Bits Bucket For April 10, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Does Wage Inflation
Cause Price Inflation?
“…is there any evidence to support the assumption that increased wages cause inflation? This study updates and expands earlier research into this question and finds little support for the view that higher wages cause higher prices. On the contrary, the authors find more evidence that higher prices lead to wage growth.”
Let me point out that last line again, “On the contrary, the authors find more evidence that higher prices lead to wage growth.”
I’ll post link below
It’s a policy discussion paper from 2000 from the Cleveland Fed
http://www.clevelandfed.org/research/PolicyDis/pd1.PDF
Economics 101: Supply vs. Demand
The more supply of money there is, the more the demand for it. In a consumer driven culture that values material wealth over simple sustainable living, there is no price roof for “stuff”, with demand for it reduced only when the consumer chooses to live more frugally.
“The more supply of xxx there is, the more the demand for it.”
You need to go back and take Econ 101 again.
“The more supply of money there is, the more the demand for it.”
Wow! Absolutely breathtaking.
Sorry, brain f@rt. Let me try again, now that I have had my cuppa joe.
The more the supply of money from spenders, the more sellers will demand it in exchange for services.
Thanks for keeping me honest.
I think you have the right idea, you’re just not saying it right.
It is indeed still the price = demand/supply formula, however in this case the “supply” is money, and the “price” is goods. So if the supply of money goes up, the “price” goes down, where the “price” in this case is the amount of goods relative to the money.
(OK so maybe that’s not a good way of putting it either)
In simple terms - the more money in the system, the higher prices are for each good, all other things being equal.
Well, other than starting the day by looking absolutely asinine (always fun), it is an good example of supply and demand curves not being applicable.
Health care and legal services are also examples of a situation where a large supply perversely creates more of a demand.
Not really the right idea either. Increased supply doesn’t cause increased demand, econ 101 and all that.
In this case, the whole argument is a little stupid since wages ARE prices. The argument is whether prices cause wages or wages cause prices. Since wages are prices we boil it down to:
Do increasing prices cause increasing prices?
OR
Do increasing prices cause increasing prices?
This isn’t rocket science. Something else causes increasing prices (all sorts of prices, including wages).
In simple terms - the more money in the system, the higher prices are for each good, all other things being equal.
Exactly.
the whole argument is a little stupid
I wasn’t referring to NSO but rather the initial issue…which is also a very old argument.
Some companies price their products or services by seeing how much a buyer is willing to pay. They take into account a buyer’s neighborhood as well as occupation. Pricing is sometimes an art form.
NoSingleOne,
you may be confusing “wages” with “credit.” If you walk into Macy’s for a sweater, you’re likely to pay more for it if you have Mastercard than if you have to hand over $10 bills. Macy’s knows about Mastercard and charges more.
This is how our grandparents were able to live on cash. Nobody had credit. Prices had to be cash affordable, or Macy’s wouldn’t sell any sweaters at all.
Nowadays it’s hard for 1 person to live on cash, when the other 99 blokes are whipping out plastic and allowing Macy’s to jack up the prices. The cash guy is forced to pay for the creditmonger’s psyche.
Multiply the Mastercard wealth effect by about 3000, and you have the housing bubble.
The ability of workers to demand a higher price for their work requires there not to be a huge excess of supply of people willing to do that work for a lower price. Local unemployed or workers from elsewhere in the world will do.
Supply of labor vs demand for labor sets the price of labor. Increase in the supply of money relative to a fixed pool of labor will cause all prices to rise.
If you increase the supply of money, yet fail to increase the demand for labor then prices of goods go up but the wages stay flat.
The medical industry is a case where the government via mandated employer insurance and other programs has created an “infinite supply of MONEY for medical”, therefore the price of medical services goes up. Increase the supply of medical services will reduce the price. I believe we are in a medical services BUBBLE where people are paying MUCH MORE for services than they are worth.
NSO, You’re going to have to explain that one.
I’ll just say that it’s a case of fingers flying faster than brain cells. The hazards of posting at 4am local time.
NSO,
You were the cause of a couple chuckles in the Eastern time zone with that and “brain f@rt”, so I wouldn’t worry about it.
Let me say it a different way.
The more XXX there is, the less XXX is worth. Pretty much works with every physical item.
I may have this wrong, but the way I see things:
With globalization, the inflation picture will be a bit different. The US can pump up money supply, but if cheap labor overseas keeps down wage inflation in the US, we will keep exporting our inflation to those places as wage inflation, and the lack of wage inflation in the US will generally keep us from a hyper-inflationary wage/price spiral.
Then again, protectionist measures could change that equation completely…
“The more XXX there is, the less XXX is worth.”
That rule surely rings true for the government.
I’d just like to gently add that there are known exceptions to microeconomic demand theory. One of these is the so-called “Veblen good”, which is usually a luxury item whose demand/desirability *increases* as its price increases. (A Veblen good is really a subset of the so-called Giffin good, which is where close substitutes for the good aren’t present - leading people to buy more of the preferred good as its price increases.)
Julius, all you have described is supply/demand where supply is close to 1. You have also described bubble psychology where the price is separated from fundamentals. In the example you provide what is sought after is a gain not the actual item… and the greater the gain, the more rare the gain is, therefore the demand for that gain increases causing it to gain more. Eventually, the price gets so far out of line that no one can afford the gain which causes the gain to stop. With no more gain, the value of the item quickly reverts to its equilibrium price. The problem is that the item gets associated with a loss and the loss potential has negative value; therefore, things always overshoot on the way down. The bottom is not reached until the loss potential is less than the degree below equilibrium price.
All of these types of price situations require cheap credit otherwise the price cannot get too far out of line before the interest rates and limits on the supply of money bring it back into line.
Without the sudden ability to print tons of money in speculation, it is very hard to get the initial “unusually high gain” necessary to start gain price spiral.
This is a chicken-and egg question, so the authors have to catch the very beginning of the cycle to find the first chicken (or egg).
Also, the authors need to account for the rise of credit as a wage substitute. Prices are now set in relation to available credit, not to available cash.
It’s not just the supply of available money, it’s also the willingness of people with money to part with it.
combo,
Just putting the puzzle one piece at the time.
It’s been asked here, “how could prices increase without wages increasing?”
Here we have a possible answer: prices do, in fact, increase FIRST, then, wages increase.
____
As to your statement “It’s not just the supply of available money, it’s also the willingness of people with money to part with it.”
That’s the easy part.
It’s quite easy to demonstrate how to get people to part with it.
In fact, you pointed out last week or so that one of my posts by an Australian economist was a find. In it, he in the course of a discussion, mentions how it could be done.
I can repost.
On the contrary, the authors find more evidence that higher prices lead to wage growth.”
True in a closed system. Not true when there is slave labor to be had around the globe.
+1
or credit as a wage substitute.
The system will close and equilibrate only when each and every emerging 3rd world labor pool is accounted for, and we shut off the printing presses and credit cards and go back to a zero-sum finite amount of money (i.e., some kind cash-only system based on a gold/silver standard).
Of course, that’s not sustainable. It wouldn’t sustain even 24 hours.
gold/silver standard IS sustainable if you do the math and realize that every trade is of “equal value” and that the net result is simply moving goods around the economy and an increase in the production of goods.
Inflation has a lot to do with the perceived value of money. Does the consumer/saver perceive the value of money as stable he/she might save the money. So, as long as money is perceived to have stable value inflationary pressures are somewhat contained. Once psychology changes and money is perceived to be devaluating inflationary pressure are on the rise as everybody is trying to exchange their money for goods. So the velocity of money is probably the single biggest force behind inflation.
In a gold based currency inflationary pressures are close to zero, everybody has full confidence in the value of the currency.
During the Weimar Republic on the other hand on pay day the wives were waiting at the factory gates to spend the entire paycheck the same day since they knew it would depreciate by about 10% if they waited until the next day.
I will just ask this as simply as I can:
What causes wages to go up?
Change in wealth distribution
Desirability and supply of goods
Money available
Can anyone think of anything else?
Now, I’m very interested in distribution of wealth in the USA. Clearly we have issues there. I think the free trade agreements have resulted in more concentration. You could also argue all the debt/credit causes the wealth concentration.
Desirability/supply/elasticity discussions. You never really know where you are on the supply demand curve and its always in flux. As far as housing goes, we have an oversupply currently. Given some moderate population growth and demographics, there is a certain rate of household formation. There are a bunch of good web sites you can find information on that. Clearly, the amount of money available effected that. Of course if it had been in the form of wages, it wouldn’t have been a problem.
Money available: Well we’ve discussed that plenty on here and the different flavors of money. Generally we are seeing an increasing debt spiral. There are lots of debates about the stability of that system.
Where was this going… oh yeah… wages. I would guess the article has noticed their are time delays between changes in the money supply, prices and wages. So, if you take a snapshot in time and say I increased the money supply by x percent here but prices didn’t go up. Or prices went up but there is a delay before wages follow. There are finite amounts of time before the money is spent, accumulated, re-spent exc. Finte velocity of money.
Again, you are also looking at terms of elasticity. This is well known. Supply and demand are not flat curves. You look at the marginal utility of extra houses. They serve no purpose what so ever except like a bank of available housing. However, it suppresses cost substantially. Something like oil has high volatility, a slight shortage can cause a major price spike. A slight oversupply can cause a major bust.
Will read the article later. I’m sure it will be enthralling.
So. You are on an island and their is one coconut tree. It has one coconut on it.
Your currency is clam shells.
You find a big pool of clam shells.
What does this do to the price of the coconut in clam shells?
You are on an island with 10 people
9 of the people have 1 clam shell each,
1 person had 5 clam shells and then found 100 more.
A person arrives with a coconut to sell.
What does the clam shell find do to the price of the coconut.
Answer = nothing, the guy with all the clam shells will bid 2 clam shells and the others will spend their clam shell on cheaper food like grass and bark.
The clam shell discovery will still tend to drive up prices, you just aren’t allowing that to happen.
The guy with 100 clam shells might decide he no longer wants to wash his clothes (or cook the coconut or whatever), so he pays the other folks to do it. Eventually some of them have more than 1 clamshell THEN the guy with the coconut arrives (or maybe its a new guy with a new coconut this time). Now everyone has at least 3 or 4 clamshells. The price would certainly be higher than 2.
And I didn’t even consider the issue of divisibility. To the extent the coconut is divisible a few of the islanders might get together to bid the coconut up to 3 clams (or more if they have more than 1 clam each as I describe above). The rich guy of course would then move the price to 4.
Not if the clam shell discoverer is a “millionaire next door” type who has no problem continuing on as he always has, doing his own laundry, etc. Oh, and preparing for the day when someone else finds a cache of clam shells and start to compete with him for the next coconut.
The guy with 100 clam shells might decide he no longer wants to wash his clothes (or cook the coconut or whatever), so he pays the other folks to do it. Eventually some of them have more than 1 clamshell THEN the guy with the coconut arrives (or maybe its a new guy with a new coconut this time). Now everyone has at least 3 or 4 clamshells. The price would certainly be higher than 2.
Why would he pay an entire clam shell to have his clothes washed when he can hire a slob from the island next door to wash his clothes for nothing more than the undigested food particles in his stool.
What if the rich guy with the clam shells offers to LEND clam shells to the poor guys, to be paid back with interest? The coconut seller can now double his price.
And the poor guys have to hunt for new clamshells, hoping to find some.
BINGO Oxide - this is a great thread - I’m going to save this thread and send it to my friends who wonder why I spend so much time lurking on this blog.
I wish there was some way to organize the creativity and Big Brains that reside on this blog. Thanks for all the insight I get here every day.
What happens if the poor guy who took out the loan can’t find any more new clam shells, or decides he/she defaults on the lent clam shells?
Should have said:
What happens if the poor guy who took out the loan can’t find any more new clam shells, or decides to default on the lent clam shells?
If lots of poor guys default on the loans, the guy with 100 clamshells will only have 50 shells left, but he will tell everyong he is going to find 200 more in the future.
Then the rich guy will tell all the poor people that he’s found a magic tree whose leaves will turn into clam shells in the future, and that from now on he will spend leaves instead of shells. But if any of the poor people take leaves from any other tree they will be banished from the island.
More Squatters Are Calling Foreclosures Home
http://www.nytimes.com/2009/04/10/us/10squatter.html?hp
“MIAMI — When the woman who calls herself Queen Omega moved into a three-bedroom house here last December, she introduced herself to the neighbors, signed contracts for electricity and water and ordered an Internet connection.
What she did not tell anyone was that she had no legal right to be in the home.
Ms. Omega, 48, is one of the beneficiaries of the foreclosure crisis. Through a small advocacy group of local volunteers called Take Back the Land, she moved from a friend’s couch into a newly empty house that sold just a few years ago for more than $400,000″.
“In the meantime, she said, she has instructed her adult son not to make noise, to be a good neighbor.”
Wow, sounds like a great family.
“Honkala, who is the national organizer for the Minnesota group and was homeless herself once, likened the group’s work to “a modern-day underground railroad”
Nice try. Honkala has some brain problems.
“likened the group’s work to “a modern-day underground railroad”
Female or not, Honkala should be slapped. Underground Railroad?? Spare me. Slaves weren’t exactly low life freeloaders trying to sponge off other people’s property for free as long as they could. Quite the contrary, as we all know.
Just another sad commentary on the downward spiral of the US and A. They all belong in jail. Or Club Gitmo.
‘Club Gitmo’
You know, it’s pretty interesting how people in this country casually toss out torture references. Only a few years ago one would be considered a monster for such things.
But go on and rant about democrats or republicans, blah blah. The frog is boiling, my friend, and it might be you.
“casually toss out torture references”
I hope I am not in the target group for that comment. It is anything but casual for me to reference torture.
Never mind any of that, how can I get one of them there free houses? Not enough empty houses around here, oh well.
The frog is boiling, my friend, and it might be you.
Dadblastit! Why is EVERYONE talking about cooking frogs lately!? Makin’ me jist crazy! NooooooOOO!
