Bits Bucket For March 12, 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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Being a billionaire ain’t all that any more…
Forbes dot com
Special Report
The World’s Billionaires
Edited by Luisa Kroll, Matthew Miller and Tatiana Serafin, 03.11.09, 06:00 PM EDT
The richest people in the world have gotten poorer, just like the rest of us. This year the world’s billionaires have an average net worth of $3 billion, down 23% in 12 months. The world now has 793 billionaires, down from 1,125 a year ago.
And so it goes for the milliomaires club…
March 11 (Bloomberg) — The millionaires’ club in the U.S. became more exclusive last year after a 38 percent drop in the Standard & Poor’s 500 Index helped thin their ranks to the fewest since 2003.
Families with a net worth of at least $1 million, excluding primary residences, declined to 6.7 million in 2008, a decrease from 9.2 million a year earlier, according to a survey of 3,750 high net-worth U.S. households conducted by Spectrem Group.
That is the lowest number of millionaires since 2003, when there were 6.2 million people in that category, the Chicago- based consulting firm said in a statement today.
“The culprit is not just the stock market, which we all know has dropped precipitously, but broad declines in the asset classes available to the nation’s wealthiest investors,” George H. Walper Jr., president of Spectrem Group, said in the statement.
‘“The culprit is not just the stock market, which we all know has dropped precipitously, but broad declines in the asset classes available to the nation’s wealthiest investors,” George H. Walper Jr., president of Spectrem Group, said in the statement.’
Sounds like what some commentators might term a ‘reverse wealth effect’ of asset price decline.
…history has not dealt kindly with the aftermath of protracted periods of low risk premiums.
Remarks by Chairman Alan Greenspan
Reflections on central banking
At a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming
August 26, 2005
And so it goes for the thousandaires club…
As someone put it:
“Kill the krill, and the whales die….”
The travails of mere millionaires are pish compared to the real posh.
Wow! They’re now (correctly) excluding primary residences! During the boom, I remember when Business Week (among others) would include “value of primary residence” in household net-worth graphs, grossly inflating the economic status of Americans.
How is that more correct? I can see that it is prudent to exclude primary residence in net worth calculation for certain decisions. I can also see that it may provide better information, depending on how the information is going to be used, to exclude pr’s (as in the article).
But I don’t see that excluding a pr from nw calculation is always more correct. Care to elaborate on that?
I sold my house in ‘08. Comparing market conditions at that time to what I owed on the house, one could say I had positive net equity in the house before I sold it. A calculation of nw for me excluding primary residence on the month before I sold would have been off by quite a bit compared to one calculated immediately after.
Because you have to live “somewhere”. It’s not really a negotiable part of your portfolio, until it’s sold and replaced.
But I don’t have to own the place I live in. I could instead convert that asset to cash and rent.
I have other assets I also use, I suspect you wouldn’t object to including those in nw.
But if bad stuff happens, you could downgrade.
Arguing about this is like arguing about the difference between common-sense accounting, GAAP accounting, and tax-law accounting.
They are all useful. They give you different versions of the same basic picture.
And it’s useless to ask which one is “superior”. The answer is simultaneously none of them and all of them.
Maybe the difference is the elites attempt to say hey we’re all in this together on the way down. They want to make themselves look as poor as possible so change the calculation.
Yeah, a lot of Russians have left the building…
I was telling my doctor about this last year but I was talking about millionaires and she said “boo hoo, they need to see how the rest of us live” I was laughing right along with her.
Wasn’t it all just bubble equity to begin with? Compared to their wealth in Y2K valued dollars, they’re just going back to normal.
I’m thinking they’ll overshoot normal on the way down dut to the Madoff wealth effect.
News reports say average US household net worth dropped 20% from their 2007 high. 20% is not a big deal but the word “average” is.
Interesting (’96) read,
The Millionaire Next Door
the surprising secrets of America’s wealthy.
I wouldn’t be surprised if these people studied
still have their wealthy as opposed to those
who were newly minted and ‘kept up with the Jones’
Foreclosures up 30 percent in February…
WASHINGTON – Despite halts on new foreclosures by several major lenders, the number of households threatened with losing their homes rose 30 percent in February from last year’s levels, RealtyTrac reported Thursday.
Nationwide, nearly 291,000 homes received at least one foreclosure-related notice last month, up 6 percent from January, according to the Irvine, Calif-based company. While foreclosures are highly concentrated in the Western states and Florida, the problem is spreading to states like Idaho, Illinois and Oregon as the U.S. economy worsens.
“It doesn’t bode well,” for the embattled U.S. housing market, said Rick Sharga, vice president for marketing at RealtyTrac, a foreclosure listing firm. “At least for the foreseeable future, it’s going to continue to be pretty ugly.”
The rise in foreclosure filings came despite temporary halts to foreclosures by Fannie Mae and Freddie Mac, and major banks JPMorgan Chase, Morgan Stanley, Citigroup and Bank of America. Those companies pledged to do so in advance of President Barack Obama’s plan to stem the foreclosure crisis, which was launched last week.
Two states that contributing to the increase were Florida and New York, where temporary bans on foreclosures ended.
But other states are moving to enact similar measures. On Wednesday the Michigan House approved legislation that would give homeowners facing foreclosure a 90-day reprieve. The legislation now goes to Michigan’s Republican-led Senate, where its future is unclear.
Sounds like prices will keep dropping like a rock for the foreseeable future, especially with the large oncoming wave crest of prime and Alt-A ARM resets ahead over the next couple of years.
In the current rate environment resets will actually help FBs and not contribute to more foreclosures. Unemployment though WILL contribute massively to more foreclosures.
Look at LIBOR 1mo, 3mo, 1yr. Add 2 to 2.5 margin built in the ARM notes and what do you get? A lower payment then what most of those currently have.
So not so fast bubba…
Indeed, but how many of those mortgages actually turn to fully amortizing? A lot of the Alt-a stuff was I/O only for 5 years or so, and then, it turned to a self amortizing mtg with a 25 year schedule… or in some cases it was 7 years with a 23 year schedule… Most of these people also were involved in the REIC, so they get the double whammy of increased payments (who cares if your interest is 5%, if you can’t pay the principal) and reduced income… Welcome to middle class REIC hell.
Unless it was just subprime related, some of the mortgages out there go from “prime -x” to “prime +y” on the reset, with y being a big number.
I think either way, what will matter in the end is how far submerged they are. If they are underwater by a fair amount, there will be no incentive to keep the house. Even if they can afford to pay the reset + principal, it will come down to money being thrown away month, after month, after month… And becoming farther under water as they do so.
Foreclosures in the area I’m watching have really dried up over the past few months, due to the 90 day foreclosure moratorium. I think it expires in May. What a stupid idea.
“In the current rate environment resets will actually help FBs and not contribute to more foreclosures.”
Wrong — got full amortization? Who ya callin’ bubba’, bubba’?
Hold on until I get some coffee in me.
The neg am loans that litter the Califonia landscape will be a disaster. It is the recast vs the reset that makes the big difference.
So they have to start paying principle on a place that is almost certainly under water. The loans let you drift further under as high as 25% more.
A very large percentage had little downpayment to begin with and they paid 04/05 pricing. Many could be greater under water by double the current market price.
Good luck trying to refi that. Not to mention all the people that are holding multiple properties and renting them.
Lotsa bank collateral destined to vanish.
Terrible… if this keeps up, people might be able to afford a house based upon their incomes at some point in the future; then, what will the parasite class of bankers and realtors do with themselves?!
+1
I wonder about a new “perfect storm” employment wealth drain in Seattle.
Boeing? (check), Nordstrom? (check), Microsoft? (check), Weyerhouser (HBB check), Starbucks? (McCheck).
Someone please turn out the lights, so that when I win the lottery I can see to find a house there.
Didn’t California just force a 90 day moratorium on Foreclosures with the rediculous Budget they passed. I must be getting things mixed up.
“the problem is spreading to states like Idaho, Illinois and Oregon as the U.S. economy worsens”
But I thought Oregon was different?? Doesn’t all of California want to move here with all their equity and pay cash for a house? I’m confused! /sarcasm off
When I moved here in 2006, everyone sure thought it was different. People couldn’t believe I was a renting and “throwing away money on rent”.
I will say one thing, after living in AZ, I sure hate the houses here in OR - but love the state when the sun is shining.
While foreclosures are highly concentrated in the Western states and Florida, the problem is spreading to states like Idaho, Illinois and Oregon as the U.S. economy worsens.
I hadn’t realized that Idaho and Oregon weren’t “Western states”.
Non-western likely means “one-string-banjo” country.
I grew up in “The Inland Empire”, in Washington, far East of Seattle.
When I was in school in Seattle, they kept talking about “Eastern Washington.” I thought they meant Washington D.C. No, they meant all those people that pay for extra bridges in Seattle even though they don’t live there.
They didn’t even realize they lived on “The Coast.”
AP
Police: Client shoots SC real estate broker…
ROCK HILL, S.C. – Police say an 88-year-old client who wanted his down payment back on a deal shot a South Carolina real estate broker.
Rock Hill Police Lt. Michael Belk says Richard Blow burst into a Coldwell Banker office in Rock Hill Wednesday and shot 68-year-old Jerry O’Neil in the abdomen and was taken to a hospital.
Belk says Blow had been charged with assault with intent to kill and could face more charges. Belk says he wanted his money back.
Coldwell corporate spokeswoman Kim Cox told several media outlets O’Neil was the broker in charge, which is the equivalent of a manager.
Belk says about 10 other employees were in the office at the time, but only O’Neil was injured.
I’ll bet the 88-year-old qualified for a 30 year mortgage, too…
…qualified for a 30 year mortgage…
It could be a 40 year if he only asked….
After all, life begins at 128 <;)
Why is an 88 year old buying a house? I wouldn’t.
Why is an 88 year old buying a house? I wouldn’t. Things will look different to you when you turn 88.
At 58 I’m getting tired of maintance and yard work. I don’t see that changing. Of course both my parents were dead before 88.
My dad will turn 88 in April and he wants to buy a house in Florida. Even worse, my BIL is a realtor in Florida. You see where this is going. I have made it clear that this will happen over my dead body, and then when I’m dead all my money will go to my hubby and none of the rest of them will get a dime, Bwahahaha!!!!
Sometimes you have to just say no.
Sometimes you have to just say no.
Yep. And then add a nice loud ‘Bwahahahaaha’.
Or three. Or seven. With a wiggly dance.
And fierce mockery when their dumb actions go against them.
Take no prisoners!
Spin Exaggerate Spin!
+
Duck Dodge Duck!
Bam!Bam! (chest target)…. Bam! (backup head target)
New skills for the RE portfolio.
I don’t see how age matters at all. As long as the property has sufficient equity, the bank can recover their lien. Hello 20% down!
“I don’t see how age matters at all. As long as the property has sufficient equity….”.
Hey, isn’t this a quote from Anna Nicole Smith or something?
He gets 3 hots and a cot now for the remainder of his life, so he’s set.
“Belk says Blow… could face more charges.”
Like hunting without a license?
If this guy gets a jury of his actual peers, he’s walking.
That’s odd wording … so the shooter was taken to the hospital? Was it a mental hospital? Did the report from the gun trigger a heart “event”?
Or is this just the usual Red Bull-fueled grammatical gibberish we’ve come to expect from the AP wire?
I’m in Charlotte and this is a local news story. According to some of the tv news reports, the shooter wanted his earnest money back on a commercial deal that stalled, and he had been trying to get it back for some time.
Here’s the link to the story on the local NBC affilitate’s website:
http://tinyurl.com/c4tarw
With a name like “Dick Blow” maybe he had a drug problem.
