Bits Bucket For February 24, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Obama’s Mortgage Plan for Fannie, Freddie May Face Legal Snag…
Feb. 24 (Bloomberg) — President Barack Obama’s plan to use mortgage-finance companies Fannie Mae and Freddie Mac to refinance as many as 5 million loans may face legal challenges over whether the administration is overstepping its authority.
The proposal may violate requirements that homeowners put up at least 20 percent of the appraised value of a home or carry mortgage insurance, said U.S. Representative Scott Garrett of New Jersey, the ranking Republican on a panel that oversees the companies.
“I don’t see how that stands in face of what the statute says,” Garrett said in an interview. “It certainly seems as though they need to seek a congressional change, a legislative statutory change.”
Fannie and Freddie’s chief regulator, James Lockhart, has said the changes are exempted from mortgage-insurance rules written into the companies’ charters and won’t require new appraisals. Lockhart said the strategy will make it easier to help struggling homeowners get affordable mortgages.
The American Society of Appraisers, a trade group representing more than 5,000 appraisers, is weighing legal action to block the policy that would cost its members potential business, said Peter Barash, a lobbyist for the organization.
The group will decide whether to sue when the administration releases full details of the housing plan, scheduled for March 4, Barash said.
“We’re not there yet because we’re not sure what their policy is going to be,” said Barash, of the association based in Herndon, Virginia. “Determining loan-to-value is the linchpin of the plan, and in order to get a reliable value it makes sense to rely on professional appraisers.”
‘Legal Snag’
Uh huh. Wait til the contract law gets reviewed.
Airlines are notorious for declaring BK as a “business decision” for the sole purpose of breaking union contract laws. (even if you hate unions, the airline did sign those contracts, and should abide by them.)
So if a homeowner wants to be break his contract and accept bailout money, let him declare BK. Let Congress make up a new chapter in bankrupcty law just for them. If the FB is underwater, he can refinance, IF he declares BK, IF he sells his toys, IF he freezes his credit cards, and goes into financial servitude. And hold them to account.
Where are you going to get 50,000 new BK judges?
I’ll do it — if the pay is right. How tough could it be. Confiscate everything except the house.
IAT
Many states have laws that force companies to sign contracts with unions *or else* the government will decide upon the agreement and force it on both employees and employer.
Doesn’t that mean the government also forces the union to sign a contract with the employer? Why the asymmetric perspective?
IAT
No contract law at issue here, except for the contract made up of the mortgages and notes between borrowers and lenders. That sort of contract is already regulated at a federal and state level. Appraisers are just third party beneficiaries of the established system, and I very much doubt they have standing to challenge anything that cuts them out of the modification process.
And most contracts are void if fraud is discovered.
I wonder how many mortgages that will affect?
“in order to get a reliable value it makes sense to rely on professional appraisers”
LOL!!
My thoughts exactly. That worked out SO well for them in the past, nothing but “reliable values” came out of the housing bubble, that’s for sure!
“… to rely on professional appraisers”
Who in the world would NEED professional appraisers when YOU can get a FREE professional guesstimate and a magnetic RE calender from Suzanne and the REIC gang in only 3.7 seconds if you act in the next ten minutes and call 1-REO- DIAL-A-Prayer
RE: when YOU can get a FREE professional guesstimate and a magnetic RE calender from Suzanne and the REIC gang in only 3.7 seconds if you act in the next ten minutes and call 1-REO- DIAL-A-Prayer
Hey, Mikey! You’re closer than you think, buddy!
I remember gettin’ occasional calls from a real estate broker friend for “advice” on what was known as “opinion of value” letters she use to write for various lenders.
Once she called relative to a small marina where the owner wanted to borrow a “paltry $600k”. The owner had plenty of “equity”, so the lender only needed something for the “file” for the auditors.
She didn’t have a clue as to value and so was “pumping” me for a little “D&D” (data and direction-since she didn’t have any).
In the course of our conversation, while telling her that this was “serious” money and perhaps this commercial grade appraisal (it was against federal standards for licensed appraisers to perform this type of work),it might be better left to a more qualified and competant source, I happened to ask-” BTW how much are you charging for this “opinion”…oh, I get around $50.00. The lender sends me their “warning track” foreclosure appraisals so I’m doing this as a favor.
And anybody wonders why the FDIC is runnin’ around to all these under the radar po-dunk bankrupt banks.
So my guess, is that in order to meet the mandate for 20% equity requirements for borrowers, the government will, as you note, merely farm the work out to $50 buck fee REALTWHORES out under the guise of providing “jobs” for the biggest PAC contributor in the country.
As a taxpayer footing the bill you can expect a “rubber stamp” number for each assignment, as this is the underwriting requirement neccessary to grease the skids for the success of O’Bama’s mortgage bail-out plan.
You can only consider rubber stamping valuation numbers as a practive to which the REALTWHORE organization is very much accustomed too.
Why call when you can just use the Z’estimate?
Since the STATED INTENTION is to lend more money than the current value of the home, what do you need appraiser for. (ducks, runs away)
Precisely, Jim. The whole point of the exercise is to re-fi them at LTVs that would not have qualified under traditional conforming standards. So having an accurate LTV is useless.
For the mortgages already securitized by Fannie/Freddie, it makes little difference since the taxpayer is already on the hook for the losses, and thus aren’t really taking on any additional risk. That part of the plan actually kind of makes sense.
The point is to have the appearance of lending standards while lacking the substance. Fools the vast majority of the population.
For the subset of loans that are already owned by Fannie/Freddie, the risk to the taxpayer from these refi’s may be LESS than the risk they taxpayer already holds.
So it’s not really a matter of fooling anyone.
The non-GSE loan reworks are a totally different story.
It seems absurd on the face if it doesn’t it? But try to remember that many appraisers were extorted to hit the numbers the mortgage company wanted and they were getting NO support from their professional associations nor law enforcement.
The Gov’t can pretty much do what it has intentions to do, one way or another… see x1 illustration below.
George W. Bush becomes Managing General Partner
In April 1989, the Rangers’ owner, oil tycoon Eddie Chiles, sold the team to an investment group that included the future President of the United States George W. Bush. Bush would serve as the Rangers’ managing general partner until he was elected Governor of Texas in 1994. Chiles was a friend of the Bush family. After hearing Chiles planned to sell the team, Bush headed a group of investors that bought the team. He secured his share of the Rangers, less than 2-percent equity, by borrowing $500,000.
During his tenure, the Rangers and the City of Arlington decided to construct a new stadium to replace the aging Arlington Stadium. Ground was broken on October 30, 1991 on what would become The Ballpark in Arlington (now named Rangers Ballpark in Arlington). Stadium construction was financed by Arlington residents, through a sales tax increase. The city also authorized the seizure of land, through eminent domain.
In 1998, Tom Hicks bought the team. Bush received nearly $15 million from the sale, mostly due to a generous 10-percent bonus of the purchases price, which was $250 million.
Texas Rangers (baseball) :
From Wikipedia, the free encyclopedia
You know he’s not the President anymore, right? We got a new guy, Obama.
You know he’s not the President anymore, right?
———————————————————————————
but unfortunately his policies will endure into perpetuity
You know Clinton was out of power for a few years, yet, during the W. Bush years, the Bush lovers were blaming Clinton.
I was commenting on the completely out-of-the-blue nature of the post. It’s a REALLY REALLY long stretch to think that the best (or even top 1 million) example one could think of to show “the government can do what it wants” is that George W. Bush made money off of a baseball team. Should this be renamed bits bucket and artitrary anti-Bush jab on the day?
“Clinton was out of power for a few years, yet, during the W. Bush years, the Bush lovers were blaming Clinton.”
We’re still blaming him. And we’re also blaming Bush for not correcting the endless revolting lies and excesses of the Clinton administration. Bush didn’t lie, but he didn’t use the truth as a weapon the way he should have.
“Bush didn’t lie, but he didn’t use the truth as a weapon the way he should have.”
BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!! You honestly believe that? I’ve got some WMD’s for ya!
Hey LeighValleyGuy,
What are you smoking? Bush didn’t lie? You’re pulling my leg right?
Wow. That was a simply STUNNING statement.
Bush didn’t lie, but he didn’t use the truth as a weapon the way he should have.
Oh golly.
Oh me oh my.
I came late to the party, so I’ll let Grizzly’s BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!! suffice.
“Way to go, Brownie!” is kind of a lie, isn’t it? -
Once a president, always a president. Do you think you can address him as “dude”? Do you think you aren’t paying for his security detail in perpetuity?
“…Stadium construction was financed by Arlington residents, through a sales tax increase. The city also authorized the seizure of land, through eminent domain.”
All that city, county, state, federal tax monies…still couldn’t buy a national championship, dang.
“Prior to the 2001 season, star free-agent shortstop Alex Rodriguez, previously of the Seattle Mariners, was signed by the Rangers in the most lucrative deal in baseball history: a 10-year, US$252 million contract.”
New stadium name: “eminent domain on the Texas plain”
“…On March 19, 2007 the Rangers announced the termination of the agreement with Ameriquest Mortgage Company on ballpark naming rights.”
This was soon repeated a mere 13 years later with another rich guy by the name of Jerry Jones.
Arlington Texas, two world class sports facilities and 3rd world roads.
W hat a lose he is! Even his papa cant stand the little failure W.
“…and in order to get a reliable value it makes sense to rely on professional appraisers.”
There’s that word again…”professional”
professional, prostitute… two words, same concept really. Just means that you’re getting paid for it.
If you want an assassination for hire, you go find a “professional” as well. They have most in common is their ability to do their work and stay out of jail.
If you want it done right call the guys at ACORN…..the 5 billion dollar professionals.
I can’t help but think that if there is any way out of this mess, 20% downpayments are going to be a necessary part of the solution, whatever that is.
Bubble Viewer,
You have to wonder if the down payments would have made a difference. Agreed, when people have some skin in the game they’re much more conservative, but for the sake of argument let’s assume that even w/ 20% DP’s we had a bubble anyway?
Would we be better off in areas where homes have lost HALF their value? Would people be walking away as well? Is it a far better thing to have millions of Americans SOL on their DP’s and vowing -never- to own again, or pumping more $’s into AIG ( again ) ?
If there was a 20% down payment requirement there wouldn’t have been a bubble. Most people make rational decisions when using their own hard earned cash.
I agree. The infestors would never have been able to drive up prices and demand would have never spiraled out of control like it did.
John,
Not arguing that in the least. I’m just trying to get some feedback and how things might have played out differently? Basically what would be the impact on the country as a whole if the debacle was simply that homeowners were out the money instead of the banks?
Had there been a 20% DP hard and fast rule in place, AND a 20% Correction, would any of this be an issue? Obviously not. It would just be tough luck. But now we go to a 21% correction, now 25% then 35%, 50%.
If you -and- the wife are unemployed for extended periods, it may not be a matter of “toughing it out”? Would we be facing a mountain of foreclosures given the structural weakness in our economy that was bound to surface anyway?
If they require a 20% downpayment from now on, houses are gonna be going for Detroit prices all over the country. Since more Americans barely even have two nickels to rub together, avg. home price would have to be fiddy cents.
Bub,
But there’s a major misconception right there. I think we’ve all been a little pollyanna-ish on this one? 100% Financing didn’t happen overnight. And 20% Down *wasn’t “the standard” as recently as 2002?
In fact 20% Down went away some time ago. Probably in the 80’s. There have been multitudes of little/no down payment programs around for years. FHA, VA etc. So why didn’t we have massive bubbles in military towns going back to the… 70’s?
Maybe the bubble happened because a house became the “American Dream” or an investment.
“But there’s a major misconception right there…….FHA, VA etc. So why didn’t we have massive bubbles in military towns going back to the… 70’s?”
All of those low down payment programs required PMI and strict employment verification. There is no major misconception.
All of those low down payment programs required PMI Not my VA mortgage in 1980. IIRC, the VA plan insured only ~$18K worth of the mortgage, the rest was not insured, and the insurance was not “private” in any case. I paid 5% down even though I was urged to put nothing down — the interest rate was 11.5%.
I don’t believe the issue was ever about putting 20% down. What really mattered was if you could afford your monthly payments.
Once interest rates reset, then people couldn’t. They were good for teaser rates and that was all.
I know we didn’t put down 20% when we bought in 1974. Don’t remember the interest rate now.
“…Obama’s Mortgage Plan for Fannie, Freddie May Face Legal Snag…”
“You’re killing me Larry!”
The Gov’t can pretty much do what it has intentions to do…see x1 illustration below.
George W. Bush becomes Managing General Partner:
In April 1989, the Rangers’ owner, oil tycoon Eddie Chiles, sold the team to an investment group that included the future President of the United States George W. Bush. Bush would serve as the Rangers’ managing general partner until he was elected Governor of Texas in 1994. Chiles was a friend of the Bush family. After hearing Chiles planned to sell the team, Bush headed a group of investors that bought the team. He secured his share of the Rangers, less than 2-percent equity, by borrowing $500,000.
During his tenure, the Rangers and the City of Arlington decided to construct a new stadium to replace the aging Arlington Stadium. Ground was broken on October 30, 1991 on what would become The Ballpark in Arlington (now named Rangers Ballpark in Arlington). Stadium construction was financed by Arlington residents, through a sales tax increase. The city also authorized the seizure of land, through eminent domain.
In 1998, Tom Hicks bought the team. Bush received nearly $15 million from the sale, mostly due to a generous 10-percent bonus of the purchases price, which was $250 million.
Texas Rangers (baseball) From: Wikipedia, the free encyclopedia
Can you post this one more time so I can figure out your point?
WIthout new appraisals, was it the administration’s plan to use three-year-old values? In California, Nevada, and Florida, taxpayers would be on the hook for 200-300% LTV. No wonder Governor Crist is slobbering all over Obama, it’s a huge transfer of wealth to his state.
Not that many in the MSM care about, or understand little things like this but the fact is…
The claim is, the DOW closed today nearly as low as May,1997. Nobody accounted for the effect of money inflation which makes today’s close 5228.58 in 1997 dollars…far worse than the advertised comparison made by Wall Street and the docile media today.
I think they understand it for the most part - that’s why it’s mentioned as such a remarkable thing. It makes the headlines. If the Dow was generally supposed to be flat always, it wouldn’t make the headlines.
And the Dow generally *would* be quite flat - only slightly rising, even over the long-term, if not for inflation. Most people don’t realize but over the long term about 85-90% of equities’ investment return is not due to business growth but rather due to dividends, which are not reflected in the indices.
I read the AMX $300 buy back, CNBC/Bloomberg talking about the tax increases for the rich and then Friday the DOW had finally found the path of least resistance.
These were not tea leaves, or the entrails of dead birds ready for auguries, they were clear, unmistakable yells in the midst of a raging fire to SELL.
‘These were not tea leaves, or the entrails of dead birds ready for auguries, they were clear, unmistakable yells in the midst of a raging fire to SELL.’
Very nicely put, there, Muir. I especially liked the ‘auguries’ part.
Actual Roman augury signs:
1. birds flying to the left
2. birds flying to the right
3. eagles flyig around the Capitoline Hill, especially more than one
4. the ceremonial geese at the temple of Jupiter won’t eat.
