Better In The Long Run
It’s Friday desk clearing time for this blogger. “From the front porch of her shotgun home in the Portland neighborhood, 73-year-old Patricia Harrell can see three properties that were sold at foreclosure auctions last year. Harrell’s street is part of a swath of western Louisville running through Portland, California and Park Hill, where just 22 investors owned 202 properties that were foreclosed on last year — more than one-third of the total foreclosures in the area.”
“Donald K. Crandall, a licensed mortgage loan officer who lives in Old Louisville, according to state licensing records, lost the most homes to foreclosure sales in Jefferson County last year — 40 overall. Crandall, whose foreclosure problems have triggered a review of his mortgage license by state officials, did not return telephone calls seeking comment.”
“But while he may stand out for the sheer number of foreclosed properties, Crandall is not alone among struggling investors. James Heleringer, a mortgage loan officer who lost 10 homes in foreclosure sales last year, said he bought most of his properties three or four years earlier using adjustable-rate subprime mortgages. Heleringer said lenders weren’t willing to refinance the loans. Efforts to sell the homes didn’t work either, partly because property values had started dropping.”
“‘It’s part bad luck, and part poor business planning on my part,’ said Heleringer. ‘I’m taking my medicine and moving on.’”
“The Obama administration yesterday released new details about its $75 billion plan to help some 9 million homeowners. The Obama plan would extend the refinancing help to borrowers who are underwater, so long as the value of their homes has dropped no more than 5 percent below what they owe on their loans. Some quarter of a million borrowers in Massachusetts fit the federal profile of having not enough equity in their homes to refinance, according to real estate tracker Warren Group.”
“AnnLouise White of Dedham, who is hoping she can refinance under the program, said she was resisting calling her mortgage lender immediately, to first digest the details of the plan. White bought her house in 2007 for $415,000 but hasn’t been able to refinance because her home has since dropped in value. ‘I’m still hoping,’ White said. ‘I’m trying not to jump the gun.’”
“Sharon Price, director of policy for the National Housing Conference, said she believed the administration was being realistic about who it could best help. ‘It will help people who are a little underwater but not truly underwater,’ Price said. ‘Clearly they are trying to reach the broadest population under both of these plans. But they are not reaching people who may be past the point of no return.’”
“The Barack Obama administration’s rescue plan doesn’t offer any lifelines for investor-owned homes –– a big portion of the troubled Phoenix housing market. Tim Mackey, managing partner of the Scottsdale-based Mackey Law Firm, who specializes in real estate and loan modifications, said 10 percent to 20 percent of Phoenix-area homes are investor-owned, and there’s no immediate help for them in President Obama’s mortgage plan.”
“‘They are in the same financial predicament they were a month ago,’ he said.”
“Dan Gonen, a Realtor in Scottsdale, said more than 50,100 homes are for sale in the Valley, and 25,600 of them are vacant. He said more than 11,400 of the vacant properties are bank-owned, and he presumes a large number of the others are owned by investors. Stan Van Dyk, Tempe branch manager at America One Finance, is skeptical of the plan’s effectiveness. He is concerned that it bypasses many homeowners who are extremely upside-down in their mortgages.”
“Many investors pulled up stakes walked away from their Arizona investments when the market turned 18 months ago. ‘Most of them have already up and left the market and left the houses to waste and … foreclosure,’ Van Dyk said.”
“California homeowners who could access the federal mortgage modification are few because their loan-to-value ratio exceeds the plan’s limits, analysts said. About one-third of California homeowners are underwater but the majority of them owe more than 105 percent, the Los Angeles Times reported Friday.”
“‘They’re underwater by six figures in many cases,’ Greg McBride, a Bankrate.com senior analyst, told the Times. ‘Many homeowners in Southern California are left to twist in the wind.’”
“Two new foreclosure prevention programs may do little to help Northern San Joaquin Valley homeowners because housing values here have fallen too far. ‘They don’t address the problem we have here in the valley,’ lamented Martha Lucey, who runs ByDesign Financial Solutions in Fresno. ‘This will only apply to a very small percentage of homeowners in the Central Valley.’”
“Home values have plunged 64 percent or more in Stanislaus, San Joaquin and Merced counties since peaking in 2005. ‘That’s not going to help 50 percent of the people in our area. We’re almost all underwater,’ said Edward Parcaut of Lighthouse Residential Mortgage in Modesto. ‘Even those people who put 50 percent down on a home four years ago owe more than their home is worth now.’”
“More than 30 percent of mortgage holders in the sunshine state are living a dark reality: they owe more on their homes than what they’re even worth. Tampa Bay Realtor Nathan Bangs says the major depreciation of home values is partly to blame. ‘We’re down 40 percent. We’re back to 2002 pricing so any homeowner who bought after 2003 that didn’t re-fi outside of their home, they’re upside down,’ he said.”
“‘Any of these subprime ARM mortgages or exotic mortgages that people may have gotten into are not backed by Freddie Mac and Fannie Mae. Those will not be eligible with the new program,’ said Scott Strepina, mortgage broker in Tampa.”
“Woven in among the many aspects of the Federal government’s economic stimulus plan is a new tax credit of up to $8,000 for qualifying first-time home buyers. But area experts are split on whether the credit actually will have the intended impact of spurring on-the-fence prospective buyers to purchase homes. ‘I think the credits are too confusing for people; (they) can’t keep up with it,’ said Barbara Pearce, president of North Haven-based H. Pearce Real Estate. ‘Nobody really knows what the story is.’”
“‘In an ideal world, a stimulus package is aimed at getting people off the fence, or getting people who are not able to buy,’ she said. ‘I haven’t heard anyone say, ‘I wasn’t able to buy, but now I can because of this stimulus package.’”
“The U.S. is producing too many vehicles, according to a new report from CIBC World Markets, and sales already at a 34-year low will likely drop another 30 to 40 per cent and may never recover to previous levels.”
“The report projects that American consumers will only buy about eight to nine million vehicles a year over the next five years, roughly half of what was purchased in the last five years. ‘Detroit’s biggest problem isn’t that it’s producing the wrong type of vehicles, but rather, that it’s producing too many vehicles, far too many,’ said chief economist Jeff Rubin. ‘Just as two million housing starts proved to be a bubble, so was the average 16 million unit auto sales of the last five years.’”
“New housing construction has ground to a standstill in Chandler and the city faces budget deficits of up to $40 million in coming years. In 2007, the city issued 935 home building permits. Last year, the number was down to 366, said Mayor Boyd Dunn.”
“And last month, Chandler issued only one building permit, Dunn said.”
“‘There are no new houses being built right now in the city of Chandler,’ he said. ‘It’s something we’re not used to.’”
