Bits Bucket For February 27, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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The Big Apple Getting Soft:
Feb. 26 (Bloomberg) — New York’s biggest banks and securities firms may relinquish 8 million square feet of office space this year, deepening the worst commercial property slump in more than a decade as they abandon a record amount of property.
JPMorgan Chase & Co., Citigroup Inc., bankrupt Lehman Brothers Holdings Inc. and industry rivals have vacated 4.6 million feet, a figure that may climb by another 4 million as businesses leave or sublet space they no longer need, according to CB Richard Ellis Group Inc., the largest commercial property broker.
Banks, brokers and insurers have fired more than 177,000 employees in the Americas as the recession and credit crisis battered balance sheets. Financial services firms occupy about a quarter of Manhattan’s 362 million square feet of office space and account for almost 40 percent now available for sublease, CB Richard Ellis data show.
“Entire segments of the industry are gone,” said Marisa Di Natale, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “We’re talking about the end of 2012 before things actually start to turn up again for the New York office market.”
The amount of available space may reach 15.6 percent by the end of the year, the most since 1996, according to Los Angeles- based CB Richard Ellis. Vacancies are already the highest since 2004 and rents are down 5 percent, the biggest drop in at least two decade
I am hearing Bank of Merrill is tying to move as much of Merrill’s operations to Charlotte as they can, and eliminating many of the riskier investment banking groups Merrill had. Think “Escape from New York” or is that too rosey of a picture?
Bank of Merrill = Bank of America. I dont sleep much these days.
We’re going below 7000 today…..And yet employers today still refuse to hire smart bright people who can think outside the box.
They have even stopped hiring stupid people.
The sad fact is that most bosses don’t want to hire anyone who can upstage them. Way too risky in corporate america. You won’t get credit for bringing in good talent, but you might get laid off and replaced by one of them.
Hey DJ -
People who think outside of the box are scary to managers, either because they fear their superior creativity or they don’t understand them. Never underestimate the intelligence of a manager with respect to the protection of his own job. At a certain level, it’s all politics.
If you can start up something on your own in your downtime, do it; jobs are overrated, and their appeal of security, health care, and retirement benefits are slowly going away.
I wanted to hire someone to be a co-equal with me, so we could work in tandem and check each other’s work but the PhD/MBA owner frowned on that. He preferred I hire some low paid flunky as an asst in order to avoid rivalry and discord..sheesh. So I went through assistant after assistant who didn’t like the money/me/duties and figured it was a dead end job.
I would have been more than happy to be replaced.
My company is looking for a PhD Chemist in Atlanta.
We are still hiring smart people.
Tim — I thought “Bank of Merrill” made perfectly good sense.
And a word to you and all posters: Loss of sleep is a hazard for those fortunate enough to keep their jobs during a recession, as former coworkers’ workloads get shifted on to your’s. To whatever degree is possible, make sleep and personal health a priority in your lives (easier said than done!).
I woke up Wide Awake today and I’m exhausted.
Well, I think I woke up. I mean, my eyes are open.
But, golly, the head hurts.
I’m with you there, Olygal; bit too much of the red stuff here. Ow…
the green stuff for me. I once crashed a pirate party (a backyard full of people in pirate outfits, how could I not!) and someone pulled out a bottle of absinthe. It was pretty lights out after that! It was illegal in the U.S. then but for the right (and exhorbitant) price you could have a courier get it by customs in a box marked “medical supplies”.
I heard its available now and someone spotted it on a menu recently. I still have a couple bottles left of the good stuff I imported.
Does a magical color change when water is added by pouring over a sugar cube atop a vented spoon. There’s a name for it, ‘releasing the green fairie’.
Tastes like flammable Good & Plenty’s.
Makes you wanna remove the wax from your ears with a buck knife. In a good way.
added to my pirate party post: I happened to have my acoustic w/me so played some music for my admission.
The green fairie kicked in just as I launched into the first solo of “Comfortably Numb”, and I fell onto my back from the hammock I’d been sitting on. I played the whole solo laying on the grass, and was helped back into a sitting position just in time to sing “IIIIIIIIIIIIIIIIII… have become…. comfortably numb”.
DIdn’t miss a note. My date was most impressed.
It’s now legal in the US because they found a way to distill it that kept out the toxin that caused it to be banned in the first place.
‘It’s now legal in the US because they found a way to distill it that kept out the toxin that caused it to be banned in the first place.’
Well, then, I don’t want any, anymore. Whassa point of that?! Jeeze, if I want to write poitry, I want to write it when my liver is failing and I’m about to fall off the granite crags of a remote castle, plummeting down to the crashing steely waves of a bitter sea.*
But what I started to say was; hunky dory, please move to the PNW and come to my parties. I’ll pick you up off the moss and haul you inside and even wipe you down, before I chuck you on the couch to sleep it off. It’d be good for your art. You’ve never seen such big trees, (and so many Green Fairies, ahahahaha)
*I made that part up. And I didn’t even require any ansinthe, yet! Imagine how much more eloquent I will get once I get some ‘Green Fairy’.
Olygal, I’m sorry but there simply must be a catch. I suspect I’d be sharing the couch with other strays from the animal kingdom…. like you found an injured PNW puke beetle and you would need me to stay up all night making sure its still puking.
I never been west of Vegas: my map has your neck of the woods marked off as “Here Be Monsters”….
I’m with you on that new stuff. Absinthe without wormwood? That’s like Aunt Jemima with no pancakes!
One of the largest law firms in the US is laying off 12% of their lawyers today after cutting around 10% earlier in the month. Even larger numbers of paralegals, secretaries, and other staff are also impacted.
Word from some upset partners is that the NYC office is going to be hit the hardest.
12% less lawsuits? OHMYGOSH! Will this recession never end!!
Lawyers in the “largest” law firms don’t spend most of their time bringing law suits. They spend most of their time on the transactional practice. And the litigation department spends most of its time defending law suits. Really big clients who can afford really big law firms get sued more than they sue - though the balance might be shifting a bit in the current climate.
I think its getting harder and harder for corporate America to swallow $600+ an hour fees from many of these firms in these times.
They shift to something called “value billing.” You get paid for what you get/save the company or a flat fee for certain types of transactions no matter how much time you put in. Bad times for first and second year associates since they don’t get paid overtime and paralegals do. The partners send the paras home (so they don’t have to get paid) and make the baby lawyers do all the admin work as well as their other responsibilities.
I worked for a “value billing” firm back in the day, but that was because the partners figured the firm was so wonderful they could charge more that way - and they almost certainly did. I did not have to do paralegal work as well as my own, but only because my department didn’t use them.
Partners were changing in the vicinity of $600 an hour or more more back in the ’90s. Bet it is way higher now - or at least it was until recently.
Polly, based on some of the horror stories I’ve heard, being a ‘baby lawyer’ may be a worse gig than being a doctor in training.
Ahh…but most of the time you are only dealing with money - other people’s money and therefore a serious responsibility, but just money. I didn’t love reviewing offering documents at 3 in the morning or drafting mutual fund disclosures on almost no sleep, but no one was going to die if I screwed up.
And when we finally did finish, we took car service home and the client paid for it.
Besiudes, I paid off all my student loans in less than three years and thereby earned the right to take a different job if I wanted to. Nasty experience. Don’t really think it compares to new doctors.
Hmmm…car service, eh? At client expense. Nice. Back in the day, the drug companies used to hand out free pens, donuts and stuff. And doctors in some specialties (alas, not mine) got golf trips to warm sunny places. Those days are long gone.
It took me 13 years to pay off my student loans. So, you win!
My daughter is a first year intern doctor in a busy urban (Baltimore) hospital. “Scheduled” 80hrs/wk of gun shot/knifings/OD’s…plus nice medical things too. Gets lots of experience. Longest shift last months was 33hrs (scheduled for 30hrs). She does like it though, and is very positive. All for $44k a year. She has to do this for two more years, a little more money each year, hours will be about the same.
Nobody can perform their best working 33 hours straight (and patient care WILL suffer as a result). There is no good reason to do that to interns. Period.
It really is stupid. In the UK the EU is trying to force them to apply normal working regs to junior doctors. Which means this sort of thing is completely illegal. And the government is opposing it.
I want to know, very seriously, who the moron is in the cabinet who wants to be treated by some poor intern in emergency at the tail end of a 30 hour shift.
– w
Well, it’s not like THEY will be treated by that doctor, now is it?
I’ve always wondered why doctors are made to work such horrific hours. Seems that if doctors were allowed to work 40-hr weeks (regular shifts, not all in a row), we might be able to put a serious dent in that “malpractice” stuff everyone keeps complaining about.
So it would appear we lowly renters aren’t so lowly after all.
The Center for Economic and Policy Research, a Washington, D.C.-based, non-partisan think tank, says 18% of boomers aged 55 to 64 are underwater and would have to bring money to the table at closing should they sell their homes.
The CEPR also found that people who were renting homes in 2004 will have more wealth in 2009 than those who were owners. That’s true for all five wealth groups the study analyzed, from the poorest to the wealthiest.
Wait, the NAR told me that the only way to wealth was to own a home? Or did they get it wrong and the only way to own a home is to have wealth?
[/Snarky comment off]
All this vanishing wealth is a wee bit deflationary, no?
Poof!
…which increases the buying power of any wealth that remains.
I like KABOOM much better
But I think a big fart sound would be most appropriate.
“What was THAT?”
“That was the wind of change…”
A Mighty Wind laughing boy
“Break Like The Wind” Spinal Tap
Kerplat!
‘But I think a big fart sound would be most appropriate.’
Yeah, but you ALWAYS think that, laughing boy.
Some people point fingers…
others pull them;).
It’s the cycle of life.
* starts to sing very loudly all the songs from ‘Lion King’ *
$1.75Trillion of air - STAT!!
Liz needs a rewrite, I saw this some months ago before the stuff really hit the fan.
So you want to be a millionaire
Me, too — in fact, I’m already there, and so are a lot of folks who shun lightning-strike fantasies about wealth. You can do what we did.
This By Liz Pulliam Weston
The day my husband and I became millionaires was a lot like any other day.
He went off to work, grumbling about the commute. I was fretting about our utility bill and decided to check our personal finance software to see how much more we were paying than the previous year. While I fiddled with the numbers, I told the software to update our account balances. Lo and behold, the net worth column showed seven figures where before there had been six.
There was no popping of champagne corks, no trips to the Continent, no quitting of jobs. The fact that the experience was so mundane speaks volumes, both about how millionaires are really created and what it means to be one.
We didn’t, for example:
Win the lottery.
Score a big win in the stock market.
Inherit a huge pile of cash.
Appear on any reality shows.
We do, however:
Make financial security a priority.
Spend less than we earn.
Save and invest regularly.
Pay down our debt.
Own a home.
Maximize our incomes.
If you want to be a millionaire someday, I hope that our experience — and those of millions of others who have achieved this goal — might provide some insights and inspiration for getting there.
First, though, let’s deal with the obvious: a million ain’t what it used to be. But that’s nothing new. Except for brief periods of deflation, such as during the Great Depression, the generally rising level of prices has always chewed away at the value of a buck. That means you need $1.85 million today to match the buying power of $1 million in 1986, or $7.44 million for the equivalent of a million in 1956.
Still, reaching the million-dollar mark put us in the top 10% of all U.S. households. (The minimum net worth to join that 90th percentile, according to the Federal Reserve’s latest Survey of Consumer Finances was $831,600 in 2004.) In global terms, we’re near the very pinnacle of wealth when you consider that billions of people live on just a few dollars a day.
From the same Liz Pulliam article
Own a house — and don’t waste it
There’s no question that owning a home in Southern California got us to the million-dollar mark a few years earlier than I’d projected.
But I’ve lived through a couple of real-estate recessions and know that home prices can drop as well as climb. That’s why I’ve valued our home conservatively for our net worth statements, and why we’ve avoided tapping our equity for frivolous spending.
Despite the ups and downs, owning a home has long been the cornerstone for wealth for most people. Consider:
The median net worth of all homeowners in America in 2004 was $184,400. For renters, it was $4,000.
Among the richest 10% of households, 96.9% are homeowners, compared with 69.1% of all households.
Among that richest 10%, primary homes account for about a quarter of the median net worth.
would be interesting to know the median net worth of all homeowners in America in 2009 …
(especially the number when excluding all those who don’t have a mortgage and own their home 100%).
Many financial advisors say you should not count the value of your primary residence as part of your net worth.
I was dared close to being a millionaire on September 1 2008 but now I’m close to a net worth of $700,000. Thanks to my treasuries and gold as a hedge against the stock crash.
In 1960, $1,000,000 net worth could afford you a chauffer, a butler, and a fancy house. That was real wealth. Now it’s middle class.
However if you have $2,000,000 net worth, and half is in the S&P 500 and the other half in treasury bills, you could have an annual income of $36,000 to $50,000 (dividend income and treasury yield) and not have to work. In flyover country, that’s a lot of money.
Yes, I’m agreement with you and FPSS, your primary residence is a liability, and as an expense all associated costs should be minimized.
Today’s boarderline millionaires don’t have the worry that the old 1960’s millionaires had.
Millonaires today may have to spend it or even loose it ..before they croak and attempt to “take it with them ”
$36,000 a lot of money in flyover country?
Is there some state where Starbucks is actually affordable?
All of the capital that is fleeing to treasuries is being used to finance consumption of real capital. This consumption ultimately destroys the networth of the world economy.
The government is crowding out productive uses of this capital as people “flee to safety”.
I encourage everyone on this board to help the economy and not put your money in treasuries.
For a single person living plainly (that’s me), monthly expenses run between $20K and $25K per year. $36K is adequate. But for a family, $36K is not enough. You probably need food stamps.
However, $36K IS a lot of money if you go on the Oil City PA plan. That is, buy a $50K home outright in Podunk with low taxes, don’t have to commute, and have the time to play homesteader. You can do that on about $15K/year.
in Netherlands the home is also not counted as part of net worth - but this strongly distorts the statistics, because a significant chunk of Dutchies completely own their home, and many of those homes are expensive enough to earn the millionaire title. Of course there are others where the home would negatively influence their net worth, but I doubt they can really check this …
interesting tidbit: the average Dutchie has about 65000 euros on a savings account, but the median Dutchie has less than 5000 euros in savings.
In Europe we are told that to be ‘financially independent’ and stop working (at age 40-50), you currently need over 5 million euros in capital. Of course that is if you want to have a lavish lifestyle without worrying too much about prices of stuff you buy/use. If rates go up again to 8% or so you need a lot less capital for acceptable income …
1 million is not enough capital to ‘live the good life’, and certainly not if you have a family.
Several years ago at the start of the downturn, we were in the Cleveland, Ohio area and had the distinct priviledge of “bringing money to the closing” in order to sell our house. It hurt at the time, but the lesson we learned was invaluable. Since then, we have been in the “lowly renters” class and have not been losing sleep while watching our largest single asset become our largest single liability as so many others have enjoyed.
It was good to get out when we did, but it would have been better to not even “get-in” in the first place.
Just as the “American Dream” has become the “American Nightmare” and HBB has been my place for sanity and solace, does anyone know of a place that we can go to get good and straight information about where our country is now headed under the new policies being implemented every day? …. a place for level-headed discourse?
Go to Obama’s home page
or you can check the USSR dot org.
Alexis Zorba (Anthony Quinn), when asked if he was married, said: “Am I not a man? And is a man not stupid? I’m a man, so I married. Wife, children, house, everything. The full catastrophe.