*leaps to feet and runs around room squealing and waving hands indicating crazedness *
Hmmm click on the wrong website links, and you can see that some people evidentially like torture.
…or at least being made “airtight”.
I’m curious: why do some people have a problem with mention of the institution (now winding down) in Cuba but don’t flinch at the common phrases like “ride ‘em out of town on a rail” or “string ‘em up”? They’re similar concepts, you know.
I’m curious why some people don’t flinch at a common word rape used in some of the postings here. (Ben excluded. He has objected to the use of the word rape when other bloggers have used this word).
The “underground railroad” reference is an interesting comment. It implies that America is about White People effectively enslaving Black People, and it’s up to the Blacks to rise up and fight for freedom.
In many areas, I see various factions fanning the flames of a civil war.
I disagree, it’s closer to a Robin Hood scenario in which the Honorable Squatters are pitting themselves againt the Big Bad Faceless Bank who took “cheated” them out of money.
Whew,…Lordy,.. Is it just me or is it gettin HOT in this here stew pot?
Mental note: avoid neighborhoods where any resident calls herself a queen.
Doesn’t Los Angeles have Queen Latifah?
Probably so, and maybe 10,000 others “like her” who call themselves “queen” so and so. I meant avoid buying in any neighborhood with the self-titled “queen.”
Ummmm. So the nicest parts of San Francisco should be avoided at all cost even at the bottom?
Ummmm. So the nicest parts of San Francisco should be avoided at all cost even at the bottom?
Having just watched Milk, I find that hilarious.
From Wikipedia:
“Most species of hermit crabs have long soft abdomens which are protected from predators by the adaptation of carrying around a salvaged empty seashell, into which the whole crab’s body can retract. Most frequently hermit crabs utilize the shells of sea snails, marine gastropod mollusks. The tip of the hermit crab’s abdomen is adapted to clasp strongly onto the columella of the snail shell. As the hermit crab grows in size, it has to find a larger shell and abandon the previous one’.
I had a pet hermit crab that died. Before doing so, he crawled out of his shell. I was surprised to learn it was not part of his body. He appeared lanky and unattractive outside of his home.
Well that leaves out Dupont Circle.
Mental note: avoid neighborhoods where any resident calls herself a queen.
Despite what people said in their replies, this isn’t the case in San Francisco!
Apparently you have not spent much time in San Francisco. Him, her, whatever. Anyways, it was a joke. I have lots of gay friends, and often find them more interesting than breeders. True lack of prejudice is recognizing and embracing differences, not pretending they don’t exist out of political correctness. My comment contained nothing negative. I do in fact know self professed queens, and some that refer to themselve as female. Pre-op, post-op, transgender. . . .
and often find them more interesting than breeders.
You know what? The term ‘breeders’ seems rather derogatory, which is odd, coming from someone who noisily proclaims their lack of prejudice and fondness for embracing differences.
I have kids. What is your point? Toughen up. If you don’t understand the difference between humor and real bigotry there is not much I can do about it.
So I guess West Hollywood is completely out
“So I guess West Hollywood is completely out”
It has been for years. I think it was the Doo-Dah Parade that did it.
Everybody should be thanking her for keeping up the property until it gets sold by the bank to a real owner who intents to live in it.
——————
What she did not tell anyone was that she had no legal right to be in the home.
The banks really ought to consider renting these out. They can torpedo the rental market or they can torpedo the selling market.
I agree that leaving property vacant benefits no one, including the bank.
Our legal system requires that most participants be honest, it was not designed for the rampant fraud that has occured recently. It’s now to the point where the moderately dishonest Queen Omegas are filling in gaps left by the grossly dishonest (mortgage brokers, NINJA loan applicants, CDO/CMO brokers, Bank CEOs, congresscritters). I’d say it’s best to work with these minor parasites while we try to rid the system of the real crooks.
On a similar note…I saw flyers hanging around Cleveland yesterday stating that one out of every 13 houses within the city have been abandoned.
From the article:
“We had a move-in that we were going to do one day at noon,” he said. “At 10 o’clock in the morning, I went over to the house just to make sure everything was O.K., and squatters took over our squat. Then we went to another place nearby, and squatters were in that place also.”
If this is not already, it is going to transition into organized gangs battling for turf. The article doesn’t give a specific location, and the fact that the home previously sold for $400k doesn’t mean it isn’t a one bedroom shack in the slums, but if this is taking place in middle class neighborhoods it is the end game for civilized society. The article tries to portray all of the squaters as down on their luck families but I’m afraid most will be used as crack houses. At some point, if the police won’t perform their duties I’m sure the neighbors will.
I think the “apparent” work ethic of her adult son tells me all I need to know.
Mike
‘When the woman who calls herself Queen Omega moved into a three-bedroom house here last December, she introduced herself to the neighbors, signed contracts for electricity and water and ordered an Internet connection.’
I can not get the image out of my head of Queen Latifah knocking on Steve Martin’s door and him answering with a stunned face.
Control the things you can.
Banks turn debtors into utilities.
It was us that wanted to buy a caravan.
Aren’t you enjoying this sudden marked change in sentiment? It’s great, ya just know there wasn’t gonna be any more sugar with all that doom and gloom nonsense.
Viva Winston!
It’s a double-plus good time to buy or sell.
Nearing the Bottom, or Digging a Deeper Hole?
“The recessionary headwinds that began in late 2007 show few signs of abating. In the United States, we have witnessed sizable declines in employment; a multitrillion dollar decline in household net wealth, which has shaken consumer confidence and eroded consumer spending; a record-smashing plunge in the single-family housing construction industry, coupled with historic declines in house prices; a domestic automotive industry fighting through the worst slump in decades; and, not least, spectacular fraud, failure and turmoil in the banking and financial investment sector. Not surprisingly, real GDP contracted at a 6.25 percent annual rate in the fourth quarter of 2008, its largest decline since 1982. Moreover, economic activity is likely to decline and the unemployment rate rise through the first half of 2009.
Otherwise, things are OK.”
_____
This one is from the St Louis Fed.
And, no, I did not insert that gem, “Otherwise, things are OK.”
The above are the first two paragraphs of an economist at the Federal Reserve Bank of St. Louis Kevin L. Kliesen
Good one, Kevin! Unlike most economists that populate the planet, he is one of the few with a good nose for data.
I’m glad you liked it.
Here’s the second part (abbreviated)
… Weighing the Costs and Benefits
Through the fourth quarter of 2008, real GDP had declined only 1.7 percent from its peak in 2008:Q2, while the unemployment rate had risen by 3.7 percentage points from its trough in the fourth quarter of 2007. These numbers, while likely to worsen further over the first half of 2009, still pale in comparison to the 27 percent decline in real GDP and the nearly 25-percentage-point increase in the unemployment rate that occurred from 1929 to 1933.
When the depth and duration of the current recession are put into a historical context, the economic justification for the massive monetary and fiscal stimulus actions becomes less clear. While these actions may indeed end the recession significantly sooner than if policymakers had adopted a more moderate course of action, this benefit might be more than offset over time by (1) higher future marginal tax rates to pay for the increase in public debt, (2) a more interventionist regulatory structure that diminishes the role of market incentives and (3) the possibility of higher inflation and inflation expectations from excessive money growth.
Policymakers must be exceedingly careful not to put in place policies that begin to erode the nation’s growth rate of labor productivity, which is the building block for rising living standards over time.”
____
INFLATION!!
Not deflation.
Let’s see: high inflation and high taxes in a market without jobs.
Yeah, that’ll work long term!
“Otherwise, things are OK”
PS: If, in addition, you click your heels three times and say real fast “These Idiot Stimulus Plans and baiouts will work”.
PB - regarding your comment yesterday:
BTW, I thought JP Morgan was an investment bank. Since when are they a home lender?
I think you’re forgetting the “Chase” portion of “JP Morgan Chase”. Chase in fact had my mortgage for a while, until I recently refinanced.
When I lived in NYC (2001-2002), Chase was the major player in consumer banking and they were renowned for their high fees and poor customer service. They are also the only bank I ever belonged to that “missed” a direct deposit payment, giving me some mumbo jumbo about a clerk screwing up a routing number and the payment being deposited late. WTF…two weeks late??? Not a happy situation when living paycheck to paycheck in the most expensive city in America.
Wells Fargo, despite their corporate shenanigans and HELOCs, has actually been the best bank I have ever dealt with.
You’ve just pointed out the downside to Federal Corporatism, of which JP Morgan Chase has been the epicenter for about 100 years now. The poor performers are made strong by their political influence, at the expense of the customers.
I want this to end. We could use a man like Teddy Roosevelt again. Bust the trusts, before they bankrupt the country? (I realize it may be too late already…)
Be careful what you ask for though. Teddy had a lot of socialist tendencies - universal health care, pro-union, etc. And his “trust busting” was very… selective.
You’ve just pointed out the downside to Federal Corporatism, of which JP Morgan Chase has been the epicenter for about 100 years now. The poor performers are made strong by their political influence, at the expense of the customers.
And at the expense of the legitimate competition. I heard on NPR small bank owners grownign about the recent increase in the amount they have to pay to the FDIC in order to bailout the too big to fail banks. The small banks will get driven out of business and the big bailed out banks will take over. Small business/banks should be rioting in the streets even more than the standard tax payer over this abuse.
Yep absolutely. There have been a few articles to that effect recently. Not only are the more responsible banks hosed by things like the FDIC fees, but also the banks that are taking TARP money are using it to their advantage - by using it as a selling point of being well capitalized now.
It’s all part of the government’s “equal opportunity for all businesses” plan. Only some businesses are more equal than others.
Precisely.
Good banks will wither to feed the bad ones.
Good companies will wither to feed the bad ones.
Sustainable wages will replaced with slave wages.
People who pay their taxes and bills will subsidize those who won’t pay.
How long can this madness go on?
I was conveniently ignoring the “Chase” part of their name.
It really sucks when Megabank, Inc goes after renters who are current on their rental payments. Where are the protections for the little guy in our system? All this dough got shoveled into Wall Street’s craw, then they can turn around and kick Joe the Plumber out of his rental home even though he is current on his payments.
Bullying disgusts me. Why doesn’t JP Morgan Chase pick on someone their own size?
I don’t blame the bank in this situation because the rent payment is taken by the owner, and never given to the bank. The lease is between the owner and the tenant, and the mortgage is between the owner and the bank. If the owner defaults on the mortgage, the bank has the right to take it back no matter who is living there. If the tenant wants protection like this it should have been written into the lease contract where the tenant doesn’t have to pay rent the minute the landlord stops the mortgage payment. That’s the way to go. Going forward if I were to rent a house that’s a condition I would make sure gets into the contract.
If the landlord doesn’t honor their mortgage contract what makes you think they’ll honor their lease contract?
Our courts are relatively toothless in civil matters, if the bonehead has no visible assets you’re toast. Why do you think all the lawyers go after the “deep pockets”, civil courts can’t do much to a broke jerk.
The tenant may just forgo rent payment in such a case. It is not up to the landlord to “honor” it or not, he just won’t get the rent check from the tenant.
Come on now, there are lots of things to hate banks for, but for kicking renters out of foreclosures isn’t one of them.
Renters rent from someone else, they don’t deal directly with the bank. ‘Current on the payments’ only describes the relationship between the renter and property owner, it doesn’t describe the relationship between the bank and the property owner.
That property owners can be shady is one of the downsides of renting mitigated by home ownership.
There are also plenty of cases detailed here where property owners are subsidizing renters to live in their property, and hey, that’s good for the renter, and tough tits for the owner.
However, if prop owner is not able to continue being in the business of property mgmt for whatever reason and stops making payments, it’s the property owner you should be pissed at, not the bank.
It has nothing to do with banks picking on the little guy.
“…for kicking renters out of foreclosures isn’t one of them.”
FU. They have already financially engineered the largest theft from the US tax base in the history of the country. Kicking Joe the Plumber out of his rental even though he is current on the payments adds injury to crime.
ok, you aren’t rational. this discussion cannot continue.
The poor banks!!!!!
I wasn’t rational when I said that housing prices were going to crash several years ago and when I pointed out that Wall Street had its hand in the subprime lending business — in fact, many trolls came on this blog to accuse me of wearing a tinfoil hat!
But I was right. Where were you, Mr Overtroll?
In the last couple of days I have seen articles “interviewing” happy first time buyers. One was in CNN, and the other in the Boston Glob. The Glob one was particularly heinous, as the vic…err first time buyer bought a condo in Mattapan… For those of you not aware of Boston’s more seedier parts, you need an APC to get there. I felt bad for them as they are immigrants, and probably were just trying to fit into the American Dream ™.
I think that the REIC and the newspapers have really turned up the heat on the propaganda lately. It will not matter though, as the cheeleading is being done at precisely the wrong point in time. Specially in MA those who buy now, are going to severely regret it in the next year or so, but it seems that buyers are coming out of the woodworks, encouraged by spring, flowers, and a steady diet of BS from the media.
I look at it this way… 300K house 1 year ago is 240 now, and will be 150 or so next year. Every year I wait, I “make” 60-90K in less debt for the same product, what is not to like?
There has been a lot more RE happy time articles in the Wash Post lately.
300K house 1 year ago is 240 now, and will be 150 or so next year. Every year I wait, I “make” 60-90K in less debt for the same product, what is not to like?
I wish I could believe this. I want to. I tell myself to. But I’m getting fed the ol’ “Now’s a great time to buy - prices won’t be going any lower” again. They’ve dropped a little in my area, but not to where I’d expect them to bottom. Average price for an 1100 sq. ft. house is low $200s. I think they should be around $175K. These are nothing special houses - old, many outdated. Am I the delusional one thinking that low $200s is still too high for something like that?
No, You are not delusional. Those buying, and paying 200K for a 1100 square foot house that NEEDS updating are the delusional ones. I will just sit in the sidelines… And wait. Patience. It will pay off. MA is still deep in denial, and until that gets worked out of the system, there are going not going to be any drop in wishing prices.
