Bits Bucket For February 5, 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
Location:Northern Arizona, United States
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Senate OKs $15,000 tax break for home buyers…
WASHINGTON (AP) — The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Obama’s recovery plan.
The tax break was approved without dissent and came on a day in which Obama pushed back pointedly against Republican critics of the legislation even as he reached across party lines to consider a reduction in the spending it contains.
“Let’s not make the perfect the enemy of the essential,” Obama said as Senate Republicans stepped up their criticism of the bill’s spending and pressed for additional tax cuts and relief for homeowners. He warned that failure to act quickly “will turn crisis into a catastrophe and guarantee a longer recession.”
Democratic leaders have pledged to have legislation ready for Obama’s signature by the end of next week.
While they concede privately they will have to accept some spending reductions along the way, conservative Republicans failed in their initial attempts to force deep cuts in the bill.
I haven’t read the actual bill, but no where is the AP article does it state the credit does not have to be paid back. There is always a lot in the fine print.
I know that’s one thing originally asked for - that it not have to be paid back. Presumably since it’s stated that this will cost $19 Billion that means that it won’t have to be paid back, I would imagine.
I think this probably will serve to slow the bleeding in the housing market, which is a bad thing of course since it’ll be that much longer before things return to normal. It’ll encourage more knife catchers - and believe me there are plenty out there now.
“It’ll encourage more knife catchers - and believe me there are plenty out there now”.
Absolutely, it will encourage many folks to get out there and buy a house.
I wonder what ‘they’ will do about the millions that would jump in if it were not for that pesky little thing called good credit, along with the down payment requirement.
Once again it is one more attempt to stave off the inevitable. Central planning will continue to mangle up a market that wants and needs desperately to correct it self, and it will!
“I wonder what ‘they’ will do about the millions that would jump in if it were not for that pesky little thing called good credit, along with the down payment requirement.”
Ugh.. I think we already got all those folks with the last round of “stimulus” from 2000-2005. They already all bought, and are now foreclosed, or about to be foreclosed. We tried the “no credit, no income, no downpayment, no problem” lending system. It pushed “ownership” to record highs. And it broke the back of the global financial system.
“Absolutely, it will encourage many folks to get out there and buy a house.”
There are still a few impediments to clueless spendthrifts that will temper any mad rush to buy shacks. We still have banks viewing risk very much differently than they did circa 2002-2006. I have no doubt that NARscum will market this price skewing abomination to the hilt and many will view the credit as downpayment in lieu of cash.
“We tried the “no credit, no income, no downpayment, no problem” lending system. It pushed “ownership” to record highs. And it broke the back of the global financial system”.
You’re right we did try that!
I would guess next up will the the return of the down payment ‘assistance’ program, along with a revamping of the credit rating system.
From what I am reading in order to get a standard 30 yr.mortgage most lenders are requiring a credit score of 700. I wonder what percentage of the population has a 700 or higher?
” wonder what percentage of the population has a 700 or higher?”
Me!
…but then I pay my bills and stuff, so wudda I know?
Groan. The credit scoring system punishes those that do not have and use debt.
Dave Ramsey has it right: it’s your “I love debt score.”
And they use this in hiring!
It is a pain in the neck, but it isn’t that hard to get and keep two credit cards, using them occasionally and paying them off right away. It keeps your credit score up where it belongs. Of course, if you are paying off student loans, you don’t even really need to do that.
Groan. The credit scoring system punishes those that do not have and use debt.
Thinking those that have or use no debt don’t care nothing bout no credit scoring system
I plan to pay cash, but FYI there are still a few lenders doing manual underwriting…
I can guarantee they are not TARP recipients…
Manual underwriting: verified income, DP, credit report (not score) gone over with a comb for outstanding debt and payment history, traditional standards apply, actual appraisal (not Zillow–yeesh).
I didn’t have much credit. I had a car that I paid payments on 100% all the time. 0 lates. One issue with Verizon threw my score down 150+ points. Disputing it has been an insane hassle.
I’ve got cards now. I pay them off in full. I find that I still get dinged. Every transaction with them is money in the banks pocket.
With a low credit score, your insurance rates go up.
I couldn’t qualify for anything when I worked for NASA (via contractor) and had zero debt and zero lates. But every kid on a college campus without a job was offered debt without worry.
Don’t worry - that type of behavior will be outlawed in the future, I am sure, since it does nothing to promote a debt-serf society.
“I can guarantee they are not TARP recipients…”
Why would a TARP recipient bother with careful underwriting, given the move underway to make them whole on their gambling losses?
Exactly. I’m in the market for a house ~16 months from now, and this is terrible news for me down here in FL. Yes, I might be able to take 15K from the govt. But I also might not be able to buy on my schedule because morons are going to jump in and become the next round of foreclosures.
I think it’s an awful idea to extend this to non-first time buyers. What nobody seems to realize is that the first time buyer is the ONLY person who can take inventory off the market. Those using this credit to move from one home to another do nothing to fix the fundamental problem (that we built 10X the needed amount of homes in FL, for example). The sooner this is understood, the faster we can move towards a real solution. Let the prices keep falling, there are first time buyers out there who are waiting in the wings (well, about 100 of us, and we all post here, but so be it!).
If you are willing to subsidize a good, it’s price will reflect this: real value + sub = current price.
If you take the sub away in two years… real value = future price.
This is a subsidy for current sellers, current buyers are just passing along the fed goodies.
I can’t wait to start looking again at housing on Jan 2 2010
“What nobody seems to realize is that the first time buyer is the ONLY person who can take inventory off the market.”
That’s the problem with most of these measures to stimulate buying of houses. They make no distinction between those those that already own and want to refi or buy a different house and those that want to buy for the first time. You can’t stabilize prices until you stabilize inventory. House building must stop and prices must fall sufficiently to allow non owners to buy. Until then, prices will not stabilize.
“I can’t wait to start looking again at housing on Jan 2 2010″
I am sure next year’s subsidy will be even larger.
We are rapidly heading towards the Dutch model, where people’s taxes are directly taken from them to prop up absurdly overinflated housing prices. That model results in complete economic collapse in the long run, but it could add years and years to this recession/depression and keep housing unaffordable for a long time.
“What nobody seems to realize is that the first time buyer is the ONLY person who can take inventory off the market.”
Exactly and I know of at least 500,000 people who aren’t going to help whittle down that 2,000,000 inventory.
Try again, blog engine has been eating a much higher then normal number of my posts.
Exactly. I’m in the market for a house ~16 months from now, and this is terrible news for me down here in FL. Yes, I might be able to take 15K from the govt. But I also might not be able to buy on my schedule because morons are going to jump in and become the next round of foreclosures.
I think it’s an awful idea to extend this to non-first time buyers. What nobody seems to realize is that the first time buyer is the ONLY person who can take inventory off the market. Those using this credit to move from one home to another do nothing to fix the fundamental problem (that we built 10X the needed amount of homes in FL, for example). The sooner this is understood, the faster we can move towards a real solution. Let the prices keep falling, there are first time buyers out there who are waiting in the wings (well, about 100 of us, and we all post here, but so be it!).
Why are they calling it a credit? Just word games I guess, if it is indeed a hand out.
because if you do not pay $15K in taxes, then you cannot get a $15K tax credit.
..they’ve gotta call it something.
A $15K tax credit would be tapped each year. If you owe $8K in income taxes the year following your purchase, you pay the IRS zero. The remainder of your available tax credit is $7K, to be used the following years.
It’s not a hand out to someone who pays no taxes..
By the way, I fully support the “tax credit” because it is a way for people to reduce taxes that they don’t owe in the first place without fear of illegal IRS prosecution.
Sure it only helps knife catchers (they need all the help they can get), but that is beside the point. There are many on this board who seem entirely to happy to promote increasing taxes on those in the real estate industry or whom “profited” from it. They promote eliminating the interest deduction and other government sponsored tax perks that favor housing.
While I do not agree with the favoritism shown, I cannot condemn any action that reduces taxes. I only wish they would give everyone a 15K tax credit.
The sad thing is that the true measure of taxes is how much money is spent, not how much is collected. So far Obama looks to be the biggest tax hiker in history with plans of running 1.5T deficits (that translates into about $5K for every man,woman, and child in our country or about $13K per average household). I expect that before 2009 is over the actual deficit will be higher because the government is always over-optimistic on their projection of the economy and therefore tax revenue will fall more than they currently anticipate.
Congress should call it the “Smoke and Mirrors Loan”.
Cause just like the ‘gimme’ that george “gave us” , it
surely will come off 2008’s tax filing as a loan given against
this years taxes. Just like the first time they did it…
West Wing show did a bit on that one with the “pres” telling his aide, it was only a loan.
It’s good to slow the bleeding in the housing market, and it’s good to encourage knifecatchers to commit their money. Money is destined be committed, destined to be sacrificed; it’s just a matter of whose money it is.
It’s better if this sacrificed money is from knifecatchers than from taxpayers.
It’s not that simple though.
A. $15k of that is from the taxpayers. Or more accurately the general population through inflation - who really believes that the federal debt will one day be paid off via taxes? Not me. That pretty much went out the window starting with Reagan.
B. This act of encouraging knifecatching will prolong the downturn, which in turn will surely result in additional “stimuli” - e.g. see Japan. All of which we will have to pay for, one way or another.
No, things will be much cheaper for us all in the long run if this stimulus crap never happened.
well, the $15K is never paid to the govt.. never reaches the govt. It’s not being taken from taxpayers and paid out to other tax payers.
Taxpayers who buy homes and qualify are keeping it in their own pockets and it will eventually be spent somewhere in the economy.
But rest assured that govt will somehow extract it’s pound of flesh and make up for the “loss”.
Evidently, you can pump and dump anything from stocks, houses and tulips at highly inflated prices with Gov’ts and businesses Econonic Blessings.
The problem, reality, arises when the consumers slowly recognize that the stock price is total crap, the 10 x income house isn’t worth the price of the shack and a cute little colorful tulip is in fact ..just a plain old dime a dozen frigging plant seed.
“Welcome to America REALITY”…you are going to be one MEAN Bitch in the up coming years… regardless of what Business and the Gov’t TRYS to do
‘…just a plain old dime a dozen frigging plant seed.’
Tulips grow from bulbs, Mr. Brown Thumb.
Actually, you can produce a tulip from seed, but it takes a looonnnng time to make a flower. I tried hybridizing daffodils from seed, just for idle interest, to see what happened, and it took 5 years for the little fat black seeds to make a bloom, and you know what? They looked like the first daffodils. Good thing I hadn’t paid too much attention, or I mighta been grumpy.
And speaking of tulips, mine are starting to emerge! OooooH! I can’t wait! And for those of you who got to hear incessant Olychatter about my tulips last year, and yada yada yada? Guess what! Yer gonna get the same treat all over again this year! Hooray!
Hahahahahaa!
It may not “slow the bleeding.” Remember, there are all those houses being held off the market. If the limited time offer motivates sellers as well as buyers, we might have some price discovery, and an accelerated decline.
If that means we get to fair value faster, however, that’s a good thing. And at least the money is going to younger generations looking for a house, now the overly entitled sellers.
From what I am reading in order to get a standard 30 yr.mortgage most lenders are requiring a credit score of 700. I wonder what percentage of the population has a 700 or higher?</i?
Actually the majority of people have a FICO above 700, the average as reported by Fair Isaac is 720.
Now does this mean that I can buy one of them houses in Detroit for $1k and make a cool $14k before refusing to pay the property taxes and having the city take it away from me?
I am sensing a money marketing scheme!!
$15K is only for a house that is $150K or higher. Otherwise it is 10% of the selling price. As per an NPR report this morning - take it with a grain of salt. I find their tax analysis to be occassionally oversimplified.
$15K or 10% of pyrchase price, whichever is LESS.
RE: haven’t read the actual bill,
Go read Dan Henniger’s column in today’s WSJ.
(bring your vomit bag)
‘(bring your vomit bag)’
I always keep mine handy, for just such eventualities.
NY Times
Senator Johnny Isakson, Republican of Georgia, a former real estate broker, who was the prime sponsor of the homebuyer credit, said it was modeled after a similar, $2,000 homebuyer incentive that helped lead the country out of recession in 1975.
The tax credit would give buyers 10 percent of the price of a primary residence bought within one year, up to $15,000, and is intended to stabilize plummeting home prices, which caused a wave of foreclosures and led to the near collapse of the financial system as Wall Street firms wrote down billions in mortgage-backed assets.
The timing is interesting in that with the approach of another spring, one has to wonder how much of the phantom inventory this will entice off the sidelines.
Maybe many sellers will see this is their last good chance to get out and swamp the system?
I highly doubt, Johnny, that a 2K credit helped “lead” the country out of much of anything, much less a recession.
I agree, although back when VWs were advertized as “Still less than $2,000″ 2k was more money than it is today.
Yeah–five years of stagflation, then the 1980 depression?
Heckuva job, Johnny.
Well, I will be renting for the time being. And piling up cash. (The financial markets and I aren’t seeing eye to eye right now.)
This stimulus actually did something for the economy today.
I’ve been wanting a new guitar amp for about a year. Done lots and lots of research.
I figure since the financial system is trashed and that since I failed to participate in the great housing Ponzi scheme of the ‘naughts and hence forth am branded with a scarlet letter “R”; it is time for a new amp.
So I bought one this morning.
Oh the wife is gonna be mad.
speaking of stimulus, wife and I got a $50 amazon gift card. I says, hey, wasn’t that Bach St. Matthew’s Passion 2 disk recording about $50? Yes, yes.
So we look on Amazon… floored by prices… $13-18 new. Yes, USD. Even a Leonard Bernstein recording.
Now we are trying to figure what’s in English or German… I want it in German.
Ha! I bought a new guitar, myself. One thing about globalization, you can get an amazing guitar made in China now for ridiculously cheap. Getting one like this would’ve cost a couple grand 20 years ago (Of course, it would’ve been made by American luthiers, too).
There has been massive deflation in guitar prices. Hell, for less than the cost of the game console and setup to play Guitar Hero, kids could buy a guitar and amp combo and actually play a real instrument instead! The guitar and amp starter packages are running $199 or so now. When I bought my first cheap Squier strat and Peavey Rage practice amp in high school it cost me twice that.
There must be some kind of amp flu going around. I recently bought a Mesa Express 5:50.
What a coincidence! I once rode on the 5:50 to Mesa.
you guys so funny. hahah!
How do you guys put those smiley faces/icons on here anyway?
Guess I will have to ask in person in Vegas..might be able to attend..fingers crossed.
: - )
like this
? I hope it works.
Thanks Skip
Notagator,
Try looking even farther on Amazon. There are boxed sets of classical recording you can get for under $1 a disc - and many are outstanding!
Try the Brilliant Classics label recording of the COMPLETE works of Bach, or Mozart. Something over 100 discs for about $100. I’ve got the Mozart set and it’s great. Every symphony, concerto, sonata, quartet, opera: everything.
I’ve got a complete set of Beethoven on Sony Classics label - Amazon had it for only $25 for a 60+ CD set a year ago.
And this is going to have an impact how? How many out there would buy a house right now? I do not doubt that some people that have “safe” jobs that are union backed would do so, but at this point in time, there are far too many large layoffs, and even those “safe” jobs are not safe any more. Towns around me are talking about laying off employees, including teachers.
If you do not have an income, any mortgage is too much. If there are more houses than buyers… Then prices will keep on driving down…
I just got an offer accepted on a decent house in Miami. Older 2/2, 1590 sqft in a nice neigborhood. The bubble price was $430K when it last sold in 5/06. Then it went into foreclosure, back on the market in 6/08 for $240K after several price cuts it ended up at $110K. With 10% from Uncle Sam the whole thing costs me $99K. So why would I wait when I am paying $1400 rent on a 2/2 that’s smaller and in a crappy neighborhood. Not sure how other markets are, but here in Miami some foreclosures can be had for less than what rent payments are. Economically it makes sense to buy now in Miami.
Here’s the MLS if you think I am making this up: M1246820
It makes sense if you can afford it, but here is the kicker… My neck of the weeds is stuck in perpetual 2005 mode… I had high hopes for MA, but it has sorely disapointed.
The good thing for me, is that I am highly mobile, and could accept a job right now most anywhere. That is something that would tip the balance for me in the next couple of years in favor of renting.
As I said, not sure what the market looks elsewhere. In Miami you still have plenty of private sellers that are holding on to 2006 wishing prices but about half of all inventory out there are foreclosures at various levels of discounts. The condition of the properties varies from nice to tear down.
Hey Penny, stuck here in Ma with ya. Houses that I believe to be 100K overpriced continue to sell regularly Albeit at a discount but not nearly the discount I had in mind.
I just put in an offer for REO. Last sold early 06 for 699. On now for 440. I offered 360 and they laughed at me. No way going under 400 they say. Oh well.
You guys in MA got the NARscum owned BostonGLOB working against you. There shouldn’t be any question of the WarrenGroup influence over the editorial dept. by now.