The “American Dream” the full catastrophe …Boss, it’s enough to drive you to wine, women, and dancing
That’s a great quote “)
That’s a great movie.
Pravda tells me tractor production is up and we’re meeting our 5 Year Plan to transfer all of the money to the bankers for Bailouts.
Winston will be along shortly to help you better understand Newspeak.
Don’t worry: those who have more wealth will have to give it to the state - somebody has to fund the Bailouts!
“Equality” for all!
Interesting.
“The reason that the one act rule exists is to put the risk of these deals on the lender, not the buyer. The purpose is to discourage bad underwriting, dishonest marketing, and unjustified price inflation by making it very, very hard for a lender to get back the money if they lent more on a mortgage than a house was worth. The system is designed to let people walk away.”
http://seekingalpha.com/article/122749-the-truth-about-mortgages
What’s the “one act rule”? I googled but couldn’t find a definition.
That’s an excellent article Palmy. I blog regularly on the PB Post and Sun Sentinel, and am continually encouraging those in way over their heads to walk away. I just posted this up for others to read, hopefully this will help them understand their situation a bit better. Middle class people simply cannot afford to have a 100% leveraged 300-600K “investment” move against them by 50%. They will never recover from that kind of financial damage, and I really think it’s wrong of us (the people) and the government to encourage them to “just keep holding on”. Every year they hold on is another year that they are not securing the financial future. Had they walked 2 years ago, they would be ready to buy again next year at 1/2 the cost. The longer these people are deluded into thinking the value will recover, or that they can afford to take a 1/4 million dollar leveraged loss (really more like 500K when you count the interest payments on the loss) the more suffering we will see.
Mr. Fink,
We often have opposing views, as with the Save Our Homes tax issues. I believe people should PAY the taxes that they supposedly paid for their houses. If I pay $100,000, I should be taxed at $100.000. That is what the house is worth. When all this frenzy started with people who had no business bidding up houses to 3x that amount, the governments re-assessed properties to 3x that amount.
It wasn’t fair to anyone who bought previously.
You took the position that it wasn’t fair to the “new buyer”.
Now that prices are about 50% below where they got to, and falling, you are taking the position that those people who willingly OUTBID me to buy a house should be able to walk away from their obligations.
I disagree with the article and I disagree with this perspective. Loaning to businesses for transactions isn’t a comparable act to lending for a house. The lender can go after the business in the form of bankruptcy or it can write-off the debt if the transaction fails.
I think Banks who loan to people for houses should go after every one of them for a deficiency JUDGEMENT and put that “buyer” into debt for the next 20 years. Then they will learn that signing an obligation is an obligation. Period. You want to “Gamble” on overpriced housing? You’re buying 5 “owner occupied” houses? It’s a “no lose” situation. Go ahead. But…………… When you lose, you should pay.
That would keep irresponsible pigs from entering the housing market and driving up prices for responsible buyers.
I don’t buy any of the “i didn’t know” stories about “predatory lending”.
Everyone KNEW the re-sets were coming. They just hoped they could get another re-fi to “cash-out” of their “investment”> TOO BAD.
The game didn’t work, but they decided to play. PAY UP, LOSER.
I sure hope Joe Biden doesn’t read this blog or he might try and rewrite the bankruptcy code yet again.
Don’t worry. Old Joe wouldn’t remember this websites name so he wouldn’t be able to find his way back.
This is a difficult call; however, I think people should be held responsible for their actions. You cannot live in a society where contracts are not respected, and people just walk away when they just ‘feel they aren’t making a profit out of their home’.
The reason you cannot do this is because everyone else ends up paying for it directly or indirectly!
Except that a non-recourse mortgage explicitly contemplates walking away from the house as long as you give the house to the bank. That is what a non-recourse loan with collateral is.
Polly,
That’s exactly my point, the “penalty” for non-payment in a non-recourse loan is explicitly written into the contract. As long as these morons do nothing to impede the banks rightful possession of the collateral, they have fulfilled the contract. I’m sorry, but I just (as much as I hate what these idiots have done to our economy) a lifetime of debt servitude for those who made a (admittedly huge) mistake. That’s what bankruptcy and non-recourse loans are for, and that’s why banks take on risk when they make these loans. If they knew they could hound these people to the ends of the earth, attach wages, and be totally non-dischargable, that would alter the pricing of MTGs, but would also be a bad thing for this country. We have to let these people resume their lives (as renters with destroyed credit) or else we will never heal as a country.
My response was to Brett, but yes, I get what you are saying. That is why the student loans are so dangerous. I have believed for years that these loans that are not non-recourse, can’t be discharged in bankruptcy and are given to 17 and 18 year olds who have no idea if they will ever be able to make enough money to pay them off are going to be a severe drain on the economy going forward. And that was before the banks were on the brink - I was only thinking of eating up discretionary purchasing power of young adults.
diogenes,
Yes, we do have conflicting views, but, as with most posters on this board, I think you have very valid points (in both arguments), we just see things differently. Either way, don’t take my comments as personal attacks, I just respectful disagreement on some of the issues.
Buying a home with 0 down is/was a no-lose situation. That’s why it’s SO stupid for the banks to do it. Value goes up, you keep the profits. Value goes down, you walk away, bank eats the loss. When you have normal lending standards, and people are putting 10%+ down, then the equation is dramatically changed, if the value falls and you walk, you are really losing 30-40K (closing costs) on a 300K home. That’s real money to most people, and a realized loss, they truly do not have that money anymore. That’s what the downpayment is SUPPOSED to do, it’s to incentivize the buyer to continue to make the payment in the event of loss. What the banks did was stupid, they basically wrote nearly “free” call options on houses, an unsustainable business model, and they deserve to suffer for their stupidity.
The banks can write off the MTG losses too (just like business transactions), I don’t see any difference here. The lender doesn’t have to “go after” anything, they are automatically (well, kind of) assigned ownership of the securing asset, again, I don’t see how this is any different they a business transaction.
Even if your “responsible” situation came to pass, bankruptcy would forgive the debts of these bad borrowers. I don’t think that people who made bad investment decisions (or were greedy, or even fraudulent) deserve a lifetime of debt servitude, that’s not the way it works in the business world, why should it work that way for the “little” guys. Now, those who were fraudulent, I absolutely support prosecution and potentially jail/fines/restitution, but that’s really a different matter (criminal, rather then civil).
The banks/lenders did NOT do their due diligence on these loans, they are some of the most culpable in the entire housing mess. What’s supposed to keep irresponsible pigs out of the housing market isn’t a lifetime of debt servitude, but an unwillingness of the banks to lend to the irresponsible!
What is your solution to this problem? Put those who were greedy morons into a lifetime of debt? You (I’m sure) realize that we are talking about trillions of dollars here, those who bought poorly and/or were greedy/morons/etc will NEVER be able to dig out from under their one bad financial decision. Also, it will take decades for the country to recover from a shock to the consumer like that; the banks should take the losses, they are the ones who are most responsible for creating this disaster. The “homeowner” doesn’t get out of jail free, they have destroyed credit and all the financial/emotional stress that comes from losing a home.
Those who were just stupid - buying a house they could not afford - should lose those houses but should NOT be shackled to years of debt. The resulting drop in “status” to “lowly renter” plus having to give up space (no more McMansion) and assorted related shocks (probable job loss, etc.) are enough damage.
Those who committed fraud, however, should be forced to pay back their debts for years to come. These clowns, with their “liar loans” and half-dozen “primary residences” did a lot of the damage and with complete intent to commit fraud. So, they should be made to pay dearly for their crimes.
I agree, for many of the seriously upside down, bankruptcy is the best answer.
Pondering,
I agree. Those who committed fraud should go to jail, and then have to pay it all back, no arguement from me there. That’s a totally different situation, I’m talking about the majority of the buyers out there who just got sucked into the madness during the boom; bought WAY too much house, and have seen it turn against them 50%. They need to walk away. The fraud needs to be punished, no get of jail free card for them!
A couple of key points:
1. Banks have lots of money. Banks have lawyers to draft up mortgage contracts, statisticians to determine how much interest to charge, and a covey of advisors to insure the transaction is in the best interest of the bank. Your average Joe house buyer has nothing but a bit of gullible trust in the American Free Enterprise System. They shouldn’t just walk away, they should run away.
2. Banks did what was in their best interest: they knowingly originated bad mortgages and knowingly lied about their value to gullible investors. Their executives and owners made millions.
All of this is perfectly legal. The bankers should keep their millions, the house owners should walk away from the houses, and the investors should learn to never invest their money in American originated securities again.
“Buying a home with 0 down is/was a no-lose situation.”
Actually, I would argue that there was some “loss” for even those who bought with zero-down: in the vast majority of cases, even with IO or Neg-Am loans, they were paying more every month than they would have had to pay for equivalent shelter as a renter.
The problem is simply that the banks were allowed to sell the loans on, first to Fannie and Freddie Mae, and then later in the form of Mortgage Backed Securities to everybody.
In theory Banks should be very careful who they lend to, it’s not actually their money that they’re lending after all. In practice, MBS and ABS securities, destroyed that arrangement, and created an infinite loan machine for them.
All the arguments above are valid - but of no interest to any bank that doesn’t retain possession of the loan. Once mortgage backed securities were introduced, they were put in the interesting position that they could generate and sell as many loans as they wanted to, provided they could find people to lend to, and purchasers for the securities. Slap on some fees for that, and you have a completely risk free profit opportunity for individual banks, that unfortunately is also a ticking time bomb for any economy that allows it to occur.
System effects now dominate.
– w
Jon,
Very accurately stated. Thank you.
Exactly, warlock. The banks deliberately committed fraud. Beginging, middle, end, period.
As for homeowners and future former homeowners, more and more are using the “…if you can find the holder of my mortgage, I’ll leave.” defense.
And it’s working.
Michael,
Agree with everything you’ve said, especially that those who committed fraud should be prosecuted, and those who walk away should have their credit reflect thier actions for many years.
One thing I’m concerned about is the environment of “forgiveness” for the borrowers, and if their credit is somehow made whole, it would be exceedingly wrong.
Banks and lenders have the ultimate obligation to themselves. As stated above, they were the ones with all the knowledge and experience. A first time buyer didn’t have a chance against them.
” I blog regularly on the PB Post and Sun Sentinel, and am continually encouraging those in way over their heads to walk away. I just posted this up for others to read, hopefully this will help them understand their situation a bit better. Middle class people simply cannot afford to have a 100% leveraged 300-600K “investment” move against them by 50%.”
Thanks for doing what you do. The notion that “protecting” their home is the right thing to do is bankrupting millions of people.
The stated objective of the Obama administration regarding falling home values is completely wrong. Then again, Marxists generally don’t “get” markets.
Marxist? Turn off Rush for a minute. Obama went to school in Chicago, and is surrounded by Chicago-school economic thinkers. No one can call him a Marxist and retain any shred of credibility. His appointments reflect his close ties to Wall Street and big business. He is a capitalist, albeit a crony capitalist.
What could serve government and banksters better than an entire generation of homedebtors shackled to their “most important purchase” forever? “Keeping people in their homes” also means “keeping people paying their mortgage for a house which will never again be worth what the mortgage is worth” which also means “massive wealth transfer from formerly middle-class people to Wall Street banksters” which is only “Marxist” to those who have been brainwashed by GOP talking points. Usually, Marxism would involve a transfer of wealth in the opposite direction.
Whatever “Marxist” crumbs may fall to American citizens in the form of national health care, extended unemployment benefits, etc., are only to keep the torches unlit and the pitchforks in the barn while Wall Street continues the looting unimpeded.
This is the biggest wealth transfer in history, and it’s from the bottom/middle to the top, which ain’t Marxist.
The president taught at the University of Chicago Law School, but I don’t think he ever attended school in Chi-town. That being said, you don’t graduate from Harvard Law School without getting a little law and economics under your belt. At Columbia, we had a required class in it.
Sorry, taught - not attended.
At Columbia, we had a required class in it.
He went to Columbia, too. (I’m guessing you know that, but others may not.)
I’m sure there are some tie-ins and cross-pollination between the law school and the economics dept. at U. of C., but my impression from people who’ve gone there and taught there is that the law school is much more progressive than their economics department.
Maybe Mr. Pussycat can weigh in, as I think he has a long history with U. of C. ….
He finished undergraduate at Columbia. VERY different than the law school.
I thought you were saying you went there for undergrad as well — I misunderstood.
Nah. I was much further north for undergraduate. New Hampshire. Snow in April. Lilacs in June. Stars in the sky. I was NOT ready for NYC at barely 18. Much better to take it on at 24.
Re - dialogue between Cobalt and Bub: I would also like to add my support for Mike Fink’s considered activism. Personally, it seems that this hyped up bailout movement has all of the characteristics of a propaganda war. Instructive to view it through combotechie’s lens. I do not think that the Saving of the Homeowners means what many people think it means.
Following the money - keeping the payments going on upside down houses as long as there is breath and life benefits the Messiah’s Wall Street cronies. It maintains the fiction of solvency for banks’ capital structure. Without which, as we have seen, we have the Friday FDIC events.
As long as the extraction of money from the middle class to the banking system for derelict mortgages continues, the morally and intellectually debased hang onto their jobs. It is unlikely they have the capacity to do anything other than give phone and smoke and mirrors. They are sh*tting their pants.
The trickle up effect - as long as it lasts - ensures continuing campaign contributions for the corrupt.
Swallowing the newspeak of Hope and Change, we are conned into thinking the trickle up effect is actually a trickle down effect.
A masterful, and successful, exercise in propaganda. When we are hyped to this degree, we are wise to look at who actually benefits. As with all masterful propaganda, the facts reveal the truth is the opposite of what we are led to believe.
FPSS said it best. He said it better, and I paraphrase, the two trillion trickle is a drop in the bucket when compared to the fifty trillion dam about to burst. The newspeak puts off the day of reckoning. The REAL Hope is actually that there will be enough confidence in the system to sustain the next several rounds of rollovers.
Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens…
Feb. 27 (Bloomberg) — Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.
The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.
“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”
“A score of 700 was once near perfect,” said Gwen Muse Evans, vice president of credit policy at Fannie Mae, the government-controlled company that helps set lending standards. “Today, a 700 performs more like a 660 did. We have updated our policy to take into account the drift in credit scores.”
Accunet’s Wickert said that a 660 FICO score would have qualified most borrowers for loans with no upfront fees in the past. Now, someone trying to borrow $200,000 with a 660 score would have to pay a 2.8 percent fee, or $5,600, he said. Even someone with a 719 score would have to pay $1,750 in cash.
“The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied…”
Gee Bri, I wonder why?
It sounds like Brian just reached August 2008.
Keep going big guy!
Credit score deflation?
I read a couple of weeks ago that FICO is currently in the process of modifying their algorithm and lowering scores.
FICO is garbage. They should be modified out of business. It’s like a Zillow of the credit industry.
If 700 is almost perfect, I’m “beyond perfection”! And my mother said I was a bum.
Note to Mike F., Palmetto and others from the prior post:
Notice here that “securitization”, the concept that it really didn’t matter about the appraisal, the neighborhood, the housing market, the employment history, the “stated income”, or anything else.
What mattered was whether the BORROWER was likely to RE-PAY the loan.