Hope you are right. I’m sitting here in Ma waiting til prices come down. The denial you speak of is rife in my area. Last November, I was watching a place, listed for 425, sell. It went for 377K and I thought–cool things are moving in my direction. It was a bit run down, on a cul-de-sac off a busy street about 200 yards from an on-ramp to 95-128 but it was a 3 br, 1 1/2 bath place close to my max price of 350K.
In February, it came back on the market. It had been flipped. They put in cherry cabinets, granite counter tops, stainless steel appliances, redid the baths, replaced windows (not sure how many), replaced the furnace, painted it inside and out and refinished the hardwood floors. Relisted price of 540K…they dropped the price to 525 recently…..wish away you vile flipper.
Great - so people are still successfully flipping houses in MA. It’s still happening in some Cleveland suburbs too. My wife occasionally babysits for a family where the mother is a 4th year resident doctor and the father is some kind of web designer. They bought a ~1600 sq ft house built in the 1940s four years ago in Shaker Heights and finished the 3rd floor, added laminate flooring in the kitchen, and painted it inside. It just got put on the market for $199k…nearby comps, however, are at most $140k, with one selling for a mere $99k.
Question:
At the beginning of the wife’s residency, the family knew they were going to be moving in four years for her to do a fellowship. So then, RE boom or not, WHY was a house bought. Even aside from having to sell in an unknown future, why would you want to have to put up with maintaining a house when you’re a resident doctor.
I’m still waiting for prices to fall in Northern Virginia/DC. I’m a doctor 5 years into practice. I just signed my lease again to rent for another year and I feel great about it! Obama and Geitner will never get me off the sidelines unless prices come back to reality.
It’s not a successful flip until they close a sale for a profit. Not guaranteed by any means.
Nothing happening in Maryland.
We’ve had some drops - maybe 10% or so - but we still see tiny, crumbling rowhouses selling for over $200,000 in Baltimorgue, falling apart, Post-War shoeboxes selling for at least $200,000, any new housing development will “start in the $300-400’s” range, unless it is a glorified apartment, in which case you can get to the $200’s. All of this in a state with a median household income of under $70,000.
Madness, and I don’t think it’ll get better since I see no way for sane people to compete with dual-income idiots who are willing to spend every dime they have (and then some.) to “own” a house… even if the place is a dump and they spend the rest of their days trying to make it worth living in. If the toxic loans came back, we’d be back to 15%+ price increases per year. People haven’t learned anything here, IMHO.
Offer $190K if you can get someone to submit it, or $225 if you are feeling generous. I bet my cousins would hear the scream in Rhode Island.
Will the government stop meddling? The Obama administration has taken a strong stance against affordable housing. Although I am sure they would disagree with my word choice, I have to call him out and state their agenda in plain English. If we can just keep things propped up until wage inflation kicks in . . . . . . ……… Renters? Screw ‘em.
Why do they think wages will inflate?
Is there a shortage of labor, or a shortage of jobs? Is the U.S. an island with rigidly enforced immigration controls, or part of the global economy? Are potential employers out to make a profit, or to employ the greatest number of workers?
Why must wages inflate in this cycle?
I am not saying they will. I am saying it is the hope of those insisting on helping homeowners in trouble. If they had no hope that housing prices would stabilize at these levels based on wage inflation in a few years, why would they try to keep prices propped up since the need for aid would be endless? In other words, it is just throwing money down the drain on undeserving people. I personally believe that except for illness or unexpected job loss (which really isn’t a bubble related issue), homeowners should not get any assistance. Foreclosure is a fresh start for people that messed up. It’s not like its the end of their life.
Sorry, I just see the words “wage inflation” and I’m off like a rabid dog. 100% you are right - those in power are hanging their hat on the hook of wage inflation.
They must live in a special world, because what I’ve been seeing all this decade is job consolidation and job elimination, neither of which is the least bit temporary in nature. Are there good jobs out there? Yes. Will there be good jobs out there? Yes.
The $64 question…will there be enough good jobs out there to support the boom economy that many view as “normal”?
As long as jobs can be exported to Asia at 10% of the cost of US workers, there will not be wage inflation. As long as they can cut costs, CEOs will never stop firing US workers and hiring low wage Asian workers as replacements.
If (1) the US turns its back on globalization or (2) the dollar loses its status as the world’s reserve currency, then all of the money printing will likely lead to hyperinflation. Hyperinflation instantly destroys the credit markets, which will cause the entire house of cards to collapse and the game will be over.
No. You have to turn the volume off and think about the simple basics. People cling to delusions. They aren’t telling you what they think, they are telling you what they wish.
Biggest expansion of credit in history, remember?
The crash has begun, remember?
The collapse is only in the beginning stage. Unemployment is soaring. Wages are falling. Companies are going bankrupt. Taxes are going up. Credit is tightening. The clowns in government make a lot of noise but they cannot stop the waves of the ocean.
What do you think the next shoe to fall be? I thought the peak for Alt-A reset is in April of this year. Has anyone seen any evidences of the Alt-A reset pain yet?
It’s starting in southern Oregon. 15 NOD’s
in last nights paper, some with jumbo mortgages from 650k to 1.5mil.
Thats what my cousin has been telling me rancher….
What do you think the next shoe to fall ??
The one that we don’t see coming….
Not falling. The one you didn’t see thrown at you
Man, I wish housing in my area was only overpriced by $25k. We’re still seeing houses here selling for $800k that were $400k in 2000.
It’s more like $50K - 75K overpriced here IMO. “Low 200s” isn’t 200 and the homes I speak of are actually low to mid 200s. And I’m not in an fancy area - just outside Philly.
“…selling for $800k that were $400k in 2000.”
Selling for $800k?
or
Listed for $800k?
Vast difference.
They’re still selling inside the Beltway, just not for as much as they used to (probably $1 million), and not as quickly. Our inventory is way up, but prices haven’t capitulated just yet.
Every year inflation eats the real value of houses even if the nominal price stays the same. In the 1970’s houses lost a lot of real value, but prices didn’t change much. It’s possible that this will be the case for many of the non bubble markets.
In Fort Collins house prices are down around 5% from 2005 (and 2006 and 2007) that’s not a huge adjustment, but from 2000 to 2005 they only went up about 10% which is less than inflation. If I use the BLS inflation calculator I see that Fort Collins prices grew only about 1.5% over inflation going clear back to the 1980’s. Most people in trouble here just borrowed too much.
Here I’m not so worried about the prices so much as my continued ability to service the debt (i.e. my job stability). We just sold our house - a 30 year mortgage payment is about $300/month more than renting a comparable house. Prices here should come down, but it’ll be slow and inflation will likely account for at least 1/2 of the decline, and, in fact, since 2003 houses have been coming down in real terms.
I think the quality of people in America is declining and dishonesty is increasing over the decades. This is part of family life too and is part of what is eroding the real values of neighborhoods all over the U.S.
Well Bill, it took you about 1,000 posts, but you finally came up with one I could agree with 100%.
Congratulations.
“But I’m getting fed the ol’ “Now’s a great time to buy - prices won’t be going any lower” again.”
Yes, listen to the folks who were dead wrong in the first round.
“I think that the REIC and the newspapers have really turned up the heat on the propaganda lately”
They and the gov’t have to turn up the heat as the legendary MTG foreclosure fecal material is about to start hitting the large whirling fan bigtime in the next 3-5 months.
To pervert my old Jr HS G/f’s “unofficial cheerleading chant a little;
” We must, we must decrease our BUST,
the Banks, the Banks, depend on US”
Look at the picture in the Globe, what is up with the buyer’s outfit? Another bad decision to be sure.
We’re looking online in the Boston suburbs, towns like Billerica and Chelmsford have really come down. Saw a bunch of stuff in Lowell for around $85k. Out of those three towns, I think I’d only consider Chelmsford, but if we could buy a house that was less than our annual salary, it would free up a lot of money for private school.
You’d probably pick private schools if you lived in Mattapan too (like the buyers in the article). Our disctrict buses about 30 inner city kids from Dorchester (of which Mattapn is part) to my son’s school.
Fed Orders Banks To Keep Stress Test Results Secret
April 10 (Bloomberg) — The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.
The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.
So - the implication being that the banks are actually in worse shape than the public thinks they are. That’s nice.
So much for transparency.
If you are a shareholder, is this legal?
If I owned a small business and the government told one of my managers something, and then turned around and told me I can’t know what they talked about, do you think I might go ape-sh(t?
Maybe fire that manager?
If you are a shareholder, aren’t you asking yourself, who is the CEO reporting to right now? Is s/he working for the shareholders or the USG?
Unfortunately the creeping answer to your question is the USG.
Actually many public companies adopt what is known as “quiet periods” between end of the quarter and the official earning release date (which is right now) to make the stock less volatile during that period of time, where no information about the company’s earning or prospects can be released or discussed. I guess you could say this is sort like that, even though it is material information.
Well since we all just learned yesterday that the new trick (let’s call just call it ‘Wells Fargo-ing’) is to take government TARP money and apportion a good chunk of it to magical profits I would say that the banking system is safe and sound for now and the stress tests don’t really matter at all.
Shouldn’t WF be returning that 3 billion ‘profit’ to the government so that they’re only in the hole for $22 billion now?
What a disgusting sham.
Theoretically, at least, the TARP money was supposed to be lent out as quickly as possible and shouldn’t be available for repayment. Not that I disagree with you..
I thought the point of TARP was to enable Wall Street firms to continue paying bonuses through the downturn?
I guess fabricating sham profits out of TARP money would be a useful first step towards legitimizing bonuses, though…
The downturn’s over…..didn’t you get the memo??
Mega Bank posts record profits.
Assets: $xxxxxxxxxxxxx in bailout money.
Liabilities: everything else.
I know. I know. It’s an oversimplification and they are using their money very, very wisely.
Natalie — Spot on. Here is another simplification:
Megabank, Inc’s profits = Main Street’s losses
“Megabank, Inc’s profits = Main Street’s losses”
On reflection, it is actually worse than that, as the usual zero-sum game of Wall Street’s money pump operation has evolved into a negative-sum game.
“Theoretically, at least, the TARP money was supposed to be lent out as quickly as possible”
Theoretically, I can cross pig DNA with California Condor DNA and get myself a nice bunch of flying swine.
That scenario and the one you posted bear about the same degree of reality
Meanwhile, uyg doubled, c tripled, and bac almost quadrupled.
Shouldn’t WF be returning that 3 billion ‘profit’ to the government so that they’re only in the hole for $22 billion now?
Well they should but the problem is that the 3 billion is probably just an accounting trick anyway. They wrote of 6.9 billion last quarter, this quarter they wrote off 3 billion. The difference is magically about the same amount that they report as profit now. Did their write downs really decrease that much, laughable.
Coming soon to a bank-owned foreclosure home in your neighborhood: Homeless squatters looking for a place to settle down.
More Squatters Are Calling Foreclosures Home
Maggie Steber for The New York Times
With their furniture in storage, Mia Dennis, Brandon Brown and their daughter, Amelia, sleep on mattresses in their family’s illegally reclaimed home.
By JOHN LELAND
Published: April 9, 2009
MIAMI — When the woman who calls herself Queen Omega moved into a three-bedroom house here last December, she introduced herself to the neighbors, signed contracts for electricity and water and ordered an Internet connection.
What she did not tell anyone was that she had no legal right to be in the home.
Ms. Omega, 48, is one of the beneficiaries of the foreclosure crisis. Through a small advocacy group of local volunteers called Take Back the Land, she moved from a friend’s couch into a newly empty house that sold just a few years ago for more than $400,000.
Michael Stoops, executive director of the National Coalition for the Homeless, said about a dozen advocacy groups around the country were actively moving homeless people into vacant homes — some working in secret, others, like Take Back the Land, operating openly.
In addition to squatting, some advocacy groups have organized civil disobedience actions in which borrowers or renters refuse to leave homes after foreclosure.
The groups say that they have sometimes received support from neighbors and that beleaguered police departments have not aggressively gone after squatters.
“We’re seeing sheriffs’ departments who are reluctant to move fast on foreclosures or evictions,” said Bill Faith, director of the Coalition on Homelessness and Housing in Ohio, which is not engaged in squatting. “They’re up to their eyeballs in this stuff. Everyone’s overwhelmed.”
If the banks are unwilling or unable to care for property than its their own problem. Hire a property management group to handle it.
They might as well, just ask for rent on the property. Sounds like it will be a tax sale eventually anyway.
As far as it goes, the property will be in better shape if someone lives there than if people intrude and don’t have functioning toilets.
Just don’t want this getting taken care of by the taxpayer. Properties should be maintained by the banks, not by the government.
GS and WFC didn’t get the memo. Position taking time.
This one goes out to all the fence sitters. Some little excerpts from Walden.
And when the farmer has got his house, he may not be the richer but the poorer for it, and it be the house that has got him. As I understand
it, that was a valid objection urged by Momus against the house which
Minerva made, that she “had not made it movable, by which means a bad neighborhood might be avoided”; and it may still be urged, for our
houses are such unwieldy property that we are often imprisoned rather
than housed in them; and the bad neighborhood to be avoided is our own
scurvy selves. I know one or two families, at least, in this town, who,
for nearly a generation, have been wishing to sell their houses in
the outskirts and move into the village, but have not been able to
accomplish it, and only death will set them free.
It is the luxurious and dissipated who set the fashions which the herd
so diligently follow. The traveller who stops at the best houses, so
called, soon discovers this, for the publicans presume him to be a
Sardanapalus, and if he resigned himself to their tender mercies he
would soon be completely emasculated. I think that in the railroad car
we are inclined to spend more on luxury than on safety and convenience,
and it threatens without attaining these to become no better than a
modern drawing-room, with its divans, and ottomans, and sun-shades,
and a hundred other oriental things, which we are taking west with us,
invented for the ladies of the harem and the effeminate natives of the
Celestial Empire, which Jonathan should be ashamed to know the names
of. I would rather sit on a pumpkin and have it all to myself than be
crowded on a velvet cushion. I would rather ride on earth in an ox
cart, with a free circulation, than go to heaven in the fancy car of an
excursion train and breathe a malaria all the way.
