Bits Bucket For February 15, 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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Pretty messded up week.
House was broken into and robbed. AZ started talking about tax increases. Work announced no raises. And Friday I twisted my knee and have had to spend the weekend sitting with my knee propped up and iced.
If that isthe worst of my trouble, I’m doing pretty well.
Sorry to hear that D…
An unintended benefit of being a work-from-home dad is being able to keep an eye on the place and mix up the cars in an unpredictable manor.
When you twisted your knee, were you keeping a realtor’s ass? If so, let me know where to mail a donation.
Lol, I meant “kicking.”
Darrell — Good luck with your travails. Breakins svck (been there, done that). Whatever doesn’t kill us will make us stronger (if it does not cripple us).
Here is something of local interest to you. See the bottom of yesterday’s bits bucket for my kneejerk rants in response (note: I don’t necessarily believe this plan will work or will even be implemented, given that pols have been fruitlessly talking about doing something similar for over a year already).
Wall Street Journal
* FEBRUARY 15, 2009, 2:10 P.M. ET
Axelrod: Obama Has ‘Solid’ Housing Plan
By JOHN D. MCKINNON
The Obama administration this week will announce a “good, solid” plan with the goal of stemming mortgage foreclosures and putting a floor under falling real estate prices, a senior White House aide said on Sunday.
Speaking on “Fox News Sunday,” senior adviser David Axelrod said the plan that President Barack Obama plans to announce on Wednesday will aim to stem foreclosures, provide immediate help to homeowners who are “right on the edge” of foreclosure, and ultimately help in “raising home values that have been plummeting.”
David Axelrod speaks on “Meet the Press.” Mr. Axelrod pressed the Obama administration’s housing plan on the Sunday morning talk shows.
Mr. Obama plans to unveil his housing plan during a visit to Phoenix. As part of his swing through western states, he is set to stop in Denver Tuesday, when he will sign the $787 billion economic-stimulus plan just passed by Congress.
The plan will be something like… Your housepayment is $2500 and the MAX you can afford is $2000… okay, we’ll make the difference.
People will say, but I could buy the same house today for $1000 a month…..
Then they will, and walk from the $2500 a month house.
This plan, just like all the ones that came before it, will do ZIP, ZILCH, NILL except ignight a short-squeeze on Wall Street that lasts about 2 days.
And, of course, propping up home prices is like saying “F-YOU” to all those who did not ruin the economy and are patiently waiting for prices to return to normal…
Why on earth would Barack Obama feel it’s morally justified to say to millions of Americans that he doesn’t care about them?
Why would a Democratic president adopt a policy which is implicitly a reverse-Robin Hood subsidy of wealthy home owners by less wealthy renters?
“And, of course, propping up home prices is like saying “F-YOU” to all those who did not ruin the economy and are patiently waiting for prices to return to normal…”
That would be about 50 people in Cali. 49 if I move out.
rob
There’s really a very simple way to avoid all of this. Produce a good product or service, be transparent and deal honestly with your fellow man. Then we wouldn’t have the mess we have now.
Why would a Democratic president adopt a policy which is implicitly a reverse-Robin Hood subsidy of wealthy home owners by less wealthy renters?
Professor Bear,
Obama pandered to the “he’s going to pay my mortgage and my gas since I supported him” cretins to get elected, but now that he’s arrived, he’s going to do the bidding of those who financed his rise to power - major financial interests, not working stiffs.
At this point, it’s all a complete joke to me, the stimulus, the plans to “save” housing, TARP, etc.
None of this “money” will ever be paid back, it’s impossible. Perhaps Washington realizes this.
Really, all you can do is laugh contemptuously at this point and do the best you can to insulate yourself from the debacle.
Produce a good product or service, be transparent and deal honestly with your fellow man.
Sorry Palmy, that won’t work. Example:
1. Company #1 makes 12% profit. They spend 4% of that profit on treating their workers well, improving product, and maintaining company so that they can make 12% for the next 10 years. Return to stockholders: 8%. Meh.
2. Company #2 makes 12% profit. They let the equipment go to pot, skip R&D and basic maintenance, and treat workers like crud so they can give all 12% to stockholders. Return to stockholders: 12% woo-hoo! Cover of Fortune Mag! Next year, they are under pressure to make 14%, which business model can’t sustain. They make 6% and cover with fuzzy accounting and nasty debt to pretend they make 13%. CEO kicks the can down the road. Short-term gain, but in the end the company goes down entirely. CEO doesn’t care because he’s got a golden parachute.
If you think companies should be required to act like Company #1, congratulations comrade, you’re a socialist.
“If you think companies should be required to act like Company #1, congratulations comrade, you’re a socialist.”
I believe Costco is an example of a company that does well on Model #1. The shareholders don’t seem to mind, although some Wall Stree ANALysts did try to pressure the CEO into screwing his employees. Here in Florida, we have a company that is employee owned, which is Publix. An excellent company, if I do say so myself as a shopper. They deal well with their customers and their employees.
No need to be a cynic. My model can work quite nicely. However, I do envision more employee owned companies on the Publix model in the future. As to those people seeking outrageous returns, I think the Bernard Madoff debacle might have cooled some jets in that department. As Mark Twain famously said “I’m not so much concerned about return on investment as I am return of investment”, or something along those lines.
Yes some will say I can rent for $1K.
A lot will say THANK YOU SAINT OBAMA and take up the $2K offer.
If anyone saw “House of Cards” on CNBC, think of the woman who spent $14K paying her back mortgage payments instead of using the money to bury her father.
Think she’d take the $2K option and remain a valued member of society - ie a homeowner - or demean herself and become the lowest scum there is known to man….a rrrrrenter?
“…putting a floor under falling real estate prices, a senior White House aide said on Sunday.”
This is the biggest joke I’ve ever heard. I don’t care if they subsidize each and every FB (they couldn’t), this would do nothing to spur demand in the face of a return to responsible lending standards. People simply don’t make enough money for housing prices to remain high. I cannot believe that the retards in charge are so oblivious to such basic arithmetic.
Now this is change.
The Obama administration this week will announce a “good, solid” steaming mortgage plan on the floor under falling real estate prices, a senior White House aide said on Sunday.
Well you could always get one of these Obama votive candles and pray to him.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/15/BA9I15TTJ1.DTL
BTW: I just installed cameras inside and outside the house a few weeks ago, and a digital video recorder that will record the last 7 days. 4 of the cameras are very visible (to deter) and 4 are less-so.
The prices for these have come way down…you may want to look into it.
(We previously had a 2-camera system that was a few years old. Fortunately, we’ve had no break ins, but it came in handy when a drunk person crash-landed his car in our lawn. His insurance settled quickly when confronted with the recording….)
reuven, can you recommend brand etc, where you bought ie:online or private vendor? Thanks,
Having been robbed/broken into on a christmas eve in NYC one year, then once mid day Saturday when grocery shopping, I would be most interested in those deterrents you speak of.
The manufacturer I used is “SVAT”. (I upgraded the hard-drive in the unit myself to save some $$$ buy buying the smallest version.)
Go to svat.com
I bought via Amazon.com
I understand the practical benefit of surveillance cameras at residences, but they’re creepy all the same. They might also have the unintended effect of signaling to the criminal element that you have something inside worth protecting, which could, paradoxically, invite a home invasion.
“They might also have the unintended effect of signaling to the criminal element that you have something inside worth protecting, which could, paradoxically, invite a home invasion.”
I dunno, Sammy, home security experts (among them former criminals) say that if given the choice, a potential burglar would rather take his chances with a home that doesn’t have deterrents like cameras, alarms, a dog, etc. However, we do seem to have a home invasion element now that is more brazen and doesn’t care, so maybe you’re right.
My hunch is that the most likely people to break-in would be some neighborhood kid–(easy to do! He wouldn’t look out of place)–and not some professional criminal.
Cameras would definitely deter someone from the neighborhood.