Much of the computer-generated lending criteria started to counter charges of Racism and Unfair and Discriminatory Lending practices. So, the best solution was to use “credit scores”. If you had a high score, then the lender simply could not refuse to loan the money or charge exhorbitant fees, without being accused of being a predatory lender.
The whole system assumes the BUYER will PAY the loan. That is why we got high LTV ratios. It was a huge mistake, but the idea of an Appraisal protecting the lender was a formality.
The Lender is looking to the Borrower for repayment. The Loan Agreement is a contract. The Debt is due. IF they WALK AWAY, then their personal Assets should be seized for non-payment of debt. No Cram-downs. No excuses. No sad stories. If they have nothing to seize, then they should be subject to payroll attachments.
Think of it as “child support” for the Lender.
The rest of us depositors to the Bank shouldn’t have to pay for their unwanted children, should we? They were irresponsible. They should Pay.
The notion that the banks had to be racist to underwrite a loan properly is garbage. The racism, in fact, was in rejecting loans in certain neighborhoods on the assumption that the true value of the home was wrong or mystically unknowable ’cause, you know, people who didn’t look like bank branch managers lived there. If the banks had done the same darn “colonoscopy” on minority borrowers that they did with everyone else back when they held the loans on their books, lending would have remained fine - 20% downpayments, no more than 2.5 to one on loan to income amount, relatively little other debt, etc. Opening a few branches in minority neighborhoods would have helped too.
Underwriting soley by FICO was not a response to charges of racism, but a way to increase worker productivity. When you only have to generate loans to use up your own deposits, you don’t have to make that many of them and you care if they are repaid so you take your time underwriting them. If you can generate fees from as many loans as you can process and don’t have to risk your own cash to do it because of securitization, why not abandon all that time consuming paperwork and go with a number grabbed off a computer?
Thank you Polly. Once again a voice of reason.
Excuse me, but don’t put words in my mouth.
I never said banks needed to be racist to underwrite loans properly.
My point is that they were “charged” with being racist when they denied loans to so-called minorities because they FAILED to pay back debts, bought in neighborhoods that consistently declined, leading to “red-lining”, etc.
The concept of FICO was to “eliminate” any “discriminatory” practices. You could be “color=bliind” and look at their past payment history, even if the history was mostly consumer purchases and NOT housing or major purchases.
Yes, the lenders also got the benefit of not doing “investigations” into the collateral or creditworthiness of the borrower, which helps eliminate those unwanted, pesky employees, but they could rely totally on a COMPUTER=generated, blank slate that did not include their own opinions (racist) about the buyer should the DENY the loan.
Red-lining was not the result of minorities living in those neighborhoods not paying back loans. Bankers just decided not to lend in certain neighborhoods - mostly because they didn’t understand what was going on financially in those places (nice interpretation) or because they were racist (bad interpretation).
If I were a bank manager who really had to worry about my loans being paid back, I would lend to people whose lives I understood. But minority families have had working mothers for way longer than white families have. Why would I lend to a family that needed two incomes to qualify when my default assumption is that the mother working is just a temporary thing? If the banks had bothered to open branches in minority areas and hire the locals to work in those branches there would have been much less red lining.
As for the racism, I once heard a law school professor speak. She got asked a question doubting racism was still an issue for middle and upper middle class black people (this was a while ago). So she told her own story. She bought a house in an upscale vacation area. Ended up doing all the mortgage stuff over the phone so she never met anyone in person. When the papers arrived, the morgage guy had checked off the “borrower is white” box. She crossed it out and checked the “borrower is black” box before signing it. Got a call a few days later. The bank decided to reject what was a previously “guaranteed to be accepted” application because the house wasn’t really worth that much because the “neighborhood” wasn’t that good. Did the repayment record of people in that neighborhood change over less than 7 days? No, of course, not. All that changed was the bank was put on notice that a black person had bought a house there.
“Borrower is white box”?
Good lord, that’s ridiculous! Does that actually happen in some places?
(I live in one of the most integrated cities in the nation; if you put various race checkboxes on applications most people would have to check several.)
I assume the lenders include the check box because of the laws requiring them to not discriminate based on race. Probably voluntary for the borrower to even respond.
Yes. FICO IS a handy, colorblind way of judging how well borrowers manage to live within their means, and their inclination to pay of their debts: what used to be called their Character. But it has little or nothing to say about their Capacity to make payments, or the value of the Collateral. And ignoring the other two C’s of underwriting was always bound to get lenders in deep doodoo.
Wrong. If you have no debts and do not use credit much, you will likely find your FICO score is really low. There are a bunch of factors that are weighted in the tightly guarded formula, but it’s been my experience that FICO hurts the fiscially responsible that do not need to use credit (live within means). Now that insurance rates and other things are based on this score, it’s starting to cost these people that live within their means (I don’t mean pay off credit cards, I mean don’t use them).
FICO is also used by many companies to determine hiring.
“FICO is also used by many companies to determine hiring.”
+1 It is a widespread practice for serious career positions.
And then the banks got creative against the scenario of 2.5x income by allowing 80/20 loans and on and on. Banks and congress were instrumental in laying this bed of nails.
Diogenes, but the contract also gives the mortgagor - the borrower - the right to give up the collateral and walk away, assuming he/she acted in good faith wrt honest submission. I’d wager that very few people who acted in good faith anticipated that they would be unable to pay their mortgages, or that their houses would plummet in comparative worth.
You have also acted in good faith, and have suffered injury at this turn of events. In contrast, the masters of the universe drink champagne and eat caviar with the spoils of this bubble and their continuing entitlements from the Treasury, which you are paying for. You are angry. You are right to be angry.
We are all injured here. Let’s focus our anger on the proximate causes. The fraudulent players of the securitization game. The realtards. All who fanned the velocity of dirty loans so’s they could take their slices off the pie as it zipped by. The dirty mortgagors who gamed the system.
But there are also honest folk who bought during the bubble. They will be some of the last to walk away. But they should have the freedom to exercise their half of the contract without recrimination, IMHO.
There but for the grace of God go I. As Polly has noted, anybody with a clearance will not have the option to walk away from debt, no matter how contractually justified, as long as they can conceivably pay their debt with their salary. Bankruptcy is not an option. There is no forgiveness in this matter. You can keep working and keep paying, or stop paying and losing your eligibility to work.
The two largest banks in Wisconsin which includes the Butler area, recently took approximately $1.7 and 0.5 Billion plus in Gov’t money( and suddenly cancelled a grand executive party in Pueto Rico and exclusive bank paid Country Club Fees respectively)
Wisconsin “official” unemployment suddenly jumped to 7.6%.
The House Dream Prices of the FB and GF remains their main hope for economic survival and retirements in the sun.
…and the beat goes on
From TDR…
Oh…we are such optimists!
So far, the Crash of ‘09 has paralleled the Crash of ‘29…and the Crash of 1873.
All three began in early September. All three saw the big selling in late October. Both in the case of ‘29 and ‘09 a near-term bottom was hit in mid-November.
“Moreover, the percentage declines,” writes Dominic Frisby at MoneyMorning, “were virtually identical. An initial decline from the high to a late October low of about 40%, then a rebound of about 15%, followed by a final low in late November - down about another 22%. The parallels are uncanny.
“The worrying thing…it is not unreasonable to expect the eventual low to come no earlier than 2010-11.”
After the initial lows were hit in the Crash of 1873, a rebound continued until May of the following year. After the Crash of ‘29, the rebound continued until late April of the following year. In the case of the 1873 sell-off, the final low was not hit until four years later, and in the case of the ‘29, the final low was hit in 1932, with stocks 90% below their peaks.
This time the rebound following the November low only recovered 15% of the losses…then, stocks headed down again…and have just now slipped to a new low. If the pattern of the previous two major crashes continues; the final low won’t come for a couple years.
Unless we have a Japan-style slump…in which case, it will take much, much longer. Everything keeps falling in the land of the rising sun. Exports have fallen 45%. And stocks are now at a 26-year low. If we follow that pattern, the eventual low in the Dow may not come until 2019…when stocks will be back to 1994 levels.
And just look at what has already happened to some of America’s leading companies. Citigroup is down 90% from its high. You can buy a share for just $2. But be careful. A government takeover could wipe out the shareholders. The Bank of America has lost 90% of its value. GM is only worth about 3% of what it once was.
JP Morgan cut its dividend by 87%…to just 5 cents a share. Overall, dividends are being cut by a record amount.
C will open around 1.50 this AM. Gubment takeover all but a certainty.
An almost 40% takeover of Citibank.
Yes SFBgal…I caught a little on the TV news but it wasn’t very little detailed…but just the general outine was amazing..whod’ve thought the USA taxpayer would buy a used bank..on a THURSDAY night
Got a friend who’s a big-wig (whig?) at Citi coming in to SF. Plan to meet for a cocktail. Also plan to tell him to pick up my dry-cleaning now that I’m, in large part, his boss. Any requests for service from the rest of you guys, er, bosses?
MrBubble
Mr Bubble. Funny, ask him to walk the dog while you are at it!
SInce we do own the bank, why not tell him to lower interest rates on their credit cards. Who do they think they are by raising the rates? Come on taxpayers, we own these people now. They are our b*tches to do what we want with them.
So, according to your metaphor, we are supposed to be rebounding now? I’m not seeing it.
I think he is ignoring the effects of derivatives and all of the hedge funds that have blown up lately.
To misquote a realtor - I think its different this time.
I’m fine with all that, as long as the gubmint doesn’t try to “fix” the people’s boo-boos by taking over their private pension plans.
http://money.cnn.com/2009/02/25/real_estate/boomer_wealth_evaporating/index.htm
So we’re finally going back to normal as indicated in the article;
“Boomers between 45 and 54 have lost 45% of their median net worth, leaving them with just $80,000 in net worth, including home equity, according to the report. That’s true for all five wealth groups the study analyzed, from the poorest to the wealthiest.”
and
“The CEPR also found that people who were renting homes in 2004 will have more wealth in 2009 than those who were owners. That’s true for all five wealth groups the study analyzed, from the poorest to the wealthiest.”
It’s about time the main stream media tells the historical truth about the investment potential of housing (or the lack of it). It ought to put to rest the deception that “everybody is a millionare and they’re all gonna be our neighbors”. Besides, it wouldn’t change a thing for anyone even if the mystery millionares were in fact our neighbors.
Invoking the honest to goodness expression “past performance is not indicative of future results” seems quite accurate. Add in massive declines in the stock indices to collapsing housing and the outlook isn’t as bright as brokers, traders, realtards and other commissioned salesmen promised. Of course they’re all saying “a rebound is right around the corner!”. That can only be true if incomes doubled or prices slashed another 50%. I wager against the doubling income.
My god, that’s a disaster. 80K (INCLUDING equity??) is the median net worth of someone 45-54? I’m 31, don’t own a home, and am already quickly closing in on that number (401Ks+savings-liabilities). How on earth can that number be right? I’d like someone else’s opinion (confirmation) of that number before I fly off the handle here!
Could that really be right? What the heck has everyone been doing, HELOCing the life out of their homes non-stop? Where did all that money go?
Believe it. Even if you were socking money away in a 401k at that age, it’s likely you were mostly in stocks and thus lost 30-40 % or so. You probably “upgraded” your house as family got bigger and real estate market went nutso, and we all know how that has turned out. Minimal equity there in the majority of cases, even if you didn’t HELOC to the hilt. And I’ll also bet the vast majority were putting minimal amounts in their 401k/savings, either because they couldn’t afford to or just had to have a stainless steel fridge and a Lexus SUV.
So, fly, fly off the handle, because I’ll be you it’s right on target.
Wal*Mart is going to have no problems finding greeters, thats for sure.
I used to think that way, I was pretty convinced that I would never be able to retire, but I’m starting to think differently.
There is such a huge wave of boomers who have had their retirement savings decimated. They are a huge voting block, and they aren’t going to be happy living outta their cars and working as Wal-Mart greeters. They are going to demand that they be taken care of, and politicians are going to do it, to insure re-election. If Social Security goes bankrupt, some other program(s) will be enacted to take it’s place in caring for the aging populace. They’ll turn this country into one giant retirement community by the time they get done.
(And the ones loudest in calling for government assistance will be the ones who voted Republican and railed against the welfare state their entire lives.)
As a Gen-Xer - I hate the generational labels, but whatcha gonna do - I figure they’ll continue to rob all younger generations to pay for it, and by the time they all croak we’ll have the biggest geriatric-industrial complex in the world, subsidized by everybody who is under 50 now.
“(And the ones loudest in calling for government assistance will be the ones who voted Republican and railed against the welfare state their entire lives.)”
BINGO. And in their sick twisted minds, they have some type of wacked out criteria by which the judge who should and shouldn’t have a safety net when they can no longer earn money.
(And the ones loudest in calling for government assistance will be the ones who voted Republican and railed against the welfare state their entire lives.)
Hahahahaahah! * snort *
A little compassion is in order. Some of us earned just enough that our children did not qualify for financial aid in college. The triple whack of actually paying cash for my childrens’ college educations, periods of unemployment in the dry rotted Northeast (may it be entombed within the glaciers - and soon - no offense exeter), and a nasty divorce from a genuine con man had a predictable effect on my financial situation.
But the kids have no debt, took a tough curriculum, and are able to reason clearly. A great freedom.
But I got out of Dodge, have a clearance and an engaging job, and intend to kick butt with forty acres and a mule at some point. Well, metaphorically speaking. The mule must be companionable, of course.
Their only hope is to keep voting for socialists like Obama, so the government takes care of them. The good news is that in Sweden the average worker calls in sick 8 WEEKS per year and gets 6 weeks vacation, all paid, so when we become Sweden I can do a lot of fishing.
“…so when we become Sweden I can do a lot of fishing.”
OR
You can do a lot of reading and posting to the HBB
The fact that I love bass fishing and I want more time to fhis is the reason I stuffed the local ballot box for BO.
The “Marxist and Socalist Lables” are flying fast and furiously on th HBB today.
Sheesh…I hope peoples Gold Bars aren’t rusting or something
You realize that Sweden refused to bail out Saab last week?
They may be socialist, but instead of health care, we prefer too throw away money on automobile manufacturers and investment banks.
If the current trend continues, you’ll be taxed on the fish you catch, at mark to market rates.
Sounds reasonable to me. You pay nothing to catch a fish, so its basis cost is zero. After you’ve cooked it, it’s worth several dollars, say $5 per fish. So you should owe short-term capital gains on the $5.
Naturally if you keep the fish for over one year you could get away with long-term capital gains.
But the fish may smell pretty badly at that time.
“You pay nothing to catch a fish……..”
Sometimes………depending on the gear you use to catch it, and how far you have to travel to fish.
WSJ had a story several years ago on the Pennsylvania deer hunting season. They did a calculation on how much deer meat cost, when you divided the pounds of dressed deer meat by the money spent hunting the deer. It worked out to about $30/pound.
They then calculated pounds of dressed deer meet coming from collision with cars, divided by the cost to fix the cars………cost, approx $20/pound.
“…..put some little headlights and a horn on it, and the deer will actually jump in front of the bullet….”
“They did a calculation on how much deer meat cost, when you divided the pounds of dressed deer meat by the money spent hunting the deer. It worked out to about $30/pound.”
I believe it. A lot of the guys I grew up with are big hunters. The amount of money they spend on guns, clothing, binoculars, etc. is astounding.
On an aside, I was just talking to an older guy a few days ago, and he told me that there was a group of guys who poached more than 2,000 deer in western WA (I have yet to find the story). They were selling the meat to private individuals as well as restaurants, etc. That’s a lot of animals.