5. the entrails of most of the sacrificial animals of the day are malformed. (bad news)
6. thunder heard to the left. or the right. whose right or left the historic translations which I have read don’t really say.
7. an important officer in the legion dies mysteriously before setting out on a campaign (major bad luck)
I just thought that these signs would be useful for those trying to decipher stock market signals and the mavens that think they know what they’re doing. After all, the Romans were pretty successful for 1500 years or so.
Thank silver!
Silly rabbit…the DOW, like Real Estate, only goes UP !
(you are supposed to buy and hold and to IGNOR any minor deviations, corrections and CRASHES)
“Place your Bets…New Shooter coming out !”
Nice observation.
DOW 6000 here we come!
It took me months but I finally understand PBs “deflation for now, in the end we all die” statement.
–
Did read some posters yesterday that were were sharing their elation for Real Estate now, specially the sub 100K in SE FL.
They are premature. IMHO Real Estate will be a good buy in FL and people will continue to come here, it’s just too early.
We will go pass 6000 on our way to 5000.
Dow 5000 is what I’m thinking and have been thinking for a while, but thought I was being tin foil hat. Now, it seems possible.
And people (not here, but outside HBB world) thought I was crazy when I was saying DOW 10,000. I honestly didn’t see 7,000 or lower.
I have a sticky note I hung on my cube wall in January, 2008 IIRC.
“9,500″
That was going to be my return to the stock market. Then someone here posted the old line that “when you’re making bets and you look around the room and can’t identify the sucker, then that’s you.”
I’m still not back in because I figured out I’m the guy getting taken for a ride. The rules keep changing and the benefits to me are too small relative to the risk. The people making money on stocks are the people taking the vig, not the people making bets. Same as with real estate: the vig-estors of the mortgage brokers and real estate agents made the money, the little speculator got taken for a ride.
I wouldn’t be shocked to see 4,000 at this stage. I also wouldn’t be shocked to see the indicies move the decimal place by a factor of ten so we could get DOW 55,000 tomorrow.
During GD I, the Dow dropped 89% from its peak (according to Wikipedia)…that would translate into a bottom of approximately 1400. So I’m gonna be optimistic and go with 3000.
“During GD I, the Dow dropped 89% from its peak (according to Wikipedia)…that would translate into a bottom of approximately 1400. So I’m gonna be optimistic and go with 3000.”
The amazing thing implied by the GD-I experience is that by buying in at 3000, there is _still_ a risk of losing 50% of your capital. Hard to believe, but…
“The amazing thing implied by the GD-I experience is that by buying in at 3000, there is _still_ a risk of losing 50% of your capital. Hard to believe, but…”
Well said, Prime.
Another interesting point implied by the GDI experience is that even if you were lucky to time the bottom, you would see mediocre returns on your investment for almost 20 years. This is a thing that is missed entirely in all discussions I have seen. Everyone is waiting for the bottom to jump back again, expecting big returns to follow almost right away.
If GDI and Japan experiences are any guidance, there could be easily a decade or two of no returns on our investments. And it is easy to see why – there is overcapacity of everything imaginable and it will take quite long for these overcapacities to go away and the markets to return to sustainable demand/supply levels.
Good point. So, question. If one is investing with a 20 year time horizon, isn’t this implosion a Godsend. I mean, if one started saving for retirement late, being able to invest during this crash with money one does not need is a chance to buy many more shares per unit cost. If it takes 20 years to get back to (inflation-adjusted) $10,000, all the better!
IAT
PS — Of course, one must still pick non-losers.
IAT
IAT, my point is that we will be having global demand destruction for the next several years (maybe even decades). Accordingly, there need to be supply correction to bring the supply in line with demand. But the problem is that in the last economic cycle, we grossly overinvested and now we have a huge overcapacity in everything.
While the demand can shrink overnight, the buildings, machines, transportation, et cetera, which were build in order to meet previous demand, do not disappear at once. And as long as they have useful life in them, there will not be a demand for investment capital. Why would anyone need new capital, if one has unutilized capacity already? If there is no demand for investment capital, than there will not be a demand for our savings. Hence we, the savers, will not have good returns on our money no matter if we buy stocks or keep them in the bank, as long as there is still overcapacity.
It sounds like some traders expect Bernanke to resume Greenspan’s favored role as stock market cheerleader in chief.
February 24 2009 8:54 A.M. EST
Bears repairing to their lairs
Stock futures point higher. Fed chief Bernanke, testifying on Capitol Hill, headlines trading-day highlights. Home Depot, Microsoft and Pfizer in the spotlight among the blue chips.
• Bernanke should cut the pessimism, observers say
INDICATIONS
U.S. stock futures nudge higher before Bernanke
By Steve Goldstein, MarketWatch
Last update: 7:48 a.m. EST Feb. 24, 2009
Clarifies wording of J.P. Morgan comment
LONDON (MarketWatch) — U.S. stock futures nudged higher Tuesday ahead of testimony from Federal Reserve Chairman Ben Bernanke, with traders waiting to see if the Fed chairman can shake markets out of the gloom that has sent stocks to nearly 12-year lows.
Not sure if this is the “comment” whose wording was “clarified”:
J.P. Morgan Chase, which late Monday cut its quarterly dividend to save $5 billion a year and said its first quarter has been “solidly profitable,” said in a presentation that it could see a two-year recession, unemployment over 10% and a house price decline from peak-to-trough of 40%.
J.P. Morgan shares rose 5% in pre-market trade.
One “expert” was quoted this morning, saying Ben B. has got to be much more positive even if things are not that good. “We need a more positive statements from the FED to get things going again”
Is there blood in the streets yet?Simply amazeing to see these levels on the dow.
Nah — I don’t expect to see that before housing prices bottom out…
Is there blood in the streets yet?Simply amazeing to see these levels on the dow.
As heard in the elevator on my way up to the office this morning, a middle aged business wonk stated: “The stock market is crashing. It’s like the end of the world”.
The blood is coming. Most of the 50+ million holders of defined contribution plans (aka 401K) in this country are willfully ignorant of the losses they took last year and continue to take because they didn’t adjust their portfolio to reflect what was coming and are now too afraid to make any changes for fear of locking in losses.
401k’s are a crap shoot
I’m not willfully ignorant of my losses, but I am too afraid to get out for fear of locking in losses.
Nor’Easter–I’m feeling quite smug about my decision a year ago to rebalance my 401 k into 88% treasuries. So my gains were -3.42% woo hoo! OTOH, my Roth IRA is down something like 40-50% so I’m not going to sprain my arm patting myself on the back.
We won’t see anything in the 6000’s today, at least. The DOW, decoupling from reality, just rocketed straight up nearly 100 points to just shy of a 180 point gain on the day.
DOW hits 1997 levels. Once-in-a-lifetime opportunity. BUY! BUUUUUUY!
Maybe thursday I will be buying (puts).
*evil grin*
I just took a peek at numbers for SE FL and nearly passed a brick.
2/2 condos with at least 1200 sq. ft. under $50K. SFH under $100K. In Boca Raton. (Granted, West Boca.) Egad.
Seriously? I’d like to see that online, if you have a link.
I lived in west Boca in the early 90’s. Those prices are lower than *then* even!
I replied with a link, but it didn’t post. Anti-spam filtration?
Go to realtor-dot-com and look up zip code 33428 (which is in West Boca).
Just that one zip code has two 2/2 1200 sq. ft. condos listed under $50K and three or four SFHs for under $100K. Not mobile homes, but real freestanding SFHs.
There are also condos and SFHs with much-too-high wishing prices. A total of 187 listings in that relatively small area for condos and SFHs for under $200K.
Very strange times we are living in.
Probably Boca Century Village. You’d need to be 55, and have approval from your Rabbi.
Nope. The Village Green. I’m assuming its a 55+ community, though none of the ads say so.
The fact remains that 3.5 years ago in this area, 2/2 condos were selling for $170-250K and SFHs started around $325K for the crappiest dump in the worst neighborhood you could find. Quite a collapse.
I live in Boca. I knew prices were too high, but didn’t think they’d drop 75% in some cases. I just had an amazing thought - the monthly square footage cost to buy one of these, even including taxes and insurance, is LESS than they charge for STORAGE around here. A 5×10 (50 SQFT) unit is $100/month.
I wonder if storage is the next bubble to fall?
From what I see - those are all out in the very old and fairly rundown very-SW-corner of Boca. In other words even though they have a Boca address, they’re not really “Boca”, at least as most people think of it (especially the Boca-ites). Most of those homes date from the 70’s and probably have severe mold and/or termite problems, from looking at them.
Nonetheless, it’s a start. E.g. I see one for sale for $99k that at the peak (per zillow) was valued at $296k!
However that also shows it currently valued at $170k - so something’s definitely wrong with the house. That’s probably the case for all the sub-$120k ones.
Zillow is way off on its valuations in this area of FL. They appear to be ignoring recent transactions because they are “significantly below value.” Well, DUH, whatever someone was willing to pay for it is its “value.”
Take a look at actual completed transactions post-Wall Street implosion (9/08) to see what stuff out there is actually worth now.
Vast numers of homes here in Ohio are 20 to 30 percent over zillowed; tax collectors are suicidal. Cuts to city workers are being called permanent if Obamabucks dont start falling soon.
2/2 condo at $50K? What would that make a 1/1? $35K? That’s cheaper than run-down homes in Oil City PA! I abhor condos, but at that price even I would consider buying one.
Add in taxes and HOA and your payment would probably be over a grand a month though.
That is correct. Figure mortgage payment around $400, HOA $300+ and taxes $300+. Still not worthwhile for snowbirds, imo. Much cheaper, easier, and less stressful to rent a furnished place for 3 months out of the year if you just want to escape winter.
A place in Boca purchased for $50K would have taxes of $1,000 per year, nowhere near $3,600. If you lived there full time, you could subtract the $50K homestead exemption, your taxes might be zero. Not sure if the government would allow that, though.
Unfortunately, if you purchased it for $50K, it would still probably be assessed at the same level it would have been last year or the year before. IOW, expect an assessment of around $200K, for approx. $4000 per year in property taxes.
There are people in FL screaming about this very fact right now. The gov’t drags it heels when it comes to re-assessing property values DOWNwards.
Much of South Florida has already capitulated but the better areas of Boca are still a little sticky on the way down. West Palm Beach, just to the north, has already crashed even in the better areas. Look at the sales history on this 4 bedroom house on a private golf course in the middle of the city.
http://www.zillow.com/homedetails/2056-Chagall-Cir-West-Palm-Beach-FL-33409/46920715_zpid/
May 1995 $216,000
Mar 2002 $234,000
Jun 2002 $275,000
Aug 2006 $500,000
Oct 2008 $250,000
Another 5 bed 3.5 bath in the same neighborhood sold in foreclosure last year for $235,000. Its original price newly built was $222,600 in June 1996.
Property taxes $7929.00/yr
Muir — I fully expect the stock market to bottom out and to be in rally mode by 2012 (next presidential election cycle). Just my hunch…
“…bottom out and to be in rally mode by 2012 (next presidential election cycle)
Hwy consults his Mayan calender, … Oh, that’s not a good date for anything to standing… drawing breath
PB - And when that happens both of us will know that “it’s a bull market and in the end we all die.”
Thanks for your book recommendations many months ago.
I have to thank many people, but I thank you today.
Just finished “Reminiscences of a stock operator.”
Also read “The money game” most of “the Intelligent investor” and “Where are all the customers yachts?” this past two weeks.
I’m humbled, grateful and have found some peace with these books.
It must amuse you to no end to see the same speeches, word for word, that were used so many decades ago, to see the same foibles and to see the same weaknesses.
Though, of course, I can assume that other emotions also come to play.
Muir, you might also like the Creature from Jekyll Island
Yep, it’s deja vu all over again.
several EU markets are testing their 2003 lows this week; if they don’t hold (and it doesn’t look like it, except for a brief bounce) things will get really ugly.
Dutch stock exchange AEX is down 70% from its 2000 top, down 60% from its 2007 top and today testing the 2003 low (which is close to values from 1993-1995). The Dutch index is overweight in financials. The most important of them was ING which is going down just as fast as $hiti in the US. Judging from the stock value, ING is going to be nationalised within a week. More downside for the Dutch and EU stockmarkets seems likely, some analists already argument the index could fall back all the way to its 1984 value.
Now if the housing market could do the same … but it is still climbing
You beat me to the point. But I have a question for you: How far before 1997 does one need to go to match today’s stock market level in inflation-adjusted dollars?
The other rather obvious question is that of how much farther the market will drop from here. It is really starting to feel like capitulation is underway to me.
IMO it’s too early for capitulation. Not enough despair.
Remain patient (and in cash).
Combo, I will hold you harmless for your answer.
If you were a guy like me (so long as I keep my job), and it’s 2010, and you have, say $30-40k cash in the house fund, would you go into stocks instead?
Depends on the level of the market.
The price you pay determines the return you get.
I depends if BigV and the “others” decide to start a trade war.
Then all bets are off.
With respect here BigV. I was clamouring about the trade agreements back in the 90s.
Now, it will be more disruptive. While eventually it might help balance out the situation it could easily be a decade or more before business adjusts to the new lower productivity enviroment.
Agreed. Once we shed some banks (or buy them). That’s going to take its toll on the market.
Ask and ye shall receive. I give you inflation-adjusted DJI. Looks like your answer is late 1996.
It looks like there’s somewhat of a “baseline” of the DJI at around 2,000. So - there’s a very good chance we could get there, IMO.
It looks like there’s somewhat of a “baseline” of the DJI at around 2,000. So - there’s a very good chance we could get there, IMO.
2000? Lord.
The haircut to the 7000s has already humbled many, and I think 5000-ish is a real possibility. But 2000 would be downright … depressing. (Not saying it can’t happen, though.)
Getting to 2000 would be bad. Going full Japanese and staying there for a couple of decades would be really bad.
Another common mistake is to chart the DJIA as if it were similar to a single equity, currency or commodity. It is not.
The Dow index is constantly manipulated as newer, more vibrant and promising (HOT) issues replace those going out of business.
Does anyone here even know what the 30 Dow component companies were, 10 or 20 or 50 years ago? Throw in a bunch of ZEROES and the DJIA would more likely be at 3000 today.
Just as, calculate unemployment today the same way it was calculated 30 years ago, and you have 18% unemployment now.
Americans have been fed BS for so long,
they think of it as one of the basic food groups.
You should also remember that the DOW has not removed any of its components that have dropped below $5/share as it normally does. There is a subtle manipulation going on.
Yes but if the Dow were to keep the same 30 companies forever, it wouldn’t then represent - even closely so - the general health of the economy. Almost every company eventually goes belly-up at some point - the index would end up near zero, even though the general health of the economy may be good. So the DJI has to swap companies and and out to represent the general economy, because that’s what the general economy does.
Obviously it has flaws (number one being that it only uses 30 companies), but the idea that it’s flawed because it swaps weak companies out for strong one is in itself flawed - because it has to do that in order to mimic what the general economy does.
W/regards to not removing companies below $5 - give it time. If they remain low, I’m sure they will. They can’t react instantly to big fluctuations in stock prices, appropriate as they may be, and they shouldn’t.
