Bits Bucket For April 11, 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.
April 11, 2009
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LOL, FIRST! Sorry, saw it come up, could not resist! Just repeating below what I saw on yesterday’s thread since no-one will likely see it, but in the attempt to be first AND new, here goes.
So today I get to be 1) new 2) first and 3) last:
Hey, G’day from Sydney Australia and happy Easter to Ben and the Best Housing Blog in the World. First-time poster long-time lurker:
My husband has been encouraging me to post something just b/c I’ve learned so much from so many of you through the past couple years. He says that Sydney Australia might be of interest to you even tho we so far away. So FWIW here goes.
We live in the Sydney slum - err, ’suburb’ - of Meadowbank. For the last two years I’ve been watching the apartment (”unit” or “flat”) turnover it seems pretty obvious that people here buy quick and then “flip” or rent out at exorbitant values. No-one buys to actually live here. The rents are high; there are always half-a-dozen to a dozen “For Sale” signs on my street which turn over quickly to “Sold”, only to have new ones spring up within days.
Any given weekend you’ll see heaps of unit tourists clutching papers wandering in and out of open houses. Mostly the tourist groups are Indian or Asian. And the Sale signs come and go so quick it’s hard to keep track of them.
We live in a glorified slum - garbage on the street, graffiti everywhere, loud domestics or partiers or engines at night but b/c the units are old (’60s vintage) it’s easy to block out some of the noise by closing the windows. But we’ve had to call the cops though several times now, just so we can sleep.
There is mucho development going up here. One group of concrete beehives has been completed across the river and is the subject of litigation thu people defaulting on mortgage commitments. The beehive a block away from us is fill of thousandaires asking $375-$700/week for one- to two-bedroom units. Some of those have been on the MLS for months, but construction continues. The cheaper ones (leasing $250-$300/week) get “snapped up” pretty quick. For sale they range (no word of a lie) $750K - $1MM per 3-bed, 1-bath, 1-parking unit. They buying continues but has slowed considerably in the last year. In our little cellblock, they are cramming in two and three families to rent per unit (we rent at $240/week. It’s gone up twice in the four years we’ve been here and we rent cheaper than anyone we know. It’s nasty but cheap. We earn six figures, save 50%, and regard the conditions as a trade-off to the future).
I know Ben started an international thread but quit it since it was difficult for many of us to post given the time zones. I just thought I’d throw a Sydney report on here so you’d know the Sydney bubble is alive and well. It’s beginning to deflate but the sheeple don’t really get that yet even tho unemployment is starting to shoot up. We’ll see what happens thru this year. We’re long gold & silver and looking forward to a New Global Reserve Currency by year-end. (No disrespect intended to the wonderful outspoken American posters here who point the way for many of us around the world.)
Meanwhile, the government here is attempting to prop up prices by offering $14G-$21G bribes to “first-time buyers” willing to take on mortgages of roughly 10x income at the beginning of a depression. Me and my husband seem to be alone in thinking this a dumb idea, at least in this suburb where $250K for a 3-room unit is touted “cheap”. HA! But at least the government here is bribing the GFs at the beginning of the cycle, rather than in the middle like the US did. That will make a big big difference I’m sure.
We can look forward to a long stagnant period followed by a quick histrionic fall wherein the government successfully blames “US subprime”. We’re about a year behind you guys. Of course all the corporate spin here is all about how We’re Not Like American Subprime, even as we do the same thing (give huge loans to people who have no hope of paying them back). Plus ca change. You poor dudes I bet are the government scapegoats for a LOT of countries around the world!
Just in case you were wondering if things are Down Unda: They aren’t, they’re just behind. Don’t ever move here hoping anything will be different. Not that we couldn’t use a few informed been-there Americans like yourselves to speak UP (me and my husband try but we are considered a bit Odd). But don’t do it b/c you’ll just have to put up with the same cr*p for a year longer. Don’t let anyone tell you that It’s Different Here.
Since your Housing Bubble seemed to really pop last September, I’m very much looking forward to this September here! My husband has his eye on a multi-unit deal in a small town which has been reduced to “Make An Offer”. In a year we’ll see how much of a mood they are in to unload.
Best wishes and many thanks -
Cat
thx, thoroughly enjoyable reading!
Yeah, thanx for seeing thru the typos.
Specially from one of my Florida favourites who posts loads of numbers.