Too bad it’s not Elizabeth Warren…
Patience. I know it seems like a long time, but it’s only three years past the peak. Not every market will crash fast, but every market where house prices aren’t in line with incomes will crash.
Just make a commitment to pull yourself out of the market until 2011. Then that house you offered 360 on will be 250.
Mike in Miami - I’d be buying, too, if I lived in Florida. Houses are back to 1990s levels in most places.
Here in the Rocky Mountains, it’s still 2006 prices everywhere. Fault lines are showing, inventory isn’t moving, but realtors are still of the belief that houses are worth no less than a 10% discount of wherever peak was. Whatever, it’ll come down too, just gotta wait. Realtors are getting hungry and they’ll stop taking overpriced listings before long.
http://www.bloomberg.com/apps/news?pid=20601206&sid=a8mdg7z0u7Dw&refer=realestate
‘I just put in an offer for REO. Last sold early 06 for 699. On now for 440. I offered 360 and they laughed at me. No way going under 400 they say. Oh well.’
Hey, Wantsout, let us know when they call you back begging to take your 360K. And then be sure to tell us how you cruelly reply, ‘Oh, no, NOW I’m offering 300….’
HAHAHAHAHa!
“It makes sense if you can afford it, but here is the kicker… My neck of the weeds is stuck in perpetual 2005 mode… I had high hopes for MA, but it has sorely disapointed.”
That’s Maryland in a nutshell as well. Gutted dumps in the city still sell for over $10,000, 90-old houses in floodplains sell for close to $300,000, etc. Nothing is remotely reasonable when based on incomes, and the slide is taking forever.
Olympia, I’m a stubborn old b@stard and have done exctly that to spite myself.
Similar story but a year ago I offered 440 for a home on a river asking 539. They came back 9 months later trying for 460 and some incentives. I told them NO it was now 420. They eventually sold for 440 11 months after my original offer.
‘Olympia, I’m a stubborn old b@stard and have done exctly that to spite myself.’
Good on yer.
It looks like you got a good deal and will most likely be worth it. The way it could backfire is if rents and house prices both drop enough to make your deal seem expensive. I’m thinking at $99K though you won’t have much to regret.
Sure, we are in a deflationary environment. Rents will drop, not ifs, ands or buts about it. Especially with something like 50000 empty condos. How much will they drop? Hard to say. But at $99K I don’t stand to loose more than a hundred grand
Good for you Wantsout !
But at $99K I don’t stand to loose more than a hundred grand
I have to share the joy.. I made a smiley face. yessssss
So far 2 fun/good things happened for me today. This is one of them..hehe. I know. I can get excited about the tiniest things..
the other thing was bigger/more important.
No comment.
‘the other thing was bigger/more important’
Does this warrant a ‘nyuk nyuk’?
Mike,
That’s great news, I’m very happy for you. At 99K, as long as the whole thing doesn’t fall through the floor of the earth, I think you did just fine! That’s under 100/sq/ft, and less then 1/4 the last sale price (OMG!).
The only thing I would say is that “in some cases” it makes sense to buy in Miami. There is still a ton of inventory in Miami, and a ton of sellers with their head in the clouds. We have the same thing up here in Palm Beach. I do see some deals, and some places that I will be looking more closely at in the next few months. But there are still FAR too many homes at 200-300/sq/ft in developments that are in the middle of no-where.
But, again, congrats. And, your absolutely right, economically (given your numbers), I don’t see much/any downside on your deal!
One thing. Let me/us know what happens with the taxes. I’m sure you’re going to have to appeal about 100 times because the appraiser still has the value at 300K, and you just bought it at 100K. I’m just curious what your experience will be like trying to lock in the lower base price for SOH. I am very concerned about this, I know people who are in a fight with the appraiser right now who just bought. The appraiser says the house is worth 800K. They JUST bought it for 300K. The difference in taxes there is ~10K/yr, for the REST OF THEIR LIVES (because of SOH). That’s a really, really big deal, and something that they need to sort out pronto.
How on earth can you buy something on the open market for 300K that’s actually worth 800K? The sale SETS fair value. The appraiser up here is a real piece of work.
I’ve thought about that. One strategy is to put the house back on the market with a realtor, say for $170K. Then after nobody makes an offer (or much lower offers than $170K) for a year you can use the MLS record to claim that the market value is certainly less than $170K. The problem is that taxes for 2009 are based on the 2008 sales. So it won’t really be until 2010 when the really big drops in the comps will take hold. I also suspect there’re some case action lawsuits rolling towards the county appraisers.
This is why I will also wait in Florida. Looks like I’m setting down roots for a while (b/c of work), but in no rush to buy because I do NOT want to spend hours of my time fighting the appraiser.
I want to be able to buy for $40k, which is only $15k taxable… Johnny Johnny thinks I shouldn’t be able to buy for that little, so he put in this “up to $15K” credit. Of course, you realize this “incentivizes” the big earner/big spender class big time (from econ point of view, this is rational, but not from social pov), but it only puts houses out of reach for po’ folks like me. I don’t even pay $5k taxes a year, and I don’t intend to spend $150k on a crappy GNV shack. The only houses worth that much or more are in Haile and that would mean buying a car to get to work–you can see that “cost of upkeep” would be well above my current annual rent, never mind opportunity cost on my money and necessary mortgage!
Not just no… haaayyyyeeeellll no!
Sounds like a decent deal.
What’s the “10% from Uncle Sam”? Is that the tax credit thing? If so - are you under the existing rules where you have to pay it back? Or are you holding off for the new rules (I think) where you don’t have to?
FWIW - 70% off (what you’re getting) is still unusual in Miami. Case/Shiller has Miami in general down 40% or so. So it sounds like you got a good deal and it does sound worthwhile, though of course depending on your situation.
County Taxes:
2008 Taxes:
Date Applied Register/Receipt Amount Paid
11/21/2008 LF /0000667 8298.46
3/1
Floors: 1
Living Units: 1
Adj Sq Footage: 1,590
Lot Size: 10,530 SQ FT
Year Built: 1937
—
—
FEMA
FEMA 12025C0093J
Not in flood zone
—-
—-
COMPS pre bubble:
54 NW 104 ST
Square Feet 1416
Year Built 1941
Bedrooms 3
Bathrooms 1
Month of Sale 8
Year of Sale 1998
Sale Amount $97,000
Address 67 NW 103 ST
Square Feet 1182
Year Built 1935
Bedrooms 2
Bathrooms 1
Month of Sale 3
Year of Sale 1998
Sale Amount $72,000
Address 25 NW 104 ST
Square Feet 1498
Year Built 1948
Bedrooms 2
Bathrooms 1
Month of Sale 9
Year of Sale 1997
Sale Amount $110,000
—-
—
Outside of city limits of Miami Shores
—
—
Census(1999):
White
16.8%
Black or African American
71.1%
Hispanic or Latino (of any race)
18.6%
High school graduate or higher
51.0%
Economic Characteristics - show more >>
Median household income in 1999 (dollars)
$21,775
Families below poverty level
29.3%
Individuals below poverty level
33.8%
Median value (dollars) (for 1999)
78,100
What exactly are you trying to sell us Mike?
—
THIS IS A HORRIBLE DEAL.
—
I’ve seen dozens and dozens of such houses.
What’s it going to cost to just make it habitable?
This is a 1939 house, so it was well built, but, if it has not been maintained, it’s a nightmare… flat roof.
–
I cannot overemphasize what a truly horrendous deal this is.
Just look above at the facts in previous post.
It has nice floors, granite counter tops, nice kitchen, good brick work. Very little wrong with the place. Electric & plumbing are new, central air. One leak around a window and someone made off with the outside condensor unit for the AC. About 3 blocks over there’s a ghetto, but you got that anywhere in Miami.
“About 3 blocks over there’s a ghetto, but you got that anywhere in Miami.”
No you don’t.
Nope.
No.
No.
And, you are overpaying.
–
–
But this conversation convinced me this morning of something I have been thinking about for the last two weeks: getting a Real Estate salesperson’s license.
I do not have to join NAR if I find a broker who doesn’t subscribe.
I can give comps all based on pre-2000 (like I would do for myself)
I’ll work from home so I wont have any overhead for the broker.
And, if don’t sell a dam* single condo/house I’ll still be the same person.
–
–
Lastly, I do not know if you are on the up and up. I did notice a healthy dose of gullibility and a lack of cynicism in the replies. However, I do know a little about both the area and the type of house you are buying and just in case you are for real (which I have strong suspicions) I will inform you that flat roof houses of that time period are notorious. (I’d love to build a house with a solid concrete flat roof, but that’s another topic) You are 70 years (!) into plumbing and other issues. That having been said, they did (as I said previously) know how to build Fl houses in 37 (not like in the 20s or anything after the 50s)
Then you neighborhood, here’s a simple and straightforward analysis: it sucks.
If you want a nice house in a mixed neighborhood there are MUCH better neighborhoods.
But, I will not dispense free advise, as I said, this thread sold me on a plan.
Thank you.
What will your taxes and ins be Mike?
You have to add 9K tax to the price.
This wipes out your goverment credit.
If comps don’t change, add another 9k next year.
Unless taxes go way down I don’t see how you are better off than renting.
9K/year tax =750/mo.
Mortgage is another $500 ++
so you are up to 750+500=$1350.
How’s is that much better than rent?
I would wait until taxes fall.
Sounds nice. G’luck.
Stop!
If you were about to close on a home this week, don’t do it. There might be some great new incentive coming out!
Maybe you can get a bigger house…with stainless steel appliances…?
See, this is exactly the problem with these “stimulators”. People will continue to hold out for the next, best deal. And, on top of that, imagine you just bought a home yesterday. And today it comes out that you can get 15K from the govt for a downpayment. Well, guess what? You just LOST 15K. That’s a real impediment to jumping into the market, every stimulus that comes out is more money lost to those who miss out on it.
I’m waiting until this time next year before I really get serious about buying. By that time, maybe the handout will be 100K, or 200K.. Who knows. All I do know is that this is exactly the WRONG thing to do to fix this market. It’s death by 1000 cuts; just get it over with and let’s move on. Raise interest rates to something reasonable (2%?), raise credit standards to something reasonable (700+) and wait it out. In 1-2 years (from now) we’ll hit a bottom and the investors, first time buyers, and move up buyers will come in.
Hmm….So a 15k credit is like deflation. Or at least the future possiblity of one has the same (wait it out) effect.
I think it will stop a lot of sales on the bottom end of the market, which ought to be strong right now (”the deals”).
Sellers will want to price with $150K floor. If it’s overpriced for their ‘hood, no-one will buy. But even if it’s about the right range, you’ll see people biting who then don’t hit the income/downpayment/credit requirements. Because when median household is $50K, and median CC debt is around $10K, $150K is *right on the edge*. Very few have $150K to pay cash, and those people will want a much nicer house than that….
The nicer houses will want to price higher, but there’s no tax incentive above $150K, so price discovery will continue, except they think they can price $15K above the last comp, except they are wrong. So more months on the market.
In the 1970’s you could deduct any kind of interest payments AND if you were in debt you could send your kids to school for free. My mom’s college roommate’s father bought a second house to put them in debt so she could go to school for free. (My mom was pissed.) Then inflation wiped out the price of the mortgage!
Congress changed the rules after that b/c it was clear that some people were cashing in big time. I wonder what happens this time.
Say you owe 5K in federal taxes for for the year, will you still be able to get the full 15K tax credit? IOWs, will they write you a 15K check for buying a home even if you owe no taxes? And, will it phase out as your income increases? Do you have to pay it back, ever?
The only thing this will do is make sellers raise their prices $7K as they try to “split” the loot with their knifecatcher.
Well arguably this is the GOAL. We hear alot from the politicians about stopping the slide in house prices. So the intention is to have buyers pay sellers more money. So they’re going to GIVE buyers more money to pay sellers.
I’m listening to NPR now, and they say that the 4% interest rates “won’t cost taxpayers anything”.
Of course, it will.
Directly, it will cause more unqualified or barely qualified people to buy houses, which–unless I get so p*ssed off I leave the country–I’ll end up having to pay for. (BTW: The US now tries to take money from expatriates, too, after they’ve gone. And now they track foreign bank accounts so you can’t move your money first and then move.)
It will keep house prices artificially high (or try to), and cause people, at least half of whom are taxpayers, to pay too much money. Also, inflated house prices will cause taxpayers to pay too much in property taxes.
(At least now NPR has an alternate view! They got a quote from an economist called “Joseph Jerko” who said that they government shouldn’t be encouraging people to use leverage to buy a declining asset…)
Joseph doesn’t sound like a jerk-o to me. He makes sense. That’s hard to find (in an economist) these days.
According to Radar Logic, San Diego’s home prices were recently (November 2008) falling at a rate of $0.22/SqFt/day. On a 2,000 SqFt home, that translates into a daily loss of $440. It would take about
$15,000/$440 = 34 days to eat up the $15,000 credit as a home equity loss.
My suggestion: DON’T BUY YET.
P.S. If you want to check my math, here are the PPSF figures I used (available for free off Radar Logic’s web site — just google Radar Logic to find it):
Date RPX.SD.28 (28-day moving average)
11/4/08 $204.03
12/4/08 $197.41
The trend ain’t your friend if you are a San Diego home owner.
If it never has to be paid back, then “good job” to Washington for just making housing $15,000 less affordable. Nice… Why not just set a minimum price for all houses of 5x the income of the person buying it? ARGH!!
At this rate, housing around here (Maryland) will never be affordable, barring dumps in the ghetto of Baltimorgue or places with no jobs.
Tell me again how this helps the economy aside from the parasite bankers?
Wmbz:
But NONE of these ideas help me. Most all my work is off the books so what good is a tax reduction or credit? Lowering my credit card balance $1-2K would be the right stimulus for me.
But this is way too obvious to OHbahma.
If you are working off the books, you don’t deserve any Obama help.
“Most all my work is off the books so what good is a tax reduction or credit?”
Perhaps you should apply to a cabinet post in the Obama administration.
PB, trade mark this. Too funy. LMAO.
Perhaps you should apply to a cabinet post in the Obama administration™.
You could become a democratic party consultant. They need a Joe the DJ
And we will have a great Mardi Gras too….
http://www.myspace.com/anycdj
“Historically huge to begin with, economic stimulus legislation is growing larger by the day in the Senate, where the addition of a new tax break for homebuyers sent the price tag well past $900 billion. . . Isakson said the new tax break for homebuyers was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall. The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.”
The economy is falling because housing prices are still way too high. To lure renters into the housing market with incentives that wont exist for future buyers will destroy more lives as the new marks have no exit strategy during one of the greatest depressions in US history. I am getting annoyed by the constant desire to delay the recovery.
Why do we waste bandwidth on a 15,000 gov’t perk?
Homes are plunging in value in 15k increments monthly. This will be yesterday’s news by next weekend.
“Homes are plunging in value in 15k increments monthly. This will be yesterday’s news by next weekend.”
Agree, spending a dollar to chase a dime!
$900 billion divided by 4 million jobs (yeah, right!) = $225,000 per job.
$900 billion divided by 300 million = $3,000 for every man, woman and child in the U.S.
That might stimulate the economy some.
Looks like they are starting to get it in Russia. Let the weak ones fail, that is the way it should work.
Moscow abandons bail-outs for bank aid…
By Stefan Wagstyl in London and Catherine Belton in Moscow
Published: February 4 2009 12:16 | Last updated: February 4 2009 19:38
Russia signalled a change in its policies to fight the financial crisis on Wednesday, indicating that it would switch from bailing out individual companies to supporting the economy through the banking sector.
Moscow also plans huge budget cuts in an attempt to limit its fiscal deficit – rejecting pressure to follow the US and other western countries to try to stimulate the economy with a big boost in public borrowing.
EDITOR’S CHOICE
Kazakhstan devalues currency - Feb-04
Lex: Russian rouble - Feb-04
Russia ready to defend floored rouble - Feb-03
FT Alphaville: Russia - from rags to riches to rags - Feb-04
John Thornhill: A Russia united by anti-westernism - Feb-03
Russia banker calls for capital boost amid default fears - Jan-29
The proposals suggest that Moscow is losing hope it can stave off the crisis with public spending and is instead battening down the hatches for what might be a prolonged recession.
The plans also indicate that the authorities are not giving in to public demands for a quick-fix response and are ready to resist pressure for money from cash-strapped oligarchs.
The news came amid mounting economic gloom in Russia and eastern Europe, with Fitch, the rating agency downgrading Russian sovereign debt, the International Monetary Fund warning of serious difficulties in Ukraine, and currencies plunging from Poland to Kazakhstan.
And so many naive souls really thought Barry was sticking it to the man. Just a little grandstanding, to help his followers feel like he is on their side.
Goldman, JPMorgan Won’t Feel Effects of Executive-Salary Caps…
Feb. 5 (Bloomberg) — Executives at Goldman Sachs Group Inc., JPMorgan Chase & Co. and hundreds of financial institutions receiving federal aid aren’t likely to be affected by pay restrictions announced yesterday by President Barack Obama.