There is no need to adjust for inflation. Some people are seething from these losses. Rather than take responsibility for their “buy and hold” decisions, people will look for someone to blame. It’s going to get ugly real quick.
Markets expand and contract. Earnings expand and contract. It’s the same with stock prices. It’s like a Ponzi. When the buyers stop buying — game over — everything contracts. So, you got to take the profit when its on the table. Don’t blush. Don’t hesitate. Don’t ask. Don’t apologize. Just, Take it.
“There is no need to adjust for inflation. Some people are seething from these losses. Rather than take responsibility for their “buy and hold” decisions, people will look for someone to blame. It’s going to get ugly real quick.”
Yep. I just talked to my neighbor yesterday. He’s angry as hell since he’s semi-retired, though still owns his business, and his stock portfolio is down 50%. He said something to the effect of “I thought I had all that money and now it’s gone. It’s these politicians.” I just mentioned greed and let it go. I’m not really tearing up for the guy as he’s got more money than he needs.
I bet the guy would have preferred to have his stock portolio up 100%, denominated in dollars that were worth 75% less than they currently are …
“The claim is, the DOW closed today nearly as low as May,1997. Nobody accounted for the effect of money inflation which makes today’s close 5228.58 in 1997 dollars”
To be fair, you also have to include the effect of dividends.
In a report I read a few days ago it said one proposal being considered was dropping the eligibility age for Medicare from 65 to 55. There, now that should ‘fix’ it!
Health care costs to top $8,000 per person
Government report: Health care costs top $8,000 per person; Medicare insolvency moves closer
Ricardo Alonso-Zaldivar, Associated Press Writer
Tuesday February 24, 2009, 6:48 am EST
WASHINGTON (AP) — A new government report on medical costs paints a stark picture for President Barack Obama, who is expected to call for a health care overhaul in a speech Tuesday night to a joint session of Congress.
Even before lawmakers start debating how care is delivered to the American people, the report shows the economy is making the job of reform harder.
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare’s giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That’s three years sooner than previously forecast.
At the same time, the government’s already large share of the nation’s health care bill will keep growing.
Programs such as Medicaid are expanding to take up some of the slack as more people lose job-based coverage. And baby boomers will soon start reaching 65 and signing up for Medicare. Those trends together mean that taxpayers will be responsible for more than half of the nation’s health care bill by 2016 — just seven years from now.
“The outlook for health spending during these difficult economic times is laden with formidable challenges,” said the report by statisticians at HHS. It appears in the journal Health Affairs.
The health care cost forecast did not take into account recent legislation that expanded medical coverage for children of low income working parents, and added to the government’s obligations.
The report “accelerates the day of reckoning,” said economist John Palmer of the Maxwell School at Syracuse University.
Government-supplied medical care for seniors (that includes me) will have to fall into just two categories- preventive and palliative. Want a new knee joint? Head to someplace like Thailand and pay for it yourself.
Yep…That type of medical care will only accelerate…
Not when the dollar crashes.
My guess is that they will consider means testing, and possibly rationing care with some type of cost benefit analysis. I’ll get screwed by both of these but it’s the best way to control costs. Expand Medicare (Which uses 3% of dollars spent for administration vs insurance which consumes 20+%) Use medicare to drive down costs and restrict care. Insurance agents can then sell secondary policies to peple who want all the bells and whistles. The entire system is being set up to drain the upper middle class in order to keep the poor and formerly middle class from rioting and the elite from loosing wealth.
I always think its funny how everyone is against government getting involved with health care, yet Medicare is never mentioned.
Drop the age to 0 and be done with the whole thing.
+1,000,000
I am against Medicare… there, it was mentioned.
“Those trends together mean that taxpayers will be responsible for more than half of the nation’s health care bill by 2016 — just seven years from now.”
Including indirect spending, and just looking at third party payments (not copayments and cosmetic surgery people pay for themselves), the government already pays for 75% plus.
Indirect = private health insurance purchased by taxpayers on behalf of public employees, and the exclusion of private health insurance paid for by private employers from taxable income.
Countries like Canada that don’t have to pay for a lawyer glut, a large military industrial complex, and does not hand out ridiculous tax breaks for wealthy corporations have much more money to pour into socialized medicine. We can’t pursue true health care reform if we don’t try to trim the fat somewhere else.
Putting in price ceilings will completely gut the medical advantages the US enjoys over Canada (namely in quality and technology, as evidenced by the number of Canadians that cross the border even when they have to pay out of pocket). Of course, those who view Canada as the Shining-City-on-the-Hill will deny that this ever occurs and that manpower/technology/timeliness issues don’t exist.
The easiest way to trim the fat is cut out overblown profits. I’m not seeing that the privatized system we have now is any more efficient than Medicare or other systems used internationally. As to having the best healthcare available, it’s limited at best. If you don’t have insurance you are screwed and even with insurance you can go broke. If you are in an HMO, the wait for a referral to a specialist can be lengthy. And the biggest joke is COBRA. As if once you’re unemployed paying $800/month is going to work out.
We do not have a privatized system. We have a system controlled at all levels by government regulation, government enabled IP, tax subsidies, FDA, mandated employer coverage if the company is above a certain size. Mandated medical care at hospitals, etc. Government licenses also restrict supply and limit options to people.
Give people freedom, remove the requirement for companies to provide health insurance, and allow the customer to pay for liability insurance of the doctor. If the doctor makes a mistake, the customer gets an agreed upon settlement from the insurance company. This way customers have more control over costs.
We do not have “health insurance” we have “pre-paid medical”. If car insurance included oil changes, common maintenance, and old-age related fixes then the price of car insurance would go through the roof. Now imagine that all employers are required to provide a minimum level of car insurance. People start complaining that prices go through the roof and that insurance companies do not allow certain repairs and then demand that the government pay for all car repairs because without cars the economy would grind to a halt and people have a “right” to move about the country and not be “home bound”.
For some reason people ignore economics anytime someone can pull an emotional heart string. Everything is perfectly clear if you use cars, but somehow bodies are different.
They decide that a “good cause” means they can “morally” steal from on individual to support another.
There is no such thing as a free market in medicine.
1. You can’t have a free market if the customer doesn’t understand the product. Not many have gone to medical school, and most don’t understand insurance law. How many have read their entire insurance policy cover to cover and understand it here?? How many have read the policy of the competitors cover to cover??? How many do this on a yearly basis?? Most buy their insurance because its cheapest or they like the duck add on TV.
2. You can’t have a free market when there is a monopoly on medications. If a company creates a new drug they may have zero competition.
3. You can’t have a free market when their is a gun to your head. Your in a car accident and bleeding it’s hard to shop around.
4. You can’t have a free market when you can’t compare the product. How do you rate doctors and hospitals. Sure they can come up with metrics, if these became adopted doctors would stop seeing sick patients. I’ll only due surgery on healthy people that way my numbers will look better. While the tertiary referal centers would get all of the risky patients and despite better surgeons, or primaries their numbers might look worse.
5. You think competition is the answer to lowering price. Think again, MD’s have the ability to create extra work. Oh you have a little head ache, if MD’s are busy 9 out of 10 MD”s say call me if it doesn’t get better or worsens, if MD’s aren’t busy 5/10 order some tests. Mild abdominal pain will end up in the OR more frequently, ect ect. Not to mention the fact that insurance and Medicare already dictate what MD’s can charge for most patients.
6. Think insurance competition saves money, we have to pay for all of the administrative overhead and advertising (They consume 20% of medical dollar spent vs Medicare which is <5%). Doctors and Hospitals have to hire an army of people to fill out all of the different forms and call all of the non paying insurance companies adding huge costs to medicine. One provider one set of rules.
Expand Medicare
Means test it
Perform cost benefit analysis for common diseases.
Allow a secondary market for people who want all the bells and whistles.
measton,
1. B.S. Most customers in most industries have no understanding of the products they buy. They rely on experts they trust and 3rd party opinion. Layers, computers, scuba gear, cars, the list could go on for ever. There is no need to use government force to tax some people simply because “they cannot understand the product”.
2. There would be no monopoly on drugs without the government enforcing it. Natural monopolies or trade secrets are part of the free market, your argument is unsound.
3. Most people would still buy insurance of their choosing. People are still charitable. The only gun in the scenario is the one you are pointing at me if I do not pay for your medical bills.
4. Reputations matter. Every “failure” you suppose exists in a government funded system. The difference is you have removed my choice and if I think the government is incompetent then I am screwed. This is not a failure of “free market” it is a failure of your ability to innovate and think out side the box. If people need a trusted system for identifying quality doctors, then a workable and profitable system will be produced to meet the needs of consumers.
5. The problems you mention are even more prevelant when a 3rd party is being forced to pay. All of a sudden the patient has no reason to be conservative. The customer has the right to choose the quality of care and whether or not some more tests are “worth it” to them. Doctors are not DICTATORS, the customer is.
6. Insurance costs will go down with competition because there is incentive to reduce overhead costs. Without the bureaucracy and government mandates doctors would never deal directly with insurance companies and would be free do deal with customers on a cash basis. If they wanted to deal with an insurance company then they can. The government overhead is HUGE and they lack a profit motive to keep costs low.
Well, Dan, good luck getting rid of patent law. Even the founding fathers considered it a “necessary evil.”
Yeesh.
VTDan,
you have options. I am sure there are other countries to which you might move that would not require you to pay all these bills of others, and would not require others to serve you in a hospital on an emergency basis should you be carted in incoherent and unable to tell them of the vast wealth holdings you will use to pay them when the bills come due.
There’s something akin to a free market in countries, if you are willing to renounce US citizenship — why haven’t you taken action to research all those other options, and moved to the free market nirvana of your choosing? If free markets solve everything, why haven’t you taken the opportunity to select a country more in line with your philosophy?
Just askin’
IAT
They have more money but Canada actually spends a fraction per patient that the US does. Lawyers may be part of it but I think it’s mostly that they control costs, prevent drug companies from raping citizens, and don’t have the administrative headaches of the current private insurance system. One set of rules.
I never have understood why drugs are cheaper in Canada and why it is dangerous to import these cheap drugs from Canada.
It is NOT dangerous to buy prescription drugs in Canada. That’s only a talking point of the drug manufacturers. One of the benefits to living in WA state for those unfortunate enough to require a prescription (which is probably less than 25% of those prescribed), is easy access to Canada to fill them at a fraction of the price the exact same product sells for in this country. The prescription drug market is a scam.
Drugs are cheaper in Canada because in order to sell in Canada the drug companies have to negotiate with the government. Since the government is the insurance company, it has a lot of leverage to demand reasonable prices.
The legislation that implemented Medicare Part D specifically forbade Medicare from negotiating the price of drugs down.
Never mind - Target, Walmart and Walgreens have taken care of that - all generic prescriptions at $4 a pop!
I never understood why the government couldn’t provide a very basic level of healthcare, after a very high deductible (at least for the non-poor), and let private insurers and doctors take care of a better level.
Now if I want to spend a week in the finest hospital with the finest physicians cause I have a nasty head cold, that option is open to me.
“those who view Canada as the Shining-City-on-the-Hill will deny that this ever occurs and that manpower/technology/timeliness issues don’t exist.”
Lord, that chip is still weighing on your shoulder?
It is unfortunate that it is so difficult to discuss the relative benefits of socialized medicine without getting so defensive that any preference of a Canadian (or French, or German or whatever) system automatically defaults into some patriotic nonsense. According to you, anyone who prefers socialized medicine to the weird maze of social/private medicine currently offered to American citizens is a shiny-happy-daydreamer with delusions of the deep superiority of other nations over America.
Which is really dumb.
Yes, we have problems. We. Have. Problems. We know it. Sometimes people go down to the US for certain specialized treatments, and sometimes people get stuck on waiting lists. It hasn’t happened to me, I have had excellent care in Canada (thought I’ve been accused of lying about it on these boards!) but it happened to a family member. Got suggestions for us, I would love to hear them. No sarcasm.
On the other hand, if we break a leg next week, or we have a child with an infection which gets out of control, or we get cancer, we are covered. If we get fired, or decide to leav our jobs to start a business (like me), we are covered. We don’t put off going to the doctor with weird symptoms that could be the first sign of something serious OR which could be the outbreak of an epidemic. The surgery I had last year, didn’t involve even 5 minutes of paperwork, no stress, no decimation of my savings and my health insurance premium is less than $100 month. We pay less per capita for our care than you do. Americans are not being treated fairly, I think. But keep up the nastiness & sarcasm, because I’m sure it’s really helping you develop a better system.
Hmmm. You know, I really regret posting that.
(There are two very upsetting health-related things going on in two of my friend’s lives (one in Canada, one in the US), and health care is too much of a hot button issue. It deeply upsets me that medical tragedies can be compounded by financial stress for anyone, but I did not mean to post anything so angry-sounding, and should not have posted in haste.)
MY wife and I each got a colonoscopy in the last two years. It resulted in a colectomy for me and a clean bill of health for her.
Our out-of-pocket about $8k in two years with good insurance.
Medical community would have charged the uninsured (or us taxpayers) over $15k. Something is very, very, very wrong. If you are uninsured and have had surgery, there are experienced companies that will help you negotiate your bill lower by 50+ %!
Look online. We were lucky, and we hope this helps someone.
Wasn’t angry-sounding at all…
actually, most rational.
You are correct. America has a bizarre, chaotic, and thoroughly unjust maze of healthcare reimbursements that are unfair to all involved. Same treatment, seventeen different price structures, depending upon who is picking up the tab, who has the best backroom knowledge of the billing codes, and what the high school graduate in some insurance company cubicle determines as appropriate medical protocol.
Get the insurance industry/layer upon layer of middlemen out of medical care and the prices will standardize…and be significantly reduced.
For those who wish more than the publicly-defined quality of care, private options will always be available–for an additional fee.
The Vegas photos are amazing. I can’t over how development just stops, like a line in the sand. I wish I could have been there, but since this is likely to last years, I’ll be sure to make the meet-up in 2010, or maybe 2011, or 2017, whenever… If you ever have an NYC or Florida meet-up, I’m on it (easier to make littleman accommodations).
Manhattan West, WTF!? –> FAIL
I think a Florida meet has to be next. As far as the Vegas photos go, you ain’t seen nothing yet. The film crew went with us and shot interviews with the posters at each stop. It was a real hoot. We should have something on youtube soon. I don’t think we could have found a better place to see abandoned real estate, with the exception of Florida, of course.
Florida next winter, for sure. It would be great fun. But you’d have to choose between Orlando, Miami and the Tampa area. Probably Orlando or Miami, I think they have better visuals than Tampa.
“better visuals than Tampa”
That’s what I was thinking. I have some friends that are excited to be visiting in April, and want to see some carnage, but I said no go…
I’d love to see Cape Coral/Ft. Myers area.
Florida would be excellent.
Cape Coral and Lehigh Acres would be a must-do - these are great precedents for overblown development expectations - in their case going back to the 1950’s after the war. There are still miles and miles of roads to nowhere, with an occasional run-down house stuck out in the middle. Check out satellite photos.
Palm Beach and Coral Gables would also be a good place to catch the history of the 1926 crash. There’s not as much visual there though since the carnage there has actually been built-over since then.