(I’m going to take the opportunity to shamelessly butter up my “favourites” if I can stay awake long enuff. It’s about midnite here. And I can only post b/c it’s the Easter long weekend and I don’t hafta go to bed on time for once. Lawts of cawfee means I can post some strokes to all y’all b4 I pass out. It hurts being The ONLY HBBer in Oz except for ozajh who I barely ever see prolly for the same reasons I’m never here. You guys are usually pretty cranky watching the morons of the world so you can use the props once in awhile.)
I’m just so sure that so many will enjoy reading your post!
Funny isn’t it?
From so many distant places, yet, we are not alone.
Love and best to you and hubby!
Hi Renfal..Have brother in Bowral. Quite an astute person.
Keep telling him that what happening here is/will happen
in Oz. Last nite I mentioned the falling rents (SMH) in posh
Syd burbs.
Think the problem is - same all over, the sheeple cant seem to grasp or comprehend what’s happening on the “grand scale”. “That couldn”t/isn’t happening here”
I’m in So Cal. Among all my aquaintences, there is only one I can talk to “that’s got the message” and he is the least educated. I get the feeling when discussing situ, they think i’m suss.. or not completly there. An alarmist of sorts.
I don’t like predictions,..as that’s all they really are, but I do think I t’s going to be worse than “even we” think it will be.
Daughter and family from Melbourne here on hols at moment. Briefly mention the housing problems to Hubby.
Got the “what you talking about look”, end of discussion on that.
Depression Graph and Pols comments (yesterday blog) was enlightening.. it’s the same BS that we’re hearing today, only from different suits.
Wizards…one thing that’s “good” about the American experience is that you guys are now and have been for the last couple years, a lot more in touch with the reality of what’s going on. There is a reason that The Best Housing Blog is AMERICAN, and I have YET to find any good Aussie one. You get the odd discussion thread now and then on the occassional Oz blog, and even those are often overwhelmed with Realtwhores or wanna-be The Donalds.
I have been using the term “Depression” for a couple of years now, simply by virtue of logic (massive global credit bubble + deleveraging = depression to oversimplify). It may not ‘officially’ be one until the ‘recession’ has lasted another year, but why wait calling it what it is?
I hope for your sake your brother is one of the Few, the Enlightened.
I have had to talk my sister in Ottawa off the ledge on about a quarterly basis for two years now, even with another sister already drowning. The first page (of 6) on realestate.com.au of Bowral listings ranges from $500K to $2,700,000, with several at $1.5MM. I really, really hope your brother is neither buying nor selling right now, but esp. not buying…
Bowral is NICE. But not that nice. I think Bowral’s main industries are health care / social assistance and tourism / retail. I think it’s population is what, less than 10,000? Lots of retirees?
Renfield: He listens, but doesn’t want to hear.
Two properties. Bowral (residence) Nice house on 1Hect.
other is like new Federation house in M-Gong.(rented)
Both owned free and clear.
Bowral been on mkt on/off for two years (retired) , lots of lookers, no takers. I don’t think it’s overpriced. Tell him to drop it down, before the mkt does. He’s not in a hurry to sell, so like an idiot he’s just waiting..!!
He is fortunate, had for ~20 years. Got them for a song.
See on earlier reply to your post, that jingle mail will be
happening in Oz. Not so..all loans are Recourse. Think that won’t be a problem in future. No up and walk away, to start again at later date, It’s hard to imagine what will happen to those 10x buyers who will end up underwater.
You’d better bget to bed..it’s 2am for you.
HEY. *I* never said jingle mail! And Lord knows I’ve wanted to, wished to hard, but no it doesn’t apply here as you said, b/c the banks will hound you TO YOUR GRAVE except in the case of…
Bank.Rupt.City.
Guess what are way up lo this past Housing Bubble decade?
Up 12% this year, up 260% since 1990. (I’ll post the link in the next post since I think the HBB likes themn not…)
PS: Yeah, yeah, I know…but it IS the Easter weekend and, to give me credit, this is a much more wholesome way of staying up too late than I used to indulge in, back when I was young and immortal.
linkety link, barba trink:
http://voice.unimelb.edu.au/view.php?articleID=5740
Renthal: It was a replyer to your post that mentioned “jingle mail” Just mentioned it, because many, tho not all States here have “non recourse” and many even on this blog dont consider that most other coutries and some of our states do have recourse only.
Yes, BK is only way out under these circumstance, but not sure how much this protect one in Oz. Beeen away to long to have followed it.