“The condo market across the valley, including downtown, is hurting badly. As of a few months ago, buyers at four of the five condo projects recently completed or under construction in Las Vegas — Newport Lofts, Juhl, Allure and Streamline Tower — were finding it difficult, if not impossible, to get financing to close on their units. On the other hand, there appear to be few if any apartments downtown like the ones downtown developer Sam Cherry plans to build.”
“‘We went from flophouse motels and government-subsidized housing to half-million-dollar condos — with nothing in between,’ said Michael Cornthwaite, owner of the Downtown Cocktail Room.”
“North Dakota’s real estate market has also held up better than those in many other states, a trend that experts say is likely to continue. America’s Home Loans owner Darin Ketterling adds, ‘We’re talking builders, realtors, lenders, appraisers have always taken the client’s best interest into consideration, and that’s really helped the most.’”
“‘It’s down a little bit now, but we’re in a buyer’s market right now, and it’s slowly changing to a seller’s market, which basically means that the housing prices, I believe, are going to start increasing a little bit,’ says realtor Greg Mayer.”
“For sale: 4,000-square-foot Cocoa Beach canal-front home near the Banana River; pool, Jacuzzi, private dock included. Sold for $800,000 in 2006. Now available for $320,000. Glen Simser couldn’t pass up the bargain when he saw it last year. ‘It was a killer deal,’ he said.”
“Of course, there was a catch. The home was a fixer-upper, in need of major TLC. But the potential savings found in that deal and many others across the Space Coast makes them one of the few bright spots in the current housing landscape. Organizers of the Space Coast Home Show this weekend at the Cocoa Expo are expecting a stream of visitors who will, as the HGTV slogan puts it, ‘dream big, start at home.’”
“When co-owners Sue Lavallee and Eva Basile opened their one-stop remodeling shop in Rockledge two years ago, their market base was different. ‘We were first dealing with new homeowners, but six months later it shifted to people redoing their homes,’ Lavallee said. ‘Now it’s people buying fixer uppers. We’re seeing some flippers again. That’s promising.’”
“A few months ago, America Harris was marketing real estate with the promise that Dubai would continue to prosper. The North Lauderdale native would show prospective clients articles from the local English-language newspaper that claimed Dubai was still a good investment even as most of the world’s real estate markets were faltering. ‘Dubai was going to be unfazed by the financial crisis. It was resilient,’ Harris said.”
“Young professionals from Europe and America, lured to the Gulf by high salaries and Dubai’s mystique as a new land of opportunity, are now out of work and scrambling to sell their property, including condos and cars, before their residency visas expire - typically one month after losing a job. ‘Dubai in the fall was such a vibrant city,’ Harris said. ‘Now, it’s almost like a shell of its former self. All the shops are empty. The restaurants are empty.’”
“Nick Hadous, from Dearborn, Mich., who arrived in December to take a job as a corporate lawyer, says he can now afford to live at Jumeirah Beach Residence, a tony development near the marina, which was out of reach when he arrived. ‘I think it may turn out to be better in the long run,’ Hadous said. ‘The market here was way out of whack. They needed a correction.’”
“Real estate agents going into this new sales season without a BlackBerry, iPhone or other personal digital assistant better get with it. A new survey of homebuyers says when people call a real estate agent, they want to hear back right now, not tomorrow or later. And they’ll judge an agent’s ability and savvy by the speed of that response.”
“‘More than half want to hear back from you in 30 minutes,’ said Leslie Appleton-Young, economist for the California Association of Realtors, briefing a few hundred Sacramento Association of Realtors members.”
“Many home sellers are still out of touch with the changing housing market, a new survey shows. Almost half of homeowners polled by HomeGain Inc. said they think their houses should be priced 10 to 20 percent higher than their sales agent recommended.”
“Almost 60 percent of potential buyers said that they considered home asking prices too high, HomeGain found in its nationwide poll. More than half of real estate agents surveyed predicted that home prices would fall further during the next six months. Only 11 percent of agents expect prices to rise.”
“Also, most real estate agents – 60 percent of those surveyed – said that the latest government economic stimulus programs will not help home prices. Just 3 percent of those polled were optimistic that the government programs would cause home prices to rise.”
“‘Our survey shows that the market and Realtors are telling homeowners their homes are worth considerably less than homeowners think they are,’ Louis Cammarosano, general manager of HomeGain, said in the report.”
‘AnnLouise White of Dedham…bought her house in 2007 for $415,000 but hasn’t been able to refinance because her home has since dropped in value.’
No Boston Globe, she just paid too much. I suppose White was possibly reading the Globes cheerleading in 2007, so this FBs on you BG!
Anywoo, another great week. My thanks to those who support this blog. Please check back this weekend.
Right!!! The home never was “worth” $415K to begin with. This simple fact seems alien to the press.
“bought her house in 2007 for $415,000 but… her home has since dropped in value.”
GH: The home never was “worth” $415K to begin with.
Well… just playing Devil’s advocate here, but technically both statements are true. If we define “fair market price” as “what a willing and able and buyer offered to pay”, then that house really was “worth” $415,000 in 2007. Because that’s precisely what Ms. White actually paid for it (legally, with a dodgy loan). What the press can’t seem to grasp is that:
a) 20% per-year price hikes aren’t “normal”.
b) Such price hikes were fueled by a too-cheap credit bubble (that isn’t coming back anytime soon).
c) When the price falls, the house is not now selling “below” fair market price, but *at* fair market price.
d) Perpetually rising house prices without matching increases in wages is *not* a good thing.
Forgot to add that the terms “worth” (or “value”) and “price” are NOT synonymous. A house may be priced –and sold– at $415k, but not “worth” a bucket of spit.
Yeah, and let’s look at the market here … time was, the most high-end homes in Dedham were in the 300k range … the schools suck, so there’s no reason that house should be more than $200k. Also, locations in Dedham vary a lot. Some are very bad, others are esconced in a suburban setting and okay.
She probably sought out Dedham as a bargain–now she’s holding the bag.
Another house priced at the “conforming maximum”. In many areas, this became the bottom price because ANYONE could get a mortgage for that amount….
“…..scrambling to sell their property, including condos and cars, before their residency visas expire - typically one month after losing a job.”
So these supposedly intelligent highly compensated induhviduals bought property when they knew their residence in the country was mightily temporary?
My in laws did the same thing in Mexico. They’re there on year by year visas, yet the two of them put every spare $ plus some borrowed money into an Hacienda that could house 12 or more locals. The remarkable part of the story is that one of the houses they considered buying had been on the market for 6 years when they looked at it. There’s a liquid market for your life savings.