The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need “exceptional” assistance in the future. The limits aren’t retroactive, meaning firms that have already taken government money won’t be subject to the restrictions unless they have to come back for more.
The new guidelines are the first salvo in a broader financial-rescue plan Obama plans to announce next week. The president and Congress have had to defend billions in aid to banks that continue to provide generous bonuses and luxury perks while posting record losses. Pay caps may provide the political cover the administration needs to deliver additional infusions of capital into the financial sector that may be necessary.
Some analysts said the new rules wouldn’t have much effect.
Companies that need “exceptional” help to stay solvent should fire the management brain trust that got them into that position in the first place.
Millions are losing jobs. Millions more are being asked to take pay cuts. Whilst, these guys do everything in their power to save shivering fat cats. It’s just another ho-hum day on the farm.
I thought this short article nicely summed up the real “class war” going on.
http://www.cnbc.com//id/29016555
Average people are relatively insensate.
They don’t feel pain like the executives do.
Wow - just wow.
The audacity - flat out blatant in-the-open corruption is amazing.
We have sunk to new lows.
You ain’t seen nothin’ yet.
But the Messiah said it. IT HAS to be true.
Nothing but common politics, they don’t want Volckers opinion, so he will be kept at arms length and thrown a bone every now and then, until he quits.
Volcker Chafes at Obama Panel Delay, Strains With Summers Rise…
Feb. 5 (Bloomberg) — Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said.
Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.
While Summers, a former Treasury secretary, oversees the official White House economic policy apparatus, Obama tapped Volcker for a new Economic Recovery Advisory Board charged with injecting fresh, outside ideas into policy debates.
“When you have two strong, highly accomplished, driven people, it’s not unusual that there is going to be a battle over turf,” said James Cox, a professor at Duke University Law School in Durham, North Carolina. “I would hope that Obama doesn’t lose Volcker’s counsel. They need someone to help them think outside the box.”
“I would hope that Obama doesn’t lose Volcker’s counsel. They need someone to help them think outside the box.”
So they can comfort all the people who are going to be living in a box.
Nothing but common politics, they don’t want Volckers opinion, so he will be kept at arms length and thrown a bone every now and then, until he quits.
I wouldn’t blame the shadowy “they.”
The key is in the second paragraph — Larry Summers, Well-Known Horse’s Patoot.
Other people in this administration have made it clear they value Volcker’s opinion.
I lost a lot of respect for Obama when he tapped that guy.
I like to rib Bush for being so immune to outside input, but sometimes listening to advisers too much can be a bad thing.
Something I respect about Clinton was that he would let his advisers give their opinion, then he would make his own decision. Kind of like Captain Picard. Wow, I can’t believe I just made that comparison.
Kind of like Captain Picard. Wow, I can’t believe I just made that comparison.
Laugh.
There are lots of people, some in high office, who’d be tickled pink by that comparison.
Poor old Worf. Always recommends some kind of violent solution and always gets shut down.
‘Always recommends some kind of violent solution and always gets shut down.’
Sigh. It is true. Plus he’s got that bumpy noggin. I bet he really goes through his washcloths fast, trying to get the lint out of all those crevices and convolutions. On the plus side, he gets to wear a shiny silver ‘Beauty Queen’ sash around and no one tells him to take it off, because that would be culturally insensitive, as well as a risk to life and limb.
Say, is it ‘jewelry’ when a Klingon wears it? Nope. Just like dollies for boys are called ‘action figures’.
Oly, you are fantastic…hehe
“action figures”
I can see Obama as Captain Picard.
Captain, the incomprehensible murderous aliens just ate four more planets!
Try again to negotiate with them. We can’t attack them because they are the last of their species!
Having picked this horse a couple months ago, I feel pretty damn smart this morning.
He was appointed to head a powerless committee while surrounded on all sides by philisophical adversaries, and expected to be the source of fresh ideas. Concluding that Volcker was nothing but window dressing was a safe bet.
So.. where do I cash this ticket?
So tired of all this change. Tools. Each and every one of them.
Until they let it all crash all at once all this stimulus will do is decrease the rate of decay. Too bad the rate of decay is incredible. 900 billion now. 1.8 trillion in 6 months. 3.6 trillion in 2months. Conjecture of course, but not outside the range of probability.
The mule has been worked too hard pulling an overloaded wagon full of crap. Let the poor thing die.
Speaking of “tools”. Each and every one of them.”
did you hear this morning the Rep Gary of New York just ream the SEC.. it was fantastic. Now I hope and pray that the Reps and Sen all get the same balls and start smashing “Tools.Each and every one of them”.
Gosh it was good. The public loves it. I loved it.
I say “smack down” for all the “Tools.”
So tired of all this change. Tools. Each and every one of them.
Yea. I’ve had about all the change I can handle, and we’re only, what, 2 weeks in?
I am over seas right now, I often have my foreign friends ask me about obama…I have just started to say that I think he is very likable but…the people he has working under him are the same people that helped make this economic mess, soo i dont really see how we will have change.
They just get quite after that
Please post the source…not just you’re take…thanks
BLOOMBERG
This isn’t fishing derby…
Dark Days for Green Energy
KATE GALBRAITH, New York Times
February 3, 2009
Wind and solar power have been growing at a blistering pace in recent years, and that growth seemed likely to accelerate under the green-minded Obama administration. But because of the credit crisis and the broader economic downturn, the opposite is happening: installation of wind and solar power is plummeting.
Factories building parts for these industries have announced a wave of layoffs in recent weeks, and trade groups are projecting 30 to 50 percent declines this year in installation of new equipment, barring more help from the government.
Prices for turbines and solar panels, which soared when the boom began a few years ago, are falling.
We’re borrowing money from China to bailout SUVs and McMansions while alternative energy loses money, so we can keep paying the Arabs.
I participate on a board with a lot of environmentalists concerned about things like this. They are getting the idea that having the government, controlled by those with political power, allocate resources is not necessarily a good thing, and one man (Obama) ain’t gonna “change” that.
Simple. Do what Europe did after Suez–tax on fuel. Heck, just tax the gunk when it crosses the border, forget about trying to collect energy taxes and gas taxes, b/c utilities will try to get a break and we spend more on buildings than cars.
Tax crude imports, this will help make refineries solvent (they can remove sulfur from the sour crude we pump here) and make coal look more attractive. Okay, so we can’t tax Mex and Can crude, (right?), but it’s the marginal cost that matters.
Wrong! the last thing you want to tax, is the fuel to heat our houses. That’s a necessity, not a luxury. I don’t think Picard would go for that.
Are you saying environmentalists are dropping the concept “central planning” as part of their political ideology? If you are right that would be a heck of a political/economic realignment.
People who would rather spend $40,000 for a car (or boat or outdoor kitchen, etc.) instead of completely self powering their home deserve what they get.
And we are about to get it REAL good.
Eco, an astute observation, IMHO. Methinks we will have hit bottom when we begin pricing the things we think we want in units of the things we actually need.
A pedicure? Worth two Hoilies? (just supposin’, ‘two heating oil equivalent units’) HECK NO.
Haircut? Worth two WEQs? (water equivalent units). GO FLY A KITE.
Probably how barter economies get started.
Come to think of it, bookies, traders and blackjack players will probably have a natural advantage in kick starting liquidity in a barter economy. An interesting career in the NEW new world order - thinking up, continuously adjusting, and disseminating the new standards for exchange.
Good maybe there will be a surplus of panels and turbines when I build my house. The I can get them for dirt cheap.
Me too. I’ve got a great, south-facing roof. And I’m in Tucson. But, even here, the cost of installing solar is way up there.
So, bargains in the offing? I’ll keep my eyes peeled…
Slim, when you start seeing those discounts.. please advise.. I will stockpile and get my hammers and nails out.
Land prices are going down.
“Nobody saw that coming”–people are broke, duh!
Roll over and play dead, Cubes!
Damn f*#^ing shame.
–
Another INCREDIBLE opportunity wasted.
Could really have done so many things:
Helped the environment.
Freed us from the yoke of Arab Oil.
Created jobs.
Made our National security so much simpler.
–
But Noooooooo…..
[/rant]
Muir… I suspect that this is exactly what happens each and
every decade when alternative energy becomes exciting..
suddenly there is a national/world emergency to override
the changes. Pfffft alternative energy is gone with the wind…
again.
I think it is orchestrated to a great deal. This time it has gotten
way out of hand for the PTB who are behind the scenes orchestrators.
…..Then the reality sinks in that someone has to pay for the outrageous cost of that “alternative energy.” Like with an alternative extra job. On a similar note for all of you “climate change” believers, my electric bill arrived today with some interesting statistics:
Bill for January 09…….$106.00
Bill for January 08…….$81.00
Average temperature for January 08……..30 degrees F
Average temperature for January 09……..20 degrees F
How does this fit into your global warming prognostications? It tells me that I wish I had a smaller house.
Carlos, “How does this fit into your global warming prognostications?”
When did I mention global warming?
You need a/c whether you believe in global warming or not.
Wind and solar is cleaner than coal, that has nothing to do with your mini-rant.
Take a tranquilizer.
Wind power is nothing but a lot of hot air.
We’ve been callin’ these projects DOA for awhile; now the Old Gray Lady catches up:
Two Chicago Towers Fall Victim to Scarce Financing
By ROBERT SHAROFF, New York Times
February 3, 2009
CHICAGO — Back in 2006, at the height of the real estate boom, two projects here stood out as harbingers of a bright future for residential development.
The first and most significant was the Spire, a twisting lakefront condominium tower designed by the renowned Spanish architect Santiago Calatrava. At 150 stories, it was to be the tallest building in North America. (The current tallest, the Sears Tower, is also in Chicago.) The developer of the Spire is Garrett Kelleher of Shelbourne Development, a firm with offices in Chicago and Dublin as well as several other cities.
The second project was Waterview Tower, a 90-story mixed-use hotel and condominium building in the Loop, the central business district. It also was to be among the 10 tallest buildings in the city. The developer is Teng & Associates, a local firm.
Both projects got off to fast starts in terms of sales and construction, but both have now ground to a halt amid the many mechanics’ liens filed by subcontractors as the developers struggle to find additional financing …
Both will be torn down, or left as empty hulks, nearly no doubt about it. We might not need another condo for a generation, putting more up in this environment is simply suicide. Every unit you build you immediately lose 80%+ of what it cost you to finish. That’s not a business model that will last for very long.
Condos are a NICHE product. There are very few buyers for them. When the RE industry finally realizes that (again), the s**t is going to hit the fan!
Are there really that many SFH in Chicago for condos to be a niche product?
I wouldn’t call them a “niche product” in Chicago, but condos are unquestionably overbuilt here, especially in areas near the Loop and on the near-Southside.
Well not anymore they aren’t - but they should have remained so.
BTW - did you see the Sun Times article reporting that according to Zillow 19% of our houseowning neighbors are now underwater?
And they said it couldn’t happen here, that the Midwest was different, that people here are too hardworking and honest (fabled Midwestern work ethic), that prices never bubbled.
This is just the start.
Absolutely! There are vast swaths of SFH throughout the city proper, and if the west and south sides had not been allowed to decay, there would be even more.
During the boom they forced the condo issue and intorduced them into areas where they had never existed. Meanwhile they converted buildings that had been apartments since they were built. The boom time demand for condos was distorted and will prove temporary.
Condos were just away to tap dance around the fact that house prices had gotten out of whack.
… if the west and south sides had not been allowed to decay, there would be even more.
An excellent point.
There are many neighborhoods that dropped off the cliff in the ’60s to ’80s, never to return — at least not in the eyes of the middle class. It’s a shame, really, ’cause you can find lovely buildings (or their bones) in even the dankest Chicago neighborhoods.
Well you don’t really “tear down” a hole in the ground, and that’s as far as the spire got.
We can fill it with water and use it for the Olympic pool!!!
“bright future”
I thought most Chicagoans called it “the Screw” and “the Dildo” and considered it an architectural abomination?
You are correct. Only the developer and the city officials salivating over the property tax revenue thought of it as an indicator of a “bright future”, i.e. their own.
Now it’s time for the Trib or Sun-Times to hold a contest: What shall we do with this giant hole in the ground?
My entry will be: fill it with water and let people scuba dive in it.
That’s a good idea, Elanor. You often have good ideas, I notice. Hey! And other people can stand on the rim and throw rocks and concrete chunks in, randomly, in order to promote excitement and reflex development in the scuba divers!
Also, there should be some ducklings involved, but only on days the rock-throwers are not there. Because I love ducklings. Let’s have the ducklings on Tuesdays and Thursdays, and the scuba-divers and random rock-chuckers on every other day. Okay? Okay.
But what about frogs? There ought to be frogs, Olygal!
I’m envisioning a uniquely Chicago-style diving experience, modeled after Disney World’s. Instead of swimming with ocean fish like they do in the big Disney aquarium, our tank will have a couple of 1930’s-era cars at the bottom, with dummies made to look like Al Capone and John Dillinger in the driver’s seats. And replicas of the Bulls’ six NBA trophies–people can see how many they can find in 15 minutes. I have other ideas but they’re mostly too tasteless to put into print.
I have a feeling that it would be a dangerous thing if we ever got together to brainstorm.
‘But what about frogs? There ought to be frogs, Olygal!’
Well, a course, Elanor! Why, I got three or four glued to my person at this very minute, here and there. I never go nowhere without my precious frogs. But, as you doubtless know, frogs don’t like Chicago. There’s no arguing them out of this, and don’t think I haven’t tried. Sigh.
But your diving ideas is freakin’ brilliant! I can’t even express my admiration…give us your other ideas, I urge!
And I think you’re right about the brainstorming. We’d probably lose a state or two before the night was over. But if was a stupid state I wouldn’t care, so it still might be worth doing sometime.
Hats off, Oly and Elanor! I also am in your respective fan clubs.
One small suggestion - since we are going with the 1930s era gangster theme, and the scuba divers, why not have the Dillingers in the cars all rigged up to take random potshots at said divers too?
The potshots need not hurt - it’s the thought that counts - I’m thinking more like paintball sized mementos from the failed economy. Like gobs of that toothpaste made with antifreeze, or sulfuric drywall pieces, miniature Chia pets, those singing bass thingies, or those nifty stylized diplomas in assorted studies and philosophies?
Those scuba divers will get plenty of reflexology improvements. Bet you could set it up with judging, or turn it into an Xtreme competition with ticket sales.
Filming the underwater action would likely provide a decent job for the enterprising. Jobs for the gatekeepers and ushers! Collecting a slice from the ticket sales would go a long way towards cheering up the town fathers, I bet. The aspiring MBAs from U. Chicago could handle the betting action. Could even be some upside for the struggling health care sector - a couple of EMTs might come in handy. I sense an economic recovery for the area.
Given the revenue potential, I think the ducky days will need to be shelved for now. We could substitute yellow rubber duckies instead and have them every day.
Who would have thunk?
OK, I am returning to my teevee watching.
Oh how telling - from Wikipedia:
It doesn’t get any better than that.
Not to doubt you packman, but I HAD TO look that up myself.
You are 1000% right.
It doesn’t get any better.
Thank you.
Sometimes truth is indeed stranger than fiction.
So how are the Hawaii RealTards feeling these days? Things don’t look so hot in HI. Nope. In fact it’s downright ugly. If emailforeclosure.com is any good indication, take a look at 5 full pages of foreclosures on the tiny islands. A real Pacific Tsunami in the making.
I’m sure my bro who claimed he was an RE millionare as late as last year still won’t acknowledge gravity taking hold in HI in a very big way.
Our beloved Robert Kiyosaki hails from Hawaii. In fact, that’s where he got his start in real estate, doing whatever it is that he does.
One thing I’ve always wondered about: In his books, he talks about his friendship with Rich Dad’s son. Why has no one ever done the research to find out exactly who this kid was? With that piece of info, it wouldn’t be too hard to figure out who Rich Dad is. If such a character even exists.
I have friends who were gearing up to help sell $2M lots on the big island, under the theory that rich people still spend money during housing downturns. Good luck with that.
I was talking with friend from lower DE last night. He’s in the steel erection biz and said that they have more work they can handle, all retail. Lowes, Bestbuy, etc etc. With retail sales volume and profits coming apart, this makes no sense.
Had it been Calif I would have guessed jails.
“steel erection biz”.
Maybe he’s in an industry other than the constuction one?
He works for Smilin’ Bob?
Darth, you beat (haha) me to it.
“steel erection biz”.
wondering…will the HBB team bite? hehehe
Mortgage Fraud Insider Apologizes
The link won’t post properly..
but go to //tinyurl.com/cc2vkn
Says he “helped destroy the economy”
Warren said he left Ameriquest three years later with the personal information of 680,000 Ameriquest customers to start his own mortgage banking operation in Sacramento called WTL Financial.