Yes, I enjoyed it very much as well. I urge you to keep posting, Renfield, you and your cat. The anecdotes describing local conditions are one of the best things about Ben’s blog, especially when they’re lively and interesting.
hehehe…my cat is me. I didn’t name myself, but I must admit as a nicky it kinda suits. (You can’t swing a cat w/o hitting a Catherine around here.) If my real name were something exotic, like Gabrielle or Raphaela (Raffi?) or whatever THEN it would be different.
I’ll try to keep posting and have fought the urge for lo these many years only b/c my DH likes to have someone next to him when he goes to bed. (It’s quarter to two here now and it’s just me my wine and my 3 cats…he wimped out two hours ago.)
You guys are the only thing that is BETTER I have to say, than going to bed with a nice warm giant hot-water-bottle guy!
hehehe…my cat is me.
Oh, and here I was imagining your cat sneaking on to your computer and gently patting out posts with her cute little pink-padded paws, blogging interspersed with delicious recipes for mice canapes; perhaps secretly bidding for items on eBay…
Hot water-bottle husband: (surveying newly delivered package with outraged wonder) ‘Who the HELL ordered a gross of chew-toys?!’
You: ‘It wasn’t me! Seriously! …What flavor are they?’
You guys are the only thing that is BETTER I have to say, than going to bed with a nice warm giant hot-water-bottle guy!
You know, this could very well be the nicest thing anyone has ever said to us HBBers.
Right, guys?
*chokes back an emotional sob and pretends it was only a cough *
But I must say you have my cats DOWN…uncanny. Is it that extra-sensitive persperation thing or have you’ve been google-earthing into my windows! (where the deuce is my tinfoil hat?)
PS: Confession time. I can’t sauce anything right. He cooks; I burn; I’m seriously banned from the kitchen after the last stove fire.
Here, lemme help. “Biiig girlz…do-on’t cryiyi…they don’t cry…”
Well, you prolly not a big girl, though, so I guess it’s OK this time. Unlike me and my ample white gluteous assimus (and proud of it!)
I NEVER cry.
Might yowl once in awhile…
I NEVER cry
Really? Well, that’s ’cause you’re a tough Australian.
I cry quite frequently. I do it like chewing colorful gumballs, because it seems fun and I may as well.
Hmmmm. Lessee…I cried when I sat in my camellia fort and listened to La Traviata the other day, and I recently cried at a yard sale, and I cried when I saw a little dead mouse this morning in my laundry room, with its poor little mouse tail sticking out like a wee gray stiff baton.
….Here, you want me to cry right now? Hey, may as well.
But first I must spit out my lollipops, so I don’t swallow them when I gasp theatrically, ’cause that would make me choke, maybe, and then I’d REALLY cry!
Well! Welcome to our friends from “Down Under”.
Now,
“Meanwhile, the government here is attempting to prop up prices by offering $14G-$21G bribes to “first-time buyers” willing to take on mortgages of roughly 10x income at the beginning of a depression.”
Is this really 10x income? ..choke, sputter, … can’t breath…Heimlich maneuver … portable defibrillator… “CLEAR!”…booomph… ahh…better…eyes focus…pulse normal… respiration normal…
Ooohh, that will end very badly. How do they qualify for a loan at 10x? NINJA’s? Liar Loans? I had been reading about how much more dangerous the bubble was in other countries but 10x? That is a massive BK problem. Jingle mail here we come. This cannot be propped up for much longer.
How is the Australian gov’t going to cope with this amount of deficit spending? The oligarchs in our gov’t can’t really do it although they claim they can.
Again, welcome Cat and please keep us updated on this. We don’t get a lot of ground level info from your part of the world, and I found your post topical. That is an understatement!!!
Roidy
We had 10X loans in FL; actually, I was told by a RE agent (god bless their souls) that 10X was the new “standard” for loan qualification (~2006). After she told me that, I couldn’t sign my rental paperwork fast enough!
Wow, at 10x income, I should be living in the penthouse of the newly-remodelled Book Cadillac in Detroit, (if I wanted to live in Detroit ), at the very least. THE VERY LEAST ! Let me get out my diamond tiara while I post this.
ROIDY. I’ve spent some time wondering WTH ACH means for someone named ‘Roid’. I’ve saved a fair few posts from you in my “files”. (Yeah, shameless butterup b/c I am NEVER on here ’sep to lurk.)