We also have an alarm. The cameras help because if there is an alarm, I can check online (my system will page me in addition to calling the central station). My phone system will let me remotely call “911″ as if from the house, so I can then do it and get expedited police response if I can positively confirm a break in.
test
I was thinking about installing surveillance cameras, too. Firstly, to deter criminals, secondly, to provide evidence should criminals tote my stuff off, and thirdly—and most importantly—after a good party I expect I would have some really funny and entertaining footage to show at my NEXT party. Also, then we could have settled once and for all who it was who tried to eat the candle I had on my porch that was shaped like a pineapple. They consumed half of it. Look, man, there’s ‘too drunk’ and then there’s ‘TOO DRUNK’. And eating half of a paraffin candle ought to be one of them clue thingies about which state one happens to be experiencing. I didn’t really care about the candle, because I got it at a yard sale for 50 cents. Mostly I just want to know so I can laugh at them. And see, that’s where a surveillance camera would be ever so useful.
Work announced no raises.
This, and the following, are going to becoming standard in Corporate America:
No more 401(k) match.
No more health insurance.
Decrease in paid time off (holidays and vacations)
No more “full time” hires. All new hires will be temps.
Which is why I am now seeking employment with Uncle Sam. Once deflation had run its course Uncle Sam will be the only employer who will be giving cost of living raises (because he can print money.
If company matches disappear it is reasonable to think 401k contributions overall might slide as well. What effect will that have on the markets long term? Would those declines be offset by another source of money?
And if too few people participate in the 401K, you can lose your “right” to contribute. There are bizarre laws regarding 401Ks that limit contributions if only higher-paid people contribute.
Google for terms like 401K IRS Compliance testing and read all about it.
I’ve already experienced that at my company the last two years running…
401K contributions have already been canceled at several large companies ( Ford, Starbucks, etc).
Once other companies realize they can cancel them and not cause a brouhaha, they will jump on the bandwagon.
“Starbucks”
No! We don’t have time for a h*nd job!
F–k off, I’m eating!
It won’t have any effect at all once the printing presses really get going!
To which I would add: Rampant crime, as local gov’ts cut back on essential services and get a lot more selective about which cases to prosecute - that costs money. The only people who will get justice are those who can afford to pay for it. And yet if people use firearms to defend themselves and their property, the Obamites will accuse them of “taking the law into their own hands” - like whose hands is the law in now?
We have a “Make my day” law in Colordo.
How does the Colorado Callahan law work?
“…the Obamites will accuse them of “taking the law into their own hands” - like whose hands is the law in now?”
Who are the Obamites?
This, and the following, are going to becoming standard in Corporate America:
No more 401(k) match.
No more health insurance.
What kind of effect would this have on the equity markets if 401k mathces go away on a large scale? I think part of the reason the markets were buoyant for so long was due to the vast sums of money being poured in by company matching 401k plans.
Agreed. How many times do we hear to max out 401K, dollar cost average, etc.
Over time, this breeds the need for more people to follow those before them and do the same in order to keep the market moving toward the northeast (up). Almost has the ponzi ring to it, eh?
Which section of the Constitution is it again where it says every American is entitled to a yearly raise, 401k match and 3 weeks paid vacation again?
You do realize that if we turn our back on basic concepts of a “decent living” we’ll be dirt farmers lucky to get 1 bowl of rice a day.
Something about “Life, Liberty, and Pursuit of Happiness…”
Hope you feel better.
Hate that violated feeling.
I imagine having one’s home broken in to is psychologically akin to the physical sensation of a Joshua tree suppository. One feels violated, vulnerable, unsafe in the world for a while. Luckily the feeling fades over time.
The feeling shouldn’t fade over time. Outrage in the part of crime victims and their neighbors is justified and appropriate. Only when people get to the “I’m mad as hell and I’m not going to take it any more” will they have the fire in their belly to push for true change, not the fake Obama or McSame variety.
I believe the Old Testament says something about making robbers repay seven times what they stole. What a deterrent to some of these latchkey hoodlums whose parents don’t know and don’t care what they’re up to - until they get fined for junior’s crimes. Severe corporal punishment would also go a long way toward “rehabilitating” these scumbags.
I bet caning would do the trick (works well in Singapore I hear…).
http://www.corpun.com/awfay9405.htm
Here is one way to deal with hoodlums. Friends of my parents were expat teachers over in Singapore when this punk kid got caned, and they said he had it coming.
I remember that situation and all the media fussin’ well. And I thought a simple beating wasn’t nearly enough. I hate people who litter. If I had my way, anyone who litters would be made to eat whatever it was they littered with; soda cans, Whoppers wrappers, cigarette butts, used disposable diapers…
But I’m not some sort of insensitive heartless savage. I say, let them have salt and pepper and plenty of water to wash it down with. Heck, they can even have a napkin and a finger-bowl, is how gracious I am.
I was outside one day last summer when I heard a ruckus. It proved to be a Honda Civic with an obnoxiously loud tailpipe filled with screaming teenagers blasting by as they threw out their entire fast food meal along with empty cigarette containers, etc. They never even bothered to stop for the stop sign and could’ve killed someone. I was livid.
‘I was livid.’
Me, too! Frowny face!
I’m not impressed with Singapore’s behavior on this one, nor am I impressed with a law against graffiti that has its roots in trying to opress political dissent.
I don’t thing residential burglary is treated seriously enough. It changes you permanently.
I also think a “Megan’s Law” to alert neighbors when a convicted burglar moves in the neighborhood (including Juvenile offenders) would do more to protect citizens than the sex offenders registry does.
I think a red-hot brand to the forehead that spells out THIEF would be appropriate.
Convicted burglars should be stripped of all rights as citizens. They should be forced to put THIEF tags on their cars, just like some sex offenders have to, to alert police when they’re out and about, and should be subject to being pulled over and searched at any time and for any reason. Ditto for their person and premises.
I remember a thread a while back where we were discussing if stealing your stuff or loot is like stealing your life/time. Somebody said yes and someone else said no.
I’ve always thought yes, that stealing anything is really bad.
Now Sammy’s making fun of me!
But there’s a serious issue here. Crimes of “Juveniles” are kept secret, except for things like sex crimes. I argue that ceratain property crimes (breaking and entering) should also be made public, regardless of the age of the criminal.
Wow, does that mean all those Wall Street pigs and mortgage brokers and such could be branded? Or at least people could be alerted? Can we have the PO-lice constantly pulling them over and searching them?
Love to see that happen to Paulson, Madoff, Thain, Blankfein, et al. All that securitization was theft by fraud.
Reuven,
I’m not making fun of you. Granted, I wouldn’t actually brand someone - at least for the first offense. But you better believe that I would support caning them in pubic as an example and deterrent to others. And I’d make them make them pay back seven times the value of what they stole. If they’re juveniles, then the parent(s) are responsible. That might encourage better parenting.
Someone who breaks into another’s home isn’t just guilty of breaking and entry. They’re guilty of stealing the security and peace of mind of everybody in that household and community. They have forced people to become prisoners in their own homes, with bars on the windows and doors. Prison is too good for people like this. If they’re caught twice, they should hang. That sounds severe, but do we really need scum like that in our midst?
“Wow, does that mean all those Wall Street pigs and mortgage brokers and such could be branded?”
Now yer talkin’: Put the PIGMAN brand squarely in the middle of the forehead of any white collar thief who fraudulently Madoff with someone else’s life savings!
LOVE your ideas, Sammy!
PB,
true. You never recover the exact value of your losses, even though insurance pays about 60% and the idiot convict generates $18 checks to you every 2 months or so.
Restitution is good though. I don’t knock it. I deposit every check from that bastadge.
I just sprained my ankle and got my foot up on my desk with ice on my foot. My computer I bought with my stimulous check has a broken Motherboard and I did not have a valentines. Looking forward to tax increases soon.
Very sorry to hear it, Darrell. I hope they catch the asshats and get your stuff back. It could happen.