“At the ripe old age of 22, a fraudster trained by the best corporate environment for fraud, I built a company modeled after the movie Boiler Room,” Warren wrote.
Warren said WTL Financial faked credit scores and W-2s to peddle loans to investors who failed to scrutinize the files.
“I made over $2.25 million, all of which was spent on 24 cars, five houses and drugs,” he wrote.
Weird. I thought for sure he was going to say he made and spent all that money trying to get laid.
“Weird. I thought for sure he was going to say he made and spent all that money trying to get laid.”
What do you think all the cars and drugs were for?
start his own mortgage banking operation in Sacramento called WTL Financial.
Too bad he didn’t call it WT Financial.
Then people could say they worked at “WTF”
I’m laughing so hard! His essay was an extremely arrogant confession.
Even made fun of the FBI agents who are too old and slow to figure out what he did and prevent it from happening in the future.
The authorities should make an example of him with an extremely long sentence among the general prison population.
Hopefully, while doing time this little 20 something puke will get loved repeatedly against his will by a big 30 or 40 y.o. seasoned violent cell mate.
Maybe the feds will ‘rehabilitate’ this guy and hire him
just like the young man, now older who works FOR the feds.
You know the guy..”Catch Me If You Can”..DiCaprio played him.
Now multiply this by hundreds if not thousands.
Oh I forgot, it was the po’ folks and that Frank Barney guy. Yeah, that’s it. I almost forgot.
I had to tell someone to shut up last night as he kept going on about how it’s all Barney’s fault. I’m not sure he can even spell “fraud” let alone put together the oh so complicated concept of “mortgage fraud.”
EU bubble update:
BOE cutting rates again today, down from 1.5 to 1.0%. The ECB held rates steady at 2% today, but today variable mortgage rates in Netherlands declined more than 0.5% to 2.5% (effectively 1.25% as a result of HMD). A majority of recent Dutch homebuyers have an I/O loan with variable rate, so they are having the time of their life - these are probably the lowest mortgage rates in 400 years.
It is no surprise that the lowest rate is now offered by battered banking giant ING, who got effectively 28 billion for free from the government, in return for the promise to lend 25 billion to businesses and consumers at low rates. The low Dutch mortgage rates are directly subsidized by the taxpayers, but because the mortgages come from a bank that is officially in the free market no one can blame the kleptocrats for what they are doing
You missed one thing: as result of the cut, pound rose against euro.
Bizarro world.
yes, I just noticed … very strange. But I have seen some more examples like this in the currency markets, especially when it comes to euro-dollar. Maybe central bank interventions?
Wow. Extraordinary times indeed.
I’m sure the MSM won’t give HR 833 even the slightest mention…
It is the policy of government schools to keep pupils in the dark about the nature of money and credit. As a result, bankers - particularly the Federal Reserve System - have been able to pull the wool over the eyes of the general public. Since Congress gave its authority over money to the private banks the dollar’s purchasing power has been reduced to 5¢. (Source: Federal Reserve)
Rep. Ron Paul has introduced a bill in Congress which would eliminate the Fed and put the people and Congress in control of money. This may be over the heads of our representatives in Washington, but we should remind them of their duty to straighten out the monetary mess. HR 833
If he attached some serious pork to it, maybe it will get a real discussion.
You gotta do what you gotta do. Ron, you listening?
God Bless Ron Paul! In time the sheeple may realize truer words were never spoken.
Mike
U.S. Housing Slump Has ‘Just Begun,’ Says Forecaster Talbott
Feb. 5 (Bloomberg) — Let’s say you own a $1 million home in Santa Barbara, California.
The house seemed like a steal when you bought it with that adjustable-rate mortgage in 2005. You still love the white beaches and those yachts bobbing up and down in the harbor.
Then you awaken early one morning, troubled that your monthly payments will soon double. You go out to pick up your newspaper and see for-sale signs on five houses on the street. One identical to yours just sold for $500,000.
Are you going to pay the bank $1 million plus interest for your place? John R. Talbott, a former investment banker for Goldman Sachs, poses that hypothetical question in his latest book of financial prophesy, “Contagion.”
His answer: “I don’t think so,” he says. “If I’m right, then this housing decline has only just begun.”
Talbott is an oracle with a track record: His previous books predicted the collapse of both the housing bubble and the tech-stock binge before it. A friend who runs a New York steak house introduces him as Johnny Nostradamus, he says.
What sets him apart from other doomsayers is his relentless emphasis on simple arithmetic. He walks you through the numbers to show how U.S. house prices got so out of kilter with wages, rental prices and replacement values — the cost of buying a property and building a home. (“Homes in California by 2006 were selling at three to five times what it would cost to build a similar home from scratch,” he writes.)
So what kind of hand outs or credits will central planning come up with to bailout folks with million dollar houses? After all it wouldn’t be ‘fair’ not to help them out also.
The show has just begun, the crap that will be pumped out of D.C. will be without compare. Yet, it still won’t ‘fix’ anything. It’s is fun watching all these dour faced idiots falling all over themselves as they come to the rescue.
“What sets him apart from other doomsayers is his relentless emphasis on simple arithmetic.”
Ahh, that good old simple arithmetic. It’ll getya every time.
I always try to keep it simple when I talk to others about this mess. Income X 3 is the max home you can afford. Home price / 100 is about what the home should rent for. 100/sq ft is about what it should sell for.
These “financial wizards” have all kinds of formulas to try to value this stuff.. Guess what, they don’t work, and they confuse people who are looking to buy. Give people VERY easy math and they can do it themselves. If we had just followed on of those rules (3X income) this whole disaster never would have happened.
“Income X 3 is the max home you can afford.”
You better bone up on your inflation arithmetic before you get priced out forever
3x income is actually high! Look at the prices in the 50s and 60s. It was more 2x.
In the early 80s on Long Island, when mortage interests were double digit, a person like me who worked at Grumman Aerospace making $35,000 could easily afford a house on Long Island–for $45,000. (But I was renting back then, thank goodness). That’s 1.3x
Want to save banks? Raise the interest rates!
In the classic Cary Grant flick Mr. Blandings Builds His Dream House, high powered advertising exec Blandings is making the princely sum of $15K per year. After deciding to move the family to Connecticut, fighting with architects and decorators, cost overruns, and delays, the total price tag is $18K.
Yup. 1.2x income.
At the end of the movie, my mother declared that he had gotten a bargain!
I remember that movie. He was saved because his cook came up with a catchy name for a brand of ham. Wham, I believe it was called.
Wow, I’m surprised you remember the details from that film (which I also enjoyed). I think it proves the point though.
There are three kinds of lies: lies, damned lies and STATISTICS
Mark Twain
I prefer the simple arithmatic method too. As little a kid, I even my used my fingers and toes.
At least I knew what I HAD and most of the time, I GOT the CORRECT answer.
That’s a better record than the frigging US Gov’t
“Homes in California by 2006 were selling at three to five times what it would cost to build a similar home from scratch,” he writes.
No kidding. And to those who say it’s all about location, let’s say - where else can you sign up for $1,000,000 in debt, to be in the middle of a multi billion $$$ illegal alien giveaway mindset, drug gang wars, and toxic government with confiscatory income and property plans in mind?
cobaltblue
Well said.
b..b..but MY location HAS to better than your location !?!
Suzanne and all of her little who fleeced for the extra $100k TOLD me so
You forgot earthquakes and water shortages.
I liked this quote
This crisis was no accident,” he says. It began, in Talbot’s view, because the U.S. government was “co-opted” into deregulating the financial industry. Politicians were “paid to deregulate industry,” taking billions of dollars each year in campaign contributions.
His investment advice for this prolonged recession: Hang on to cash and invest in gold or Treasury Inflation-Protected Securities, or TIPS. If he had to invest in stocks, he would put his money in China.
Living in smaller houses with their savings gutted, U.S. baby boomers will face yet another big challenge, Talbott says:
“The toughest job to get in the future will be the elderly person greeting you as you enter the local Wal-Mart.”
“His investment advice for this prolonged recession: Hang on to cash …”
Excellent advice.
… AND invest in gold or …
Wise advise, as cash is losing value on a daily basis vs. gold (even in US dollars lately despite the dollar surge, in almost every other currency cash value has been dropping for months now …).
Measured against everything I intend to eventually own, cash is relentlessly increasing in its value.
No kidding, I have a 100K set aside for my down payment. I only got about 3K in interest on it of which some goes to taxes. Last year at this time the median price for a SFH in grand ole Taxachusetts was about 325K, this year it’s 275K. So in theory, last year I would have had to finance 225K and this year only 175K. Boy, would I like that to get down to 100K.
Aladin?
How sad
We beat up too much on Alad
‘We beat up too much on Alad’
I had this discussion with Fasty just the other day.
He was drunken, and therefore relaxed and more tolerant and high-strung than normal. Interestingly, I, too, was experiencing the same state, and IIIIII said I missed Alad’s steady flow of bon-mots and Alad’s professed love of big, green-haired babes, although not his Ayn Rand worship–and Fasty’s posture was that Alad deserved no relief, as he, Alad, was mongering fear. Shiny yellow stuff and fear, and that’s all, incessantly.
So, I’m still pondering that. I haven’t made up my mind.
Yes, Olympia.
But, it was great fun to catch him in something he had obviously misunderstood, as in Collapse by Jared, where he quoted from a book that made the exact opposite point he was making. (The author argued that the rich in past calamities had only bought for themselves the privilege to starve last.)
It wasn’t a sense of superiority on my part that made me like Alad, it was his innocence, of sorts, and blind faith that was quizzical.
I miss Lad. The songs were great. Lad got people
participating in continual posts. Creative.
He’ll be back, in one form or another
‘He’ll be back, in one form or another’
Hahaha, that’s what I thought! I was thinking he’d tell himself, ‘oh, just a liiiiittle peek. Just one little quick peek…’ And then we’d have him! Ha!
After all, it’s hard to break a craving, right?
And you can take that from the ‘Queen of Fully Utilized Exciting Substances’.
LOL - as a side note - I did a search on “slump” in Bloomberg news, and it came up with 38 articles put out just today.
Got to disagree with this though -
“By the time the crash ends, Talbott predicts, homeowners will have lost as much as $10 trillion, with investors and banks worldwide losing almost $2 trillion. And just as the U.S. starts getting over a prolonged recession, the first big wave of baby boomers will retire, depriving the economy of their productivity (and high consumption), he says.”
I don’t see retirement in their future, I see the bulk of baby boomers working well into their 70’s if not 80’s. A large portion will work until they die, because their financial situation leaves them no choice.
The medical profession will be a good one to be in for the next 20-30 years. There will be a very high demand.
“I don’t see retirement in their future, I see the bulk of baby boomers working well into their 70’s if not 80’s. A large portion will work until they die, because their financial situation leaves them no choice.”
Therein lies the solution to the Social Security underfuding problem.
See, it’s all good.
And who exactly is going to be hiring 70/80 year old baby boomers?
Exactly. Ask some 50yos how hard it is to get a decent paying job.
Age discrimination is real.
Don’t quit/retire from the job you already have.
My father’s 84 and still working. He’s an engineer, that’s his life, and for that, my mother is very glad. When my father’s not working on something, he drives her nuts.
sure, but he uses brains rather than brawn. there are precious few 84 year-olds who could flip a queen mattress many times a day changing sheets in a hotel, for example. some jobs are impossible to hang onto as you age.
I’m one boomer who saw reality and sold off my inflated San Jose home in May 2006 for a large pile of cash. I’m now retired in low cost of living Boise. If the banks started paying some real interest on savings, I’d be “comfortably retired”.
Other friends my age may be screwed. One friend, making a good income at a mutual fund company, paid $2 million for a McMansion in Los Gatos and proceeded to put $1 million into improvements in it before even moving in. Zillow says he’s already lost a million.
Another friend mortgaged his previously paid-off LA home for $715K and used the proceeds to speculate in 5 pieces of commercial real estate (i.e. strip mall spots). Zillow now says his home is worth $640K and I’m sure he’s underwater on those 5 commercial properties too. IIRC commercial mortgages are NOT “no recourse” ones under CA law.
I don’t think either of these guys will be thinking of retiring anytime soon.
Oh I just had a bad though, what if the housing mania goes into reverse, you have NAR telling you not to buy a house, people at parties talk about how there is too much land, never buy just rent…
‘He walks you through the numbers to show how U.S. house prices got so out of kilter with wages, rental prices and replacement values — the cost of buying a property and building a home. (“Homes in California by 2006 were selling at three to five times what it would cost to build a similar home from scratch,” he writes.) ‘
And if you told the house owner that their house was two times or more inflated in price, they would take it as a personal insult. Where is the Kool Aid guy crashing through the wall of these places with the news?
A friend who runs a New York steak house introduces him as Johnny Nostradamus, he says.
Others say it’s rumored that he reads something called the H B B???
LaVI that was exactly what I thought..
Jonny nostradamus is a lurker on the HBB. For sure.
So lets say a bank agrees to the terms and decides to take the govt’s bailout money. One thing they need do is limit executive pay to 500K per year. Lets assume the bank is run by angels and plans to abide by that rule.
All other banks offer virtually unlimited income to prospective executives. Competition for positions in those banks is fierce. Those banks hire the cream of the crop.
Govt subsidized banks get the leftovers… the dredges.. the people who couldn’t make it in the free market.
Now, i know a lot of people think banks lavish big salaries and bonuses for no other reason but to rip us little people off, but my point is that govt subsidized banks will be run by the least talented.. the runts of the litter.
All other things being equal.. interest rates, services, etc, who in their right mind would deliberately pick a no-talent subidized bank to do their business with? Given a choice, would you entrust your money and possibly your financial future with the losers? Can we be sure these people even know what they are doing? What was wrong with them? Why couldn’t they get a real job?
Why pay them at all when they belong in jail? Jail ‘em. Problem solved.
+1000
Too many to feed and not enough jails.
I am not fan of the Chinese… but they do have a cheap solution to their BigTime thugs, criminals and hoodlums
You mean the 9 mm enema?
I thought they ate fancy food and very small portions? (Hey, recession chefs have to work somewhere.)
I am not fan of the Chinese… but they do have a cheap solution to their BigTime thugs, criminals and hoodlums
They put them in power?
“but my point is that govt subsidized banks will be run by the least talented.. the runts of the litter.”
As Jon Stewart commented in response to Thain’s whining about having to pay exorbitant sums to retain talent: “I got news for you: you don’t have any talent!”
LOL. That’s pretty much my take on the whole thing. A bunch of drunken monkeys pushing “approve” and “deny” buttons COULDN’T have don’t a worse job then these “talented” bankers. There is absolutely no need to retain 80-90% of these people, there are plenty of people who will do the job for 1/10th the amount, and will do it just as well or better.
We have to retain the talent… WTF. Your “talent” broke the back of the most powerful financial system in the world. Your talent bankrupted every major bank in the country. Your talent, in fact, isn’t all that talented. There are 1000’s of qualified people in line for those jobs. Let them have a shot.
My other favorite quote is “Our good bankers will leave if we don’t pay them 50 ga-gillion dollars”. Ahh.. I’ve got news for you. There’s NOWHERE for them to go. Let them leave; they will beg you for a job as a janitor 2 years from now.
The big secret of banking is that it’s VERY hard to get a job at a major bank/brokerage. Once you’re there, the job is VERY easy (in most cases). Basically, take big risks with other people’s money. If it works, you get incredibly rich. If it doesn’t, you get fired and try again at the next bank on the street.
+1
come to think of it: please let these banksters leave for the Netherlands, so they can all compete with our scum to drive their outrageous pay levels down
Boy, I couldn’t agree more with you… second to housing, the next biggest bubble in all of this is the image of what it takes to be an “investment banker”… paaaaleeese.. there is no doubt in my mind, whatsover, that there are hundrends and hundreds of people walking around in most major cities on any given day that could do a better job running these financial companies than the clowns currently in charge… hell, throw me in that list and I have virtually no experience in the field, but would learn it pretty quick.. they are not doing brain surgery or designing rockets (although they’d like you to believe they are… BS)..
The rocket scientists are working for them about 15 floors down for some piddly $150K/yr or thereabouts. They’re called “quants”.
They figure they did good for themselves b/c the alternative was post-graduate slave labor at $16k/yr w/ a slot on the sign-up list for campus family housing (3 yr wait).
certainly; the last decade has shown that the highest incomes will get you the biggest scum on the planet, and definitely not the most talented people (except if you mean talented in lying and cheating).
P.S.: even low level banksters in Netherlands still get more than 500.000 dollars pay, plus double bonuses and a FAR lower tax rate compared to the US. Even our ’socialist’ Finance Minister is against cutting their lavish pay levels.
I’m not even talking about spending most of that income on mortgage so you don’t pay any taxes at all (100% deductible for income taxes over here). If these US executives don’t like the pay level they can always move to the Netherlands, where homeprices keep rising forever (they should like that as well).