It’s no wonder so few people make money investing. Not that I can speak too proudly, my 410k plans are barely doing better than a bank CD, but at least I can honestly say I had no other choice. 401k scams, oops, funds have very limited choices. If it weren’t for the match I wouldn’t play that game either.
take a look at this
I am from Sarasota Florida but thank goodness I sold my home and downsized to a condo in St. Louis
any way in Sarasota there was a beautiful ranch ranch home circa 1960’s placed on a very large lot. The owners sold and a developer came in and built I would say 12 of the most typical mcmansions. I was there at every stage of the building (i lived accross the street) take a look at what these idiots paid for these ugly poorly built monsters: http://sarasotaproperty.org/search/subdivision_search_results.asp?kw1=2949&year=2009
can you believe what these people paid??
As I said I grew up in Sarasota so I know what a scam these “homes’ were
My point is this until those homes in Nathaniel Place come down to reality to their actual value (what I belive to be 290.00-350.00) there will be no recovery in this realestate mess
It’s sad what rampant development has done to so many cities across the U.S.
Jeeze, ya think?
*throws up violently *
No, serious, ca renter. I’m not mocking you. I agree wholeheartedly. And while we’re at it, let’s add: “It’s sad what rampant development has done to rural lands, working lands, forest lands, wetlands, riparian corridors, animal habitat, salmonid habitat, transportation systems, and last but certianly not least, agricultural systems and lands and practices across the U.S.”.
Let’s not leave anything out.
This mess pressed a chancred and leprotic finger on everything.
Definitely agree. If I could change one thing in the real estate world, it would be the cozy relationship between developers and politicians…as well as concentrating the control of vast quantities of land in so few hands (there’s the socialist in me coming out
).
Even if we bulldoze all the worthless stucco nightmares down, the environmental damage done by building it in the first place/then tearing it down is shameful.
“And last month, Chandler issued only one building permit, Dunn said.”
Chandler, Arizona, home of the annual ostrich festival and the wonderful failure project “Elevation Chandler,” a luxury hotel and condo complex in a suburban mall parking lot. Its skeleton still stands as an attractive nuisance:
http://www.azcentral.com/business/articles/2008/04/16/20080416cr-elevation0416.html
What I miss most about my Chandler McMansion is the rapid appreciation I experienced in 2004 and 2005. (I also miss observing all the beautiful results of plastic surgery at the Chandler Fashion Mall). Unfortunately, I wasn’t aggressive enough to get it sold at the top. I had to give it away. Let’s see, I bought for $440,000, listed it at $899,000 in Oct. 2005. I almost had it sold for $825,000 in Feb. 2006. I ended up giving it away for $705,000 in May 2006. Oh, the inhumanity of having to “give” my 5400 sq. ft home on a half acre away!!
Sure was nice getting a check for $385,000 after closing. I have no complaints about Beazer homes, they were the builder and we all made some money. I have been a lowly, “bitter” renter ever since. However, I feel so much better now that Obama has declared me a first time buyer if I buy this year. Maybe I can buy my old house back for $300,000 and also get my 8K from the IRS??
I am trying to do my part here in Hillsboro, OR. I made an offer at a used home seller’s listing since they were holding an “auction”. Of course it was a short sale and a nonsense auction. The house was listed at $399,000. The “bidding” started at $199,000. I didn’t want to “insult” anyone so I bid $225,000 (cash). That still caused hurt feelings and the used car salesman told me my bid was too low to take to the bank and they had recieved “signficantly” higher bids. Of course, I told her I was standing firm and felt in 6 months from now $225,000 would be too high. Oh well - I think that we are in about the 3rd inning in this melt down. First two innings were extremely boring, but the action started to pick up a bit in the 3rd inning.
In all fairness to the used house salesperson. She didn’t annoy me too much and didn’t use the usual parroted lines. She is trying to get that it isn’t different here despite the urban growth boundary and the fact that all of california doesn’t want to move here after all.
Ya know I don’t know squat about you but something about bragging about flipping that house make me despise you and your ethics. I hope your is karma sh*t. Society would function a whole lot better without so many get rich quick artists like you.
Ever think of going into politics?
Does the phrase “tongue in cheek” mean anything to you??
Your comment is out of line.
OK, I was a bit hard. Human nature is what it is. I just wish people like “AZtoORtoCOtoOR” had a special birthmark on their face to let the rest of us avoid them in real life.
For those of us so caught up in the consumer culture that we fail to see the invisible hand of mass psychology has such a destructive side effects.
I recommend watching the BBC mini series called “The Century of Self” to really examine the origins of our current culture. I think YouTube has it online plus you can find it on many torrent servers.
http://www.mininova.org/tor/2092193
http://video.google.com/videoplay?docid=8953172273825999151
Yup, Its snarky braggarts like him who fed the Bubble mindset. Poor Oregon.
I’ve disagreed with many posters, even Ben.
Yet, I’ve learned a TON of stuff here.
Some things, I’m still trying to learn.
Anyways, I just do not see any productive outcome to having feelings like those you expressed.
I’ve tried to emulate Ben’s forward looking approach to problem solving. I said tried.
Maybe the guy bought a house to live in, saw it got insane and it was a bubble, and decided to sell.
Guess what?
That happened to me too.
As I had expressed here about 2 years ago when someone blamed the “greedy” babyboomers for the entire bubble because they were selfishly selling their homes for too much money, if you have a possession, you offer to sell it to someone else at a certain price, and they pay you for it, that doesn’t make you “greedy”. If you can get $ 1,000 for your cat, then why sell it to someone else who doesn’t have $ 1,000 for only $ 10 ? That makes no sense at all to me. If someone is stupid enough to pay $ 1,000 for my cat, then I’ll probably take it. ( By the way, I don’t own a cat, but wish I did. The poodle doesn’t like cats. )
Ummmm BlueStar and SaladSD, AZtoORtoCOtoOR has been posting here for quite some time. As Blano says tongue in cheek and +1 to Silverback.
Wow humor is going by the way side.
If I had a cat, I’d pay someone ELSE $1,000 to take it!
‘By the way, I don’t own a cat, but wish I did. The poodle doesn’t like cats.’
——————————————–
You can have MY cats. Yes, please. I will happily mail them to you.
I have four (4) cats. Some a*sshat dumped off a litter in the woods, totally feral, and I had to catch them and haul them in to get shots and spayed and all that. This is 2+ years ago. When I look into their beady little sneaky yellow eyes, with my beady little sneaky green eyes, I clearly perceive that they would eat me if they could. They’s totally thinking about it, absolutely. They hunt as a pack, like lions, I’ve seen it. They’s thinking ‘That’s a big pink mouse in sparkly clothes, is all. We could take her.’