Or one nasty bladder infection…
Thanks for the link. I’d been to busy to look it this morning. I’m from Rock HIll and my son goes to Wnthop.I can maybe see investing in commercial property. I wouldn’t though.
RE: Client shoots SC real estate broker…
Just when you think the sucker pool is empty, the real estate hucksters come up with another target.
…the elderly and mentally ill.
http://news.yahoo.com/s/ap/20090311/ap_on_re_us/real_estate_shooting_1
And again, what is with the names in these articles: Belk, Blow, and Cox?! Sounds like a rogue law firm!
How about a grade for the contingent of bottom-calling ‘expert’ economists often quoted by the MSM as regards their anticipation of unfolding events in the collapsing credit bubble? I propose F-.
WSJ dot com
* ECONOMIC FORECASTING
* MARCH 11, 2009
Obama, Geithner Get Low Grades From Economists
By PHIL IZZO
U.S. President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the economy from participants in the latest Wall Street Journal forecasting survey.
In striking contrast to President Obama’s popularity with the public, a new Wall Street Journal survey of economists gives the president and his treasury secretary failing grades. WSJ’s Phil Izzo and Kelly Evans discuss.
The economists’ assessment stands in stark contrast with Mr. Obama’s popularity with the public, with a recent Wall Street Journal/NBC poll giving him a 60% approval rating. A majority of the 49 economists polled said they were dissatisfied with the administration’s economic policies.
On average, they gave the president a grade of 59 out of 100, and although there was a broad range of marks, 42% of respondents rated Mr. Obama below 60. Mr. Geithner received an average grade of 51. Federal Reserve Chairman Ben Bernanke scored better, with an average 71.
The economists, many of whom have been continually surprised by the depth of the downturn, also pushed back yet again their forecasts for when a recovery would begin. On average, they expect the downturn to end in October. Last month, they said the bottom would arrive in August. They estimate that U.S. gross domestic product will continue to contract in the first half of this year, with slow growth returning in the third quarter.
This is getting to be a joke. How about this headline: “Economic forecasts worthless, forecasters incompetent, yet media continues to quote them”
Economists like Ben Stein? He thinks that Obama should just be a cheerleader for Wall Street to improve confidence. Just like Phil Gramm famously asserted, the economy would be just fine if there wasn’t any fearmongering by the POTUS, bloggers, and the media.
The Ponzi economy is all just a figment of our collective imaginations. Yeah.
I would take what they have to say with a grain of salt. If we didn’t listen to all of these expert economists we probably wouldn’t be as deep in this mess as we already are.
Ponzi schemes feed off of ignorant new investors. The only investor ignorant enough to invest right now is the US taxpayer. Who’s next?
“Economic forecasts worse than expected”
What came out of their mouth was more dire than they had intended?
*Scratches head*
Wrong interpretation. What I meant by “worse” is that their forecasts suck, and never quite anticipate the next leg down in an ever-worsening economic situation. They are “worse than expected” in the sense that one would expect professional economists to do better at prediction than a ragtag band of sassy blog posters.
This is all just fodder leading the sheeple on:
“They’re incompetent” -> “They’re not doing enough” -> “More Stimulus!!!” -> “Keynes!!! Keynes!!! KEYNES!!!”
The state of the economy right now has very little to do with the competence of the current administration. Rather it is the result of years of incompetence - starting with FDR but getting specific to housing with Clinton and Bush.
Bush and Clinton? Try farther back.
For 1000, this president created “Voodoo Economics”.
Yep.
I’ll take Reaganomics for $1,000, Alex…
Agree with you, eco. Reagan was at the forefront of this credit crisis.
Sounds like the bottom to me. Buy! Buy! Buy!
Yeah, talk about looking for peanuts in a turd. There’s a three-day rally on Wall St., and the financial boosters here in Atlantic City, NJ, are echoing their national counterparts. YOY grosses or net (I forget which) at the city’s casinos are down 30% from February ‘08, but they’re down only slightly from last month. What did I hear from industry analyst on radio? You guessed it! “I think we’ve found a bottom.”
Friend of mine has free tix to Atlantic Ten College B’ball Tournament for tomorrow night in Atlantic City’s Convention Hall. I really lost interest in all types of b’ball about 30 years ago, but I might go only because Convention Hall is such a nice venue. It is hard not to enjoy yourself there, get caught up in the excitement of whatever is going on. If I go, then I’ll be sure to report back over the weekend. I know tourney organizers were very worried about turnout, profitability, etc.
The only thing that will satisfy these economists is if we (taxpayers) buy up all the “toxic” paper from the financial institutions. Oh, and we’d better not impose any regulations on them or anything, nor should we restrict their incomes…the “talent” might choose to go elsewhere!
Of course, we should just cut everyone’s mortgage in half and let the taxpayers make up the difference with the lenders. That’s fair, right?
Ca renter …….Well said . When the public ,or innocent taxpayers get full knowledge of who is really being bailed out,
which are the borrowers/investors and lenders/investors involved in dumb high risk and often fraudulent contracts ,law and order and Justice will not be something that will not be taken very serious anymore .
The economists, many of whom have been continually surprised by the depth of the downturn,
So we’re expected to value their opinion now??
I saw Ben STein flapping his gums on CBS yesterday about how Buffett and Obama should get out there and pump sunshing up Americas A## by telling us that this will all be over by next year. He thinks things would return to normal if we just had a little more confidence. FACTS be damned. Of course this is also a guy who publicly supports creationism.
its great to talk sunshine and ponies, but it wont pay the massive debt Americans have. There is very little hope left for them to cling to.
Things are getting worse here in Bakersfield, alot of road rage and even the bums are coping an attitude when you refuse to give them money.
Sunshine and ponies??? We need a CANDY CRAPPIN’ UNICORN (tm - however you do that)
Any coincidence that we’ve had at least one police pursuit per day this week in the LA area?
Worse than that, Stein was telling people last year in his Yahoo! column about how things were not going to be that bad and how investing in stocks and buying real estate was still a good idea.
After things went to heck, he said it was all because the of the program to get poor people into houses and that all the financial geniuses got it wrong so don’t blame him.
When prices in Malibu start crashing, he is going to ape sh*t.
Stein, Jim Rogers, BIll Gross and Suzie Orman and of course Cramer should ALL be packed up and put on an island, survivor style for a year or two. They all claim to be omnipotent, but give terrible advise to their sheeple/disciples.
Stein, Jim Rogers, BIll Gross and Suzie Orman and of course Cramer should ALL be packed up and put on an island, survivor style for a year or two.
I’d actually go out and buy a TV to see that. I’m sure they would eat Stein early on just so they wouldn’t have to listen to his sand paper monotone voice.
That is one fine idea for a reality show!
Genious!
And there should be caches of delicious Spam and a couple Husqvarna chainsaws hidden here and there, to add suspense and excitement!
And some giant Easter Island Tiki heads. I always like to look at those.
Sadly way too many Americans have listened to these jokers and are paying for it. I for one, would off Jim Rogers first, but you could easily make the case for any of the others. I thought we could have 1 shelter and watch them out bid each other for it. Gross could sell Bonds to finance it while peddling other stuff, Rogers could have the commodities on the island and try to horde those, Orman - well I’m not sure what teh heck she would do, and of course Cramer would just be yelling something over and over again…. It would be over when one of their predictions actually came true.
Waiting for CBS to get back to me….
Suzie Orman isn’t bad, IF you know what to ignore. She started our with gooc common-sense stuff, and her books have good financial and legal checklists for women. But once she starts the belive-in-yourself crap, tune her out. the problem is that she’s turning into 65% crap.
Stein, Jim Rogers, BIll Gross and Suzie Orman and of course Cramer should ALL be packed up and put on an island, survivor style for a year or two
Why are you knocking Bill Gross? His PIMCO Total Return Fund saw a 5% return last year and is in large part why my 401K was in positive territory for 2008…
For what it’s worth, I don’t care if this guy is the “Bond Pimp”, he made me money. It’s been said before on this blog (by me as well as others): who cares if he’s talking his book or using his influence in Washington to help his firm? Do you want to be right or do you want to make money? As long as PIMCO is making money and I’m invested in it’s fund(s), I don’t care what he is quoted as saying in a Bloomberg article.
She’s not the worst on that list but her constant refrain to buy index funds, even when they started to lose their lustre (no more easy money) was very bad advice. I hope she donates a ton of cash to PBS since she road that train for along time and built her following from those folks.
President Obama, please appoint GOv. Patrick to a postion, anything at Treasury would do.
Patrick awards state senator a $175,000 job
March 12, 2009 01:13 PM
By Frank Phillips, Globe Staff
Governor Deval Patrick has awarded one of his earliest political supporters, State Senator Marian Walsh, a $175,000 job as an assistant director at a state bonding authority, despite declaring in the past that he would not honor patronage appointment requests from lawmakers.
Walsh, a 54-year-old Democrat from West Roxbury, had originally been slated to take over as executive director but a Globe story, written after the newspaper obtained an internal e-mail from a Walsh adviser to Patrick’s chief of staff, forced the administration to back down. The plan at the time was for her to replace the current director, Benson T. Caswell, who has extensive experience in public bonding and nonprofit debt.
[snip]
Last May, Walsh’s adviser, Michael Goldman, had emailed Patrick’s chief of staff Doug Rubin, outlining an apparent agreement to appoint her to Caswell’s $225,000 job by September. ”Is this still the game plan? If so great!” wrote Goldman.
[snip]
Walsh had applied to Patrick’s Judicial Nominating Commission to become a District Court judge. But she withdrew her name a year ago. The governor appointed her husband — Paul V. Buckley, a retired District Court judge — to the state’s Industrial Accident Board, a post that pays $113,000 a year.
UNFREAKIN’ BELIEVABLE!!!!
Suzie Orman is GAY…….
now what are all the guys going to do with her?
Some of his latest columns have taken disingenious to a whole new level…they’ve been about pulling one’s self up by one’s bootstraps.
Absolutely hilarious, first the free marketers go running to the civil servants, now they stand alongside the very Americans they fleeced and say: “we’ll pull through this, brudda”
So, the only thing dumber than an economist is someone who believes in creation? HAHA!
The poster was referring to one of the greatest idiots in television, Ben Stein, who, factually, is a creationist/Intelligent design.
I don’t know anything about Ben Stein.
Well, if you do not know what the poster was posting about, then it makes sense to read up about the subject he is posting about before replying.
Ben Stein has an interview regarding creationism with Billo on youtube.
His idiotic ramblings on the economy are much more well known and posted all over the place.
Consider yourself lucky.
His father was a famous economist and he is demented. Seriously wrongly demented. That this clown gets to be anywhere in media is just disturbing.
Ben Stein was a Nixon speech writer. That is all you need to know.
here, here
“So, the only thing dumber than an economist is someone who believes in creation? HAHA!”
Nice call! There are dumber, but not many and not by much…
Obama et al should be playing this up big time. From Al the speech writer:
“I’d like to thank the economists who participated in the WSJ survey. Their continued commitment to making bad predictions supported with personal assurances is a testament to their ‘profession’*. Their assesment of my and my team’s performance should not be overlooked, for what better endorsement could there be? I do regret, however, that my efforts after weeks in office are not equal to what they have ‘accomplished’* with their decades of ‘expert’* advice.”
* these words have to be pronounced with just the right tone. Full disclosure, I do believe that real economists have something to offer. The paid shills who call themselves economists do not.
Or he could say, “You can always give the money back if you don’t like what we’re doing.” That will happen sometime between O-dark-thirty and never.