Here’s an interesting study on Lehigh acres. Cape Coral was pretty much the same. It’s very interesting to zoom into some of these areas with google maps and such.
Sound familiar?
As late as the 1990’s I think, you could still see signs by the empty roads “Now that you’re back from the war - how about a new house?!” or something to that effect.
“I’d love to see Cape Coral/Ft. Myers area.”
I’ve seen it. Truly depressing. Not even worth making fun of. Northport is a real sight, too. Perhaps that is where the best visuals are, but there’s nothing else interesting close by. Now, if the meetup was in Miami, it would be possible to take a drive across the glades (and in the process, see how far the development extends into the glades) and then drive up to Ft. Myers/Cape Coral for a look-see.
palmetto is right about SW Florida. Its so bad you can’t even make fun of it because the poor elderly folk left behind are living in 3rd world ghost towns.
I didn’t consider it making fun, but just the spectacle of it. I think it may have been the first tour of its type. I said at the time that it looked just like Texas in the 80’s, especially the commercial vacancies and construction that looked like it got halted at lunch or something.
Ben, thank you for saying “Texas in the 80’s.” And I remember the long long slow recovery too, just mucking along the bottom. Real estate going up 1-2% a year for years and years. I still remember those lessons.
Orlando or Tampa — count me IN!
Me too!
What, you don’t want to take a nighttime stroll a few blocks north of Ybor?
Max bang for the buck in FL will probably be Orlando, it has acres of deserted communities, much of it’s a he**hole, and it has UNLIMITED land on all sides (ok, maybe not the north, but all other sides are empty land). You’ll be able to find cheap hotels in Orlando as well, however, there’s not much (other then Disney) to do in that area.
Miami has the condo cranes everywhere, which makes for some striking visuals. Also, Miami is a neat spot to visit if some of the attendees have never been there before. It’s like going to another country, Miami in San Diego are the only places I’ve ever been where English is a 2nd language. However, Miami has the downside that it’s expensive to stay there, and you’re too far from any of the big west coast disasters to go see them (should you choose to). Orlando is in the middle of the state, everything is drivable from there (but it’s all hours away, except of course, for metro Orlando). Miami is better if you want to see the Ft Lauderdale, West Palm, and Port St. Lucie disasters.
If your planning on FL for the next meet-up, I’d like to volunteer my time to help with any preparations that may be needed. I think you’ll find some other willing volunteers here as well!
Orlando does have LOTS of cheap hotel/motel space. I disagree that there’s not much to do…as long as you’re not expecting museums or Broadway-calibre theater. Besides WDW, there’s Sea World, Universal Studios, and tons of gloriously tacky tourist stuff like themed dinners (Medieval Times is probably the biggest rhinestone in that kitschy crown).
If you’re a space enthusiast, Kennedy Space Center in Cocoa is not too far away (90 mins?).
Kennedy Space Center -
We visited the KSC (two adults) and really enjoyed it, and I thought I wouldn’t. Well worth the effort.
http://www.skyventureorlando.com/
Indoor skydiving for the adrenaline junkies out there (bring a thick wallet). The real thing’s nearby, too.
+1 on everything.
Totally agree.
I am in Miami and would love for everyone to see $10-20 Billion of Real Estate in a 10 square block that has gone “poof.”
But Hotels are expensive.
Besides, with all the nude beaches, clubs on the beach that open midnight, parasailing ….
For pure, “why on earth would anybody ever build this subdivision in this godforsaken place?” there are no substitutes in Fl for either Cape Coral or Orlando (North into Lake County or East or….)
It be a tough decision but I would pick Cape Coral!
Reason, it’s been done BEFORE!
We could look at subdivisions from the 1940-50s were rattlesnakes sunbathe and close by look at Cape Coral, Rotunda, Leigh acres….
“I don’t think we could have found a better place to see abandoned real estate,…”
I have no basis of comparison, but having driven through the California Central Valley a few times in recent years, I have to suspect it would be a strong competitor.
I agree Bear except for the “Size”…The projects that are shut down in Vegas are “MASSIVE” & “MANY”…
If you are coming to the Ponzi State, sign me up. I’ll be there.
Ponzifornia?
Has a nice ring to it…….someone should have attached a law mandating a name change to the stimulus bill.
Yea..Ben’s taking us to Disneyworld…mouse ears, a T-shirt and a Free house for everyone
Florida…Good pick Ben…
where are the photos posted?
NM, found them in the last BB.
hi muggy
you live in midtown west? I live in the victory … i agree about hk - fail
When did Rochester get fine dining? Lol..
Fine dining restaurants in Rochester, NY area are coping fairly well with financial downturn:
http://democratandchronicle.com/article/20090224/NEWS01/902240326
After the disclosure that Toll owns Philly newspapers, one has to be skeptical about misplaced sentiment expressed in newsprint.
So how fat was the envelope accepted by the editor of the Rottenchester DemocratChronicle?
I still think the best city for foodies is Philadelphia.
That’s quite a downshift, to $23 chicken.
And why does a 24 yr-old need to go out for fine dining. At that age, we cooked spaghetti with friends.
Also, when Wegmans Pittsford, many years ago, started to offer their ‘entrees’ for prices that were close to NYC restaurants, I felt already that this was odd. They cut back on the entrees a while ago, there is more profit in cheap and unhealthy ‘dough and cheese’ combos, like pizza. Still, years ago, I preferred Wegman’s over the local attempts at fine dining, after once trying that “Grill” something place on Monroe near Pittsford.
I then stopped going to Wegman’s in Pittsford too, because I did not enjoy the bad table manners in their upstairs.
Local news said American Express will pay $300.00 to close cc account, must be paid off and closed by April 30 I think they said. They call it simplify your finances.
I know, I’m hoping they offer me this deal. From what I heard, it has to be offered to you, right? I can’t just run up some charges, pay it off, and then call them to close my account can I? Wonder if they will pay for multiple closures? I have a few cards through them that I would be happy to close for 300 bucks each. Shoot, between my GF and I, I’ll bet we could get 1500 bucks out of them!
“between my GF and I, I’ll bet we could get 1500 bucks out of them!”
Now that`s a simulus plan!
Can cardmembers demand the offer?
Amex kinda scares me. Twice in the last month I’ve received calls supposedly from them by a fellow that sounds like Butthead but with marbles in his mouth. I pray it was a vishing (phone phishing) attempt - otherwise Amex is in big trouble if it hires people like this guy.
When I asked him why he was calling his response (both calls) was “uhhhhhh…” (click)
That probably wasn’t them.
I tried to get a credit line increase, because using the card is hurting my credit score (which is stupid, I pay the dumb thing off in full every month).
No go. The people seemed intelligent though. Discover is better IMO.
This is like a run on the bank. Only the amex clients are the bank.
American express wants all it’s clients money before others come after it. They just figured out that their clients use fractional reserve banking and that despite high net worth, there’s really little cash there.
Amex became a bank late last year and accepted TARP money.
They are giving you your own money.
Tinkle-on economics at work.
“They are giving you your own money.”
I`ll take my money, better me than some FB or a mouse in California.
BINGO
They see a total collapse of credit card debt and want to cash in their chips before everyone else realizes that the casino does not have enough money to pay for all the existing chips. A dollar in the hand is worth $0.20 in the consumer bush.
Kodak’s Oscar streak ends
All streaks must come to an end. And Eastman Kodak Co.’s decades-long run of being able to boast that every Academy Award Best Picture winner was produced on Kodak-made film ended Sunday night as Slumdog Millionaire took home the Oscar at Kodak Theatre in Los Angeles. Slumdog Millionaire was filmed digitally on equipment made by Silicon Imaging Inc.
http://www.democratandchronicle.com/article/20090224/BUSINESS/902240336/1001
—————-
I’m sayin’…. there are some real paradigm shifts occurring: the death of CentralizedMegaCom. I just might get my artsy/indie life back.
$1 dollar houses + affordable media production should make for another era of the good stuff.
I saw the Oscars. Sort of predictable and dull. Lots of self-congratulatory, aren’t-we-special stuff going on. Boring. And I’m sorry, but Beyonce and Latifah just don’t cut it, compared to Aretha, Etta James, Ella Fitzgerald, etc. zzzzzzzzzzzzzz
All this corporatization bites the big one.
It has morphed into the equivalent of the Superbowl for Gays!
Nah, in the Superbowl large sweaty men run around in tight pants slapping each other on the buttocks and jumping on top of each other.
You must have watched a different Oscar show.
The Oscars are the ultimate in douchebaggery. Just another example of what’s gone wrong with our civilization. Overpaid actors being worshiped by the sheeple, truly bread and circuses for the masses.
“You must have watched a different Oscar show.”
Yes, I was watching the show where everyone was moist with delight over going global and the shortage of American winners.
Just make it like the tawdry, corporate Olympics and have a different country host it every year.
I don’t think a lamer group of movies has ever been nominated for Best Picture. The best stories almost never originate in Hollywood anymore. They are only good at special effects and marketing these days.
Overpaid actors being worshiped by the sheeple, truly bread and circuses for the masses.
Of course professional sports is totally different.
“Overpaid actors being worshiped by the sheeple, truly bread and circuses for the masses.”
“Of course professional sports is totally different.”
All of that crap needs to go bye-bye.
No, I was just commenting on the Oscars. Pro athletes are a bunch of overpaid jackholes too. But at least pro jocks don’t go espousing their political views like the Hollyweird bunch does (Sean Penn, Susan Serandon, George Clooney, etc,etc,etc). I can’t recall Jim Brady, Tiger Woods or any other jock preaching to me about how I’m destroying the planet.
No, they just preach about how gays getting married is destroying the planet, or about how they’re afraid a secret gay in the locker room is going to steal their pee-pee.
I enjoyed the Oscars, although I found the Broadway-type production numbers trite and turgid and Hugh Jackman boring. Queen Latifah and Beyonce could have done a lot better with better material.
After decades of watching the Oscars now and then, I remember them all as long and boring, even the ones with celebrated “moments” (Brando and AIM, Sally Fields…). But I like seeing the outfits, pretty people, and the “glamour” - punctuated by bizarre body enhancements and preservation attempts.
The only thing I can remember exciting in the Oscars was mid-1990s when Stomp performed. I hadn’t seen or heard of it before and was just wowed.
Most notable thing about this one was the lack of bling - very little jewelry. With business down, Harry Winston didn’t want to pay the insurance to lend jewelry to the stars for Oscar night? The Hollywood PTB decided that the economic crisis now renders hundreds of thousands of dollars in jewelry in poor taste? Viewers worried about their mortgages and job security want to see celebrity austerity?
“I saw the Oscars. Sort of predictable and dull.”
My husband was looking at the newspaper and listed out loud to me who won. It took him all of 30 seconds to tell me, and I was literally bored before he was done.
If I want interesting fashion, I’m surrounded by it. If I want to watch dysfunctional narcissists, I’ve got reality television. If I want a dramatic storyline, I’ll read the wall street journal. Kate Winslet: you can cry on cue, but so can Anderson Cooper.
I like a good cheesy movie now and again. I like pretty dresses a lot, but! There is such a wide array of entertainment and fashion these days that big stars just don’t have the advantage they used to.
…that every Academy Award Best Picture winner was produced on Kodak-made film ended Sunday night as Slumdog Millionaire took home the Oscar…
The article referenced is not exactly correct.
According to an interview with Anthony Mantle (the cinematographer
who won an Oscar for the photography), about 40% was shot
on 35mm film and the rest digitally.
But, having said that, there is no question that digital imaging
technology is making giant technical strides. On the other
side of the coin, so is motion picture film. It’s one of
those religious debates way outside the scope of this blog.
If interested, here is the interview:
http://www.promax.com/Answers/InsiderAccess/tabid/192/Default.aspx
My point is that, for almost all arts, there exists real estate costs and tools costs — both are becoming very affordable again, so we might actually see, in the near future, creative people creating things instead of the suits “banking on a hit.”
I’m looking forward to it.
I really hope you’re right!
Did you see this?
http://www.nytimes.com/2009/02/15/arts/design/15cott.html
“The Boom Is Over. Long Live the Art!”
Charity is a good thing. “Forced charity” is not. The time approacheth when overtaxed citizens will hone their pitchforks, gather up tar, feathers, and fence rails, and march on City Hall.
Public funds to pay for private debt.
Houston aims to clear balances so some can buy homes.
Houston taxpayers could start footing the bill to help first-time homebuyers pay off debts and improve their credit scores, under a proposal before City Council this week.
The “Credit Score Enhancement Program” will give up to $3,000 in grants to individuals who are trying to qualify for mortgages through the city’s homebuyers assistance program. City officials say some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers.
The proposal has aroused critics who say the city should not use public funds to help people pay down car loans, credit card balances, or other debts — even if the slight credit bump would help them realize the dream of home- ownership.
“We just can’t give away government money to help people with their credit scores,” Councilman Mike Sullivan said Monday. “You’re giving them other taxpayers’ money to pay off the bills.”
Councilwoman Anne Clutterbuck called the program well intentioned but said it would go too far.
“If this credit crisis has taught us anything, we need to focus on paying off our debts and saving more,” she said. “Using government money to help someone pay off their debts is not the same as asking them to pay off their debts themselves.”
That is just outrageous.
The city supports fake FICO scores.. and people who shouldn’t get loans, do..
Imagine if Houston could just get people to donate clean urine for those who can’t pass drug screening..
Be a Urine Donor.. Give the Gift of Employment
here’s the link: http://www.chron.com/disp/story.mpl/front/6277344.html
–
It gets better “Some banks previously had accepted credit scores of 580 or 600 as a qualifying threshold, but most are now requiring 620, Fairfield said.”
There are 473+ comments.
“Clowns to the left of me, Jokers to the right, here I am, Stuck in the middle with you.”
I agree. It’s more outrageous than words can describe. It’s criminal.
Unbelievable! And yet totally believable.
“If this credit crisis has taught us anything, we need to focus on paying off our debts and saving more,” she said. “Using government money to help someone pay off their debts is not the same as asking them to pay off their debts themselves.”
Whatever the details of the arrangements, it should be some combination of the borrower and the lender taking the hit.
“City officials say some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers.”
What is an eligable score ? 600
The Option ARM defaulters who will make the news later this year all were above 700.
that all sounds very much like what they are doing in Netherlands …
if you are officially ‘disadvantaged’ (like foreign immigrant, without work and savings) you can make a killing financially. There are special city workers who go out to search people who could qualify for their giveaway programmes, which can include things like a free home, free furniture, free food (food bank), possibly a car (if you don’t have a job but say you might need one to go job hunting), two free vacations a year (one of them to a foreign country), free pet food/theater tickets/computer for the kits etc. etc. etc. And they help to pay off your debts, which includes counceling but in reality often means that the city counceil takes over 90% of the debt.
Many of these ‘disadvantaged’ people end up much better off than those who have to work the whole week in a basic job to make ends meet. Of course, many people (and entrepreneurs) know how to take advantage of such stupid initiatives. And many people make a living organising this kind of stuff for the government …
“And many people make a living organising this kind of stuff for the government …”
Oh yeah, that’s a big one here in the states, too. Our prez being a good example.
I’ll never forget a show I saw on PBS a year or so ago..