On the bright side, spring is coming and there’s beer in the fridge!
(I hope there’s beer in your fridge. Gosh, if there isn’t, then I feel REALLY sympathetic.)
Darrell,
Sorry to hear about all your troubles this past week. Break-ins suck!!! Don’t forget to pass along this information to your neighbors. Maybe you guys can help keep an eye on each other, even schedule times or days where you all keep watch (high-crime, like weekday mornings, etc.).
Hope next week brings about much better news for you!
I can relate, Darrell. I had my house broken into a few weeks before Christmas a year ago. They stole pretty much everything of value which could be easily carted off with the exception of a few items. Most of it was just “stuff” which could be replaced (electronics, tools, etc.), though I lost all of my pictures which were on the laptop which was taken. My advice to anyone is BACK UP YOUR DATA IN MULTIPLE PLACES. I learned a very painful lesson, as 5 years of hard work was gone forever. The anger will subside, though never disappear entirely.
I was also the victim of burglary (common wall broke in, apartment complex). The boob was in prison within two months of the breakin (idiocracy, no?).
You will get a percentage back from insurance, about 60%. The idiot will be in jail making license plates and giving you $18.00 checks every two or three months.
Joe Arpaio is like a double edged sword. One edge works for you and the other edge works against you. I’m going to learn more about that dude. He has my former neighbor wearing pink undies and working to pay me $18 evey 2 months or so.
Is Joe a St. Augustine type of Catholic? Laws are getting more stringent. The U.S. prison population will grow to ten percent of its population. Cure for the unemployment problem. But the bad news is your taxes are up to the 60% bracket. Canada is at 70% so we cannot get to 70.
Cheers.
“The U.S. prison population will grow to ten percent of its population. Cure for the unemployment problem.”
China got its start as an industrial power using the prison population.
http://www.worldpressphoto.org/index.php?option=com_content&task=view&id=1482&Itemid=50
Anthony Suau (USA) wins World Press Photo Contest for 2008.
The picture shows an armed officer of the Cuyahoga County Sheriff’s Department moving through a home in Cleveland, Ohio, following eviction as a result of mortgage foreclosure.
———————
Haha. Remember when renters were the hallmark of a bad ‘hood? These days you have to approach “owners” with some heat. You never know what kind of mortgage holder could be lurking in the closet.
As I’ve said, Cleveland is a vision of every cities future if this course is kept for another 5 or 10 years. Just a word of caution for you knife catchers.
“House was broken into and robbed.”
Happened to me once many years ago. Most of my stuff was still in boxes that were carted away, and it took several years to realize everything that I lost. Good thing I didn’t know who did it because I’d likely still be in prison.
Darrell:
I am so sorry to hear you got broken into and robbed. It happened to me once in St. Louis. I know the feeling. Goid Bless, and hang in there.
ATE-UP
ATE-UP: Happened to me in St. Louis, too! Luckily for me, the crook was so dumb that he basically only stole $15 worth of change, deciding to not deal with the hassle of trying to fence $20,000 or so worth of musical instruments that were sitting on my living room floor.
PB, give me list!! Whatcha got? There’s got to be a vintage Tele and some, wait, you’re not a drummer, are you?
Well he’s on this blog so we know he can read…
I had a gig the day of the break-in, and I was responsible for bringing equipment (instruments, stands, music, lights, etc). Not only was my violin sitting on the living room floor, but a friend’s Italian viola, valued at around $15,000 at the time to my recollection…
Twenty years ago, the standard excuse for burglars caught red-handed was that they had to go to the bathroom and, of course, never would think of relieving themselves outside: Broke in just to use the loo. Nowadays, the excuse is that someone invited them to a party at the address and told them just to go on in if nobody answered the door. Well, who told them? “I don’t know. Someone named John. Met him last night.” Sure.
A real tip-off to somebody casing a place to burglarize is when they knock on a door, and if someone answers, then they they spout some nonsense about selling magazine subscriptions. They’re turned away, of course, but know someone’s at home. If nobody answers, then they look for a way to gain entry. Moral to the story? If you answer a knock and encounter some shady character selling magazine subscriptions, turn them away, call the cops, and let them know. You’ll probably prevent the burglary of a neighbor who is not at home.
that is useful information…thanks.
Sometimes I work from home during the day. If someone rings the doorbell, I generally ignore them. But if they try to gain entry, they’ll be staring down the business end of a Remington 870 12-gauge.
Hey Sammy,
Maybe you are already dialed in with your pump……but if not, Invest $75 or so in a 20″ barrel with a CYL choke for that Remington 870.
Shorter barrel + open choke. Add buck shot and you’ll never miss in close quarter armed combat. You would be deadly against any pistol or rifle.
R
Speaking of “vintage tele,” I got my weekly Three Stooges fix from a local cable station out of Philadelphia. The “car title loan” commercials, about which I posted last week, are still flooding the airways; every station break had at least one. In going after Stooges fans, though, I think they’re aiming at the wrong demographic. Maybe I’m just flattering myself, but I think the average fan of Moe, Larry, and Curley is a little more intelligent than the boys on the screen. Nyuk, nyuk, nyuk.
;-D
I just don’t see a thief taking a vintage Tele. Not flashy enough. Heck, I’ve got my tele in the shop right now (long story, normally I set up all my guitars), and I’m cruising eBay looking for another Tele.
P.S. I was single at the time of the break in and owned no TV. I did have a $15 radio sitting out on the counter top which the thief chose not to take, though.
Luckily for me, the crook was so dumb that he basically only stole $15 worth of change, deciding to not deal with the hassle of trying to fence $20,000 or so worth of musical instruments that were sitting on my living room floor.
I had a similar experience in Oak Park, IL, a few years back, but it was more like a few thousand worth of musical equipment and $10,000 worth of records. The thief even dug through the couch cushions for loose change (WTF?). If he’d chosen the right albums, he could’ve tucked hundreds or thousands of dollars under one arm …
The thief also stole a $25 VCR and a cheapo point-and-shoot camera but not my SLR or lenses.
Goid — is that Jeebus’s dad?
Middling: TEE HEE!!
Goid (sick) (sic) (tic) (tic) (tock?), oh well, hell with it…
GM considering Chapter 11 filing
http://www.reuters.com/article/newsOne/idUSTRE51D1Q120090214
“One plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company,” the newspaper said. “The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.”
Question: If it is OK for a bankruptcy court to “rework” labor contracts, why isn’t OK for bankruptcy courts to rework mortgage contracts?
Because labor contracts are not secured debt.
Courts have never yet reworked labor contracts. The threat of a judge imposing rules has always been enough to gain concessions from the unions.
I miss Alad and NYCityBoy. The paranoia/anger ranks here have dwindled.
Ya gotta point. We might be running out of tinfoil anymore…
“We might be running out of tinfoil”
Naw, you and I can keep it going with pocket listings and the PPT.
Even though I am a political atheist I am glad Obama still has defenders on this site because once they start complaining and join the PussyCat Camp I know it will be time to get really scared.
Proof that the two party system really works.
Spermint, you called?
I am FAR more liberal than most on this blog.
The only difference between me and the Candy-Crappin’ Unicorn™ is that I know how to do long division.
I am pretty liberal too!
‘The only difference between me and the Candy-Crappin’ Unicorn™ is that I know how to do long division.’
Show-off!
Show-off!
Isn’t that how peacocks get laid?
I am still agnostic on which market moves are legitimate and which are financially engineered by the PPT, but I am also quite indifferent and bored with the discussion. It was fun for a while a couple of years back, but now that the stock market has been fried to a bitter black crispy state, the discussion is less interesting to me.
Not fried enough for my taste. I’m hungering for 6000.
Yer a man after my own heart, Lehigh. Every time the Dow sinks I’m doing the happy dance. Some financial op-ed I read recently put forth that when the Dow sinks, it’s good for regular folk. When it goes up, it’s good for the pig men. So I measure the recovery of the economy by a sinking Dow.
