keeping a straight face. 8x income? That’s criminal.
In Vancouver we had average incomes of about $70,000, and our benchmark price for a house got almost to a million at the peak. It’s kind of stretching the numbers around, but that’s almost 13x income. Lucky 13.
Yes, I understand many areas were overvalued by that much, ella, but nhz’s talking about lending institutions approving loans based on that ratio; an entirely different thing. Like I said, that’s criminal.
good point.
I think the question of whether foreclosure sale prices are not representative of the value of the surrounding housing stock is open. If a home is in good condition by objective criteria, why would I care about why it is on the market, unless perhaps due to the stigma associated with buying a home that recently was the source of another household’s financial demise?
BTW, 4S Ranch (aka 4Closure Ranch by some) is in the 92127 zip code.
S.D. is 6th weakest housing market
November prices fell 25.8% from year ago
By Roger Showley (Contact)
Union-Tribune Staff Writer
2:00 a.m. January 28, 2009
San Diego County’s housing price slump may be easing at the low end but continues to worsen in more higher-priced areas, according to a closely watched index Standard & Poor’s released yesterday.
…
With interest rates falling and loans more difficult to come by than a few years ago, some buyers are in no hurry to buy now.
Such is the case of Pete Hernandez, 33, and his fiancee, Lisa Darling, 32, who have been looking for a year for a home priced from $300,000 to $400,000. They tried to buy short-sales – homes sold for less than their mortgage amounts – but grew impatient with banks that take months to review offers.
“We’d like to find one sooner than later as interest rates are low,” Hernandez said. But they are now shifting gears to concentrate on their August wedding and will look for a home to buy after that unless a deal comes their way.
Their real estate agent, Scott Voak, said high-end price drops are probably accelerating because credit-worthy owners who took out so-called Alt-A loans – those with negative amortization features, zero interest or zero down payments – are unable to cope with resetting monthly payments and having to sell at a loss.
“A lot of people in neighborhoods like 4S Ranch (west of Rancho Bernardo) and San Elijo Hills (in San Marcos) have those loans,” Voak said. “We saw a home sold for over $1 million about 2½ years ago, and the bank put it on the market for $729,000.”
…
Andrew LePage, an analyst for MDA DataQuick, which publishes monthly housing prices, said the Case-Shiller figures mirror those he has compiled. His November median price for single-family resale homes in San Diego was $335,000, down 33 percent from November 2007 and off 41.6 percent from the all-time high of $574,000 set in June 2006.
But he cautioned that both DataQuick and Case-Shiller figures reflect the dominance of low-cost foreclosure homes sold each month and not necessarily the values of nondistressed homes around them.
“We’d like to find one sooner than later as interest rates are low,” Hernandez said.”
Why on earth do these people feel ANY sense of urgency what-so-ever to buy? Prices are going to be lower tomorrow then they are today. Interest rates are likely going lower as well (a-la government sponsored/subsidized 2.99% rates). What’s the hurry? I just don’t get why anyone feels they “need” a house, or that they must buy today to get the best deals.
Let me be the first to point out, the deal tomorrow will be better then today. And that’s going to continue for YEARS, not for 5-10 months.
I’d love to have a place where I could have a large garage and work on making things. Designing circuit boards, producing them. I hate living in an apartment. I’d love to live somewhere comfortable, versus working on projects at a storage shed, sneaking power from a nearby outlet to run a soldering iron. I’d prefer to do this before I’m too old. I assume others have some sort of similar ambition. But at last, the gov’t interferes. Besides, all the jobs are going away where I live so most likely I’ll end up relocating for IT jobs in Northern Virginia / DC area.
I can completely relate to your post. We sold a while ago, and reside in an apt, with everything in storage. We’re buying this year. Price is a major factor in the purchasing decision, but so is quality of life. Besides, EE’s need a cave (lab-bedroom)to do their thingie.
Hobbies are the primary reason I’m renting a house instead of an apartment: full unfinished basement is the perfect space for me. Plus an old crapola detached garage for storing flammables.
Now THAT will be an occasion for an HBB meetup!
It’s not the end of the world. 3/2 SFRs on 1/4 acre are now between $200-$250K in Falls Church, inside the Beltway, near the Providence Rec Center. The good thing is, they are all pre-bubble construction, 60s and 70s kinds of houses. The snoots around here look down their noses at this area (on the NOVA Housing Bubble Blog, when I mentioned what I thought was a notable find, the resident maven sniffed “can’t tell from the pic if you’d be looking into your neighbor’s trailer”), but if you really ARE based in Tyson’s, vs. DC, it is a sweet commute. And, the area has vitality. Lots of Koreans. I like Koreans. They understand about productive land.
I’m not going to apologize for liking neighborhoods with older houses, hard working neighbors, and life on the sidewalks.
Not that I’m hoping your job goes away, sounds like you’re good at it and you like it, and in any case looking for a job sucks. But in the event you do need to uproot, around here there is still a lot of activity. Enterprise Architecture is still lifting many boats.
There’s even a funky live band bar in the area, and I personally heard a band there back in 2002 which caught the wave and won a Grammy. And I am NOT a barfly. OK, not that a bar is the end all and be all.
I am easy to please. I started out in CT.
I have to defend at least some of us knifecatchers…
I bought a house recently because:
1) I had very specific criteria for a home, and have rarely seen homes come on the market that met those criteria, even in the bubble years.
2) I had been in grad school many years and the “delayed gratification” thing was getting way too hard, psychologically.
3) I am acquiring too much stuff, and got tired of living like a refugee moving every few years based on factors that should have been under my control (like landlord whims, getting pets, dissatisfaction with degraded carpets, large appliances, etc).
4) I can afford the house I bought, easily.
5) I plan to stick around for the long term.
Financially it’s not a great idea to buy a house right now (maybe it never is), but I am now officially middle aged having just turned 40. Like D.H. Lawrence says…”Life is ours to be spent, not to be saved.”
As a gainfully employed grownup, if I want something I should be able to get it if I can responsibly afford it. That said, if I were a lot younger (or older), had a less secure job, and were less picky about what I consider to be a desirable home I would definitely wait to buy right now.
My two cents, I guess. Flame on…
You did fine, and I think the HBBers would agree.
My situation is somewhat like yours, only I’m 3-5 years behind.
I own one of those boxy things you live in too. Overpaid, which I realized after stumbling across this blog. But like yourself, I can afford it. And get this. I can afford it because I saved a whole bunch of money by renting. My favourite part is that bank is only getting about $4500 in interest over the life of the loans.
I think of owning as the luxury form of having shelter. You tend to get more space, you can do more with the place, freedom from landlords, etc. I know each of these points can be disputed, but they tend to be the case. At any rate, you pay extra for this stuff but for some it’s worth it. I’ve increased my shelter costs by around 10-15% by owning which isn’t too bad.
congrats
What was the “very specific criteria for a home, and have rarely seen homes come on the market that met those criteria, even in the bubble years?”
My criteria were:
1) SFH in or near downtown Anchorage, AK
Not outrageously overpriced (for what I can afford)
2) Surrounded on 2 or 3 sides by woods for privacy
3) >2000 sq. ft.
4) Has a rentable mother-in-law attached
5) Has lots of windows and a view, since I work from home
6) Lots of storage space
7) A pet friendly yard
9) On a cul-de-sac
10) Near the city trail system
I’ve only seen 1 other house come on the market in 4 years that fit those criteria, except it was horribly overpriced.
We are even older than our 40’s and will be writing one check and its ours. The future looks shaky, and we want a paid off roof over our heads for security and lifestyle. Having no mortgage will make life easier, should the shtf. We’ll have reserves.
This type of thing is becoming more and more common as jobless rate soars, really sad for the kids involved:
By REBECCA CATHCART and RANDAL C. ARCHIBOLD
Published: January 28, 2009
LOS ANGELES — A man shot and killed his wife and five young children before taking his own life Tuesday, apparently out of despair after the couple lost their jobs at a hospital, the police and city officials said.
Officers responding to 911 calls placed by the man, Ervin A. Lupoe, and by a television station to which Mr. Lupoe had sent a fax around 8:30 a.m., found seven bodies in a house in Wilmington, a working-class neighborhood near the Port of Los Angeles.
A police spokesman said the bodies were identified as Mr. Lupoe; his wife, Ana; their 8-year-old daughter and two sets of twins (5-year-old girls and 2-year-old boys).
Do a bit more reading on this story. Seems that the “adults” in this family tried to misrepresent their status so they could get childcare. And they weren’t what one would call model employees of the hospital.
Uhm, what does that have to do with what I said about “sad for the kids involved”? Are the kids involved in this “misrepresentation”? Adults who can’t make it have no right to whack the kids.
Fruit doesn’t drop far from the tree.
So may as well whack all the kids if the parents are misfits?
Read on and you’ll also hear a neighbor saying that their house was conspicously larger than the surrounding houses. The truck driver neighbor also offers up that many of those same unusually large houses (for the neighborhood) are now in foreclosure.
So perhaps the wife pushed for the HUGE family AND HUGE house? And the husband got tired of it all?
It’s getting harsh in here.
The 2 and 5-year olds deserved it for their fruit tree proximity and the mom deserved it for (completely theoretically) pushing her husband to have a large house and lots of children.
That man who shot them…poor guy?
cougar, that was a sad story.
ella,
Yeah one thing I do notice on HBB (not just recently, but for a long time now) is that the disgust &anger for over-priced assets/unaffordable lifestyles can be so high that even little kids caught up in all these get little sympathy or worse yet outright disdain from a few posters here and there, which I don’t understand. They have no control over what is happening around them and should not be put into the same bucket as the parents who made poor decisions.
I’m with you on this, cougar; I empathize with the people going through real pain (regardless of whether they brought it on themselves) while hoping that they can learn the lessons pain-the-teacher expounds upon.
Unfortunately, it seems that most people can learn no other way.
“Read on and you’ll also hear a neighbor saying that their house was conspicously larger than the surrounding houses. The truck driver neighbor also offers up that many of those same unusually large houses (for the neighborhood) are now in foreclosure”
They repeatedly added extra rooms and additions onto that house. That put a lot of pressure on them financially which may be a factor in the family suicide.
I know Wilmington quite well and it is one of the areas which has seen drastic price delines of more than 50%. Do U know why?
Wilmington is a grimy port city 50% illegals and the rest are lower working class blue collar. It has a large section in the heart of the city which resembles Tijuana. Wilmington saw rapid bubble price increases during the height of the bubble insanity as did all the lower ratty sections of LA. These areas are now witnessing prices declines back to what is expected in impoverished ghetto/semi-ghetto parts of inner LA(Wilmington is 50% ghetto).
That put these folks way underwater on their home loan(s), which may have been a contributing factor , along with losing their jobs , in this family suicide tragedy
Note: This post is based partly on conjecture as i do not know the details of the family finances, which are necessarily private .
I do know the cost of adding a room addition- $25,000-50,000 per room in LA depending on multiple factors. They could have spend as much as $200,000 just doing room additions/upgrades/remodeling.
The average price of a decent SFH in Wilmington is now about $250,000.
Do the math and see where this goes
“Read on and you’ll also hear a neighbor saying that their house was conspicously larger than the surrounding houses. The truck driver neighbor also offers up that many of those same unusually large houses (for the neighborhood) are now in foreclosure.”
Typical for large parts of City of LA such as Wilmington(W). Older semi-declining quaint of small SFH’s get upturned by developers putting up rows of boxy squat condos and monster- sized msmansions which complety destroy a neighborhood’s ambience, and many of these homes get foreclosed and/or become rented out to section 8′ers or even turn into rented out boarding homes.