Most men appear never to have considered what a house is, and are
actually though needlessly poor all their lives because they think that
they must have such a one as their neighbors have. As if one were
to wear any sort of coat which the tailor might cut out for him, or,
gradually leaving off palm-leaf hat or cap of woodchuck skin, complain
of hard times because he could not afford to buy him a crown! It is
possible to invent a house still more convenient and luxurious than we
have, which yet all would admit that man could not afford to pay for.
Shall we always study to obtain more of these things, and not sometimes
to be content with less? Shall the respectable citizen thus gravely
teach, by precept and example, the necessity of the young man’s
providing a certain number of superfluous glow-shoes, and umbrellas, and empty guest chambers for empty guests, before he dies? Why should not our furniture be as simple as the Arab’s or the Indian’s? When I think
of the benefactors of the race, whom we have apotheosized as messengers from heaven, bearers of divine gifts to man, I do not see in my mind any retinue at their heels, any carload of fashionable furniture. Or what if I were to allow–would it not be a singular allowance?–that our furniture should be more complex than the Arab’s, in proportion as we are morally and intellectually his superiors! At present our houses are
cluttered and defiled with it, and a good housewife would sweep out
the greater part into the dust hole, and not leave her morning’s work
undone. Morning work! By the blushes of Aurora and the music of Memnon, what should be man’s morning work in this world? I had three pieces of limestone on my desk, but I was terrified to find that they required to be dusted daily, when the furniture of my mind was all undusted still, and threw them out the window in disgust. How, then, could I have a furnished house? I would rather sit in the open air, for no dust gathers on the grass, unless where man has broken ground.
I would rather sit on a pumpkin and have it all to myself than be crowded on a velvet cushion. I would rather ride on earth in an ox cart, with a free circulation, than go to heaven in the fancy car of an excursion train and breathe a malaria all the way.
This reminds me of my giant-headed little nephew Pace. When he was 3 I took him to get a pumpkin for Hallowe’en and he was mighty enchanted with one particular pumpkin. To my eyes it was a fairly regular pumpkin, but no…then when I went to help him carve it he screeched like a rabid weasel, scairt the blazes out of me. It turns out he didn’t want a knife stuck in his pal. He called it his ‘Pumple’ and had to take it to bed with him–I was afraid it’d squish him like a rolling-pin, but it didn’t— and Pumple had to sit next to his chair when eating, and be carried along in the car next to his car seat, and—-this is what reminded me—he insisted on watching Teletubbies and Dora the Explorer while sitting on Pumple, his little overalled bum perched sedately and steadily there. Boy, it was a sad day for all when Mr. Pumple started to grow some gray mold spots…
Anyway, my point is, sitting on a pumpkin and having it allllll to yourself can evidently be a wonderful experience indeed.
Oly,
That is a really cute story. There is a series of children’s books about Thoreau. I don’t recall any pumples in them but he might like “Henry Hikes to Fitchburg.” Henry hikes, swims and eats wild blueberries all the way there while his friend spends his entire day doing odd jobs to earn the train fare. It both takes them the same amount of time to get to Fitchburg, but Henry has fun while his friend is dirty and tired from all the work.
A more apt allegory for the HBB wouldn’t be possible!
Sounds like Tom Sawyer to me.
I’m not too keen on sitting on pumpkin stems myself, but I can appreciate the sentiment. And I suppose it’s better than a joshua tree.
Slightly Off Topic -
What was she thinking? With an increasing number of unemployed, foreclosures, pay cuts, etc. wouldn’t this be political suicide?
Boston Herald
By Michael Graham
Tuesday, April 7, 2009
“Rep. Pam Richardson of Framingham wants the Massachusetts Democratic Party to advocate voting rights for illegal aliens.
And she wants the state Democratic Party to lead the way.
Last month, at a local party platform meeting in Framingham, Richardson looked into a video camera and bemoaned the unfairness of the immigrants’ plight:
“We have a large population of people living here who don’t have the same rights and opportunities of the rest of us,” she complained. “I’m talking about undocumented immigrants.”
Most “unfair,” she argues, is their exclusion from our democratic process.
“They don’t feel that they have anyone to represent them [in government]. It’s because they’re not part of the democracy,” Richardson told fellow Democrats.”
We’re had this proposal in New York City, for local elections, not for illegal immigrants but for legal ones. Why not just apply for citizenship? Because you might be called for jury duty?
Esssentially, legal immigrants have almost all the rights and duties of citizens. Some immigrants may want the rights of citizens and be willing to accep the duties, some citizens don’t care about the additional rights (like voting) and don’t want the additional duties (like jury duty).
My suggestion is that swaps be arranged, with the apathetic U.S. citizens giving up citizenship and the immigrants who want to vote getting it.
“We have a large population of people living here who don’t have the same rights and opportunities of the rest of us,” she complained. “I’m talking about undocumented immigrants.”
Most “unfair,” she argues, is their exclusion from our democratic process.
I can’t even believe I read this stuff. They’re not citizens, you pathetic moron. They’re criminals the minute they step over the border. Nobody should be representing them. But leave it to a Democrat to lead the way.
Like Charles Krauthammer said, maybe Obama wants to warranty the life of the entire world, not just Americans.
If this country had any brains all the illegal criminals would be rounded up and given a good kick in the behind on the way out. Along with any politician who supports this lunacy.
Or better yet, maybe they’re more candidates for Club Gitmo.
The illegal immigrants are the only folks willing to work where I live. By today’s standards, probably any of our ancestors were “illegal” aliens.
I just haven’t found them to be the boogie men that Hannity keeps telling me they are.
Maybe you should rephrase the answer…..The illegals are the only ones willing to put 6 people in bunk beds in every bedroom of the house so they an afford to work in your area.
——————————————
The illegal immigrants are the only folks willing to work where I live
Good point. I don’t think many SFH dwelling Americans would put up with living conditions that illegals do just to find work.
Sure, somebody’s standard of living is going to rise…and somebody else’s is going to fall.
Good point. I don’t think many SFH dwelling Americans would put up with living conditions that illegals do just to find work.
Not yet, but give the overlords some time,they will reduce our expectations for work down to a cardboard shack and a bowl of rice.
Illegal immigrants are the only folks willing to work? Doesn’t that imply that you are not willing to work?
I always hear that the illegals are willing to do the jobs that the lazy poor won’t. But I’ve never heard of contractors going into the ghetto offering to pay people for a day’s work. Of course, as legal citizens the poor could complain if they are asked to work a few hours unpaid.
My experience with inner cities is that those willing to work already have jobs, although not usually very good ones. But I agree, perhaps we need to be more efficient about work distribution among existing citizens.
That said, if it weren’t for illegals, I have no idea who would do service industry jobs in my town. The pay is about $8-$11 an hour. I live in a mountain tourist town. Most of the citizens here love the outdoors but hate working. Lots of trustfund kids and a few smart ones who cashed out of the real estate boom a couple years ago (although most stayed in and are bound to lose their shirts here in a couple years…then we’ll see who serves me my hamburger).
Regarding the comment that I implied I’m not willing to work, I don’t know how I would feel if I lived here for other reasons. I moved here specifically for a white-collar type job and am enjoying the work.
Ok that makes sense based on your location, but remember, that a ’small mountain tourist town’ is not the entire US, so such a generalization is dangerous.
I suppose if you said you lived in San Diego or Brownsville, then your answer might be the same, but your perspective would be quite different.
In any case, note that education and medical services do not scale efficiently, especially in areas where the tax base (made of $11 an hour earners) is low, and that in those services, all must essentially receive the same level of service.
Change your small mountain town to a large mountain town, and the education and medical opportunities afforded to your kids would be quite different. Change from 2 (roughly similarly) qualified applicants for every job to 4, and see wages and benefits fall. See the crime rate rise (not because they are immigrants, but because they are poor) and see that the quiet life afforded to you changes to be a bit noisier.
However, are you not old enough to remember who did those jobs in the past? It was teens, and they still got done.
The illegal immigrants are the only folks willing to work where I live.
What’s the work? And where do you live? Details, hmmm?
Do you really mean: ‘Illegal immigrants are the only folks willing to work for very low wages/no benefits where I live?
RE: I can’t even believe I read this stuff.
Now you know why the Boston Glob is $85 million in the hole.
Even this shit is gettin’ too much for the locals
Her husband is probably a twice retired MBTA political appointee hack drawing 6 figures in pensions and another $120k per year as a “consultant”
Oh Blano,
I remember a certain senator from Arizona who ran for president was one of the main supporters for illegal immigration reform. I’m sure you remember his name and party affiliation, Senator John McCain a republican.
“Rep. Pam Richardson of Framingham wants the Massachusetts Democratic Party to advocate voting rights for illegal aliens.”
The spirit of Massachusetts is the spirit of Columbia.
RE: “Rep. Pam Richardson of Framingham wants the Massachusetts Democratic Party to advocate voting rights for illegal aliens.
Shhhhhhhhhhh……….quiet!
Remember, this is BARNEY FRANK country.
Mazzholelander’s are now getting death threat’s in the R&R section of Craigslist because of Barney.
This one will put all those out of state the hate monger’s over the top!
It seems worth bringing this link that Professor Bear posted yesterday back to the top today.
SF Chronicle article
It has a very key stat in there - RealtyTrac estimates there is now a shadow inventory of 600k homes nationwide that are in foreclosure but haven’t been put on the market.
Lots more pain ahead.
Why would the banks who own 600K foreclosure homes not want to sell them quickly? Hasn’t anyone told them by now that housing market values are dropping at the most rapid rate in American history?
I nearly forgot — banks these days are in the business of throwing away money as fast as possible so they can qualify for Federally-funded bailouts. Viewed in that light, this behavior makes perfect sense.
Why would the banks who own 600K foreclosure homes not want to sell them quickly?
Because they would have to recognize the loss when the homes are sold for half of the mortgage balance. Why do that when the Feds seem to be willing to finance (via the FDIC) a purchase of the mortgage note by “investors” for 80-90 cents on the dollar, or whatever the “true market value” of the note is?
The best way to understand the what and why of all of this is to (as they said in All The President’s Men) follow the money.
These financial institutions aren’t stupid, they know what they have, and so do the Feds. The point of this exercise is how best to get the money back into the financial institutions without telling the taxpayers how they are doing it.
Bingo.
Aside from the PPIP, it wouldn’t surprise me if there’s a Fedguv program in the works to directly take these homes off the banks’ books, paying “fair market value” of course (as defined by the Fedguv).
The banks are just biding their time, waiting for this to happen.
(maybe)
Excellent point and there is something else worth mentioning, while the banks sit on these properties, presumably un-maintained and minimally protected, they are being stripped of their wiring, plumbing fixtures and anything else of value. Windows are being broken, floors are being shat upon, fires are being started, either for warmth or just for the sheer human thrill of f-king something up.
In other words, whatever “value” they may once have had is rappidly flatlining to zero. Once a house is open to the weather in most climates it only has a few years before overwhelming structural damage occurs. They don’t build em like they used to.
Anyone care to bet how many of these 600K will end up being demolished outright?
“Aside from the PPIP, it wouldn’t surprise me if there’s a Fedguv program in the works to directly take these homes off the banks’ books, paying “fair market value” of course (as defined by the Fedguv).
The banks are just biding their time, waiting for this to happen.”
Gonna toot my horn here and say (a long time ago) I wrote here that this may indeed happen.
Some salivating corp the likes of Haliburton probably already has a nice “contract proposal” to take the “shadow” inventory off the hands of the banks with a “taxpayer-backed loan.
They’ll then pay off this loan by extracting an nice fat continuous profit–managing these homes under a new bloated and poorly managed federal/tax-subsidized section 8esque program (which they also hawk to USG behind the curtain) to house all the displaced workers and ultra-low wage earners. Again, all bought and paid for by working taxpayers, of course.
As they will buy these REOs in bulk, wiping out the competitive market, this will effectively rob those prudent folks who rode out the bubble the opportunity to buy at sane prices or dare I say–even below equivalent rents.
DOC
“Lots more pain ahead.”
Lots more affordable pricing ahead.
Yep - one man’s pain is another man’s pleasure.
Kinda like Larry-Moe-Curly. That’s what this whole thing reminds me of in fact :-).
I take no pleasure in the housing bubble collapse. I don’t like reliving the memory of the last recession again, I don’t like renting the home we live in any more, and I don’t like the prospect of buying a home against the backdrop of a worsening recession and evidence the government is continuing a stealth program to use public monies to keep homes unaffordably priced.
I like none of it. A pox on all these houses!
It’s like everyone won the lottery at the same time, but instead of a big payout there was a slow dividend…only to find out 7 years later that the jackpot was actually Monopoly money.
THEN they realize they still have to pay the taxes and bills incurred with all that wealth using real money. Suddenly it’s panic time…dogs and cats living together, mass hysteria, and you’re right in the middle of the maelstrom. When all you ever wanted to do was just live.
It’s infuriating and depressing and just plain wrong.
Also the government is trying to keep trashy people in neighborhoods they could not afford with traditional loans and documented income. They are going to stay in them for years. May as well live in aisle 9 in Wal-Mart if I want to be among trash.
Speaking of Walmart, has anyone noticed, how their stores have reduced variety and inventory. We stopped in on e located in Rhinelander, Wisconsin yeaterday. The store is being re shuffled. All the merchandise is being re arranged. But, the thing i noticed most, is the variety is gone. Tires for example. There used to be a whole isle..top row of sample tires out, now only 6 tires total, two brands. Clothing area reduced in size…shoe department..notning there. Stopping there just re-enforced my not buying at Walmart. Chinese junk!
Do you believe Economic cycles and their bubbles are more man made or nature-physical science made?
There has been a clear pattern of up and down commerce cycles and supply/demand since the beginning of forever - even way before the first governments and formal monetary systems. If you beIieve these cycles are more of a nature-physics phenomenon, then you should also believe that man-made attempts at trying to prop-up a down econ cycle or bring down an up econ cycle is like trying to stop Summer from arriving or the sun rising in East.