But they cannot, and you know why? Because I have opposable thumbs, is why, and can open the big sliding glass door on the back deck and run back inside in time, is why. But one day I will not post, nor the next day, nor the next….and if it’s not ’cause Ben banned me, well, then, it’s because they finally learned how to open the sliding glass door.
QUICK OLY!!!
BEHIND YOU!
Stop it!
You know I’m high-strung! This is not helping one little bit.
Oh so nobody was supposed to take advantage of the situation? Your attitude is ridiculous.
I did more or less the same thing in Las Vegas. Bought low, sold high, left town and have been renting ever since with a ton of cash in the bank.
I’m not going to apologize for seeing a financial opportunity of a lifetime and acting on it.
BlueStar,
I read the post twice - the first read I had a kneejerk reaction.
Then I reread the post. Not so much of a reaction.
We share our real world experiences with another.
Learning from another’s perspective (withholding judgement) is what I love most about this blog!
Best,
Leigh
All,
I apologize for not putting the sarcasm tag on my post. I was product of the 80’s, and so my sarcasm runs deep. I appreciate those that have been around a few years and pointed out that it was tongue in cheek comments. I discovered this drug (the hbblog) in August of 2006, shortly after doing all I could to buy a house in Colorado Springs in July of 2006. No one took my low offers, which was my lucky break.
I consider myself to be one of the luckiest people that I know. I am a Montana farm boy, so believe me, the thought of buying a house and flipping it was the farthest thing from my mind. All I ever saw was borrowing money to buy something and losing it to the bank. My Dad lost
the farm to the bank, so I have seen hard times and the consequences of over-extending one’s finances.
I have never “owned” more than one house at a time. I have only dwelt in my primary residences. I am the kind that sells the house first, goes to a rental and then gets to work on the next deal. Friends can’t believe that I would be so stupid to sell the house, move to a rental, move to the new house. To them, moving more than once is not worth the hassle I go through. I do all the moving myself as well. My Chandler house purchase was contingent on the sale of my Mesa house. I purchased my Chandler house with ~$125,000 of my own money. I did have a 5 year arm at 4.75% on the house. However it was a fully amortized loan on the house.
Part of what made go for this purchase is that the model that we built was for sale for $750,000. I was able to buy the same model, but not all the upgrades, for 440,000. I did see some potential upside to this. Plus, I am ashamed to say, that my real estate agent told me he thought I would be ok on the purchase. (The agent was my wife’s uncle who is now losing his primary and rental home to the bank). Believe me, I spent many restless nights on the thought of buying a $4440,000 and having a mortgage for $325,000 and the worries didn’t stop after I was in. I really worried I was buying at the top and it would all crash. I really did not enjoy my large mortgage.
A few events led me to putting the house up for sale:
1. A good friend’s Dad had a winter house near my Chandler house. His Dad is someone that I respect greatly. He lives very conservatively and has always made good financial decisions. He stopped by my house for a visit in March of 2005 and told me they just sold their winter home and were preparing to leave for Montana in the next couple of days. When I asked why they sold it, he and his wife told me that they weren’t using as much anymore and that it “seemed like a good time to sell”.
2. I moved into my Chandler house in Nov. 2004. In july of 2005, a similar model to mine sold for over $900,000. I thought it was time to sell in AZ and get to Colorado Springs before prices skyrocketed there.
3. I did not like the thought of having an ARM. That worried me as I had always had fixed rate loans. My first house was on a 15 year fixed rate.
The backyard was never completed as I was saving the money to pay for the pool in cash instead of being like the rest and HELOC everything. I had a HELOC on my first house that I owed ~8K on. When I sold the first house and paid that off, after seeing the impact on the closing amount of the sale, I learned right then that was a stupid move on my part. Fortunately, I learned my lesson on 8K and not the amounts many are learning on these days.
I only share my story here to share common experiences here on this blog. I found this blog in Aug. 2006 and it was led to my good choices since I found it and became very educated in it. I only have my story to share, while others here have shared their learnings of sub-prime, CDOs, MBS, “Liar-loans”, etc. I had no idea all these things existed and what they contributed to the mess we are in. I am really getting tired of renting to be honest. But I refuse to pay for someone’s HELOC that has been spent so foolishly and has contributed to this mess.
I see acquaintances lose their homes in AZ and I don’t feel that they are losing their house. I feel bad that they made such stupid choices along the way and never lived within their means. I was at home putting tile in, landscaping, painting, cooking, etc. to not have to borrow while they were at Disneyland, buying SUVs, eating out, plastic surgery etc.
I live in fear today that that the cash I have today will be inflated away by the govt. The saving rate was ~5% when I sold my house, now it is just over 2%. I am married and have 4 kids and the responsibility I feel to provide for them is sobering and motivates me to live a frugal as I can and to be very conservative with money. I never sought out to flip the Chandler house. I bought it to live in, but must admit, it sure worked out pretty well for me. The guy that bought my house put down $500k, so no bank is going to lose off of my purchase. I feel bad for the guy that brought so much of his own money to the table, only to see things disintegrate hard and fast.
Sorry for the ramblings, but I appreciate everyone on this blog that contributes to the knowledge and experiences of this blog.
Thanks, AZ. Very enlightening.
I sincerely apologize, AZ. I’m tired and cranky and obviously have a short fuse these days when it comes to satire. Not an attractive quality, and I used to be such a fun gal. sigh I do hope you’ll forgive my bad manners.
AZtoORtoCOtoOR,
No apologies necessary. Some people just got up on the wrong side of the bed.
Good for you, AZ…OR–a man who learns from his mistakes.
We are a nation of the insane: making the same mistakes over and over again.
Blue, I am as usual late to the party. IMHO, I don’t think there is anything reprehensible in moving somewhere for a job, buying a house if it is within one’s means, and having to sell several years later for another move. It’s not like we get any choice in the matter. In many instances the deal is “you move to Emerald City with the yob, or here’s your severance”. The subtext here is “we’d really like to take advantage of a lower cost workforce in Emerald City”. If Emerald City is a paid for move, and if it is a lesser stress area (a frequent occurrence), it is quite feasible to take it with your OWN subtext of downsizing.
It’s worth playing out the scenario of running through the severance while scrambling for your next hit amidst thousands of other ‘left behind’ middle managers…vs. going along for the ride with open eyes if you can cut your fixed expenses by more than half, while the local labor market is ‘only’ a quarter less lucrative. As an added benefit, Emerald Cities frequently have lower taxes as well.