It appears that this home was built in 2001 and sold to the owner, who rode the the housing bubble insane price rises during 2003-2007 to add on extra upgrades, probably doubling the side of the home. I looked at W prices in 2005-2007 and was quite amazed that homes were selling for $400-500,000 at peak of bubble in 05-07. Knowing the area and income characteristics of W quite well i knew that prices would collapse in a heap.
When the housing values collapsed then the family became upside down , their mortgage pmt also went up, and they were likely on an adjustable rate or I/O. The financial pressure this brought on combined with losing their jobs was probABLY the main reason for the family suicide.
Correct, and prices are still far too high in Wilmington.
Do people still fax?
“Do people still fax?”
It’s weird to do something so horrible and have the foresight to go around faxing news outlets before shooting yourself. Didn’t think about that.
It’s nice to know that help exists too for gals who used to date high-income bankers and traders and had no spending limit:
By RAVI SOMAIYA, NYTimes
Published: January 27, 2009
The economic crisis came home to 27-year-old Megan Petrus early last year when her boyfriend of eight months, a derivatives trader for a major bank, proved to be more concerned about helping a laid-off colleague than comforting Ms. Petrus after her father had a heart attack.
For Christine Cameron, the recession became real when the financial analyst she had been dating for about a year would get drunk and disappear while they were out together, then accuse her the next day of being the one who had absconded.
They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.
In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”
“if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”
I think I’m gonna be sick… Yup… Definately gonna be sick. What in the heck is wrong with this world? I thought women wanted to be treated as equals? You hard working women must be so ashamed when you hear/see things like this. What a nightmare for equal rights.
Some men want to pay you a lot of money for being less then equal, and lots of wimmin fall for it.
————————————————————
I thought women wanted to be treated as equals?
What a nightmare for equal rights.
It’s not a nightmare for equal rights — jackasses come in all shapes, sizes, and genders.
Whining about a lack of “bottle service” is merely one Predictor Of Jackassery, not a significant step backward for one-half of our species.
Yup. Jackasses even exist on this blog.
Amen, SF Gal!
They did bill their blog as “free from the scrutiny of feminists,”, so I don’t think they’ve got the next Susan B. Anthony in there
Just some scuffed Manolos and a pocketful of broken dreams *sob*.
These ladies are just getting their medicine early, in 15 years they were going to be replaced by a younger model, anyway. And in the meantime, they get to be married to a peach of a guy. Oh, I love working for myself! I would not trade it to chase investment bankers.
What is “bottle service?”
I suspect that banker got drunk and disappeared so he wouldn’t have to deal with his golddigger girlfriend. Maybe the problem isn’t the stupid women, it’s the stupid men who fall for them. Hooker can’t be that expensive, unless you’re Eliot Spitzer.
bottle service is where you buy a whole bottle of liquor or champagne at a restaurant or bar, which gets you MVP service, since the bottles are sold at insane markups.
It’s VIP and Poppin’ bottles, no different then renting a luxury suite at football ,baseball games Private room, private hostess even a private bartender. All paid for by insanely high bottle prices $500 for a bottle of grey goose…
———————————————–
which gets you MVP service,
They are pretty easy to spot, the conversation usually goes something like “so what do you do for a living” “what kind of car do you drive” “oopps my friend over there needs me”.
_My_ car was carefully chosen to make d*mn _sure_ that her friend over there would need her.
Cheapest and most reliable weed-out mechanism I could come up with.
Christine made a bad choice, and is dealing with the consequences. Evidently enamored by the risk and perceived wealth, and not the man. Hey, I took a shot. I don’t watch Dr. Phil.
These people need a life.
Pumpkin, you’re dating an a*****e.
By RAVI SOMAIYA, NYTimes
Published: January 27, 2009
I know the article says by the NYTimes but I think that 1/2 of their staff previously worked for the “Onion”
Well, Cougar, that was significantly more uplifting than the previous news thread you posted.
Life is all about balances: one minute you are sad, the next you don’t know whether to laugh or cry.
Hmm I think I just described my sex life pretty good.
Who is slated to become the bad bank bagholder?
INDICATIONS
U.S. futures point to higher open, driven by banks
By Barbara Kollmeyer, MarketWatch
Last update: 8:15 a.m. EST Jan. 28, 2009
LONDON (MarketWatch) — U.S. stock futures pointed to a strong start for Wall Street on Wednesday led by financials after a report the Obama administration is nearing a deal to buy illiquid or bad assets from banking firms, while markets were also focused on a Federal Reserve meeting.
the IMF is desperately looking for a new role, other countries are also embracing the Bad Bank concept, and we have loads of clueless politicians to get rid off … I smell opportunity
Who really cares if these clowns create a bad bank? Fine take crap off the books. It’s still game over unless the PTB allows the old games to start over again….securitization, I’m looking at you.
That might be a bit tough, given the myriad investors who were burned to a crisp in the collapse of the securitization Ponzi scheme. They aren’t making any more greater fools, at least for the near term…
Sorry about the mixed up metaphor — it’s early — but I should have either said “burned to a crisp in the conflagration of” or “crushed in the collapse of”…
Don’t be ashamed, mixed metaphors are an artform.
Muddled Metaphor Index! It’s tough to get rated.
there are still plenty of idiots outside the US to sell to.
Economists, RE professors etc. are still claiming that there is no bubble at all in Netherlands (or the rest of Europe) and that the credit crunch is just related to an entirely unique US subslime problem. This is still the general opinion in the news and with the general public in Europe.
EU banks claim they could not have seen this coming, there is no mistake on their side - so it’s back to business as usual, although with many billions in extra help from the government (no strings attached, so why not if it helps to increase the bonuses?). Maybe the ratings agencies will have to promise honestly that they will never lie (err …) again, and probably the banks and WallStreet will have to promise to do something about their excessive greed culture, but that’s about it. Promising to clamp down on bonus culture won’t hurt - they promised this in Netherlands two years ago and incomes and bonuses of topmanagement have skyrocketed as a result.
More kitsch and sink policy is on the way from the Fed.
THE FED
Fed throwing kitchen sink at recession
Central bank wants to show it’s tough enough for this downturn
By Greg Robb, MarketWatch
Last update: 10:59 p.m. EST Jan. 27, 2009
WASHINGTON (MarketWatch) — As it meets to discuss policy action, the Federal Reserve is trying to convince the market that it is tough enough to combat this recession, economists said.
The Fed used to have an easy way to flex its muscles: Its short-term interest rate target was so powerful in setting market rates that it became an axiom on Wall Street not to fight the Fed. But with this primary weapon effectively at zero, the Fed has a tougher job after its two-day meeting ends later Wednesday.
“They’ve got to communicate in a vastly different way then they had in the past,” said Joel Naroff, president of Naroff Economic Advisers in suburban Philadelphia.
The biggest task for the central bank is to demonstrate that it’s pulling out all the stops and that it can make a difference.
“The Fed’s job is going to be to convince markets and the broader public that they can still support the economy … even with the funds rate at zero,” said Al Broaddus, the former president of the Richmond Fed, in a television interview.
If a kitchen sink comes sailing toward me, I’m getting outta the way!
+1
Lost long ago in all this noise is the very basic question as to whether gravity could or should be outlawed.
Nah, for me all the convincing needed to believe that this will end badly comes from the fact that whenever man thinks he has conquered his environs, whether they be scientific, political, economic, he receives a major slapdown.
“Thou shalt have no other gods before me” - this includes central banks, BTW.
“Thou shalt have no other gods before me”
-Alan Greenspan
My prognostication for some time has been that the myth of Fed omnipotence will be one of the bubbles to pop in this downturn.
My theory is that the pain must be directly proportional to the excesses in order to exorcise the sins of the past; the Fed can fight it the whole way with all the tools at its disposal, but like other laws of the universe (gravity, e=mc-squared, etc), the pain of the needed adjustment will be the same.
If I’m right, one of the things people will slowly realize as this thing continues to unfold is that the Fed can try like h*ll and still not prevent the same bottom from being reached eventually–e.g. omnipotence myth debunked.
That said, I could be wrong in this theory.
Isn’t “bad bank” really HP’s “superfund SIV” by another name?
Banks post pre-open rally on reports “bad bank” plan may fly
By Greg Morcroft
Last update: 8:02 a.m. EST Jan. 28, 2009
NEW YORK (MarketWatch) — Shares of U.S. banks posted strong pre-open gains Wednesday on reports that the Obama administration may adopt a plan to buy bad assets out of the financial system and segregate them in a so-called “bad bank”.
Resolution Trust Company all over again.
I thought the FDIC was a federal deposit insurance corporation, but I now stand corrected.
FDIC May Run ‘Bad Bank’ in Plan to Purge Toxic Assets (Update1)
By Robert Schmidt and Alison Vekshin
Jan. 28 (Bloomberg) — The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up as it tries to break the back of the credit crisis, two people familiar with the matter said.
FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama’s team may announce the outlines of its financial-rescue plan as early as next week, an administration official said.
“It doesn’t make sense to give the authority to anybody else but the FDIC,” said John Douglas, a former general counsel at the agency who now is a partner in Atlanta at the law firm Paul, Hastings, Janofsky & Walker. “That’s what the FDIC does, it takes bad assets out of banks and manages and sells them.”
They are going to grab the loans from bad banks. Modify, insure, and then sell them, streamline the entire process.
Who pays the insurance premiums? Oh yeah — federal govt insurance is premium-free…
If GF/FBs ever had the urge to default, there is good reason to follow through on that urge. Expect anyone who bought a home over the last 3 to 4 years to default. They’d be dumber than dogsh!t (DTD) not to get on default line.
I agree.
I’m thinking the FDIC will be too busy dealing with failed banks to mess around with the SIV reincarnated.
Al,
Correct. Besides, John Douglas’ “spin” is taking their mission totally out of context! That’s not the role of the FDIC at all. Their job is to take bad BANKS out of circulation, and make depositors whole.
WTF is this!? “Junior Achievement”?
We’re from the Government, and we’re here to help you.
Wait a minute…that was a favorite line from Reagan…this plan is modeled after one from his administration..too many levels of irony here…arghhh.
Immuna takes me some bad bad profits.
Im pullin the ripcord on UYG.
Good bank, schmad bank — it don’t matter as long as ur on the right side of the trade.
“Im pullin the ripcord on UYG.”
Me too Voz.
Nice little 20% bump.
Think I’ll take the rest of the day off.
Mike
confirmed, double down and ride the mommentum player haters.
stops on 3.58
trains leaving on track $4, all aboard.
FOMC policy confirmation on QE, and markets gonna run.
stops to 3.65
Dunno about that market run.
Pulled the ripcord myself after 30 percent gain.
I think Hoz mentioned it last week, so a tip o’ the cap for him/her.
Pigs do get slaughtered. Not saying anyone here oinks, not at all. But I’ve been turned into bacon before, so I’m good.
(Says while trying to predict the next trough.)
20 percent was good enuf for me.
Wondering if the next trade is a short.
stops at 3.80
I took half my profits and letting the rest run. UYG is possible four a long run to 6 or 40% from here.
ok, pops.
dropped half at 3.92
thought I’d see a 4 on the tape, no such luck today.
Patience grasshopper. All good things come to those that own.
“He that sells what isn’t his’n buys it back or goes to prison”
Every now and then you get the shorts by the balls and the wallet is soon to follow.
He’s always nice to me after a really good call. The foul mouthed humor and antics…not so much.
*mental note. call uncle money bags on Oahu and tell him how much I luvs him.
Hoz - Thanks for bringing that UGY dip to my attention, I was actually in the middle of setting up bank transfers and couldn’t benefit - I’m staying out for now.
Did you see SRS under 50 today?
I only put a small amount into UYG, so I’m going to hang on and see what happens. I expect more relief/rally/undue-optimism until the bad-bank news is actually out. Ideally I would like to sell and get short again (SKF) right before that happens.
heh if SKF gets under 100 there will be a lot of bottom callers. don’t know if they’ll be right - sooooo much optimism.