Speaking of Walmart, has anyone noticed, how their stores have reduced variety and inventory.
Low inventory turns = death for retailers
Inventory sitting on the shelves is like piles of money sitting there earning nothing. The best way to fix the problem is to get rid of anything that doesn’t move quickly.
If Wal-Mart is doing it (and they are the absolute kings of inventory management in retailing!) every other retailer is probably in trouble.
“Do you believe Economic cycles and their bubbles are more man made or nature-physical science made? ”
Are you kidding? If the mass media and Al Gore purport that climate change is manmade, how the heck are you going to convince them that Economic cycles are not?
The Brazilian President says economic cycles (and climate cycles) are all caused by blue-eyed white people.
Jim, I did not ask what MSM and joe-six pack thought. I was asking what the bloggers here think. My opinion is bubbles/econ cycles are not man made but more akin to natural science, physics of the universe, Carl Sagan sort of stuff. I do not believe that any economy, monetary policy, gov, no matter how brilliant their governing, can prevent boom/bust cycles. I don’t even believe man-made policy can effect the severity of boom/bust cycles.
The simple answer is - economic cycles are indeed a natural occurrence; however they are exacerbated, at the expense of the general populace, by the few that profit from them.
Economic bubbles are man-made. If not, either an inanimate object or objects cause them or an animal (not man) causes them. And that’s silly. Bubbles are a result of thinking in terms of groups. Part of “fitting in.” It’s still an individual choice and it’s always due to not taking enough time to think things through with your own hierarchy of values, but trying to use the “group’s” hierarchy of values instead. A group’s hierarchy of values is only a guessing game, and that is precisely why following the herd normally leads to disaster: You don’t really know which level of the pyramid scheme you are on. You fool yourself into thinking you are near the top of the pyramid when you are actually at the bottom! “My next door neighbor has one, so I have to have one…” One can prevent himself from making himself a victim of the bubble by thinking for himself “why should i buy a house, a Jaguar XF, a big screen TV?”
Yes of course they’re mad-made. It’s worth differentiating though between man-made by groupthink (as you describe) vs. man-made by oligarchical policy influence. The former is natural - the latter is not, and as such can be insidious.
Of course the two aren’t mutually exclusive - they interact and can feed on, or against, each other. Keynesian theory holds that they should oppose each other; however that’s theory.
In theory, theory is practiced - in practice, it is not.
“It’s like everyone won the lottery at the same time, but instead of a big payout there was a slow dividend…only to find out 7 years later that the jackpot was actually Monopoly money.”
“Monopoly money” was Main Street’s fantasy equity.
“Real money” was the bonuses and commissions extracted by the financial architects of the bubble.
DOC
“It has a very key stat in there - RealtyTrac estimates there is now a shadow inventory of 600k homes nationwide that are in foreclosure but haven’t been put on the market.”
What condition will those properties be if/when they’re reoccupied? Why isn’t timely selling of such properties a condition of any bailout? What is the public interest in letting these properties rot until either major renovation or demolition is needed?
Here’s an interesting view of the attitude of higher education toward home equity — the assumption that if a parent has it, they should get it.
http://www.nytimes.com/2009/04/05/realestate/05mort.html?ref=realestate
At Sarah Lawrence college “a household with an adjusted gross income of about $100,000, and $150,000 in available home equity, had been expected to use roughly 5.65 percent of that home equity for a year of tuition.”
Let’s say you have three children, and had worked and saved to pay off your mortgage before they entered college. And the three attended colleges like Sarah Lawrence, and the parents were expected to pay 5.65% of their home equity per year of school for each of them — over and above whatever the schools would claim out of other savings or income.
That adds up to 67% of home equity. So, such parents would enter old age with a mortgage at 2/3 the value of their house. And that’s how these schools got their tuition of $50,000K.
I have friends who bought on the Upper West Side of Manhattan - the “wrong side” of 96th street - about 12 years ago when the neighborhood was MUCH less desirable.
Apartments in the same line were recently selling for 4 to 5 times what they paid.
They are in quite a pickle as their eldest is going to college in a year - family increase in income over that time reasonable but no where near enough that they could afford to buy there today…
And with significant increases in monthly coop fees taking a home equity loan will really screw their budget. (Increased fuel costs, substantial increases in building insurance costs after 9/11, and of course the demands of the recent purchasers to do cosmetic re-dos of the lobby, etc.)
Since they want to stay in their place forever they are rooting for further declines.
How about a nice state university? Worst things have happened.
Roidy
State university tuition inflated considerably over the past decade as well, outstripping inflation and wage growth. All that fake money / alleged equity impacted all sectors.
True, but they are still way cheaper than any Private U.
Heaven forbid you should have to go to Queens College. Oh wait a minute, it’s actually really competitive, sought after.
Let’s say you have three children, and had worked and saved to pay off your mortgage before they entered college. And the three attended colleges like Sarah Lawrence, and the parents were expected to pay 5.65% of their home equity per year of school for each of them —
Or, let’s say you have eight kids, because you want to multiply and replenish the earth as per Heavenly Father’s orders, and your parental attentiveness is expressed by, every now and then as mood strikes, to count and see if there are still eight of them running around the place, more or less.
Worrying about tuition?! I always read these articles with fascinated bemusement. Who are these lucky children with such helpful and attentive parents? They’re like exotic wildebeests or perhaps gnus, to my wondering eyes.
I got through college with scholarships, a small student loan, and working 3 jobs. Otherwise I couldn’t have gone to college.
The End.
We’re saving for our daughter’s college education. If we’re careful and she makes a wise choice, she should have enough to pay for four years. But any shortfall is on her. And any college that feels entitled to whatever home equity we have can go fry itself.
Sounds like me, except there were 9 of us, and Catholic instead of Mormon
Ahhh.
Sing it with me, Laurel!
*starts to sing, prettily and loudly *
“…Every sperm is sacred,
Every sperm is great.
If a sperm is wasted,
God gets quite irate…”
–Monty Python, ‘The Meaning of Life’ —
God love ‘em! I got through undergrad playing drums in a band. You could still make a little money at it circa 19XX.
If you can afford to pay full time day care when you’re at the start of your career, you might be able to afford to pay a good chunk of tuition out of pocket by the time you reach your peak earning years. Not that saving money isn’t a good idea.
Around here (Boston), daycare runs over $15,000 a year easily.
And that’s how these schools got their tuition of $50,000K.
I wish I could find the link. I heard someone an interview on NPR where someone was claiming that tuitions would not go down, they would just not increase at the same rate as before. Sort of like on a permanently high plateau.
I know I’ve heard that somewhere before…
April 10, 2009
Consumer Reports Morning Update
Good Good Friday morning. Here are the top stories our editors are keeping an eye on today. Check back with ConsumerReports dot org throughout the day for updates and analysis on these topics and many more.
The Housing Crisis Is Not Over:
From Maine to Hawaii, millions of new McMansions, post-World War II bungalows, modern downtown lofts, exurban town homes and inner-city row houses sit empty. This unprecedented glut of vacant homes — one in nine homes across the USA, according to the Census Bureau — will change the real estate landscape for years. What happens to the 14 million empty houses, condominiums and apartments and the 9.4 million that are for sale? How long will it take to absorb this massive and unprecedented oversupply of housing? (USA Today)
Advocacy groups are moving people into vacant homes, some in secret, others openly, as civil disobedience. The groups say that they have sometimes received support from neighbors and that beleaguered police departments have not aggressively gone after squatters. (New York Times)
I am trying out a little arithmetic here:
14 million empty houses + 9.4 million houses for sale = 23.4 million houses up for grabs.
Since there are around 114 million US households, it sounds as though there is one extra home for each 5 (= 114/23.4) or so US households. I guess we had better hope the households comprising the top twenty percent of the permanent income distribution all decide to buy themselves a spare home, in order to absorb this unprecedented inventory glut.
Not to mention that at least 20% of households do not have the stability and/or credit worthiness to warrant home ownership.
at least 20%, at least
And it is this 20% which is disproportionately targeted by govt affordable housing policy, at the expense of the financially prudent.
My definition looks past those folks and goes on to include anyone who HELOCed a Harley or a trip to Hawaii.
If their homes meant so much to them, why did put them in hock?
“If their homes meant so much to them, why did put them in hock?”
I’ve always been amazed by people who have bought “Their Dream Home” then complain about it losing value and or complain about not being able to afford vacations.
If you bought your dream, why would you want to leave it to go on a vacation or worry about the value? It makes no sense to me.
Because the HEW or MEW was dressed up and made to look S*E*X*Y and not to have the old quaint connotations of Second Mortgages or going in HOCK.
Kind of amazing what fresh lipstick on a pig will do ..huh ?
If you bought your dream, why would you want to leave it to go on a vacation or worry about the value?
You know, the last house I had a mortgage on was a dream. I used to say the same thing to the ex.
2200 sq ft, burnt adobe block, walled yard on 1.5 acres, black-bottom pool/jacuzzi, ramada with gas BBQ, hilltop with city lights/ mountain views, saltillo tile throughout.
Mmmm, Tucson.
“Not to mention that at least 20% of households do not have the stability and/or credit worthiness to warrant home ownership.”
You guys are missing one point on this…..
If something is priced correctly, creditworthiness is a non-issue.
I think you can count on continuously rising numbers in unemployment, foreclosures, bankruptcies, and squatter homesteads.
It’s a rip-roaring bull market for those things.
ACORN should have plenty of busy little beavers in the days ahead.
“14 million empty houses + 9.4 million houses for sale = 23.4 million houses up for grabs.” Isn’t this a worst case maximum as many of the empty houses are also for sale? I’m just trying to keep the numbers in line.
Roidy
I’m just taking the Consumer Reports figures at face value, assuming they did not double count. It seemed they were putting homes for sale and homes not on the market into separate (mutually exclusive) bins. I don’t have an independent source to verify the accuracy of their numbers.
In my neighborhood, For Sale status, all SFH 15-40yr old:
- For sale Empty, REO, lost job, on market 10mn, just went under contract, fair condition
- For sale Occupied will stay until sold, moving for commute and school, on market one week, very good condition
- For sale Empty, divorce, on market 9mn, good condition
- For sale Will be listed next week, promotion transfer, will be occupied for next 2mn then empty, very good condition
- For sale Empty, older women had lived there, 12mn, excellent condition
- For sale Empty, flipper, on market 10 mn, poor condition
- For sale/rent - Empty, on market 4mn, fair/poor condition
- For rent Empty, on market one month, veery good condition
- For sale Empty, REO, on market 12mn, fair condition
- Abandoned Empty for 18mn, very poor condition
“14 million empty houses + 9.4 million houses for sale = 23.4 million houses up for grabs.
“Since there are around 114 million US households, it sounds as though there is one extra home for each 5 (= 114/23.4) or so US households.”
If roughly the same pool of money is available to support 114M houses (households) as 137M (114 + 23.4), wouldn’t prices still need to fall about 20 percent on average nationally to absorb all the vacant housing?
Such a decline would probably need to be more when one accounts for costs of occupying a house that don’t vary much whether one person or multiple people are occupying a house (some utilities, taxes, insurance, etc.). Hence, per person costs for housing related expenses goes up as household size goes down reducing the money left over for just the house.
I heard on our local news a couple of weeks ago that there is a 26 year supply of houses here in Bakersfield. This is going to have a happy ending, I’m sure.
yes! and I see some green shoots appearing in all those yards too! Praise the lawd, the downturn is a comin to an end.
I see green shoots of algae sprouting in the backyard pool.
Hilarious. We have a theoretical 32 year supply here in small mountain town, Colorado. One house has sold in the past two years. Sixteen houses are on the market.
Crispy&Cole, wherever you are, this one is for you…
Bakersfield’s Upside Down
4/9/2009
It was once the hottest real-estate market in the nation, but dry and dusty Bakersfield, Calif., is now the poster child for the down times in housing. Russ Britt reports.
“Property values have dropped by nearly 2/3 from the peak…
We’re upside down, and we’re lovin’ it.”
From the MarketWatch report on Bakersfield:
“35,000 vacant lots approved for building — could take three decades to work through that inventory…”
In the long run, we are all dead, and three decades is getting pretty close to the long run, folks…
That’s where I’m at in Florida. It’s entirely possible, that if we stay, we’ll be rentaz4life, yo.
A reference to an N.W.A. album. Fascinating.
I actually have used that before, and the last time I even wrote:
efil4zatner
Dre is one of the few beatmakers I like. Also, RIP Eazy
Radar Logic Data shows San Diego’s most recent 1-day average price at $181.22 — lower than the 25 MSA composite level of $186.83. Taken at face value, this implies one should be able to buy an 1800 square foot home now for $326,200 or so. That compares very closely to a reported median sale price of $326,700 in the first quarter of 2009, according to the San Diego Assn of Realtors. There is no indication in the linked article of the average size of homes that sold, but I am guessing the median-sized home that sold would be in the neighborhood of 1800 square feet.
The funny thing is that it is very hard to find homes listed for anywhere near that level on the MLS, at least in our zip code (92127). Not everyone who lives around us is a CEO, CFO or hedge fund manager, either.
For the record, if memory serves, the median SFR sale price at the peak in San Diego was $517,000 or so. Thus the recent median sale price of $326,700 is off the peak by
(326,700/517,000-1)*100 = -37 percent.
My Friendly Neighborhood Realtor sent me an e-mail last night assuring me that the Chicago Spire ain’t dead yet. In fact, he says it’s an “investment in the future.”
I especially like the part about liens. He says “while there have been some lien filings, we can assure you that everyone has been extremely well paid” — ha, tell it to the architects who’ve filed more than $15 million in liens to date. I’m sure there are additional liens I haven’t heard about.
Realtor propaganda follows:
THE CHICAGO SPIRE PROJECT
Dates:
Currently, the project completion dates remain unaffected as time allowances for unanticipated events were included in the original schedule. We are currently working with some of the world’s top financial institutions to secure project financing for the next phase of construction. The Chicago Spire will be in position to be afforded the first credit when it becomes available and we have every reason to believe that this will become reality in short order.