“When it goes up, it’s good for the pig men.”
I have said it before and I will say it again now: Part of the Fed’s game plan is asset price inflation, which in their econoganda dictionary does not qualify as inflation (it’s a wealth effect, silly!). Helicopter drops of liquidity fall disproportionately into the coffers of Wall Street gamblers, and eventually have the effect of driving asset prices up in bubble fashion. Those with wealth can chase the market up, while those of limited means are priced out forever by inflation.
“I miss Alad and NYCityBoy. The paranoia/anger ranks here have dwindled.”
So what happened to them? I know that aladinsane has been ridiculed for his gold stance for quite a while, so I’d imagine that pi$$ed him off, but I just can’t imagine what turned NYCboy away. Excellent contributors both in my opinion.
I heard Nycboy never ever wants to buy a home so he didn’t want to read about it. A fool can dream, so I still read.
The paranoia/anger ranks here have dwindled.
What do you mean by that, you bastard!
and I just sold my gold position today, so the ranks are even thinner. Euro gold made a huge run lately and it was time to pocket some gains.
Planning to buy back though before the euro (and dollar) start their final spiral.
that should read: ‘final death spiral’
Here comes the Welfare “Spendathon!”
Robert Rector, a prominent welfare researcher who was one of the architects of Clinton’s 1996 reform bill, warns that President Obama’s stimulus plan is a “welfare spendathon” that would amount to the largest one-year increase in government handouts in American history.
Douglas Besharov, author of a big study on welfare reform, said the stimulus bill passed by Congress and the Senate in separate votes on Friday would “unravel” most of the 1996 reforms that led to a 65% reduction in welfare caseloads and prompted the British and several other governments to consider similar measures.
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5733499.ece
This “stimulus” plan looks like a disaster. Lots of special interest money, little or nothing for the middle class.
Anyone noticed just about every credit card company has doubled it’s rates regardless of your history or balance. I am guessing since they are guaranteed by the Fed the bank wins if you pay or default. State taxes are going up and gas prices are going up. Together these will more than eat up any potential tax credit, and as usual the mddle class will get the short end of the stick!
Anyone noticed just about every credit card company has doubled it’s rates
Hasn’t happened to me yet.
Or me.
To infinity, and beyond!
Good Ol’St. Louis, right Professor? You know East St. Louis is always No. 1 or No. 2 in per capita homicide, don’t you?
I had a gig once in East St. Louis, and was duly impressed by the visible bullet holes above the front door of the venue where the rehearsals were held. I also used to commute on a frequent basis through East St. Louis. I always said a silent prayer asking that my car not break down en route.
“always said a silent prayer asking that my car not break down en route.”
PB,
I once was lost in the south side of Chicago while driving. Suddenly I felt like Merriwether Lewis of the corps of discovery. Not a nice place at all.
Mike
I had a (black) college roommate who grew up on the South Side of “Chi town” (as he colorfully referred to it). The juxtaposition of a sheltered white rube against a black inner city survivor was quite a culture clash, and it was definitely one of the best growing experiences of my youth to reconcile the gap between our upbringings.
One thing about St. Louis crime statistics which I always found fascinating: The murder rate in North St. Louis always closely rivaled that of East St. Louis, but was diluted by other areas of the city with much lower murder rates (e.g. south St. Louis). And there were also areas of St. Louis County (Florissant, for instance) with among the lowest crime rates in the entire country.
Will more fiat currency help?. What the devil is “fiat money” anyway? It means the Federal Reserve note in your wallet is money only by government decree. It’s a piece of paper of no value itself. It can be swapped for something of value only because the government declares it “legal tender.”
Until 1963 that note was “fiduciary money.” It, in itself, had no value - but it could be redeemed in “lawful money” of intrinsic value at anytime.
“Commodity money” is the stuff that once backed up the paper. Richard Nixon removed the last connection to it on August 15th, 1971.
The Founders defined the U.S. dollar as 371.25 grains of silver. Today the dollar is only a computer blip or a piece of paper. (Circulating coins have some intrinsic value, but not much.)
I’ll take all your blips.
While they’re still worth something.
All your blips are belong to us.
Actually isn’t Chrysler actively seeking fiat money?
Everyone I know is actively seeking fiat money. With all its shortcomings it still works quite well when it comes to solving financial problems.
Blips is king!
In one corner we have S.C. Governor Mark Sanford who is opposed to accepting “stimulus” money. In the other are the editorialists at the State Newspaper who are angry with Sanford for not conducting the affairs of the governor’s office the way they wish.
S.C. Governor Mark Sanford:
“Historically, simply throwing government money at a struggling economy hasn’t created growth. It certainly didn’t in Japan during the 1990s, when the Japanese government initiated no fewer than 10 stimulus packages over eight years. Instead of fortifying the economy, government intervention led to what is often referred to as ‘the lost decade,’ a time when Japan’s unemployment rate more than doubled.
“Supporters of the current plan like to point to the New Deal as a model, declaring that FDR’s massive government expenditures dragged this country out of the Great Depression. But the data points just don’t back that up. The Depression kicked off with the stock market crash of 1929. Ten years and billions of taxpayer dollars later, unemployment was stuck at 20 percent.”
We need a real war! WW2 kicked off the last big boom after the depression.
I don’t know if we could survice a WW3.
And the SC gov is a chump. All that will happen is that some other states will get that money and SC taxpayers will still be on the hook for the debt.
GH: We need a real war!
George W Bush said that he was not ready for war. You ready for war GH? You sure? How many push-ups, sit-ups do you do everyday? Don’t think the next war will be made-for-tv. In terms of global tensions, it’s already here and you haven’t seen anything yet.
Global tensions? You must be too young to remember the Berlin Blockade and the subsequent Berlin Airlift, or the Cuban Missile Crisis.
But wait a bit. Some power is going to test The One’s resolve. Then we can talk about global tensions.
I am being sarcastic. WW2 basically put every man and woman to work building arms for the war machine. The depression was solved at a cost. Be nice if we could put everyone to work without it having to be for war, but I doubt we could get much support for that.
That’s what the infrastructure spending is supposed to do.
BTW, it’s possible that WWII didn’t really lift us out of the depression. Perhaps we had deflated enough at that point so that all the excess capacity had been destroyed, along with the debt racked up during the 20s.
I really think depressions are the result of large-scale, secular credit bubbles. Keeping people employed during the downturns is not so much about “stimulus” as it is about mere survival and maintaining some semblance of social order.
Just MHO.
It is all good news in PHX these days:
An article about how the goverenor may ask for a special election to see if voters will approve about $1 billion in tax increases.
Another article about how we have the 3rd lowest unemployment benefits and how some want to increase it about 25%.
Another article about how state Dept of Econ Security is overwhelmed with calls and applications for assistance.
Not to mention the articles on hosiptals doing layoffs, hotels and resorts seeing fewer visitors, and a local credit union that is closing branches and cutting costs after large losses.
On the bright side……
I’ll let you know if I find any.
Oh, I know. House salesare way up from this time last year.
Jan 2008, 2500 sales. Jan 2009, 4100 sales.
Of course, that will not help you if you are just a private party trying to do a normal sale.
Jan 2008, 300 of the 2500 were distressed sales…. bank owned, short-sale, pre-foreclsoure, etc.
Jan 2009, 3100 of 4100 were distressed sales.
You forgot to mention it was reported this week that Phx is second only to Mexico City as Kidnap Central. Pretty bleak.
Just for grins, the local fishwrap reported that the major retirement community here experienced two break-ins with a unique twist. A Hispanic male (the paper’s description, before race-baiters get going) posing as a pest control worker sprayed chemicals on the hands of the ladies in the house and stripped their rings off while pretending to clean the chemicals off their hands. They don’t know what they got sprayed with, they experienced some temporary paralysis. Neat-O!