Show as about Somali immigrants coming to Massachusetts, and the story of the family “adapting” to life in UncleSugarLand.
Later in the show, husband and wife are sitting in the welfare office (or whatever they call it in Mazz-land now). Bleeding-heart State social worker is explaining to hubby that the law requires the wife to get a job outside the home to continue receiving benefits. Somali guy doesn’t want wife out of the house, wants to maintain Somali tradition (as if Somali tradition is worth maintaining).
Social worker says (and I quote), “The only exception, is if your wife is pregnant…..”
You could literally see the light bulb popping up over the guy’s head.
I had to go buy a new television, as mine suddenly had a hole thru the picture tube.
get a job??? WTF, don’t tell this to the Dutch immigrants and all their leftist supporters. Once they are ‘in’, these people are entitled to reap social security benefits (and free healthcare etc. etc.) forever, without doing anything for it.
In fact they few that would like to work are so discourage by these policies that most of them give up as well.
and regarding the pregnant part: Netherlands has some rules for granting access to immigrants (e.g. region where they are coming from). Most of these immigrants officially have zero chance. But there are some loopholes, and the wellfare workers give them detailed instructions. e.g. a single mother who got pregnant in Netherlands, or who is pregnant when she applies for residence, will ALWAYS be allowed to stay. It’s a few minutes of hard work, but you get social security benefits for life in return …
All sides of my family were originally immigrants to the U.S. I don’t want to see anymore immigrants in the U.S. Shut down the borders, we have gone forth & multiplied enough. Stay in whatever country you come from and fix it. We are screwing up our country on our own, in our own unique way, and don’t need any help. Thank you very much.
That’s shocking. Any documentation for these claims?
IAT
Thank heavens at least two of the council members have the brains to oppose this. If that proposal actually passes, expect some lynchings in Houston.
“Credit Score Enhancement Program”
This is a complete and total Clutterbuck.
Not to mention that we are STILL!!! paying housing costs for some Katrina “victims” who lived in public housing in NOLA before Katrina and have never known anything else but a nanny government.
All they have to do is have FeddyMac & FeddyMae suspend FICO as a qualifying criteria…how tough is it!:
FICO Milestones:
1975: First behavior scoring system to predict credit risk related to existing customers.
1997: The American Bankers Association honors Bill Fair and Earl Isaac with Distinguished Service Award for their pioneering work in credit scoring.
Fair Isaac …From Wikipedia, the free encyclopedia
Credit scoring models do not work. An illness or forgetting to pay a library or traffic fee can kill your score, where individuals with chronic debt problems who are able to game the system by paying one card using another for a long time etc are rewarded. Mostly I suspect the idea of credit reporting has more to do with keeping the average paying consumer in line.
People who forget to pay traffic fines are irresponsible.
Credit scoring models do not work.
Bull crap. How many 800+ FICO scorers do you know are currently defaulting on their debt? The problem was never with credit scores or credit profiling, but with lowering the standard of credit worthiness to sub-standard levels and not enforcing income verification. In the case of mortgages, allowing no/low down payments also contributed.
FICO is used to predict the statistical liklehood of defaut for a particular group. Even 800+ FICO’s default, but the chance of default is significantly lower, when examining a large enough pool, for those with a higher score than those with a lower score. The examples you give highlight why: Fall ill? High FICO: likely has health, short/long term disability insurance and savings/investments to account for the unexpected. Low FICO: likely has no savings, no insurance, default much more likely, especially if there were previous defaults in the past.
In the interest of full disclosure, my wife and I both have FICO scores above 800 and have never defaulted on debt (or been late for that matter). We live well below our means, have savings and use credit only where it makes sense, always ensuring there is a means and plan to pay it back. There is a reason we have high FICO… we are financially responsible.
FICO scores are like SAT scores. They’re a useful aid to predicting future behavior, but they’re no substitute actually looking at ALL the details. Just like colleges should keep looking at your H.S. grades, lenders should keep in mind your Capacity (income) and the Collateral (Assesment). It was ignoring these other factors helped to insure all the defaulting loans.
Properly used, a FICO score can be handy, if you are a business that needs a quick efficient method to determine if you should let someone finance a (say) washer, dryer, or maybe even a low-end new car.
The problem comes in when you use FICO to decide on giving someone a half million dollar mortgage, when no money is being put down, or income is not verified.
FICO score underwriting is useless; the housing crash proves this.
Witness the return to manual underwriting.
Oh, and what businesses extending credit need most of all is the credit report. Sadly, these tend to be rather inaccurate, but what do you expect for $15 a pop? The score becomes a guideline for pricing the debt (and a ‘liability shield’ should someone yell ‘discrimination’). But the report itself should tell you “what time it is”–capisce?
Just out of curiosity, how much government money (taxpayer) was given to businesses in Houston?
Dispelling the crdit crunch myth?
I bought a house 3 years ago (near the top of the housing bubble) and just completed a cash-out refi.
I paid $265k with 20% down, 30yr 6.5% fixed mortgage. Made not capital improvements (just regular maintenance) and paid no additional principal beyond the standard monthly payment
Hoping to take advantage of the low interest rates to reduce the term of my mortgage, I contacted my bank (who still held the mortgage) and during the refi process had my house appraised $10k higher than when I bought it 3 years ago.
So here we are, 3 years into the meltdown, and cash-out refis are still available to people like me.
(the cash has be set aside for a new roof and kitchen in a couple of years, not to pay down CC, other debt, or casual spending)
I live just north of Cincinnait, Ohio
Did they send an appraiser out or are they still guessing at this bull$hit???
An appraiser came through the house and property, measuring and photo’ing everything. He came up with a list of comps, made adjustments to account for differences in sq ft, # rooms, age, etc, etc.
In my opinion, the appraiser was very conservative with his adjustments, not giving full credit for school district differences (we are on the good side of a school district boundry between an excellently rated system and a poor one), location differences, etc.
Anyway, a couple of years ago it would have probably appraised a bit higher, and should probably have appraised higher at this time except the appraiser was being extremely conservative.
Are we 3 years into the meltdown? Not in my opinion. Some areas are further into it than others (the obvious FL, CA, LV, etc.), but many are just tipping the scales (Philly - my area).
Houston is another one of those places where we are juuust now getting started. The nice historic houses I’ve had my eye on for a few years are sitting unsold on the market as the wishing price drops and drops. Just gotta be patient and hold onto my cash…
Ditto for Salt Lake. Asking prices for the new condo developments that were overbuilt in ridiculous places are now dropping (at least on the low end), but much else is still in fantasy land, 2005 pricing.
And most of those condo complexes with lowered asking prices will probably BK and ultimately emerge as rentals. That’s what we’re trying to figure out at present.
Nah, it’s hit bottom here. No, really, a Realtor told me so, so it must be true!
If i get this right, the bank’s still at least $40,000 (from the 20% dp) plus fees and points ahead of the game.. why would they hesitate to do a refi? They make money on the deal. And it doesn’t sound like you’re a stressed out borrower.
Bank lending sucks these days.. people like you are about all they have left.
“I paid $265k with 20% down…”
“… cash-out refis are still available to people like me.”
The reason for your second phrase is contained in your first phrase.
I guess the bigger point is that the house appraised $10k higher than I paid for it 3 years ago. And I think the appraiser played it very conservative, and really did a poor job adjusting for differences in the comps. Had he done a better job adjusting for size, condition, school district, etc, I think the appraisal would have come in another $10-20k higher.
My point was banks want to lend money (that’s what banks do) but only to those willing to pay it back. Your 20% down puts some of your own skin in the game which makes you a good credit risk.
Well, it finally happened. I had to replace the 20+ year old, 19 inch, possibly Sears TV I’ve been using since my big CRT died…
I was planning to get a flat panel. Really, I was. They are a lot cheaper than they were. But I was having a hard time biting the bullet. Just couldn’t quite do it. Then the old TV spontaneously turned itself off. Then it did it again. Then it started making really loud snapping noises, like it was backfiring inside. I think there was something nasty going on with the power source. Fire hazard?
Used TVs on craig’s list didn’t usually look like such great deals. Flat panel aren’t available. People think they are going to get at least $200 or more for good name brand flat screen CRTs. Even very off brands are asking $150. And do I really want to spend $75 for a regular CRT? Someone in my building thinks they can get $50 for a 19 inch with a built in VCR, even though it is supposedly an emergency moving, everything must go sale.
Until yesterday. Sony trinitron CRT, 27 inch. In my town, though a 20 minute drive away. No remote, but only 6 years old. Woman says her husband will help me put it in my car (lots of the listings specifically say they won’t help move at all). $25. It’s mine. In place, plugged in, color mostly adjusted (might still be a little too cool - what is Jon Stewart’s real complexion?) and working great. Guess I’m not getting a flat screen.
They met my price (finally) and I got the flat screen TV.
My impression: cable TV is toast. The digital picture over the air is great, and the networks have extra channels where something worth watching might eventually appear.
Add on the growing availability of free and paid content for download (starting with Netflix movies and their competitors) and who wants to pay for a bunch of crap they don’t want as part of a monthly package?
I’m not ready to give up cable yet, but it certainly is worth plugging in the digtal box to see what I can pull up on this set. No rabbit ears though, so my guess is it won’t be much.
Sony trinitron CRT, 27 inch.
$25
Nice score!
Heavy son-of-a-gun. They’ll probably charge a $50 “environmental fee” to haul it away in ten years or so.
Along same lines, I bought a computer monitor for business use at Best Buy recently in calif., and they tagged on an extra $15 disposal fee. Told the clerk I wasn’t disposing of the old one. She said it didn’t matter, state law required the disposal fee. I said Best Buy could work in Sacramento on challenging such fees so they were more equitable, such as not charging people for equipment that is not going to the landfill. She looked at me as if I had just landed from Mars. Change a law? Imagine such a thing. I could have gone to overstock dot com or similar site and snared the monitor without the disposal fee, and the sales tax.
Sales tax wasn’t the issue. But why pay for “recycling” something that you are not junking? Or maybe they are collecting the junking fee for the future?
We have a dead 27″ in the garage. Best Buy is advertising that they will take it for $10, and will give you a $10 gift card in return.
Despite my ears being a few decades old, I can still hear the high pitched sound of a regular TV. Flat TVs are the only option now - if I wanted one, which I don’t, at this point. Plus, the old ones are so heavy.
It is heavy, but a hand truck to get it out of the car and lifting it in two stages (floor to stool, stool to final resting place) was doable. Anything any bigger would have been impossible. I didn’t even try two years ago when the old 31 inch CRT died.
Offer of her husband putting it in my car, was the kicker that got me out in the cold last night to pick it up right away. Right in the front seat and already strapped to the hand truck. Logistics matter.
You’re an amazing gal, but given everything you’ve shared with us, including the “learning to spend money” part, I would’ve insisted that you buy a new flat screen LCD with a warranty. They’ve come WAAAY down in price, are well within your budget, and can easily be lifted, moved, by even the smallest women. Logistics DO matter.
A few years ago when flat screens were first available to the masses I got my TV for free: a 27″, 15-year old Sony Trinitron. It was free because I agreed to move it to my car. Showed up with a dolly and I got a free TV. Thing still works great.
I wonder how the person that paid $8,500 for a 42″ 720p plasma feels about it now that you can get the same tv for about a tenth of the price.
Yeah, but they had it *first* so they got bragging rights.
Maybe the bailout stimulus wealth redistribution thing will pay them for the money they’ve lost because their TV decreased in value.
… and another Gold surge just started. Another financial bites the dust?
we are a fraction from a new all time high for Euro gold today, and maybe a new $ Gold record in the cards as well?
Gold is still far off its inflation-adjusted peak $ level reached during the 1980-era inflation scare. I expect it to run up over the next decade, then go back into hibernation for another thirty years or so…
*If* we don’t have THE meltdown (pun intended), I agree.
I think the current surge has more to do with fear of financial collapse than with inflation fears. Most other inflation gauges are not really on full alarm (yet).
But I think those days will come and yes, if the financial system does not disappear into a black hole gold will probably go down again for a long time after (hyper)inflation has run its course and it has topped $ 2500 or maybe even a multiple of that.
todays upsurge was short, it decided to try the downside instead. OK with me, I sold out over a week ago and missed most of the fun - hope to buy back around $ 850 / EUR 650.
nhz,
You sold your “tiny” holding and gave up your “fire insurance” in a short term play? Shame on you.
yes, that was a hard lesson
I thought I should pocket the nice gains (which would have been much bigger if I had sold one week later).
but the major factor was that I need to move the holding to an account with another bank; they are making things complicated here (although it is physical gold, it is handled like a mutual fund account). I think we are not yet at the stage where immediate fire insurance is needed, but who knows …
I prefer the continuous coverage approach to insurance. Once the water rises, it is often difficult to renew.
I’m wondering what will pop the gold bubble (is there really anyplace else to speculate on parabolic returns these days)?
What country is likely to follow the Russian model first, and sell their strategic store of Au to buy food for the people, or avoid national default? Some say the IMF is almost out of working cash… The new China Syndrome….
Just thinking outside the coin wrapper.
“I’m wondering what will pop the gold bubble”
Stability.
“Stability.”
Yeah, like we’re going to get THAT…
I agree that the IMF is the most immediate threat to the current gold price.
Until now it was always bark without a bite (officially because the US would not agree to IMF gold sales). But that could change now things are getting desperate. I read some stories about EU leaders urging the IMF to boost its loan amounts, and the only way to do that would be selling a good chunk of their gold holdings. The other issue is that IMF is under pressure because of their lavish salaries and other skyrocketing costs - new funding would come at a good time for them.
But even if IMF starts dumping, I think it will be temporary because it will also show just how desperate they are. And with the current policies, the billions or trillions they want to throw around will not help to solve the crisis.
Help or no, one would expect them to behave like politicians.
of course, for many countries IMF and WorldBank are a dumping ground for politicians that they need to get rid of …
Acceleration in national U.S. rate of home price decline continues…
Wall Street Journal
* FEBRUARY 24, 2009, 9:08 A.M. ET
Home Prices Continue to Post Record Declines
By KERRY E. GRACE
Home prices continued their multiyear slide in December, according to the S&P/Case-Shiller home-price indexes, as both the 10-city and 20-city index posted record declines, making 2008 the second-straight full year of declining home prices.
The Sun Belt continues to be hit hardest, and nationally, home prices are at levels similar to late 2003.
The U.S. National Home Price index, which covers all nine U.S. census divisions, fell 18% in the fourth quarter from a year earlier, the largest decline in the measure’s 21-year history.
Yawn…Is it time for bears to come out of hibernation yet, or should I crawl back into my cave for a few more months?
BULLETIN
FED’S BERNANKE STRESSES BANKS MUST STABILIZE IF U.S. ECONOMY TO RECOVER THIS YEAR
ECONOMIC REPORT
Home prices off record 18.5% in past year, data show
By Ruth Mantell, MarketWatch
Last update: 9:57 a.m. EST Feb. 24, 2009
WASHINGTON (MarketWatch) — Underscoring the widespread weakness in the U.S. housing market, home prices in 20 major cities dropped 2.5% in December from the prior month and were down a record 18.5% from the final month of 2007, according to the Case-Shiller home price index published Tuesday by Standard & Poor’s.