We got rid of progressive taxes, which just about guaranteed insane compensation levels at the top of industry and the banking world, then we ring our hands and wonder why the top of the corporate ladder has the highest concentration of sociopaths outside prison and, oh where oh where did those “good execs” from the 1950’s go?
no talent?
I’m not sure about Stewart, but based on your comments, I’m sure you have some brains and some talent.. lets see you get one of them high-falutin $$$B-bonus jobs.
seriously.. are we supposed to trust what is essentially a govt appointed bureaucrat with our money?
seriously.. are we supposed to trust what is essentially a govt appointed bureaucrat with our money?
Seriously, are we supposed to trust a weasel with a MBA and an overinflated sense of self-worth with our money?
We’ve seen how well that gambit works.
+ 1,000, ET
I think they have talent. But it is not focused or controlled in a productive way. These bright talented people also have to know that what they have done is essentially useless. It is the shame of our time that so much mental capital has been expended on gambling and deceipt.
Numbers games always have losers. Too bad the losers want to put the burden of their losses upon those that did not play their crooked games.
Measure the IQ of the average Wall Street thug against the average IQ of, say, a mechanical or electrical engineer or nurse or lawyer or doctor and then compare the level of responsibility and compensation for each of jobs and tell me something is not waaaaaay out of whack… it’s a club.. once you’re in, you’re in and off to the races…
I said they were talented. Many people that have narcissistic personality disorder are very bright and talented people. They see an opportunity that will help themselves and they will take it with the consequences to others be damned. Wall street is rife with these personality types. Only the damaged can survive in an insane and pointless environment.
WS also is the boy’s club, for those whose fathers made it big in industry. Like boys, they never mature…
They will test okay on IQ b/c comfortable family background and ‘good breeding’ (standard English spoken at home) just about guarantees it. Many will piddle around in middle management for years; a few, though, will have that ‘killer instinct’ and reach for the top. Among them will be a few from the rags class who were ashamed of their poverty and will do anything to leave it behind.
The generations of comfort and circumscribed social circle lead to morons like Thain going on about needing to “pay” to “attract talent”. Talent is their social class, and those who have inherited wealth have outsized requirements for lucre because they burn it at such an elevated rate.
Btw, Bear Stearns was the firm for those whose families were NOT in the top 2%. It went down last year, payback for not bailing out LTCM.
“talented and bright” I don’t think so.
Just because these numnuts get into a Biz school, come up with the money/funding to complete doesn’t say they are bright. Shoot we know of one who got low C’s and passed. I say passed because the prof’s wouldn’t have dared not pass this nutjob.
So, money, connections, and just finishing makes them “talented and bright”. No, just moneyed, connected and conniving.
My corp said the same BS…’ we must retain them otherwise they will go to other companies’.. well they haven’t done so well by us at all, let them go…I think they would be staying for less than their bonuses, no where to go.
SantaCruzSuks,
You are so right - Wall Street has created the perfect nurturing ground and home for narcissists. If you’ve ever dealt with a true person suffering from NPD this is what you’ve got:
An all-pervasive pattern of grandiosity (in fantasy or behaviour), need for admiration or adulation and lack of empathy. Five (or more) of the following criteria must be met:
Feels grandiose and self-important (e.g., exaggerates achievements and talents to the point of lying, demands to be recognized as superior without commensurate achievements)
Is obsessed with fantasies of unlimited success, fame, fearsome power or omnipotence, unequalled brilliance (the cerebral narcissist), bodily beauty or sexual performance (the somatic narcissist), or ideal, everlasting, all-conquering love or passion
Firmly convinced that he or she is unique and, being special, can only be understood by, should only be treated by, or associate with, other special or unique, or high-status people (or institutions)
Requires excessive admiration, adulation, attention and affirmation - or, failing that, wishes to be feared and to be notorious (narcissistic supply)
Feels entitled. Expects unreasonable or special and favorable priority treatment. Demands automatic and full compliance with his or her expectations
Is “interpersonally exploitative”, i.e., uses others to achieve his or her own ends
Devoid of empathy. Is unable or unwilling to identify with or acknowledge the feelings and needs of others
Constantly envious of others or believes that they feel the same about him or her
Arrogant, haughty behaviours or attitudes coupled with rage when frustrated, contradicted, or confronted
Google NPD personality disorder to learn much more.
As long as that bureaucrat is working for the people, yes. And I got news for ya. Not everyone in gov’t has horns. Oh, yah, I do my share of bitchin’ about the goobermint. But I have also dealt with goobermint folks and I’m here to tell ya that surprise, surprise, there ARE some decent folks buried in the system who take their jobs seriously.
Now, I don’t trust Geithner worth a crap. Anymore than I trusted Paulson.
However, this debate we’re having here is more or less a useless one. Because we’re talking about a system that doesn’t work anyway, whether it be public or private sector. Maybe you should survey some investors and see what they think of the “talent” right about now.
The “system” doesn’t work for who? And since when?
The housing bubble’s causes were so diverse and it’s effects so serious and wide spread it now offers anyone with an axe to grind (or an agenda to push) an opportunity to blame whoever or whatever they like, while sounding at least semi-reasonable and semi-believable.. especially to the gullible.
The housing bubble’s causes were so diverse and it’s effects so serious and wide spread it now offers anyone with an axe to grind (or an agenda to push) an opportunity to blame whoever or whatever they like
B S
The housing bubble was caused by 4 things.
1. Securitization without regulation
2. Bought and paid for rating agencies
3. Allowing banks to mingle with investment houses and the use of massive leverage.
4. Finally the knowledge that politicians purchased with campaign contributions would bail out the investment community when the crap hit the fan.
It’s wasn’t low interest rates, they are still low and the system is still collapsing.
It’s wasn’t GSE’s they are still buying debt hand over fist and we still have a problem .
It’s wasn’t the suckers who bought houses, they did not cause the problem they were dim witted victims. Banks pumped in easy credit prices went up, real tards and press sung the praises of real estate and the sheep were off to the slaughter.
The thing that has changed is that securitization is broken, people/foreign gov/pensions ect don’t trust the banks/investment houses or the rating agencies.
Yes, Joey, because the system DID fail.
The ENTIRE system.
If the system could be considered to have failed at all, it failed by allowing a bubble to be created. A perfect system would have checks and balances built in to prevent such unsustainable growth.
The downside of that perfect system is that it cannot allow any growth beyond some arbitrarily set point.
This won’t work when applied to humans. The human species differs from ants, termites and bees. Humans are always reaching out, trying to accomplish new things. They are always moving onward and upward. Attempting to put an upper limit on their growth is unnatural and eventually comes back to bite such systems in the ass.
“Perfect” systems have been tried over and over, have always proven impractical and, but for a couple of tiny, ongoing experiments in poverty stricken hellholes ruled by tyrants with absolute control, those systems now sleep with the fishes. The current crop will follow soon enough.
Our system tripped, fell, bumped it’s noggin and is sitting there dazed but still sucking air.. wondering what happened… wondering how to right itself and get back on the road. It’s not the first time by any means, and it won’t be the last.
It works well for my credit unions. It should work well for banks too.
Well dang.. If it works well for your credit union, it should work for your doctor.. and your barber.. and the cook behind the counter at the local greasy spoon. Hell, if it works for anyone, we must admit wage control will work for everyone!
Skill and talent are not related to compensation. So lets apply it universally! Just imagine how much money we’ll save without sacrificing quality.. it boggles the mind.
Why didn’t someone think of this earlier and then have the guts to impliment it?
hmm.. maybe someone did try this before.. i can’t recall. But that’s not important. We will succeed even where others have failed. “Yes we can.”
Progressive taxation.
Rewards savers. Punishes spendthrifts. Gov’t doesn’t have to tell any company what to pay people, because they’ll figure it out…
It worked great, btw, paid off WWII and created the greatest middle class in the history of the world.
The parasites have had control since the 80’s and have almost finished leeching the system dry.
Puhleeze… I missed the part where running a credit union (with hundreds of thousands of members) was similar to working as a cook, doctor or barber.
When on Government’s bailout, you shall do as your master says. Master says you can’t make more than $500k, so there you go. If you don’t like it, start your own bank - there isn’t any limit to what you can pay yourself.
I gave credit unions as an example of similar institutions that are well managed by folks earning far, far less.
So by paying $500,000, banks can’t find the talent that comes up with “innovative schemes” or “new lending practices”? Is that really a problem? A banker’s job is by definition very conservative - this is not research into quantum theory. All we need are competent, upright, hardworking folks that play by a rulebook that hasn’t changed in 200 years. And $500,000 is plenty to find that kind of talent.
I remember reading somewhere that the head of the Norwegian SWF makes far less than 1M$ per year, somewhere around 200-300k.
Nonsense.
The level of executive pay has been driven by politics and power, not value as determined in the marketplace. These guys sat on each other’s boards and voted to increase each other’s pay, while the shareholders got screwed.
The plan is to allow higher pay through a shareholder vote, or in the form of restricted stock that can only be cashed in years later — if long term value is created. That’s what it should have been all along — and NOT just for companies getting bailouts.
I’ll bet there are plenty of mid-level executives who could do better than most of these turkeys who would love the prestige of being the CEO, $500K, and the possibility of getting rich IF they succeed.
Hey Obama, I know they are part of the Democratic Party machine, but next how about limiting the pay of executives at non-profit charities and unions to $500K too? Along with the Wall Streets, New York is infested with non-profiteers, especially in the hosiptial industry.
I bet a lot of these “turkeys” were very competant middle guys, until they got on top. Then it becomes about gaming those quarterly numbers to get your options in the clear…
The incentive system just warps everything, even a decent person… it’s all about trading, the short-term… long term is irrelevant, get your golden parachute, fall upwards to another firm (Nardelli), unless you’re black or a woman (Prince, Fiorino).
yes, same problem in Netherlands.
We have about 20.000 people now who are fully paid with taxpayer money (mostly in semi-gov institutions in housing, healthcare, education) and earn at least twice the income of our prime minister, around 200K euro. Ten years ago maybe a few hundred people in the country had such incomes.
Many of these high earners were low level burocrats ten years ago - until their office was ‘privatised’ or ‘exposed to market forces’ (but always without real competition) which means they suddenly get to decide about their own pay level, bonuses etc. And the board of directors are always close friends, old buddies from the office etc. This didn’t work out very well, both regarding the current outrageous pay levels and the quality of their work (lots of bad decisions and corruption).
The public over here is pretty angry about this, especially as most of these institutions are constantly demanding more taxpayer money. But government is not going to do something about it, they have too much buddies at these well paying jobs
The plan is to allow higher pay through a shareholder vote, or in the form of restricted stock that can only be cashed in years later — if long term value is created. That’s what it should have been all along — and NOT just for companies getting bailouts.
It always amazed me that we have allowed CEO’s to trade with inside information. These guys know when they want to sell and can use accouting tricks to boost sales and make debt disappear just when the selling time comes. They should get a set amount of stock every month that has to be sold in exactly 3 years or 5 years or what ever the interval. That will create management that plans for long term wealth creation and not management that plans for how to strip wealth from the company and shareholders.
There is a website, I forgot exactly how it goes…
www Muckymucks dot com..
Sorry guys. mucketymucks..??? I forgot.
But I did check it out once and it was amazing, how
every single name or corp you put into the search bar,
came up with a fabulous connected diagram and who was
on what board, whose corp they belonged to..
It was amazingly full of important information.
Again, sorry I can’t remember the exact website.
If anyone finds it, please post.
That has got to be the dumbest thing I have ever heard the MSM push. They have no talent and are already the dredges if they needed the bailout money. Whoever replaces them can be no worse than those already in charge.
And many of the brightest would see it as a challenge to bring the bank back to its prior status.
It takes REAL talent to wreck a bank. I would definitely keep the management responsible for their predicament in power and make sure they get loads of money so they can do it all over this time with our money.
Not really! I would propose we buy each a pair of gold plated handcuffs and march them off to labor camp where they can make restitution to their many victims.
So the people who have bankrupt the bank are now the cream of the crop?? Let some young guy take over with 500k a year and stock options that he can cash in if and only when he pays back the government. I’ll gladly invest in this bank before one that overpays a CEO who has previously been a part of this scam.
Hoz,
I’ve read a few of your posts on the baltic dry index. I read this (see below) and thought about you. I hope it helps you in your search for a bottom.
“capesize prices, have rallied more sharply than any other Baltic constituent, up almost 8 times from the low to around $15k per day. This could be an indication that demand is starting to increase again from China after the rundown because of the Olympics. One must beware of the inventory rebuild story though - that caused numerous false dawns in Japan through the 1990’s and indeed in the US post the 2001/03 downturn.”
The inventory rebuild is likely fallacious. The more logical assessment is that the companies overbuilt prior to the Olympics since they knew all manufacturing had to be shut down for a month. The inventory drain has finished and the companies are back to just in time manufacturing. On top of this there is the Chinese stimulus which makes the US stimulus look like small change.
I am all in favor of a freely elected government, but a government that allows free profits and supports industry can react faster. China’s government reacted while our elected representatives are dickin’ around.
New Jobless Claims Jump More Than Expected to 626K- AP
The government says new claims for unemployment benefits jumped to their highest level in more than 26 years. The Labor Department says the number of laid-off workers seeking jobless benefits rose last week to a seasonally adjusted 626,000, from the previous week’s upwardly revised figure of 591,000. The latest total is far more than analysts’ expectations of 583,000.
Again with the seasonally adjusted numbers. Why can’t they just tell us how many people actually got laid off without rounding down??
Yes, but rates are low and they might be able to take advantage of that proposed homebuyer tax credit. My Realtor called me with a once in a lifetime opportunity this morning. I told her she was fired (I never really new I hired her, just some open house leech).
” My Realtor called me with a once in a lifetime opportunity this morning. I told her she was fired (I never really new I hired her, just some open house leech).”
ROTFLMAO!!!!!
Your bottom is showing…. again.
“U.S. housing market bottom seen within sight”
http://www.reuters.com/article/gc03/idUSTRE5140H420090205
It seems Mr. Zandi has stolen the Emperor’s clothes.
“U.S. housing market bottom seen within sight.”
Such thinking should be encouraged. The System needs knifecatcher money.
“The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year”.
The outlook “ASSumes” just like millions of others, hanging all of their hope on the D.C. gang to get the vodka spiked kool-aid flowing again.
Of course they don’t see a FULL recovery until years end! LOL!
Would this be the first-ever bottom in housing either right in the middle of a bad recession or just after it ended? And does Zandi realize the Alt-A and prime ARM resets are scheduled to reach a temporarily high plateau over 2009-2010? Maybe he knows something I don’t, but otherwise I find this forecast just as implausible as all the other one-year-out bottom call forecasts that have been made over the past three +/- years. For comparison, the early 1990s recession officially ended in March 1991 (according to the NBER), but housing did not bottom out in California until 1996 or so.
But perhaps it does not matter — economic forecasting is so discredited by its poor recent track record that one more bad prediction will put him in good stead with his peers.
Isn’t “economic forecasting” an oxymoron?
All this time I was thinking it was an Onomatopoeia…
“heehaw heehaw heehaw”, followed by: “Yakety Yakety Yak”
““The outlook, however, assumes stronger action by U.S. policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year”.
And the depression we’re entering will keep it from stabilizing for 5 to 10 years, much less recovering. Most of these fools won’t live long enough for housing to recover to anything close to what it once was.
Yeah well, it sounds like there are 626,000 less potential buyers out there this morning.
Yeah, and is anybody counting the number of people with decimated credit from the recent foreclosures. All of the people with good credit are stuck in their depreciating assets. This thing is going to require a decade-long washing-out period and only then will jobs and increasing incomes result in home price inflation.
Should have read, “All of the people with good credit with the exception of HBB renters”… thought I’s put that out there before getting bombarded with righteous indignation.
Yeah well, it sounds like there are 626,000 less potential buyers out there this morning.
And how many of those already own, and are going to lose the house after losing their job? More inventory.
coin shavers unite.
UYG heading back down the rabbit hole.
BAC-death spriral.
WFC-cracking hard.
The pilot has turned on the fasten your seatbelt sign.
I had a thought today. I think it’s clear by now that this new administration has no new ideas and our regularly scheduled downturn will continue as planned.
I’m in short, fwiw.
It took bush, cheney and the neoCON rethugs along with Wall Street 8 years of hard work and practice to run the United States COMPLETELY into the GROUND.
Now the all the little rush-pukes are crying and whining that obama and the dems haven’t halted or cleaned up THEIR ON-GOING MESSES in under a frigging MONTH
Newsflash : The VOTERS have said that the criminal bush/cheney repuke REGIME is OVER and you and your likes have absolutely NO CREDIBITY. If the SHOE fits, wear it
Like the your late, great bushGod said, “you are either with us or against us”.
America KNOWS that the repukes are AGAINST them… so sit down, shut up and get over it
Oh, what a lovely, wonderful, exquisite post. *hops up and down in chair *
Feels like the bottom is about to fall out. Maybe it’s just the Percocet.