I guess this forecast would include 1980-82, eh Hoz?
BULLETIN
IMF FORECASTS SLOWEST GLOBAL GROWTH SINCE SECOND WORLD WAR
ECONOMIC REPORT
Slowest global growth since WWII expected
IMF urges more aggressive action to reverse financial meltdown
By Rex Nutting, MarketWatch
Last update: 9:22 a.m. EST Jan. 28, 2009
WASHINGTON (MarketWatch) - The world’s economy is expected grow at the slowest pace since World War II in 2009, the International Monetary Fund said Wednesday, as it once again sharply marked down its forecasts for the global economy.
The economy is now expected to grow 0.5% in 2009 and to slowly rebound to 3% in 2010, as measured by purchasing power, the IMF said in an update to its World Economic Outlook. The IMF has updated the outlook twice since October. In November, the IMF projected global growth of 2.2%. In October, it forecast growth of 3%.
“The outlook is highly uncertain and timing and pace of the recovery depend critically on strong policy actions,” the IMF said. Risks of deflation in advanced economies is rising.
“A pernicious feedback loop between the real and financial sectors is taking its toll,” the global financial institution said.
LOL
Show me the facts not the projections. I can show data that the 4th Q had positive GDP - a preposterous idea. So the numbers will be fudged to reflect the miasma of the country. In reality the GDP probably dropped about 3%.
The IMF is a tool and sometimes tools work and sometimes they sit in the back drinking coffee and playing backgammon.
The IMF wants to appear relevant. Supernovas sell.
“Supernovas sell.”
Point taken.
Also the current crisis always looms more catastrophic than fading memories of previous ones.
God Save The Banks!
Especially… the one’s that make loans for the Amish!
What on God’s earth is anyone doing with a $5m mortgage loan? If you want to buy that much house, you might want to first make sure you have the money on hand before making the purchase…
Wall Street Journal
* REAL ESTATE
* JANUARY 28, 2009
Banks and Investors Face ‘Jumbo’ Threat
By NICK TIMIRAOS
Rising defaults by affluent homeowners are raising the specter of another cloud over banks and investors, which could get stuck with thousands of expensive homes.
About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007.
[Banks and Investors Face Jumbo Threat]
Jumbo mortgages average about $750,000 and can run as high as $5 million or more. More borrowers with such loans are being hit by layoffs that are spreading through practically every sector and pay level of the U.S. economy.
On Tuesday, the Labor Department reported that the jobless rate rose in December in all 50 states, hitting at least 10% in Michigan and Rhode Island. States that suffered the biggest jumps in unemployment in the past year include California and Florida, where the largest number of jumbo loans were made.
That means trouble for banks that made those loans when times were good and investors who snapped up jumbo loans packaged into mortgage-backed securities. Defaults on jumbo mortgages tend to result in especially steep losses for lenders, because pricier homes are tough to sell in the current market.
“There is more pain to come,” says Herb Blecher, vice president of analytics at LPS.
Now that’s one bad case of affluenza!
PB, if I were to buy an asset of that size, even if I had my own money I wouldn’t use it. I would borrow it from someone else and leverage up, since all leveraged ones are getting bailed out anyways.
Good point — always a good idea to spend other peoples’ money rather than one’s own, if given the choice…
I saw a story on CNBC yesterday about a surgeon (and wife) who are about to lose their house (a giant mcmansion). They got it with “creative financing” (two mortgages).
Here’s the kicker: The story wasn’t about them losing their house. The story was about “loan modification” companies that have sprouted up, some of which are charging people a fee and then taking off, providing no real service. These people in particular got taken for $3,500.
It’s immoral to let a sucker keep his money.
I’m not sure why they chose to do the story on a surgeon, but I suspect it was to leave the impression these companies are so crafty they could even fool a doctor, *gasp*! lol
(psst, bluprint, I’m sorry but I was using my realtor calculator yesterday…I mean August August babies are tops)
Yeah, I saw that…but I let go. Mostly b/c it just made me confused.
I am very upset with Obama; he’s been in office for more than a week, and I still haven’t received my stimulus check that will get me out of this recession!!!!!
Yeah, and I’m still wondering who will be on the starting lineup for the White House basketball team. I’ve heard that the Prez has a pretty good outside game, but we need some big men who can get inside.
And have you seen the Obama basketball videos from his pre-Presidential days? The other teams have no defense on this guy. None!
I’m in a church basketball league where most of the participants are young enough to be my kids. The game is played completely different these days it seems. Everybody wants to shoot 3’s it seems.
Me, I love playing down low, banging bodies with these kids and grabbing rebounds and blocking shots. I’m holding my own, and my teammates are pretty happy with the old man, but boy am I sore the next day.
Charles Barkley: “Nobody owns the paint.”
Go get ‘em Blano.
When they complain, tell them:
“Man’s game, bi#ch…..”
Signed,
The “Clones”
LOL both of you!!!!
Sorry, no check for you!
B.O. has spent this week continuing to back peddle, now it’s up to the workers and businesses to get ‘us’ out of this mess!
UNITED STATES TREASURY
SWEEPSTAKE LOTTERY DIVISION
NATIONAL PROMOTION/PRIZE AWARD DEPT.
REF: SSL/61-ILGI0509/45
BATCH:SSL/15/096/GCO
DATE: 26/01/2009
RE: WINNING FINAL NOTIFICATION
Dear Winner,
This is to inform you of the release of the US Treasury’s Sweepstakes “Everyone Is a Winner Lottery” Promotional Program (part of the US Congressional Legislation entitled the “No Household Left Behind Act of 2009) held on the 26th January, 2009 in which your ticket number: 212005600545188 with Serial number: 4888/02, an entry automatically attached to your SS number, which drew the Lucky numbers: 41-6-76-13-45-8, consequently won the lottery in the Second category of the year 2009. You are therefore approved for a lump sum payout of USD10,000.00 (TEN THOUSAND US DOLLARS ONLY) in cash accredited to file reference number: KPC/9080333308/03 from a total cash prize of USD 1,600,000,000.000.00(ONE THOUSAND SIX HUNDRED BILLION USDs ONLY) to be shared amongst among the One hundred and sixty million households automatically enrolled winners in this category. Your funds are now deposited in a security company with your prize money insured in your email….”
Cassandra
BRILLIANT!
The “Bad Bank” must be a wonderful new concept of High Energy and Quantum Finance from the rocket scientists on Wall Street.
The way I undrstand it is we merely stuff all the Bad Stuff and Things that we don’t want into a nearby Black Hole, cover it with cardboard and attempt STAY AWAY from it for 10,000 years, until their retirements, their last bonus or whatever comes fist.
I learned all this in Miss Grey’s 9th grade Business and Finance class when she demonstated how she balanced her OWN checkbook
I want to do the branding for the “Bad Bank”, and also design uniforms for the tellers, and develop standards. Like, tellers have to chew tobacco and spit before greeting each customer, the security guard has to trip each person who walks in, and everything is painted a shade of black.
What’s the bank’s slogan…suggestions?
OK, I’ll start:
“The Bad Bank. We’re back in Black.”
“The Bad Bank. If you ain’t broke, we’ll fix it.”
“The Bad Bank. It’s Swedish for Common Cents.”
“The Bad Bank: We’ll take your stinky deposits!”
“The Bad Bank: We will buy CR*P with your deposits, and you will LIKE it!”
Oh wait, that’s all the banks we already have… Hmmm….
The front doors should be just like an Old West Saloon!
That would be kind of awesome.
You’re hired for the interior design of The Bad Bank, and I see we have some talented copywriters aboard, too
Oh, hope you don’t mind but the Bad Bank pays in stock options only. No liquid paychecks for you!
if you’re gonna pay me in liquid, ella, I’ll take MacAllan, Tanqueray and Bass Ale!
Ooh, Tanqueray Every tried Hendrick’s? It’s a bit fancy, but it is so tasty you can have it with straight soda water & some muddled cucumber…sounds werid, but it’ll make you a believer!
Dammit, I’m running from the layoff blade again this week… stressful…
At least, you’ll be able to keep your insurance at 35 pct of cobra cost or qualify for Medicaid and not pay unemployment taxes under the stimulus plan.
Healthcare looks to be a good trade, career, or business target, no? They are even pouring money to upgrade information technology.
Heck, you can probably go back to school or become a teacher as a result of all the money pouring into education, another business target.
“Heck, you can probably go back to school or become a teacher as a result of all the money pouring into education, another business target.”
Not in NYC, and probably not in most places. All that “education” money will be pouring into teacher pension and other retiree benefits. Education spending has been and will continue to be slashed. Same with other public services.
People need to understand the different between government spending and paying now for spending that happened in the past. We’ll be mostly doing the latter. Don’t expect much in return.
You’re exactly right - they play to the masses with that schtick. For our small town and suburban friends - you haven’t seen a money pit until you’ve seen a big city school district/government up close. You’d be amazed.
If we don’t spend money we don’t have, the country will go broke — the more the better.
Keynesian Maniac
Apparently all future bad news is now priced into the market.
Even Boeing who released worse-than-expected numbers - including future expectations - is up 2% today.
Looks like it’ll take Armageddon at this point for the markets to break below the 800 / 8000 floor. Or maybe Armageddon is priced in already, with an expectation that there will be a sharp recovery afterward.
Where’s the volume?
I wouldn’t fall in love with 800 on the next down move.
I expected big oil or GDP to take us below 800 by week’s end but the G-Men had other plans. WSJ:
Conoco reported Wednesday a fourth-quarter net loss of $31.76 billion, or $21.37 a share, compared with year-earlier net income of $4.37 billion, or $2.71 a share.
…
Revenue slumped 16% to $44.5 billion for the oil company, the third-largest U.S. oil company by market value, after Exxon Mobil Corp. and Chevron Corp. Conoco is the first of the major integrated oil company to detail fourth-quarter results.
Seconds later, a competitor counters at $510,000, and Parkin must decide whether to raise his limit on the unfinished, 4,878- square-foot property with a stop-work order taped to the window.
Call me crazy but I’d value a property with an unfinished house on it this way:
(Value of land) - (cost of demolishing house)
Half a million dollars for the ‘opportunity’ to finish a house is nuts.
How the heck do you come up with a reasonable inspection on an incompleted house? You could have all sorts of problems, e.g. the permits may have expired/not be transferrable.
“Seconds later, a competitor counters at $510,000, and Parkin must decide whether to raise his limit…(rest unimportant)”
RAISE HIS LIMIT??? Hopefully they meant “raise his bid”. If he goes to an auction with a hard limit in mind and exceeds that limit, he is a fool soon to be parted from his money.
You make your maximum-bid decision before you show up.
“Personally, what I am most concerned with is the fact that I can’t count on social security, etc. But that has been baked in the cake for almost 30 years, so I am over that anyway.”
Here’s a thought. To reassure our Chinese and Arab creditors that we aren’t borrowing more from them than we can pay, use that fictional Social Security Trust fund to buy all the toxic assets for the “bad bank!”
Thus while the amount owed to the Chinese and Arabs will go up, the amount theoretically (but not actually owed) to those under age 50 who have been paying higher regressive payroll taxes their whole careers to “save Social Security” will go down!
Then use some of the stimulus package to install new lamposts all over the country. And then when it is clear that the taxpayer was made to overpay for the toxic assets to bail out the rich, and the “trust fund” is gone, perhaps people will catch on, round up all the financiers and related pols, and hang them from the lampposts.
But WT, by that time & place… it will be against the law for any citizen to owe a rope that is >5ft in length.