Nationwide, nearly 291,000 homes received at least one foreclosure-related notice last month, up 6 percent from January
============
And given that Feb has 3 fewer days than Jan, that 6% increase is more like an 18% increase.
January had two holidays(does anyone get the day off for President’s day anymore??).
I would guess the same people who get MLK Day as a holiday also get Presidents Day as a holiday. That is to say government workers.
My company traded President’s day for MLK.
Its not uncommon in the Fortune 500 to get both.
Not if you’re J6P and work for those F500.
Of course this won’t happen here… LOL!
House prices ‘could drop another 55%’ and leave Britain bankrupt!
By James Chapman
Last updated at 8:59 AM on 12th March 2009
Financial analysts warn that house prices could fall a further 55% - leaving 6million Britons in negative equity
House prices could slump by another 55 per cent, a respected City forecaster warns.
It also predicts a deep recession lasting throughout next year and a ‘very real probability’ that Britain will go bankrupt.
The report leaked yesterday from financial analysts Numis Securities says that the collapse in house prices is not ‘anywhere near over’.
They have already fallen 21 per cent from their peak, but the report says they will slump further by up to 55 per cent if the over-correction in prices is as bad as in the early 1990s.
That would leave many millions of Britons in negative equity - when their house is worth less than their mortgage.
Yesterday also saw Alistair Darling warn that there could be ‘no instant remedy or overnight solution’ to the economic crisis.
Of course this won’t happen here - House prices ‘could drop another 55%’
It won’t.
One, the UK bust is only about a year old, so prices haven’t come down nearly as much to date as in the US. Two, on a national basis the UK was a lot more overvalued than the US. The US has some big ares - the Midwest and the South outside Florida and Northern Virginia - that never really got overpriced. Really the whole UK was overpriced - even places like Wales and Northern Ireland. Also note the recession arrived later in the UK than in the US.
Now I’m not saying that the total decline at the end of the bust won’t be close, just that the US faces a much smaller decline going forward from today. The biggest part of the bust is already past.
Certainly not overpriced by Canadian standards, but the Midwest is starting to crumble. The midwest is not immune to problems like unemployment, loss of retirement funds, over building, etc.
Oh the Summer time is coming
And the trees are sweetly blooming
And the wild mountain thyme
All around the blooming heather
Will ye go lassie go……..
And we’ll all go together
Even north of 44
I believe much of the Midwest is over-priced, but that economy has been so depressed for so long with respect to the rest of the US that Midwest prices just seem like they are fine — however, in Detroit, houses are being given away. North Dakota may be an exception, if you can endure the weather. Much of the eastern half of the state shut down for this week’s blizzard.
Even more worrisome than housing prices in flyover-land is the fact that there are so many ridiculous loans out there. With the economy tanking and a general trend toward price decreases there will be enough of a hit nationally to rival Europe. I personally think Britain will rival California, but it’s really apples and oranges.
If the Midwest is not overpriced then I’d like someone to explain why my old neighborhood experienced a 377% increase in foreclosures since 2006.
Damn skippy there’s bad loans and MEW abuse in the Midwest. Local stories here have foreclosures riddled all through neighborhoods and suburbs that are home to the last people one would think would still have a mortgage - let alone be foreclosed upon.
Blue Skye said “not overpriced by Canadian standards” he didn’t say not overpriced at all.
It’s all relative. I recall stories out of Cali and such places along the lines of “in 1998 I bought a house for 100k and sold it in 200x for 350k”.
Those stories in particular resonate with me b/c in 98 I bought a house for 71k. I sold it in Jan 08 for 101k, pretty close to the top of the market. Are there bubble mechanics in play here? Sure. But you have to adjust expectations to local conditions. If you want to buy a house but are waiting for a 60-70% drop in prices, you’ll be waiting forever. It’s not gonna happen.
(I’m in Ark, not exactly the midwest but the point holds)
Damn skippy there’s bad loans and MEW abuse in the Midwest. Local stories here have foreclosures riddled all through neighborhoods and suburbs that are home to the last people one would think would still have a mortgage - let alone be foreclosed upon.
All of us who live in the Midwest know that the bubble happened here, too — questionable development, bad loans, mortgage fraud, kickbacks, pie-in-the-sky valuations, and everything else.
Perhaps we won’t flame out as dramatically as the Inland Empire or Las Vegas, but the Great Unwind is underway in Flyoverland as well. The cities and regions that were already on the margins — Detroit, Elkhart IN, northern Ohio — are in for some difficult times.
agree; I think you can compare the UK to the US hotspots like CA and FL - and even then the UK was probably worse.
I’m pretty sure the UK will see a bigger price decline, top-to-bottom, than the US.
“The biggest part of the bust is already past.”
Not sure I’d say that. Prices are down about 25-30% in the U.S. nationwide, but they were up over 120% since 1997. Even inflation-adjusted, we’re not halfway down yet.
You’re right however in that we’re farther ahead on the curve than the UK, and also that the UK bubble was higher - so yes they will definitely be worse off than us.
Another 55% drop from here in the USA? Probably not, but 55% down from peak on average in the US sounds about right since that would get housing prices in-line with incomes.
Now, if incomes fall off a cliff thanks to “brilliant” leadership (sending all our jobs overseas or insourcing them with dirt cheap labor), then prices will just keep falling.
It’s funny how the Leaders want to pay us all a few bucks a day and yet expect the median housing price to stay “valued” at $300,000 or some other silly number.
What’s the old saying? “It’s good to save money in business but you can save yourself right out of business?”
Northern VA was *WAY* over priced, the town house I bought for 350K (Nov 2004), sold for 390K (Mar 2006) is now going for 270K and was 125K when it was built in 1998.
In my parents neighborhood prices have fallen from 800K to 500K.
“The biggest part of the bust is already past”
In FL and CA yes…. the games are just beginning in the northeast.
“House prices ‘could drop another 55%’ and leave Britain bankrupt!”
I guess that would knock out Britain as a source of speculators who compete in the U.S. residential real estate market with families who just want a house in which to live and raise their kids. I hope the dollar tanks so that any Brits who are already long U.S. RE lose their arses.
It’s my understanding that recent UK investment in US RE has been mostly in places like Florida or Nevada, or idiots buying houses in Detroit or Buffalo sight unseen. Outside such markets I don’t they had much of an impact to speak of. In fact foreign investors in general had little impact outside such areas.
High rollers in Las Vegas - December 20, 2006
Perhaps riskier is his $280,000 (£150,000) bet on Desert Oasis, a condo complex in West Wendover, a tiny town near Nevada’s border with Utah. The hook is the city’s five expanding casinos, patronised by renegade Utah Mormons, which have produced a sharp increase in demand for staff housing. The ground won’t be broken until later this summer. “If it doesn’t work out in four years’ time, I will sell it on,” says Barclay.
BwaHaHaHa!
“foreign investors in general had little impact outside such areas. [FL and NV]”
What about NYC? Foreign investment has been constantly cited as a prime justification for the huge run-up in prices there.
Lots of Germans bought land/cabins in the N. Georgia mountains.
Which makes a lot of sense to me, really. Why spend your weekends in the Alps when you can instead fly 8 hours to Atlanta then drive 2 hours to the Blue Ridge Mountains and spend your weekends there.
I know some Germans who bought land in Canada - their thought being if it ever got bad in Germany - they could flee to Canada.
Manny -
Maybe they are in search of the Kid from Deliverance.
“Maybe they are in search of the Kid from Deliverance.”
I heard he married a hill woman in Wasilla, Alaska and has a brood of knuckle dragging mouthbreeders.
German companies bought a lot of office buildings in the DC area.
“If it doesn’t work out in four years’ time, I will sell it on,” says Barclay.
sell it on what? eBay?
West Wendover?? Has anyone else been to “Best Bendover” (as my research team calls it)? It’s a heinous little pimple on the NV/UT border. If you ever do, please go to the Rainbow Motel. Stars and planets carpet, mirror everywhere in the rooms and velour valences. Must be seen to be believed.
MrBubble
If you ever do, please go to the Rainbow Motel. Stars and planets carpet, mirror everywhere in the rooms and velour valences.
Heckfire, I’m gonna go pack right now!
*wonders where my pink suitcase is *
it’s about time.
The Brits where the first and worst equity locusts in our part of the globe, and probably even in large parts of Oz/NZ and the America’s. I remember seeing show after show on TV in the early 2000’s about British homeowners who sold out from some POS home outside Londen and used the money to retire in a palace in the Caribbean, or on the Mediterranean coast. By doing this in droves, they drove up prices almost everywhere in Europe and beyond and kickstarted the equity locust game.
I guess US viewers have no idea about what happened in Spain etc. British speculators were making tons of money there, doing simple jobs like hairdressing, owning a fish&chips restaurant or being a RE broker - all geared exclusively towards RE-millionaire Brits on the Costa. Those times seem to be over now, and I hope that when they return broke to the UK there are no pensions or social security payouts left for them.
Of course, the Dutch and Irish did the same but their mass speculation over the borders started later. I also hope they get stuck somehow in their new homeland, without social security benefits (but little chance of that happening, especially for the Dutch speculators …).
Seeing what Dutch citizens bought in Southern France, I thought that €s grow on trees.
they still do - but the trees are starting to look less healthy by the day. There will be a lot less € leaves to harvest this year.
“I guess US viewers have no idea about what happened in Spain etc.”
Some do. I was in the Barcelona area last May and the (over)building was bonkers. We all wondered aloud “who the hell is going to live in these Soviet style block apartments.
They touch on this issue in the “7-Up” documentary series (the last one). Very sad to see these people try to make southern Spain into Britain. Sad meaning pitiful.[Same happened in "Sexy Beast" -- and then even weirder stuff]
MrBubble
[Same happened in "Sexy Beast" -- and then even weirder stuff]
Oh, yeah, I enjoyed that movie.
“Do the job”
“No, Don”
“Do the fracking job!”
“No”
“Do the JOB!”
Ben Kingsley was so great in that. Also, Ian McShane (Swearengen from Deadwood) was good.
I think the Soviet style building blocks in Spain are mostly for their own citizens; and maybe for low income immigrants from South America and Eastern Europe.
You can find this type of housing in most of the big Spanish cities (I agree it looks horrible, but probably this style has some advantages in their hot climate, seems many Spanish don’t have a problem with it).
The Brits, Irish, Dutch, Germans etc. live mostly on the Costa, in villa’s or luxury apartments; I’m sure most of them avoid these block apartments.
The British Pound has dropped 35% against the dollar in the past 5 months. If their investments only drop 35% its a wash.
on another note:
for Dutch second home buyers, Spain has become the number one country this year, surpassing France. Italy is number three for Dutch buyers. According to the RE brokers:
“Spanish properties are now selling at 20-40% discount to previous asking prices, mostly as a result of British pensioners who are getting in trouble with their Costa homes and have to sell”
You probably know the Dutch love to buy on the cheap; but I guess this is catching falling knives. And probably the British Costa asking prices were way too high to begin with …
Dutch buyers are less interested in Turkey this year, compared to previous years. This is first of all a result of overbuilding (strange, I guess that should lead to discounts as well??). And apparently, Turkey started to attract too many visitors from Russia and Romania, who scare the Dutch buyers …
By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Wednesday, March 11, 2009
Palm Beach County’s foreclosure rate jumped by more than 50 percent in February, according to numbers released Thursday by RealtyTrac, a foreclosure data firm in Irvine, Calif.
About 2,665 Palm Beach County properties were in some stage of foreclosure, up 53 percent from January and up 57 percent from February 2008.
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RealtyTrac counts all foreclosure filings on a specific home. Because each foreclosure can have three or more court filings, the company’s numbers may be larger than the number of homes involved.