Companies don’t leave a geographical area in a vacuum. There is always a pattern. Up to you to discern. Sometimes it’s because they’re on the ropes and the Massas have to give the illusion of action (still worth the free trip, if your intention was to cut your overhead all along, although you know you have a limited time to jump ship). Sometimes it is because where you live has gradually turned into a high cost toxic waste dump and others are fleeing as well. In this case, it is definitely worth the free trip, because you do not want to be one of the last holdouts in an employment desert, carrying your resume with you to your stock clerk interim job for years. Most people think “it’s different here” and don’t see it happening. You don’t want to be one of them.
Fact is, there are benign reasons why you might reap a windfall due to structural changes beyond your control.
We have all been damaged here by forces beyond our control. My personal opinion - as members of the community of the damaged, we ought to extend one another the benefit of the doubt. My two cents.
Jane (and AZtoORtoCOtoOR), Points well taken. I will confess that I too benefit from unexpected windfall profits too. My area of Ft. Worth has Nat. Gas under it so I took in $3,300.00 with a 3 yr. lease. Now that Natural Gas has fallen to $4, the oil company is ‘underwater’ on the lease right now. But there is a long term down side to this deal for me too. Having Nat. Gas drilling rigs, pumps, compressors and pipes embedded in your neighborhood is a bummer.
And what, exactly, was unethical about someone who bought something he could afford, undestanding the risks, and sold it at a profit?
Was it “unethical” for *me* to make money over the past few months buying the ETFs that short the Dow (NYSE:DOG)?
Hear, hear.
Personally, I think there’s something patriotic about seeing through the lies and taking action. Maybe I got a little TOO into it last year… shorting financials got rather painful. But guess what? Meredith Whitney was dead right. Shame on her detractors.
However, I feel so much better now that Obama has declared me a first time buyer if I buy this year
This I don’t follow! You can be a first-time home buyer even if you’ve bought before?
But I think you’ve hit on something: many people who will benefit from Obama’s plans are knowledgeable people who like to find unintended angles on ill-conceived Government plans.
I have a friend who owns a home and a condo on either coast, both inherited (so he never “bought” them.) His elderly father owns a house in Chicago. He’s has his own “C” corporation and can set his income at anything he’s like to. So he’s penciling out schemes–only legal ones are being considered, of course–where he buys his father’s house and qualifies for as many handouts as possible. His legal address, because he travels a lot, is still his father’s house, which was his childhood home.
I hope he succeeds with this scheme, as long as he stays within the letter of the law.
Cleveland - all boarded up…
http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html?_r=1
Houses at < 0…
“This is Brancatelli’s conundrum: many of the abandoned homes should be razed. They’re either so old or so impractically tiny that they have little resale value, or they have been stripped of their innards and are in utter disrepair. There are an estimated one million lender-owned properties nationwide, and on average each house sits empty for eight months, a length of time that is only growing. Demolition, though, is costly: roughly $8,000 a house. Two years ago, Litton Loan Servicing, a mortgage servicer, discussed giving the city a number of foreclosed homes. Free. The city told them that would be fine, but only if the company came up with money to pay for the necessary demolitions. The transaction never occurred.”
thamks! …that article is waaay disturbing but well written and very interesting…though maybe a bit apocalyptic
The Obama mortgage rescue plan as currently written will do virtually nothing to prevent foreclosures, since it specifically excludes almost ALL troubled properties by virtue of the 105% loan limit on current valuation. Would that be this weeks valuation or next weeks?
Amazingly, as property prices continue their freefall losses per foreclosure grow at an astronomical rate and prices are further forced down.
“The Obama mortgage rescue plan as currently written will do virtually nothing to prevent foreclosures…”
Last year on this blog, someone posted that Obama (when elected) would be forced to come up with SOME kind of foreclosure plan, knowing full well that it would do nothing. Maybe if he just looks like he’s doing something, people will keep worshiping him.
And keep up with their house payments.
BTW, the comments/server problem should be resolved now. Thanks to SFBAgal for notifying me!
Well, I’m sure glad she did, because I was despondent. I thought, oh nooooooo, I’ve proffered too many bold opinions on cannibals and leprechauns and my panties and ‘The Wife of Bath’s Tale’ and telemarketers and how they should be kilt, and other such totally germane stuff, so Ben banned me.
But then I thought, nohow!
Why, that stuff’s the very essence of life, man! It is to housing/credit bubbles discussion as is chewing strawberry flavored gum while you drink beer at a grimy dive bar is. It’s vital background, and just makes things better.
But then I thought, well, perhaps Ben was captured by some sort of foreclosed-upon cannibals and that’s why the blog is down. So I prayed for a bit, and drank some beer as an earnest gesture of prayiness.
But now I see it was just mysterious computer things. Whew! I guess I won’t offer dark sacrifice after all.
*puts away knife *
Feel free to expound on your panties some more.
Oh, very well. If you insist. Today’s they’s prim white substantial no-nonsense granny panties, entirely unornamented. Normally I like to wear frisky panties on Friday, as I feel that that sets the tone for the weekend, but I woke up late and had to grab the first thing handy outt’n the drawer.
You all know how it is, I imagine? *flaps hands in a world-weary sort of way, indicating that sometimes granny panties are simply unavoidable *
And now it’s YOUR turn to talk about your panties, Mr. Blano. Bows? You got bows anywhere on them? In fact, I want to hear about everyone’s panties. Dish! Go!
Mine are your basic tighty-whities except today they are black.
Which is ironic because today I am in the opposite of a black mood which would be white.
One could put it down to the basic predilection of New Yorkers to wear black but I’m going to have to go with the more prosaic reason that I grabbed the first thing handy.
Which is a neat symmetric counterpoint. WOOOOO!!!!
So, you’re wearing granny panties, too? Is what I’m gathering here?
*paws at fluffy, moss-laden head in puzzlement *
Today’s they’s prim white substantial no-nonsense granny panties, entirely unornamented. Normally I like to wear frisky panties
Size please?
I was worried too.
I’m just too manly to admit I was worried.
Ben is the only guy I know who figured out the solution (jobs) to a problem (bubble) years and years before others even suspected it and even now cannot properly define.
But, my real worry was not Ben, rather it was Oly.
Would I ever hear about trees and frogs and recipes for inquisitive census takers?
____
Too much pain to even consider a World without those.
Can’t have you banned. You’re far too much fun.
Did you and your family see Watchmen?
I have to admit Olygal, I was having some withdraw symptons. Then I sent Ben an email and now the shaking has stopped.
symptons=symptoms
Dang Oly!
No - wait - dang YOU Ben Jones!
She was going to offer a dark sacrifice and all!