I believe those stats are generally correct.
Some are truly amazing.
For example, I read (don’t have links handy) that 50% of
*all* households have less than $1K in liquid cash.
Another stat I saw recently: *Mean* household now spends
14% of disposable income servicing existing debt.
Mike,
Most of my friends in their mid 50s are net in debt. These are folks with reasonable education and jobs.
Personally, I found it easy to piss away a million by that age. Women and children are expensive endeavors.
Skye
This is a sad thing for me to think about, but, even given my income (which is rather high by most people’s standards), children are probably not in my future for financial reasons. My GF and I are in the top 5% of households in our area, and I honestly, after running all the numbers, can’t see how we could continue our lifestyle (which is expensive, but certainly not outlandish), buy a home, and afford a child.
Children are just so expensive in today’s society (and people, like myself, are selfish and don’t want to sacrifice for 20 years) that they are truly an endeavor of the rich and the poor. The poor are fully subsidized, and the rich… Well, they are rich.
The middle class? They are pretty much priced out.
A living example of Idiocracy in action Mr. Fink. The best and brightest don’t reproduce while the rest breed like rabbits. This will end well.
X 4 here. I love em though.
I once was rich and had no money. I now am a “poor renter” and have an abundance.
My son stopped by my place with pizza last night. Dividends.
The fact that our society has managed to make raising a proper family financially impractical these days (unless you’re rich, on the dole, or have lots of nearby relatives of which to sponge for daycare, etc.) will accelerate us along the path to “Idiocracy.”
Is it *really* that expensive to raise a kid? Seems to me you could do it on the cheap. A friend bought their kid clothes when it was born, this his wife would sell those and buy (used) the next set. Repeat a whole bunch of times. In the end, there wasn’t that much spent on clothes (ebay made some $$ though!). You don’t HAVE to buy fancy toys. Sure it takes time, but so many poor people have kids and welfare don’t pay that good, does it?
The Millionaire Next Door.
enlightening book.
Welfare doesn’t pay that much, but there’s one huge difference. You don’t have to work when you’re on welfare! Take a family of 2 working adults making 50K a year combined (25K each), which is about the median HH income in most of the country. Now factor in the baby sitters, daycare and all the other related childcare expenses (when you don’t have a stay at home parent). That’s totally out of reach for the median income, it’s probably out of reach for 2X the median income in most areas. Yes, you can do it, people do it ALL the time. But it’s not going to be the “white picket” fence life that most people associate with a normal American life.
I really don’t know how I compare here. But my wife works part-time at my son’s private school (Catholic, which costs me $365/mo for 10 months of the year (and I’m an atheist!)). I have 2 older kids, one in college and one graduated and married. I bring home just over $100K.
Kids never cost me much except for school. They don’t eat a whole bunch until the boys hit high school. Just about everything they ever had was used because they grow out of it so quick, though they always thought it was new stuff.
But the joy they give you is far beyond anything else you could ever do with your money. Life can be great without kids, as long as you never know what you are missing.
Jon…thank you
Kids don’t have to be that dollar expensive, other then college and even that doesn’t have to be that bad. However to do it right the time expense is rather stagering, and we just had two. But they are wonderful.
“But the joy they give you is far beyond anything else you could ever do with your money. Life can be great without kids, as long as you never know what you are missing.”
True words of wisdom!
Yay Jon! My kids are the best thing ever.
We’d have a whole lot more savings (or expendable income) if we didn’t have 2 kids.
Of course I wouldn’t trade them for anything, but they aren’t cheap (and we are).
We would rent a smaller place if we didn’t have kids. The girls share a bedroom, so that extra bedroom (in a city like San Fran) easily tips our rent up another $700.
Buying 4 plane tickets whenever we fly anywhere (usually 1-2 times a year to visit family on the other coast) is pricey.
Public school is free, but preschool costs an arm and a leg (we both work).
Clothes=goodwill and hand-me-downs.
They don’t eat *that* much, but dang, organic milk is $7.00 a gallon, and they drink at least a gallon a week. I’d do non-organic for many things, but for the kids I insist on organic dairy, fruits, and vegetables.
Swim lessons are a must (drowning being the 2nd leading cause of childhood death, after car accidents), and for 2 kids it adds up.
Pets are pretty expensive, too. Our 90 pound dog eats a ton. Gotta stop losing leashes…
$7.00 a gallon for organic milk? Is there a Trader Joe’s in your area? They’re usually cheaper on milk and they do have organic varieties.
“Swim lessons are a must (drowning being the 2nd leading cause of childhood death, after car accidents), and for 2 kids it adds up.”
My father taught me to swim at a very young age.
He said his uncles taught him to swim by throwing him in the pool.
Mike
Children are a joy, a worry, a pain in the butt, and a source of pride and happiness ( well, once they’re not 17. That’’s a tough age ). All I can say is that the older I get, the more I’m glad we have our daughter. Just talked to her a little while ago. She’s going out contradancing ( ! ) with some friends and they all wanted to know what that was. Told her it was medieval type dancing. Turns out it’s like Scottish/Irish/folk-dancing and sort of medieval too. Looks like fun per the u-tube video I was just watching. Yes, we’d be a lot richer without her. But, a lot poorer, too.
“My GF and I are in the top 5% of households in our area, and I honestly, after running all the numbers, can’t see how we could continue our lifestyle (which is expensive, but certainly not outlandish), buy a home, and afford a child.”
You’d better have a plan in place. When the biological alarm clock rings your GF will become pregnant, with or without you.
Could that really be right? What the heck has everyone been doing, HELOCing the life out of their homes non-stop? Where did all that money go?
As heard on NPR during this morning’s commute: “We as consumers saw debt rise from 2001 - 2008 to be equal to our entire annual GDP. Historically, we have maintained that debt level at 50% of GDP. This is similar to 1929 when debt rose to a level equal to GDP”…
So yes, I would say the last eight years people levered up with debt. Now comes the fun part: paying it back or paying the consequences of default…
I don’t think 80K is right either.
It seems a little high.
Are they including the value of pensions?
Those who entered the labor force after 1980 didn’t get them–say those born after 1958. Or boomers and GenXers younger than 50 today.
I’ll bet if you looked at those age 45 to 49, or age 49 and under, the numbers are even more stark.
similar stories in Europe for most workers in small and mid size companies (including their management). They don’t have state pensions, or a pension from one of the large labor union funds.
Many of these employees of small companies have lost between 40 and 90% of their pension payments, because the insurance companies first pocketed huge fees (sometimes more than half of the yearly payment - no problem when you promise 15-20% yoy appreciation and don’t explicitly state the fees) and invested everything in some dumb historically well-performing stocks/index funds like the financials. There are lots of lawsuits going on because of the outrageous fees, but when this storm is over I don’t think the pension insurers will have much money left up for grab.
For the state pension funds the situation is much better up to now. These pensioners will probably have to do without inflation indexing for the next five years or so, but government will guarantee their pension by extracting more money from future taxpayers. But gradually the retirement age will keep drifting upwards, and pensions will get more and more behind relative to wages (or general inflation). The current pension system is a pyramid game, just like the housing market.
Oh well … the news just reports that some of the big Dutch pension funds will have to start cutting pensions. Even keeping pensions at the zero line for a few years (which already means losing out on inflation) is no longer an option.
We will be seeing this across the board in the U.S., IMHO.
BTW, I’ve not been to Europe for a long time, but don’t most western Europeans have public pensions, or did that change?
I am 45 & I AM NOT A BOOMER !!
My Dad didn’t even go to ‘Nam for heavens sake!!
45′ers (born in ‘63) are the first X’ers!!!
My parents are Boomers!
Spot on Shelby! I’m in the same boat. I’ve never felt like a boomer and resent being categorized as such.
I am about to be 44, and am definitely not a boomer, but I can tell that I am on the cusp (the music I listen to, some of my political values, etc.) between the two.
The last time I saw a graph on it in the New York Times, they put the first year of Gen X at 1965. But then people starting including Stephanopolous as a Gen X’er, so that muddles things a bit.
Yea, the whole definition of ‘Baby Boomer” drives me crazy.
I was born in 1961 and have very, very little in common with people born 5 years earlier than me.
I graduated college in 1983. Whole different economic outlook than those who graduated 5 years before me.
AS I see it, there were ‘early boomers’ (say 1945-1956) and ‘late boomer’ (1957 - 1963). These 2 groups of boomers faced radically different life paths, economically, socially, politically, militarily, etc.
You simpley cannot lump these 2 groups together in any meaningful conversation.
I wouldn’t lump 1955 or ‘56 in that first group either.
That 55yr didnt’ have to be eligible for Vietnam. HS grad ws ‘73, so, there is definitely an in between era for sure.
Hey that would be me. Trust me when I say, I don’t have anything in common, except my birth date, with the “early baby boomers”
I checked some numbers a while back, and figured that 3/4 of my whole work career has been either during recessions (73-75, 79-83, 87-88, 90-93, 2000-2003, 2007-present), or during inflation, where COLAs (if you got them) never seemed to make up for the loss in purchasing power (75-81, 95-99, 2003-2007).
Of course, my job has always been considered “overhead”, and not a “profit center”.
So if we lump all these opinions together NOBODY is (or wants to be) a boomer; i.e one of those nasty, spiteful, selfish, money-grubbing, SS taking ogres.
Class of ‘63
Hee hee. Like I care. I’m a boomer, and am proud or not-so-proud, to write it. Guess it depends on which evil crime I’m being categorized for today.
Mum (RIP) born in 1940, me 1960.
Those baybee boomer thingies scare me!
Especially the clothing. Yikes.
Not sure numerically where I fit, but does not matter.
People are not defined by a year.
(Please let this be true!)
Leigh
Funny…
I’ve ranted time and again how Baby Boomers were born from about 1938 to 1954 - and have received nothing but derision for my comments.
I, too, was born in the early 1960s. We are nothing like those born up to about 1955. There’s nothing in common at all. Different life experiences, employment opportunities, costs, perspectives.
About the only thing we have in common with those born in 1950 is that huge numbers of kids were born during the early 1960s as well. In fact, 1963 is #5 on the list of years with the highest number of live births (from 1946 to 1964).
I don’t remember ever having been part of an elementary school classroom with less than 34-35 kids. There were years when there were 38 of us kiddies in a single classroom.
NOTE: Michael Fink, one of the reasons why those aged 45-54 have so little in real assets is because of our huge numbers and the huge numbers of people 5-12 years older than we that enjoyed first-come access to plum, high-paying jobs. We don’t have any such access.
Never have.
You - as a 31-year-old, also was born into a highly favorable demographics group relative to employment opportunities and income. There are a great many fewer 31-year-olds than 50-year-olds. Don’t ever underestimate simple demographics.
There was a huge difference in opportunities between early and late boomers. While seeking their first employment, late boomers were confronted with the terrible economy of the seventies and early eighties. The seeds of today’s problems were planted then.
ET, saw your l’il homie picks, cute little guy, destined to be a complicated, visually-driven, indie-rocker like dad!
I have to say having a baby definitely shifted my focus (as it should). I would normally be very concerned in my situation, but I really don’t care. I’ll live in my parents basement for a few years if I have to.
The hallmark of loserdom is living with your parents… but I know an Albanian, multi-generational family in my ‘hood, they always tell us how funny/stupid Americans are for living they way most of us do.
Sorry, my post is a little contradictory… I think y’all know what I mean.
As in, is the nuclear-family household another relic?
Not contradictory at all. I interpreted it as saying that having the baby meant you ceased to care about external measures of “loserdom” ’cause they just don’t matter any more.
My brother used to be very, very close to a pacifist. Then they had a baby. And he looked at me when she was about 9 months old and said he would gladly kill to protect her - not die, kill. Then he said he used to think that an emotion like that - being willing to kill - would freak him out, but it didn’t. It just seemed natural.
Yes, Polly, exactly.
Thank you for helping me clarify myself!
Very welcome. Glad I got it right, but it wasn’t that hard to figure out. You were being pretty clear.
Oh, just realized that I didn’t mean to say that he wouldn’t die to protect her. He would. But he always assumed that he would have that emotion. It was being willing to kill that surprized him.
And speaking about living multi-generationally, am viewing any and all properties with the firm idea that I will be bringing mom. Ranch style for sure.
Also, if I were to build or remodel, it would be with really wide door openings. Ya never know.
Wouldn’t have thought of that ten yrs ago, but now..times are different for sure.
This is exactly what I’m planning for, also…right down to the wide doors and level floors (no steps anywhere in the house). Oh, and a roll-in shower.
I agree with Muggy’s Albanian neighbors: we Americans have been fools for allowing our families to break apart and move so far away from each other.
The Latin Americans (and other immigrant families) have the right idea, even if they can be a bit too extreme. There are many benefits to having multi-generational families living together. It’s all about resource allocation.
I felt the same way when I first held my nephew. I still feel like that today for my nephews and nieces.
The hallmark of loserdom is living with your parents… but I know an Albanian, multi-generational family in my ‘hood, they always tell us how funny/stupid Americans are for living they way most of us do.
People who’re more connected to their immigrant roots or in an ethnic pocket seem much more inclined to live this way. I’ve always thought it was great, provided you actually get along with and respect your family. My aunt and uncle lived for more than a decade with my grandparents, and that multiple generational unit really molded their children in a positive way.
I’ve grown to think of it differently now that I’m a father, too. As we’ve talked about before, you can’t really put a price on having family close by to help out, whether you’re actually under the same roof or not.
(And thank you for the kind words about the lil’ boyo.)
“A growing number of Americans are stocking the basement with Spam and marketable gold, while they peek out from behind the curtains with their firearm of choice,” analysts led by Chris Mier in Chicago wrote in a Feb. 26 note. “Hormel’s plants are now running on weekends to keep up with demand.”
…
“If people believe the end of the world is coming and we’re in for anarchy, people are going to load up on weapons and Spam for their fallout shelters,” said Tim Ghriskey, who helps oversee $2 billion as chief investment officer for Solaris Asset Management in Bedford Hills, New York. “The most popular one is gold when there’s no consumer confidence, when there’s no confidence in the markets.”
Bloomberg: Spam, Guns, Gold ‘Bizarre’ Confidence Indicators
That’s odd, I never considered Spam to be a store of “wealth”.
If you are saving during good times, why not save the good stuff?
Spam lasts for decades. Sardines also.
At $2.29 a can, Spam is probably the best investment ($/protein calorie) for the SHTF scenario. It’s what gold and silver are being hoarded for and what the guns and bullets will be hunting for. Living off the fat of the land is laughable. Alad said he gave away a good deal of his food stash to charity before he submerged. Im sure that by now he’s replenished his supply.
See, just goes to show there are jobs after all
What’s really funny is that we used to joke about going long on Spam a few years ago. Bet most of us thought that was just a joke.
Q4 revised GDP negative 6.2 from 3.8. And, it got worse in Jan.
Quick! somebody crap some candy!
I know, can you believe it? Obama has been in office 6 weeks and look at what he has done to the economy.
Hmmmmmmmm Skip,
Reads like you’re fishing and hoping someone is going to bite
That would be me…;-) actually 37 days isn’t 6 weeks…but whose counting…oh yeah,…Dawn insHannity, has a count down clock on little Opie™ : 1345 days, 14 hours, 9 minutes, 42 seconds…I have one too…for this years Thanksgivig feast with my siblings, (Hwy smiling, the kind that suggests):
“Republicans in Ohio…change to Democrats & vote for Hillary!”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!