Even so, the number of court filings is clearly growing relative to last year. In St. Lucie County, 1,014 homes were in default or foreclosure, down 26 percent from January but up 24 percent from a year earlier. In Martin County, 279 properties were in foreclosure.
ITEM: Treasury Secretary Timothy Geithner says the Obama administration believes it is essential for other major countries to commit to substantial and sustained efforts to bolster their economies.
His comments highlighted a growing rift with European nations who are balking at the administration’s call for increased stimulus efforts. European officials argue they do not want to pile up more debt to fight the downturn.
Uh, oh. Strained relations with our trading partners is bad news. The U.S. has no business telling European Union nations (or any other nation) how to run their affairs. Next thing you know they’ll quit lending us money, and then what?
If the U.S. government can’t sell its debt to Americans or foreign nations the Federal Reserve will have to monetize the IOUs. That is, run the printing presses full blast. That’s not a smart move, either. Inflation damage.
Ah, TTT, the hapless one. Somehow I don’t think he carries as much weight abroad as has been touted. At least, not in Europe. I’ve seen him on C-Span acting like a little prick to CONgress, with his lips all pursed up, wagging his finger and warning them and insisting on his way of doing things. All self-righteous. I don’t think the same act goes over so well in the EU.
But it makes you realize how utterly cowed and confused CONgress is.
it makes you realize how utterly cowed and confused CONgress is I have long ago realized Congress is incompetent, and that the only thing most of its members stand for, is office.
The only assured skill you get with a politician is the ability to get elected. To get elected, you need the following:
1. Can’t be horribly ugly.
2. Must be willing to say things people want to here, regardless of what you believe.
3. Must never take a specific stand on a specific issue (unless it is to support the troops).
4. Must be willing to do whatever the people who give you money tell you to do.
Managing the economy from that background is not likely to be successful.
Europe was behind the aggressive and early bailout of AIG, at US taxpayer expense of course, because they were the most reliant on swaps to hedge risk.
They will play ball. They’ll make a big show of pretending not to be bossed around, but they have too much to lose if they truly antagonize America.
Bailouts for everyone — every last human on the planet gets one! Now to find that hidden wellspring of wealth that will provide for all the bail…
it is clear that TTT still subscribes to the ’savings glut’ nonsense.
EU officials and economists are dumb, but not THAT dumb.
Some of the banks in Europe are bigger than the countries they are located in. I see know way for the smaller countries to stimulus their way out of this.
More stark evidence that the PTB doesn’t haven’t any innovative ideas for the future. They are so rooted in the dying postwar consumer paradigm that they want to drag the whole globe down too.
It looks like the bankers have a spokesman, in Jamie Dimond ( JP Morgan chase). Did anyone catch his act, in front of the US chamber of commerce, I believe? I heard it on bloomberg radio w/o knowing it was him speaking. At first, I thought it was a stand-up comic, very aggressive and in yer face attitude. His fast talk, New York smartass, schtik seemed to amuse and befuddle. Which was how it was intended. I found it repulsive.
Isnt Morgan using Tarp money to fund the Dow - Rohm Hass merger which will lay off 16,000 people?
I have not heard anyone using the money to create jobs…
That Cash-Kari guy that Paulson hired to oversee the TARP money is the only person I could point to that has a job because of TARP.
In New Future, jobs not needed - taxes will pay for everyone!
I think that is almost unavoidable. If you could produce everything far cheaper in China, why manufacture stuff in the U.S.? If you could hire Mexicans far cheaper than Americans for internal work, why hire Americans?
Tax those who get the profits from corporations so that the average american doesn’t have to work! Sure, you can make extra if you actually want to work as a VP at GE or something, but give the average joe $40K and all is well.
Otherwise, average joe just becomes like the Chinese or Mexicans. Ultra-poor. And average joe has been well trained in the use of fire arms by the Marine Corps and won’t be happy about his lot in life.
Remember, Dimon is one of the few who made the good moves.
The real spokesman for the era showed up Downtown this morning in a bullet-proof vest: Madoff. He’ll be speaking for, oh, about 50 million people when he says “guilty.”
I heard all this on the radio before I left for work. They had quotes from the passersby. “Take away all his money, make him ineligable for Social Security, and dump him on the Bowery!” “Give him 150 years, and all his friends too!”
Except for one Black woman who said “They all wanted to be in his exclusive club. When I go to an illegal club, play the numbers and lose, I don’t go running to the police.”
Good point. There are lots of ads online promising me huge returns for a tiny investment, love with Russian mail order brides, and cheap love drugs…but no one will rescue me if I am stupid enough to send money to them.
The real problem is the SEC, which was warned for years that this was a Ponzi scheme and gave him legitimacy by not investigating him, and even seeking his advice in how to regulate hedge funds. Christopher Cox is getting a golden parachute, not jail time unfortunately.
lol. Very good.
Sounds like everyone has agreed to not go after his family and employees for their part. When the Feds and local authorities agree not to seek charges on something this big, you know that there has to be some pressure from somewhere being applied to keep this under wraps.
This will go down in history as the largest fraud ever carried out by a single man.
I am sensing some Oscar winning material here in a couple of years.
“I am sensing some Oscar winning material here in a couple of years.”
Nah, made for TV only. Mybe Ahnold will be available to play Bernie after he gets recalled. Tracey Gold as Ruth? Hmmm.
After what his industry has done, dude has some very large cajones.
He’s right, however. We shouldn’t just vilify banks. We should do more. Break them up and turn them into utilities. Make their CEOs wear BS alarms. Vilification isn’t enough.
Maybe we should just turn them into credit unions. Definitely won’t be too-big-to-fail then.
Dimon
not Dimond
I predict, Jamie Dimond will be on the Jon Stewart show soon.
Cramer is on Jon Stewart tonight.
Thanks for the heads-up Skip. That I want to watch
Time to buy more popcorn? Though I must confess that watching floods in progress is not my idea of an entertaining spectator sport.
Financial Times
Rescue plan has mortgage lenders set for deluge
By Saskia Scholtes and Michael Mackenzie in New York
Published: March 12 2009 02:00 | Last updated: March 12 2009 02:00
Fannie Mae and Freddie Mac, the two government-controlled housing financiers, are gearing up for a flood of applicants wanting to refinance their mortgages under the government’s housing market rescue plan.
President Barack Obama’s housing plan is designed to allow 4m to 5m homeowners to refinance mortgages guaranteed by Fannie Mae and Freddie Mac, and could see up to $1,000bn of mortgages refinanced at lower interest rates.
Time to dig out the rubber stamp. Here we go again…
Taxpayers Billed $211 Million in Auction-Rate Failure By Darrell Preston
“March 10 (Bloomberg) — From Carnegie Hall in New York to the Los Angeles bus and subway system, American taxpayers are paying investment banks millions of dollars in fees for bond auctions that never happened. ” Nice work if you can get it. The fees-for-no-service are nothing compared to the rest of the bankster’s boodle.
Greek terror group says Citibank attacks over financial crisis, promises more bombings
ATHENS, Greece (AP) — A Greek militant group threatened in a statement published Thursday to continue its bombing campaign, saying recent attacks against Citibank were in response to the international financial crisis.
http://biz.yahoo.com/ap/090312/eu_greece_terrorism_citibank.html?.v=4
The militant group vowed to continue to carry out time-bomb attacks against the country’s “political and economic elite and the apparatus of capitalism and the state,” and would issue warnings to the media.
*gulp*
Leigh
“Gulp ” is right Leigh . Really, “the polictical and economic elite “,as a result of unregulated capitalism and a undected crime wave ,did cause this mess to a huge extent .
1929 ,along with the development of price cutting and the monopoly and Ponzi Schemes ,proved that Capitalism had to be regulated . The money supply should of been regulated along with lending . I hate it when Capitalism gets a bad name because of simply violations to that system . Capitalism has to be regulated because of guys like Madoff and Wall Street and human greed and simply the tendency toward bubbles . When its a Government sponsered Bubble ,than Government has reached the status of being “Corrupt” and they have failed at their public duty to protect America ,and the duty isn’t simply to the Elite . It’s clear that the Elite got their way with the Politicians and long held laws were dumped in favor of self-regulation . Still ,I think a lot of standing law was violated during the unregulated boom . In general ,Business Law states that fraud and bad faith in Business is a civil,if not criminal violation .Contract law can be voidable if there was a fraudulent intent .
The boom was riddled with a crime-wave of fraudulent lending ,stockes were pumped up ,accounts were underfunded ,insurance was extended without means to pay ,and leverage was extended beyond any reasonable humans ability to justify that sort of leverage being anything but a Ponzi scheme .
Because of the mess we are in we are on the verge of over reacting and
turning over the Country to Socialism or Communism or a Obstruction of Justice that will have its moral hazard . There has been other times in History in which America came close to giving up the concept of Capitalism because People in Power abused Capitalism . I could of never imagined the taxpayers being the bagholders to the folly of greedy gamblers and criminals just 5 years ago . Look at the mass brainwashing that occurred in Germany that resulted in crimes of mass murder .
My point is that crimes ,coupled with Obstruction of Justice, will give Capitalism a bad name . It is always true that a civilized Country that practices Capitalism must have a strong Rule of Law in which Justice is served to back-stop Capitalism . A Country that does not render reward and punishment in a just manner is doomed to fail .
The problem is that where ever you have a monopoly on “justice” you create the very institutions which can legalize fraud that would not be permitted in the free market. Without government created fiat money capitalism does not have the means to fund bubbles with debt not backed by real savings. Bubbles can still exist, but are offset by cheaper prices in other areas.
Unless you enable free competition of governance you will not have the necessary checks and balances to prevent the slow and steady corruption of government. Surely, you do not think that if our government was restored to its constitutional size that it wouldn’t immediately (within one generation) be back to where it is today? The constitution was a failure for it lacked any real means of enforcement.
When the government is its own judge the “separation of powers” is meaningless. You need a dozen or more different “equal” and independent powers all lacking a territorial monopoly if you want any hope of preventing legalized fraud. These governing agencies charge a fee to members who voluntarily join and then provide justice for crimes committed against their members. The governing agencies could choose who they allow to be members and through this choice regulate their members how ever they wish.
You bring up good points VT . The natural evolvement of laws and regulations took place in this Country pursuant to trial and error after the Original Constitution was put in place . Currently the Government is making prior fraud legal by the current lawmaking and new Bills . I always thought that the Justice System was the third wing of Government and the role was to weight any laws for their Constitutional adherance . It is strange that the Judicial system has not come into play to much in rulings regarding what might seem like Constitutional violations to the taxpayers .
Most individuals have not studied the utter corruption of our court system. Judges inform educated juries (those aware of the constitution) that they, the judge, will tell them what the “law” is. Any juror who attempts to exercise nullification, or their own understanding of the law and constitution is thrown off the jury (if the Judge finds out about it).
Judges, through the power to interpret and set precedent, have created a country subject to the whims of a carefully licensed few with no respect for the “rule of law”. The court system is utterly biased toward supporting the government against the people instead of the people against the government.
Ever since congress and the president threatened to double the size of the supreme court if the court did not rule in their favor any semblance of separation of powers has been destroyed. The only thing our governmental system does today is provide the *appearance of legitimacy* without any real substance.
Again ,you bring up a good point that even the Court system can be corrupt and the Jury system has its drawbacks . I was thinking of the Higher Courts that tend to decide Constitutional issues .Of course who gets on the High Courts is also politically influenced .
But my point is that when corruption does reach a point
when it tips the scales ,as it is doing now ,maybe that is when forces do rebel . Corruption creates destruction .