Fook! Now you decide to fix the %&*(@ server!
Grrr. I hold you responsible for our lack of Oly entertainment - Dang you Dude!
P.S. Love ya Oly (you too Ben, but you owe me on this one!)
Leigh
I’m going to make a dark sacrifice to you and yer emerald eyes.
Hahahaha.
Does this refer to the slight problem this afternoon, or just posts in general getting lost in the void? I’ve noticed that a few of my posts (even with no links) never made it through. Coincidentally, it always seemed to happen to my more…shall we say…spirited posts. Not that this is a bad thing. Maybe it’s better they stay left unsaid.
Ahhhhaaa! So I’m not alone Oxy!
Yeah, Lawd bless those lost post.
Oh, and Dearest Ben, thank heavens for the $^&@ server thingy.
Might have - er - nervermind!
Leigh
Comment by Big V
2009-03-06 14:19:33
OK, DinOr, BiLA, Blano, hd74man, L’AIG, etc …
How do you know what a priority is “as far as the market is concerned”? What potentiates a good/stable market? Is it unfettered gains on the backs of globalization and corporate hegemony? I don’t think so. It’s a reliable socioeconomic system that provides an infrastructure with which to do business in an efficient manner. The end goal of all social programs is to provide that infrastructure and preserve it.
V, I tried answering this in the Bits Bucket but I don’t know if it’s going to come through.
V, I tried responding to this in the Bits Bucket but I don’t know if it’s gonna come through.
Whoops.
I read it. Aren’t you supposed to be grocery shopping right now? Can you pick me up a bottle of merlot? All I have is pinot noir.
Blano,
How was that hamburger?
So the new Obama home rescue plans are looking pretty good to me. He seems to be more interested in helping the “walking wounded” instead of the terminally ill. I keep watching the ABX index for some kind of bottom but today almost all the MBS tranches hit new lows today which tells me the fools who were looking for a bailout of these mortgages are screwed. That’s a positive for me.
http://www.markit.com/information/products/category/indices/abx.html
I’m a listing agent covering all of San Diego County specializing in bank owned or REO properties. We generally recieve the properties a few days before or after the trustee’s sale. I’d say 30-40% of the properties are investor owned which won’t qualify for the Federal Loan Modification plan. Furthermore, even if they were owner occupied and considering the other 60-70% that are owner occupied are all WELL above the 105% loan-to-value required to qualify. I’ve heard that borrowers can even go up to 120% with certian debt-to-income ratio’s and that won’t help either. Most or 150% and more loan-to-value and just too far in the red. I read somewere the other day that you can’t fix a flooded levy without draining all the water out first. Maybe Obama should re-consider this bailout plan??
“I read somewere the other day that you can’t fix a flooded levy without draining all the water out first.”
My preferred metaphor:
You can’t build a seawall to stop a tsunami in progress.
And if your bank isn’t backed by freddie or fannie you’re also screwed. The bailout helps very few once you get past the qualifiers. Too little too late.
“Real estate agents going into this new sales season without a BlackBerry, iPhone or other personal digital assistant better get with it. A new survey of homebuyers says when people call a real estate agent, they want to hear back right now, not tomorrow or later. And they’ll judge an agent’s ability and savvy by the speed of that response.”
Not good enough. I want an Agent to be clairvoyant, and call me just as I am think about buying a house.
Better yet, I’ll bypass the agent (buying agent anyway) altogether with my own iPhone and Redfin, thank you very much.
OT but entertaining.
““Anyone who got out when Dow was 11K or 10K or 9K or 8K will be putting some of that money towards RE. That is the only sure bet. Oil, gold, corn, copper are all going to come croppers too.”
This is from a site: miami condo investments
posted less than an hour ago.
Yes, there are people like that.
Even today.
‘Yes, there are people like that.
Even today.’
——————————————————-
Let’s laugh at them robustly! Laughter is the best medicine, you know.
I learned that from Reader’s Digest magazines, gathered up and pored over at my gran’s house when I was 8 or so. (I started thinking about literature yesterday, when the subject of Chaucer, and subsequently, ‘Canterbury Tales’ came up, and I’ve been thinking about what I read at gran and grumpaw’s house there in Provo, Utarr, so long ago. Like I said yesterday, formative times, man.)
But wait! Did Reader’s Digest just die? No…that was Paul Harvey that just did. Yes, I remember now.
See, in my mind all those things are inextricably linked. Also split pea soup and heaps of ‘Better Homes and Gardens’ magazines that would leap off tables and attempt to crush me when I wandered innocently by. Oh, and there was a wooden toothpick holder from Germany shaped like a little yawning man.
Is this off topic? Surely not.
You are never off topic.
Your radiant intellect is topic for any soul craving humanity in a rather let’s all jump off the cliff together World.
Muir <—— basking in Olys radiance
ahhhhhh…..
‘let’s all jump off the cliff together World.’
———————————————
Okay, let’s do it!
*flaps arms briskly in a raring–to–go sort of gesture, towards Florida and Muir’s condo in the sky *
Yes, and there shall be candy and darling bunnies when we land with a mighty plop in a wondrous new World!…
(hiccup)
Oh, and thank you, Muir.
Say, how’s things? Well? Middling? Mostly tolerable with a slight leaning towards a k*ill-spree?
How about you natter on and on. For example, did you read Readers Digests at your gran’s house?
“did you read Readers Digests at your gran’s house?”
No Oly, your intellect and intelligence are like soooo much higher even as a toddler than mine, or is it bigger or well, anyways, I think it’s like sooo cool that so many really BIG brains are here, does osmosis work through all the bits of 0000s and 111111s, like if you type 01000100100101001110 would I get smarter?
Oh, my reading habits as a toddler? Nah, I just flipped through the Natural Geographic for the nudie pics.
Fast forward to more or less the here and now, which is like nebulous at best (though sometimes amazing solid in 3D with wondrous colors.)
Well, nowadays, I’d like to think I have that “slight leaning towards a k*ill-spree” under control.
But then again, you never know.
Like when I finally quit smoking, some 6 months later (for real, 6 months) I woke up sweating and shivering with a desire for a cigarette.
Which goes to show you.
Don’t know exactly what but it does.
But then again, you never know.
Like when I finally quit smoking, some 6 months later (for real, 6 months) I woke up sweating and shivering with a desire for a cigarette.
Which goes to show you.
Don’t know exactly what but it does.
—————————————————————–
Well, yes, absolutely.
I’m sure I speak for all of us when I say that there’s no point in spending time with someone who doesn’t wake up sweating and shivering with some sort of desire. For something, at some point.
Right? Right.
Relax, man. You’re among friends.
(inhales deeply)
Ha!