Years of appreciation have been wiped out, with average home prices standing at levels similar to those seen late in 2003.
“There are very few, if any, pockets of turnaround that one can see in the data,” said David Blitzer, chairman of the index committee at Standard & Poor’s.
U.S. home prices continue record slide
U.S. home prices continue record slide
Los Angeles-area home prices ended 2008 down 37% from their late 2006 peak.
Second straight year of double-digit declines; L.A. market off 37% from market peak.
By Peter Y. Hong
7:21 AM PST, February 24, 2009
U.S. single family home prices ended 2008 with record declines, continuing that trend for a second straight year, according to a leading index released today.
The Standard & Poors/Case-Shiller U.S. national home price index fell 18% in the fourth quarter of 2008 compared to the same period a year ago, the largest decline in the index’s 21-year history.
The sharpest declines from the previous year were in Phoenix (down 34%), Las Vegas (down 33%), San Francisco (down 31%), Miami (down 29%) and Los Angeles, which includes Orange County, (down 26%).
Las Vegas, Phoenix, Miami and San Francisco home prices were down more than 40% from their market peaks, which occurred at different times. Los Angeles-area home prices ended 2008 down 37% from their late 2006 peak.
“Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines,” said David M. Blitzer, chairman of the index committee at Standard & Poors.
“…Los Angeles-area home prices ended 2008 down 37% from their late 2006 peak”
This is good news for Norwalk CA, that’ll bring affordability within range of all those pent up “snapping turtles”.
Just for purposes of comparing, I thought you should know I was in Vegas the weekend before you all were there. While staying at the Encore, I noticed *none* of it’s or Wynn’s rooms used for special purposes (corporate events, ball rooms, etc.) were used. However, there were lines everywhere and huge people traffic on the strip. Lousy car traffic around Cesar’s palace on the strip.
I know, I just noticed my redundancy. Mea culpa.
“…and huge people traffic on the strip.”
When I was knee high to a grasshopper…we use to go “cruising” down the main drag …turn around at the bowling alley…but I’m certain “adults” in Vegas would never participate in this sort of behavior, right?
BTW, I asked a taxi driver if that traffic was always like this. He said that the area in question tends to be bad, but it was probably worse than usual because it was Valentine weekend and people came to get married. I asked him when it was busy for divorces, and he said usually the next day when they sober up.
One other thing: one time the traffic was held up by the cops busting a black couple in the middle lane. Sheesh, pull over already!
Sheesh, pull over already!
Ha ha!
Once, I was sitting on a retaining wall having a beer on the Strip with a friend (it’s legal to drink on the Strip)
A car came slowly up the middle lane heading north at about 20MPH. A cop came up behind him and hit the lights and “booped” the siren once. The car came to a complete stop. The cop got on the police cruiser bullhorn, “Pull over!”
The guy driving was frozen, man. I think he was so polluted that he couldn’t comprehend that he was being stopped. It was hilarious.
Jumbo loans are just too big to bail.
Wall Street Journal
* REAL ESTATE
* FEBRUARY 24, 2009
Jumbo Mortgages, Jumbo Headaches
By NICK TIMIRAOS
Washington is trying to ease the mortgage crisis by helping people refinance into home loans with better terms. But one group is being left on the sidelines: borrowers with loans too big to qualify for government backing.
Fort Myers foreclosure court clears up to 1,000 cases a day
http://www.cnn.com/2009/US/02/23/rocket.docket.foreclosures/index.html
I’ve skimmed recent comments about the economic impact of the New Deal vs WWII. Has anyone pointed out that the vast physical destruction of foreign industry gave the US a long lasting economic advantage, thus ending the depression?
If this is in large part what ended the GD, the revival of global industry would seem to imply that GD2 is inevitable.
Yes, it is inevitable.
The world produces to many things for far too few people, but some basic necessities are not met for a large amount of the population.
The people in Africa and Asia still have tons of unmet needs, but do not have the money, or the ability to make money to meet them. A large part of them live on a subsistence economy where they barely meet their nutricional needs.
Unfortunately their lack of education (in Africa specially) would make them pretty useless unless a massive undertaking to educate them is made.
The biggest problem is that for the whole world there is one ultimate buyer, and that is us, in the good old USA, but now that we are insolvent, we just stopped buying stuff.
Think about the amount of things that you have in your home, and compare that with most any other country of the world to get an image of how different our life styles are.
For instance, a middle class wage earner here, has about the same quality of life as the leisure class in most of Latam. The middle class will have a house, a car or two, some nice furniture, takes a vacation every year, etc… And the poor here, and I use the word losely, live a pretty confortable life compared with the rest of the world where being poor, means starvation and death.
New markets exist, but it is the issue of exploiting said markets that becomes an issue. The lack of resources, and money makes exploiting them very hard.
The only real way out of this, is the eventual death of the megacorp. Megacorp is usefull as a colonization tool, but the amount of overhead makes it unable to compete against smaller, more nimble and flexible competitors. The downside is that you might not get to order a big mac in Peking…
I agree. Like I keep saying, we really need globalization just not this globalization. We need a world wide push toward education and improvement. Otherwise, you can bet that the US will eventually join the rest of the world mired in hopelessness, disease, filth, and poverty.
I’d like to see the Africans make things that the Chinese will buy, the Chinese make things they themselves will buy, Latams sell to Russians, etc., and everyone make/do things.
Of course, we can’t do this with Wall Street’s version of “capitalism”, the Chinese version of “Communism”, or the Russian’s version of whatever they are doing. (I must admit I don’t get the Russians, and I studied them extensively in school. Robber Baron economy?)
I’m willing to bet that a world push toward education would, over several generations, do more good than some over-paid idiot on WS. It can’t hurt except for a few insurrections, riots, etc., thereabouts.
Call me cynical, but it seems to me that vast swaths of the world’s population are poor and uneducated, because a lot of people in those places are happy with the status quo…….or are not unhappy enough with the status quo to make changes.
There is a direct correlation between economic prosperity and the size of government. The bigger and more corrupt the government the lower the prosperity. Anyone who attempts to explain poverty without looking at government is missing the majority of the picture.
Central banking is a creature of government, and most 3rd world countries have been duped by the international banks which caught them with cheap debt and now entire nations are enslaved by it.
People are innovative and will produce to improve their quality of life if given the opportunity. If someone comes and steals everything they produce then they simply stop producing.
Milton Friedman, in “Free to Choose” said the same thing. Back in the late 70s or early 80s he presented North Korea versus South Korea. East Germany versus West Germany. Quite a difference. An impressive observation. It’s all lost today though. How sad that people conveniently forgot the lessons and decided to put in a clown who gleefully “spreads the wealth around.”
Dan … that’s ridiculous … just look at these areas of the world where gov’t is nearly non-existent … and how prosperous their people are.
When the facts don’t match the theory, it’s time to discard the theory.
In the US, I see in the news that women will soon be 50% of the workforce.
Gee, must not be many jobs in the Arab middle east. They are so far ahead of us culturally they can waste half their geniuses and blow up another significant fraction.
The only real way out of this, is the eventual death of the megacorp.
Good luck with that.
If the recording industry’s battle with the internet is any indication, they are not going to go quietly and will have no qualms against trying to take the Constitution with them.
Why should they care about “the” Constitution. They live in every nation, and thus are bound by none. All a constitution does is get in the way of their efforts to extract profits from their minions.
IAT
Yes, it’s been discussed. IMO it was perhaps the single biggest factor, along with the general euphoria for winning the war itself.
Most people think the GD ended due to WWII - i.e. at the beginning of the war, due to GDP and unemployment figures. I say uh-uh - GDP and unemployment figures based on a war economy don’t count. We came out of the GD at the end of 1946, in my very strong opinion, when we had GDP and employment improvements based on actual civilian production.
IIRC, Gore Vidal says the Truman’s fear or the return of the depression post WWII convinced him to scare the sh*t out of the US to keep us on a (cold) war stance, thus keeping gov’t spending going.
An politician using fear to sell an agenda? Who’d a thunk it!
It’s a good thing today’s progressive and highly educated society would never tolerate that!
Government spending after the war was definitely way higher than before, but still nothing like the spending that happened during the war, at least not until the late 1950’s.
See link (not inflation-adjusted).
The government was spending money, but not on defense, in fact the DOD budget was being cut across the board by Truman’s Secretary of Defense.
Thngs were so bad that the 70th Tank Batallion (sent to Korea in August 1950) could not find enough M-26 Pershing tanks to fill out their heavy tank company (needed to match the NKPA T-34s). They ended up pulling all of the “Monument Tanks” at the gates at Fort Knox to fill out the heavy tank company, the rest of the batallion getting M-4 Shermans.
X-GSfixer:
With no “Great Society” and the New Deal already in place, what *was* all that spending on anyway? (circa 1948)
New deal spending appears to be a blip on that graph vs war spending.
“New deal spending appears to be a blip on that graph vs war spending.”
I noticed that myself and was wondering about it. It’s very contrary to my view - and most people’s I’m sure - of the scale of New Deal spending. Perhaps New Deal doesn’t fall into that bucket? Not sure. May need some more research (don’t have time right now though).
A specious post hoc argument from Vidal…who’d a thunk.
Posted this one yesterday, but late.
Priceless.
Bus driver who bought $800,000 house pleads with Obama - “Stop the Foreclosures!”
Hey…some Milwaukee City bus drivers made OVER $120k with over-time last year.
I BET they don’t teach that little factoid at the University of Madison MBA Program
Mikey,
Well received point, but we made $165K (no kids/no debt) in 1998, and were not that comfortable with a mortgage of $380,000, after a sizable down.
They knew they were in over their heads. In the heart vs. brain war, the heart won for the Garcia’. Being a minority, who barely speaks English, she has the entiltement gene, imo. That was a $800,000 house?
What did she buy for $800,000 in Wisconsin? The governor’s mansion? The monstrosity shown in the video looks like a crapbox.
(from the video it looks like she might be in AZ, well the question remains)
In what kind of world is this house worth 800 K ??
Wall Street wants to know why it can’t get no…R.E.S.P.E.C.T.!
Any suggestions?
First order of business is removing the over-sized American flag on NYSE.
http://www.flickr.com/photos/65602608@N00/493366311/
I can only wonder what the hourly wage is of the person hired to polish it’s brass balls?
http://en.wikipedia.org/wiki/Charging_Bull
UK banksters demand higher salaries to make up for lower bonuses:
http://www.independent.co.uk/news/business/news/8216we-need–a-pay-rise8217-bankers-demand-1630307.html
“Average weekly earnings across the UK economy rose by just 2.1 per cent in the year through December, according to data from the Office of National Statistics. That is below inflation.”
“But on the high street, Royal Bank of Scotland has already raised its employees’ salaries by 10 per cent this year after failing to pay them their guaranteed bonuses for 2008.”
But Vince Cable, the Liberal Democrat Treasury spokesman, said it would be “completely perverse” to award bankers salary increases.”
He said: “The laws of supply and demand suggest that this is completely perverse, as there is a currently a considerable reduction in the demand for bankers as the sector contracts. If members of the financial services community are managing to pull the wool over the eyes of their shareholders, this suggests that the problems of governance in the sector are even deeper than we imagined. The continued ability of the semi-nationalised banks to put highly paid staff ahead of taxpayers shows that the Government has been far too detached and pathetic in its arms-length approach to them.”
“The continued ability of the semi-nationalised banks to put highly paid staff ahead of taxpayers shows that the Government has been far too detached and pathetic in its arms-length approach to them.”
Why can’t our own politicians speak that bluntly?
“Why can’t our own politicians speak that bluntly?”
Some did to some extent, hence the efforts to limit executive bonuses for bailout companies. However, any outrage seems rather muted. They should be demanding resignations in addition to sharp compensation limits in return for any bailout funds.
The threat of unemployment is often a big motivator.
That Opie™ …cute little feller.
What was that woman reporter that Shrub would never acknowledge?
Opie™ = 1
Limpbaughs = 0
Obama Orders Review of Helicopter Project:
“…Mr. Obama made the announcement Monday when his one-time presidential rival, Arizona Senator John McCain, questioned the need for the costly program when the government is trying to curb spending.
The president responded that he thinks his current helicopter seems “perfectly adequate,” and he said the costly military program is “an example of the procurement process gone amok.”
http://www.voanews.com/english/2009-02-24-voa9.cfm
Obama… “..said the costly military program is “an example of the procurement process gone amok.”
Who better understands spending gone amok..
…than the Bush Administration, which created a larger deficit than all other presidential administrations combined? Why weren’t you Righties speaking up then, instead of attacking the patriotism of Democrats?
Testify.
Amen, sister, amen
We were.
Didn’t you say “Bush didn’t lie” somewhere upriver on this page?
That there is a tough sentence to swallow for most of us who live in, you know, reality.
Obama is following the path laid down by Bush for a reason. He knows a winner when he sees one.
Testify!
Gross national debt as a percent of GDP since 1950:
http://zfacts.com/p/318.html
Thanks Greg, I can use that for this years Thanksgiving feast with my sibling… evangelical / TrueBeliever™ /holyerthanthou / democraps are sooooooooooo unAmerican / bluepillpoppingporkulusAMNaziradioyelling / young Repubicans…I’ll just keep reminding them, over & over, what a disaster Jimmy Carter was for our Nation.
Habitat for Humanity, in America…what a Blockhead, Charlie Brown!
Run!…Cheney is stomping down the hallway with his Halliburton “No-Bid” contract paddle…he looks very, very …angry!
Bush administration with 6 years of GOP control in congress, followed by 2 years of a virtual tie. 110th 49 dem, 49 gop, 2 independent w one being Leiberman.
O is doing his best not to be a little spending b1tch like W was.
Go Obama!!!
This is going to be one long game of whack-a-mole.
I think the problem was a non-US company won the helicopter bid. Money was not really the issue.
I’m getting a bit tired to see every politician trying to destroy the aviation industry. Heaven forbid they crusade against the three martini lunch industry or drunk driving.
Dude in a cave can’t refi his cave house, a must see!!
http://abcnews.go.com/Business/Economy/story?id=6941993
I just read that article! It’s like the Onion come to life or something.
Cr@p that candy out, babe
Cr@p that candy out
Candy crappin’ mama
Cr@p that candy out.
Guy’s behind on his mortgage, and the Joker and Riddler now know where he lives. Not good.
Nice looking cave.
Hey…they aren’t MAKING anymore Caves !
“…They made a 50 percent down payment”
What did they do different then the Trump-wanna-be-from-Uzbekistan?
Different strokes… for different folks.
Moreover, reading the article…they seem to making babies the “old fashioned way” and @ home/cave to boot…. unlike… Calif OctoMom with Gov’t student loans, Gov’t subsidized housing, Gov’t provided hospital costs.
Thats actually pretty cool, the cave house that is. The loan seems pretty foolish. I mean they had to sell off their DVD collection to get the scratch for a down payment but then they agreed to an 80K balloon payment after five years? WTF?
On another note, how the hell does anyone appraise something like that? Whats the comp? Fred Flintstone and Barney Rubbles’ house?
160k price
80k down payment
5 years worth of payments
outstanding balance of 83k
hello?