Mom’s gated senior community has been broken into several times and that is in the “safe” Indian Wells. They are being told to lock their cars, keep their garage doors closed immediately upon entering/exiting, and don’t walk to the ‘clubhouse’ with their purses. During christmas the few folks who put up lights, a couple of houses had their lights dismantled/removed.
Many moons ago when I owned a duplex in a marginal part of Ft. Liquordale, a buddy of mine kept his boat on a trailer in my yard. He came over to work on it one day and had two bags that basically contained garbage sitting on the end of the trailer. But the guy who came along on his bicycle, grabbed them and took off didn’t know that. We had a good laugh about it.
Hmm. What if people started booby-trapping some stuff that looked tempting to steal?
Hmm. What if people started booby-trapping some stuff that looked tempting to steal?
Well that is the traditional response to a garbage strike: giftwrapping your garbage.
Doing the ring stealing Americans won’t do.
Thanks McAmnesty. Thanks Bush. Thanks Nancy. Thanks Barry.
Y’all rock!
On the bright side…
You don’t live in California. Possible gas tax of 12 cents, an extra penny added to the sales tax (if you live in certain places of CA, that can bring it up to 10%), one time (supposedly) added tax on personal income etc…
We’re talking about all those things here too. Maybe tripple the gas tax. Maybe up income tax 30%. Maybe add 1-2% to state income tax. All possible proposals.
It’s only going to get worse. In Los Angeles, the illegals are gathering again in early March, saying that they are the key to healing our economy. Meanwhile, L A is gangbang central.
Italy: Taking On The Mafia -sm town-winning
http://www.pbs.org/frontlineworld/stories/italy801/
The Mexican Mafia seems worse, imo.
“the illegals are gathering again in early March, saying that they are the key to healing our economy.”
ROTFLMAO! If that were true, Mexico, Central and South America would be economic powerhouses and a paradise to live in.
Amen, palmetto.
Of possible interest to anyone even remotely tuned in to LDS culture: The Poway Stake is one of the wealthier in SD County. My wife (who is a member thereof) told me that in church today, an announcement was made that a new stake-wide position would be established for an employment specialist. Supposedly in the past, there have never been more than two or so unemployed men in the entire stake (which includes plenty of corporate officers, venture capitalists, business founders, etc), while there are currently 40-60 unemployed men on an ongoing basis.
Oh, thanks. I love to hear about Mormons.
Olygal — You would love my ‘hood. There are so many direct descendants of the Utah pioneers that some times I get confused and believe I have accidentally landed in the Celestial Kingdom.
Interestingly, I’m a direct descendant of the original Profit. Of course, we all are, probably….the man liked to ’spread the gospel’ with the help of his 13 year old sister-brides.
the man liked to ’spread the gospel’ with the help of his 13 year old sister-brides
I can’t even count the number of things wrong about that.
Goid help us all.
Senator Lindsey Graham (R-SC) this weekend, on ABC —”This idea of nationalizing banks is not comfortable. But I think we’ve got so many toxic assets spread throughout the banking and financial community, throughout the world, that we’re going to have to do something that no one ever envisioned a year ago, no one likes. To me, banking and housing are the root cause of this problem. I’m very much afraid any program to salvage the banks is going to require the government … I would not take off the idea of nationalizing the banks.”
He found himself in agreement with Maxine Waters (D-CA) and Peter King (R-NY) on the program (who, dare I say, probably agree on very little), while Senator Chuck Schumer (D-NY) disagreed with the idea of nationalizing any financial institutions.
Are we officially living in Bizarro World?
Avowed “conservatives” advocating for nationalizing banks, while some “liberal” counterparts demur? To be certain, it seems there are proponents and critics of this scenario on both sides of the fence … but it’s an interesting development.
The LA Times is running a large feature on the front page of the business section on foreclosure delaying tactics. I wrote them a frustrated letter that will never be published so I’m posting it here:
Mainstream media coverage of the foreclosure boom like your “Foreclosure 101″ series is missing the forest for the trees. The basic problem is that millions of Americans bought mortgages they cannot afford during the completely unsustainable increase of housing prices from 2001-2007. This housing price increase coincided with a decline in real incomes and was made possible only by hokey financing schemes sparked by the leveraged derivatives markets that have caused a collapse of the global economy. These schemes are gone for good and what those who bought loans with balances more than four times their regular steady reproducible annual incomes must face is that they are not homeowners, but renters. They are renting a mortgage from a bank until they experience their next illness, job loss, divorce or other hardship that they will experience every five to seven years on average. The sooner they get rid of that obligation and simply rent a home the sooner they can start saving for a mortgage they can afford and the sooner they might be actual homeowners. All of this denial and these band aid solutions simply prolong the pain, reduce the mortgage renters’ chances of someday being homeowners, and slow the inevitable return of housing prices to sustainable levels. Sustainable home pricing is highly studied and well understood, it is where the median home price is two to four times the median annual income for a particular area, period. The secondary markets will no longer permit loans of more than four times median incomes, regardless of monthly payments, and prices will return to a sustainable level. Since incomes are again dropping, house prices are very likely to fall below 1999 era prices in California. This is well understood and the faster the ratio of house prices to income corrects to sustainable levels the better off we are as a society. Encouraging people to prolong their period of renting mortgages with amounts of more than four times their regular income is simply irresponsible. Although it might keep some unsustainable finance and real estate industry jobs going for another six months, it hurts everyone by promoting unsustainable practices. It’s bad for the mortgage renters, bad for homeowners, and bad for the regional and global economies in the long run. Let’s suck it up as a nation and pull the band aid off quickly, deal with the pain, learn to build sustainable systems, and move on rather than trying to prop up a broken system that will do nothing but drag us all down.
This problem is world wide. Many countires suffered unsustainable price runnups and are contributing to the losses. The US leads in this area, but other countries including most notably those of the UK are about to suffer the wrath in a big way. With some 150K jobs being lost in the US alone I predict foreclosure and other debt failures to accelerate over the next 6 months, feeding more unemployment and so on.
I do believe something needs to be done and fast, or we will all be relegated to the poor house. Just not sure what. There is a lot of pressure from those collecting retirement bennies to keep inflation low, but with all the funds backing these retairement funds going into default it appears many will end up with sod all!
Ok, what is a Bank Holiday?
I know I should google it but may we discuss the possibility of one happening now? Could it?
Great letter, but some paragraph breaks would make it more digestible for J6P.
Paragraphs work. Try them!
Bravo! Couldn’t have said it better.
Nice letter, awaiting. Please let us know if you hear anything from them.
Ben and all the readers , I have enjoyed this site for the past 4 years and have enjoyed many comments. As we move forward , the real pain of this housing market is just setting in. We still have a ways to go however. We are only in the 1st 20% of the real damage and will have another 3 or 4 years of pain before things start getting better. With wages and salaries falling in real terms, housing prices will fall because the maximum amount a bank will lend if you qualify will fall. We had all better live within our incomes and learn to stay out of debt if we are able to raise the standard of living as we cannot borrow our way to the top as past experience has proven.
“We had all better live within our incomes and learn to stay out of debt …”
This is what seems to be currently happening.
Good advice for the long-term, but in the short-term the economy gets screwed, and those with jobs dependent on borrowing-and-spending are hosed.
It’s back to basics. Frugality rules, debt sucks, and cash is king.
So true. But now the question is: How does one deal with the aftermath?
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html
Russian and former Warsaw Pact economic woes will leave Western European banks holding the bag.
We all know what happened the last time Europe had a major depression.
Well now, that’s a sobering read! How the heck did Osterreich come to have 70% of their GDP entangled in Eastern Europe? Wow! Are they the next Iceland?
“monetary Stalingrad” indeed!