Right now we are on the verge of to many people hurting and the Corruption Society will be challenged no doubt if this keeps up . So, I can’t say that I can argue with you when you point out the corruption of the systems . I have said many times on this blog that a purging is needed . I just don’t know exactly how that will come about . Of course when anything is purged it has to replaced by something better ,but I just don’t want the concept of Capitalsim itself to get a bum rap . I don’t want any good concept to fall by the way side just because of this Corruption cycle .
There is no such thing as a “free market.”
There is either regulation with fair and consistent enforcement or crime. And that crime is perpetuated against YOU. Period.
Your belief in self enlightenment and self regulation is naive at best but most probably disingenuous.
Greed and incompetence and outright criminal pathological behavior put lie to any argument for “self correcting markets.”
An ounce of prevention is worth a pound of cure.
And yes, our government is corrupt beyond belief. I can agree with that.
ecofeco …You could not be talking to me because I believe in the rule of law and highly regulated Capitalism and that a ounce of prevention is worth a pound of cure .
The natural abberation of Capitalism is the natural tendency toward a gamed system or monopoly or price cutting or any other dispictable ploy or Ponzi scheme the free market would tend to end up falling prey to with self regulation . The rules of law and regulations keep
Capitalism from becoming a gamed system . But the political lobbying system is another wrench in what laws, rules, and regulations will be enacted and what the capitalism playing field will be like .
March 12 (Bloomberg) — Americans battered by the biggest slump in home prices on record are facing higher property taxes as local governments struggle to plug budget deficits.
Municipal finance officers budgeted for a 3.6 percent drop in revenue from residential taxes this fiscal year, a survey by the U.S. League of Cities in September shows. With home prices down 12.4 percent in the fourth quarter from a year earlier, the most ever for an index compiled by the National Association of Realtors, cities and counties are compensating with higher tax rates or appraisals, even where laws cap property-tax growth.
Cities and towns need to raise rates after their main sources of income — sales, income and property taxes — declined together in 2008 for the first time in 12 years, the League of Cities survey said. Higher costs may strap consumers who’ve cut spending in six of the last seven months, the Commerce Department’s Personal Consumption Index shows.
Little Solace
That’s little solace for residents whose property taxes doubled from 2001 to 2007 as prices soared, said Arthur Purves, president of the Fairfax County Taxpayers Alliance. Real estate levies per household increased an average of 5.7 percent a year from 2003 to 2008, the county’s 2009 budget document shows.
Cash remains the king.
Big story here yesterday was that the Chicago Public Schools need ~$450 MM and they want to take it from property tax increases. This is just the start, and it certainly isn’t going to help the “luxury condo” market here one bit! Add in the travails of retail and small business - and the local picture darkens more.
This is just the start, and it certainly isn’t going to help the “luxury condo” market here one bit! Add in the travails of retail and small business - and the local picture darkens more.
The “luxury condo” market here is already wheezing along like a septuagenarian with an oxygen tank. A tax bump isn’t gonna make that any prettier.
Now that you mention it, though, there’s a condo down the street from me that just added a sticker to their For Sale sign — “Special Tax Freeze!” Don’t know if that’s typical Realtor’s spincter talk, but now it makes sense.
As far as small businesses go, I feel for them. I’ve talked to a couple of small business owners I know, and they’re pinching pennies and preparing to bargain hard for reductions when their leases are up. One lady we know who’s had a storefront on Division since before the boom has been scouting new locations for months. Rents are too high to be sustainable in that stretch between Ashland and Western.
The numbers of tax havens for corrupt zillionaires continue to fall like dominoes. I wonder what kind of “pressure” they’re really bowing to? It isn’t a sense of responsibility, that’s for sure.
March 13, 2009
Liechtenstein Pledges Tax Openness
By Matthew Saltmarsh, NYTimes
PARIS — Liechtenstein bowed to international pressure Thursday, saying it would adopt global standards on transparency and information exchange in tax matters, turning up the heat on Switzerland and other tax havens to follow suit.
“The Liechtenstein government accepts the O.E.C.D. standards on transparency and information exchange in tax matters and supports the international measures against non-compliance with tax laws,” the tiny principality said in a statement.
Pressure has been building on tax havens to do their part by divulging more information on potential tax evaders.
As the Group of 20 leading developed and emerging economies prepare for a meeting in early April to try to improve financial rules and restart growth, the issue has increasingly come into focus.
“We are aware of our responsibility as part of a globally integrated economic area,” the Liechtenstein prime minister, Otmar Hasler, said in the statement. “With today’s declaration, we are making our contribution to a joint solution that will make an effective enforcement of foreign tax claims possible and takes account of the legitimate interests of the clients of our financial center at the same time.”
Last part of the post got clipped off:
On Wednesday, the French newspaper La Tribune reported that the Organization for Economic Cooperation and Development had added Austria, Hong Kong, Luxembourg, Singapore and Switzerland to a list of uncooperative tax havens, which already includes such well-established havens as Liechtenstein, Andorra and Monaco…some jurisdictions — including Singapore and the British crown dependencies Jersey and the Isle of Man — had taken steps to move closer to O.E.C.D. norms for cooperation and disclosure.
my guess is that they will make it more difficult for the relavitely small fish, people who have couple of 100K euro or maybe a million in ‘black’ money. Those people will have to pay taxes from now on, just like they would in their homeland for official savings. This makes hiding in a tax haven pretty unattractive (in most EU countries it is difficult to use this foreign money for things like buying a home, yacht, car etc.).
I’m sure the really big fish and those well connected to the political/banking mob will not be harmed in any way by the new regulations. And if they don’t like the new rules, they will simply move to another country (like Malta, lately). If you have loads of money it doesn’t matter that you have to hire some high level attorneys from time to time to ‘relocate’.
I dated a girl in Holland. They used to make a few trips a year to Switzerland with a suitcase full of cash. This has to be an Ohh Shht moment.
sure, I know several people who have to have these yearly trips to Switzerland. Some of them even own a second home close to the Swiss bank office …
On the other side, when we had to convert from Dutch guilders to Euros in 2001, it became clear that Dutch banks have no problem dealing with ‘black’ money, as long as the amount is big enough. Officially one could only exchange EUR 200 or so in cash notes each day (and after some time, even this required proof of ID). But if you wanted to exchange a briefcase full (100K or so) of guilder banknotes to euro notes, you simply had to call your bank manager and they were happy to arrange something.
I wonder what the percentage of GDP is related to tax-haven status in these countries. If that goes away, what happens to the economy in those countries?
Without tax-haven status, all Switzerland has is rugged mountains and a dairy industry. Not much different than Idaho.
All the watch makers decamped to Hong Kong et al. a long time ago.
I think they are nothing without their tax heaven status; even the safe heaven status of the Swiss frank is declining quickly, and probably for good.
It is an extremely expensive country with probably most of its ‘production’ in the financial services sector.
Switzerland has a very large precision armaments and design engineering industry and are recognized as some of the best in the world.
This reminds me of a cockamamie plan some boosters here had back in the 90′ to make Montana into an “offshore” banking haven. I mean, WTF?
Was this craziness going around other states too?
Life insurers’ woes have come largely from investment-grade corporate bonds, commercial real estate and mortgages, regulatory filings show. Many insurers ended 2008 with high levels of losses that, due to accounting rules, they haven’t had to record on their bottom lines. MetLife, the nation’s biggest life insurer by assets with $380.84 billion in its general account, had $29.8 billion in unrealized losses at the end of 2008.
MetLife says it is amply capitalized, with more than $30 billion in cash, and that it doesn’t expect to realize significant losses from its investment portfolio….
Hartford Financial had $14.6 billion in unrealized losses at year’s end. Prudential, the second-largest insurer by assets, had nearly $11.3 billion in unrealized losses, up $5.4 billion in the fourth quarter from the previous quarter….
WSJ: The Next Big Bailout Decision: Insurers
“MetLife says it is amply capitalized, with more than $30 billion in cash, and that it doesn’t expect to realize significant losses from its investment portfolio….”
No, no, of course not. It’s just those annoying accountants with their-mark-to-market rules that are causing this fuss. There are no economic fundamentals involved here. Everything will be fine.
This article raises some really BIG issues. First, it answers the question: Where did all the junk go? But, it also raises other questions like: How is the junk accounted for in pension funds? Should everyone be using M2M accounting? Who is and who isn’t?
The insurance industry is arguing despite the fact it cannot sell these assets to raise the capital necessary to payoff policies, it’s all good, no problem. WTF?!?! If you don’t have the cash to pay, that is a BIG problem. What are the implications of all of this?
I saw Gwen Eifel?? interview some guy from teh AEI and a bond investor about the current plan to have private equity buy up the banks loans.
1. Bond investor all for it said it would establish a market price for these mortgages. I had to laugh. If Chrysler values a bunch of their cars at 20,000 but no one will buy them because they know 80% of them will fall apart. Then to move these cars Chrysler will have to cut the price. Now if the Federal government comes in and gives out 0 down, 0% loans, stuffs the car with $10,000 cash, and guarantees the car for 250,000 miles does this really establish a true market price??
2. The AEI guy just wanted the gov to buy up all the bad debt at fantasy prices.
Funny they didn’t have anyone on argueing that the banks should be taken over broken up and resold, or argueing that both of these plans failed to create real price disclosure.
There is a MetLife Home Loan Division bldg off the 101 (Ventura) Fwy in Agoura, Ca. I had no idea this entity existed, until I noticed the sign the other day.
Frankly, I think our Canuck friends should tell Chrysler to kiss off.
http://www.freep.com/article/20090312/BUSINESS01/90312027
hope this goes through today
http://www.cbc.ca/money/story/2009/03/11/chrysler-plant-closures-concessions.html
from look of comments, Canadians either want radical surgery on the product line or want to see it go bye-bye. I hope the Canucks stand up to these private equity BS artists where GWB didn’t (heck, they belong to the same club).
One poster was totally right–take Chyrsler out so the others may live. Look, it’s like when you plant seeds, if they’re too close together they all suffer. Thin them out, and the ones that remain prosper.
As a Canuck, that’s exactly what I’ve thinking. The union can do as it sees fit, make concessions or not. Whatever. But the govt shouldn’t be bailing them (or GM) out. They’re going to lay off a bunch of people and then go bankrupt one way or the other, which they can do just fine without government intervention.
But in the spirit of being part of the solution, I’ve come up with an alternate, more effective strategy. The government should take a whole bunch of money and put it in a big pile. They lite the pile on fire and thow all the top management and union reps into it. We still burn through a bunch of money, but at least something positive is accomplished.
Now-needy FDIC collected little in premiums
With fund going strong, banks didn’t pay for decade
By Michael Kranish, Globe Staff | March 11, 2009
WASHINGTON - The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.
The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
I’m going to miss ING. But this s— isn’t funny.
“But Congress believed…”
Well, there’s the problem right there.
Not a surprise that Congress was pretty much dominated by anti-government Republicans during those exact years. The private sector will take care of itself!
Party of fiscal responsibility my @ss…
General Electric Long-Term Credit Rating Cut by S&P to AA+
Bloomberg
GM
the short squeeze on this news is a laugh riot. I like GE to about 12ish. and that makes sense as Im holding long at 13ish.
A fine short squeeze is a thing of beauty.
This one is not up there on the greatest list (perhaps, Volkswagen would be on it) but it’s still quite pretty.
ooops…more coffee!
Love your contributions here MM!
EU bubble update:
According to British research, home prices declined in 2008 in most of the EU countries, with the biggest declines in the UK (-19%) and Baltic states (-23%). Prices still increased slightly in Netherlands (of course), Switserland, Italy and Greece. The report expects more declines in 2009 (that’s a pretty sure bet …).