Gotta love those balloon payments!
Hey, he did put 50% down though.
Watching Dodd on the tube asking where the Fed was while the poor people of Bridgeport were being victimized by predatory lenders. My question is where was Sen. Dodd ? Oh thats right, he was refinancing his house with CountryWide in the “friends of Angelo” program that saved him $80,000.00 .
Not to mention, Barney Frank is “outraged and appalled” and all the shady dealings that took place in the Financial Services sector of the economy; while he himself was Chairman of the Financial Services Committee protecting the public from those very things.
Those conflicts of interest sure do produce some interesting conflicts in trying to explain them.
HBB Las Vegas Get Together photos here
At least, my shots…
Thanks, lavi!
I soo want one of those Grand Theft shirts!
Was that a custom made?
Ooo, me too. It looks shw33t.
I recognize Ben, and I think Allena, but who are the others??
Some of us may be in a witness protection program and do not wish to be identified.
Oh, and one more thing. Well done Lavi! And Kudo’s for the album title!
Thank you.
Did you stay at The Hotel? Did you check out the bathrooms with huge glass windows - so you could sit on the loo and stare at the view down the strip? Awesome………:-)
Only in Vegas.
O.K. Now Dodd has asked Bernanke if people can retire after their losses in housing and the stock market. My question to Sen. Dodd. Can Angelo Mozzillo retire after the tens of millions he made selling his CountryWide stock before its collapse?
Feb. 24 (Bloomberg) — Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars.
The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4 …
Is it me or is CCL (Carnival Cruise Lines) a no-brainer short right now? They’re defying gravity - up 5% today in fact despite the horrible consumer confidence numbers. Amazingly they’ve yet to go negative on their earnings, but none of the fall meltdown has been reflected yet (last quarter ended 11/08; anyone taking cruises at the end of that quarter would have already been committed).
That is a truly momentous plunge in confidence. Good thing the economy is on schedule to bottom out by later this year, or this would be very worrisome information.
http://www.msnbc.msn.com/id/3683270/
“Bernanke, making his semiannual report on the economy to the Senate Banking Committee, said the economy is likely to keep contracting in the first six months of the year — hardly a surprise to Wall Street. But he also said the recession will end this year and that he would use all available tools to help end it.”
Thank goodness.
Really?!? My crystal ball sees it persist well into 2012.
We shall see.
You mean from here to 2012 every quarter (total of 4×4=16 more quarters) would be a negative GDP or there will be just no recovery of any significance even if GDP is even of slightly positive? If every quarter just have -1% contraction every quarter we have 16% contraction in GDP using overly simplified assumptions. If 2% each quarter we are down 32%.
No recovery of any significance.
I expect GDP to tick up sometime in mid-to-late 2010 and everyone will be like “It’s all over”, and then the stuff starts all over again in 2011.
The reset chart doesn’t lie.
Oh, and that answers polly’s question too. WHEEEEEE.
2012? Still actually contracting? How long before the second derivative is at least a little positive?
(for non-mathies - when does he think that while still contracting, the pace of contraction will no longer be accellerating and might improve just a bit?)
I’m a mathie. Local minima (x”= 0) are useless in examining any power series precisely because they are local. Eliminate the higher order terms, and you can start to make some meaningful predictions about non-linear arithmetic progressions.
Local minima may be useless to predict the long term trend, but they are interesting to look at just for the sake of their own interesting little selves. And I wanted to know if he thought it was going to be a black hole-like chart on GDP or a little less exponential. Got my answer. Thanks, Faster.
You and Mr. Bear are resonating with similar 2012 vibrations
Hwy checks emergency survival supplies in garage… yep, just enough Tide detergent to last ’till then (x2 loads per week constant)
“…December 21 - The Mesoamerican Long Count calendar, notably used by the Maya civilization among others of pre-Columbian Mesoamerica, completes its thirteenth b’ak’tun cycle since the calendar’s mythical starting point (equivalent to August 11, 3114 BC in the proleptic Gregorian calendar, according to the “GMT-correlation” JDN= 584283).[4] The Long Count b’ak’tun date of this starting point (13.0.0.0.0) is repeated, for the first time in a span of approximately 5,125 solar years. The significance of this period-ending to the pre-Columbian Maya themselves is unclear, and there is an incomplete inscription (Tortuguero Monument 6) that records this date. It is also to be found carved on the walls of the Temple of Inscriptions in Palenque, where it functions as a base date from which other dates are computed.[5] This date figures prominently in the religious syncretism of New Age Mayanism.”
2012…From Wikipedia, the free encyclopedia
I was just out purchasing a battery. The owner of the shop walked away from his office TV and announced to his workers: “the recession is going to end this year, and the stock market is finally getting better”. One of the two guys said “thank goodness, it’s about time”. They all just took what the MSM fed them, and ran with it. I didn’t say a word.
To me, the idea that this economy will suddenly turn around is absolutely laughable. I see no way out of this until the jobs/wages situation is addressed, and that means moving from a service based economy, to a more sustainable production based model. This ain’t happening anytime soon. Until then, our standard of living will steadily erode into something most never imagined. I sure hope I’m wrong, but I think this is going to be worse than the great depression.
Our standard of living needs to erode to the level of the average Chinese peasant so that we can be competitive and become a production based economy.
That will happen as soon as the world drops the $ as the reserve currency and we burn through our remaining assets.
“the recession is going to end this year, and the stock market is finally getting better”. One of the two guys said “thank goodness, it’s about time”. They all just took what the MSM fed them, and ran with it. I didn’t say a word.”
ROTFLMAO! What a bunch of Stooges, “Its true the TV told me so!” Lol!!!
If you think it, it will come true.
This is worse. If they say it, it must be true.
IAT
msnbc left out a detail or two.. According to Marketwatch, Bernanke said..
.. If actions taken by the Obama administration and the Fed are successful in restoring some measure of bank stability, “there is a reasonable prospect that the current recession will end in 2009 …”
From another MWatch article;
Fix banks first, growth will follow: Bernanke
Only with the return of some measure of financial stability is there a “reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Bernanke said.
——–
i agree.. bank stability could do it. Will BO’s policies restore some measure of stability early 2009? Not from what I’ve seen so far.
Unless you believe in the Magic Fairy, why do you think the deleveraging will stop? I’ll put my money on the F*ckup Fairy making a visit to at least one large institution before that. Most likely a European one which opens up that counterparty risk wide open.
Sorry, this is all if-my-grandma-had-danglers-she’d-be-my-grandpa kinda wishful thinking.
ben lies…ben lies…ben lies; when he cries.
(bernanke not jones)
As one of our poster says the Federal Reserve lies, lies, and then tells more lies.
How do you know when Bernanke lies?
When you see him moving his lips.
Good to hear this. And I am also relieved in retrospect that subprime was contained to $200bn worth of damage.
Yes I agree, the recession will end this year…….bc we are headed for a DEPRESSION (a severe recession by another name)!!!!
“Subprime is contained.”
“We are not in a recession”…..until a year later.
Sneaky thieving Idiots.
I’m glad that I have no debts, and a savings life jacket to help me stay afloat for the coming tsunami.
The next several years will be humbling for many americans.
“I’m glad that I have no debts, and a savings life jacket to help me stay afloat for the coming tsunami.”
I have those, too. Now to work on the missing element: Confidence in my household’s ability to survive as a piece of flotsam atop the oncoming wall of water.
Sorry if repeat: Hitler raging over the housing bubble is lol.
http://www.youtube.com/watch?v=bNmcf4Y3lGM
lol
Someone posted this a while back and I’ve watched it several times since.
I love the line where’s he’s pissed because he’ll have to sell his classic Camero “SS” that he purchased with home equity.
I have to admit I didn’t get that one line about the Camero. What makes the Camero SS especially funny?
Schutzstaffel…
Herr Blase
Just the thought of Hitler buying a classic American car, a Camero, using his house as an ATM. The subtitle also matched with the sound at the point he was refering to the Waffen SS.
It’s even more ironic when you recall that Hitler had a strong desire to collect fine works of art (paintings, sculptures, etc.). At least, the ones he didn’t burn. What he desired he just stole or looted from the occupied countries and jewish population.
got it, thx
(puts on tin foil hat)
Did anyone else have internet connectivity issues around market open this morning?
My streaming quotes died for a while, but everything else was okay. My broker told me to wait 10 minutes and reboot the trading platform, and that did the trick.
Big Qwest outage I heard.
Scottrade crashed for about 10 min at open. No connectivity. Other sources seemed fine.
Kinda’ convenient on what could very well have been a seminal day in the markets that Joe small investor had a very hard time putting sell orders in at the open.
Benny Boy see things recovering, somehow:
WASHINGTON (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke warned on Tuesday that unless government efforts succeed in restoring financial stability, the nation’s recession may not end this year.
Bernanke told lawmakers that the fast-shrinking U.S. economy was at further risk from a mutually reinforcing cycle of weak growth and financial market strain.
“To break the adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets,” he told the Senate Banking Committee.
“If actions taken by the administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability — and only if that is the case, in my view — there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” he said.
Translation: “If, and only if, we dump a whole tanker full of gasoline on this house of ours which is burning out of control, can we expect the fire to burn itself out.”
Meanwhile, Eddie Haskell, aka Turbo Tim, now says we are “close” to finding the missing plate of cookies from Mrs. Cleaver’s kitchen, and that he “cannot believe” that either Theodore or Wallace were involved.
That teaching position in Princeton looks really great now, right?
Maybe greed is not good. As Cramer said yesterday - only 7000 more points to go and we can stop discussing the stock market.
Man I wish my photographs are worth $10 million. Another example of an over-leveraged high profile person:
NYTimes
By ALLEN SALKIN
Published: February 23, 2009
Last fall, Annie Leibovitz, the photographer, borrowed $5 million from a company called Art Capital Group. In December, she borrowed $10.5 million more from the same firm. As collateral, among other items, she used town houses she owns in Greenwich Village, a country house, and something else: the rights to all of her photographs.
In other words, according to loan documents filed with the city, one of the world’s most successful photographers essentially pawned every snap of the shutter she had made or will make until the loans are paid off.
Those who know Ms. Leibovitz said she used the money to pay off mortgages and deal with other financial stresses. But whatever her reasons, she is not alone in doing business with Art Capital and similar lenders. At a time when stock portfolios are plunging and many homes, even grand ones, have no equity left to borrow against, an increasing number of art owners are realizing that an Old Master or a prime photograph, when used as collateral, can bring in much-needed cash.
As the go-to photographer for the glitterati, sounds like owning the rights to her portfolio is a good investment.
maybe when the crisis is over and done, no one wants to see pictures of the kind of people that she has in her portfolio …
a lot of them are tied to the roaring nineties and all the bad that went with it.
Her portfolio and its worth extends well before the ’90s — seminal shots of the Stones on tour in the ’70s, for example.
I came across that article as well, and my thought was “Why wouldn’t Annie just get rid of some real estate?” (Even at falling valuations.)
Three townhomes in the Village? Who needs that?
The other thing that struck me was that she signed away future works in addition past creative work. She really bet the farm on those damn loans, in other words.
Whoever is managing her money really sucks at it.
WTF? Credit Suisse analyst upgrades PHM today, immediately after downgrading them two weeks ago. Did they downgrade just so they could upgrade?
maybe someone paid them a lot of money for enabling a quick trade?
Alan Keyes is not exactly the most ardent supporter of B.O. He calls the mortgage writedown proposal “insanity” and says Obama must be stopped:
http://www.youtube.com/watch?v=3DlTgrMCxPg
Alan Keyes? The crazy carpetbagger who ran for Senate against Obama? Why would anyone listen to him?
It’s becoming abundantly clear the stress test is a ruse. It is NOT designed to rid zombie banks from the system. The stress test is designed to figure out how much more capital the government needs to inject to keep zombie banks afloat.
There goes that. Nothing is what it seems on the Farm.
Today is my birthday and also Fat Tuesday. Party time, woohoo!
The sun is out, skies are blue and I have my family (mom cancer is right now in remission), friends, health and many acquaintances here on this blog.
Thank you Ben for this blog. Thank you to Olygal, FPSS, PB, Polly, Neil, Muggy, NoSingleOne, meastron, desertdweller, combo, voz (aka clue), hoz, Hwy50ina49Dodge, Big V, sdrebear, marketmaven, mrbubble, wmbz, etc.. This has been a fun year with all of your insightful posts. I may not agree with some of you, however, I’m glad to see your opinions and comments.
I love being able to celebrate another year. To quote a famous Vulcan, “Live long and prosper”
Happy Birthday!!!
HAPPY BIRTHDAY!
My wife celebrated her 39th yesterday for the 5th time! LOL!
Have a great day!
The happiest of birthdays to you SFBAG.
Sincerely,
etc.
Hey, today is my birthday, too.
Live long and prosper.
x1 post then…Happy Anniversary since last one…to both of you!
(Hwy, throws back a Trout Slayer Ale)…Hip, Hip, Hooray! x1
…Hip, Hip, Hooray! x2
…Hip, Hip, Hooray! x3
O.K., now forget about e-con-o-nomics…go out and celebrate!
ET you too, my bff its her bd today also. GREAT FOLKS!
Happy Birthday Mr chicago!
Happy Birthdayyyyyyyyyyyyyyyyyyy to Youuuuuuuuuuuuuu
And many happy returns of the day (I always liked that).
And I am honored to be in that list of yours…
Happy Birthday Gal!
And thanks for saying the same to me a few weeks ago.
I thoroughly enjoy your posts. Call a taxi after all the fun you are going to have.
HAPPY BIRTHDAY!!!
Happy Bday, SanFranGal…
Happy Happy SFBAG! Can’t believe that you’re still 29! I just keep getting older.
Reminds me. When is the next SF meet-up? I know that Big V just got back from Las V, but she is a good ring leader. March?
MrBubble
happy
happy birthday to you.
http://en.wikipedia.org/wiki/File:Vulcan_statue_Birmingham_AL_2008_snow.jpg
largest cast iron statue in the state of ALABAMA….roll tide.
and another.
http://en.wikipedia.org/wiki/File:Andrea_Mantegna_045.jpg
What the heck is this “Obama Housing Grant, Everyone’s Approved, Never Repay” crap on here???
A google ad. Most likely a scam. Or maybe just a mortgage broker looking for victims (also a scam).
Schedule “C” for “convict”, or,
Will there be 4000 new Treasury Department jobs in Los Angeles soon?
LOS ANGELES – (AP) The head of the nation’s largest sheriff’s department is warning that nearly 4,000 jail inmates might be released early and about 600 deputy and professional positions could be eliminated to meet budget cuts.
Owing to the economic crisis, the Los Angeles County Sheriff’s Department faces a $71 million cut to its $2.5 billion budget in the coming fiscal year.
That’s less than a 3 percent cut. Maybe they should hire a couple of accountants and get rid of a couple of spokes holes.
As Investors Business Daily reported in March 2005:
“The U.S. Justice Department estimated that 270,000 illegal immigrants served jail time nationally in 2003. Of those, 108,000 were in California. Some estimates show illegals now make up half of California’s prison population, creating a massive criminal subculture that strains state budgets and creates a nightmare for local police forces.”