Sigh. Sooner or later, the banksters are going to have to realize that globalization is a failed experiment.
probably they do realize it but are keeping mum. As time goes by, there will be less and less of it. Inadvertantly, the US has, by all its securitization and the housing bust, pretty much put an end to globalization. Oh, you’ll hear all this screaming about US trade agreements and retailiation from other countries about “Buy American”, but “Buy __________” will be all the rage all over the planet. I’m glad it is over. Too bad we had to have another Depression to make it happen.
The US and the western world needs globalization more than anyone at this point. We need to keep things going, but at the same time rebuild SOME of our manufacturing capacity over time in order to compete with the rest of the world, i.e. developing nations. We now need the low paying jobs that will pay our residents and keep them from revolting. House prices will be cheaper, yes, but there must be jobs first, even if they are $hit jobs.I say raise tarrifs on imports by only 10% to raise money.
“The US and the western world needs globalization more than anyone at this point.”
Like a hole in the head. Look, all these systems and ways of doing business are nothing more than agreements. Heck, if we wanted to make acorns the medium of exchange we could do it. We can make our own economy if we want to. How do you think the present system came about? People agreed to it. If it sucks, disagree and do something else. What we can’t supply here in the US, we certainly can work out some sort of exchange with whatever country can supply the need. But globalization is essentially over. It failed miserably. Sweep the board, re-set and start anew.
And what’s all this spew about “protectionism”, like it’s a bad thing? The concept of protecting oneself, families and friends from bad events always seemed like a good thing to me. Same for nations. They can and should protect themselves. Charity begins at home. Set things to rights here and then see what we can do for other nations, in a more benign way.
I’m all for pulling all aid, all military bases and such from all over the world. Would go a long way toward funding the stimulus.
A+, palmy.
just the daily dose of Ambroses scaremongering and news manipulation. Every few days again he is trying to force the ECB with his articles, to lower rates to zero percent ‘right away or total disaster will struck’. He wants the ECB to follow the inflationary policies of Ben Bernanke and Gordon Brown; we know how well that worked out
California’s $4.1 billion budget plan looks like it is going down in defeat. The California Senate is one vote shy of the two-thirds majority needed to pass the budget and the Republican senators are not going to give up that one vote. Apparently Republicans are afraid their constituency will vote them from office if they do vote for the budget changes that would increase taxes. Sales taxes would increase one more penny per dollar, personal income tax increases 2.5% or 5% depending on the outcome of a May special election, gasoline is another 12 cents per gallon tax, car registration taxes go from 0.65% to 1.15% and income tax deduction for dependents would be dropped from $300 to $100. The tax increases would amount to $14.4 billion and there would be $15.1 billion in spending cuts mostly in education, with $11.4 billion in borrowing.
Since California has severe cash flow problems, the Controller is not paying Counties, disabled people, State income tax returns, businesses that are owed money by California plus other items. I also remember reading somewhere a month ago that the State cannot legally declare bankruptcy. The credit rating is the worse that all other states, as are our schools the last in the nation. Out prisons are also costing us $10 billion where the cost has doubled since the three strikes and you are out legislation was voted in by referendum, and the Federal courts are telling California to spend $8 billion on prison health reforms, or let prisoners go early. Prisons are at twice capacity and our recidivism if higher than most states. Parole officers are sending more back to prison than the courts mostly apparently for minor infractions. About half our homeless are now families that have never been homeless before. It used to be said that the rest of the Nation follows California. Well, I sure hope not.
California’s $41 billion budget plan… (off by a decimal point)
Locking up more people in a bad economy makes sense and is an easy way to reduce unemployment.
Wow, how times have changed.
I remember in the late 60’s and into the 70’s California was the place where everyone wanted to be.
With all the budget woes, onerous rates of taxation, overpopulation, and congestion (not to mention ridiculously unaffordable housing) it makes me think that despite the gorgeous weather and scenery, California is the last place I’d want to live.
Southern California is pretty, though….
Maybe Nancy Pelosi can donate to California out of her private savings the cost of housing, feeding, educating, medical and retirement benefits for the MILLIONS of illegal aliens she insisted take top priority.Oh, what’s that you say, no one can ever question anything about illegal aliens without being labeled a RACIST? No problem, just raise taxes on the Politically Correct leftists. They have all the answers, so obviously, they have all the money.
Yep, raise taxes on those who employ the illegal immigrants. No reason for taxpayers to subsidise the employers who want the lowest-skilled, lowest-paid workers. Let them pay for their own “cheap” labor.
“Prisons are at twice capacity and our recidivism if higher than most states.”
So why is that? Could it be because the state condones criminal behavior? Whatever the state or anyone else throws money at, you will certainly get more of.
Which necessarily brings me to the point of: Are you a statist? Do you believe the state is responsible for your wee being? Do you think the state is responsible for your well being? Do you believe in a nanny state? Why or why not? Only four sentence or more responses are acknowledged.
well, of course. Sorry!
This alone would bankrupt most states. As wards of the state, prisoners have a constitutional right to medical care that most of us probably cannot afford. As California elected to put lifelong drug addicts (i.e., third strikers) in prisons instead of treatment and this population is now turning 40 and 50, the state will soon be footing the bill for major organ transplants, chemotherapy, and all sorts of medical intervention people need to prolong the lives of bodies that have been ravaged by decades of drug abuse. Look for news stories of innocent people dying while waiting for an organ transplant while prisoners are given the organs. Like the healthcare nightmare in the US, the prison-industrial complex of California provided the most expensive possible solution to a somewhat complex yet addressable social problem.
That was a bad budget that should be defeated. It doesn’t cut any of the spending that could be cut with minimal impact, still relies on a lot of borrowing, and levies the largest state tax increase in history, $70B over 5 years. Closing the budget gap is a huge challenge, but this was a lame first effort. The state adds 50 employees per day every day for the past 10 years and yet this budget plan doesn’t cut a single position. Instead of looking for areas that could or should be cut, they instead just try to stick taxpayers with a bigger tab. What cowards, all of them, for trying to pass this with minimal coverage in the middle of a holiday weekend.
At least when I’ve contacted my U.S. reps I’ve usually gotten an acknowledgment if not a more detailed response. From my state reps, nada. Do they not have the means to respond in some form or do they just not care? There’s been no response of any kind yet to my email of a few weeks again regarding my plans to adjust my state income tax withholding if any tax refund is delayed.
A church in Syracuse NY took out a full page color ad in our local Sunday paper and I quote “God will bail us out”. Whew I was getting worried but now I can relax this church has a back up plan if Obama’s plan fails for the nation. The church is also seeking more donations by encouraging people to give them more money as they are hurting financially.
I put all my money in a basket, then throw it up in the air. God takes whatever he needs, and I keep the rest.
ROTFLMAO
Anyone remember those Pfister Barter card commercials on TV? I do. I just found out they were illegal. Hmmmm?
Hey, seems like a good time to continue that music talk from a few weeks ago since most of us are posting. I’ll dive right back in, randomly:
1. I played at the Wetlands in NYC as a teen, now condos. That really upsets me.
2. I hate that the bubble effectively killed cheap, artists areas.
3. I hate that the bubble mentality effectively killed the fun atmosphere of gigging and live music; like, turn it down, we’re counting money in here!
4. I’m not stupid, I realize that the intarwebs killed a large portion of the live scene; however, I think it’s not coincidence that most of the pop music during the bubble era was pure garbage, and I mean musically.
5. I miss the house parties, yes. See #2 and #3
6. I hate now that bars (hopefully ending) cater to the fruity drink crowd. Whatever happened to cheap beer, a pack of smokes, and some office guy shreddin’ on a Friday night.
7. I hate that the bubble crushed little boutique stores and clubs that supported all of this (also, intarwebs, too though)
Have you ever read:
Neo-Bohemia: Art and Commerce in the Postindustrial City
by Richard Lloyd
?????
Given what you just typed I think you’d love it. In a nutshell - popular culture always searches for “the other” (new and exciting stuff) so that it can sell it. Urban America was commodified for the consumption of the monied mainstream masses and the result is the very observations you mentioned.