‘K, I might have been carried away there. Let’s see, they took a census in 2006, median (national) income was $53K as I recall. Sydney a bit higher, I think over $55K but not as high as $60K. (Could look it up but not very awake.)
Median mortgage was as I recall about $450K so in fact nationally it is about 9x. But that was in 2006, before the knifecatcher wave really got started here. (It is in full swing now b/c of the government bribe.)
I was saying 10x ONLY IN MY OWN SLUM NEIGHBOURHOOD, and alas I was not exaggerating the price range; a quick search on realestate.com will serve you loads of $400K-$500K listings. Of 130 offers on realestate.com, for example 30 are below $400K, and that’s including about 15 at $399K. (And if the median income in THIS immigrant-heavy suburb is at national median I’ll eat my ample brassiere with tomahto saurce.) So it gives you some idea of what we are dealing with.
There is, of course, a “housing shortage” on that everyone knows about albeit there are hundreds of listings on every real estate website and most of them at exalted prices…altho in the stix it’s softening quite a bit. (cf the “Make an Offer” my husband has been eyeing lo these many months.)
I almost moved to the US (Arizona) before I came here. Now part of me wishes I’d gone (the bubble is bursting faster there as the sheeple are a bit more clued in - yes, REALLY) and part of me is scared of the empty suburbs & illegals. But I don’t think I could talk DH into it anyway as he’s pure Ozzie and just prolly won’t go even if China does take us over one of these days. OTOH learning Mandarin sounds interesting I guess.
9x is pretty close to what we had in Netherlands. Until last year, the median homeprice was 8.5x median income on a national basis. Of course, in the hotspots it was much higher. In my relatively small hometown it was probably around 12x, but difficult to know for sure because they don’t publish local (median) incomes.
8-10x income loans were considered pretty normal until this year; most of these are I/O loans running for 30 years, often with variable rates and as we recently found out, with loan values up to 200% of the appraised value of the home (the average loan amount is 114% though).
It seems certain now that the Dutch bubble has started to burst, but you never know (some more details in separate message).
SHOUT! OUT! NNNNHHHHHZZZZ!
I love you b/c you are one of the few, the proud, the internationals.
Who has held his own on the inflation debate more than somewhat.
The inflation here in food and utilities is pretty bad - I don’t have figures, just our shopping budget and telecom budget which have easily doubled in the last three years. CPI is a joke here much as it is from other governments. All we know is our weekly shopping budget used to be $150, and now it’s $200-$400 depending on whether we’re doing a ‘big shop’. (Yes, my DH eats a lot.) It’s one of those things that is purely anecdotal, which ‘everyone’ knows/talks about but we don’t have real figures for. We secretaries trade discount shopping tips at work now (I work at a large law firm). It used to be all about vacations…
Aldis is the big winner among the support staff these days.
I don’t have anything of substance to say except that when the deflationists start up here I’m always secretly cheering NHZ who points out the PRICE INFLATION in stuff we actually NEED on a weekly basis, as opposed to houses or cars we might buy once in a decade…
yes, in Europe inflation is also a sure thing, although not as bad as down under. Official CPI is now 2%, but I guess actually it is around 8%. Many items like energy cost for homes, healthcare, local taxes are 200-400% more expensive than 10 years ago, and despite the credit crunch hardly anything that is required is going down (food is a bit cheaper though than last year).
Probably Oz is worse now because of the currency. I’m following the kiwi dollar which went from 0.62 euros to 0.39 euros recently (it’s now up to 0.44, although the rate is jumping strangely so I don’t know what to think of it).
Obviously, inflation can never go down with Dutch wages rising at an average 4% (mostly caused by outrageous wage increases for government workers, and I don’t think this will stop this year either). In other EU countries wage increases are even higher (e.g. in Germany many workers got 8-10% higher pay this year).
You got wage hikes! You rich bosstards!
Hmph. WE got a nice little letter saying “Due to being a world-crass lolyer firm…blah blah competitiveness…blah blah shtandards…blah blah we will not be giving you any more money this year.”
I merde you not. And that was for ALL the secretaries…the head honcho secretary and her underling walked around and personally delivered each letter to our desks!
But that’s not as bad as the poor junior lolyers…a lot of them were AXED with apparently little notice…two on our particular hallway were there one day, literally gone the next, barely time to pack up a box or two and a couple tearful hugs.