Hoz, if you liked UYG at $3 not so long ago, do you like it at $3 again now?
I feel so dumb to be renting right now.
How do I get on the smart team?
Ann, unless you’re joking, you probably already are on the smart team. I don’t feel dumb renting at all.
For me, it’s smart because it increases my options and freedom, especially a couple years down the road. So unless you’re suddenly getting the nesting urge or the desire to establish some roots, what’s the hurry??
There is a website, I forgot exactly how it goes…
worldwideweb Muckymucks dot com..
Sorry guys. mucketymucks..??? I forgot.
But I did check it out once and it was amazing, how
every single name or corp you put into the search bar,
came up with a fabulous connected diagram and who was
on what board, whose corp they belonged to..
It was amazingly full of important information.
Again, sorry I can’t remember the exact website.
If anyone finds it, please post.
Good Morning, HBB!
Our new prez is not impressing me with his appointments in general.. too much good old boy BS… clean house I say Barrack… that’s what you pledged to do… you too Pelosi.. Dodd and Frank need to be canned (NOW) and put in charge of some harmless subcommitee overseeing the internet or some trivial BS… they stink..
Get rid of Pelosi first! Talk about scum. And get the Senate ethics committe on Dodd. If they won’t, sic the Justice Dept on him.
Put Frank in charge of something he’ll really get into, but can’t do much damage in … I know, threaten to cut HUD spending by 30% since rents are going down. Tell him you want a new HUD bill on your desk by next Friday. That’ll keep that old coot busy.
How about full IRS audits on everybody in D.C.?
That would REALLY clean house!
Unfortunately, the President is not allowed to fire Senators, only promote them.
Damn, Barry fired both barrels, we went from going to have a catastrophe. Now today, we may never recover, if they don’t pass barf2.
WASHINGTON – President Barack Obama warned on Thursday that failure to act on an economic recovery package could plunge the nation into a long-lasting recession that might prove irreversible, a fresh call to a recalcitrant Congress to move quickly.
In an op-ed piece in The Washington Post, the president argued that each day without his stimulus package, Americans lose more jobs, savings and homes. His message came as congressional leaders struggle to control the huge stimulus bill that’s been growing larger by the day in the Senate. The addition of a new tax break for homebuyers Wednesday evening sent the price tag well past $900 billion.
Senate Democratic leaders hope for passage of the legislation by Friday at the latest, although prospects appear to hinge on crafting a series of spending reductions that would make the bill more palatable to centrists in both parties.
Obama painted a bleak picture if lawmakers do nothing.
Yeah. Big change there. Booga Booga! Give us money or EVERYONE IS GONNA BE DOOMED! I think we’ve heard that line for about what…forever.
Whatever happened to, “The only thing we have to fear is fear itself”?
Not a huge FDR fan, but Obama has certainly done nothing to inspire confidence in the people like FDR did. Hope can only take you so far.
I figured he’d be a slightly smarter Jimmy Carter. Now I having my doubts.
Look, centrism is all about preserving the status quo. (Honestly, though, you’d think in a nation of 270mill there would be some better candidates for some of these jobs than these known shills and crooks?)
The US is through Denial, Anger put Obama in office, and now we are Bargaining.
It happened to Hoover, too.
RE: I figured he’d be a slightly smarter Jimmy Carter. Now I having my doubts.
OB’s is in way over his head.
And to be saddled with Pelosi and surrounded by tax cheats.
Toast….
Hey that reminds me, …anyone know how Phil & Wendy Graham are “managing” through our National “Mental Recession” these days? (Phil slaps Hwy, “Quit your whining”)
Gramms regulated Enron, benefited from ties:
http://www.oreilly-sucks.com/News/grammfacts.htm
Would that be Phil “Who-needs-the-Glass-Stegall-Act-anyway?” Graham?
What’s really driving the sudden urgency, perhaps the 2012 election? No one will say it publicly, but it’ll take at least until then for enough of a recovery to take root to allow for a reelection of this adminstration.
The decider wanted two terms because daddy didn’t - these guys want two terms because they couldn’t stand seeing the decider have them both.
It’s only 2009 and we’re already seeing the Hail Mary.
Booga Booga
http://www.urbandictionary.com/define.php?term=booga+booga
One thought I keep having…
No matter what you think of our war in Iraq, it should be working at least as well as a “stimulus” as these current plans do.
Most of the money goes to troops, or to American contractors making things, or salaries at American contractors. Even with all the money going to Cheney’s friend’s offshore companies, it’s probably more money going back to working Americans than any of these Democratic-sponsored stimulus packages will ever be.
If our economy is shrinking with all this internal spending we’re doing, resulting in actual manufacturing, etc., how the heck will encouraging people to buy money to spend on imported goods or worthless houses going to help?
And, once we finally wind down the effort in Iraq, won’t we see another hit to our economy?
I feel bad for all our returning troops who, while doing their best for our Country, will come back to a country ruined by greedy deadbeat homedebtors and crazy banks.
“I feel bad for all our returning troops who, while doing their best for our Country, will come back to a country ruined by greedy deadbeat homedebtors and crazy banks.”
+1
Now, whose idea was it to send America’s “National Reserve” Coast Guard to fight a foreign war… x2? Maybe, the Gov of Tennessee might have the answer.
That’s assuming we can afford to bring them back, and they don’t have to hitchhike…
The War-in-Iraq stimulous plan has too many coffins, too many amputations and too few WMDs.
“Obama painted a bleak picture if lawmakers do nothing.”
Sometimes it would be nice if that’s exactly what they did….nothing.
Few things are irreversible.
Hey Exeter,
Now what were you saying about the republicans using fear to scare the voters?
TARP v1. What was that expression Bushed used in a supposed off script comment? “This sucker’s going down”. It wasn’t off script but a very much contrived scam to transfer $$$ to slimebucket bankers.
Boorish Fear is him.
If you are going to use quotation marks and imply the former president of the United States said something, then please bother to get the quote correct.
Please post the source…not just you’re take…thanks
i said it all through the election…the next president of the u.s. will be a one term president…
whether it was mccain or obama.
Is it time to get back into UYG?
Looks like a lot of overhead resistance at 3.3…
Was going to ask the same thing. Missed some nice bounces already though in FITB, HBAN, PNC etc. this morning.
Textbook bounce off 820 in the S&P this AM. Any bets when the next test will be? This afternoon? Tomorrow?
I am thinking of an AAPL short here at about 96, but I don’t have the guts.
you and me both.
Bwahahahah!!
I haven’t been on Realty Trac in at least a year. Just for the hell of it I went clicky-clicky.
Now, last time I saw a lot of condo conversions in default but really not that much excitement. And that was for all of metro GNV.
This time I got 217 DEFAULTS for my zip code alone! Mostly SFHs!
Suckazzzzzz!
The funny thing is, there are less signs up about houses for sale… I guess the FB’s are just waiting for the sheriff or some “workout”. (I did see another sign the other day about “owner finance”–yeah, I’m sure you will, since no bank will sign off on your price, natch.)
Prices start lower than the wishing prices offered on condos (which still aren’t selling, I’m sure, as all of them, even the holdouts, have a sign up: “now leasing”). Of course, old GNV condos are worth $30K, new maybe $50K and that’s pushing it. They still want $120K, or $80K for the really crappy ones. Hello, you can now get a 3/2 house for that. In a better ‘hood. Get real.
The Gainesville Sun has had a few bearish on housing articles (including a long one on the carnage in rentals), but hasn’t said a peep about sales lately. No article for them about the market being 50% off. Well, by the foreclosures, it certainly looks 50% off.
UF just announced it will have 1000 fewer students in fall and will cut $73mill from budget, following already 150 layoffs. City must cut 10% from budget, already in soft freeze, many positions unfilled. Nobody can say they didn’t see this coming, but I guess many believed it was just a bump–now they know it’s real. GNV is not immune, Pegeen, you are wrong. Kindly shut up now.
More on Gainesville:
The median income for a household in the MSA* was $30,877, and the median income for a family was $40,536. Males had a median income of $29,665 versus $24,003 for females. The per capita income for the MSA was $16,225.
*Entire population of Alachua and, oddly, Gilchrist Counties, which is about 250,000 (wikipedia gave conflicting figures). Of these, about half (estimated anywhere 90k to 120k) live in the immediate GNV area, either in the city limits or along Tower Road, “Jonesville”, west of Newnan’s Lake, etc.
So why are these clowns trying to rent units for $1100/mo again–? I know Saul Silber occasionally gets some sucker from Tampa who doesn’t know how depressed wages are here to put down $1100/mo on a 3/2 HOUSE (in a district where they sell for $45k), but seriously! How many “rich students” are there? Get real.
As for Not a Gator and Ms. Gator, our combined household income is nicely above the median, but we live in only 50-60% the sqft of our colleagues. Of course, some of them were lucky enough to be buying when prices were much lower (and to which they shall return), but of the renters, I wonder… you can’t save much money that way.
A blast from the past, for perspective :
http://money.cnn.com/magazines/fortune/fortune_archive/1998/02/02/237209/index.htm
Can the Housing Boom Last? IT’S NOT LIKE THE ‘80S–EXACTLY
(FORTUNE Magazine)
By Kim Clark
February 2, 1998
notable quotes :
‘Could be. Real estate, especially on the coasts, has always been subject to boom-bust cycles. ‘
…
‘What’s more, real estate players remember the hard lessons learned in the last cycle: Toll Brothers, the nation’s premier luxury-home builder, approves only projects that will be profitable even if housing doesn’t appreciate, says CEO Robert Toll. Regulators also are more careful. While banks have been easing their lending standards–as they always do in good economic times–the FDIC and the Office of the Comptroller of the Currency have been issuing warnings to get them to slow down.’
‘ And thanks to the coastal real estate crashes of the late 1980s and early 1990s, even fast-rising San Francisco and New York prices have only recently surpassed the tops of the last cycle. Meanwhile, incomes are about 30% higher now.
The higher incomes are key. As long as housing prices rise in tandem with economic indicators like job growth, GDP, and household income–as is the case now in much of the country–homeowners’ gains are usually sustained.’
This article was sent to me by a friend - love it!
My god, that article was calling possible bubble back in 98! That might have been the most forward looking article I have ever read. I didn’t really see the bubble until around 2002, that’s when things got totally out of hand in my locale (FL).
Big cities on the coasts were bubbly already in ‘98, yeppers.
Of course, we assumed some crashing would occur after dotBomb. Thanks to Greedspan, it did not.
Thanks to Greenspan, we have the mother of all crashes underway from the highest ever level of overvaluation for the longest duration (save maybe Japan — 1990-200???).
That’s…SIR Greenisspent… Mr. Bear, please give American “Royalty” it’s proper “entitlement”. I have a bit of “Despondent Exuberance” myself today, it’s created quite a “conundrum” as to how to resolve it, …beer or wine?
“Despondent Exuberance”
Good summary of how I feel today, Hwy…
Have a potato! (Hands him a potato.)
maybe he peeked at the other side of the pond - in Netherlands the housing bubble started around 1990 (double-digit pricegrowth by 1992 all over the country). Around 1995 other EU countries were joining the party and by 1998 the Dutch bubble was already bigger in % price gains than the current US bubble ever got …
Yes the coastal bubble here in San Diego was clear to me by mid 1997. By that point condo’s around me had jumped from 150’s to 180’s for no apparent reason.
“The higher incomes are key. As long as housing prices rise in tandem with economic indicators like job growth, GDP, and household income–as is the case now in much of the country–homeowners’ gains are usually sustained.”
That’s a key to sustainable rises in house prices - rising incomes.
I guess Toll didn’t follow his own advice on building only properties that would be profitable even if they didn’t appreciate. Did he consider what would happen in prices fell?
Hey, I’m back… been awhile since I posted. I moved up to Philly from Tampa/Sarasota. Hope to get back into posting…
Damn it’s cold here!
Not to worry, it’s freezing cold in Florida too, today.
Welcome to Penns-uh-van-yah in the winter time. If it’s not cold, it’s just gray and damp.
Well, it’s about damn time, Tom. We’ve all been waiting with increasing impatience.
Feb. 5 (Bloomberg) — Orders placed with U.S. factories fell in December for a fifth month, reflecting a pullback in business spending that will extend the recession.
Bookings declined 3.9 percent, more than forecast, after a revised 6.5 percent drop in November, the Commerce Department said today in Washington. Other reports showed firings jumped at the end of January.
We’ll miss those kind of numbers if someone succeeds in igniting a trade war - even a cold one.
Why? No one buys our stuff unless there is absolutely no other choice. Funny how its ok for our trading “partners” to protect and even subsidize their industries, but it is muy malo if we do it.
I agree wholeheartedly with your viewpoint.
Keep in mind that anything we do to “protect” “our” industry ultimately hurts every single American by increasing prices. The concept of “protectionism” is the same as “socialism” in that it assumes that it is “our” industry and not private industry. You and I do not own these factories.
If we are so concerned about “our” industry we should simply eliminate all taxes on industry. Collect the taxes on the economic prosperity that surplus industry generates if you must tax something. Remember that regulations are just another form of tax, so regulations should be cut to 1/1000 what they are today. This does not mean that the industries could pollute excessively because they would be violating the property rights of their neighbors.
Keep in mind that anything we do to “protect” “our” industry ultimately hurts every single American by increasing prices.
I’m tired of hearing claims that if we stop importing stuff that we will end up with $20 socks and $100 blue jeans. My brother used to be in procurement for a well known apparel maker who used to make stuff here. He told me tjhat the offshoring savings were trivial.
We used to make stuff like not all that long ago. I don’t recall them being super expensive. In fact, they pretty much cost the same then as they do now.
Anyway, we can’t run trade deficits into perpetuity. That’s just as bogus as “real estate prices always go up!”.
Colorado, I don’t know how you claimed that I felt that imports were “necessary”. That was not the argument I was making is that protectionism is not necessary and only harms americans and that if you want to increase “american made” then simply reduce taxes. Our corporate/employment taxes are among the highest out there.
So if you are proposing “laws” to favor local companies then you must first support your claim that it is cheaper to produce here than abroad. If that were really true, then some company would use that as a competitive advantage? You must answer *why* aren’t they doing it now. Otherwise you must concede that the only thing that laws can do is increase costs to americans.
Again, it’s really simple: no jobs means no purchasing.
So, a little protectionism so we can create some jobs and the other countries sell less product or no jobs and we buy nothing.
To me, sending jobs to other countries is nothing short of TREASON.
And yes, the rest of the world has plenty of their own protectionism.
I didn’t even realize we still exported things out of this country!
Top 11:
1 Electronic integrated circuits
2 Aircraft
3 Motor vehicles
4 Motor vehicle parts
5 Computers
6 Low value shipments
7 Regional jet parts
8 Oil, not crude
9 Computer parts
10 Aircraft parts
11 Medical instruments for surgeons, dentists, vets
“Orders placed with U.S. factories fell in December for a fifth month, reflecting a pullback in business spending that will extend the recession.”
The groundhog saw his shadow this year for sure…
Is citi being sliced and diced?
Feb. 5 (Bloomberg) — Citigroup Inc., paring assets after accepting a $346 billion U.S. government bailout package, agreed to sell servicing rights on 185,000 loans to Wilbur Ross’s American Home Mortgage Servicing Inc. for $1.5 billion.
I bet the Saudis are pi$$ed.
I hope so.
STD has swallowed whole the SOV, and 21k two dollah fitty cent puts are on the April ‘09 hit list.
So, even though SOV did not go Subprime…they want ALT-A, heavy northeastern exposure, and now you get the Spanish housing bubble as well…..
kids its not too late to pile on the pile of steaming shat.
The symbol STD sounds rather appropriate then.
couple that with the fact that Nomura downgraded STD to “Sell before the smoking crater engulfs your childrens children”
I would add that hot money outflows on todays trading has STD right up near the top of the list……bout #12ish
Lets see, Gates…. the “DOS” genius…”clicking on little icon thingys…how unintelligent can you get!” (Hwy, bytes into an Apple)
“…Gates releases more bugs into the world.”
“In a TED session titled “Reboot,” Gates also called for vastly improving the quality of teachers at US schools because it will take “brilliant people” to solve the world’s woes.”
http://news.yahoo.com/s/afp/20090205/ts_alt_afp/usitinternethealthfinancegates
Total lack of social graces. And people felt compelled to laugh along with his lame jokes because he is a rich philanthropist?
I hope he quickly progresses through his Gallagher phase.
OK, I’ve been here for awhile, but FB=Foolish Buyer, F*****Up Buyer, what? We’re in a slightly better situation than some people, but no complacency here. I’ve been underemployed for a number of years (SAHM), unemployed since before Xmas (very seasonal part itme job), have friends out of work, & yes, we drank the koolaid, & bought a house in 2004 (not quite the top of the market)in an overpriced area. Any bones to throw me? or advice, other than just wait & see?…
Post some numbers…
It might make sense for you to stop the bleeding… In the meantime, if you have no income, maybe you can rent a room?