Neo-Bohemia: Art and Commerce in the Postindustrial City
by Richard Lloyd
Is this Richard Lloyd of NYC band Television, I wonder?
I read a bunch of Hebdige in college, basically the same.
There was a narrow band of “not mainstream” that existed for years that never went major; like Ska-rock band Bim Skala Bim. They toured, and recorded, and had a reasonable life until it all went to crap in the late 90’s. There’s a million bands like this, now all probably working stupid day jobs.
All the Dischord bands, Taang! bands, Moon bands… Cargo Records, Fat Wreck… you name it. Evaporated. I’d settle for something like Matador, which was functioning like an indie, but funded by a major.
Again, youtube and digital piracy didn’t help, but housing is a huge component.
“I have nothing to do with it. I’m not in it, I’m not on the board,” Trump, who was chairman, said in a telephone interview yesterday. He said he had “no idea” whether there will be a bankruptcy filing.
Trump’s departure comes ahead of a Feb. 17 deadline to make a $53 million bond payment first due on Dec. 1. The target has been extended four times since an initial grace period ended Dec. 31.
And I will guarantee you that Trump will be saying 10 years from now he has never been bankrupted.
“Trump will be saying 10 years from now he has never been bankrupted.”
I’m hoping 10 years from now he’s drooling into a bib, gumming his Cream of Wheat and mumbling “You’re fired.”
http://news.yahoo.com/s/ap/20090215/ap_on_re_eu/eu_broken_britain;_ylt=ApFsT6tQjgbGlfvUPMLQPRRvaA8F
Sounds like (once) Great Britain is even further down the road to IDIOCRACY than we are, if that’s possible.
* FEBRUARY 15, 2009, 2:10 P.M. ET
Axelrod: Obama Has ‘Solid’ Housing Plan
By JOHN D. MCKINNON
The Obama administration this week will announce a “good, solid” plan with the goal of stemming mortgage foreclosures and putting a floor under falling real estate prices, a senior White House aide said on Sunday.
Now this is CHANGE.
The Obama administration this week will announce a “good, solid” steaming mortgage plan on the floor under falling real estate prices, a senior White House aide said on Sunday.
How is the decoupling theory holding up these days? Does anyone know the name of the Megabank, Inc analysts who were pushing that theory so hard a year or so ago? I would like to know whose face is covered in egg. (Anyone who has read my comments here over time knows that I have consistently ridiculed this idea since it was first floated in the MSM).
Japan’s GDP Shrinks 12.7%, Most Since 1974 Oil Shock (Update2)
By Jason Clenfield
Feb. 16 (Bloomberg) — Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, amid an unprecedented collapse in exports and production.
Gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.
Exports plunged a record 13.9 percent from the third quarter as global demand for Corolla cars and Bravia televisions evaporated. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. — all of which are forecasting losses — are firing thousands of workers, heightening the risk a slump in household spending will prolong the recession.
“The economy is in terrible shape and the scary part is that we’re likely to see a similar drop this quarter,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “All we can do is wait for overseas demand to pick up.”
The Nikkei 225 Stock Average fell 0.7 percent as of 9:35 a.m. in Tokyo. The yield on 10-year government bonds rose 2 basis points to 1.28 percent.
“All we can do is wait for overseas demand to pick up.”
——————–
This is funny.
““All we can do is wait for overseas demand to pick up.””
If they’re willing to buy up toxic assets, there should be no shortage of orders. They’d have to fight Uncle Sugar for the business, though.
Financial bailout-angst: ‘People are mad’
Email Print Link
Posted February 12, 2009 11:15 AM
The Swamp
by Mark Silva
Outrage - that’s what members of Congress are voicing at the bankers hauled before them to account for what happened with billions of bailout dollars.
(See the Tribune Bureau’s story below about the “masters of the universe” called on the carpet.)
But there should be just as much outrage over a lack of oversight in Washington, says one who made a fortune on Wall Street, served in the Senate and now runs a state, New Jersey Gov. Jon Corzine.
Asked about the $1-million salaries reported by banker after banker at the congressional hearing, the governor said: “I don’t think anybody’s losing any sleep on those salaries… I think we have been asleep at the switch on oversight of all activities.”
The governor was somewhat reserved in his criticism for the most vocal of the critical congressional questioners in an interview on MSNBC’s Morning Joe.
“There were 72 people in that hearing on the congressional side of the table,” he said. “There were a wide range of folks and a wide range of quality of questions.
“The thing that stood out - people are mad,” said Corzine, a former co-chairman and CEO at Goldman Sachs before entering politics with an MBA from the University of Chicago. “It doesn’t mean that individuals haven’t made their own mistakes. But the fact is that there is a systemic problem.”
Check out this quote from Steven R. Hurst of the AP today:
“Late last summer, Americans began feeling the pinch of the recession and left the housing market in huge numbers. That coincided with a sharp increase defaults on home mortgages, a devastating combination that triggered the financial crisis. Lending froze as banks and investment houses realized they were holding trillions of dollars in bad assets.”
Huh? What a bunch of baloney! This guy needs to be fired!
In many places, sales are way **up!** The market is healthy, and prices are returning to normal, healthy, affordable levels which have not been seen this entire decade.
Why do these people get away with this stuff?
test
As market falls, more homes are selling for less than owed
‘Short sales,’ once a market rarity, can be preferable to foreclosure for both lenders and borrowers.
By TUX TURKEL, Staff Writer
February 15, 2009
The townhouse at King’s Pine in Westbrook is vacant, and Kim Fowler is trying to sell it for the owner, who borrowed $181,000 against the property.
No way he’ll get that much, in today’s sagging real estate market. So Fowler, who owns Maine-Stay Realty in Scarborough, has been trimming the asking price since December.
She’s now at $148,500. And she’ll cut it twice a month until someone makes an offer.
“Everything will sell at the right price, we hope,” she said.
Fowler and her client are hoping for a “short sale,” in which lenders agree to accept less than the full amount they are owed.
Experts say short sales are multiplying fast in Maine during the recession. More people are losing jobs. More low-interest adjustable-rate mortgages are resetting. Home values are continuing to fall. Of 30 listings Fowler has had this year, all but one had an asking price that’s less than the sellers owe.
There’s no way to quantify the number of homes in Maine that are “under water” the term bankers use to describe a property where the mortgage is now higher than the market value. No one wants to sell his or her home at a loss, and some sellers omit the distinction in their advertising.
As interest in short sales grows, however, more agents are getting educated about how to handle the deals. Companies that charge a fee to package short sales and shepherd them through the approval maze also are setting up shop in Maine, and catching the attention of consumer advocates and state credit regulators.
In 2009, for better or worse, “short sale” is becoming a familiar term in Maine’s real estate vocabulary.
Banks agree to short sales to get as much money as possible from borrowers who can’t afford to pay off their loans. Borrowers resort to selling short to avoid the credit impact of foreclosure, and to get out from under debt.
But getting a short sale to close is a complicated, drawn-out process. And it’s not always successful. It takes persistent sellers, patient buyers and flexible lenders to put all the pieces together.
Owners must document that they can’t make the mortgage payments. Some sellers may have to repay some of their debt. And if the property is a vacation or investment property, the seller may need to pay income taxes on the debt.
But for clients such as the one Fowler is representing, a short sale may prevent foreclosure.
The condo owner paid $160,000 for the three-bedroom end unit in 2003. He also took out a home equity line of credit in 2006, when real estate values were peaking. Altogether, the owner borrowed $181,000 against a property that today is worth much less.
The owner tried to stay current on his loan after moving to take a job in Ohio. He rented his condo, but the rent never covered expenses. Then his renter had financial trouble and got behind in payments. Now the owner must sell, or risk foreclosure.
Fowler listed the home in December for $178,000. No takers. She has been lowering the price since then, and is now at $148,500.