Oh, but you know what Muir? You could’ve perceived my last post as being glib. No, no, not at all…
*takes feet off splintery wooden desk and leans forward earnestly, even going so far as to put down inebriant*
If you don’t want to smoke stuff that’s okay, too. You can tell us. We’ll like you. This is stressful times. That’s understood.
Have you ever read the Waterbabies?
I’m just thrilled you remember my (stupid) comment about Chaucer. I should have posted something else that the colleges are teaching because as you correctly pointed out, Chaucer is a good example of common sense.
My problem is college taught me a bunch, but not how to remember it as I get old.
Yes, that’s exactly what I did/am doing. I cashed in stocks and brought it home to my (landlord’s) real estate. And here it stays.
I’m keeping all my money in currency.
Rant On/
The Obama Plan does not exclude flippers/speculators/investors. Rather, it excludes 2nd, 3rd, 4th, homes etc. Even Casey Serin can be bailed out on his “primary residence”. Any bailout should exclude owners of multiple homes entirely. Otherwise, it is a bailout of flippers.
Rant Off/
Beware of geeks bearing anagrams.
latest news
Hoenig: ‘Too big to fail’ has failed
Some banks try to escape TARP trap
Dividend cut may help Wells Fargo repay government quicker; exits will take time
By Alistair Barr, MarketWatch
Last update: 6:51 p.m. EST March 6, 2009
SAN FRANCISCO (MarketWatch) — Wells Fargo’s decision Friday to slash its dividend may help the bank repay its $25 billion government investment sooner.
However, analysts say it will still take years, not months, for big banks to extricate themselves from the Treasury’s Troubled Asset Relief Program, or TARP.
In October, the government invested more than $100 billion in the nation’s nine largest banks through TARP, with Wells Fargo getting $25 billion. See full story.
“Back in October, receiving TARP capital was viewed as an implicit seal of approval from the government and regulators,” said David George, a bank analyst at Robert W. Baird & Co. “Now it’s viewed as negative.”
YES!!!
Hoenig Hits Treasury for Lack of ‘Decisive’ Action (Update1)
By Steve Matthews and Vivien Lou Chen
March 6 (Bloomberg) — The U.S. Treasury has failed to take “decisive” action to address the bank crisis, pursuing an ad-hoc approach that leaves management in place and avoids necessary asset writedowns, a veteran Federal Reserve official said.
“We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions,” Kansas City Fed President Thomas Hoenig said in prepared remarks in Omaha, Nebraska. He called for a resolution process for firms deemed too big to fail, allowing their break-up if their complexity makes them unmanageable.
This is the first hint I have seen in print that a top Fed official “gets it” — that the rescue regime in place encourages bank growth to a fundamentally unmanageable scale of operation that virtually guarantees eventual failure and subsequent bailout. Left unchecked, “economies of bail” for Megabank, Inc agglomerates into “economies of fail” for Uncle Sam.
Man P’Bear,
I read this yesterday and thought to myself (I feel a song coming on here…), IS this for real?
AIG? Me thinks.
Something is in the air.
Did you read about ICE? (International CDO/S trading at par)?
WOW. Talk about tooooooo much information.
And to think that I was just a baby a mere three years ago.
*Clink* to you P’Bear!
Best,
Leigh
Leigh —
You probably are far beyond my feeble grasp of these high financial goings on at this point if you have been paying any attention at all. I am personally impressed by how many financial corporations formerly known as “too-big-to-fail” have stock prices in the $1-or-less neighborhood, which I find rather puzzling. At the end of the day, what is failure, anyway?
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build ‘em up with wornout tools;
…
Yours is the Earth and everything that’s in it,
…
Rudyard Kipling
If
The beneficiaries of the government’s bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.
Among those institutions are Goldman Sachs Group Inc. and Germany’s Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.
Covered Counterparties
Some banks that were paid by AIG after it was bailed out by the government
* Goldman Sachs
* Deutsche Bank
* Merrill Lynch
* Société Générale
* Calyon
* Barclays
* Rabobank
* Danske
* HSBC
* Royal Bank of Scotland
* Banco Santander
* Morgan Stanley
* Wachovia
* Bank of America
* Lloyds Banking Group
Source: WSJ research
Wow, it’s like a roll call of scumbags. Nice to see my old friend Sócíété Générálé on the list. Yo, Jêrômê, wassuup?
My personal translations (not claiming to fully understand Fedspeak):
- “pursuing an ad-hoc approach” = TARP, TALF, TANF (Temporary Assistance to Needy Financiers), BARF (Big Asshat Relief Fund), etc
- “that leaves management in place” = remove managers who lost billions of dollars of shareholder wealth, and for good measure, why not retroactively reclaim their multi-million dollar bonuses?
- “and avoids necessary asset writedowns” = if the assets really are only worth pennies on the dollar, why bother trying to hide it? Truth will out.
I thought of a better way to state my point:
Beware of geeks bearing grifts.
BwaHaHahahaHAHAHAHAHAHAAHHAHAAAAAAAAAA!!!!
“‘We went from flophouse motels and government-subsidized housing to half-million-dollar condos — with nothing in between,’ said Michael Cornthwaite, owner of the Downtown Cocktail Room.”
So now you have 1/2 million-dollar-flophouses…see, everything works out in the end in Las Vegas
“We’re seeing some flippers again. That’s promising.”
Oy veh. Doesn’t this numbskull understand anything?
SanFranciscoBayAreaGal
Husband, daughter, and I saw Watchman. We all loved it. I saw only one other over 45 there although I could have missed someone. It was faithful to the graphice novel.Total geek family. Second daughter lmost even into shock when she realied that her husband has not read the comicl I think they are going this weeend.
Three Cheers for this bailout plan,it wont save California,which means we get to see the true bottom,this Happy Renter is waiting for 1991 prices in Los Angeles good Hoods,then i pounce..,.
Watch out for blood in the streets in Los Angeles bad hoods…
Good advice anytime.
cities like la will be dangerous,after all we are short 4000 cops….
Fed’s Hoenig-Fed needs to tighten before rebound
Wed Mar 4, 2009 3:00pm EST
WASHINGTON, March 4 (Reuters) - Kansas City Federal Reserve President Thomas Hoenig said the Federal Reserve will need to start tightening its “extremely accommodative” monetary policy well before the economic recovery takes hold to avoid serious future inflation.
Is GM heading the way of the buggy whip sector?
Hope so. Bad models need to be replaced.
Mitsubishi and Peugeot are collaborating on electric city cars for Europe and Japan market. Meanwhile, GM is circling the drain. Boy, I bet they wish they hadn’t scrapped EV-1 now!