Many places back to 2000 prices, say goodbye to your equity. Don’t drain all of your savings trying to save this house. You may not be able to bring home much money in the next two years.
You got the meaning of FB correct.
A lot of areas are still at 2004 levels. Can you get out and break even?
I can’t blame you for deciding to wait it out, but it will cost you in the grand scheme. Just keep in mind, should things get bad, don’t sacrifice everything for the house. I read of people who - often at the bank’s encouragement - sell family heirlooms, cash out their 401Ks and liquidate everything they have in order to make a few more mortgage payments, only to loose the house anyway. Don’t wait until that point to walk away.
Don’t forget that Mark Zandi was the top economic adviser to John “The Economy is Fundamentally Strong” McCain. So if Zandi is predicting a housing bottom, you can assume that he’s off by about 10 years.
Actually that was Phil Gramm.
Yet so many think they are smart!
Watchdog: Treasury overpaid for bank stocks
Feb 5 11:32 AM US/Eastern
By JIM KUHNHENN
Associated Press Writer
WASHINGTON (AP) - A government watchdog group says the federal government overpaid for stocks and other assets from financial institutions under its $700 billion rescue program.
The chairwoman of the Congressional Oversight Panel for the bailout funds told the Senate Banking committee Thursday that Treasury in 2008 paid $254 billion and received assets worth about $176 billion.
The figures were reached by extrapolating the results of a study of 10 government transactions.
The Treasury by Jan. 23 had spent about $294 billion on more than 300 companies under the Troubled Asset Relief Program. In one bright spot, the inspector general in charge of reviewing the funds said the federal government has received more than $271 million in dividends from preferred shares obtained through the program.
Interestingly, it appears the viewpoint posted the other day on the Morgan Stanley website, by Joachim Fells, has apparently been removed. Guess they considered it a bit too out there, or something like that.
OK, I’ve been lurking for awhile, but FB=Foolish Buyer, F*****Up Buyer, what? & yes, I’m one of them , drank the koolaid, bought in 2004 (not quite the top of the market)in an overpriced area. We’re still in better shape than alot of people although I’m underemployed-SAHM, & unemployed since before Xmas (seasonal part time job). Any bones to throw? other than ‘wait & see’?
Sorry, folks, now I’ve double-posted,not patient enough…
Thistle -
There are mostly cut and dry numbers guys/gals here. What price did you buy, what’s your loan, what are the latest comps in your area telling you, that sort of thing.
Urghh, cut & dry! OK, $445 in 2004, currently owe 313K @5.8% & 60K @4%, don’t really want to walk away, we like this place & honor our obligations. Mortgage payment is not a problem, neighborhood, while down from highs of 2007, is steady, not alot on the market.
I would not want to be in the position of having to sell a house right now.
Zillow, which is WAY off the mark right now, has us only down $7K, which would only be relevant if we were trying to sell, which we aren’t. We are comparable to most homes in our neighborhood (most recent sale is 11/08). That’s our dirt…
445K, I hope it’s a mansion.
Not a mansion, we live near DC…
SELL NOW! Buy back @ $200K… or less.
Can you refinance at a lower rate ?
Sell! $445k will look good anytime from here on out.
Rent, and buy back at 2000 pricing levels.
Hoz wrote late yesterday:
“With the current ‘just in time inventory’ management, there is reason to believe that companies built up 4th Q inventory for realization of a later profit. Economists worry about the inventory build up which has no significant meaning. The item that should have been addressed by the economic pundits and was ignored by most was the negative GDP deflator. That was a first since 1954. ”
Hoz, optimism about future growth is one reason to build inventories. But isn’t another equally good explanation that companies did not slow production quickly enough in the face of a demand decline? I’m thinking the latter is more likely, and if so, it would bode quite poorly.
The various stimulous efforts are doomed to fail for very simple economic reasons-
1. We have as many a 18-20 million homes sitting empty. Supply exceeds demand. And more homes are still being built than are being bought (newly built homes exceed new homes purchased).
2. The price of homes, and therefore, the carrying costs of housing still exceeds the income levels needed to pay for the housing (on average). Think of the old ‘annual income:house price ratios’.
3. Wages are falling in real terms, making number 2 above worse! And now we are actually seeing the elimination of jobs nationwide (2.6 million in the last 6 months of 2008=an additional 1.6 million homes potentially coming onto the market).
4. Mortgage carrying costs are still higher than comparable rental incomes for the same properties, throughout the US.
5. On a household basis, debt and deficit spending still exceed long term trends. Savings rates have not recovered from our period of “irrational exhuberance”.
6. Households, local governments, state governments, and the Federal Government are, on average, in their worst deficit spending positions of the past 80 years. Translated: there are very few entities in the position to spend. And, at every level, revenue streams are ‘drying up’.
7. All of the above are forcing every financial institution to act it its own self-interest, in order to survive, by hoarding cash.
If going over the proverbial waterfall is inevitable, we can either paddle over now, or wait until we are exhausted, and see how it turns out. It takes real courage to face life’s most difficult realities. And, in the words of Yoda, “courage we must have”.
Shane, notwithstanding all these amusing facts of yours, the fundamentals are still quite strong. And on top of these strong fundamentals, confidence has shown signs of improvement in certain instances. The concerted efforts of economic and political leaders will ensure that the economy will not suffer a protracted downturn. I’m predicting a recovery in the fourth quarter of 2009 or the first quarter of 2010.
Now which of us do you think could get published?
Al: I respect your comment, but disagree with the “fundamentals are quite strong” statement. I hope you are right! Another area where we would probably disagree; you appear to believe that men control the economy. I tend to see it the other way around; the economy controls us.
Certainly, in the short run, men can manipulate the economy, for short-term gains. But, in the long run, the economy always has its way with us! As a society, we will either operate from a positive cash flow position (in the long run) or we will cede control of our resources to others! It will not matter who the President is, or who the CEO is of any particular firm.
Your post lays out very clearly how much further things have to fall. If government has responded to the current decline with 2T of spending, how much more will they spend in a futile attempt to counteract the facts you presented above? There is a positive feed back loop between housing -> banking -> credit -> unemployment.
The only way the government will be able to get banks to lend on housing again is if they guarantee the new debt like they do college loans. This would eliminate risk on the part of the bank and shift it to the tax payer. This would also force mortgage rates down to slightly above government debt rates.
The problem is that even if they succeed in increasing the total societal debt and money in circulation, they will not be able to undo the misallocation of resources. In effect there is NO WAY OUT of this that can avoid hyperinflation because the government will keep printing money in a futile attempt to fix an ever growing, self-reinforcing problem.
“In effect there is NO WAY OUT of this that can avoid hyperinflation because the government will keep printing money in a futile attempt to fix an ever growing, self-reinforcing problem”.
I agree, they will keep printing money, and printing and printing. “They will not be held to a monetary figure”to fix the problem according to Barry, and I take him at his word.
…and in the immortal words or Yogi Bera, “When you come to a fork in the road, take it!”
Bailout High Kabuki: Focus on the $500K salary caps, and ignore the move underway to dump Megabank, Inc’s gambling losses on to Uncle Sam’s balance sheet. And by the way, you cannot guarantee against losses which have already occurred; this is simply a way to make the wealth transfer politically palatable. Given his personal tax experience, I cannot think of anyone better qualified than Geithner to oversee this scr3wing of the U.S. taxpayer.
Wall Street Journal
Opinion
* REVIEW & OUTLOOK
* FEBRUARY 5, 2009
The ‘Guarantee’ Morgue
Good for bankers and politicians; bad for taxpayers.
…
Taxpayers need to realize, however, that Members of Congress want to impose salary and bonus limits to give themselves political cover when they are next asked to provide more bailout cash. Congress wants to seem to be tough on bankers in return for the cash, even if in reality the feds aren’t tough at all.
This is where the toxic asset guarantee gambit comes in. The Obama Administration is debating several new bailout options, and the favorite of bankers is federal guarantees. The idea is that the government would agree to absorb any potential losses on dodgy paper, perhaps after some small initial loss by the bank. With the losses thus insured, the theory goes, investors won’t fear a bank failure and the rest of the bank can go about its business lending and rebuilding its balance sheet and earnings.
Chuck Schumer, the Senator from Wall Street, told Bloomberg this week that insuring bad bank paper “is one possibility that seems to be gaining some currency.” And no wonder: For bankers and politicians, the benefits are clear. The bankers know their losses have been limited, which means their bad lending choices become largely the taxpayer’s problem. Unlike a public capital injection, a guarantee also doesn’t by definition dilute current shareholders. When the Federal Reserve guaranteed $29 billion in Bear Stearns paper for J.P. Morgan Chase last year, it came with no strings attached.
For Congress and the Obama Administration, a guarantee is also a thing of political beauty. As a mere promise to pay in the future, it requires no Congressional appropriation — and thus no popular uprising against bailouts. And unlike a federal resolution agency or a “bad bank” that would buy toxic assets from banks, a guarantee doesn’t get into the messy political business of how to value those rotten assets. It’s a bailout without the political fuss.
The problem is that guarantees don’t do much to clean up the mess. The bad assets are still sitting on bank balance sheets, resting in a kind of financial Rue Morgue. The bankers have little incentive even to manage the assets because the taxpayer is ultimately responsible for any losses. The assets could end up sitting on bank books like dusty coffins that no one wants to open for fear of the horrors they might find.
Private investors will know the mortuary is still there, however, which will continue to deter new private capital from entering the banking system. And what happens if in two or four years the assets are still rotten? Will a Treasury Secretary take the political risk of removing those guarantees, even in stages?
“this is simply a way to make the wealth transfer politically palatable.”
+1
With a knick knack pattie wack throw the sheep a bone, this might keep them paying their loans!
“With a knick knack pattie wack throw the sheep a bone, this might keep them paying their loans!”
LOL - good line!
Scary, this is right in line with an earlier comment I made about the only way for the government to encourage lending is to provide loan guarantees. The “nice thing” about guarantees is that they get to use very optimistic loss estimations and there is no limit to the bailout coverage. If these guarantees extend to new loans… the effect will be the same as the FDIC and with twice the monetary base (created over the past 5 months) to work with we would be facing 100%+ price inflation (assuming demand for the dollar stays constant, which it wont).
Darrell: thanks for the explanation late yesterday.
I see your point: if you can pay off all the debts in less than 5yrs on your own play, then there there is no point in doing a Ch13 to discharge and having to live with court supervision. But were you including the student loans in that analysis? If you could pay them off while running up dischargable debt, they effectively become dischargable, and it might be worth doing the 5yr plan after all, since I doubt you could pay off both the credit-cards and the student-loans in the 3-4yrs you outline.
On the house front, it sounds like you are considering doing a buy+walkaway or buy+short-sale; I agree that that makes the most financial sense.
The one benefit of the Ch13 over the walk-away 2-3yrs from now is that the sooner you take the credit hit, the sooner you start the clock ticking and the sooner your credit is repaired.
If your situation changes, though (e.g. either of you gets laid off), then suddenly the Ch13 or Ch7 may make a lot more sense now (or as soon as you could prepare for it by paying off the student-loans), since your ability to pay off in less than 5yrs would drop dramatically.
Hovnanian CEO Gets Performance Bonus as Company Value Drops 76%
By Bob Ivry
Feb. 5 (Bloomberg) — Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, gave its chief executive officer a 20 percent pay raise in 2008, including an almost $1 million performance bonus, as the company lost three-quarters of its market value.
Ara Hovnanian, who runs the Red Bank, New Jersey-based company his father founded 50 years ago, received compensation of almost $10.3 million last year after getting $8.5 million in 2007, according to a filing with the Securities and Exchange Commission. The figures include stock options of $7.34 million from 2008 and previous years, which the company says are worthless because the shares have fallen.
Homebuilders are struggling through the fourth year of the U.S. housing recession, cutting jobs, slashing prices, selling land and renegotiating debt payments. Ara Hovnanian’s performance bonus was based on generating cash, Chief Financial Officer Larry Sorsby said in an interview. The company had $838 million in cash on Oct. 31, the end of fiscal 2008, after finishing fiscal 2007 with $12 million, he said. That qualified Ara Hovnanian for a $979,302 bonus, Sorsby said.
Imagine how much compensation these REIC CEOs could earn if their companies were not losing billions of dollars in shareholder value.
(The parrot on hwy’s shoulder has learned a new phrase):
“Squuuuaaaaaak, Squuuuaaaaaak… less than 1 dollar”
“Squuuuaaaaaak, Squuuuaaaaaak… less than 1 dollar”
(parrot head bobbing up & down)
Have stocks reached a point of infection?
MarketWatch dot com
February 5 2009 1:15 P.M. EST
Stocks at infectious point?
Increasing numbers of investors smitten by notion that an inflection point is at hand. Historically, according to one market expert, a recovery takes twice as long as a decline.
Rumors are flying about suspending accounting rules, smaller bad bank, ring fencing, and free ponies.
Looks like the new deal is same as the old deal.
I saw that headline and figured you would post since it seems to be your primary news source. I was rolling on the floor with laughter. I did like Mr. Bill Gates release of Mosquitoes at the TED conference that is what I call a a bug in the works.
*Chortle*
Great play on words my friend!
Tear leaking laughter!
Leigh
WASHINGTON — The husband of President Obama’s labor secretary nominee paid about $6,400 Wednesday to settle tax liens that had been outstanding for as long as 16 years against his business, the Obama administration told USA TODAY this afternoon.
The disclosure came shortly before a 2 p.m. meeting of the Senate Health, Education, Labor and Pensions Committee, which is scheduled to vote on Rep. Hilda Solis’ nomination as labor secretary.
the US definitely need a better IRS system; in Netherlands tax evasion by kleptocrats NEVER becomes public.
ROFLOL.
What country is it that publishes the list of citizens and how much taxes they have paid? I always thought that would be a good idea.
that would be awesome.
Except that the secret billionaire attempting to live modestly would be exposed and face all sorts of threats. Exposing taxes paid is akin to exposing the income of everyone in society.
VirginiaTechDan, +1. I wouldent want my friends, family or neighbors having access to info. about the amount of money I rake in each year. I believe in flying under the radar of thieves and thugs. As far as anyone knows I’m in the same boat as they are, just barely making it each month.
Ok, ok, sheesh. Party poopers with your “privacy”…
I agree it would be undesirable as far as promoting liberty. I just thought it would be cool data to look at.
It should be OK to show THE AMOUNT THEY DON’T PAY though.
Daffy: Why that down right Dessssssssssspicccccccccccable!
It’s refreshing to know that, no Republican politician or “appointee” has ever had a “tax” sit-u-ation since at least…1952 …Wow, that’s quite a lot of honest-to-goodness, clean-living, keep-your-hands-off-of-my-stack, citizens!
My “millionaire ” brother has his own tax business…you ought to see what “ordinary people” do in regards to the US Gov’t’s 20,000+ pages (and growing
) tax bible…it makes the cirque du soleil folks look like keystone cops trying out a new trampoline. 
close, but yer a commie. you baited that comment so hard I almost fell for it.
hook line and sinker.
The procession stretched across the stage and into the wings..
“I’m sorry” said the first who then moved aside.
“I’m sincerely sorry.” said the next.
“I am deeply sorry.”
“I’m made a mistake and I am sorry.”
“I am truly sorry!”
All morning long Obama’s nominees dutifully stepped up to the microphone and expressed his or her deepest apologies.
Soon, the audience was unable to hold back the tears. Sobs and moans could be heard throughout the auditorium. It was a pitiful. At one point they began to stand and shout things like “We forgive you!” and “Please stop.. I can’t take any more!” and “Don’t be ashamed. Everyone does it.” and “We feel your pain!”, but for the most part they just sat there awe struck and silent, or hung their heads and wept.
What do tax cheat nominess and bailout packages have in common?
There’s too bloody many of them to keep them all straight.
Let’s nominate all of them over the course of a few years and get them to pay up for a chance at the job… then tell them that they should have paid when it was due. NO SOUP FOR YOU!
He kinda look like the “tan man Mozilla” in a interview I saw yesterday:
McSame: “I’ll stay in Iraq… a 100 years!”
“…suicides have been rising steadily since 2004 amid increasing stress on the force from long and repeated tours of duty to America’s two ongoing wars.”
Army reports alarming rise in suicides last month:
http://news.yahoo.com/s/ap/20090205/ap_on_go_ca_st_pe/army_suicides
I served alongside US troops in Afghanistan awhile back. The standard tour for Canadian troops is 6 months or sometimes 9. After that there are rules restricting returning to an operational tour for a year. By contrast, I believe the US troops have a standard 1 year deployment that is commonly lengthened. Some soldiers will board a plane leaving Afghanistan and end up in Iraq or vice versa, as apposed to going home. I’m amazed how well they handle this.
“Some soldiers will board a plane leaving Afghanistan and end up in Iraq or vice versa, as apposed to going home. I’m amazed how well they handle this.”