‘LOOK AT THE OPTIONS EARLY’
Fowler is very familiar with short sales. She went through the process herself a couple of years ago with an investment property. She later took a course to become a certified distressed property expert, which gives her expertise in handling short sales. The certification is becoming popular with real estate agents, and several Maine brokers have taken the course.
But even when Fowler gets the condo under contract, she won’t try to manage the short-sale negotiations.
The process can take months. Lending requirements vary and keep changing. Frequent calls must be made to loan modification officers at out-of-state banks, who are swamped with hundreds of similar requests. Instead, she’ll hand off the job to a loss mitigation specialist.
“It allows me to do what I do best, which is sell properties,” she said.
Fowler works with M.H. Solutions Inc. of Portland. Most of the business taking place at the four-year-old company today comes from real estate agents who don’t have the time or expertise to bring a short sale to closing.
“The successful short sale is only the one that closes,” said Doug Solman, the company’s president.
M.H. Solutions completes roughly seven of 10 short sales, Solman estimated. Daily experience negotiating with lien holders gives the company an edge that many agents don’t have, he said.
To make money, the company tries to negotiate a fee from lenders, and sometimes takes a piece of the agent’s commission. But the most typical arrangement is to charge the buyer a flat $2,500 fee, which essentially becomes part of the sale price.
M.H. Solutions helped Robyn Palardis and her family close last month on a home they had been trying to sell in Biddeford since August 2007.
Palardis paid $240,000 for the large colonial-style home in 2001, and used part of it for a flooring business. But the business closed, and with an adjustable-rate mortgage rising and oil bills mounting, the family needed to sell.
They started by asking $300,000. But as time went by, the price dropped to less than the $230,000 owed on the mortgage. Then their real estate agent suggested M.H. Solutions.
During the process, Palardis got some insight into the dysfunctional state of the short-sale market. A buyer made an offer of around $190,000, but the out-of-state bank that held the mortgage rejected it, holding out for more money. Months later, the bank agreed to sell for $170,000.
Palardis said she learned a lesson.
“Look at the options early,” she said. “Don’t wait, thinking, ‘It’s going to be OK, the market will turn around.’ ”
DELAYS COST BANKS BUYERS
The growing demand for short-sale services has caught the eye of Will Lund, superintendent of Maine’s Bureau of Consumer Credit Protection. Companies that charge money to act as intermediaries and modify a debt are subject to regulation in Maine.
“Whenever there’s this much money changing hands, we think it’s important to regulate these businesses,” Lund said.
In some states, companies have taken money from desperate homeowners, with the promise of saving them from foreclosure. Then they disappear, or do little to help.
http://pressherald.mainetoday.com/story.php?id=239443&ac=PHnws
“M.H. Solutions completes roughly seven of 10 short sales, Solman estimated. Daily experience negotiating with lien holders gives the company an edge that many agents don’t have, he said.”
Even if they’re cherry picking the properties they handle, completing 7 of 10 short sales is outstanding. That’s a tough, time-consuming business, even for the relatively uncomplicated cases.
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Sorry if this has alreadt posted
* FEBRUARY 15, 2009, 2:10 P.M. ET
Axelrod: Obama Has ‘Solid’ Housing Plan
By JOHN D. MCKINNON
The Obama administration this week will announce a “good, solid” plan with the goal of stemming mortgage foreclosures and putting a floor under falling real estate prices, a senior White House aide said on Sunday
This is CHANGE.
The Obama administration this week will announce a “good, solid” steaming plan on the floor under falling real estate prices, a senior White House aide said on Sunday
Recipe for a larger dependent class plus a higher crime rate: A return to welfare with no strings attached. Even the Clintons got that one right…
UNION-TRIBUNE EDITORIAL
A multilevel disaster
Stimulus bill’s contents, handling could not be more disheartening
2:00 a.m. February 15, 2009
The conventional media wisdom – in the form of The Associated Press – has already weighed in on the $787 billion economic stimulus bill approved Friday by Congress. It’s a “big win,” AP concluded, on the “signature initiative of the fledgling Obama administration.”
That may be the view now. In time, however, we fear the measure will prove an epic mistake, both for its contents and its handling.
There is no question that in this deep recession, some economists believe heavy government spending is the only way to jolt the economy back onto track before millions more jobs are lost. There is also no question that millions of Americans think Barack Obama is right to chart a sharply different course than that of George W. Bush.
But the problems with the 1,000-plus-page bill are legion. The most basic flaw is that many of its projects costing tens of billions of dollars cannot be started for several years, meaning they will yield no short-term stimulus. It is outrageous to pass the tab for these projects on to our children and grandchildren.
Another unforgivable flaw is how the bill makes huge changes on major national policies without any significant debate. One provision guts the 1996 welfare reform law, which reduced caseloads by 70 percent. Instead, individuals will again be entitled to unlimited lifetime benefits without work requirements and, amazingly, states will have financial incentives to increase caseloads.
People vote for socialists for the perks.. you might have a union job.. you might have a low paying job.. you might have personal responsibilities or burdens you cannot comfortably pay for by yourself.. You might have very strong leftward feelings about a particular social or economic policy.. Anyway, it’s a relief to have Big Govt backing you up on at least some, if not all, of that stuff.
The leftists know there’s a huge amount of free enterprise out there, far more than capable of feeding their desires. Sure, someone else earns and pays for their perks, and that’s not exactly fair.. but so what? The productive people in the business world can afford to pay for big government and still come away with much more profit than they need, and they have much more than you have.
And, what are the chances our socialist tendancies would actually kill the golden goose of free enterprise? Just about zero. It’s practically unthinkable. The economy is beyond huge. It cannot be reigned in or controlled for long. Nothing can stop the quest for growth and profit because it’s part of human nature. So, every election, year in and year out, a very large portion of us vote Leftist.
Then one evening, purely by chance (or perhaps fate), a rare, critical ingredient, normally missing, appears. Certain vital enzymes form and coagulate in the broth. The chemistry is perfect. All the pieces fall into place. The lab is just the right temperature.. the atmosphere is just right.. wind, temp and humidity.. ozone levels are perfect. A bolt of lightening of just the right voltage strikes the antenna.. and the creature gasps it’s, first deep breath.. and opens it’s eyes. It’s alive.
you have hit it on the head; keep whacking, it’s getting up on its feet…..
“We took a little money out to build our swimming poll, you know, ’cause I have three boys and I gotta keep ‘em happy.”
http://www.cnbc.com/id/28993790/?slide=9
CLASSIC! No dip stick….all you have to do for your three boys is be an A D U L T and make sure they have a roof over their head plus food and an education.
Extras like a pool, WII, XBox, mobile phone, cars, whatever are just fluf…..you and your children and not entitled!
Oh, and shave that idiotic soul patch on your chin. Tell your wife to wipe that stupid “deer in the headlights” look off her face and wake up. Maybe start thinking for herself, gee what a concept.
Parents are such children themselves today. My girlfriend gets caught up in it sometimes because her 3 kids always complain to her how much stuff their friends have.
I keep telling her give it a few more months. Her kids friends will start feeling the pain when mommy and daddy finally have to face the forclosure and the maxed out credit cards.
EU bubble update:
1 month Euribor, the base rate for most variable rate mortgages (very popular in Netherlands, Spain etc.) declined from 5,20% on October 8 to just 1,61% today. A Dutch variable rate mortgage costs about 0.8% above Euribor, so currently around 2,4% nominal (1,2% effective). In Spain the premium is probably higher but they still get a terrific deal if you ask me. Despite this fact, homeowners keep complaining that they urgently need help from the feds because ‘rates are too high’.
You gotta admit that the ECB is pulling miracles: wages are rising like never before in the last 10 years (up 3-6% yoy in many EU countries) and mortgage rates are hardly above inflation (close to 2%, officially - in reality mortgage rates are below inflation for sure). Homeowners should count their blessings, especially as a huge amount of variable rate mortgages is resetting in Netherlands this year. This miracle cannot last much longer …