I felt pretty special to be only getting a NO MORE $ FOR YOU letter after that. Especially when the head honcho secretary (who is actually a pretty sweet person) explained that their secretarial quandary had been “no raises or sackings” this year and that ‘natural attrition’ had about run its course….
Nelly. It’s a good thing I’m fairly sanguine about this stuff or I’d prolly be freakin right now like some of my compatriots are. Unemployment is on the rise and you should SEE the hunger for fees among the various partners…o the tales I could tell were I not terrified of being ‘dobbed in’.
PS: How the government will cope with it is anyone’s guess, including theirs I think. (Or they have a Cunning Plan which they’ve chosen not to share with the proles for their own reasons of state!) Our government is better than the fascist one deposed last year, but about as effective as Oh!bama over there, and as popular too. So in other words, they’re banking on paying for it “when the economy turns around” and they’ll be in power until that happens. (ie, a LONG time)
So we’re looking at deficit spending for more than a few years now and hence. But that’s only b/c of “exposure to American subprime” (I wish I was kidding) and so it’s all good - not our fault, you see. If I had a 10c piece for how many times I’ve seen “American subprime” in the papers, I’d be able to pay for a slum flat in our suburb…
‘Or they have a Cunning Plan’
Do we have a Blackadder fan here?
No, more a Baldrick fan, alas.
Baldrick: Have you got a plan, my lord?
Blackadder: Yes I have, and it’s so cunning you can brush your teeth with it.
Darn it, I am just looking into shifting a large portion of my cash holding from US Dollars to Australian Dollars. You telling me the Aussie Gov’t is also manipulating its financial markets? Oh this is gonna end well.
heh..well, I hate to say it but I think most countries manipulate their currencies these days…
OTOH (and I’m not just puffing pink clouds out the arse here) you could do worse than Aussie dollars, for these reasons:
1) proximity to Chinese markets and LOADS of mining (the Chinese have begun buying up our mines as much as they can and one deal has already caused a bit of a change in law I think, concerning the level of foreign ownership allowed);
2) our currency hasn’t yet fallen at the rate the others have and Rudd very friendly with both Chinese and West so well-placed for trade esp. if we wind up with a ‘tripolar currency’ base; HOWEVER
3) even tho there’s not much (yet) government debt, I don’t know how long that will last, and that’s balanced by an astronomical level of private debt, I believe 1.5x the American level according to Steve Keene’s Ozzie debtwatch, which I suspect will soon be shifted onto government rolls.
When it comes to currencies, I’m betting more on the Chinese myself, BUT Aussie is not so bad for the short term, I think simply b/c of where we are placed and our commodities trade.
I don’t know much about it though, just like some of you here a non-trader regular joe trying to make my way and keep my savings safe in uncertain times. But we (my family) are planning on buying renminbi a bit later in the year, once the easy-access small-quantities gold market is tapped out (we think).
I’ve been following the Oz dollar since my trip 2 yrs ago. Seems to be holding quite strong, for all the reasons you mention. I had a chance to find work in my area of interest in Perth or Canberra…Canberra was way boring (kind of like the Los Angeles suburb of Irvine) with weird weather but Perth looked like a great city and economy. I’ll probably regret not moving there, but anyway…greetings from Alaska!
Renfield (Cat),
Welcome. Glad your husband encouraged you to post.
Please keep posting when you can. I love reading from posters from around the world.
SanFranBayAttitudeGal!!!
(I always picture you in a Power Suit.) I am so worried that this is going to become a late-night addiction for me and DH might have to put his foot down…well, guess until then that means it’s OK, right? I too love reading you guys from around the world…I have to admit I’m starstruck this morning only b/c I’ve been reading you guys for TWO!!!! YEARS!!! and didn’t say nothing b/c I valued sleep way too much. Tomorrow, the bloom will be off, I’m sure, and I’ll be setting off political bombs just like Ben loves, with the best of you. 
Yes, this blog has become my drug besides coffee ;). I’ve found myself up into the wee hours of the morning reading the posts.
Well, SanFran, Renfield, once I got up in the middle of the night to go pee and I just automatically walked over and logged on to the HBB and started posting. I wasn’t even awake. Heck, my EYES weren’t even open! Heck, I might not even have been fully phased into this dimension!!
And yet, the call of the HBB did verily lure me…
*sticks out arms and rolls back eyes like an enchanted zombie *
And you know what? That means I gotta be first to post! Hmmm….I believe I nattered on about something consummately off-topic, like a dream about a duck, or a doily or something.