Holy cow. That truly is the worst since the GDP, and by a long shot.
I assume you mean the GD. Actually, not even close, and there have been many down 5%+ quarters:
http://seekingalpha.com/article/62350-historical-gdp-numbers-1947-present
Yeah typo - I meant GD.
I was more comparing it with this:
Real GDP % change
but that’s YoY numbers, whereas the number that came out today is QoQ, so it is indeed apples-to-oranges.
So far.
WASHINGTON (MarketWatch) - The U.S. economy was hitting on almost no cylinders in the fourth quarter, as gross domestic product fell at the fastest pace since 1982 on sharp declines in consumer spending, investment and exports, the government said Friday.
GDP fell at a 6.2% seasonally adjusted annualized pace in the final three months of 2008, revised from the initial estimate of a 3.8% drop, the Commerce Department reported. It was the worst decline in GDP since a 6.4% decrease in the first quarter of 1982.
…
Consumer spending fell at a 4.3% pace, the worst since 1980. Spending on durable goods plunged 22.1%, the worst since 1987. Spending on nondurable goods fell a record 9.2%. Spending on services rose 1.4%.
Business investment dropped 21.1%, the worst since the 1975 recession. Investments in equipment and software fell an eye-popping 28.8%, the worst since the 1958 recession. Spending on structures fell 5.9%, the first decline in more than three years.
Residential investment fell 22.2%, the 12th consecutive decline in the sector where it all began.
…
Exports fell 23.6% in the fourth quarter, the most since 1971, reflecting the global recession that is hitting Europe, Japan and other trading partners even harder than the United States. Exports of goods dropped 33.6%, also the worst since 1971. Imports fell 16%, the most since 1980, as U.S. consumers and businesses just stopped spending.
Twas just last summer when exports were Goldilock’s last lifeline.
The kool-aid is getting weak in China and India as both are now sobering up quickly and closing in on zero growth. India fell from 7.6% to 5.3% from Q3 to Q4. It’s therefore likely that they are currently between 0 and 3%, or very close to zero per capita. China continues to officially forecast 8% growth for 2009 with a recovery in the second half; my guess is they will be negative for the year.
And therein lies the difference between an open democracy and China. You’ll never know the real numbers for the latter. My guess is that any positive number is a lie.
You don’t know the REAL numbers here either.
Futures down big this morning - could be a rough day on the street.
That is quite a craptacular forecasting miss. All economic seems to turn out “worse than expected” anymore…
This seems to be a worse worse-than-expected than most.
We’re getting into worse-than-expected derivatives now - not a good sign.
Most interestingly, some folks are currently making big long range bets on so-called financial weapons of mass destruction…
Wall Street Journal
* AHEAD OF THE TAPE
* FEBRUARY 27, 2009
Buffett Takes the Long View; Will Investors?
By SCOTT PATTERSON
Warren Buffett is about to learn whether his investors can keep their eyes trained on the long view.
Mr. Buffett’s Berkshire Hathaway likely took a big fourth-quarter hit on several derivatives contracts it wrote, analysts expect. Investors will discover just how big when the company releases its annual report, reflecting fourth-quarter earnings Saturday morning.
In recent years, the Omaha, Neb., holding company sold what were essentially insurance policies against a long-term decline in U.S. and foreign stocks in exchange for $4.5 billion. When the contracts expire in periods of either 15 or 20 years, Berkshire will have to fork over cash — possibly billions — if the indexes are below where they stood when the deals were struck.
The S&P 500 is down about 50% from its peak, and indexes around the world have cratered. Berkshire has to calculate its potential liabilities on the contracts every quarter. Liabilities have risen and are part of the reason Berkshire’s Class A shares have lost nearly half their value since late 2007.
In the third quarter of 2008, Berkshire said its mark-to-market liabilities on the options were $6.7 billion. Since then, stocks have fallen more, and volatility, a key element in valuing options, has soared. That means Berkshire could take a fourth-quarter hit on the options, as much as $12 billion, says Fox-Pitt Kelton analyst Gary Ransom.
My mood has been worse than expected.
Given these numbers and the interaction he had w/congressman Rn Pl, I’m surprised BB still has a job. “We’re not entirely in the dark,” BB said. “It’s contained,” he said some months ago. Add to that, the flawed campaign to save zombie banks at the expense of broader economic growth. The evidence says otherwise. Gather food and water.
Looks like CiTi is getting scalped, no worries though the gubmint is going to show them how it’s done. LOL!
Wasn’t there a Saudi prince who kept doubling-down on his monster stake in Citi and owns a huge position? He must be pretty happy.
Al-Waleed bin Talal bin Abdalaziz al-Saud.
No, it is Azheed mah Druwars. He’s related to Jouis bin Pharteen.
Jouis bin Pharteen II
Believe it or not - I’d almost as soon have a bank that’s run by bumbling idiots.
However (though I don’t use Citi) if they change the online security system to be the same stupid “type with your mouse and also have your paper card handy” thing that TreasuryDirect uses, I’m going to be pissed. That has to be the most asinine security system I’ve ever seen. Maybe it works a little better at preventing identity theft - but I would almost just as soon have someone steal my identity than to use that thing all the time. Anyone who uses TreasuryDirect knows what I’m talking about.
That security system is exactly why I stopped using TreasuryDirect.
“Believe it or not - I’d almost as soon have a bank that’s run by bumbling idiots.”
My question (since the beginning of this discussion about banker pay, and “pay for performance”) is, “HOW COULD THEY DO WORSE”? Seriously, you could have had a bunch of drunken monkeys hitting “approve” and “deny” on loan documents and you would have done BETTER then those who are currently considered the “best and brightest” on Wall St (because, at least some of the time, the monkey would have hit “deny”). Simply put, there’s just no possible way that anyone put into the banking system could do worse then those they replace.
I’ll take the bumbling idiots, they can’t be as dangerous as the “best and brightest” in the room have proven to be. What a crock, we have to pay for performance… If that’s the case, most of Wall St should be getting pay checks with directions for how to remit payment.
However (though I don’t use Citi) if they change the online security system to be the same stupid “type with your mouse and also have your paper card handy” thing that TreasuryDirect uses, I’m going to be pissed. That has to be the most asinine security system I’ve ever seen. Maybe it works a little better at preventing identity theft - but I would almost just as soon have someone steal my identity than to use that thing all the time. Anyone who uses TreasuryDirect knows what I’m talking about.
Definitely the most assenine security design I’ve ever seen. It’s beyond cumbersome.
This happened overnight in what was formerly a bubbly area of the Chicago suburbs. I have a feeling that a mortgage was involved.
Wal-Mart worker burns self to death in parking lot
A 58-year-old Wal-Mart employee who said he “couldn’t take it anymore” lit himself on fire outside the Bloomingdale store where he worked late Thursday night and was later pronounced dead at a hospital, authorities said this morning.
…
At least 10 people, including some teenagers, witnessed the suicide and several attempted to help the man by throwing their coats on top of him in an effort to put out the flames, he said.
“He said he didn’t want any help and threw the coats off,” Sater said.
http://www.chicagobreakingnews.com/2009/02/wal-mart-worker-immolates-self-in-parking-lot.html
How sad to work at Wallmart in a town named Bloomingdales.
Pass the smiley faces.
When I saw this headline, I thought - if the guy was employed by Walmart, why did he work at Bloomingdales? Now I see it’s Bloomingdale, IL, wherever that is. I don’t even know if Bloomingdales is still in business.
Wow! Self immolation. Comparable to monks in Vietnam?
Selfish. He could have set the headquarters on fire instead.
I remember the song:
“You Ain’t Seen Nothin’ Yet”:
WASHINGTON (AP) — The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession.
The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated by the government last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.
Looking ahead, economists predict consumers and businesses will keep cutting back spending, making the first six months of this year especially rocky.
The new report offered grim proof that the economy’s economic tailspin accelerated in the fourth quarter under a slew of negative forces feeding on each other. The economy started off 2008 on feeble footing, picked up a bit of speed in the spring and then contracted at an annualized rate of 0.5 percent in the third quarter.
Deflation is at hand.
But inflation is within arm’s reach.
Oh, then maybe I should go into debt as deep as I can.
A rational decision for those without scruples and the wherewithal to do so, according to government signalling.
“A rational decision for those without scruples and the wherewithal to do so, according to government signalling.”
What choice does that leave for anyone with scruples?
Comment: The system still seems to be rigged to punish the scrupulous and the prudent. But I suppose acting too unscrupulously or imprudently could land one in the slammer (Madoff). I find this state of affairs very unfortunate.
Quite.
Madoff is not in the slammer. So pardon me for correcting your statement from:
“But I suppose acting too unscrupulously or imprudently could land one in the slammer (Madoff). I find this state of affairs very unfortunate.”
to:
But I suppose acting too unscrupulously or imprudently could land one in their million plus apartment (Madoff). I find this state of affairs very unfortunate.
Well, the largest debt the average person could take on quickly is to buy a house.
Have two legally independent individuals allocate assets with one individual and liabilities with another and then mortgage one of the houses and anything else that you would likely lose in hyperinflation anyway. Use the proceeds to buy gold/silver/guns or other assets that will maintain real value or gain in value. You debts are all non-recourse and backed by real assets (houses,cars) that the bank agreed to. If things go as expected you pay them off with devalued money, if things go poorly then mail in the keys (honoring the contract) and keep the gold/silver.
Taking on debt to buy an asset you do not need that will fall in value is dumb. So don’t buy a house with money you do not have, but if you have a house or car paid off then mortgage it. If you need to buy a new car, get the 0% loans and use your cash to hedge the coming hyperinflation.
“A rational decision for those without scruples and the wherewithal to do so, according to government signalling.”
What choice does that leave for anyone with scruples?
You don’t have a choice - that’s the point.
Have two legally independent individuals allocate assets with one individual and liabilities with another
How do you do that?? who’s going to agree to take my liabilities?
and it sounds like you need three people, not two
Price deflation is at hand while the government is busy inflating the currency. Eventually prices in general will inflate. Gold is bargain-priced right now.
My health insurance premium increased 39%. Really not that bad since I was paying $100 monthly previously. But I’m on the verge of shopping around.
Yes, things are always the best bargains when they are at multi decade highs. Take chickens, for example. Houses were a great bargain in 2006, now not so much.
Psychology is so crazy.
$ 100 monthly?
I often hear that health insurance in the US is far more expensive than in Europe. But in Netherlands the basic (mandatory) health insurance is now at least EUR 100 monthly, and even then you have to pay the first couple hundred euro costs from you own pocket.
When not covered by your employer, a policy for a family can run $1,000 month.
When not covered by your employer, a policy for a family can run $1,000 month.
Quick! Get those kids on the payroll…
The fact that a family plan often costs more than 4X an individual plan is the epitomy of ridiculous. My family is generally healthy and only sees doctors for emergencies and checkups for the kids. We are not using 4X the medical resources of an indivudal even though there are 4 of us… basically the health insurance industry has us over a barrel.
And don’t even get me started on smokers. Where are the higher rates similar to life insurance? Where are the multi party discounts like with auto insurance? Complete racket… and now in Mass you have to have health insurance coverage or the state will fine you.
i pay $550 a month for a single guy 41 in california, and this has a $2000 deductable, so i must pay routine stuff out of pocket.
It also depends on the size of your deductible, your age and overall health (if you are purchasing it on the free market).
There are policies out there that are essentially only for catastrophic care (huge deductibles). They won’t pay for run of the mill visits to the family doctor or prescriptions. They are essentially for covering those hospital stays that can cost tens of thousands of dollars.
As Skip said above, a regular policy that will cover most regular care for a family costs $1000 per month. And even then there are tons of out of pocket expenses. In our case:
$20 copay for a visit to family doctor.
$45 copay for visit to specialist (say a dermatologist)
$1200 deductible for any outpatient care (say a colonoscopy) or hospitalization.
Prescription copays of $20 up to $50 for a one month supply. Most pharmacies sell generics for $4 or $5 for a 30 day supply (insurance doesn’t cover those).
family insurance: in Netherlands often the wife (or husband) and kids are insured on the same policy for no or just a little extra fee, compared to the cost of a single person. As an individual, I think this is ridiculous - because it is very clear who is paying for that almost free insurance (of course we pay not only for the private insurance, but also an even bigger amount through income tax etc.).
Any vets that read or post. Don’t forget you are eligible for medical benefits. I had a duh moment a month ago and am now registered for medical benefits through the VA.
Health care has a few obstacles that make its allocation difficult in a market economy:
1. You are often stuck shopping for the product when you are feeling absolutely miserable or even have an emergency situation that does not allow you to shop around.
2. You don’t know how much something costs until you have an accurate diagnosis, which can cost a ton of money up front.
3. Most folks don’t have the educational background to even guess at how to resolve significant medical issues. And the information asymmetry is deadly to an efficient purchasing process.
In the U.S., the providers have colluded in the form of the AMA and AHA to insure that the provider holds all of the advantages, hence the enormous amounts paid in our system.
I don’t ever plan to get an inheritance. I suspect all of my parent’s wealth will end up in the stuffed pockets of a few physicians some day.
Speaking of which, thanks for the toe information that everyone gave me yesterday. Toe is very swollen and bruised, but not displaced or dislocated. And the swelling is down enough today that I can curl it a little though it hurts to do so. I’m skipping the doctor. Sounds like they can’t do anything anyway, and as long as the bruising shifts around a bit, I can be sure there is blood circulation in the area. Doc would be a waste of time.
Unfortunately I think there is more to come in these type of things, including a lot more home foreclosure resistance violence:
Violence Between Repo Men, Car Owners on the Rise
HALSELL, Ala. (AP) — Alone in his mobile home off a winding dirt road, Jimmy Tanks heard a commotion at 2:30 a.m. just outside his bedroom window: Somebody was messing with his car.
The 67-year-old railroad retiree grabbed a gun, walked out the back door and confronted not a thief but a repo man and two helpers trying to tow off the Chrysler Sebring. Shots were fired, and Tanks wound up dead, a bullet in his chest.
The man who came to repossess the car, Kenneth Alvin Smith, is awaiting trial on a murder charge in a state considered a Wild West territory even by the standards of an industry that’s largely unregulated nationally. Since Tanks’ death last June, two other repo men from the same company Smith worked for were shot, one fatally.
”It’s gotten to where it’s a crazy world out there,” said Smith, 50, an ex-Marine who preaches part-time and sings gospel music. Smith said Thursday that he fired in self-defense after Tanks fired a shot.
With the U.S. dealing with an economic slide that has cost millions of jobs, the number of vehicle repossessions is expected to rise 5 percent this year. That’s after it jumped 12 percent to 1.67 million nationally in 2008, said Tom Webb, chief economist with Manheim Consulting, an automotive marketing firm. That followed a 9 percent increase in 2007, creating more opportunities for bad outcomes in an industry where armed confrontations and threats happen every day.
Dead over a Chrysler Sebring? You’d have to put a gun to my head to get me to take one of those.
I have no real respect for repo-men or towing companies that tow cars out of parking lots and what not. Cars are a big investment, and a big chunk of peoples money. If you really want to mess with other people’s property without actually speaking to them first, death is the risk. Many of the companies are very shady and do not operate fairly.