Put them on buses with a one-way ticket home. Or cram them into coach seats on a chartered flight south.
I bet if someone took a poll of the criminals’ victims, a majority would approve of that idea.
Yeah send them to Mexico, as Mexico is doing such a bang up job dealing with criminals. My guess is Mexico is on the verge of collapse and failed state status.
It is. A good friend of mine who lives down there has thrown in the towel after his family had a close call with a nasty situation. They are sort of wealthy ( I would guess a net worth of at least $10 million US), which makes them a natural target. They own a couple of homes in the US, both paid for and have green cards.
I’m more concerned with what happens north of the Rio Grande, but that’s just me.
I mentioned this Wired Magazine article yesterday and it has now been posted online:
http://www.wired.com/techbiz/it/magazine/17-03/wp_quant
Thanks, I’ve been meaning to track that down since the discussion the other day.
The market friendly solution is temporary nationalization,” Roubini told “Worldwide Exchange”.
“Doing something surgical and radical actually may improve the market sentiment,” he said. “If we don’t do it, we risk ending up like Japan, that had zombie banks for a decade,” he added.
Furious banking consolidation that took place in the years preceding the crisis has made matters worse, as it had created banks that were too big to fail but also too big to save, according to Roubini.
The US government has already provided between $7 trillion and $9 trillion in explicit or implicit support for banks, and taxpayers would actually benefit from nationalization, as they wouldn’t have to bail out shareholders (BINGO lets have some accountability) as well, he said.
“If you don’t nationalize them on a temporary basis the fiscal commitments will be bigger,” Roubini said. “The alternative is actually a dangerous debt spiral. We risk ending up in a near depression for the US and the global economy if we don’t take this radical action as necessary.”
This is brilliant. Many of us (including me) may have recognized and occasionally complained about this problem with banker bonuses, but Dr. Black Swan has hit the nail on the head.
I believe that with slight modification, his point also applies to the incentives facing pension fund managers, investment advisers, hedge fund managers, politicians with term limits and FOMC members whose appointments are of shorter duration than low-frequency, high-amplitude cycles in asset price movements.
How bank bonuses let us all down
By Nassim Nicholas Taleb
Published: February 24 2009 19:53 | Last updated: February 24 2009 19:53
One of the arguments one hears in the compensation debate is that the bonus system used by Wall Street – as John Thain, former Merrill Lynch chief executive, put it – is there to “reward talent”. While I find this notion of “talent” debatable, I fully agree that incentives are the heart of capitalism and free markets – but certainly not that incentive scheme.
In fact, the incentive scheme commonly in place does the exact opposite of what an “incentive” system should be about: it encourages a certain class of risk-hiding and deferred blow-up. It is the reason banks have never made money in the history of banking, losing the equivalent of all their past profits periodically – while bankers strike it rich. Furthermore, it is that incentive scheme that got us in the current mess.
With slight adjustments, his comments apply equally well to hedge fund managers, pension fund managers, and politicians and FOMC members with limited terms in office relative to the long periods of low frequency cycles in asset appreciation.
Take two bankers. The first is conservative. He produces one annual dollar of sound returns, with no risk of blow-up. The second looks no less conservative, but makes $2 by making complicated transactions that make a steady income, but are bound to blow up on occasion, losing everything made and more. So while the first banker might end up out of business, under competitive strains, the second is going to do a lot better for himself. Why? Because banking is not about true risks but perceived volatility of returns: you earn a stream of steady bonuses for seven or eight years, then when the losses take place, you are not asked to disburse anything. You might even start again, after blaming a “systemic crisis” or a “black swan” for your losses. As you do not disgorge previous compensation, the incentive is to engage in trades that explode rarely, after a period of steady gains.
“With slight adjustments, his comments apply equally well to hedge fund managers, pension fund managers, and politicians and FOMC members with limited terms in office relative to the long periods of low frequency cycles in asset appreciation.”
Sorry for the editorial glitch — I accidentally embedded my comments in NNT’s quote.
I’ve long thought that bonuses (esp for anyone with fiduciary duties–e.g. top execs, investment advisors, money managers, hedge fund managers, etc) should ONLY be paid in-kind; in other words, only in the stock/portfolio that they manage, and only in shares that vest slowly over a LONG timeframe (10yrs or more).
In other words, force them to think of the long-term value of the stock/portfolio, since that is the coin in which they are being compensated.
That would clearly align their interests with their own interest with their fiduciary duties, avoiding the oh-so-common conflicts of interest.
Bailouts fit into this discussion of the effects of bonuses on bankers behaving badly. If I am CEO of a bank and know that bailouts will be used to funnel money my way if things turn ugly, I have more incentive to take high-stakes gambles, secure in the knowledge that other people’s money will be used to shore up my losses in case of a bad outcome. Limiting a corporation’s liability has a similar effect. The rules are rigged to encourage risk taking that forces others to unwillingly and unwittingly bear the downside risk.
Wall Street Journal
* OPINION
* FEBRUARY 25, 2009
Bankers Need More Skin in the Game
Partnerships may be a more trustworthy business model than corporations.
By JAMES K. GLASSMAN and WILLIAM T. NOLAN
Of all the causes of the financial meltdown of the past few years, the easiest to understand is that an irresponsible attitude toward risk led to terrible mistakes in judgment. But where did this casual approach to risk originate?
A major culprit, we believe, is a change in the way Wall Street financial institutions are organized. During the late 1970s and ’80s, much of the responsibility for risk was transferred away from the people who made the financial decisions. As a result, leverage rose from 20-1 to 40-1 or higher, creating shaky towers of debt, which, as we know, eventually collapsed.
Oakland A’s says NO to the City of Fremont
http://sports.yahoo.com/mlb/news;_ylt=Ai1Pm_gxEgLPJsLuDXPQc0k5nYcB?slug=ap-athletics-fremont&prov=ap&type=lgns
“Some local residents had opposed the Fremont plan, saying a $1.8 billion stadium and village would create traffic problems and drive down property values.
Supporters of the plan argued that it would help the local economy.”
I’m sure Fremont locals are re-thinking that property value argument. But too late.
Fremont would only be a minor upgrade from city of Oakland anyways.
Wall Street Journal
* FEBRUARY 25, 2009
Twin Crises Feed the Spiral
By JON HILSENRATH and PHRED DVORAK
U.S. Federal Reserve Chairman Ben Bernanke held out hope for an economic recovery by 2010 — even as new signs emerged that the recession and financial crisis are feeding on each other in ways that worsen both.
The confidence of U.S. consumers tumbled in February to its lowest level in at least 41 years, partly because people are increasingly discouraged about job prospects. Two fresh measurements suggest home-price declines are accelerating. New Fed data showed rising bank loan delinquencies. And companies from software giant Microsoft Corp. to retailers Office Depot Inc. and Macy’s Inc., reported a worsening profit outlook.
In one relative counterpoint to the gloom, stocks bounced off Monday’s 11-year lows after Mr. Bernanke played down the need to nationalize American banks. The Dow Jones Industrial Average snapped three days of loses, rising 3.32%, to 7350.94. Still, it is down 48% from its October 2007 peak.
But Mr. Bernanke also issued a stark warning: Economic revival hinges on policymakers’ ability to break the “destructive power” of the deeply intertwined twin crises in banking and the broader economy.
In what economists are calling an “adverse feedback loop,” job losses and falling corporate profits are creating new loan defaults, hurting banks beyond the original mortgage problems that started the financial crisis. The banks’ falling stock prices, along with loan defaults, makes it harder for them to raise capital and more reluctant to lend. All this saps the economy’s lifeblood — spending on cars, factory equipment or other goods — feeding the cycle of job cuts and falling profits.
Financial-rescue packages and an $780 billion fiscal-stimulus plan are meant to break the U.S. economy’s downward spiral. But so far it isn’t working. “If actions taken by the administration, the Congress and the Federal Reserve are successful in restoring some measure of financial stability — and only if that is the case, in my view — there is a reasonable prospect that the current recession will end in 2009,” Mr. Bernanke said in testimony to lawmakers.
http://www.bizjournals.com/phoenix/stories/2009/02/23/daily23.html
First Solar becomes $1 billion company, produces cells under $1 a watt.
First Solar Inc. joined to the ranks of Arizona companies earning $1 billion in revenue last year as it broke through on development of a solar cell at less than $1 per watt.
Mark Levine - The Financial House of Cards
As Americans come to realise the full scope of the now global economic crisis, the instability it causes is being seen as a bigger security threat than terrorism.
Every sector of the US economy has been negatively impacted and layoffs are being announced almost daily.
The roots of this crisis can be traced back to the economic policies of the 1980s.
For a generation the growth of the US economy has been disproportionately driven by the availability of cheap consumer goods and investment credit.
This system, which peaked with the rise of the securitisation of highly risky sub-prime mortgages in the last few years, enabled an investment system to emerge in which the debt to equity ratio was an outstanding, and totally unsustainable, 100 to one.
As Nouriel Roubini, a New York University economist who was among the first to predict the collapse we are now experiencing, explains it, the largely unregulated debt system created a “credit chain”.
This debt-to-equity ratio was so unstable that even a one per cent fall in the price of the final investment at the end of the chain “wipes out the initial capital and creates a chain of margin calls that unravel this debt house of cards”.
The world economy similarly depended on a growth formula based on a debt-equity ratio of five to one.
This means that in order for countries to maintain real GDP growth of two to three per cent, available credit would have to expand by 10 to 15 per cent.
How can renters be losing ground on homeowners when owner-occupied housing prices are dropping at the fastest rate in history? My rent did not go up this year. There will be a time when it makes more sense to buy than to rent, but we are not there yet.
Wall Street Journal
* REAL ESTATE
* FEBRUARY 25, 2009
Renters Lose Edge on Homeowners
Cost Gap Returns to Historical Norms in Some Markets as House Prices Drop
By NICK TIMIRAOS
The relative cost of owning versus renting is swinging back in favor of homeownership in some U.S. markets, buoyed by several quarters of sharp declines in home prices.
At the height of the housing boom, as home prices surged, demand for rentals started to rise as the gap between owning and renting widened significantly. Even after the housing market soured, apartment demand grew as former homeowners became renters, allowing landlords to push healthy rent increases.
Now, after two years of rapid home-price depreciation, the relationship between the cost of rental payments versus after-tax mortgage payments is tilting toward ownership in a number of metropolitan areas.
Over the past 18 years, after-tax mortgage payments have averaged 26% more than rent payments, according to Green Street Advisors, a real-estate consultancy based in Newport Beach, Calif. In 2006, at the height of the housing bubble, mortgage payments reached as high as 66% more than rent payments. But by the end of 2008, average monthly rent for the largest 50 metropolitan areas was $1,045, compared with after-tax mortgage payments of $1,300, assuming a rate of 5.5% on a 30-year fixed mortgage. That means mortgage payments averaged just 24% more than rent payments, the narrowest gap since 2001.
As you noted PB, this is more BS, this year’s house prices vs. last season’s rents. August is shaping up to be a holy reckoning in a very many rental markets … perhaps even some that do not now “see it coming”.
The fact that Manhattan is plummeting now just tells you something about the town–their RE is “mark to market”. (Their CRE fell early on, too.)
With so many doubling up or moving in with the inlaws, with so many new rental units on the market, with so many illegals en viaje a la casa, this baby’s ready to crumble.
With the stock market plumbing 1997 levels (1996 after inflation adjustments), can the housing market be far behind? I think not…
I’m thinking I will hang on to my losing edge in the rental market for a while. BTW, a 1-month decline of 5.1% (like in Phoenix from Nov 08-Dec 08) occurs at an annualized rate of
((1-0.051)^12-1)*100 = -46.6 percent.
Apparently, the rate of decline is accelerating.
From the WSJ piece on the Case-Shiller indexes:
“Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those [areas] now with negative rates exceeding 20%.”
Both composite indexes and 13 of the 20 metropolitan areas have reported consecutive record year-over-year declines since December 2007.
As of December, average home prices are down 27% from their mid-2006 peak. The 10-city and 20-city indexes have fallen every month since August 2006, 29 straight.
Both the 10-city and 20-city indexes fell 19% in 2008. December’s drop marks the 10-city index’s 15th-straight monthly report of a record decline.
The indexes showed prices in 10 major metropolitan areas fell 2.3% from November, while home prices in 20 major metropolitan areas fell 2.5% from November.
Yet again, none of the regions could stave off a decline from November to December. Month-to-month decliners were led by Phoenix and Las Vegas, which fell 5.1% and 4.8%, respectively, and Minneapolis, which dropped 4.6%.
And for the ninth straight month, no region was able to avoid a year-over-year decline. Phoenix and Las Vegas were again the worst performers, with drops of 34% and 33%, respectively, from a year earlier. San Francisco followed, with a decline of 31%. Phoenix is down 46% from its peak in June 2006.
Feb. 25 (Bloomberg) — Japan’s exports plunged 45.7 percent in January…
It’s o-kay, however; BB says large US banks are solvent. There is no problem.
Nikkei rallies, as a result.
Nothing to see here, move along….
OBwan makes me feel better when he speaks, and I now think I can see the light at the end of the tunnel which I could not earlier today.
But cheerleader-in-chief Pelosi is very irritating. Is she the standing-ovation starter or something?
Oh, P-Bear. You can’t honestly believe all of this can you? The number and scope of things being proposed is so astronomical that even the biggest stoner in stonerland couldn”t believe it.
No kidding about Pelosi. Can somebody please drop an anvil on her head so she can stay sitting the hell down.
The number and scope of things being proposed is so astronomical that even the biggest stoner in stonerland couldn”t believe it.
And if you want to hear lame, watery rhetoric delivered in a sing-song drawl, listen to Gov. Jindal’s rebuttal speech.
He’s the bright young thing in the GOP? Yawn. Not even a coked-up former financier on one last bender could buy that pablum. Gonggggg.
(Actually, I do think Jindal’s bright and fairly savvy, but the speech was a dog. He’s gonna have to do better than that on the national stage.)
I second your sentiments re: Pelosi, however.
I didn’t say I believed a word he said — I just said it made me feel better to listen to him speak, and watch him smile while everyone in the room with him stood and cheered. The love fest continues, and I am entitled to enjoy it…
Is the president really stupid enough to believe that a person who can’t refinance due to being upside down will lose the house if he/she can’t get a lower rate or cram down?
He actually differentiated between the people who bought too much house that shouldn’t have and people in trouble because they can’t get a lower payment at reset.
I was just sickened by his argument that debt is the fuel of the economy. He’s never heard of savings? He has proven to me that he is the banker’s man through and through. Debt servitude for all, serfs up!
Japanese sewage yields more gold than ore from Japanese gold mines.
He is right, except he does not seem to realize the possibility that the market is supported by the PPT, which would interfere with its ability to properly stress test the banks…
Wall Street Journal
Op-Ed News, Political Opinion Columns International Social Commentary
“Has it occurred to the new administration that markets stress-test the banks every day? How is the government adding value to this ongoing process?”
— Dennis Duggan McMahon, responding to “Treasury’s Unreality Show.”
Not to say the government is going to do any better, but if the market stress tests banks every day, how come the entire banking sector became insolvent en masse before “the market” noticed?
IAT