Oh, well, it was the best I could do, being asleep and all. I was only mocked for a day or so.
“Yes, this blog has become my drug besides coffee ;).”
Does that give frequent posters the status of drug dealers?
I’m seeing a future business opportunity here.
Hmmm, 12 steps, lots of coffee…
Hmmm, 12 steps, lots of coffee…
Huh?
*wakes up suddenly *
Well, where’s the duck?
And the doily?
admittedly addicted.
Coffee “The last legal high”
Well glad to see you got over being starstruck and took the plunge. You did great.
I have to say that I value sleep very highly also, but to be honest, I’ve learned so much by reading these posts that (sometimes) it was as valuable as sleep to me
Silverback, wife of (sounds like) a very sweet husband and survivor of the attack of the 50-foot woman lolyer!
I too value sleep…just as soon as this bottle is empty, I’m so outta here, I swear it.
Great post, Cat. Australia is very high on my must do list before I die. Can’t wait to see it. Please post anytime. Thanks again!!!
“Blano Does Aus”.
Hmmm…works. I like it.
Renfield, what a pleasure it is to hear from you in Australia! Kudos to you for sticking to your guns, so to speak, and not buying into the craziness.
An indebted populace is a malleable populace, wherever we may be.
Thanks for the commentary. It’s always good to hear the various perspectives out there. Good luck, and don’t be a stranger.
BTW, I read the Cali thread most of the time the next morning for max effect, and I don’t read BB until past noon local, so don’t think that comments you make won’t get read.
RE: We live in a glorified slum - garbage on the street, graffiti everywhere, loud domestics or partiers or engines at night but b/c the units are old (’60s vintage) it’s easy to block out some of the noise by closing the windows. But we’ve had to call the cops though several times now, just so we can sleep.
You need to immigrate to the US.
Santa Barbara will give you safe, quiet, space to hang your hat.
There only downside is you have to sleep in your car.
PS. You might want to leave your Aussie cattledog’s with friends.
http://www.youtube.com/watch?v=A4P3sdOUxco&feature=related
Sad to hear that the housing madness (and the general slide of civilization into one huge slum full of shamblers, flippers/scammers, and ghetto behavior) has spread to the other side of the world. Ugh…
I just moved to the Sydney area back at the end of October 2008 from the states. I too live in the Sydney slums.. Minto. I too am waiting for reality to finally hit here. My in-laws keep pushing the wife and I to buy a place, but even with a 6 figure income, there is no way I would be able to afford anything in even the worst suburbs.
Rents here are outrageous, and the demand for the affordable places is so high. Our lease runs out in July and we hope to move closer in to the city so I dont have to sit in traffic 2 hours every morning.
Hopefully one day things will change here, but until then, we rent and save.
Anyone up for paying $200K for 250SF of an apartment?
NYTimes: Making a Comeback: $200,000 Studios
By MICHAEL M. GRYNBAUM
Published: April 10, 2009
BARGAIN seekers, nostalgists and ascetics, take heart: the $200,000 apartment has returned to Manhattan.
It is something of a homecoming. The turbocharged market of recent years left the island all but walled off from middle-class buyers and sent younger New Yorkers scurrying to the outer boroughs. But as prices fall sharply and sellers hope to attract reluctant buyers, numbers that seem a relic of a bygone era have re-emerged.
With all the chatter about bargains, the time seemed ripe to explore just how low one could go in one of the most expensive real estate markets in the world. A bit of hunting turned up 10 studio apartments in prime Manhattan neighborhoods. The most expensive: $269,000. The cheapest: $199,000.
To answer the obvious question: yes, these places are small. How small? Combine the square footage of all 10 apartments and you’ll fill less than half of the Rockefeller Center skating rink.
To tour these Lilliputian abodes is to find the feats of pragmatism that are a hallmark of Manhattan living. Murphy beds abound. One owner, perplexed by a tiny kitchen, decided to place the full-size refrigerator a few feet away — in what had been a coat closet. Another enterprising woman tucked her home office into a side closet, storing clothes and boxes on shelves above a folding table that doubled as a desk.
I’ll take 5, please.
Roidy
Thus it is in NY. People think Apt.s that used to go for 300K are a deal at 200K. Even though they are probably worth 120K.
POS SFHs in Queens still around 450K-500K, down from 600K. Worth less than 300K.