The collapsing real estate market is making things ever more ugly in the Hamptons, according to Dan’s Hamptons:
Other problems according to a new agent of a local firm are caused by the “vulture” - the uncouth, crude speculator who will go around and visit every rental property and make “insulting offers.” This year, there seems to be an increase of this breed, which hopes to prey upon others’ misfortunes. Many believe the activity of Craigslist.org has introduced the bottom feeders to the East End real estate market. Many Craigslist renters know underhanded tricks - like suing the home owners months later in smalls claims courts in towns up island, where judges may have some bias, thinking that all Hampton homeowners are rolling in the dough, and that the rental prices paid were unjustified. In these cases, the judges may rule in the favor of renters who sue, because, say the pool wasn’t truly heated as the contract said. A word to the wise renter is: Beware of your contracts and whom you rent to. One unnamed agent said, “Beware of renting to lawyers!”
Sellers out east used to brush off talk of decreasing prices simply by saying “I’ll just rent it out”.
Now that the rental market has caught pneumonia, there may be nowhere to run.
“…by saying “I’ll just rent it out”
Landlord: “I see your FICO is 519 & you have a pet goat…no worries, I can work with that.”
Hwy:
Tenant: I see YOUR fico score is 519, you have not paid your mortgage in 4 months, here is what i will do for you…You want $2400 in rent Ill give you $1200 cash each month and cut the lawn….sounds fair to both of us.
Renter: “you do own a mower, right?”
“Renter: “you do own a mower, right?””
He doesn’t need a mower. You said he had a goat, put it to work!
“Beware of renting to lawyers!”
I rented FROM a lawyer, and that weren’t no birthday party either.
I rented FROM a lawyer, and that weren’t no birthday party either.
Maddog: “just follow him/her around for 24 hours…you bound to find some kind of “leverage”
Fed Adopts Program To Stem Foreclosures
(WaPo)
“With its bailouts of Bear Stearns and American International Group, the Federal Reserve took a vast portfolio of mortgages onto its books. Now, it is trying to use its control of billions of dollars worth of home loans to help prevent foreclosures. ”
The Fed will seek to renegotiate mortgages it owns that might otherwise enter foreclosure, Chairman Ben S. Bernanke told congressional leaders in a letter yesterday. The decision won praise from congressional Democrats, who took it as a sign that the central bank’s leaders are cooperating with efforts to use government power to try to stem the number of foreclosures. “
Link
Who ultimately pays for the Fed’s cramdown program, and how?
My guesses would be:
- “Who” = everyone, via inflation (or lack of deflation) due to Fed money creation.
- “How” is addressed some in this part:
“It is impossible, based on public information, to know the exact dollar value of the mortgages the Fed holds — though it is in the tens of billions of dollars. In the near term, the mortgages affected are those held in special limited liability corporations that the central bank created to hold assets after its March rescue of investment bank Bear Stearns and September takeover of insurance company AIG. ”
I’m guessing this is a very small percentage of mortgages, but perhaps significant nonetheless. The details will be… sticky… for sure, since (as we’ve dicussed for a long time on HBB) these mortgages are sliced and diced up such that it’s really hard to pin down an “owner” of the mortgage in order to do the logistics of term modification.
W/regards to that - does anyone know who actually does handle the logistics of collecting payments on these? So for instance let’s say someone’s mortgage is held in whole or in part by AIG - do they actually make out their monthly checks to AIG? Presumably not right? Is there there some other intermediary bank or other holder (say Chase or BofA or whoever) that is the “holder” of the mortgage but doesn’t actually provide the bulk of the financial backing?
“everyone, via inflation”
Why not go hog wild with inflation hedge investments if you believe that? For instance, go out and buy ten houses, or if you cannot get financing, just invest in REITs which buy houses at fire sale prices?
Housing actually would be an excellent hedge against inflation right now - and I very much would invest - if it weren’t for the fact that we’re still on the backside of a bubble, with prices continuing to go down (relative to whatever inflation or deflation we have) for probably 5-6 years still.
Otherwise - I do invest a fair amount in things that will likely protect against inflation - specifically PM’s and foreign currencies. Though I have my doubts about the latter since the whole world is following the U.S. into this abyss.
BTW I never said we’re having inflation, or will have in the near future. Long term yes I think we’ll have inflation problems. As I’ve stated many times recently - obviously right now we’re very much in a deflationary state. However the deflation would be much greater (mostly in the near future) if not for the bailout and stimulus packages. This lack-of-greater-deflation is essentially a tax on people. Wages are going down incredibly - primarily through job loss, but prices are not following as quickly. In a non-government-intervened environment the two would be equal - prices would fall as fast as wages, including wage deflation in the form of unemployment.
The delta between this potential deflation and current actual deflation is how we’re paying for the Fed’s actions. It’s a tax on everyone.
The MBS pool has a servicer that collects the checks, takes a small fee, and forwards the rest to the “pool” trustee for dispersement.
OK - for clarification - servicer = ???
I’ve had lots of mortgage holders, perhaps might one of these be an example of such a servicer, that didn’t actually financially back the loan?
Countrywide
Provident Funding
Chase
USAA
I had thought all these were self-contained w/regards to the loan servicing and the financial investment - perhaps not though.
(Just got USAA via refi, so not sure if they might immediately sell it to someone else)
“A Nashville real estate investor didn’t know he was giving away a valuable piece of artwork when he donated a painting he found in his parents’ storage bin to the Goodwill.”
Real Estate investor! HA. Oh well he is sure to make that back ten fold as soon as the market rebounds. I bet that is what he keeps murmuring to himself over and over.
http://www.foxnews.com/story/0,2933,484154,00.html
Reminds me of when my family moved when I was 11 years old and my mother lied to me about packing up my comic book collection and threw them out instead. Nowadays, many of them would have been worth hundreds of dollars.
From the Southampton Press - and the job losses and bonus reductions on Wall Street still haven’t fully worked their way into prices.
Rampant building during the heady days at the start of this century and the recent collapse of the mortgage and finance industries has left a glut of inventory in the East End real estate sales market and brought a sudden decline in the number of house hunters.
Some who built in the hope of a quick sale, and others who suddenly find themselves in need of unloading a large asset, are facing a potentially desperate situation.
Mr. Morabito recalls the days of “fire sale” auctions in the 1980s, which gave him his start in the East End real estate business, when builders were losing their shirts on houses suddenly worth a fraction of what they cost to build. He says he hopes the current market will not get to that point, but that many builders are looking to at least break even.
Mr. Horcasitas said that among the five properties already in line for auction is a 6,500-square-foot house south of the highway in Bridgehampton that will have a starting bid of half what the owner was asking two years ago.
“Some who built in the hope of a quick sale, and others who suddenly find themselves in need of unloading a large asset, are facing a potentially desperate situation”.
Maybe these folks look back and have second thoughts about things like:
- $300 bottles of wine at restaurants
- the fanciest private schools for Muffy and Dexter
- Annual trips to Aspen
- Annual trips to the islands
- Private exercise lessons
- Multiple Mercedes Benz’s
- Hummers
- Rolex’s
- Yachts
- Exclusive club memberships
- Always eating out at only the best and trendiest places
- Disney Cruise with the kids x2 per year
- Hotel that has dolphin swim & pet pool
- Helicopter rides to Hamptons
- Limos to Hamptons
- Temperature controlled wine cellars
- Sub Zero Refrigerators
- Private movie theaters
- $50,000 a year colleges
- Riding lessons
The economic crisis came home to 27-year-old Megan Petrus early last year when her boyfriend of eight months, a derivatives trader for a major bank, proved to be more concerned about helping a laid-off colleague than comforting Ms. Petrus after her father had a heart attack.
For Christine Cameron, the recession became real when the financial analyst she had been dating for about a year would get drunk and disappear while they were out together, then accuse her the next day of being the one
who had absconded.
Dawn Spinner Davis, 26, a beauty writer, said the downward-trending graphs began to make sense when the man she married on Nov. 1, a 28-year-old private wealth manager, stopped playing golf, once his passion. “One of his best friends told me that my job is now to keep him calm and keep him from dying at the age of 35,” Ms. Davis said. “It’s not what I signed up for.”
They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.
In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”
If you’re losing the game - change the rules.
Regulators Endorse Plan to Lower Insurers’ Cash Cushions
WaPo article today -
“Life insurance companies moved a step closer yesterday to being allowed to operate with thinner financial cushions as they try to weather the economic crisis.
“A committee of state regulators endorsed proposals that would make it appear that insurers have more capital to withstand financial setbacks and meet their promises to policyholders. The action paved the way for a final vote tomorrow by the leadership of the National Association of Insurance Commissioners, an assembly of state regulators. “
Link
It seems there are still a lot of real estate agents living in denial:
http://www.cnn.com/2009/LIVING/01/28/jobloss.hard.times/index.html
In Delaware, Manoj Philip, 24, said he had a full-time job in 2007 with Agilent Technologies making about $55,000 a year, including all the perks and benefits that came with it. But in July 2007, he quit that job to pursue a career in real estate.
“I knew it wasn’t going to be easy, but I didn’t think it would be this tough,” he said.
By September 2008, Philip needed a second income because of the withering housing market. He picked up a full-time contracting job and continues to do real estate about 20-30 hours per week.
It was a shock, he said, to return to full-time work while putting his real estate dreams on hold. “It took a lot for me to change that mental outlook. Because before I would’ve thought of it as something holding me back,” Philip said. “But I don’t look at it like that anymore.”
He’s since learned the value of living within his means, budgeting and making every dollar he spends count for something. “These are really important lessons to learn. I’m glad I learned it at such a young age.”
*smacks Mr. Philip with a newspaper*
Manoj, the first lesson you needed to learn was “Know Your Market.”
Quitting a decent-pay tech job for real estate in mid-’07 says you didn’t have the faintest clue what you were doing. And now you’re working 70+ hours a week, 30 of which are probably almost totally wasted.
If you had any sense in your head, you’d drop all that “real estate work” you’re doing like a hot potato, and put that extra 30 hours into freelance work related to your core competencies which will actually PAY you money that you can save or re-invest in yourself. And then you’ll wait until around 2011-2012 to start messing with real estate again.
But you probably won’t. Bonehead.
Fed = MBS investor of last resort…
Davos = Beluga flatulence.
“Beluga flatulence”
I suppose it smells better than Blagojevich flatulence…
If you’ve never eaten smoked sturgeon on a New York bagel†, you’re missing out on one of the joys of life.
Dammit, I want one now.
† Not “chauvinism” but you need to boil them in malted water before baking. This “two-step” is missing in most of the country.
Davos = financial wolves community tent social
This years theme: “Finding Opportunity in Chaos & Destruction”
“prices ALWAYS go UP! = Solar sun flare or monkey wrench?
Home builder and other bubble-era stock market darlings are green as grass in spring time on stimulus announcements from the Obaminites and the Fed…
Green Grass and High Times Forever
Castles of stone, soul and glory
Lost faces say we adore you
As kings and queens bow and play for you*
(* in Davos)
“Boeing to cut 10,000 jobs”
This is the nail in the coffin for the greater Seattle area. Stick a fork in ‘em.
Seattle is DIFFERENT.
Buy now before you are priced out FOREVER.
EVERYONE wants to move to Seattle.
The ChIndoEuropeans are coming.
SIGH. This is no fun any more. It used to be so entertaining. It’s all downhill now.
Starbucks to Close More Stores
Starbucks Corp. will close another 300 stores and cut nearly 7,000 workers as it continues to reel from overexpansion and a sharp sales slowdown.
The coffee chain reported Wednesday that revenue in its fiscal first quarter ended Dec. 28 fell 6% to $2.6 billion, with sales at stores open more than a year falling 9%.
Starbucks Chief Executive Howard Schultz asked the company’s board of directors last week to reduce his annual base salary to $10,000, from $1.2 million, a move the board approved, according to a company spokesperson. Once his health-care coverage costs are deducted from his salary, Mr. Schultz will earn less than $4 a month.