I’m sure those people got late notices and repo notifications in the USMail. I don’t see why the note holder should not be allowed to reclaim their collateral.
Or are you saying the sheriff should have to be involved in every car repo, as they are with foreclosures/evictions?
Good morning everyone! Here are some more pictures from the HBB meet-up in Vegas last weekend. More stuff, including video, to follow eventually.
http://picasaweb.google.com/SanDiegoREBear/HBBPhotos#
Great pictures San Diego RE Bear.
Thank you.
Wow, Ben! Looking good. Got the heart beating much faster
Cool, thanks sharing the pic’s SDBear.
It looked like a great get together and I hope that the food and drinks were as good as the all the fine company in Vegas
Down, girl. Contain yourself.
Sweeeet! Thanks so, so, so much. Names…handles.
Please, please do this in FL next!
We are worthy, I know we can live up to the standard set by Las Vegas. Maybe we can schedule around a high-rise that’s 1/2 built being torn down?
Michael, can we have it in that palm beach condo you bought, because it was in the parking lot of the mall? “They’re not building any more parking lot land”, I think was your reasoning.
LOL. Yes, you got me, I bought a 1M dollar condo in the parking lot, I just couldn’t resist any longer!
We certainly could go see the high end condo in the mall parking lot, that I can promise! That condo (The Landmark) and the one in Riveira beach (which is, quite literally, in a WARZONE) are 2 of my favorites, both (when built) were asking about 10X the actual value of the condo.
Michael - where are you exactly? I think Florida’s a definite tour stop the only question is what part. I’m hoping for something by the beach.
I’m in Palm Beach, about 1M from the ocean. Any of the big cities in S. FL (West Palm, Ft. Lauderdale, Miami) will be good fodder for the HBB crew, and will put you very close to the beach should you decide to catch some rays while your in town.
Palm Beach sounds good to me - I’ve never been there! Just tell me there are drinks with little umbrellas in them, because I didn’t get any fruity little umbrellas in Vegas and I went into withdrawal from lack of frou frou.
Palm Beach is a really unique place (well, the island is), it’s really a very special and different part of this country. You feel it the minute you get on the island, you know you are in the presense of unimaginable wealth. The traffic jam of RR and Bentley and Ferrari also gives it away, but, as much as I hate to admit it, Palm Beach island is one of those “special” places, people will pay a huge premium to live there, and probably will be that way forever.
However, the real housing carnage isn’t Palm Beach, its West Palm, Palm Beach Gardens, Jupiter, Ft Lauderdale and Miami. Either way, if we did an event in S. FL, you should take a drive to Palm Beach, it’s a sight to behold!
Hmmm housing bubble con and scuba diving. Tempting.
Hold on a second. If you guys are doing a FL get together next week, then it will only be local people. That’s cool with me, but I kinda want to meet Palmie. If folks from around the blog want to check out Florida, then we will need a little more time to plan it out.
Peace Out,
Big V
Who said next week?
I’m just putting FL in the ring as a possible location for the next meet-up. That will be at Ben’s discretion (although next week works for me). 
Oh, OK then.
Yes, yes, Florida. Very good. Can go see my Dad on Marco, too. ( Talk about a real estate bubble but I’ve posted about that before here ). Do it during cold weather and we promise we’ll be there. Go down there anyway for vaca every year, so maybe we can hitch hbb get-together on end of our regular vacation.
…I know we can live up to the standard set by Las Vegas.
Whoah, bucko. That wasn’t even an entire quadrant in the Vegas Valley, just maybe 1/3 of the southwest. We got more FAIL in Vegas than you got in your whole state!
We’re number one!
Cool photos! Thanks so much for posting those. Wish I could have been there. The photos of the tour say it all, don’t they?
Recovery looking good, Ahansen! Glad to see it.
Wow, RE bear! Great pics! Thank you SO much. I was very pouty and sorrowful that I couldn’t make the meetup, and this cheers me up a bit. I was pleased to see that the mental images I had constructed in my head did pretty much match the real faces, too.
)
Except that bink wasn’t wearing a mint-green cummerbund and carrying around a bowl full of frogs, and lavi d wasn’t wearing a matador cloak, with a rose clenched in his teeth. Other than that, though, yeah! And ahansen, you look good, I was pleased to see. You should have been wearing a bearskin, though, come to think of it.
And I liked the one of Ben in the fluffy white bathrobe, although I would have liked to see more pink Ben skin. That pose was entirely too modest. (Now, don’t be mad and ban me, Ben. I’m just teasing yer.
Anyway, I really appreciate these photos, and the ones lavi posted, too. I am forced to conclude that we are a great bunch, huh huh huh!
I’m sorry Oly, but there were simply times people would not allow to me to take pictures. Such as the costume ball where people were dressed exactly as you stated. And the orgy where of course Ben wasn’t wearing anything and had lots of pink flesh showing. (Actually I heard that someone took pictures, but they didn’t invite me to attend so I just had to stand outside the door and listen. Sounded like fun though. But maybe for the right price you can get copies of all the pics.) bink does have the frogs on his lap in the shot with him and Ben at the bar, but he did a pretty good job of hiding them throughout the night. And ahansen didn’t wear the bear but she has rehabilitated him and he served her drinks all night so I think they are back to being friends after their little tiff.
Imagine the stories we’d have if you had shown up!
* chokes, spews forth water all over entire desk *
Oh, thanks a lot! NOW look!
Back in a minuyte.
Ok, I gotta ask:
Photos 33 and 34, who’s the blonde with her back to the camera??
That is someone who does not want to be identified due to her work and possible retribution there. Before you ask, yes her front is as cute as her back. And yes, her significant other was there (and he does not want to be ID’d either.)
Figures. Never hurts to ask. Nice butt.
Thanks SD.
Keep your sexist remarks to yourself, please.
Great stuff, I hope I can make the next one. I’ll be in Chicago area in late July (19-23) for AACC and it would be great to meet with some HBBers.
Give us a shout out when you’re headed here, dude. I’m sure a bunch of us will be around.
Dude, I’ve been thinking about trying to get a midwest HBB meet-up going ( ILL, Ohio, MI ) going. Anyone interested ? If enough people show interest, I’ll try to start on getting one organized. Help is appreciated. Just post in the next couple of daily bits or email me Oakash1011@aol.com.
That would be great for me if the dates coincide, I’ll be either in Chicago or McComb, IL the whole week mentioned.
It would be a hoot if Rick Santelli’s tea party was that week. Nothing makes for a good time like a bunch of drunk, pissed off Irish folk.
Be sure to post that in Bits early in on a weekday so that more people can see it!
Great photos, San Diego RE Bear. It looks like it was a fun weekend.
It was. Needed a bit more organization which we’ll work on for next time, but I think people had a good time. And how nice (and unusual) it was to spend a whole weekend around people who agreed about the problems with the housing bubble!
What a treat to have the photos! Ahansen, you are looking gorgeous! Congratulations on the recovery, Wish I had been there to meet you all. Elderly dog kept me home. Next time, hopefully I’ll make it too.
The hard times just keep getting harder. Pee b/4 u board.
Feb. 27 (Bloomberg) — Ryanair Holdings Plc, Europe’s biggest discount airline, may charge passengers to use toilets on its planes, adding to fees already imposed for beverages, stowed baggage, airport check-in and preferential boarding.
A dime slot on the bathroom door, maybe?
http://www.telegraph.co.uk/travel/travelnews/4861505/Ryanair-may-charge-1-for-toilet-use.html
14 dimes. Currently.
I’m cool with it as long as charge is per time used, preferably increasing per unit time used, so as not to penalize men and end up encouraging even longer stays.
Parking meters in the stalls?
“penalize men”?
hahahahahahaha
Paul is a child.
Take a “truckers bottle” with you.
I wonder if they’ll have some sort of creepy guy in there, selling mints and cologne, handing you a paper towel?
Will this new policy fly? It Depends.
I’ve liked Ryanair when I’ve flown it, but you gets what you pays for…
(BTW, most of thier flights are less than 1.5hr long, Europe just isn’t really that big)
What do you guys think about the cost of education? Tuition & fees have been going up every year here in Texas; The University of Texas claims every single year funding from the State is down, and they need to make up for it somehow. Thus, tuition goes up to compensate for the lack of funding.
Tuition pretty much doubled while I was in school; thankfull, I do not have any student loans to repay, but some of my friends have A LOT of debt to repay.
A lot of parents drew equity from their homes to pay for their children’s lifestyle (new car, nice pad, tuition & spring/summer trips). That money is unavailable right now!
I don’t see State governments increaseing funding for higher education; this implies students will have to ask for even MORE students loans to make it through college.
I appreciate your comments!
Make it tougher to get student loans and the cost of education drops. Supply and demand. Just like houses. Its a tuition bubble.
College education is overpriced and quality has dropped just like the housing bubble. After you factor in the opportunity cost of 4 years of income it will take the average graduate 10-20 years to pay off the loan and longer to make up the opportunity cost w/ interest.
Far better to teach yourself a trade, volunteer to get experience, and then switch to a paid position. If I were to go back to HS I would have contacted Apple or Google and offered to work for them for 1 year for free. Then taught myself as much as possible and made myself an integral part of their development teams. Then after 1 year they will know me and I would have no trouble getting a job without a degree. After 5 years of working for a big-name company like Apple or Google you can get a job just about anywhere without a degree.
I got instate tuition to VT and my parents paid my way (but not room/board/books/play). Still, the amount of debt my wife and I would have had without our family paying for school would be close to 50 to 75K which would take 10+ years to pay off if I was able to use 10% of my income to pay it down. This would undermine all efforts to save for the first 10 years. Considering that when I lived in NoVa and worked for a defense contractor (where most jobs are) that the vast majority of our income went to pay rent, food, insurance, gas, and tolls and we spend very little on “toys”, we would not have been able to pay down the debt at 10%/year. Throw in the cost of kids/daycare/etc… This is probably true of most people I know in most fields. The higher paying jobs come with an order of magnitude more expensive degree (lawyers, doctors, etc).
The only way I have been able to “stay ahead” is by running my own company for 5 years and making twice what the average software developer makes in a traditional R&D job. Running your own company doesn’t require a degree.
What I hate is that people are going 10’s of thousands into debt for degrees in Sociology, Music, Spanish & such. Now they come out not only in tons of debt but essentially unemployable.
Make college loans only available for the jobs the country needs like engineers, scientists & doctors and watch costs plummet.
I’ve known people that were in positions in the corporate world where they could not get ahead without a degree. A degree in Spanish or some other thing satisfied the requirement. I think it’s silly. Nothing bugs me more than being told I can never get a raise outside of COL increase because I have no degree. Meanwhile the guy with the degree in that office did nothing but fantasy sports and made $10K+ more. He wasn’t smarter. Easy solution though, switch jobs or start a company. Don’t let the man tell you what you can do!
My San Jose sister’s degree was in Spanish and Psychology, and she pulled in a six-figure salary (the first in our family to do so.) Why? Because she worked her butt off, that’s why. The degree was irrelevant.
(Incidentally, we all paid for our own college educations. My parents told us how to do it— you work like mad in high school and apply for every scholarship you’re even marginally qualified for. I ended up with a series of scholarships that paid for full tuition— my student loans were for living expenses only.)
“Running your own company doesn’t require a degree.”
No, but it does require customers, capital, tap dancing and the ability to cope with bipolar situations along with a whole lot more luck than people think.
Owning your own business isn’t as easy as the MSM makes it sound.
Amen! The administrative nut is a killer. Plus, you are paying twice what you normally would in Social Security. Plus, I don’t care WHO you are, you have to develop the pipeline. Plus, if you get into that uncomfortable situation of working 90 hour weeks, you can no longer avoid getting staff. And then you have those soap operas to deal with. It is tough to control YOUR attitude when you are putting in that effort - by comparison, anybody you bring on board is going to feel like a prima donna at least once a week, doesn’t matter if they are Mother Theresa. By comparison, working in a “job” is not so bad. Even if your boss is a jerk, once you are there you can make believe you are introverted to a fault, grind out the goods, collect your check, and take your (paid) vacation days. And network when you’re out of sight.
In exchange for reducing state funding, Texas started allowing colleges and universities to set their own prices in 2003. However, the tuition has gone up higher than the decrease in state funding.
I think the issue is that UT/A&M/etc had the lowest tuitions of all universities in the US. In fact, a friend of mine paid less as an out of state student at UT Austin in the 90s then he paid as an instate student in Michigan. Add in the 12 month requirement for residency and instate tuition and Texas was a bargain for college.
In fact, they quickly realized that students were going into debt to the tune of 20-40-80-100k for education in other states and Texas was not getting a piece of that pie!
Of course for realizing this, people were rewarded:
— William Powers, president, $577,500.
— Lawrence Sager, dean of law school, $365,000.
— Kevin Hegarty, vice president/chief financial officer, $353,995.
— Steven Leslie, provost, $353,600.
— George Gau, dean of McCombs School of Business, $332,500.
For the record, UT Austin spends over a $1 billion dollars a year on athletics alone, however, it is “self-funded”.
UT Austin spends over a $1 billion dollars a year on athletics alone
Not sure about other athletics, but I would be willing to bet that at least football not only doesn’t cost (net) the school anything but in fact makes it better off, financially.
As tuition continues to skyrocket and the number of classrooms decrease, “better off financially” could be debatable.
Better off for the school yes.
Better off for the students? Not soo much.
It’s essentially a side business. Without it the school would have less money/income. I don’t see much correlation between “number of classrooms decreasing and skyrocketing tuition” and football, except to the extent programs like football help increase the number of classrooms and help fund tuition and scholarships.
Seems you got some kind of axe to grind and are doing a poor job of making a sensible, ax-grinding argument.
And why do you use “self-funded” in quotes? The sports which are “self-funded” are not only self-funded but generate net income.
I can understand arguing against sports on other grounds or proposing that sport programs which don’t at least “self-fund” should be done away with, but people that rail about how much money schools “spend” on football (and I think basketball is the same situation for many schools) on behalf of the school or students are just out in left field. It don’t make sense. The sport makes money for the school.
Great shots.
Thanks for sharing, and please repost the Lavi D link.
That shot of the Mall was amazing. Scary stuff.
Ahansen you ‘rook mahvelous! and the rest of ya’ll are endearing!
Scholarship offers have started to arrive for my daughter. We already have one school that is willing to cover all but $3000 per year. Some schools have automatic offers that hinge on GPAs and ACT/SAT scores. The University of Wyoming is looking promising, but we are still waiting for the offers. Also still waiting on CSU and CU. Will know more by May.
What is interesting is that the best deals so far have been with state schools. My Alma Mater, a private school in San Diego, gave my daughter the cold shoulder with scholarships. They actually seemed quite uninterested in her overall, even though she has a 4.0, AP credits and scored a 29 in the ACT (top 95%). Then they had the nerve to call and ask for a donation.
Is she a National Merit Scholar? That little designation netted me two scholarships, one from the organization itself and one from the school. The latter was even designed to rise with tuition!
That is suicide for the school.
I read a while back that tuition was rising 15% a year. That is no more sustainable than housing prices rising 15% a year.
This story gets better by the day. Shouldn’t companies that took federal monies to fund bonus payments at least have to divulge which employees were paid billions of dollars and for what services rendered?