Ed:
A 2fam bought last year on our block at $749K looks abandoned, old mail in the box and no garbage for 3 weeks. No curtains or blinds on anything but the front windows.
Full-size refrigerator?…that kinda contradicts the discussion last week of how people live in Manhattan. I thought Manhattanites buy dinner from the deli each and every day on the way home from work. The fridge need only be large enough to hold the typical bachelor fare: soy sauce, a six pack of Bud, coffee creamer, a withered apple or two, 8 oz of Gruyére and a half-bottle of merlot for company.
Manhattanites watch HDTV, so, while the people who truely embrace the lifestyle don’t need much fridge space, some folks want the fancy appliances. But exactly how they expect to live without that coat closet is beyond me. A fridge is just a fridge, but a coat closet can hold clothes, luggage, small appliances AND pantry items. Truely a valuable space.
I had a 400 square foot studio in Brooklyn, right on the edge of Brooklyn Heights, that I paid $725 a month for right after law school. The owner had paid about $110K. I could have bought it for $35K when I moved out. It had windows on the long wall facing west with a view of the WTC towers. Easy walk from Clark Street, Borough Hall, Court Street and High Street which covers 4 of the lines that come into Brooklyn at all. Now, the area was a little iffy at the time I moved because you had to walk past the entrance to the Brooklyn Bridge and there were still squweegee guys at the time, but they didn’t really interact with pedestrians, and when Giuliani got rid of them the Nation of Islam guys “took over” the area (well dressed young men passing out pamphlets) and they had no interest in even talking to women or white people, so I thought they made the area quite a bit safer than it would have been otherwise. 24 hour doorman building; laundry in the basement; heat, hot water, electricity, and gas for gas stove included in whatever my landlord paid for his co-op fee.
In my opinion, unless you are using the space as a full time office, Murphy beds aren’t worth it. You are better off making the bed and using it as a sofa during the day. I had enough space for both a bed and a sofa, but that was only because the room was long and somewhat narrow.
A studio is an inherently temporary space. People vary, but the first day I got to go to sleep in a bedroom with a door on it and didn’t have to slip between the wall and a bookcase to get to the bathroon was amazing and I’m not the type to lust after a huge house with a special room for blowing my nose and a bathroom that only gets dusted, not cleaned, because no one ever uses it. So, why would anyone ever buy a studio? You have to either be convinced that your social life and income will never change, be buying for rental income, or be speculating. I can’t see another reason.
Polly:
Its the new DIGITAL Lifestyle. Everything is on a hard drive , laptop,or memory stick..no need for old fashion things like bookcases or entertainment units…or BIG desks for the CRT monitor let alone for the 27″ TV picture TUBE…some upscale (not Bose)stereo receivers have an ipod dock.
And you can buy a futon or a couch with storage draws underneath raise a bed ……It seems that’s what they are pushing for the next generation, living with a minimal amount of “stuff”…..which does not bode well for a lot of businesses in the “stuff” business
———————-
So, why would anyone ever buy a studio?
They’ll buy a “cheap” studio by rationalizing that it’s cheaper than paying $2000+ a month in rent for the same and “building equity” and all the other rot.
All for a glorified dorm room.
Only grown up people I know who are happy in a studio have weekend houses and work a lot during the week so it’s sort of a hotel room.
> So, why would anyone ever buy a studio?
When you live in the burbs and work downtown. Place I used to live in Chicago had a bunch of studios taken up for that purpose. Plus, you can lend the place to friends when they come in to town for dinner, a play, and some drinks.
Why home prices may never recover
http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/why-home-prices-may-never-recover.aspx
They need to remove the “may” from that statement. Inflation adjusted, none of us will live long enough, and none of the homes built today will last long enough to see a recovery. Even in nominal terms, it will be >1 decade before we see anything that even resembles the numbers reached at the peak.
I like this authors idea though; because of the implosion in RE, it’s going to be seen as just another risky asset class; and, as such, is not at all promised anything that approaches an upward trajectory. I agree with him.
I agree with that article for the most part. Out west, stucco boxes that look the same as other stucco boxes don’t seem like the American dream to me. However, some ocean view good-quality home is appealing. Unfortunately such a house is out of reach for me. I expect rents to continue being much cheaper than owning for the next five to ten years, even in the beach cities of LA. I’m not sure about places around the area where the author writes about (NYC).