Earnest Money:
Buyers’ Earnest Money deposits are held at Bank of America in segregated interest-bearing accounts assigned to each individual Buyer. The accounts are insured by the Federal Deposit Insurance Corporation (FDIC), are held harmless from any developer debt and are unable to be accessed for construction costs.
Construction Status:
Approximately 70% of our construction materials’ procurement is bid out. A significant body of construction work has been completed to date including:
* Foundation and substructure works by Case Foundation Company;
* Ramps to serve the site, to and from Lake Shore Drive completed by Lorig Construction; and
* Utility relocation work (substantially completed).
Construction/Liens:
We announced recently that due to the global credit crisis, a slowdown in the rate of project construction would be necessary. Shelbourne Development has been working closely with our contractors, advisors and design professionals over the past two years as this project has come to fruition, and while there have been some lien filings, we can assure you that everyone has been extremely well paid.
An investment in the last remaining undeveloped parcel of land on Lake Shore Drive represents an investment in the future of one of the leading cities in the world today, and Shelbourne remains committed to realizing this vision.
“The U.S. economy is set to emerge from recession in the second half of this year as consumer spending and the housing sector recover, but unemployment will rise well into 2010, according to a survey. The Blue Chip Economic Indicators survey of private economists released on Friday showed that 86 percent of respondents believed that the economic downturn would be declared to have ended in the second half.”
I’m glad this blip is just about done. It was yucky.
Yes, because the unemployed make such great consumers.
My guess: A majority of these forecasters will report later on in 2009 that the economic situation turned out “worse than expected.”
+1 Prof. Bear, how many times have they and others came out with that excuse? I quit counting them.
For months we have heard nothing but recovery is right around the corner.
At some future point over the course of the next three decades, the bottom caller brigade’s stopped clock forecast for “recovery by the end of this year” will prove 100 percent accurate.
Yes, but the same logic applies to our our continual predictions that we haven’t reached the bottom. Some time in the future a good portion of people will be sitting out waiting for “the next leg down” that doesn’t doesn’t come.
If “86 percent of respondents believed that the economic downturn would be declared to have ended in the second half”, you can safely bet that all 86 percent will be dead wrong.
Happy endings are crowd favorites, but the crowd is notoriously unprepared for, and dissappointed with, biting, glaring and grinding reality.
99 percent believed real estate always went up, until it didn’t.
“If “86 percent of respondents believed that the economic downturn would be declared to have ended in the second half”, you can safely bet that all 86 percent will be dead wrong.”
But those 86 percent that expect it to end will be the same ones that will declare it has ended whether it has ended or not. An echo chamber of delusional fools is still a bunch of fools, not a bunch of experts.
How many of that 86% totally blew the call on the bust - and now seek to rehabilitate their reputations by getting in early on predicting the next boom?
This may seem like insider baseball for non-Chicagoans, but Ben Joravsky has an excellent article in the Reader this week about the privatization of our parking meters. The big picture, of course, is that municipalities all over the nation are selling off assets and cutting deals to cover short-term budgetary problems — at a considerable long-term expense.
FAIL
By Ben Joravsky and Mick Dumke
April 9, 2009
The origins of the meter debacle actually date back to 2005, when Mayor Daley began selling off public property for up-front cash payments without much scrutiny from the City Council or the public. Then last year, when tax revenues plummeted, the mayor increased the pressure, directing his staff to be “creative” in attacking budget problems. But even as city officials celebrated privatization agreements for Midway Airport and the meters, both worth billions of dollars, they refused to release the most basic information about how they’d been reached—such as which firms had bid, how much they’d offered, and short- or long-term cost-benefit analyses. Both plans were hustled through the City Council in less than a week. As one alderman told the Reader, but not for attribution, during a hearing on Midway: “Somewhere in this deal we’re getting screwed. I just can’t figure out where yet.”
We can help with that. First off, a private company gives the city—i.e., the mayor—a big pile of cash that conveniently isn’t subject to the same oversight as the rest of the budget. Eventually the private company will make a fortune off the deal—but by then everyone now running the city will be gone. In the meantime, fees are raised and management is moved out of the reach of voters.
http://www.chicagoreader.com/chicago_parking_meters/
October 2, 2009 - mark the date in your calendar. The short man’s betting the house on October 2, 2009.
And both possible outcomes are undesirable, at least with the way he played our cards.
Nice post ET….Sell assets instead of cutting expenses…Real smart…
You have to pay freeway tolls to drive up in get screwed by a privatized parking meter. Way to go Chicago…what’s the City’s Cover Charges for breathing air and occupying space while crossing the streets ?
I should add, too, that Joravsky and Dimke made a handy little timeline of the subterfuge and included many details not commonly known before:
Ten groups submitted packets detailing their “qualifications” for leasing the city’s parking meters, including Morgan Stanley, JPMorgan Chase, Lehman Brothers, and partnerships led by Macquarie Capital Group and Cintra, the overseas firms that leased the Chicago Skyway.
Morgan Stanley, JPMorgan Chase, and Lehman Brothers wanted a piece of Midwest parking meter action? With the margins the former Masters Of The Universe were making, you know they wouldn’t stoop as low as parking meters unless there was some serious profit potential.
Just think, at some point a dollar saved by someone who refinanced their mortgage will find its way into one of those new meter boxes.
So is everyone here in favor of socialised parking meters?
Time for a Boston Tea Party
On April 11th, 2009, the public will come out in cities across the country to express their frustration and disapproval with how our elected officials have handled the economic crisis. No one has been left unscathed; this protest is yours.
www
anewwayforward.org/demonstrations/
Where were these people when Chimp was running up trillions in debt? Sounds like something Rush would sponsor.
The same place they are while the present Chimp is running up trillions in debt.
That’s funny because they sound like a left leaning group. I view this as something that the right and the left should agree on. Too big to fail is not capitalism. I voted for Obama, and I was hopefull that TARF was going to be used to covertly determine the true value of these assetts. Ie Real price = Sales price minus incentive, but the reality is that they are letting the banks bid on this crap. So Bank A way overbids on Bank B’s garbage (115% of what others might bid) and Bank B does the same for Bank A. They borrow 85% of the bid from you and me. Then they call and say whoops that stuff we bid on is now worthless. They have effectively dumped this garbage on the tax payer as the loans are non recourse loans. Not only that they will get to write off the 15 % from their taxes as a loss.
Larry Sumners and Geitner work for Goldman Sachs inc. same as Hank Paulson. That’s all I can conclude.
It is. According to the Daily Kos, the ‘teabagging’ protests are being sponsored by FOX News.
I knew it. Need to generate phony outrage to whip the sheep into a frenzy.
The Nation — Two days ago I wrote about introducing a new kind of scale-based antitrust. Before exploring some other structural reforms, I want to encourage people to join a nationwide demonstration of support for some basic principles of structural change in the banking sector.
On Saturday, 60+ demonstrations will be held around the country, demanding structural change in the banking sector. The group organizing the demonstrations, a New Way Forward, started less than a month ago, but is already approaching 10,000 members. A New Way Forward embodies the logic of the most thoughtful economic thinkers in the country, translated into clear, direct language and action.
We/they support a Nationalize, Reorganize, Decentralize platform, pointing to Krugman on the need for temporary nationalization, Simon Johnson on the need for removing current leadership in the banking sector, and Mike Lux on the importance of creating a new, decentralized private market, with new banks run by new people. Any bank that’s “too big to fail” means that it’s too big to exist in a free market.
I got involved in A New Way Forward a week or so after it started, and its an amazing grassroots organization in a few ways.
The first is that it is completely unfunded. Tiffiniy Cheng, Donny Shaw, Morgan Knutson, Andrew Packer, and the 60+ local organizers who have sprung up are all working (a lot) for free: not a one is making a dime. There are no paid advertisers, media campaigns, or strategists. Every piece of this effort is unpaid.
The second is that it is intellectually serious and engaged, without being condescending. On the organizers listserv, the 60+ organizers share tips on how to get megaphones, how to make effective signs, how to get permits, who to ask for legal advice…and thoughtful opinion pieces by economists about the pros and cons of different regulations. The wisdom of particular regulations is debated.
I don’t think this is the same group. They are protesting the concept of too big to fail. Again not a right or a left issue this is a citizen vs corporate elite issue. The right incorectly call this socialism, where the gov controls industry. The left call this facism where corporate America dictates the actions of our governement.
PS I used the term Boston Tea Party without having seen any news on Fox News sponsored protests. I don’t think these groups are at all the same. I’m sure half the people on this board consider me a socialist.
Then after awhile they will march on the university president’s office and occupy it ? “Protests” pretty much went out of style in the 1980’s and haven’t reared their heads since. I wouldn’t spend the gas money go to one, much less the time standing on a street corner with a group yelling slogans at passersby. I don’t think protests do much good. Being the history buff that I am, I remember seeing an article cut out of a paper from the 1930’s ( on display at a local library ) about a protest that happened in the cute little town of New Boston, MI, where some of the general populace gathered to burn “General D. Pression” ( I kid you not) in effigy in protest of the great (general) depression. It didn’t do much good, but I’m sure it made them feel better, and gave the newspaper reporter a story. These tea party protests in the same category, to me. They’re not going to change a thing.
“According to the Daily Kos”
BWWWAAAHHHHAAHAHAHAHAHAHAHAHAH
Economist Nassim Taleb, and author of The Black Swan has a must-read piece in today’s Financial Times. The 10 points made
1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.
2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.
5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.
6. Do not give children sticks of dynamite, even if they come with a warning. Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.
7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.
8.Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).
10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
Clap clap.
Excellent points all.
Anyone read The Black Swan? Sounds like it may be a good one.
It is very good, although a little repetative and he wanders off subject.
The Black Swan is good but the updated edition of “Fooled by Randomness” is even better. Genius even.
Taleb can be a little full of himself at times. OK OK, MOST of the time, but there is no denying that he’s sharp as a well honed samuri sword.
“1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.”
Evolution is a very polite euphemism for a government protection racket.
Are you sure it’s not a euphemism for creating increasingly abstract and overleveraged financial instruments that can’t be regulated or quantified accurately?
I agree, except:
“Instead, find the smart people whose hands are clean.”
How many of them are there? And how many would still have clean hands if given the same opportunties for self-dealing?
I sense a shortage.
“8.Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.”
I guess Nassim shares my doubts about the efficacy of hair-of-the-dog hangover cures.
Sounds like a line of fantasy BS to me.
#9. What should they rely on instead? Govt promises?
#7. Goverments do restore confidence all the time. Kennedy, Reagan, FDR, Lincoln and more all have had to restore confidence. If a govt doesn’t need to restore confidence, then that means nothing bad ever happens, internally or externally.
#3. What exactly is he suggesting? Shut down the govt, all corporations, and start over? Ok, sounds great. Who’s going to cover the hiring process?
#1. You need to provide definitions of ‘early’ and ’small’. These are relative terms. The current financial crisis is only about 10% of homes and jobs. Isn’t that small?
#6. CDOs are not particularly complex to understand. They are derived via simple algebra. That a knife can be used to killl does not mean that it’s inherently dangerous.
“#3. What exactly is he suggesting? Shut down the govt, all corporations, and start over? Ok, sounds great. Who’s going to cover the hiring process?”
Good point.
I’ve told my coworkers on more than one occasion that all prospective holders of high office or high positions should be screened by taking the MMPI (Minnesota Multi-phasic Personality Inventory).
High “lying” score…so sorry, you’re out.
High “antisocial/sociopath” score…so sorry, you’re really out.
I always get the reply…hey, its too expensive to administer!
My reply now is…look how “expensive” it is NOT to administer.
DOC
These would be instructive points, were it not for the fact that the 800 lb gorilla in the room, the Federal Reserve Bank (a private international banking cartel with an official sounding name) has no “interest” in abiding by them.
The Fed controls our currency and economic policy making, if not the entirety of the popular perception of the political process, with an iron fist.
The Fed insists these days, that trillions of dollars be borrowed by the USA, as often as possible. Bailouts, taxpayer funded bad asset purchases, wild entitlement spending, huge deficits: all serve the purpose of creating obscene interest income for the Fed. They will attempt to collect every penny of interest on those borrowings. They will not hesitate to bankrupt this country. They have done it to other countries before, and will do it again. It’s what they do best.
> Economist Nassim Taleb
I think he would pass out if you called him an economist. He basically said economics is snake oil and economists are snake oil salesmen.
Sorry for OT: Any vets here?
I’m beside myself right now… my pug was fed raisins by my littleman yesterday. The vet said his bloodwork is o.k., but to keep an eye on him. He’s just chillin’ in my lap like he always does. He was really sick this morning. Pet essay writer alert: I am one of those crazy dog-lovers; I treat him like a kid, so this is really stressful. Vet said to make sure he drinks water and urinates regularly, and gave me emergency room directions.
He’s usually a goofball - I hate to see him so lethargic.
I think they can be poisonous to dogs. You may want to call your vet. I hope he feels better.
Oh sounds like you did. I wish him the best.
Kidney damage maybe ?? Is he vomiting ?? Watch for dehydration…My 10 year old has kidney disease…I give him 1000 cc’s of fluid through IV once a week to help with dehydration assist the kidneys to flush out..As you can see, crazy dog lover here also…
“Kidney damage maybe ??”
Exactly. I have to make sure he keeps drinking and going to the bathroom. I think we’re good, but man, I was turning in my stomach, thinking, “I suck!”
I’m just glad we caught it. I have to give him some prescription fluid to settle his stomach.
O.k., I think I qualify for that Mansion in Ocala.
http://www.wftv.com/news/15828442/detail.html
(one year anniversary! (almost))
Dude, pets and kids story. You could really tug the heartstrings with that one you’ve got!
I’ll donate $10 to the “House Muggy” Fund.
“You could really tug the heartstrings”
Lol, don’t forget I may lose my job and my wife’s grampa had a stroke. I had a lot to fight through in the last month, but you get to that breaking point when suddenly everything is fine and you embrace the chaos. But the dog? I need the freakin’ dog - he’s doing fine so far. I think this morning was the worst of it.