Price info for the Dutch market remains sketchy. According to a major website, Dutch average asking prices declined for the fourth month to 332K euro in March. This probably means that sellers are overasking a little bit less lately (median sales price is in the 250-260K euro region).
U.S. News and World Report comes up with spooky numbers concerning Americans’ general level of solvency:
“Without a steady paycheck, 50% of Americans say they could not meet their financial obligations for more than a month — and, of that, a disturbing 28% couldn’t support themselves for more than two weeks of unemployment.”
No government on the face of the earth can bail out a population that won’t look after itself. A good place to change public attitudes is in the public elementary schools. We may have lost a couple of generations, but there’s no reason to keep on neglecting fundamental training in handling money.
A good place to change public attitudes is in the public elementary schools.
As I recall the great depression changed public attitudes for a couple of generations. My guess the school of hard knocks will be the teacher once again.
Those are frightening numbers.
Has anything like this study been done repeatedly over the last 70 years or so? Seems like much of the US population has been used to living paycheck-to-paycheck for at least that long.
Here’s a link to the press release, good read.
http://www.metlife.com/about/press-room/us-press-releases/index.html?compID=12452
Thank god stagnate or dropping wages, outright corporate and government corruption, illegal immigration and the flight of jobs to foreign countries had nothing to do with J6P being unable to save money.
Nope. Nothing at all.
Once again, you’re right on, eco.
Funny how no one understands that you can’t have falling wages and rising asset prices in perpetuity.
We’ve been expected to spend as though wages were going up, when in reality wages (buying power) for the masses have been going down due to cheap overseas/immigrant labor, and rising prices that were fueled by ever-expanding credit. No room left to save.
Speaking of Madoff, those who got their money out early now face “clawback suits” to force them to give it back and share the losses.
http://online.wsj.com/article/SB123681586212702121.html?mod=mktw
“The alleged Madoff fraud is now being viewed as a classic Ponzi scheme in which new money from some investors was used to fund withdrawals of fictitious profits for other investors. The trustee, Irving Picard, has said he would go after — or claw back — the profits of investors who withdrew far more money than they contributed to Bernard L. Madoff Investment Securities. Mr. Picard said he intends to distribute clawed-back funds to investors who were wiped out. A spokesman for Mr. Picard wasn’t immediately available.”
“Under the bankruptcy code, those who will be most susceptible to a clawback are investors who withdrew any money in the 90 days before Mr. Madoff’s arrest on Dec. 11, attorneys say.”
OK, I ask you now given what we know about all those 2004-2007 mortgages: how is this any different than the pay and bonuses of all those who helped to create and package them? Is the reason we can’t get that money back because it was a novel Ponzi scheme instead of a “classic” Ponzi scheme?
good point; I would LOVE to see all the loot clawed back, but very little chance
sentiment is changing though; in Netherlands the big banks like ING and ABNAMRO (bailed out with lots of taxpayer money) are still throwing around huge salary increases and bonuses (except for the top three or so managers). Government and parliament are refusing to act, while at the same time they are cutting pensions and many other entitlements for the normal citizens due to the credit crisis.
The sheeple are getting angry; this could be a hot summer, and not only in the City of London …
Since the books were crooked, how do they know who got what money when?
How do they know the client list is even accurate?
There is definitely a ‘too little too late’ aspect in the linked story below.
Rather like locking the barn door after the bulls’s escaped, eaten your flower garden, f-ked your neighbors cow, crapped all over your lawn and then wandered into the street to get hit by a passing truck but at least its a start.
http://www.nytimes.com/2009/03/12/business/12crime.html?_r=2&hp
While assorted Wall Street executives have been prosecuted over the years, any concerted legal attack on the financial sector would have little precedent. After the Depression, Congress formed what became known as the Pecora Commission, which grilled top financiers. But the point was mostly to embarrass them, and the upshot was to set the stage for stricter regulations. The most indelible image of the commission’s hearings was a photo of J. P. Morgan Jr. with a midget who had been plopped in his lap by an opportunistic publicist.
Leigh
It’s really sad they’ve all been bought. Who is going to lead the commission? Dodd? Frank? Schumer? LMAO!!! Right now they are entertaining a change to M2M accounting.
Where are they going to find the midget?
Now that midget bowling is politically incorrect, that shouldn’t be a problem.
Is this saying, that I learned yesterday, un-PC?
“Lo pasamos como enanos!”
Even if it is, I still like it.
They should do `midget tossing’ like at that tasteless Fidelity party a few years ago.
Attempts to prosecute mortgage fraud may be easy against those at the bottom, but hard against those at the top, says the NY Times.
http://www.nytimes.com/2009/03/12/business/12crime.html?partner=MARKETWATCH
“We punish people for intentional misconduct, we don’t punish them for stupidity or innocent mistakes..If you’re a prosecutor, you want evidence that shows real dishonesty. You want something that shows that these people were doing something wrong, and they knew it.”
“That nearly all of the banking industry acted the same, possibly reckless, way could actually help any executive who lands in court, lawyers said. The herdlike behavior suggested that bankers were competing for business using widely shared assumptions, rather than trying to get away with a crime. It would be hard to prove that anyone broke the rules, these lawyers said, since regulations in the riskiest parts of the mortgage industry were so lax.”
“One defense lawyer said he expected to argue that either his clients did not understand the financial instruments they were marketing, or were not warned of the dangers by underlings.”
We punish people for intentional misconduct, we don’t punish them for stupidity or innocent mistakes..If you’re a prosecutor, you want evidence that shows real dishonesty. You want something that shows that these people were doing something wrong, and they knew it.”
I think a strong case could be made against Mozillo, that guy was selling stock hand over fist telling stock holders and workers that everything was fine.
You cant say that liar loans and Real estate /Mortgage Agent
misconduct was anything but a crime wave and a Ponzi Scheme . Lenders and Wall Street breaching their duty to underwrite loans and a criminal leverage game that knew no bounds are crimes in my book . They have laws against Ponzi Schemes .
For example ,do you go after a Appraiser who inflated the appraisal (in spite of overwhelming contrary evidence ),when that party was blackmailed and threatened by lack of work
should they not comply ,in spite of it messing up the appraisal comps for all appraisals that followed . Do you let everyone off because of a Mania in which people where not of right mind ?
Is a liar loan borrower innocent who inflated their income by 200% because of the moviation of fear or greed ? Maybe you do let that party off the hook because it was a mass-marketed Ponzi Scheme that was endored by the media ,the industry ,and the Government .
People who were innocent are just plain pissed that they have to pay for other people’s crimes . Justice not prevailing damages the Souls of the innocent and revenge is a natural
by product of Justice not prevailing and the moral hazard cannot be underestimated . I see normally law abiding Citizens
now wanting to game the system rather than pay for other peoples crimes . It’s a serious matter that the Government and Crammer take to lightly .
“…not warned of the dangers by underlings.”
Mirror image of the “Nuremburg defense”. aka, “Blame the krill”.
Yeah, that’ll float. If I was one of these guys, I’d push for a trial ASAP. This plan may work better now, than a year or two from now, when the jury pool has fully experienced the “SHTF effect”.
I agree whole heartedly with this. The banks & mortgage companies didn’t break any laws. Their were no laws. And what little there were were never enforced.
As the president of a bank, your responsibility is to compete for profits. You do whatever you can, no matter how unethical, because if you don’t, your competition will. You really have no choice in fact.
These were all transactions between willing partners.
So are you saying that borrowers reviewed, approved and underwrote their own loans? That they were agents of the bank?
Interesting.
These were all transactions between willing partners.
———————–
Then those “willing partners” should share all the losses and leave the rest of us out of their mess.
The reason so many people are getting angry is because **we** are being forced to pay for their little “competition”.
Alachua County, FL School Enrollment Drops
From 2007-08 to this school year, statewide student enrollment numbers dropped by nearly 25,000 to 2,620,801, Florida Department of Education numbers show.
That’s the lowest number since 2004.
In Alachua County, a head count from this school year put student numbers at 27,203. That’s down from 28,378 in 2007-08 and from 29,108 during a 2005 count.
Alachua County’s decline in enrollment from 2004 to 2008 was the ninth highest in the state, according to DOE. From 2007 to 2008, the decline was fifth highest in the state.
[...]
Stan Smith, director of the University of Florida Bureau of Economic and Business Research, said factors in the statewide enrollment reduction include a decline in the state’s birthrate throughout the first half of the 1990s.
He said the birthrate picked up again in the first half of this decade, but there will still be a gap before that leads to a significant spike in the number of school-aged children.
Smith said research has also shown a tell-tale sign of population decline, which in turn affected school enrollment: a drop in the number of residential electric accounts across the state.
He said the Bureau of Economic and Business Research has monitored those numbers since the early 1970s and they have never declined until the past six months. During that span, the number of accounts have been on a consistent decline, Smith said.
David Denslow, a UF professor and research economist with the Bureau of Economic and Business Research, agreed.
“It’s clear our population growth has hit the bricks,” Denslow said. “The same thing is not happening in other Southern states.”
When will you figure it out, Florida? SOH = So Long Florida
“It’s clear our population growth has hit the bricks,” Denslow said. “The same thing is not happening in other Southern states.”
——–
Florida ceased being a “Southern” state long ago.
Nah. Florida is actually two states:
- North Florida is part of The South
- South Florida is part of The North
believe it or not. Floridians know what I’m talking about.
Grew up in Miami, lived in Jax. You are correct.
Absolutely. But Alachua County, being in North Florida, is part of the South.
Spring Tour Showcases Historic Gainesville Homes
http://www.gatorsports.com/article/20090311/ARTICLES/903111006
You must read and see this article to believe it! OMFG!!!
These flatscans spent big bucks renovating RENTALS to live in … the pictures say it all … and their names are just the icing on the cake!
“Homeowners in Duckpond are proud of the restoration, renovations and maintenance of their historic homes,” Scott said. “My neighbors graciously share their experiences and tips.”
Another home on a tour will be the 1928 Matthews house, now owned by Marilyn Wall Asse, a co-founder of the Hippodrome State Theatre, and Carlos Asse, a set designer at The Hipp.
It, too, was a rental house when it was first built. The first renters paid $50 a month.
The Asses bought the house in 2000 and have renovated the kitchen, bathroom and front closet. The mechanical systems and wiring were updated and ceilings re-plastered. Carlos Asse designed a deck, which Marilyn Wall Asse built.
HAHAHAHAHAHahhahahahaha!!!
Duckpond is a district in NE around the old Thomas Hotel (where Robert Frost, late of Amherst MA, used to winter). The actual ‘old’ hood where the rich (white) people lived was in SE (just south of the GHS, now Kirby-Smith Ctr). What remains of that ‘hood has been turned into B&B’s and doctor and lawyer offices b/c it’s basically a bad neighborhood now. Anyway, I never thought Duckpond was all that attractive (tiny lots, frankenhouses, clogged streets, dust) and now I know the truth: they were built as rental units!!
I couldn’t get past the names in the article.
If the Strange’s daughter married the Jesters son, she could be a Strange-Jester and live next to the Wall-Asses.
Toooooooooooooo funny!
Ya just can’t make this stuff up!
Leigh
Somewhere in America…there really is a… Mr. Joshua Tree…might even be residing near sea level!
Thanks for that, not a gator (and Kim).
Saturday, when everyone here seemed sounded bummed out, I was cool - posted about gardening.
Yesterday and today I have been SO bummed out - I guess Geithner on Charlie Rose Tues and the Globe FDIC non-payment of premiums story Wed were the one-two punch.
So it was just the right time to read about the historical rental renovations and deck design by the Wall Asses and other Duckpondians, and their Spring Promenade.
Freddie Mac loses lotsa money.