The way it was, I think they owned a controlling stake in the LithION technology, which I think they sold? right? because it was pounced on by the laptop and cell phone industries. What dumbasses, they could have had everyone in the world coming to them. Instead they followed Jack Welch’s lead and blew up their finance arm… ensuring their own blow up a few years down the road.
BWAAAAAAHAHAHAHAHAH!!! Paid in Dedham!
Dedham was redlining (refusing to sell to Blacks) as late as the 1990’s.
The only nice part of Dedham is an “old
townvillage” (a green and just houses–although there is also a separate village center with stores around the Norfolk County Courthouse) but most of Dedham was built along US 1 and looks like everything built along US 1. There was also a freight RR which is now gone. Oh, and the marsh. Marshy marsh.Dedham is in some sort of denial: if they just keep the “wrong people” out, they’ll be a nice suburb like Needham. (In fact, not so long ago, they thought they were better than Needham.) Part of Dedham is this industrial mess alongside Hyde Park (Boston), which also isn’t as nice as it thinks it is. Must be something in the polluted water.
Dedhamites believe the buses running to the Dedham Mall (which started out middle class but nice, but tanked over the years) destroyed their town. DUDE! ROUTE ONE? Heard of it? (Remember the White Dove restaurant on Rt 1–Mafia hangout? Good times.)
Oh yeah, the problem with buses? They let Black people ride them.
Seriously, I’m not sure I made this point clear, but if you’ve ever been to Dedham, you’d know: this town is seriously fugly. I mean, FUGLY. With lousy access to Boston (where the jobs are). Hello, traffic. You basically have to drive Wash St (whoa, traffic) to Forest Hills and then pay to park or take a chance and come back to find your windows smashed and radio gone. If you work on 128, you have a nice 45 min + commute on the most worn down, broken up pavement on an “Interstate” in existence.
And the schools? They suck.
You’re not even on the shore or anywhere pretty. No, you might abut some Charles River MARSH, and that’s it for natural beauty (what’s left of it). Oh, and forget about canoeing to Cambridge–you have to go all the way around Newton and portage twice at falls and then portage the old industrial parts of Waltham/Watertown. Fuggedaboudit!
Dedham ppl tried to stay all white to keep their prop values up… that was all that was keeping them from going as low or lower than Hyde Park (which at least has a rail station… oh yeah, Dedham has Readville, I forgot about that). Problem with that strategy: IT’S ILLEGAL. Also? They still suck! Parts of the streetcar suburbs have actually surged in value, and ugly, ugly Dedham is only along for the ride. I say they crack first, and the hipsters who bought into Roslindale will be laughing over their vanilla lattes and artisan pita sandwiches.
Seriously, if you were at a drunken pahty in lower JP, which would more likely get your ass kicked: saying you’re from “Rozzie” or admitting you’re from Ded’m? Anyone who grew up on the Parkways knows the answer to that!
More info on CIBC:
http://en.wikipedia.org/wiki/Canadian_Imperial_Bank_of_Commerce
It’s fascinating, especially the part about the CEO’s having to return their bonuses after their bad decisions lost shareholders a lot of money and also the part about customers suing over opaque and excessive fees. Finally, some people who aren’t sheep!
I question some of their assumptions about the US market. I can’t follow the reasoning and it seems excessively bearish. Now, do I think sales of 8-9mill light vehicles might be about right for the next two years? Yes. Do I see Detroit shutting down more plants? Again yes, but there is going to be gov’t interference in that process, which the CIBC analysis fails to account for.
As for their fantasy about Americans going all Euro-style with $4 gas, apparently these anal-cysts haven’t spent much time outside of NYC when visiting the US.
So is the plan still to divert precious financial resources into propping up home prices, despite the cost of massive job losses to the economy, under the highly suspect assumption that the way to fix problems due to a collapsing real estate bubble is to reflate the bubble? Or is money still growing on trees these days? Enquiring minds want to know.
Wall Street Journal
* MARCH 7, 2009
Jobless Rate Tops 8%, Highest in 26 Years
Some Economists See Index Reaching 10% This Year as Layoffs Sweep Construction, Services; ‘Companies Just Didn’t Hire’
By KELLY EVANS
The U.S. unemployment rate surged last month to its highest level since 1983, and the toll seems set to go higher as employers batten down for a sustained drop in consumer demand.
The latest unemployment data reports the U.S. economy lost 651,000 jobs last month, signaling there’s still no end in sight to the recession. WSJ’s Kelly Evans tells colleague Phil Izzo what to take away from the report and what the bright spots are.
The number of jobless Americans rose to 12.5 million in February, pushing the unemployment rate to 8.1%, up from 7.6% in January, said the Labor Department.
“We’ll be at 10% unemployment by year end,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “What’s going to stop it?”
All we have to fear is . . . no job or savings or loans
By Dean Calbreath
Union-Tribune Staff Writer
2:00 a.m. March 7, 2009
Fear is a powerful force.
As unemployment rises and stock prices plummet, fear of losing homes, jobs, salaries or savings can force people to slash spending and squirrel away cash. The fear of declining sales and mounting losses can impel businesses to cut costs and lay off employees, creating more fear.
A bevy of recent studies shows that fears about personal finance are rising in the American work force, which could further slow the economy.
More than half of all Americans fear they could soon lose their jobs or face salary cuts, according to a Washington Post-ABC News poll. Nearly 60 percent feel personal anxiety about the economy. More than 40 percent say they feel financially insecure, compared with 35 percent last fall.
“Even if you’re not afraid of losing your job, you may have seen your retirement funds lose half their value over the past couple years, so you hoard your money,” said Michael Belch, a professor of consumer behavior at San Diego State University.
Fears of what’s happening in the job market are having an impact on how employees perform at the office or factory. For some workers, the idea that they could soon lose their job or that their company may go out of business can be paralyzing.
For others, though, concern about job security can lead to higher productivity as they strive to prove their worth to their employers.
“I’m not as frightened as I was when I started looking for work in December, but I’ve never seen a job market like this,” said Karyn Stevens, an accountant in La Mesa who had temporarily left the work force to help an ill family member.
Unable to find a permanent position, Stevens has been working in temporary jobs arranged through Accountemps, a job-placement firm.
“I figure I have to be willing to do more work for less money,” she said. “Employers are the ones who have the foothold because there are a lot of people out of work that they can pick and choose from.”
It’s a buyer’s market both for houses and for wage slave labor. (Not to suggest now is the time to buy a house, though…)
It’s a buyer’s market for most things. The only thing is short supply is ready cash.
Conversely, ready cash in short supply is a key factor creating the buyer’s market.