Wall Street Journal
* FEBRUARY 26, 2009, 11:13 P.M. ET
BofA Subpoenaed on Bonuses
By CHAD BRAY
Bank of America Corp. Chief Executive Kenneth Lewis testified in a meeting with New York Attorney General Andrew Cuomo’s office for four hours Thursday about $3.6 billion in bonuses handed out to Merrill Lynch & Co. employees on the eve of its merger with the bank last year.
Benjamin Lawsky, deputy counselor and special assistant to Mr. Cuomo, said the attorney general’s office served a subpoena to Bank of America during the lengthy session, asking for the Charlotte, N.C., bank to turn over a list of who received bonuses at Merrill Lynch.
Mr. Lawsky said Bank of America had refused to turn over the information in recent weeks and Cuomo’s office had hoped to question Lewis about the list on Thursday.
Just an email funny to start your day….
Young Chuck, moved to Texas and bought a donkey from a farmer for $100.00.
The farmer agreed to deliver the donkey the next day.
The next day he drove up and said, ‘Sorry son, but I have some bad news,
the donkey died.’
Chuck replied, ‘Well, then just give me my money back.’
The farmer said, ‘Can’t do that. I went and spent it already.’
Chuck said, ‘OK, then, just bring me the dead donkey.’
The farmer asked, ‘What ya gonna do with him?
Chuck said, ‘I’m going to raffle him off.’
The farmer said, You can’t raffle off a dead donkey!’
Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’
A month later, the farmer met up with Chuck and asked, ‘What happened
with that
dead donkey?’
Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars a
piece and made a
profit of $898.00.’
The farmer said, ‘Didn’t anyone complain?’
Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’
Chuck now works for Fannie Mae.
I almost posted that yesterday, but decided that while funny the analogy does not fit the crisis. This crisis is more like Chuck selling the same horse to 200 different people and using the proceeds from the new buyers to buy a horse to give the original buyers. This worked until people stopped buying horses. Now everyone wants their money back.
LOL
but I had it in my mind that…Chuck was going to end it by saying: O.K., you’re the winner! You can pick up the donkey at farmer Brown’s place, here’s were he lives. 
Lurkers Soundoff!
Some people are regular posters but I was wondering what the lurkers were thinking. Let’s have a zip code poster name and report views for all.
I’ll start. 92054 looks fine.
Great picasa site SD realbear.
mikey = zip 53213 SITREP
Dream Prices defenders are holding out.
Unemloyment 7.6% and attacking hard.
Banks and FB urgently need re-enforcements of Gov’t money.
Whiskey..Tango..Foxtrot(WTF)
Am considering bugging out.
Calling for Arch Light on this position.
Will use Escape and Evasion find to a Place in the Sun.
….over..click..click..click
Mikey, cool.
Next?
Mikey –
I always thought that it was “Arc Light”. Thanks for clearing that up. Had the soundtrack on cassette with random dialogue when I was a gung-ho teen. Weird kid. Surprise surprise.
You ever seen the Redux? Is long and plodding, but there’s a scene at the French plantation that illustrates what a bad-ass Cpt. Willard is. It’s easy to miss, but the screenplay makes it far more explicit.
MrBubble
Dream Prices defenders are holding out.
The Dream price
it lives inside my head
The Dream Price
it’s the one I can’t get
The Dream Price
I’m holding out for it, oh no
You know that talk is cheap,
and those rumors aint nice.
And when I fall asleep
I dont think Ill get my price, my price
92264 - nonlurker.
Dream prices holding out, High season and lots of canadians looking to buy.
Down valley, Indio, Coachella, Thermal, Mecca etc hard hard hit.
One caveat in Indio is that the PGA West is in there, as is the Griffin Ranch (Merv Griffin’s old estate)which Griffin Ranch is doing mass advertising on tv and running a raffle. Either a home or I forgot what else.
Dyson&Dyson closed, high end RE agency, folded into Windemere.
Prudential closed.
32780, east coast central florida. Next to Cape Kennedy.
Median sales price at peak (2005): $255K
Median sales price in January: $127K ouch!!!
Prices still headed down, way down.
Unemployment rate at 8.3%
Only real jobs are Federal (NASA/Cape Kennedy & military contractors). Obama not increasing military spending and the space shuttle program shutting down next year.
Collapse imminent.
29651—not great, live on a small street, one house has been for sale for amost 4 years, 3 others sold in the last 3 years
93065 here. Long time lurker.
I was glad to find this site. We moved here from the northwest suburbs of Chicago in Spring 2004. We took the new job to be near aging parents. From the time my husband applied for the job in January, to April when we were flown out to find a house, prices went up over 20%! Possibly because we had been through this before- sold our house in Long Beach in April 1994 for about 30% less than it had been”worth” 2 years before. So, we knew for a fact that RE prices don’t always go up! We refrained from buying. We have been renting here since then, waiting for sanity to show itself in the markets. We began “looking” a few months ago. Foreclosures have been very, very slow to make it to the MLS. Homes that are priced in the low 300’s go very, very quickly, often with multiple offers ABOVE list price. Sigh…. So, our opinion is that there is still a great deal of stupid to work its way out of Ventura County before we will buy. We do have an offer in on a short sale- I will let you know what happens. Ours is an all cash offer- about 80K below a recent foreclosure sale of the same model. According to the realtor (I know!!), they love our offer and just need to get three signatures. Also, the poor woman who owned the house had no where to go, so they were waiting for her to find someplace to go….. And we all thought that lenders didn’t have a heart! There are at least 3 layers of people involved in this communication who routinely shade the truth (I said it nicely)- the assets manager at the lender, the listing agent and the buyer’s agent. We both would like to know the real truth!
Properties other than REO’s or short sales are priced insanely. Short sales are being approved now, though.
Anyway, thanks for keeping me sane for the last five years, Ben.
48something-something-something area. Price for this house is 2001 - $ 174,900 ( husband bought ). Put down 30 percent down payment. Price for house in equal to better shape now - $ 129,900 to $ 145,000. Price for repos = $59,900 round the corner ( I’m looking into it ) to $ $103,000. Sigh.
Morale stress test continues…
latest news
[$INDU] Dow Jones Industrial Average falls 122.81 points to 7,059.27
UMich consumer sentiment falls in February: report
By Ruth Mantell
Last update: 10:10 a.m. EST Feb. 27, 2009
WASHINGTON (MarketWatch) — Amid persistent economic turmoil, a consumer sentiment index fell in late February to 56.3 from 61.2 in January, according to a media report of a survey released Friday by the University of Michigan and Reuters. Analysts polled by MarketWatch were looking for a final February reading of 56.2.
The economic disaster will continue until morale improves.
To elaborate on my comment of last night:
The way I see this disaster possibly coming to a rapid crescendo - perhaps sometime in the next couple of months - is (1) a sudden run-up in long-term rates of 100 basis points of more over the course of a few days, due to a kind of buyers’ strike, followed by (2) an announcement by Bernanke that the Fed is buying/will buy massive amounts of bonds, followed immediately by (3) a spike of 20-30% in the price of gold in the matter of a few days, followed by (4) a complete breakdown of “scruples” in lending/borrowing due to moral hazard, culminating in (5) a declaration of an Economic State of Emergency by BHO.
Bonds getting punished again today, I see.
Sounds like a reasonable series of events…
“Bonds getting punished again today, I see”
Why aren’t CD rates spiking?
Would this be the same state of emergency Bush was supposed to declare before the election?
LOL!!
I also see businesses shutting down as people take to the streets. There will be widespread looting and other forms of civil disorder. Get your food and water b/4 that happens, at least 3 months worth. No, I’m not kidding.
What? People will turn off their TVs and Xbox 360s to go run around in the streets?
Hope for the best. Prepare for the worst. Never say never.
Feb. 27 (Bloomberg) — Argentina’s government is considering a plan to take over the country’s grain trade, threatening to worsen a year-long conflict between farmers and the state over agriculture policy.
Now there’s a good idea!
Feb. 27 (Bloomberg) — Hayman Advisors LP, the firm that earned $500 million betting on the U.S. subprime mortgage-market collapse, says Europe’s monetary union is about to fall apart.
…
“People said subprime could never blow up but it did and now they’re saying the exact same thing about the eurozone,” said Howard. “There’s no stopping what is now a downward spiral.”
Feb. 27 (Bloomberg) — The cost to protect against a default by Latvia rose to a record after Prime Minister-designate Valdis Dombrovskis said the Baltic nation must cut budget spending or face bankruptcy.
More than 5,000 swarm South Florida job fair
By LAURA FIGUEROA
The Miami Herald
Friday, February 27, 2009
The prospects were slim, the wait was long, the jobs not that alluring - at least not to someone with their sights set on something more lucrative than working as a janitor or Avon lady.
Still, the lure of steady cash was enough to attract more than 5,000 people, some clutching briefcases and clad in dark business suits - to a dimly lit Davie hotel ballroom Thursday morning in pursuit of what nowadays seems to be a luxury: a job.
From recent college graduates to out-of-work business executives, thousands waited in a line that snaked out of and around the Signature Grand, 6900 State Road 84, for a career fair hosted by Diversity Jobs USA.
Though doors for the event opened at 11 a.m., many camped in front of the hotel as early as 8 a.m.
“I almost thought I was at the wrong place,” said David Rodriguez of Hollywood. “I thought I was at a Hannah Montana or Jonas Brothers concert because there were so many people waiting in line.”
The Financial Times has a good video today on housing …
http://tinyurl.com/bmsrbp
Good info, thanks. The first chart really helps illustrate the fact that they are still building more new homes than they are selling. The glut according to them is at 13 months, and that probably include the sales that developers just make up.
Thank-you for all the info. I lost money in the the dot.bomb(ML) and I remember thinking there has to be some one out there that knew this was about to happen. I started to peruse the internet(newbie) and came upon this site about 3-4 yrs ago. I’ve been listening ever since. At first I wasn’t sure how accurate the intel(once burned twice shy) was but as I listened I realized how important this site was. I tried to get people to listen but they were as ignorant of the market forces working against them as I was earlier. Now I’m hearing 20-30-40-50% loses in 401K’s.
Michael Fink- People like myself started out with jobs paying $8K /year and increased over the years. I lived at home and really never did anything except save and invest. That’s how I bought my first house(60K with 1/2 down) from stocks that had doubled. So, don’t be so hard on those of us that have very little because there were people who worked a lot harder and made far less. There have been scams throughout the years as well. There have also been illnesses. Think of trying to invest w/o the internet and the information it provides. Some people still think of it as a place to get porn.
I knew something was wrong w/ housing prices but in my circle of friends and assoc. they didn’t see the warning signs. Their parents had had a sucessful run up in prices and they used there own experiences to sell the dynamic to their children.
I am happy with my little paid off house and taxes that cost less than rent. Because the house is 950 sq. ft and we have lived in it for 20yrs I have been able to rescue 22 dogs and 8 cats during that time. Some of the animals lived with us as little as 2yrs(sicknesses) and others as long as 18yrs. I did what I felt I needed to do with the time on this earth and I wouldn’t trade it for anything. I guess I’m just saying that if people haven’t saved a lot of money it may not be because they have spent it on foolish things. Perhaps they never made the bucks to begin with. There may be other circumstances.
The gentlest souls I know have been taken in by the biggest conmen and sociopaths(maybe we all have). I on the other hand have always had friends or family to help me and almost always intervene on my behalf.
Thanks for all the laughs and chuckles — you are quite a group and very clever. I may have thought I was losing my mind w/o you all. Thanks
Survival,
You are my hero or heroine.
There’s porn on the internet?
This isn’t a porn site?
“I guess I’m just saying that if people haven’t saved a lot of money it may not be because they have spent it on foolish things. Perhaps they never made the bucks to begin with. There may be other circumstances.”
This is the case for a majority of people. J6P got the shaft over the last 30 years.
I currently rent in a mid-rise in Chicago. Each floor has 6 units.
In November, my immediate next door neighbor’s door had a pasted on Sheriff’s sign that said “No Trespassing” - a completed foreclosure.
Last night, I returned from another business trip to see that another neighbor has a pasted-on notice of impending foreclosure, complete with helpline listings, etc.
They are dropping like flies around here…
It Really Is Different Here
(or Why Renting In This Town Sucks)
I live in Elk Grove, California. It’s not a bad little town, though it is about as prototypical suburbia as a place can get. But renting, to put it bluntly, is a royal pain around here.
To give some context, here’s some stats. In 2000, when Elk Grove incorporated, its population was around 60,000. In 2005, that had more than doubled, to over 130,000. Owner-occupancy runs ten to fifteen percent higher than average and the median income is about $20K higher than for the county as a whole.
I don’t know why the last stat; it’s not as though there are tons of high-paid professional jobs in the city limits.* Perhaps this is a bedroom community for state legislators and people from the north Bay, though I pity anyone who would take on the hellish commute of the latter group.
So what we have here is a town that became a city in a remarkably short time that just happened to directly coincide with the housing boom. And that’s where the problems come in.
See, there was a shortage of apartments even before the incorporation (according to a teacher friend of mine who has lived here for over a decade.) And in a housing boom, nobody wants to build apartments. They want to build single-family residences, or condos. So that drives the proportion of rent space down. To make matters worse, a number of complexes became condo conversions, further driving down the rentable space.
And now… well, now a lot of people who bought during the bubble are facing a lot of bad things. And some of them are trying to rent their space out. Unfortunately, they’re trying for “wishing rent”, and you’d be a fool to take it, because if your landlord gets foreclosed on, you’re SOL. Our realtor (yes, we have one) has some friends who have had to move four times in the last year and a half because of foreclosures.
We like our current apartment. It’s in a nice complex, with friendly and on-call managers. We’d stay with them if they had larger apartments, but the amount of living space we have is, unfortunately, also the sum total of our storage space. No garage. No place to park a bike out of the rain (or the sun, more to the point. I finally gave the bike back to my dad after the tires kept falling apart.) And, unfortunately, no place to store the 1001 things that come with a baby.
The small fry come with a LOT of accessories. And none of them are small. (A lot of them are hand-downs, too— easy on the pocketbook but not usually adapted to our circumstances. The stroller, for one, is HUGE.)
So— if I had my druthers, I’d prefer to rent a place for a bit. I’m sick of having to move but it would be nice to not feel so cramped while we look, leisurely, for a house. But I am NOT going to pay hundreds above my current rent for a place that might end up with a sheriff’s knock on the door, especially when we can pick up a foreclosure at little more than our current rent for twice the space.
I wish it wasn’t different here. At least when it comes to renting.
*My husband works in a division of thirty people that manage a global retail chain. (Thirty people is enough if your company is efficient, and it makes for great job security, especially if you’re driven, which Evil Rob provably is— he was a warehouse manager for this chain seven years ago. But his salary is still below the median for the city…) The rest of the large plant is devoted to lower-level technical support and call-center types.
Propertyshark has title records online for most counties in Cali. You can look up any potential rental address and know in quick order if the LL is an FB or is old school.
Useful to know. Thanks!
FDIC raising fees on banks, charging emergency fee to rebuild depleted insurance
The agency said there were 252 banks and thrifts in trouble at the end of 2008, up from 171 in the third quarter
The Federal Deposit Insurance Corp. now expects that bank failures will cost the insurance fund around $65 billion through 2013, up from an earlier estimate of $40 billion. The bank failures, 14 already this year following 25 last year, reflect the ravages of rising unemployment and falling home prices that have sent loan defaults soaring
http://finance.yahoo.com/news/FDIC-raising-fees-on-banks-apf-14492541.html
now expects that bank failures will cost the insurance fund around In 12 months the headline will read “Bank Failures Worse Than Expected” Count on it.