The main skill required to run Freddie Mac seems to be the ability to light three one thousand dollar bills on fire every second of every day.
lol
Well it’s a step up from being able to mislay $12 Billion and not go to jail.
(google Franklin Raines) Also Wikipedia. You’re gonna the Wiki article.
When you put zero down on your home and you thus have no equity in your home your leverage is literally infinite and you are playing a Ponzi game.
And the bank that lent you with zero down, a NINJA (no income, no jobs and assets) liar loan that was interest only for a while with negative amortization and an initial teaser rate was also playing a Ponzi game.
And private equity firms that did over a $1 trillion of LBOs in the last few years with debt to earnings ratio of 10 or above were also Ponzi firms playing a Ponzi game.
A government that will issue trillions of dollars of new debt to pay for this severe recession and to socialize private losses may risk to become a Ponzi government if – in the medium term – does not return to fiscal discipline and debt sustainability.
RGE: Bernie Madoff is the Mirror of a Made-Off Ponzi Economy
Vanity Fair had a couple of interesting articles on Madoff in April’s issue. (It might be available on-line, but I’m old fashioned and read the print)
Some highlights:
1. There were wealthy people (inherited wealth, I’d suspect) that took out mortgages on their paid-for homes, worth millions of dollars, and invested that money in Madoff. “By investing the $10 million proceeds of the mortgage with Madoff at a 12 percent return, the 8 percent difference between the carrying costs and the return would have given the owner $800,000/year.”
2. Some of his victims feel they’re entitled to get money back from the SIPC, etc. “‘I Want JUSTICE!’ screamed Joan Sinkin, who, along with her husband Arnold [...] had sunk every cent from 55 years of work [...]. I want to be treated like GM and AIG and B of A! I want SIPC to put people like us back on their feet!”
3. Madoff went to the same college as I did
During the boom, I was told several times about “opportunities” with some hedge fund or similar deal, or some money manager who can get me double-digit returns. For some reason, I was smart enough to stay away from all that…. Maybe it’s my degree in math (from Madoff’s alma mater.) While I don’t feel good about people losing their fortune, I don’t think they deserve government bailout either.
Anyway, now that Bernie’s in jail, let’s now go after the 4 Million Americans who lied on their mortgage applications. They’re just as criminally-motivated; it’s just they didn’t have the opportunity to cheat on a big scale.
Some of his victims feel they’re entitled to get money back from the SIPC, etc. “I Want JUSTICE!”
They could’ve cashed out (or attempted to, at least) at any point. But those constant 12 percent returns kept them hooked.
“‘I Want JUSTICE!’ screamed Joan Sinkin
I can imagine the moment when she first got that Sinkin feeling ..
She and her husband entrusted every red cent to a single man? She shouldn’t be screaming in public, she should be weeping in a dark room with the drapes drawn shut.
Madoff: Don’t hate the playa - hate the game.
“…let’s now go after the 4 Million Americans who lied on their mortgage applications.”
And the loan officers that APPROVED those mortgages.
“Anyway, now that Bernie’s in jail, let’s now go after the 4 Million Americans who lied on their mortgage applications.”
Apparently, you’ve forgotten the meaning of NINJA. There was no need to lie. “Here are the keys to the house, have a nice day.”
You have to hold someone accountable. If enough people demand a product, no matter how dangerous, someone will provide it.
We need to make a choice: either we’re a free society where people can decide for themselves–and face the consequences if they make a foolish choice–or we’re not.
And We the People elected representatives that poured gasoline on the fire by mandating that banks lend to unqualified buyers, and encouraged reckless spending.
You have to hold someone accountable. If enough people demand a product, no matter how dangerous, someone will provide it.
—————————
Then the lenders are the fools. That’s their problem if they want to make loans to deadbeats, but they are also the ones who claim to know what they are doing.
Borrowers, for the most part, are pretty naive when it comes to mortgages, and are looking to the mortgage brokers for assistance…because the brokers are supposed to be the “experts”.
From CNN moneydotcom they are asking about peoples 401(k)’s and 32% say they can’t bear to look!
1. In the past six months, how often have you looked at your 401(k) and other investment balances?
http://money.cnn.com/POLLSERVER/results/45448.html
The Federal Reserve z1 data for Q4 is out. There’s a stat in there I keep my eye on - F.218 line 1 Home Mortgages - Net Borrowing. This IMO is a very key stat gauging the impact of mortgage borrowing on the bubble, and therefore size of the bubble itself, as well as perhaps some kind of a gauge indicating how close we are to recovery.
The value had skyrocketed of course during the bubble - from a pre-bubble rate of about $250B annually to about $1,100B annually at the peak. It has since been plummeting and is now down into negative territory, due to foreclosures presumably.
The odd thing is - in 2008 Q4 the plummeting stopped, and I’m not sure why. There have been some foreclosure moratoriums, but it seems like they would have been fairly insignificant, especially since most of them effected early 2009 and not so much late 2008. Here are the numbers (annual rate of net mortgage borrowing, in $Billions):
2006 Q4 1075.7
2007 Q1 871.3
2007 Q2 813.1
2007 Q3 531.2
2007 Q4 632.8
2008 Q1 270.3
2008 Q2 -65.2
2008 Q3 -327.5
2008 Q4 -248.0
I was thinking that this number would continue to fall, to about -1000 annual rate, and then rise back up to a normal level by about 2014 (will post a graph link in a sec), but that was based on a Q4 number of -600. Since the Q4 number is a lot higher - then that would perhaps indicate that the mortgage debt bubble may end up extending way farther out - like to 2020 or so even. Ugh.
Or maybe the number is skewed by something I’m not thinking of.
Thoughts?
Here’s the graph I was talking about.
Seasonal adjustments? Q4 2007 was up from Q3 2007 and then fell dramatically Q1 2008. You could be looking at a similar pattern?
Could well be - though these are supposed to be seasonally-adjusted rates. However the seasonal adjustment may not properly allow for the currently-plunging values. It’ll be interesting to see what 2009 Q1 brings.
I’m not clear on what the annual rate of net mortgage borrowing is?
1. If there is a foreclosure on a house of 100k does that immediately reduce the ARONM by 100k or does the house have to be sold and the money returned first??
2. How does refinancing affect the picture, I imagine it’s a wash unless more debt is taken out.
3. What’s the usual seasonal fluctuation?
Square foot reduction:
http://www.cnn.com/2009/LIVING/03/12/roommates.recession/index.html
Apparently, those saying that rents would increase because all the former owners would have to rent forgot something…
please check out this link..
http://sandiego.craigslist.org/csd/gms/1064301649.html
it’s well worth it.. I sent a email asking if I could move the house!
Crime crime crime.. somebody get this guy! Word is he is a lawyer.. go figure
Wow. I sure hope that is a joke (or a sting operation?).
Some people suck!
What you talkin’ about, Willis?
http://www.chicagotribune.com/business/chi-biz-sears-tower-name-change-willis-march12,0,7014962.story
I was surprised to see how low of a price per square foot they paid. 14.50 a square foot in the Sears (now to be named Willis) Tower? No sir, no recession here in Chicago…
Part of it is probably people still being spooked after the 9-11 thing. I still don’t know if it was ever a legitimate target, but everyone else in Chicago still seems to think so.
AP headline: “Pelosi pours cold water on idea of second stimulus package”
From the article: “Pelosi left the door open to a second stimulus package.”
Huh?
latest news
U.S. household debt falls in 4Q for first time on record
ECONOMIC REPORT
Household net worth plunges 18% in 2008
Consumers pay down debt for first time on record in fourth quarter
By Rex Nutting, MarketWatch
Last update: 1:38 p.m. EDT March 12, 2009
WASHINGTON (MarketWatch) — Hit by a double whammy of declining home prices and a falling stock market, U.S. households saw their net worth fall by $11.2 trillion, or 18%, to $51.5 trillion at the end of 2008, wiping out four years of gains, the Federal Reserve reported Thursday.
In the fourth quarter alone, household net worth fell by $5.1 trillion, a record 31% annualized decline. Consumers lost $937 billion on the value of their real estate. Their direct holdings of corporate equity dropped by $1.68 trillion, while holdings in pension and life insurance reserve dropped by $1.46 trillion. Mutual-fund holdings fell by $730 billion.
Columnist David Wessel argues that the government has big questions to answer about reconstructing the financial regulatory structure.
Net worth has fallen for six straight quarters since peaking at $64.4 trillion in the second quarter of 2007. Net worth — defined as assets minus liabilities — is down 20% from the peak.
The 20% figure sounds low to me, given the massive vaporization of leverage that supported asset prices in conjunction with non-vaporization of liabilities.
Would that be considered deflation?
Lol!!!!!!!
In a fiat-world, asset deflation IS deflation.
All possible goods that can produce income have been put up as collateral to pyramid even more asset purchases. That’s the FIRE economy in a nutshell.
Then they all come tumbling down.
As I recall, didn’t lots of people say the low U.S. savings rate didn’t matter, because it didn’t include capital gains?
I hadn’t heard that but it makes sense for people to say that. However that’s a false argument on a macro scale, because capital gains are meaningless on a macro scale. Production gains are what matter.
So the macro-level savings rate (what gets the headlines) *does* matter. Depending on unfounded stock market growth to fund retirement is not valid.
“Production gains are what matter.”
Excellent! Why is it so hard for top policymakers to grasp something so simple? For instance, you can’t bail out everyone on the planet by printing money, as if you double the amount of money in everybody’s hand, you also double the nominal prices and it’s a wash. The only way to stimulate is to hand a wealth effect to group A courtesy of involuntary donations from group B.
And what’s the deal with people not wanting to tax capital gains? I pay $10 for a stock and sell it to you for $20. I’ve done almost zero work. I should get taxed for actual hard work, but doing nothing and adding no value to the economy should go untaxed?
I say get rid of the income tax. Tax only assets: property, stocks, & any capital gains. Tax wealth and people will be very, very careful with it.
Tax wealth and people will learn to hide it.
Tax wealth and people will learn to hide it.
They already hide it, but it
Looks to me like those tax havens are being dismantled. You could have a 100% forfiture law for people who illegally skip paying their taxes.
Bring back the guillotine and increase punishments when the richies you describe are found to be hiding wealth =P
Comment on a Marketwatch article claiming Madoff may have turned baby boomers off stocks for good:
ConanTheLibertarian 2 minutes ago
|
“Boomers have a lower wage generation following them, unable to purchase the same equities at the price Boomers paid. That means equities move lower. Some thought globalization would bring new buyers to market, but the wages are even lower in those countries.”
“Houses are the same story. Boomers grew up in 1000 square feet and bought 3000 square feet as adults. Gen X has fewer people, lower wages, less buying power. Voila, home prices decline. And they should. If the average wage is going to be 40k, then that ought to comfortably afford a mortgage.”
Exactly. The second half of the baby boom is poorer than the first half, but richer than Gen X which had fewer student loans than Gen Y.
was 666 the low on the S&P or is this just a bear market bounce ?
And if it is the low will home prices finally stop falling ?
I think we have another leg down in stocks.
But stocks are a lot closer to fair value than houses.
And houses are a lot closer to fair value than long term bonds.
Long term treasuries are over priced I think corporates are the “thing” now as they are selling at steep discounts.
Q: Won’t government bailouts turn deflation into inflation?
Trillions of dollars in bailouts “injected” into the economy - won’t they reverse deflation and turn it into inflation instead?