When all hope is lost and their is no opportunity back home on the streets of _____, you go where the system tells you. It’s one more reason to institute the draft.
The GOP’s best choice for 2012! ….Sarah “The Barracuda”:
Duck hunting …or…Moose hunting?
She really has to learn the Rash Limpbaughs “dialogue technique”: “cut’em off mid-sentence…then go on a yelling rant to prove your point.”
Palin rails against ‘anonymous, pathetic bloggers’:
http://www.google.com/hostednews/ap/article/ALeqM5jmnVpq0nGcPOacLhEz0w_sLrSBiQD965H9EG0
Sarah, do you mean to say that we-all here on the HBB are anonymous and pathetic?
I resemble that remark Slim!!!! : )
She is God’s gift to democrats.
Go Sarah!:)
Consumer prices in the U.S. fell at a breathtaking annual rate of nearly 13% in the last three months of 2008. Prices plummeted for all sorts of goods, ranging from clothing to TVs to furniture, as retailers advertised sale after sale.
news.yahoo.com/s/bw/20090205/bs_bw/0907b4119000357826
Interesting article - thanks for the link. Check this out:
“For economists, overcapacity is a tricky concept. Human wants are unlimited, so how could the world ever produce too much of a good thing? The key is what people can pay: In many goods sectors, prices still aren’t low enough to bring forth enough buyers. There will have to be some combination of falling prices and destruction of productive capacity before supply and demand come back into balance.”
Sound familiar? Like maybe - housing?
Same thing is happening for all goods now - massive oversupply, with demand plummeting not due to lack of want, but due to lack of money.
(cue combotechie…)
Obamania redux, or why goose-stepping and chanting unifies the Democrats:
Vasily Klucharev, at the Donders Centre for Cognitive Neuroimaging in Nijmegen, the Netherlands, found that the brain releases more of the reward chemical dopamine when we fall in line with the group consensus.
His team asked 24 women to rate more than 200 women for attractiveness.
If a participant discovered their ratings did not tally with that of the others, they tended to readjust their scores.
When a woman realised her differing opinion, fMRI brain scans revealed that her brain generated what the team dubbed an “error signal”.
This has a conditioning effect, said Dr Klucharev. “It’s how we learn to follow the crowd.”
Researchers have found that if groups perform tasks in unison, such as marching, dancing and chanting, they show more loyalty towards each other and are less likely to go against the norm.
The findings, published in New Scientist, could explain why the likes of Hitler and Mussolini both seemingly had the ability to bend millions of people to their will.
Mr.Pimpco says we need mo money, trillions! So turbo tax Tim over at the treasury had better get his $h!t together and revise the numbers, 900 billion…Taint enough!
U.S. Must Spend to Avoid Mini Depression, Gross Says…
By Kathleen Hays and Dakin Campbell
Feb. 5 (Bloomberg) — Bill Gross, co-chief investment officer of Pacific Investment Management Co., said the U.S. may slump into a “mini depression” unless policy makers spend trillions of dollars to spur growth.
“This economy needs support from the government, a check from the government in the trillions,” Gross said today in a Bloomberg Television interview from Pimco’s headquarters in Newport Beach, California. “There is a potential catastrophe if the U.S. government continues to focus on billions of dollars.”
Gross manages the $132 billion Total Return Fund, the world’s biggest bond fund. The fund gained 4.8 percent last year and has outperformed 99 percent of its peers over the past five years, according to data compiled by Bloomberg. The average government and corporate bond fund lost 8 percent in 2008, Bloomberg data show.
Pimco is a unit of Munich-based Allianz SE, Europe’s largest insurer.
So if the government does nothing we get a “mini-depression” and then things get better? What great news! I thought things would be worse forever if the government did nothing…
In my opinion, the best thing that could come from this mess is that the whole world comes to reject fiat money and central banking after world-wide hyperinflation. The size of the collapse will be so huge that no one would dare entertain the fallacies promoted by today’s “experts”.
Until sound (austrian) economics is taught in the majority of schools and the average citizen learns the pitfalls of printing money things will keep getting worse. If people will not learn the “easy way” they must learn the hard way and so the world is about to learn the hard way. Lets hope the lesson sticks.
Here is a list of what the “experts” have been saying since the beginning of this crisis:
1) “It’s contained”
2) We’ll have a “soft-landing”
3) There’s a 50% chance of a recession
4) We’re in a recession but we’ll recover in the latter half of 2009
5) Today: we may enter into a “mini depression”
Consider the track record of these experts, it seems that there is no doubt we’re heading for a full-blown depression.
“Comment by hoz
2009-02-03 15:23:45
darrell in phx
Have you thanked your employer for getting you out of US Treasuries near the top? lol
Always better to be lucky!”
I don’t have to sit here and take that from you…. Well, actually I do.
I’m still sitting in the Principal fund that mostly just hold Principal’s corporate debt. Taking longer to get the self-directed thing set up than I would have expected.
My wife’s 401(k) (actually 2x mine) is still in their “Government Guaranteed” with a lot of GSE paper and a mix of TIPS and Treasuries. She’s down about 2% YTD and is not happy about it. I showed her the return on the other options… okay, 2% down isn’t that bad, she decided.
Team Barry will have to act fast to reverse this. I was thinking perhaps they can drop rates to 0% on mortgages just like cars, it worked so well for that industry!
Mortgage rates rise to highest in six weeks
Lara Moscrip, CNNMoney.com contributing writer
Thursday February 5, 2009, 1:27 pm EST
Mortgage rates rose over the past week, pushing the cost of borrowing to its highest level since Christmas. And volatility is expected to continue as the debate over the economic stimulus plan continues.
The average 30-year fixed mortgage rate rose to 5.70% from 5.48% for the week ended Feb. 4, according to Bankrate.com.
The average 15-year fixed rate mortgage increased to 5.31% from 5.10%, and the average jumbo 30-year fixed rate jumped to 7.12% from 7.06%.
Adjustable rate mortgages were mixed over the past week, with the average 1-year ARM falling to 5.73% from 5.87% and the 5/1 ARM increasing to 5.5% from 5.41%.
The increase in mortgage rates makes borrowing more expensive for many would-be home buyers.
Last week, when the average 30-year fixed mortgage rate was 5.48%, a $200,000 loan would have carried a monthly payment of $1,133.07, according to Bankrate.com.
With the average rate now 5.70%, the monthly payment for the same size loan would be $1,160.80, a difference of nearly $28 per month.
Mortgage rates have been climbing since the Federal Reserve released its most recent post-meeting statement on Jan. 28, which was noncommittal about the possibility of buying long-term Treasury securities in an effort to reduce mortgage rates.
But offsetting that move is the government’s massive stimulus plan, which is being paid for via Treasury auctions.
One stimulus idea that’s being pushed by Senate Republicans would create a 30-year fixed rate mortgage at 4% for a limited period of time.
Artificially keeping mortgage rates low sounds like insanity. That’s one reason why some many people and businesses are in debt and there is general over capacity across the economy.
The car companies or other businesses can’t seem to stay in business without 0% financing and people are unable to buy their products without it. Don’t our policy makers see the disconnect here?
Now were about to do the same thing with housing. We’re going to have artificially low mortgage rates until it bankrupts the U.S. Treasury. But hey, at least we help people stay in the homes they couldn’t afford if only temporarily.
“We’re going to have artificially low mortgage rates until it bankrupts the U.S. Treasury.”
Don’t low rates reduce borrowing costs? Or am I confused?
The government will guarantee the loans. When there are defaults, the government eats the loss. This increases the amount of government debt, and the amount of treasuries it has to sell. In the long term, using the government to give people low interest mortgages, will increase the interest rate the government has to pay for its money.
Well, the last “long term” (1980-1982?) increased the interest rate the government had to pay by a substantial amount, and we are still here to discuss it.
if the government can buy its own debt then its free money right ?? makes me want to work hard for the same thing others get for free, is that Moral Hazard
Third time the charm?
About the house-purchase tax credit that was passed by the Senate, if you live in the house (principal residence) for 36 months you don’t have to pay it back. I’m not sure, but that part of the rule might be retroactive to folks that already got the $7500.
Also, it allows for transfer of the credit. If you don’t pay 15k in taxes, you can transfer part of the credit as payment for loans, expenses, etc associated with the purchase of the house.
- struck first-time homebuyer provision (now available to all buyers if principal residence)
-Recapture happens if
you sell the house OR
fail to occupy as your principal residence at any time within 36 months of when you bought it
Meaning, it really is a tax credit not just a loan as long as you stay in the place for 36 months.
Woops, meant for that to be a reply to the last one. Anyway, to continue:
(g) Availability of Credit for Transfer
(1) IN GENERAL- A taxpayer may transfer all or a portion of the credit allowable under subsection (a) to 1 or more persons as payment of any liability of the taxpayer arising out of—
(A) the downpayment of any portion of the purchase price of the principal residence,
(B) mortgage, flood, and hazard insurance premiums in connection with the purchase and paid at or before closing,
(C) interest on any debt incurred to purchase the residence,
(D) State and local real property taxes paid in connection with the purchase, and
(E) funding fees paid to the Department of Veterans Affairs in connection with the purchase.
WOOT!!!! $15K to help me buy and dump!!!
Suh-weet!
Whoa! Just noticed that you can transfer this $15K credit as your _downpayment_. So that’s how they’re going to deal with the fact that hardly any buyers have cash to fund a downpayment as lower LTVs are required.
For example, on a $100K house, with the $15K credit, only 5K cash is needed to get down to 80% LTS.
I think its still a 10% limit so in that example the credit is only 10k.
Right you are.
But for houses less than $150K, it’s an up-front downpayment subsidy of 10%.
Seems like a fairly transparent attempt to do an end-run around the increasing downpayment guidelines.
Jas in depression camp.
GE Immelt in depression camp.
Pimpco Gross in depression camp.
UK Brown in depression camp.
Did I miss anyone?
Yes
The Market
Ron Paul
Karl Denninger
New Hampshire House of Representatives (but its in committee)
3.4 million NSA Unemployed wokers in the US (tomorrow)
20 million migrant workers in China
Skip tracers in Dubai.
If the camp gets any bigger, we may need to put up razor wire-that’ll keep some of the folks off the fence.
Give America back to the natives even the ones in Oregon. Where is your stimulus check Vozzie? I am in line waiting for mine.
I only asked for a few hundo and promised I wouldn’t pay myself more than 500K a year as a salary. Then the UP can secede. The Independent Country of Forgottonia. Set it up as a democracy where anyone that can write their name can vote and if they can’t write, some other proof of residence will be used such as the pickup truck with old bumper stickers saying “The Pack will be Back”.
Then we can issue billions in government bonds that will never be paid back and nobody will ever have to pay taxes. Just roll over the bonds.
This may be the article Voz refers to - walking away in Dubai. Hard to imagine flippers even there.
http://business.timesonline.co.uk/tol/business/markets/the_gulf/article5663618.ece
Are there any restrictions on the sale / ownership time frame in order to get the the 15K tax credit? Could two people “swap” houses with each other twice and both claim the 15K credit? Transaction costs would probably cost about 5K.
Thoughts?
Bad idea in Florida, for most folks. It would re-set their property tax, a killer for the lucky ones who have save-our-homes and a house bought pre-bubble.
If you don’t keep the new house for 3 years, you have to pay it back.
http://cosprings.craigslist.org/reo/1022597217.html
This Craigslist poster breathlessly claims that he’ll be auctioning off his beautiful house this weekend for “52% of its market value!!!” As determined by who? - Zillow, naturally.
Yawn. Good luck finding a knifecatcher.
Productivity grew 3.6% for the 4th Q. How many recessions have had productivity growth? Did the great depression or the recession of 80 -82? Or did those events have declining productivity? I know the answer.
Also 22% of all layoffs have occurred in California. A couple of states set new lows for fewest claimants for unemployment - Maine and Virginia.
POLLYANNA !
productivity grew cuz fewer peoples is carrying the load….Output gap. Krugman sees it, why cant you?
Ben, I gotta tell ya, if my posts continue to get eaten….Im walkin off, AND IM TAKING MY BALL !!!
I thought about taking your ball away from you! But I figured you’d whine. I hate whiners. Eat the food that is set before you.
well played sir.
now back to Moody’s downgrading 52% of the ALt-A CMBS.
now go drink yer piss water at the Dewdrop Inn and buy all the beer for Lars….make sure you dont spend the milk money, two-holed corn pickers gotta have lunch.
I wish :>(
“No more partying at the DD for a few weeks” said Doctor ‘I’m gonna make you suffer so much for making fun of me as a kid’ Lowe. Eat these nice sweet pills to help you rest and . Frag im.
I am gonna ask you for all the dusty Stock Certifates that you dont want….real ones…. I’ll even send you blackberry jam and apple butter….Im serious.
yer like my rich uncle that I love.
Thimbleberry jelly
and Pasties
and stuffed cabbage
and dry smoked whitefish sausage
and Swedish Potato sausage
and beer.
for lunch: lol
Mr. Krugman is wrong on that point, Ol buddy. The recession is a white middle class middle manager male (BEA). A totally redundant species.
Yup.
Also, uneven unemployment means migration. Already happening where I live.
what you mean they tend to layoff the least productive !! thats crazy talk
NO they layoff the highest paid, then they turn up the heat on the others. My sisters boyfriend is a programer. They just told him he needed to increase the number of hours he works from 40hr/wk to 60. No pay increase of course. He looks around and sees his unemployed friends. I suspect this type of thing really increases productivity.
Boeing technical workers have a useful system. Everyone knows going into a layoff whether they are in the most risky quarter (rather less than 25% of the pool, since there are seniority bumps).
Matt, my sources in Boeing told me a month or so ago that things are being done differently this time around.
In the past, everyone had what was called a “retention rating”, which essentially told them which quartile they were in–e.g. if they were would be the first to go, or the last to go.
I was told that “retention ratings” are a thing of the past.
BTW, my source for this also is what you would call a “technical worker”–e.g. non-production, non-unionizedl, on the computing side of things.
Productivity has risen vs. other downturns because companies have learned that in a recession it is cheaper to make remaining employees work OT instead of hiring another warm body.
“I think the main reason for this global financial crisis is the imbalances of some of the economies themselves. For a long time they have had double [fiscal and current account] deficits and kept up high consumption based on massive borrowing.”
Chinese Premier Wen Jiabao
Fortunately we know he is not referring to the US about whom he stated, “We believe that it is important to stabilise the current Treasury bond market. To do so will be in the interest of shoring up market confidence, overcoming the global financial crisis and facilitating the early recovery of international markets….We will take into account China’s own needs to maintain the safety and good value of our foreign exchange reserves.”
In the meantime the instability and dysfunction in the US Treasury bond market continues to deteriorate with spreads as much as 85bps for similar risk US Treasury bonds. 15 yr expiring in 3 yrs vs new 3 yrs etc.
Vozzie, you have never seen a currency collapse before. You may be witnessing one now. “…As a country with a current account deficit and a majority of Treasury debt held abroad, the US is more at risk of such a development than a country such as Japan where the government bond market is primarily domestically held….”
http://www.treas.gov/press/releases/tg10.htm
Chinegro noise….red dragon sendin the boys back to the farm. China owns the vast majority of the claims on money. “They” can not only feed their own people….”they” dont need the dollar..
the US boys go farmin for moneys, and
2 holed corn pickers in the US iz workin for digitized satelite dot com.
dot.
deaf laotian.
The whooooshing Chinegro noise are the dollars sucked out of the US being used to purchase goods in Japan.
a new frontier?
you owe me the money fer what ive lost on GM.
apple butter and jam for a truck. Ill throw in a stained glass piece from Mrs Voz, and a two legged dog.
deal or no deal?
Im keeping the 2 legged dog. DD’s price is non-negotiable.
Sure I’ll keep Mrs. Voz!
That is what you meant wasn’t it?
Feb. 6 (Bloomberg) — Toyota Motor Corp., the world’s largest carmaker, lost its top credit rating from Moody’s Investors Service, as plunging car demand in the U.S. and Japan propel the company to its first operating loss in 71 years.
Moody’s cut the rating to Aa1 from Aaa. The outlook is “negative,” the U.S. rating company said in a report today.
Up 1.974% on the news.
On semiconductor will close its remaining Phoenix wafer manufacturing plant, eliminating 350 jobs by the first quarter of 2010, the company announced Wednesday.
The announcement of the plant closure came as the Phoenix-based ON (Nasdaq:ONNN) released its fourth-quarter results, which showed a net loss of $519 million, including special charges of more than $581 million.
ouch
Great interview with Schiff on TechTicker:
He so sounds like he reads the HBB.
He called the US economy a “Ponzi Economy” built on an un-sound foundation; heargued that the markets were providing the medicine needed to shift to a productive economy, and that no stimulus would be the right thing to do.
finance.yahoo.com/tech-ticker/article/169781/Peter-Schiff-Stimulus-Bill-Will-Lead-to-%22Unmitigated-Disaster%22