So sorry to hear about Muggy Canine’s problem. I hope he gets better. I will say that having been married to a veterinarian for 23 years and having been half owner of a failing veterinary clinic ( ! ), I have seen dogs eat all sorts of things and most of them survive, although they feel like crap, and make crappy (lose) crap, for many many days. I never heard that raisins were bad for them, but then again, we never had a dog come in that had overdosed on them. Please keep us posted.
Maybe the raisins bound him up??
Some dogs are more affected than others - my dog ate 2 bunches and was poorly but survived without vet intervention, but I have heard it can kill others. As long as your pooch is drinking and urinating then that’s a good thing.
In case you missed this. I posted it late last night.
I must be keeping company with some really great characters. Some of you may remember that I personally knew the controller at New Century. My wife worked for him for years. Well, turns out a client I wrote a software program for last year was operating a $200+ Million Fraud in California.
http://articles.latimes.com/2009/mar/06/business/fi-friedman6
I met Bruce on several occasions. He was a real cocky asshole. Turns out, he was also a convicted felon. But boy was he living large. Nice cars, houses, planes, etc. Bruce even asked me to invest in his company. He guaranteed 9-12% annual returns. Having a finance degree (and not being stupid), I asked him to explain how he could guarantee such high returns. Sorry, but it sounded too good to be true, so I passed. It was also very confusing, and he made a point of making me feel like an idiot because I didn’t get it. I also made sure all my invoices were paid pronto.
Here is the really sick part. I looked over the lawsuit and they listed the investors that were fleeced. Most are elderly, but many of them were the same people I was working with at the company. He screwed the employees and their family members. Shit, he even screwed the chick he was screwing! She was also listed as an investor.
You cannot make this shit up!
I like all of the curse words! Nelson DeMille-style!
I hold nothing back Muggy!
Interesting story…sounds like a mini-Madoff.
The SEC just charged a maxed-out donor to Hillary Clinton, Bruce Friedman of Sherman Oaks, California, with what sounds like pretty serious fraud.
Red meat on Good Friday. LOL
“I met Bruce on several occasions. He was a real cocky asshole. Turns out, he was also a convicted felon. But boy was he living large. Nice cars, houses, planes, etc. Bruce even asked me to invest in his company. He guaranteed 9-12% annual returns. Having a finance degree (and not being stupid), I asked him to explain how he could guarantee such high returns. Sorry, but it sounded too good to be true, so I passed. It was also very confusing, and he made a point of making me feel like an idiot because I didn’t get it. I also made sure all my invoices were paid pronto.”
Ahh yes, the lovely narcissistic sociopath…
Not all of them are violent and/or stupid…as you found out.
On the contrary, “partial” sociopaths are quite intelligent, charming and crafty, yet completely devoid of conscience and unable to feel guilt, remorse or shame…just the right mix of hardwired traits to fleece his fellow men with unrestrained glee.
Unfortunately, I fear (along with others) that quite a few of these nasty folks have ascended to high political and financial positions and we’re reaping the whirlwind.
DOC
Primary and secondary ed on the chopping block in Detroit.
Associated Press
Friday, April 10, 2009
DETROIT, April 9 — Detroit Public Schools would close 23 schools and lay off 600 teachers in a proposal released Thursday that would consolidate facilities in a shrinking district facing a projected $303 million deficit.
The proposal was made by the state’s financial overseer, Robert C. Bobb, who also has asked the state for $200 million in federal stimulus funds to improve the remaining schools and strengthen safety and security.
A financial emergency has been declared for the district, which has been struggling for years with declining enrollment as the city’s population shrinks and charter schools draw students.
Fountainebleau, heh-heh, heh-heh.
Whad’ya know — if you drown banks in TARP money, they end up reporting profits, even after throwing hundreds of billions of dollars into the sea.
U.S. Stocks Gain, Capping Biggest Jump Since 1933 as Banks Rise
By Eric Martin and Lynn Thomasson
April 10 (Bloomberg) — U.S. stocks rose for a fifth week, capping the steepest rally since 1933, as Wells Fargo & Co.’s higher-than-estimated earnings and speculation banks will pass government stress tests spurred optimism that the industry’s slump is ending.
Bank of America Corp., American Express Co. and JPMorgan Chase & Co. helped drive a gauge of 80 financial companies in the Standard & Poor’s 500 Index to a 9.4 percent advance. Wells Fargo surged 20 percent after reporting record first-quarter profit. Lincoln National Corp. and Principal Financial Group Inc. jumped at least 37 percent as the Treasury considered bailouts for life insurers.
Steepest rally since 1933…. And we all know 1933 signaled the end of the GD… right?
Exactly. The next phase is when people realize the economy isn’t coming back. Serious fear straight ahead.
Muggy, I hope your pug is O.K. I know how you feel, we are animal lovers at our house and have rescued animals (who live with us). Keep us posted on how he’s doing.
Haven’t posted on here in quite some time, but I try to catch up on the weekends. Originally from Florida and been living in Saskatchewan Canada for more than six years now. The bubble seems to have reached it’s peak up here.
Regina housing starts down in March
BY ANNIE MCLEOD, LEADER-POST
“There’s a lot of builders who built homes in the last couple of years for customers who were actually speculators, so they’re not actually moving into those houses,” he said. “Now those houses are on the market. It does make selling a custom home, that we’re going to build for you, tougher.”
<a href=”http://www.leaderpost.com/business/Regina+housing+starts+down+March/1478186/story.html”
This is not going to end pretty. Saskatchewan on an island? Please.
What were some of the rifle and shotgun suggestions that some of you had for your doomsday scenarios? I think one was a Remington 700 or 1200. Thanks.
Remington 870 express is the best shotgun (considering performance and cost) around and one of the best guns, period.
The Remington 870 12 gauge - yes, yes, and yes.
Tomahawk cruise missile….. after all, the afterthoughts to the constitution sez its “my right”…… right? Errrr….. wait. FoxNoise and Jerry Falwell said my right to keep and bear nuclear arms is a God given right so I’ll stick with that. Yep. That’s it.
Tell you what, if push comes to shove concerning some bad guys with bad intentions one night in your backyard around Squamscott Falls, you lob some granola bars and a copy of the Sunday NY Times at them.
The Remington 870 with three and a half inch magnum shells is my personal favorite. It’s not thermonuclear, but its unmistakable and universally understood CLICK_CLICK is quite the deterrent in itself.
yeah, 12 guage, thanks for clarifying.
Do they make that model in another gauge…?
And I should have removed the “considering performance and cost”. Its the best regardless of cost. The fact that it is relatively inexpensive is a huge bonus.
I assume it would be good for Trap Shooting? That is one main use I’d have for it, in addition to protecting my rice.
Remington 1100…….in 20 gage. Especially for someone who doesn’t shoot that often
-Semi-auto reduces felt recoil, 20 gage reduces it even more vs.12 gage.
-When throwing buckshot, your target will not be able to tell the difference between 20 gage v 12.
-Pumps run the risk of jams due to “short cycles”. A concern if someone doesn’t shoot that often.
-True, pumps are less suseptible to dirt, etc., but….. Dirt usually isn’t a problem for home defense guns.
-My personal favorite load……..one slug, then buckshot.
(A single slug blasting thru a wall or door may be enough by itself to dissuade some folks from forcing entry).
JMO……..this is what I’ve recommended to my daughter.
I assume it would be good for Trap Shooting?
Yep, tons o’ fun. Comes with a 28 inch barrell typically. Great duck hunting gun too. You can even take it deer hunting or squirrel or just about anything in between.
I was just recommending a good gun in general (including hunting), not necessarily “home defense only”. I wouldn’t recommend a 20 gauge (for general purpose) for anyone over the age of 14. Its just too small. Yeah the 12 gauge kicks a little but its not that big of a deal. It just requires a little practice to become accustom to it so you don’t flinch.
Pumps run the risk of jams due to “short cycles”. A concern if someone doesn’t shoot that often.
If you are talking home-defense only for someone who never uses the gun, i agree there might be some consideration for this (although someone who doesn’t know how to properly use a gun shouldn’t have it to begin with) but for general purpose I’m sticking with a pump action.
1. With practice you can shoot nearly as fast as a semi-auto.
2. It’s more reliable assuming a qualified user. Sure, an inexperienced person could jam a shell but only a small amount of practice is required to get the right feel to prevent that. And a pump is easier to clear. In contrast, semi’s will freeze (when duck hunting) and are more susceptible to dirt.
3. Someone who practices so little they don’t know how to properly cycle the weapon, probably has not made up their mind they could shoot someone and therefore shouldn’t have a gun even for home defense. It will only cause problems.
That is one main use I’d have for it, in addition to protecting my rice.
Hahahahaaha! That’s funny, sleepless.
Wha, Oly? You don’t believe me?
Mostly brown rice, if anyone’s keeping track.
I love this discussion. I remember the good old days when I was ridiculed for suggesting guns, ammo and canned goods.
Got SPAM?
LOL
Twelve gage pumps,…….pumps, pumps, pumps……..
You guys are probably the same guys that prefer revolvers to autopistols, or an 03 Springfield to an M-1 Garand.
What is wifey going to be most likely to shoot (either in practice, or for real), given the choice between an 20ga. autoloader and a 12 ga.pump?
Better yet, which one is she likely to use, going from a relaxed, watching-Oprah-on-the-couch state, to a full adrenaline, someone-is-kicking-in-the-door state?
There’s a lot less to think about with the autoloaders.
I’m biased though…….saw a video once of a guy in Oklahoma (since jailed) who was converting Remington 1100s to “full-auto”
Makes a bigger impression that a “full-Auto” Glock
“That is one main use I’d have for it, in addition to protecting my rice.”
Isn’t all the lead from the shot bad for the rice, or the people who eat it?
Get a cheap used short barreled 22 Ruger Pistol Rimfire, two clips, with a couple of boxes of premium 22 LR ammo*. Used correctly, they will get you anything you need or want in the “impending gun nut revolution”.
Never flash it around or let anyone know THAT you have it and remember, despite what and ALL you have been told, “Bigger ISN’T always Better” :)…when it comes to guns and knowing when and HOW to use them.
PS: Prefered 3:1 by the old US Army SFO snatch teams, “professional assassins” and even little old ladies “are in the know”.
**merely advise and not responsible for self-inficted injuries**
Peace…mikey
Benelli M1 Super 90
Sig 556 with Holographs
Mossberg 500 six shot, pump action with a pistol grip. Easy to shoot, easy to aim and if by some fluke you DO manage to miss your target the thing is so f-ing menacing you will still end up scaring him (it) to death.
Mossberg 500 six shot, pump action with a pistol grip.
If this is a re-post, my apologies. Blog weasels seemed to eat the last one.
Thanks to all for the suggestions. Shootin’ clay and goons is important ya know.
Cartoon of the week:
Tom Toles from the Washington Post on April 7th
That guy’s got some great cartoons - e.g. see the one from Apr 1.
Sorry if already posted:
…Meredith Withneys report, titled, “The Agony of Incrementalism” forecasts home prices to fall by more than 66.0% of current bank assumptions in the 10-City Case-Shiller Index….The average bank thinks the total decline in housing prices was going to be 30% at the end of the first quarter. Now, says Whitney, they’re thinking more like 37% — still behind reality….
http://www.forbes.com/2009/04/08/meredith-whitney-housing-markets-financials.html
Gee, I wonder what would happen if suddenly 30 million young Chinese guys showed up on the West Coast of the USA with the intent to homestead it? Would we grant them amnesty? Or arrange a date with our sisters?:
BEIJING – China has 32 million more young men than young women — a gender gap that could lead to increasing crime — because parents facing strict birth limits abort female fetuses to have a son, a study released Friday said.
The imbalance is expected to steadily worsen among people of childbearing age over the next two decades and could trigger a slew of social problems, including a possible spike in crime by young men unable to find female partners, said an author of the report published in the BMJ, formerly known as the British Medical Journal.
“If you’ve got highly sexed young men, there is a concern that they will all get together and, with high levels of testosterone, there may be a real risk, that they will go out and commit crimes,” said Therese Hesketh, a lecturer at the Centre for International Health and Development at University College London. She did not specify what kinds of crimes.
The study said analysis of China’s 2005 census data extrapolated that males under age 20 exceeded their female counterparts by a whopping 32 million.
The study found that China has 119 male births for every 100 girls, compared with 107 to 100 for industrialized countries.
“Nothing can be done now to prevent this imminent generation of excess men,” said the report by Hesketh and two professors from eastern China’s Zhejiang province.
(Really? A world war might be viewed by some as a solution.)
Sausage Fest
Viking Party
“Sausage Fest”
Lol, time to get out of the hot tub!
I predict a bull run on “Pet Shop Boys” CD sales. Well, pirated ones.
More likely, these young men will go out into the world and spread Chinese hegemony. Given the number of young American college women heading to China for study, it only makes sense. Make love, not war and all that….
My niece married a young business major from Guangdong two years ago. They bought a house in San Diego -where they are doing very nicely in technical/travel translation services.
A great article on “The Dark Side of Dubai:
(From the U.K. Independent; by Johann Hari)
Dubai was meant to be a Middle-Eastern Shangri-La, a glittering monument to Arab enterprise and western capitalism. But as hard times arrive in the city state that rose from the desert sands, an uglier story is emerging.
Construction workers in their distinctive blue overalls building the upper floors a new Dubai tower, with the distinctive Burj al-Arab hotel in the background. The wide, smiling face of Sheikh Mohammed – the absolute ruler of Dubai – beams down on his creation. His image is displayed on every other building, sandwiched between the more familiar corporate rictuses of Ronald McDonald and Colonel Sanders. This man has sold Dubai to the world as the city of One Thousand and One Arabian Lights, a Shangri-La in the Middle East insulated from the dust-storms blasting across the region. He dominates the Manhattan-manqué skyline, beaming out from row after row of glass pyramids and hotels smelted into the shape of piles of golden coins. And there he stands on the tallest building in the world – a skinny spike, jabbing farther into the sky than any other human construction in history.