A question for you smarter than exeter folks (most of ya’s)
Is a paid for house included in ones net worth?
I know it sounds stupid but there was a discussion here long ago that called that assumption into question.
TIA
Technically yes. I think there are some schools of thought that you should not include it.
If one were making a financial decision based on net worth, it would seem prudent (depending on the decision) to leave that out. Consider it similar to the difference between equity and net working capital. One might be a technical measurement of what you are worth, but the other is a practical measurement of what assets you really have available to “work with”.
Exactly. It seems to be a gray area. If I owned a million dollar house (honestly I don’t think there is such a beast) am I really a millionare? I don’t believe so. If I had a million in cash in the bank and lived in a refrigerator box, clearly I’m a millionare.
Putting aside valuation issues (e.g. living in a house worth a mill only during a bubble), if you have a million dollar house and owned nothing else compared to owning a mill in cash and nothing else, those are the same thing.
The thing is, if the house is really worth a mill, then you can sell it (discounting transaction costs for the time being) put the money in the bank and live in a cardboard box.
I expect that you perceive the cash in the bank as a “more legitimate” millionare b/c it appears to be lower risk. And that’s totally legitimate. So, you know, the answer I guess is “it depends.” It depends on your personal values.
But technically, if you want to get down to brass tacks, houses and all other assets count in the calculation of net worth. Valuation issues (what are my assets really worth) are a whole ‘nother set of problems.
One other thought, the benefits to having cash over having the house are obvious I think (liquidity). But what might be missed is the fact that the house does provide value on an ongoing basis (shelter) as well. So it’s not as if its a “worthless” pile of wood and brick. Although the marginal benefit of a million dollar house for shelter over a 50k house is probably nil.
If you took all of your cash and bought a $500K house, would you be worth $500K the day before you bought and $0 the day that you settled? That, of course, is a loaded question, especially here; but it calls attention to the fact that one’s worth fluctuates based on the value of all of his/her assets, be those assets cash, gold, equities, real estate, etc…., all ofwhich are subject to variations in value themselves.
I’d say one can use the value of a principle residence in a net worth calculation as long as it’s imputed rental value is the basis of the calculation.
If my house would rent for $2000 easily in my market, then I could calculate what cash equivalent it’s worth using the 100-120X rent number. That’s a pretty conservative method of valuation and wouldn’t get most folks into trouble. Having said that, if most people calculated a net worth in that fashion they would curl up into a fetal position and start crying for mama.
One way to look at a paid-for house is in terms of tax-free imputed rent.
Whatever the price is of a tax-free bond that generates the same amount of tax-free money as net imputed rent, that price is the value of your paid-for house.
Or, stating it a little differently, if one was to buy a tax-free bond with the intentions of using the tax-free interest to pay his rent, what would the price of that bond be? Whatever it is, the price of the bond could be considered to be the value of his paid-for house.
I’m a long-time lurker, I’ve been reading this blog for years, since I lived in Europe and it is one of the reasons we decided to rent when we moved back and not buy.
I’ll report locally. Inside the DC Beltway prices are softening and inventory is not moving as quickly. It’s nothing like what’s going on in the outer suburbs, but I know it is just a matter of time. In the nicer close-in suburbs, (Bethesda, Chevy Chase) there is actually SFH inventory well below $700K, although these tend to be small and need a lot of work.
Lots of denial still abounds. Had an interesting talk with a realtor this past weekend at an open house. He told me he was betting on prices staying flat and then going up at the end of the year. I told him I was betting on the opposite. He said $729 was a good price for the house he was showing. I told him I was thinking of offering $650 when I saw it online, but now that I’ve seen how much work it needed I would have offered $500. He practically guffawed and hinted I should offer $700. I asked him if he ever read the paper, or was aware we were in a recession. He said DC was special. I said, it’s not about special, it’s about available credit. We parted amicably.
For DC-locals — take a look at the Washington Post Magazine cover story this weekend and try not to projectile vomit. It’s a about a seemingly nice couple buying their first “starter” home in Gaithersburg! They don’t want to miss the bottom. It’s an opportunity of a lifetime. Oy.
As for whomever said having kids is out of reach financially, I have to call B.S. It’s not that expensive. Check out “The Tightwad Gazette” — a few years old at this point but filled with loads of great tips on raising kids with minimal expense. So they don’t get a new Wi or iPod every year, or designer clothes etc. It’s quite doable, in large part due to all the barely used consumer goods that people sell at yardsales and at Goodwill for 1/1000 of the original price.
the starter part sounds similar to Netherlands.
Our prices are still holding up near their alltime high, but sales numbers are down strongly. Because of that realtors are advertising that this is the best time ever to buy a home, especially for starters. Plenty of choice (that part is true) and the lowest ARMs rates ever (but 5-10yr fixed rates have started to climb, so these starters look like cannon fodder to me). Of course there is plenty of charming stories in the newspapers about happy starter families …
Apparently the number of starters applying for a loan almost doubled over here last month. But they can’t tell us how many of those applications were approved …
Per Case/Shiller prices are down 28.71% in 3 years in the DC area. I don’t think “softening” is the word I’d use. Softening = slowing the rate of ascent. Uh uh. I think “plummeting” is the right word, or perhaps at least “falling”.
Hmm. If you are familiar with DC then you know the “area” encompasses an enormous swatch of real estate, including some pretty far-out suburbs as well as some pretty rough neighborhoods/towns. “DC-Area” includes Frederick (a different city in my book) and parts of West Virginia!
So I have no doubt that the “DC area” as defined by Case-Schiller is down 28 percent.
But prices are not “plummeting” inside the Beltway, at least not in areas where you would feel safe walking outside.
This is true - and from looking at Zillow it appears you’re right. I live in Leesburg, and we are seeing prices 30-35% down, which is pretty much reflected in Zillow - but it does show prices only slightly down in DC.
I think there are a few main reasons (first two apply to all cities):
- The gas price thing last year made places inside the city more desirable vs. outer burbs
- The general large amount of empty home inventory means people aren’t “squeezed” out to the burbs as much just to find a place as they were before
- In DC there’s probably a big anticipation of future demand due to all this new money flowing through the city via the expanded government programs, and thus new jobs being created. So far though DC unemployment rate has followed the nation up.
Florida Association of Realtors’ stats for January are out. Holy cow - the carnage is amazing - even to me. Some highlights:
- Statewide prices are now down 40%
- Half of that drop is only in the last 10 months!
- However despite that - they’re still only down to mid-2003 levels, which were about 60% above pre-bubble 1997 prices.
- Ft. Myers just broke right through $100k median, to $94,900. Even when smoothed out over 4-month average, the median there is down 64%!
- Other areas in the north like Jacksonville had been resisting the downturn - they are no longer. Jax peaked in late ‘07 (rest of the state in mid ‘06), and was down on 10% until just a few months ago, but now down 25%.
Certain areas of CA, NV, AZ, and VA may have Florida beat slightly - but as a whole state, I think FL is the creme-de-la-creme of the bust.
Those numbers are looking good, and they will look even better in the coming months.
I am sure most FB’s wouldn’t agree. LOL!
I live in Florida.
A nutjob in my hood bought a 1200 sqft house with a postage stamp size pool on a corner .25 acre lot for $183K at the peak in 2005. Put it on the market in spring 2006 for $280K! Whoops! Market crashes. Since then:
Spring 2007: Drops price to 230K.
Spring 2008: Drops price to 199K.
Current price: $183K.
The house next to me, which is about the same size on nicer lot sold last November for $143K.
My guess is he’ll walk. The bank will sell it in 2 years for $80K.
“I just bought 800 acres of land in Washington on the Potomac River,” declared master debt financier Donald Trump today. “It’s a club, with golf courses and other tremendous things… the reason I did it is I see Washington as the only growing place in the United States. They’re going to own the banks… they’re going to own the car companies… it’s a very scary scenario.”
FWIW - what he bought wasn’t in Washington - it was in Sterling - two counties away from Washington in Loudoun county. Within commuting distance nonetheless, and fairly close to the Great Falls area, where lots of the bigwigs live. I live in Loudoun - there’s been lots of hubbub. I’d just as soon not have him here - a swath of bankruptcy follows him wherever he goes.
I was about to say, who in their right mind would listen to a guy who ends up in bankruptcy all the time?
Story in Norfolk… Gov’t might start to assist Navy people who are underwater on homes. Gov’t buys the home or covers the difference from what it sells for. In the article the one couple bought for $210K, and no owe $340K or such. I’m sure the reporter mentioned this on purpose. The gov’t would be paying for their cash out refi they used to pay off debt. Crazy stuff:
http://hamptonroads.com/2009/02/some-military-families-will-get-help-selling-homes
Those men and women in service to our country were some of the most preyed upon of all the FBs.
“to assist Navy people who are underwater ”
Hey being in submarines is just part of the Navy experience.
Here are some fun facts about Massachusetts based on census data found here…
Population (2007): 6.2M
In labor force: 3.5M
Government workers: 411K (12% of workforce)
Education, Healthcare, and Social Services: 821K (25% of workforce)
Households earning over $100K/yr: 672K (28% of households)
Families earning over $100K/yr: 560K (36% of families)
Median Household income: $62K
Median Family income: $77K
Median value housing (owner-occupied, 2007): $366K
Medain monthly owner costs (with mortgage): $1958
One thing I found interesting was that the median monthly owner costs in 2007 (with mortgage) was approx. 30% of median family income (households of 2+ related by blood/marriage). I think that is fairly close to the traditional measure of affordablity. The reason I keyed in on family income vs. household income is that I think family income may be more representative of SFH buyers/owners.
Basicaly, I was curious as to whether the census data would help explain what most of us Mass residents have seen: a local economy and real estate market moving lower at a glacially slow pace. The median house price in Mass is down around $287K. My theory is another 20-25% lower from here to get in line with incomes.
I’m curious to hear other opinions…
37% percent of your workforce is government. This translates (or should) into stable jobs, benefits and pensions. It should not be underestimated the amount of security and therefore confidence this gives people.
Prices will drop. But it will continue to proceed slowly.
I’m late in dropping by today, but thanks to those who said such sweet things about my lad yesterday.
Here’s an interesting article which summarizes some of the pain going around in Europe.
finance dot yahoo dot com/techticker/article/195065/Europe’s-Crisis:-Much-Bigger-Than-Subprime,-Worse-Than-U.S.
“In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. … The Polish zloty has basically dropped in half compared to the Swiss franc. That means if you are a mortgage holder, your house payment just doubled. That same story is repeated all over the Baltics and Eastern Europe.”
In Poland, 60pc of mortgages are in Swiss francs. I don’t know which is worse, taking out a loan for far more than you can repay, or taking one out in a currency not used where you live.
It’s housing and currency speculation at once! Double down!
Yep, everyone knows that the zloty is much more stable than the Swiss franc. (rolls eyes)
From today’s WSJ DOT com: Huge surge of applicants for truck driving jobs “For years, a shortage of drivers was the single biggest problem for the trucking industry… companies spent millions of dollars annually trying to attract applicants for a notoriously unappealing job that involves spending weeks on the road, sleeping in cramped cabs and showering at dirty truck stops. Annual driver turnover has routinely approached or exceeded 100%.” The industry employs 1.32 million, lost 25000 jobs just in January, 3600 trucking companies OOB in 2008, and 7% of big rigs went off the road in 2008. Despite all this, there is still a 65% driver turnover rate. There must be something about the pay of $45000/yr along with being on the road for weeks at a time. “Two years ago, Don Hockersmith of suburban Phoenix lost his job as a superintendent for a home-building company. He enrolled in truck-driving school and took a job with Werner Enterprises Inc., but quit within two months. He was sick of living out of a cab and spending weeks away from his wife and daughter. He now drives a city bus.
“I felt like I was part of a carnival,” said the 53-year-old Mr. Hockersmith. “Some of these truck stops are the filthiest places you’ve ever seen.”" Flying Js tend to be pretty nice, but the J in Texarkana is nasty looking, and the one in ABQ “feels” dangerous. The co. is going through Ch. 11.
“There must be something about the pay of $45000/yr along with being on the road for weeks at a time.”
Lot lizards?
BTW, there goes my backup plan in case the whole lab automation thing doesn’t work out.
truck driver, not lot lizard.
I’m in the Mood for Default, or,
Reaching Your Peak Debt
From the U.K. Telegraph:
Moody’s predicts default rate will exceed peaks hit in Great Depression
By Edmund Conway, Economic Editor
Last Updated: 7:42PM GMT 26 Feb 2009
In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody’s said it anticipated a tidal wave of defaults was approaching.
It said that in the coming months more than 15pc of speculative-grade bonds and loans - all but the most highly-rated - would default on their debts.
This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.
Kenneth Emery, senior vice president at Moody’s said: “The three main drivers of the forecasting model are forecasts for the high-yield bond spread and the unemployment rate, along with the current level of issuer ratings. In the fourth quarter, the high yield bond spread reached unprecedented levels; and we’ve got an unemployment forecast approaching 9pc this year and issuer ratings at record low levels.”
Have we finally reached a bottom? Reusable azz wipes! I’ll pass, thanks.
As seen on The Drudge Report and Australian News!
“Alright,” you say, “You’ve convinced me about cloth diapers, and I understand using cloth gift bags and napkins. But toilet paper??” For some people, making the switch to cloth toilet wipes is a huge leap, that’s true. But it doesn’t need to be!
Using cloth toilet wipes actually has many advantages. For one, it’s a lot more comfortable and soft on your most delicate body parts. It’s also more economical, uses less paper, and saves you those late-night trips to the store. And cloth wipes can be used wet without any of the sopping disintegration that regular toilet paper is prone to. For a discussion of the practical aspects of using cloth toilet wipes, please check out our page detailing How to Use Cloth Wipes.
Lately, with all the media attention, there’ve been a lot of naysayers talking about the stench. I can honestly say, our wipes don’t stink. They don’t go into a sealed container. They go into a little (lidded) garbage can in the bathroom.
When I lived in Mexico the free elementary school text books make a point that throwing dirty TP into a waste basket was a no-no, and that the proper task was to flush it down the toilet. They made a point that to discard the TP in a waste basket would create a “foco de infeccion”
Or just install a toilet/bidet combo unit.
its still real time live on the intertubes:
twofer at the hour:
Security Savings, Henderson Nevada.
Heritage Community, Glenwood IL.
its five o’clock somewhere.
dRINK kNURDS.
Hey Voz, I loved your Haiku yesterday.
thats pretty dude of you, dude.
Im into beverages.smoking weed. running a business. reading the tea leaves. and carpentry.
haiku is just mind bending. not easy.
look at the time signature.
OK, I’m not a liberal arts major, what is it?
2009-02-27 17:59:47
its still real time live on the intertubes:
17:59:47
was two minutes before 5 in Oregon….
just sayin.
What’s the over/under today??
5
big change on the real time mind link commentariat data flow.
would you please translate.
Thank you.
BTW thank you for the Vulcan link.
The talking heads are shaking in their booties.
Repost, sorry if it appears twice.
From CR -
“Today real GDP growth was revised down to minus 6.2% (annualized), the Citi deal was announced, two banks failed (Heritage Community Bank, Glenwood, Illinois and Security Savings Bank, Henderson, Nevada), and the S&P 500 is back to 1996 prices. ”
Where are Hozzie and FPSS when we need them? I miss them.