The Seattle coffee giant plans to close 200 locations in the U.S. and 100 locations internationally this fiscal year, which ends in September. That’s on top of more than 600 store closures the company announced in July.
With the new closures, Starbucks plans to get rid of 6,000 store workers. It also plans to cut 700 non-store workers at its Seattle headquarters at other field offices.
Starbucks said its fiscal first-quarter net income fell to $64.3 million, or nine cents a share, from $208.1 million, or 28 cents a share, in the year-earlier period. Restructuring charges, primarily related to store closures, took a $75.5 million pretax bite out of earnings in the recent quarter.
23 people to support and run one Starbucks?
sometimes you gotta burn the village to save it.
This is no different than subsidized housing. It’s basically allowing the ones who could not afford their mortgages in the first place to live in the neighborhoods higher than their class. The law of unintended consequences will cause those existing houses to continue to depreciate in price. Remember school desegregation was the hot issue in the 70s and 80s. This is neighborhood desegregation. The mission is now complete: There is no way anyone can escape the desegregation by way of property rights anymore. So why buy? Just rent. Real Estate is destroyed along with individual liberty.
http://finance.yahoo.com/news/Fed-moves-to-help-distressed-apf-14179632.html
The one-week drop in mortgages to purchase homes of 2.9% occurred at an annualized rate of ((1-0.029)^52-1)*100 = -78.4 percent, while the 38.8% overall drop in mortgage applications played out at an annualized rate of ((1-0.388)^52-1)*100 = -100 percent. Can the Fed’s housing market stimulus offset that degree of mortgage lending demand destruction?
BULLETIN
BOEING TO CUT 10,000 JOBS
Mortgage applications dropped 38.8% last week
By Amy Hoak, MarketWatch
Last update: 7:12 a.m. EST Jan. 28, 2009
Comments: 13
CHICAGO (MarketWatch) — Applications filed for mortgages last week fell a seasonally adjusted 38.8% compared with the prior week, the Mortgage Bankers Association reported Wednesday. Interest rates charged on fixed-rate mortgages declined slightly over the week.
Application volume was down 40.4% compared with the same week in 2008, according to the Washington-based MBA’s weekly survey. The survey covers about half of all U.S. retail residential mortgage applications.
The week-to-week drop in applications was primarily due to a decline in refinance activity: Refinancing applications sank 48% for the week ended Jan. 23, compared with the previous week.
Filings for mortgages to purchase homes were down a seasonally adjusted 2.9% compared with the Jan. 16 week. Survey results were adjusted to account for the shortened week, due to the Martin Luther King Jr. holiday.
The four-week moving average for all mortgages was down 10.5%.
So there’s been a lot of talk on here about mobility being important and valuable in today’s economy/job market.
So say you have that mobility (don’t own a home, etc). Would you move to California for a job opportunity in this environment? I’m sure where you’re moving _from_ is an important consideration, so hypothetically assume you’re moving from Seattle. And you’re a computer software programmer.
Curious what others would think about this scenario.
“Would you move to California for a job opportunity in this environment?”
Yes, if it is a sufficiently better opportunity than others available to you (after considering the cost of moving).
And if you do so, and see housing prices bottom out in a few years, I would also buy a home, as buying at the trough always leaves open the option of moving and selling at a capital gain in the future. It’s not hard to figure out when prices have bottomed out, as it will eventually be more expensive (on a monthly payment basis) to rent than to pay a fixed-rate mortgage, just like it was back in 1996.
I guess the question is how you define “better”. And what you consider when making that evaluation. Given CA’s budget deficits, all the proposals on the table for raising taxes…it seems there’s a lot of risk moving there when it comes to what one’s take-home income will actually be.
“It’s not hard to figure out when prices have bottomed out, as it will eventually be more expensive (on a monthly payment basis) to rent than to pay a fixed-rate mortgage, just like it was back in 1996.”
Mr. Bear,
but, but, but… in California, we have the State “renters credit”!
“It’s not hard to figure out when prices have bottomed out, as it will eventually be more expensive (on a monthly payment basis) to rent than to pay a fixed-rate mortgage, just like it was back in 1996.”
It is approaching that in Glendale Az area according to my daughter. Do we believe the bottom is in though?
In the early 1990s recession, home prices kept falling in CA long after the national recession was officially over (for maybe five more years). The latest news is that job losses are happening in all 50 states — hardly a bull signal for real estate speculation…
Would you move to California for a job opportunity in this environment? … And you’re a computer software programmer.
No.
Or I’d think long and hard about it.
My circumstances are different than yours, but I was offered a job in the Bay Area twice in the past year. In my case, it came down to affordability and community ties — but I truly think California is in for a rougher ride than most of us in the downturn.
Maybe you’re OK with pulling stakes again when things really go south. I’m the kind of person that likes to stay put at least for a few years, though. And I’m not sure Cali is the place to do that in the short- / medium-term.
ET - That’s roughly how I’ve been thinking about it. I do think that Cali is in for a rough ride, and really don’t want to feel the need to move again in 2-3 years if things get really bad. The only reason I’m seriously considering it as the job itself is pretty much ideal - the role, the product, the industry, etc. The hard part to weigh/figure out is the things outside the job - the location, quality of life, local politics, and whatnot.
Even if you live in a large city, I would think it is nice to be flexible. I like to live near where I work and wouldn’t want to start a 1.5 hour commute if I were (theoretically) laid off and had to apply all over town. Even a 1 hour commute (10 hours a week) + gas money, is quite an expensive premium on pride of ownership.
+1 on the flexibility.
Far too many people lock themselves in to a specific job and a specific commute when they really should plan more generally. (And preferably a miniscule commute at that!)
Of course, not everyone can do that but I’m counting on the HBB-ers to be smarter than the average mouth-breather.
Would you move to California for a job opportunity in this environment?
It only depends…
As a traveling computer software consultant, I use a spreadsheet another consultant friend of mine made. The factors are hourly rate, state income tax rate, per diem, overtime hourly rate, estimate of amount of overtime hours (kind of difficult), cost of rent in typical upscale apartment, transportation costs, utilities, whether is a matching 401k, whether you can get an ESPP (stock at 15% discount), etc.
The spreadsheet is very useful when you have several opportunities, whether or not they are in the same city or state. You can adjust it for salaried jobs.
Bottom line is income after taxes and expenses - then go for the most for you. Location is not a factor.
Seattlepi.com:
FBI saw mortgage fraud early
The FBI was aware for years of “pervasive and growing” fraud in the mortgage industry that eventually contributed to America’s financial meltdown, but did not take definitive action to stop it.
“It is clear that we had good intelligence on the mortgage-fraud schemes, the corrupt attorneys, the corrupt appraisers, the insider schemes,” said a recently retired, high FBI official. Another retired top FBI official confirmed that such intelligence went back to 2002.
The problem, according to the two FBI retirees and several other current and former bureau colleagues, is that the bureau was stretched so thin that no one noticed when those lenders began packaging bad mortgages into bad securities.
…
Yes, this is true…the Director had a special seminar for all agents…he gathered everyone in a realtime internet video conference and together they analyzed what Warren Buffett was referring to by speaking of: “Weapons of Mass Financial Destruction” …afterwards they setup a special committee, code named: the “Two-Hump Camel”
Yes, this is correct.
And why? Because they were MANDATED by law to looking for FOREIGN terrorists and NOT the “Weapons of Financial Destruction.” (credit Warren Buffet)
And who mandated this? Take a wild guess.
To the grade-grubbers go the spoils. And the grade-grubbers in this case are rabble-rousing parents in Virginia’s Fairfax County. Residents of the high-powered Washington suburb have been battling the district’s tough grading practices; chief among their complaints is that scoring a 93 gets recorded as a lowly B+. After forming an official protest group last year called Fairgrade and goading the school board into voting on whether to ease the standards, parents marshaled 10,000 signatures online and nearly 500 in-person supporters to help plead their case on Jan. 22. After two hours of debate, the resolution passed, a move critics consider a defeat in the war on grade inflation.
Tell me how America will compete with parents like this.
Let’s just give everyone an A, is it any wonder that politicians want to bail out gamblers who made bad decisions. In essence they are giving the C and D students A’s.
Was it Pussycat who was mentioning the arbitrariness of the signifier yesterday?
If you are a lazy teacher, you can just give everyone high marks, because it makes everyone happy. The tough graders are the ones who really care.
Yeah, but that’s because I’m all about the “signified”.
Ah, and all this time I thought you were all about the deconstructive criticism =^_^=
ROTFLMAO
Here’s a revealing site about nationwide college grade inflation - just saw the other day.
In particular check out this graph (preliminary data).
Grades these days are relatively meaningless.
Grades these days are relatively meaningless.
Edison would nod in agreement.
chief among their complaints is that scoring a 93 gets recorded as a lowly B+
When I went to school, 90-93 was an A-, so I can see the parents side on that one point. Grade inflation is a real problem, though, and whoever reclassified the numbers to begin with was just kicking the can down the road.
Born and bred dopes.
(I forgot who says that around here, but it’s been the truth for decades)
With all the money the government is planning borrowing and spending, I’m really starting to wonder what the best course of action is at this point. I’m hedged with some physical, and eft metal, but have the lion’s share of my new house fund in the safest bank I can find. Here are some questions I have:
1. With all the government borrowing and spending, when does serious inflation kick in?
2. With the current state of the California economy, and the people in power who can’t seem to even come close to balancing the budget, would it be prudent to buy a house in CA as an inflation hedge, and if so, what would you consider the most desirable place in the state to raise a family?
3. Would the benefit of owning a house in CA as an inflation hedge be offset by the potential of skyrocking income, sales, and property taxes that the governments may resort to in an attempt to keep themselves afloat?
I know one of the obvious answers is to move out of CA, which we have considered, but we’d like to due to family, business, and sailing interests.
Any suggestions would be greatly appreciated!
If you really want to be prepared when TSHTF, you may be better off with a few acres of farmable land, surrounded by a barb-wire fence.
Why would you buy a house as an inflation hedge? Buy now or be priced out forever? I assure you that the massive oversupply does not make that a risk. So you can sell later for more money? Well, if there is inflation, there is also higher interest rates, and that will drive prices down… plus there is that massive supply/demand imbalnce that will be driving prices down for a long time to come.
Or, are you buying now so that you can pay massive property taxes to help the state not go bankrupt?
Would I buy in CA??? Not even if there was a gun to my head.
Devaluation, not inflation. ZIRP.
When you devalue a currency, wages devalue too.
That doesn’t change the price/rent and price/income metrics.
FAIL. You want to try again?
I didn’t say house prices wouldn’t continue to decrease. I was just saying that you won’t get inflation without wage increases, and the funny money is all being channelled to the big banks, most certainly not J6P.
I BONK your FAIL.
whats the difference between devaluation and inflation?
Child, child, child, you have a ways to go before you “get” it.
We’re talking about U.S. currency, so “devaluation” doesn’t make sense in the normal use of the term (or at least what I consider normal) where a govt or central bank has its currency fixed to another and just changes the exhange rate by mandate. The dollar floats so we can’t really “devalue” it in that traditional, mandated sense.
The way the Fed can devalue the currency is by inflating the supply, no? ZIRP is a target not a policy or mandate, since the Fed doesn’t mandate all interest rates. The Fed sets the target and modifies the supply (inflates) in an attempt to achieve its target.
As I see it, in the context of the dollar, the only difference between devaluation and inflation is a technical one, we inflate to achieve devaluation, and other wise these terms are virtually synonymous.
For dude to specifically say it’s one and not the other doesn’t make sense to me. Considering this is a discussion regarding how a person who owns assets denominated in dollars (or holds actual dollars) should respond to the threat of inflation, making a distinction between devaluation and inflation makes no sense at all.
I suppose there must be a significant part of our monetary policy/management that I am missing. Can you give me a hint as to where I might look for that additional component?
by China not “floating” the currency, they punt monetary policy, unless they don punt. or fake a punt.