But something has flickered in Sheikh Mohammed’s smile. The ubiquitous cranes have paused on the skyline, as if stuck in time. There are countless buildings half-finished, seemingly abandoned. In the swankiest new constructions – like the vast Atlantis hotel, a giant pink castle built in 1,000 days for $1.5bn on its own artificial island – where rainwater is leaking from the ceilings and the tiles are falling off the roof. This Neverland was built on the Never-Never – and now the cracks are beginning to show. Suddenly it looks less like Manhattan in the sun than Iceland in the desert.
(link: http://tinyurl.com/cgwa9q)
Page one on Bloomberg dot com - the Recession is over in 60 days!
Story link reads “Obama Sees `Glimmers of Hope’ for Economy After Meeting Bernanke, Geithner”
From the article:
White House chief economic adviser Lawrence Summers yesterday expressed confidence that the U.S. recession is nearing an end.
“We can be reasonably confident that is going to end within the next few months and you’ll no longer have that sense of free fall,” Summers, director of the National Economic Council, told the Economic Club of Washington.
That’s the boldest time specific prediction I’ve read since Alad said the Comex would blow up last Thanksgiving.
Cramer still says the housing market will hit bottom on June 30th.
My humble (or not) contrarian opinion to those posted is that while it is true that the underlying sickness will not be allowed to run it’s course by letting the banks fail, and that therefore, there will be no long term health, it is nevertheless quite possible that we do have a reflated economy and thus “an end to the recession.”
So, they’ve wiped away the $15 trillion in excess debt, all the manufacturing jobs have returned to the U.S., the 5 million too many houses have all been absorbed, we’ve solved the problem of imminent Baby Boomer retirement, etc.
Wow, I’m so glad that all was so narrowly avoided…..
““We can be reasonably confident that is going to end within the next few months and you’ll no longer have that sense of free fall,” Summers, director of the National Economic Council, told the Economic Club of Washington.”
My thought upon reading this was that skydivers no longer have that “sense of free fall” either, once they hit terminal velocity.
Good analogy actually.
Our rate of decline is no longer accelerating - things are looking up!
(splat)
“My thought upon reading this was that skydivers no longer have that “sense of free fall” either, once they hit terminal velocity”
Yeah…some of those Sudden Stops at the end of terminal velocity can be a real Killer
3rd and 4th quarter of last year, my company was beating sales plan numbers. We’re the low cost provider and sell software that helps companies reduce other costs. As recently as December we were collecting resumes, doing interviews, and had even hired a couple people in anticipation of higher head counts effective Jan 1.
Mid Dec… okay, let’s not do any more “anticipatory hiring”.
Jan 1, no new recs, let’s add some cost controls.
Feb, more cost controls. No raises. Restructuring the bonus to 2x a year from 4x.
March, HARD hiring freeze even for vacant positions if people leave. HARD travel freeze on all travel not in direct support of likely sales. One of the “anticipatory hires” got let go.
April, we badly missed Q1 numbers, are no longer cash flow positive, more cost controls. No bonus unless we do much better Q2 than Q1. No layoffs planned (at this time).
Customers just aren’t spending ANY money, even if spending that money is likely to save them more money a year from now.
We’re HARD focused on getting a piece of the government cash now!
I’m so glad the recession is over.
Well, I’m ready to buy this month.
$120,000 for 60 acres, 25 of it on a fairly level hilltop suitable for raising food or livestock, fifteen minutes drive from the medium sized (300,000) city where I work.
One gated road up the side of the hill to the top, anyone who wants to get in any other way is going to have to rope and piton up 200 rocky feet.
Yep, I’ll have to pay construction costs that are a lot higher per square foot than buying a repo on 1/2 acre in the burbs. But I can do it without debt (thanks to the sucker that bought my house in 2005)
Sounds awesome. (seriously)
Let us know after you build the house, and we can have an HBB party!
What State is this in?
Not yet built.
Let him buy it first, then I’m sure he’ll tell us.
I’m all in favor of buying a house when you can afford it easily, and you are buying it to live in long term, not flip…because then its value on paper is immaterial to you in the face of further price drops (or rises).
I hope your attitude spreads, because buying a house should be about having a place to roost, be comfortable and maybe even raise a family, not about getting rich or keeping up with the other hamsters on their suburban treadmills.
I am really saddened that such a personal decision and traditional rite of passage got perverted by so many in our society into just another get-rich-quick scheme. It is still a wonderful milestone in our lives.
That’s cool Riley .I have been eyeballing a little hobby farm with 80 acres(15 wooded/65 crop, pastures and fenced) with a small river running throught it for a couple of months now. Nice updated farmhouse with all the critter buildings.
I’m kinda hoping that some young local farmer that knows what he is doing buys it before I get stupid, make an offer and have to sneak down some dark night to do a midnight “requisition” on one of my friends small tractors.
Still, it’s hard to imagine myself sitting on a pumpkin staring at a border collie pup saying “Okay Ralph, what’s next ?”
till, it’s hard to imagine myself sitting on a pumpkin staring at a border collie pup saying “Okay Ralph, what’s next ?”
Really? I find it very easy to imagine you doing that. And I find it easy to imagine what happens next— Ralph has been shaved and painted blue and the nearest town is on fire. And you brought the pumpkin along.
Nah…that’s not the nearest town on fire. That’s just mikey’s 300 yards of Xmas lights on burning down the barn…relax Ralphie old boy..the more passes with the clippers and your a born again shaved poodle.
One gate road up….
Make sure you’re not in a fire area!
This is a really great article on the illusion that is Dubai.
Dubai is all of the sham of Vegas, with none of the sinning.
In other words - doomed to failure.
Actually, there are other articles that argue quite persuasively that there’s a lot of sinning just “officially ignored”, and if you’re the local sin-city, all the neighboring Arabs will flock to you.
Which is precisely what happens.
Figured that was probably the case. They’re still hosed nevertheless.
I wonder if Halliburton plans to stay?
Even better question………..do we let them back in?
Oh please! Like they can’t bribe everybody under the sun.
Sometimes the whole naivete in this country gets to me. Get a clue!
Most interesting deals are made by people behind the scenes - people you’ve never even heard of - they won’t even show up in a newspaper anywhere.
Wow. That was an amazing article. I read it twice, slowly.
Thanks, Fasty. (I think.)
The whole thing is just crazy. It’s so environmentally unsustainable and it’s also so economically unsustainable.
Yep, absolutely crazy. Great article, though–thanks for the link. Reading it was disturbing on so many levels.
I sorely wish there were a tracking-stock ticker for Dubai. That place is so toast.
While your logic is totally accurate in the “larger” sense, you would lose all your money in the “rational” sense.
It takes so little money to move a small market like that, you’re going to be on the wrong side of the trade precisely when you stand to make cr_ploads of money.
The bailout brigade will scr_w you six ways from Sunday!
Somebody’s a little late to the party??
http://www.detnews.com/article/20090410/AUTO01/904100406/S&P+cuts+GM++Chrysler+ratings
PARIS – The International Energy Agency has lowered its estimate for global oil demand in 2009 after “much lower-than-expected” economic growth in the global economy.
The Paris-based agency based its forecast on an “unusually severe recession” in rich countries, and also revised its expectations for developing countries where oil demand is seen falling for the first time in 15 years.
In its closely watched monthly survey, the IEA cut its forecast for demand this year by a daily 1 million barrels to 83.4 million barrels a day — 2.8 percent lower than last year.
The IEA said that “the pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010.”
In rich countries belonging to the Organization for Economic Cooperation and Development, the IEA forecasts a cut in oil demand of 760,000 barrels to 45.2 million barrels a day — 4.9 percent lower than 2008.
In non-OECD developing countries, the IEA said it has lowered its expectation for oil demand by 230,000 barrels to 38.3 million barrels a day — 0.1 percent lower than last year.
“Although small, this will be the first contraction in non-OECD demand since 1994,” the agency said.
Gains in oil prices in late March and early April are due to financial markets’ hopes that the global economy is starting to mend, but weak economic fundamentals will limit further gains, the agency said
Those green shoots they think they see are weeds and thistle.
Budget deficit at $957B for first half of year.
Packman, did you see the marketwatch post with the link (see below) on it about the banks loan performance’s? It has some great info. and graphs on the major banks.
http://206.71.60.110/main.asp
Holy crap! Thanks for the link - no I hadn’t seen that. That’s some very detailed in-depth data. I wonder how they got that, and how accurate it is.
I’ve spent a couple of hours looking thru the site today and it gives you detailed info. I looked at the loan delinquency’s of some of the failed banks (check-out Indymac) and it looks accurate to me, but I would like to have FPSS’s opinion about this site.
That’s so weird - I didn’t realize that data was public. However being that it’s only an IP address and doesn’t have a domain name, and I can’t find it via google - I’m guessing that’s actually not supposed to be a public site, and the link from MarketWatch was actually a mistake! Maybe, or else maybe it’s just an under-development site (by William Moreland), and he hasn’t yet posted it under a domain yet.
At any rate - great data, and it really points out how Wells Fargo is actually in for a world of hurt.
“the link from MarketWatch was actually a mistake”
The link came from one of the posters commenting on the article from your link. The post is on page 11 of the comments and the poster’s name is contrarian01. That’s why I questioned the accuracy of the info.
And yeah, Wells Fargo looks like they are in a world of hurt. LOL!!
I am encouraged today. A first for this area- a 4 bedroom SFR with a 7k lot was listed today for $219K. This is in Simi Valley, CA. Yes, it is a small house on a busy street, but the next runner up in price was a gutted house for $250K that sold immediately. That one had no kitchen at all and a shell for a pool in the backyard. Both were REOs. Now, if we could just get the banks moving this inventory, prices can get back to reality!
Here’s the link:
http://www.realtor.com/realestateandhomes-detail/2817-Royal-Ave_Simi-Valley_CA_93065_1108355276
Experts fear recession contributes to rise in child abuse, domestic violence
Some hospitals report seeing more than twice as many shaken babies as a year ago. Deaths from domestic violence have increased sharply in some areas.
Calls to domestic-violence hotlines have risen too, and more than half the callers said their families’ financial situation has changed recently.
Across the country, these and other signs point to another troubling effect of the recession: The American home is becoming more violent, and the ailing economy could be at least partially to blame.
“Our children and families are suffering,” said Alane Fagin, who runs a Long Island nonprofit group called Child Abuse Prevention Services. “With more layoffs expected, the threat of foreclosure looming over so many and our savings disappearing, even the best parents can feel stressed out and overwhelmed.”
http://finance.yahoo.com/news/Economy-may-contribute-to-apf-14901679.html
Not to be crude but surely this can’t be surprising.
Isn’t this completely inevitable? Didn’t we b_tch about this kinda thing non-stop for the last four years or so?
I feel bad for the children but not the adults.
I, for one, can’t wait to hear the story of a female realtor who first got a serious smackdown and then in retaliation cut off the husband’s wee-wang.
I won’t be happy until I hear that. I love the schadenfreude.
I feel bad for the children but not the adults.
Ditto. There really are some true ‘victims’ in this horrible mess. And almost NONE of them are the REtards who signed on the dotted line. It’s the little guys and animals who depended on a responsible wise person to do the smart thing; you know—plan for the future and all that tedious stuff.
Too bad responsible wise persons were in such short supply.
The only “good” thing that can come out of this mess is that maybe, just maybe, some of the children will learn from their parents’ bad decisions.
That’s a reaaaally big maybe and a bit more pollyana-p_ssy-sniffin’ than I typically care about but I see the fairly irrefutable logic of that argument.
They will I’m sure. See the Greatest Generation, who not only were raised during the Great Depression, but then went off to a horrible war as teenagers and young adults.
They then came home to create the last true great non-bubble economic boom, before eventually their baby-boomer kids started ruining everything, to be followed by their even worse kids, etc.
(Generalizing of course; there are exceptions to everything)
As a side note - if you’re still around - take a look at whino’s link up above if you would - I’d be curious of your thoughts, since you seem to have some of the best inside info. What do you think about the accuracy of that info?
“What do you think about the accuracy of that info?”
Me too, please.
I will do some homework over the weekend, OK?
For now, I’m gonna stick to my whisky
I keep trying to post. It’s not working.
“I keep trying to post. It’s not working.”
I’ve lost a couple of mine too. I’ll check back tomarrow.
Thank you!
Cape Fear Bank becomes 22nd US bank failure of ‘09
NEW YORK (AP) — Regulators are shutting down Cape Fear Bank, the first North Carolina bank to collapse since 1993.
The Wilmington, N.C.-based bank is the 22nd federally insured institution to fail this year.
First Federal Savings and Loan Association of Charleston in Charleston, S.C., is assuming all of the bank’s $403 million in deposits and buying about $468 million of the bank’s $492 million in assets.
The Federal Deposit Insurance Corp., which was appointed receiver of Cape Fear Bank on Friday, will retain the rest of the assets to sell later.
On Monday, Cape Fear Bank’s eight branches will reopen as First Federal branches.
The last North Carolina-based bank to fail was Crown National Bank of Charlotte, N.C., in May of 1993.
Be sure to click the boxes for automatic campaign contributions on yer tax return. cuz that mensa you are a team player.
I guess the difference between the way I file my taxes , and “those people” makes a difference. I dont do electronic communication very well. This is actually the first year I had the return typed and prepared….I’m oldskool.
The analysis of the return is very interesting when you review 50 or so.
http://www.fec.gov/pres96/presgen1.htm
Never again will I check off that box…its a FRAUD
Perot had $16 million less then 1/2 the repdemo money yet was denied entry into the political debates…
Even my stupid Network Court TV was yellow bellied and didn’t want to discuss the legal issues around that illegal decision.
So we will never ever have a 3rd party again unless Bill Gates or Bloomberg pays for it.
Barrell of oil is worth 3 times the price of the barrel?
stick that in yer actuary table.
The Muja Somali pirates with 12 tankers?
Decode, please??