Answer:
Here is a quote from Bob Prechter’s October 2008 Elliott Wave Theorist: “Believers in perpetual inflation think that the government can keep assuming others’ bad debts infinitely. But it can’t. The only reason that Congress has gotten away with issuing this latest blizzard of new IOUs is that society is still near the top of a Grand Supercycle, so optimism and confidence still have the upper hand. But as pessimism and skepticism continue to wax and the economy contracts, the bond market will figure out that the Treasury will be unable to fund all these obligations with tax collections. Then Treasury bond prices will begin falling as if they were sub-prime mortgages. A collapsing bond market is deflation; it is a contraction of the outstanding credit supply. Recent bailout schemes will not reverse the deflationary freight train. They will serve only to confuse the marketplace and hinder the efficient retirement of bad debts, thus exacerbating the crisis and aggravating investors’ uncertainties and thereby falling right in line with the declining trend of social mood.”
from safehaven dot com
Mark to Fantasy being brought back to life. “We want it NOW!”
House panel gets pledge from FASB head to try to act on accounting rule in 3 weeks
WASHINGTON (AP) — In a torrent of bipartisan angst, members of the House Financial Services subcommittee on capital markets pleaded for emergency accounting relief they said would help small banks, taxpayers, bank depositors and homeowners suffering in the economic crisis. They addressed Herz, who appeared before the panel with officials from the Securities and Exchange Commission and a Treasury Department bank regulatory agency.
“We have been dithering while the patient is sick,” said Rep. Ed Perlmutter, D-Colo. He has proposed legislation to create a new federal board to oversee how accounting principles are applied to the financial markets.
“Three weeks is too much,” Perlmutter told Herz. “We have to move on this thing. We can’t study it any more.”
It was a reversal of stance for Kanjorski, who had previously said Congress shouldn’t intervene in establishing accounting rules such as the mark-to-market standards now at issue.
The rule has drawn criticism because it has forced banks to take steep write-downs on mortgage-backed assets since the collapse of the housing market — gutting their balance sheets even though the assets could eventually recover their value before the banks sell them.
Was that why the market jumped today?
The shorts are getting squeezed as tightly as the garlic in my garlic press. The aroma is sublime.
WASHINGTON (AP) — In a torrent of bipartisan angst, members of the House Financial Services subcommittee on capital markets pleaded for emergency accounting relief
“Was that why the market jumped today?”
Maybe coupled with this:
“The Federal Reserve, other federal regulators, and the Treasury Department have stated that they they will take any necessary and appropriate steps to ensure that our banking institutions have the capital and liquidity necessary to function well in even a severe economic downturn,” Chairman Ben Bernanke said in his speech before the Council on Foreign Relations. “Moreover, we have reiterated the U.S. government’s determination to ensure that systemically important financial institutions continue to be able to meet their commitments.”
Doesn’t matter how much capital a bank has when their customers disappear due to a lack of employment. What a joke.
Question:
If a bank is insolvent, mark to market-wise, can it still cash flow positive over the long term?
Sure!!
Here, let me give you a good analogy.
I live in Miami, so you will indulge me somewhat.
Let’s say I am a drug dealer.
Just sayin.
Let’s say I get busted.
Just sayin.
Let’s say I decide to “cooperate.”
Definitely, just sayin.
Could the business “cash flow positive over the long term?”
Sure.
Just sayin, now.
If people leave their money in it and pretend it is solvent, why not? On the other hand, if enough of them decide to take their moneys out and the bank cannot sell or pledge its assets to meet its cash needs then not so much.
Until the final day, Bear, Leh, FNM, Freddie, Countrywide, IndyMac, all said their liquidity positions were strong. Fake accounting will increase suspicion not lessen it. Confidence in our financial system will grow beyond repair. People already don’t trust the banks!
From a Yahoo! Story.
http://news.yahoo.com/s/ap/20090312/ap_on_bi_st_ma_re/wall_street.
“We might find that the banks are not as bad, or not bad at all, if these assets are marked differently,” said Doreen Mogavero, president of the New York floor brokerage Mogavero, Lee & Co.
Heck, then why not just market to 2006 levels and the banks will look golden? And all along we thought there was a real problem with the banks. It turns out there were just typos on their balance sheets. Whew, that was close!
Yeah! That’s the ticket! And my large yacht! And my beautiful wife, Morgan Fairchild! Yeah!
- Jon Lovtiz
Some people are just terminally stupid, I guess, but isn’t it plainly obvious that Wall Street can’t get back to standard scam operations again now that the tide is out and the big Ponzi schemes (including debt securitization) have collapsed? This idea that a return to fraudential accounting will somehow serve to pull the wool back over the sheeples’ incredulous eyes is just plain ludicrous.
It’s ironic that on the same day criminal Ponzi financier BM was sent to jail, the overseers are telling the regulators to bend the rules for the Street. And, people wonder why Made-off was able to get away with his crimes until now. And, they wonder how we got here, two bubbles, followed by a cataclysmic collapse. There it is.
+1 You do a good job at boiling it all down into something a 4th grader could understand.
“We have been dithering while the patient is sick,”
One way to cure a sick patient is to rig all the medical instruments so that they signal robust health — normal body temperature, normal heartbeat, normal lung function, normal cholesterol… NOT!!!
You can’t cure the patient by rigging the medical equipment to lie about his condition — d’oh! (Something telles me Ron Paul understands the problem with this logic…)
From a friend just back from Dubai
Dubai was amazing to see, mainly at how much construction is not completed over there. From all the stuff you hear about it and see online, it makes it seem like things are a lot further along than they are, but I just get the feeling that its going to be a ghost town in about 10 years. They have stopped construction on half of their projects and it looks like the other half have really slowed.
People will flock to Dubai because …?
Really!
The Pussycat was looking at SKF the other day to go to 140. I looked at it and it was 170ish. Was thinking - 140? Dunno. Currently at 145. Jeezzz.
In the money on my UYG after buying too early. Again.
Winky, winky.
I’m still waiting. This rally has legs.
Thinking so too. Was looking for confirmation. Thanks so much.
Don’t think the bears have been punished enough. Probably a lot of shorts being bought as I type, which will be slaughtered on the next leg up.
Meantime, the stampeding buyers not wanting to miss this rally will push it up too.
Love the smell of fear in the financial markets. Love you too by the way. Your sense of humor never fails to make me laugh. And, the financial education has been priceless. “You are my hero”, she says with tears welling up in her eyes.
The stampeding buyers is the classic slaughter. Buy now before you are priced out. LOL
The market is just way too high for the earnings stream that they are producing. The multiples make no sense at all.
Hence, my claim that there is one last puff left in the cigar-butt for shorts (but not quite yet.)
This is like the 2002-market. Fierce euphoria followed by the slow ride into hell.
Its been an exciting day. I was out earlier, which kept me from making the big mistake of buying SKF in the 150s. Looks like we’ll close above 740 on the S&P. Next resistance 780?
I posted yesterday about buying SKF at the 120 level as an entry and out at 175. You can’t get too fine with this thing. Maybe it won’t get down to 120, but I need that cushion. I closed out my XLF April calls a few minutes ago. I am sure I left money on the table but 75% return in a week or so is nice. Still playing catch up my my FXP crash and burn so I need these “breaks.”
I was just about to post something…
SKF @ 139 anyone?
If we get down to around 100-120 I’ll give it a hard look.
Tons of support in the 100-120 range to the extent you believe in technical analysis and it having any meaning for ETF’s.
“If we get down to around 100-120 I’ll give it a hard look.”
Oh, it will get there, but not in a straight line. If you’re quick, you could profitably trade in and out (on the long side even) before it reaches that level.
Not, me. I’m like a bull in a china cabinet with this stuff. A functioning retard at best. I need large margins for error.
Hozzy, vozzy and the fleet-footed feline may do all that fancy stuff. I prefer to just walk around with a beer in my hand and pick up the coins I find here and there.
If you’re into SKF at 120ish, you could do better with FAZ @40 or so. I had a nice ride last time around.
Note: FAZ = 3x anti-financials. SKF = 2x.
The UN group of leaches should be thrown off our real estate. They should set up shop somewhere on the continent of Africa, so they can truly help the needy. Never has a more useless group has been put together.
White House objects to UN calling US ‘deadbeat’ Mar 12 02:18 PM
WASHINGTON (AP) - The White House objected Thursday to U.N. Secretary-General Ban Ki-moon’s description of the United States as a “deadbeat” donor to the world body.
Ban used the phrase Wednesday during a private meeting with lawmakers at the Capitol, one day after he met with President Barack Obama in the Oval Office.
White House press secretary Robert Gibbs said Ban’s “word choice was unfortunate,” given that the U.S. is the largest contributor to the United Nations.
The United States pays 22 percent of the organization’s nearly $5 billion operating budget but is perennially late paying its dues.
Asked whether Ban should retract his comment, Gibbs said some recognition by Ban of the U.S. role would be appropriate.
“I think given the contribution that the American taxpayer makes, I do think it would be appropriate to acknowledge that role,” Gibbs told reporters at his daily briefing.
Ban, apparently concerned about his choice of words, issued a statement late Wednesday saying the U.S. “generously supports the work of the U.N., both in assessed and voluntary contributions.” Ban also said he enjoys “an excellent working relationship with the United States and appreciates the many ways that it supports the United Nations.”
I have a great place for the UN to set up shop. Then Robert Gibbs can tell Ban Ki-moon, the choice of the new UN site Ciudad Juarez was unfortunate.
The Mexican government has deployed 700 extra federal police to Ciudad Juarez, a city bordering Texas where local police have been overwhelmed by drug violence. Earlier this month, 3,200 federal troops were sent to the city.
Mexican officials say the violence killed 6,290 people last year — and more than 1,000 in the first eight weeks of 2009.
I’m sure he really meant to say “crooks, thieves and liars.”
Wazup? No damn body wants to work with Turbo Tax Timmay! LOL! Has the boy got cooties or something?
WASHINGTON (Reuters) - Prominent Wall Street lawyer H. Rodgin Cohen has withdrawn from consideration to become deputy U.S. Treasury Secretary, Democratic sources said on Thursday, dealing another setback to the department’s efforts to fill critical positions.
The sources, who spoke on condition of anonymity, said vetting issues came up in the final stages of considering Cohen for the job.
Cohen, who has been with the New York law firm Sullivan & Cromwell for nearly 40 years, could not immediately be reached for comment.
He has been a major influence on the bank rescues and mergers that have reshaped Wall Street in the past year and has advised nearly every top financial firm, including recent work for Fannie Mae, Lehman Brothers, Wachovia Corp, American International Group and JPMorgan Chase.
Cohen is the second person to withdraw from consideration for the No. 2 job at Treasury after former Securities and Exchange Commissioner Annette Nazareth decided to drop out last week. Top candidates for undersecretary positions have also withdrawn from consideration.
March 12 (Bloomberg) — Berkshire Hathaway had its issuer default rating cut to AA+ by Fitch Ratings from AAA and senior unsecured debt rating lowered to AA from AAA.
Even elephants tremble!
and big boats full of stuff go over waterfalls….
ben, run ‘em both.
March 12 (Bloomberg) — H. Rodgin Cohen, chairman of New York law firm Sullivan & Cromwell LLP, has withdrawn his name from consideration to become deputy Treasury secretary, according to a Democratic official.
…
Cohen has ties to numerous firms that have been shuttered, bailed out by federal regulators or acquired during the financial crisis. Among the companies he has represented are Lehman Brothers Holdings Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Fannie Mae and Wachovia Corp.
http://1.bp.blogspot.com/_qFiyjwMlP0Y/SbiQGxyr6XI/AAAAAAAAAoM/0Okx3-JgPxM/s1600-h/6a00d8341d417153ef010536bb8e68970b.png
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sometimes I think if the Pound even survives it’ll be the next Yen in say, 20 years or so.
crashed queens,
crushed dreams….