China rule #1. dont fake punts.
I don’t think inflation will set in before property prices bottom out. When that time finally arrives RE will be the best hedge against inflation, imo.
From an investment perspective I expect a cornucopia of choices, so I certainly wouldn’t put everything in RE.
As for where to raise a family, my choice would be away from population centers… of course others would have to assess their own requirements, like a local job market, before picking a spot.
“when does serious inflation kick in?”
Sometime after the deflation knocks off. JMO.
Captain Obvious to the rescue.
Maybe. Some people think the fast approaching train is hyperinflation. Deflation may be obvious, but not to all.
The perfect hedge against hyperinflation is a fixed-rate loan.
So why not run out and buy 200 of them? What’s stopping you?
“The perfect hedge against hyperinflation is a fixed-rate loan.”
-
So, I should buy a house after all, err, I mean, I should let the bank buy a house, after all.
FPSS,
Surely you are not suggesting that I am looking for a hyper inflation strategy! Oh, I am so misunderstood………
A loan?
BWAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
I know you’re not. I “get” you reasonably well.
Sometimes pointing out the consequences of “free-flowing ideas” has its own merit.
You joke, but if I didn’t have a conscience or a family - I’d be making tons of money from this mess by doing just that. I’d max out my mortgage, probably take out some more if possible on “investment” houses, take all the money and put it into non-recourse things, and just walk, or perhaps just stop making payments and get a few loan rewrites, and then maybe walk still.
All perfectly legal, just not ethical.
why short ten year bonds?, when the FED will produce a two.
There was a good column on kitco.com yesterday about inflation and deflation. It points out that inflation can happen and is happening even though general prices can be falling (gas, real estate, electronics). The opposite could happen too - the fed could shut down the presses rapidly while prices are rising. Eventually what is happening at the Fed will be reflected in the general economy.
I see deflation in general prices but the Fed is printing money like crazy and keeping rates artificially low.
Wages will rise when the effects of all this printing money gets into J6P’s hands. It could take 3 years, it could take 5 years.
Gold, oil, and commodities will catch up.
“Wages will rise when the effects of all this printing money gets into J6P’s hands.”
I think I’ve just hurt myself laughing. Neither one of those events will ever happen.
Knowing everything that is wrong in this state, why would you want to buy right now?
I want to buy, however, I will wait and see what is going to happen in the next few years.
Soros: ‘Bad Bank’ for Troubled Assets Is Bad Idea
Wednesday January 28, 2009, 11:17 am EST
Yahoo! Buzz Print
Billionaire financier George Soros told CNBC he disagrees with plans to create a new government entity to buy up troubled bank loans and believes former Treasury Secretary Henry Paulson mis-managed the first rescue attempt of financial institutions.
“That (the “bad bank” proposal) will help relieve the situation, but it will not be sufficient to turn it around,” Soros said during a live interview at the Davos economic conference in Switzerland. Instead, Soros said he would create a “good bank” and re-capitalize the good assets.
He admitted his alternative plan is not likely to get support because it too closely approaches nationalization. “The political will to do that is not there,” he said.
As to Paulson’s handling of the first half of the $700 billion Wall Street bailout fund known as TARP, Soros said the money was used “capriciously and haphazardly.” He said half of it has now been wasted, and the rest will need to be used to plug holes.
Although Soros saw trouble ahead, he stresses he did not foresee how bad it was going to get after the “life-changing event” of the Lehman Brothers bankruptcy.
“The storm that started in the financial system has now spread, in a very big way, to the real economy,” he said. “It has fallen off the cliff following the Lehman thing.”
He believes still more must be done to turn the slowing of decline into real economic growth, including the reorganization of the mortgage system, and skillful handling of the international repercussions.
My question:
Does any here believe that the PTB will be able to salvage common shareholder value by doing this for the “to big to fail” entities?
I’ll take that as an emphatic, no!!!
He still believes in the “storm is spreading” paradigm, rather than “eyes opening.”
Mr Soros is most likely net short US banks, and long pussy in Davos.
The common shareholder is screwed.
Can anyone give me intel on
280 North 107th Drive
Avondale AZ 85392
The tools I use in NY to research are no help for Arizona.
Son in law wants to be a knife catcher. My daughter is at least communicative.
Maybe you can offer a “cash incentive” if they wait a year?
There are many ways to skin a cat.
I was thinking of this. Grampa J, the head of the clan that spawned my SIL, offered to give the younguns the downpayment as an incentive to join the fold. They’d be using a VA loan, so it would be an interesting gift to my daughter and grandson to counter offer.
Good people own homes!
Good people don’t do rape their youngun’s financially in their mad rush to join a mania.
Alternate perspective.
Bird’s-eye view
Public data at the Maricopa County Assessor’s office
A man fatally shot his wife, five young children and himself Tuesday after he faxed a note to a TV station claiming the couple had just been fired from their hospital jobs and together planned the killings as an escape for the whole family.
”Why leave our children in someone else’s hands,” Ervin Lupoe wrote in a letter posted late Tuesday on the KABC-TV Web site.
Aah, the joys of home-pawnership.
BWAHAHAHHAHAHHAHAHHAHAHAHAHHHHHHHHHHHH!!!
p0wn3d
lol
Aah, the joys of home-pawnership.
BWAHAHAHHAHAHHAHAHHAHAHAHAHHHHHHHHHHHH!!!
You reveal yourself, once again!
youve eaten and are enjoying the show.
Not mentioned…some of these “bridge loans” were issued to the Amish!
Troubled Times Bring Mini-Madoffs to Light:
“Mr. Cosmo promised returns of 48 percent to 80 percent a year, and none of his investors apparently minded — or knew — that Mr. Cosmo had already been imprisoned for securities fraud. In the end, 1,500 people gave him their money, often through brokers who worked on his behalf.”
http://finance.yahoo.com/banking-budgeting/article/106500/Troubled-Times-Bring-Mini-Madoffs-to-Light
I wouldn’t call $400M to be “mini” in any dimension.
“…returns of 48 percent to 80 percent a year” = mini-me
This entire TARP 123 (and beyond) process is like watching someone with a automobile, whose engine is about to sieze up, pouring fuel additives and oil treatment in by the gallon to try to keep the engine running above 5000 rpm!
Intuitively, it appears that we are about to see our financial cyclinders sieze up, and the “noise” is so deafening, noone seems to see the truth for what it is: we are broke, bankrupt, outta money!!!
I know that many of you expect this financial black hole to turn around and spit out hyperinflation. It does make sense, on the one hand. However I think we are careening toward a complete meltdown of the global financial system. All me need is one more significant shock, of some sort. Maybe that shock is California….
At some point, with the huge upswing in Federal Spending, the World Financial Markets will not be able to provide the necessary liquidity to maintian our spending levels. At that point, the only option is printing money. The challenge that I see is that, if several States come to a dramatic halt (e.g. California) there may not be time enough to print money and get it in circulation fast enough to prevent the meltdown. I know, I know, we are already, in effect, printing money, but it is all being absorbed by the Financial Black Hole of Large Bank Insolvency.
The “financial noise” of our economy is so varied and “cloudy” that I do not see a good outcome until the dust settles. I do not think the Federal Government has the financial resources to prop ‘this puppy’ up for 10-15 years, so that we grind it out like Japan during the gurgling 90s! No, the longer this insanity is perpetuated, and the more cloudy the proverbial financial horizon becomes, the more I expect for there to be a financial storm of epic proportions!
Look for-
1. California to quit providing cash streams to thousands of economic sectors in February and March. Layoffs will follow suit, with perhaps 1,000,000 layoffs in California, alone, in less than six months.
2. Bankruptcies and Bank closures to flare up like grass fires across California, Nevada, Arizona, and then with a bit of delay, Oregon, Washington, and then simultaneously, several East Coast environs.
3. The Federal Government to nationalize everything in their sights. Private property rights will fall by the way-side as Governments sieze assets in order to keep their own programs viable.
4. The emergence of a huge, almost instantaneous “barter” underground economy. As people trade things to survive the short term shocks.
5. Mass migrations, as people abandon homes, and communities in search of “greener pastures” where they can subsist or survive.
6. The complete short term break-down of city, county, and State Governments, as all semblance of financial where-with-all crumbles, and as the respective governments ask for Federal assistance in keeping order and maintaining basic infrastructure.
National Guardsmen face a very promising employment outlook!
No, not a pretty picture at all, but we, like Lemmings on the edge of the presipice, are staring this reality square on!
shane, California is really only that important to….well, California.
The government will simply “loan” money to California. They have the most electoral votes of any state.
Besides, whats 30 or 40 billion more in the TARP universe?
Shane,
This outlook is very scary, but as each passes this might become reality. If you would made this comment about 6 months ago, I would not believe you; but now we are very close to this happening.
I strongly think that the bankcruptcy of California (if a state can go belly up?) will tip this off.
If you have been opposed against gun ownership, well now it is time for you to change. You are going to need them.
Also keep an eye out of the water supply and your access to said supply.
This is going to get ugly before it gets better.
Shane,
It was explained to me a long time ago that there are really only two basic mistakes you can make regarding the economy:
One: You become firmly convinced that “this time is just like every other time”, or,
Two: You become firmly convinced that “this time, it’s different”.
Having said that, I too, do not put current events in the “just like every other time” category. I also believe the current era will be remembered not for deflation or inflation but for the disintegration of the financial system.
The wheels are coming off, the boiler is exploding, and we have run out of track.
This is different from what Americans have experienced in the last 100 years. Coincidentally, the so-called Federal Reserve (a private international banking cartel) has continuously manipulated our economy, currency, and national government for the same time period.
Hey HBBers:
Yes, this is only one of an infinite number of potential outcomes. Who really knows? All I know is that the more cloudy the Government’s attempts to solve the problem, the more apt we are to see a cataclysmic event. Mr. Obama is preaching transparancy, which is important for markets. However, the Government’s own policies are creating so much smoke and mirrors that it is impossible to make “informed financial decisions”.
Guns? I love ‘um. After all, I grew up in Alaska, before the pipeline, and before the money; where individuals had to cope with losing fuel, electricity, water etc. with subzero temperatures, for days at a time. By the way, I would rather be stranded in Alaska, without fuel, at minus 20, than in the middle of Los Angeles, or Detroit, with a food shortage! At least I would know what to do, and would have resources at my disposal.
For our own sakes I hope my scenario, as described above, does not come to pass (or anything remotely close to it). However, the potential is there, and a single “Black Swan” event could send us spiraling in that general direction.
As far as Housing is concerned, all of the economic fundamentals are in play, now. The only certainty is that housing is NOT returning to the pricing levels of 2002-2007, anytime soon! Grandpa’s old house in Montana, with the hand crank well, stand-alone septic, large garden, and windmill sound pretty good, huh!
yes they do sound pretty good if you know what to do with them.
If stranded in Detroit, run.
Looks like turbo tax isn’t the only thing this going to need some training on! LOL!
Geithner’s Yuan Call Rejected as ‘Horrible Advice’
Jan. 28 (Bloomberg) — U.S. Treasury Secretary Timothy Geithner’s call for China to loosen restrictions on its currency was criticized by economists and policy makers at the World Economic Forum.
Allowing the yuan to strengthen would be “economic suicide” amid an economic slump, Stephen Roach, Morgan Stanley’s Asia Chairman, told a panel in Davos, Switzerland, today. “I’ve never seen an economy in recession voluntarily raise their currency. It’s horrible advice.”
Renewed clashes over the yuan threaten to stoke tension between two of the world’s biggest economies and undermine cooperation to counter the global recession. China limited yuan gains against the dollar in July 2008 after the currency rose 21 percent following the end of a peg three years earlier.
“Shouting from Washington to Beijing is not going to make a difference,” said South Africa’s Finance Minister Trevor Manuel on the same panel.
‘This idiot is going to need training on”
‘This idiot is going to need training on”
Exactly how I felt about Cheney-Shrub!
If China were to float its currency, there is no clear evidence that the currency would strengthen. A sound argument can be made that the Yuan Renminbi would weaken.
+1 on this one.
Jim Rogers be d@mned! I see a strong prospect of the Remnimbi weakening.
The current official Chinese policy is to try to weaken the yuan. I don´t have first-hand knowledge of purchasing-power parity, but since the yuan has strengthened over the last 3 years, I consider the current government policy as evidence that further yuan strengthening is likely under free-market conditions.
It is very difficult to measure ‘hot money’ in China, but there is a likelihood that the money would flee and the Yuan would drop 20%. Mr. Geithner was totally off because of money flows.
Demand and supply always beat the motherf*ckin’ cr@p out of fundamentals.
Jes sayin’.
“Demand and supply always beat the motherf*ckin’ cr@p out of fundamentals.
Jes sayin’.”
Oil @ $147 a barrel…gasoline @ $4.60 per gallon = Demand & Supply
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!
oil at 41 and gas at 2.
whose winning the war?
I recently read an article that made a persuasive case that the Yuan will hyper-inflate before the dollar because in order to maintain the balance of trade with the US the chinese must print Yuan to make up the difference. Combined with the fact that Chinese imports are down 20% while exports are only down 3%. This situation will quickly become a choice of losing the Yuan to hyperinflation or dumping the dollar.
At the end of the day, China has more “real wealth” in the form of factories to produce the things we need. So after the money is worthless they will be able to recover much faster than most other countries.
The magnitude of this crisis is on a whole different scale than the great depression. I don’t think the world has ever faced the potential of world-wide hyperinflation of almost every major currency.
Wealth consists of physical and financial capital, plus human capital (labor + entrepreneurship). If we assume universal default, then physical capital and human capital become the primary economic inputs (financial capital becomes a stepchild). In such a scenario, one sees China and Asia gaining relative advantage.
However, disadvantaged economies with powerful weapons may try to employ military force to eliminate or reduce the physical and human capital of others.
This is nothing new historically, it is only the end of The World As We Know It.
There has been a stopped clock end-of-the-world prediction in play for at least the past 2000 years. So far they have been wrong…
As you speak…I see people disappearing before my eyes!
“End of the World as We Know It” has happened many times to many peoples over the past 100 years let alone the past 1000 years. Hyperinflation IS “end of the world as we know it” and “start of a new world that we do not know”.
“So far they have been wrong”
New HBB Award: “Lucy: “Your are a BLOCKHEAD!”
Lucy: “Linus, you’re a blockhead, The Great Pumpkin is not going to “raise out of the Great Pumpkin Patch this year.”
Lucy says: “You’re not elected Charlie Brown!”
Additional comments by: Snoopy & Mr. Cole
Don’t forget Sally: “All I want is what I’ve got coming to me. All I want is my fair share.”
–
Wall Street, Banks, and American Foreign Policy by Murray N. Rothbard [written in 1984]
http://www.lewrockwell.com/rothbard/rothbard66.html
The players have changed over the years but the game has not. Actually, the game has only intensified. The shades of the change of players could be seen in Great Britain of hundred years ago:
“In our golden age the face wears more often the shrewd features of some Hebrew financier.” Brailsford, 1910. (Quoted from Cash Nexus by Niall Ferguson).
I am sorry but I hope that people are not offended when similarities between Great Britain and the US, with time lag, of course, are pointed out. The same also applies to Germany and the US.
Bankers and Wall Streeters took control of the US govt and, thus, the foreign policy in mid 1980s. Things have gone downhill since then and the two largest bubbles of their kind in US history had everything to do with Bankrupters and Fraudsters having the control and exercising it. Anyway, that is my explanation of America’s problems.
Jas
The guys from GS are relentless turds. They keep popping back up after every flush.
“Anyway, that is my explanation of America’s problems.”
Geez Jas, go outside, look around….you forget x2 things…resources & resourcefulness!
America has a genetic reproductive tank that has no match in the history of humans.
“When measured in terms of production, the U.S. economy in 2008 was the best in its history.”
Mr. Casey B. Mulligan
University Of Chicago
Lawd, that is the most embarassin’ thing out of my alma mater!
Is it true? Got a reference?
posted link an hour ago. oh well only 1:5 posts show up - probably my language
No, Ben examines all links.
Crabby Steak to Roger Regnum Delta. Rendezvous @ 11:00am at the the Salty Sliver Steakhouse.
“No, Ben examines all links.”
As well he should…calling: disciple of Rash (itch,itch,itch) Limpbaughs, let loose your “joy stick”… Cheney is safety in Dubai, copy…
Oh no! Team B.O. just got defeated on the all important TV converter box extension bill. His first set back said the reporter. LOL! Who the hell cares about converter boxes.
Yes We Can†.
† Eff’ everythin’ up (shoulda read the real prospectus!)
Pay attention to the notes, yes?
Oh what the heck. I’m tired of waiting. Broadcast it already.
Roidy
“LOL! Who the hell cares about converter boxes”
Since I’m a halfway house to the Amish…I care …looking at my 13″ working color tv from Fedco @ $119.00 as you speak…besides, I’m just trying to “maximize” my initial investment…for the “Long Term”
It’s not as though people haven’t had enough time to get ready for it.
I’ve been wondering if once again, the government is abrogating contracts. They sold the liberated bandwidth, now are those investments in limbo, until/if the government decides to stop backtracking?
It seems the DOW is just floating around at lofty heights, immune to any bad news, but highly receptive to anything that can be deemed positive.
its rallying on the worst, of the worst, cant get worse, I dont see a bottom news.
If you spend that money at Wal-Mart, all the
money will go to China. If you spend it on gasoline it will go to the
Arabs. If you purchase a computer it will go to India. If you purchase
fruit and vegetables it will go to Mexico, Honduras, and Guatemala. If you
buy a car it will go to Japan. If you purchase useless crap it will go to
Taiwan.
And none of it will help the American economy. We need to keep that money
:) !!!
here in America! You can keep the money in America by spending it at yard
sales, going to a baseball game, or spend it on prostitutes, beer or
tattoos, since those are the only businesses still in the US
WRONG, and BORING (which is worse.)
You need to understand what “value add” means.
BORING. NEXT.
It wasn’t intended to be serious, unclench your butt cheeks.
LOL!
BORING. NEXT.
We need to keep that money here in America!
I suggest, that Ben hire you for “marketing”
At least two of the above in the second paragraph sound great to me!!
I hate tattoos! -
“It’s sometimes uncanny how history repeats. Historian Frederick Lewis Allen writes about the New Deal of the 1930s in his book The Big Change: ‘It rewrote a good many of the rules of the economic game as played in America. The New Deal continued to prop up ailing corporations through Hoover’s RFC; made arrangements to prevent near-bankrupt firms from going broke; aided farm owners and homeowners in meeting their mortgage payments; underwrote the financing of new housing enterprises; insured bank deposits…’
“It also went into the business of stimulating the economy directly by ‘building dams, bridges, parkways and playgrounds on a grand scale.’ If FDR walked the Earth again, Obama’s stimulus would look familiar.”
Dr. Nouriel Roubini, the economist who has gained fame as “Dr. Doom,” is roundly criticized for his predications….which have, been mostly correct. One peeved commentator said: “IF Roubini is such an expert , why doesn’t he come up with a solution to the problem , instead of being a part of the problem. He is just another horn blowing in the wind, wanting to be recognized as some kind of I TOLD YA SO, JERK.”
Hold on there, Peeved. Nobody is talking about solutions beyond temporary bailouts with a flood of fiat money. One reason for the monetary mess is that we’ve all been doing business with phony money for years. How can a currency that is not redeemable in anything lead to anything but eventual collapse? However, mention a return to honest money - the money commanded by the U.S. Constitution - and everyone will laugh in your face. Honesty is held in low esteem by the general population. We’re in the process, now, of paying for that moral slippage.
“How can a currency that is not redeemable in anything lead to anything but eventual collapse?”
So far it is redeemable in food, housing, clothing, transportation, entertainment and inflation hedges.
What else did you want to buy?
Cant the US just sell Alaska and New Mexico to pay off all this debt?
Selling land is in some ways similar to but much more economically sense-making than inflating the currency to pay the debt. It reduces the value of existing landholders, but puts productive assets into the economy. I would be in favor of it.
This was a main source of funds for the Treasury when the federal government began, along with tariffs. The United States expanded westward, claiming land and then selling it off via land grant offices, generally for around $2/acre. Land was also used to pay government salaries, commissions, and contracts, as well as reward meritorious service.
Well they can sell off the national parks, just like Minnesota is selling it’s airport and highway system.
Why not North Dakota, or Kansas, or Rhode Island…..Oh ya, they are not worth much, are they? I guess Alaska is probably worth more, in terms of Natural Resources, than any other State in the Union, huh!
Not to mention, it is more than twice the size of Texas! I used to love to tease my Texas Roustabout friends with the line, “hey, if they cut Alaska in half, you guys would number three”!
If you were to flatten out Idaho, it is bigger than Texas, too!
It has the best view of the Kremlin!
Blue Skye –
So as not to clutter the board with more off-topic and foolishly polarizing GHG talk, I posted response to your late night post on the yesterday’s “Slow Moving Train Wreck” thread. Funny, I didn’t even think of the parallels between the slow moving train wreck that is RE and that of global warming/climate change until this morning.
MrBubble
Thanks. I’ll check it out.
Was watching a show on the Chinese economy last night. A few of the highlights:
-10% of LAST YEAR’S college grads in China have still not found work.
-Serious concern about civil unrest, by laid off factory workers being forced to return to the farm. So………
-The government has ORDERED companies to stop laying people off.
Man……whodathunk it would be as simple as that?
Mercantilist societies ALWAYS get banged far harder than their debtor counterparties.
Coming soon to India too.
History provides ZERO exceptions. Why would this time be different?
Unfortunately that principle applies to people as well, not just societies.
Why is it “unfortunate”?
My guess is, he is a saver rather than a consumer. As a result, he’s going to get pounded on his savings while the debtors get to walk away.
In the story of the ant and the grasshopper, the ants forgot to account for spoilige.
Because I don’t like seeing ethical people, including myself, get screwed, and this is true whether the ethical people are smart or not. I’m smart enough to not get screwed in this mess for the most part (so far anyhow), but many ethical people aren’t.
Sorry if that sounds Pollyanna to you FPSS.
I was just being slightly sarcastic, at least about the last two points
The 10% number was eye-opening. I have a kid planning to go to college next fall. Sometimes I wonder if it is worth the bother. The good news (?) is that the economy should be a lot better by the time she graduates in 4-5 years.
China has it’s own set of problems, many of which go unpublicized here. I expect, that they will do what is best for China, even if it means screwing over everyone else.
After the shorts are washed out, the market typically falls like a stone. Is this a repeat?
Yes, though IMO this rally isn’t long enough in time yet. Give it a couple more weeks, or maybe even a couple of months.
One factor I think will be when states start getting their tax returns. There will be a collective “OH CRAP!!!” as they find that their capital gains income is vastly negative. I think April and May are going to be interesting months in muni-land.
Just this layman’s opinion.
Dammit, you posted 11 seconds before me!
You owe me a whisky (or seven.)
Not yet, but yes.
I really don’t know about this stuff… But I’d guess….
This is the “buy on the rumor, sell on the news” pattern involving the bad bank idea.
As soon as the details come out, or it gets held up in congress… watch out below.
You know the congressmen are going to be pressing for the loans in their district to be bought up, then modified to lower principal…
Of course, they won’t admit the price tag for that will be north of $3 trillion.
How soon before the bad bank will be expected to buy bad commercial mortgages? ABS? Corporate bonds? Etc. Etc. Etc.
Haven’t they been throwing kitchen sinks at the market since August 2007? What’s different now that makes them so assuredly call a bottom later this year (for the ???th time)? Or is their bottom call merely a stopped clock prediction which will eventually pan out at some unforeseeable future time?
THE FED
Fed prepared to buy Treasuries
Fed still see gradual recovery in second half
By Greg Robb, MarketWatch
Last update: 3:31 p.m. EST Jan. 28, 2009
WASHINGTON (MarketWatch) - Pulling out all the stops to try to break the downward spiral of the economy, the Federal Reserve on Wednesday moved a step closer to purchasing longer-term Treasury securities if needed to improve conditions in private credit markets.
The Federal Open Market Committee kept its interest rate target in a range of zero to 0.25%, as expected. Rates will need to stay close to zero for “some time,” the statement said.
The lack of action on interest rates was expected, as was the FOMC’s statement that rates were likely to stay low for a considerable length of time.
All of the action in the statement was related to the Fed’s continuing efforts to flood the financial system with money.
The Fed has adopted a “throw the kitchen sink” approach to combating the downturn, which is being fueled in part by weak banks.
Apparently the Davos gloomsters missed the Fed’s memo that happy days are soon to return later this year.
Buried in the economic avalanche
Policy makers to hold balance of power in Davos
By William L. Watts, MarketWatch
Last update: 7:12 p.m. EST Jan. 23, 2009
LONDON (MarketWatch) — A global economic crisis won’t be enough to keep CEOs and high-flying financiers away from the helipads in Davos next week, but the corporate elite will no longer be the stars of the show when the World Economic Forum’s yearly retreat for top executives, economists and politicians gets under way high in the Swiss Alps.
A crippled financial system and the threat of the deepest global downturn since the Great Depression have changed the equation, participants and observers say.
“This is not just another Davos,” said Andy Stern, president of the Service Employees International Union, the large and powerful American labor unio
Oddly, pulling out the stops does not make pushing on a string any more effective.
We HAVE to get the banks lending again…. Oh really? To WHOM? The people aready burried in debt?
We have to get the toxic assets off the banks’ balance sheets… And, put them where? And, after the government has bought them up at overvalued prices, how do we get the money back out of the economy should inflation become a problem?
We have to get people back to work… Oh really? Doing what? There is too much supply of everything and not enough demand of anything. Are we going to put people to work digging and then refilling holes?
Seriously… What are all these stops that have been holding them back from pushing on that string?
Are we going to put people to work digging and then refilling holes?
—
As a husband whose wife is addicted to flower beds, I have experience in this line of work. I say go for it. It would seriously crimp the national wasitline.
Wouldn’t be cheaper to put some of these bad bankers on the dole rather than create a bad bank?
After the S & L crisis, bad bankers got banned or went to prison. This time around, they’ve got the cajones to pay themselves ‘retention bonuses’ and fly around in half a billion dollar jets.
What’s more, what sense does it make to you create a bad bank and leave all the bad bankers out there? Pretty soon, they are going run amok again. At a minimum, purge the bad bankers.
I’m all for the bad bank idea… IF like the RTC, all the banks that it buys assets from are put out of business and liquidated. We buy the assets for the minimum needed to make the government insured depositors whole.
But this idea of getting debt flowing again???? INSANE!!!! There is already too much debt.
My sentiments exactly-
Allow the failure of the big banks (already insolvent).
Allow the debt to vaporize, or be paid down, in the wake of bankruptcies and failures.
Use available resources to help people get started again. Forget about propping up housing prices. Let the markets clear for “Pete’s” sake!
“But this idea of getting debt flowing again????”
Do you guys prefer the ‘total economic collapse due to debt implosion’ alternative? Or is there another alternative I am missing?
P.S. Financial engineering par excellence:
Create a crisis so ginormous that the only possible recourse is to use $1.5t+ in freshly printed monies to fix everything.
It seems this crisis was simply “deficit spending” by the private sector. They were spending money they didn’t have.
The world is so used to the to the government’s deficit spending that having the government absorb all the bad loans doesn’t seem like such a ridiculous idea to many.
“The world is so used to the to the government’s deficit spending that having the government absorb all the bad loans doesn’t seem like such a ridiculous idea to many.”
It’s so egalitarian — rich guys and big companies spent themselves into unrepayable debt, and now that they clearly cannot repay it, the Fed & FDIC will relieve the lenders that loaned the bitter fruits of the grim harvest they sowed for themselves. Somebody else will get to deal with the burden of toxic assets…
As I understand it, the good bank-bad bank theory is that if a bank is split into two parts, and all the bad stuff is consolidated into a “bad” govt bank, what’s left is a “good” private bank.
That good bank can then work freely with other good banks. They suddenly have reason to trust each other again. And then they can attract depositors, sell loans and mortgages with confidence.. and investors can buy those mortgages… and get the money flowing.
Sure they will lend.. that’s what makes the business (think jobs)world go round. But there’s absolutely no reason to think Good Banks will necessarily fall back into the stupid lending that almost bankrupt them.
We “good” citizens of the USA then own lots of “bad” stuff.. In time most of this stuff will be sold off at a loss.. but in the meantime we have jobs and can put food on the table.
hey.. lay off.. I started out saying it’s theoretical.
I was just listening to Bill Siedman on Krudlow. He argues RTC2 could take control of insolvent banks without pausing banking operations. It wipes out shareholders, liquidates bad assets, then sells clean bank to competent managers. The result is a stronger banking system.
The problem is no one has the cajones to wipe out shareholders. Instead, they prolong the economic pain and jeopardize the entire financial system by protecting incompetent investors and management teams.
“The problem is no one has the cajones to wipe out shareholders.”
Isn’t that what was done to AIG, Wamu, etc.?? The PTB has already made it’s test runs, hasn’t it??
at 98% off, its never been a better time to buy.
I like Seidman’s ideas. The shareholders are wiped out. The bad assets are liquidated. The clean bank gets auctioned off to competent managers. The bond holders get the proceeds. The financial system gets stronger with each cleanup.
Under the current hodgepodge no one knows the good banks from the bad banks. As a result, they all get punished.
i heard someone compare this with the savings and loan crisis, and conclude that S&L solutions will work. While the outcome was similar, there are plenty of differences with the Bubble years, including some opposites.. I think the fed was raising interest rates just before things went south.
Who would envy those that must decide… the consequences are huge. Wish them success but watch out for #1.
DAVOS, Switzerland (Reuters) - China and Russia blamed debt-fueled consumption on Wednesday for massive financial collapse and called for global cooperation to repair the world economy.
“The existing financial system has failed,” Putin told business and political leaders holding their annual World Economic Forum in this Swiss ski resort.
Growth was based on greed where one center printed money without respite and consumed wealth, and another manufactured cheap goods and saved money, he said.
“China and Russia blamed debt-fueled consumption on Wednesday for massive financial collapse…”
What about the debt-fueled consumption on Sunday, Monday, Tuesday, Thursday, Friday and Saturday? One should not just focus on Wednesday spending…
The existing financial system has failed,” Putin told business and political leaders..
Such a convincing argument! But before falling into ranks and goose-stepping behind that esteemed KGB leader, we must wait on pins and needles to see what jewels of economic wisdom might come from Ahmadinejad, should he open his pie hole.
Get your head out of the sand and behold the financial destruction around you. The subprime lending sector is gone from the map, as are all the major Wall Street investment banks. California’s unemployment rate is 9.3%, increasing recently at a 6pct annual rate. Unemployment is climbing in all fifty states, and home prices are dropping at an unprecedented rate. The Fedury has tried one economic rescue plan after another back to August 2007 to no avail.
Other than those and a few other inconvenient truths, everything is rosy…
Well, I’d be the last one to argue with all that.
Widespread fear and anxiety is the key that will someday soon open this door to opportunity.
Putin is backstage at Davos with Roubini gettin massages, sipping PimpJuice outa tha crunkcup, and licking the tuna…
occasionally lets out a whale blubber queefe./
Silent,
and Deadly.
There has never been a better time to buy a home.
Financial Times
Economic pain to be ‘worst for 60 years’
By Krishna Guha and Alan Beattie in Washington and Chris Giles in Davos
Published: January 28 2009 19:23 | Last updated: January 28 2009 20:48
The world economy will this year suffer its worst performance for more than 60 years with a serious risk that 50m people will lose their jobs, international organisations warned on Wednesday.
The warnings came as the Federal Reserve expressed fresh concern about deflation, noting that the US economy had “weakened further” since its last policy meeting in December.
Spoke with a Rep from Canada…..yeah….Canada.
bought 3 condos in Florida for 90k, last month.
….guy knows Im long Westport.
That settles it, Im buying both lots across the lane, AND I’m buying the house three doors down….90k.
I got a 2 holed corn picker I need to boot out and charge rent to.
Two salesmen from Citibank just knocked on the door of my business. (Ignoring my “no soliciting” sign).
I thought they were missionaries from the way they were dressed.
“Jeremy Zhang” handed my his card and an advertisement for buisness checking.
“How is your buisness doing,” he asked.
“The real question”, I answered, “is how is YOUR buisness doing?” before telling him to never come back again.
I had a guy drive 300 miles, walk into my office and wanted my nuts and bolts bidness.
That people; is HARD @#$%in times.
Did you tell him about the “internet”?
Bank of America is planning to defer bonus payments to some investment banking staff this year – a move certain to inflame tensions between its employees and officials of newly acquired Merrill Lynch, executives familiar with the matter say.
…
Word of the deferred payments has sparked anger at BofA’s capital markets operations in New York and London, which were already facing the prospect of layoffs of up to 40 per cent as they are combined with similar units at Merrill.
BofA staffers are unhappy with the disparity between their bonuses and those earned by staffers at Merrill Lynch. BofA staffers, on average, earn far less than their Merrill counterparts.
Apologies, that was from the FT.
Oh, the humanity. There is no way BofA survives this kind of cultural upheaval.
Good. F’ k ‘em.
Have I mentioned I hate Bof In…,er America?
whats yer thoughts on the Bank of Italy, or has that been outsourced to Germany?
gotta go to bed.
nytol…fist fulla pills and a 12 pack of bud is bettern cuttiner @#$%in head off.
Atlanta condo market collapses:
Demand for condominiums in intown Atlanta has “evaporated,” with just 66 new units sold in the second half of 2008, according to Haddow & Co., a local real estate consulting firm that’s been studying the condo market since 1999.
That’s an 88 percent dropoff from the number of units sold in the first half of 2008. Just 645 new condos sold all of last year — 76 percent below the annual average of the previous eight years.
http://www.ajc.com/business/content/business/stories/2009/01/28/atlanta_condo_market.html?cxntlid=homepage_tab_newstab
Violent crime is increasing in metro Atlanta as well, and gun sales are responding in kind. There are reasons to think it is just the beginning.
Rents are dropping dramatically. In town for a one-year job and rented a gated, guarded one bedroom w/great amenities and location for $607 on April 1,2008, down at least $150 from prior prices, and now the same apt rents for $538. Friends were here on 2 different occasions recently to look at apts and both times current tenants were in the leasing ofc arguing for rent reductions based on the new prices. Guess all those condos coming on the market will further change the rental picture, as some new condo buildings (Mezzo, for example) have already been temporarily converted to rentals.
Atlanta Condo Sales Collapse:
http://www.ajc.com/business/content/business/stories/2009/01/28/atlanta_condo_market.html?cxntlid=homepage_tab_newstab
Atlanta is different.
-I’ve actuall written like four different posts….didnt have the heart to post any of ‘em.
The Airport was enough. I simply could not do a year on the ground, ever. not at any price, not gonna happen in my lifetime.
clyde