3 years ago when I was predicitng a bottom of “at least” 40% off peak here in PHX…. Man, was I called INSANE for that prediction…. I would talk about 25-50 years for prices to return to peak in nominal terms, and NEVER return in inflation adjusted.
Oh, the good old days of being an insane “boom and gloomer” that was predicting the end of the world. Well, so far, everything I predicted has happened pretty much as I said it would.
Back in 2005-6 when I used to tell anybody willing to lisen that the house prices in Chicago would drop at least 50% I was called flat out “conspiracy teorist” and brushed off. Now thay ask me “Is over yet?”. I just smile.
Darrell, I enjoyed your analysis yesterday regarding price levels and transaction levels at various points in the housing bust.
I haven’t heard a peep at all from my buddy who lives in Glendale, Arizona. He’s the one who told me a couple years ago that a man in his 40s should be a home owner! No, at the time he did not mean “home moaner!” I stopped needling my other friend a year ago when he told me that this housing bubble talk is bad for his blood pressure, even though he kept ribbing me beforehand that I’m a rent slave! Now we don’t discuss economics much at all. It’s peace. I’m content that their silence is the acknowledgement that this stuff I learned from HBB the last 5 years is the best approach.
I think that we all share this experience, and being part of the hbb community.
‘Federal regulators have told the nation’s largest banks to keep quiet about their performance on government stress tests. They fear investors could punish companies with nothing to brag about.’
‘In letters to the 19 banks undergoing tests of their financial strength, regulators told the companies not to disclose their performance during upcoming earnings announcements, according to industry and government officials who requested anonymity’
It worked so well for Japan…
Now that’s eery.
I just posted on Japan before seeing this post…
“Wells Fargo & Co. Chief Executive Richard Kovacevich’s calling the process “asinine.” …
The Securities and Exchange Commission on Wednesday opened a public debate on how to prevent downward pressure on stocks from investors betting against their performance — a practice called “short selling.” Critics of the practice, including many in the financial industry, blame short sellers for causing much of the panic that engulfed financial markets last fall.”
See, this gets to what I am sure is going to come up in the next documentary interview that’s scheduled, especially since some big shot economists are being asked to jump in. All these experts, all these ‘regulators’ were supposed to prevent just exactly what happened. All through college we were force-fed this idea that central banks were the only thing that stood between us and the dark ages.
Well, I say BS. The world’s central bankers were just as foolish about the housing bubble as a 23 YO camping out for a condo. Except the central banker was much more educated and supposed to be looking out for the system!
BTW, I’m told the next segment of the documentary preview will be out tomorrow. I’l post a link right away.
Key word, ’supposed’ to. Supposed by whom? I’m not sure the central bankers were ‘privately’ foolish, so much as just ‘publicly’ foolish…if the IMF does succeed in becoming the comptroller of the ‘new reserve currency’ (IMF special drawing rights) then I think US/UK central bankers pretty much have a lock on the ‘New World Order’.
Is it better to look like honest ‘mistakes were made’ rather than deliberate malfeasance? I personally think the Central Bankers are the least at risk of all players in this “depression”…
Look, one of the reasons we never have straight talk about the CBs and the money system is it gets complicated and then we’re often told to leave it to our betters to figure out. When was the last time the question of central banking came up in a presidential election debate? Even in college, it is presumed above our heads.
I’m not tripped up by supposed, and we have to be direct or things will never be changed. These guys are charged with regulating the banking system. Look up regulation X. Didn’t Bernanke, etc, issue a rule to stop a lot of the crazy loans? (Although, it was closing the barn door, yadda yadda, and I don’t think it was gone into effect even yet!)
Let’s face it. The Fed blew it on the housing bubble, and I don’t care what Greenspan says. The IMF, the BIS, they all failed. The question is, what needs to change? That is what I’m going to ask when these guys come to Flagstaff to talk.
“When was the last time the question of central banking came up in a presidential election debate?”
If you count primaries, then 2008. Ron Paul… He got my vote, and 2-4% in most of the states.
Sad thing is, I believe it truely IS above most people’s heads.
Ben:
Agree completely. Am equally offended, that it’s supposed to be “over our heads” and yet to me the currency crisis IS THE KEY to this Greater Depression, even more so than debt deleveraging.
Any bets on what will be happening this year?
I don’t want to sound anti-anything, but I very much doubt we will have the American $ as the Global Reserve Currency much longer. Even at the milquetoast G20 it was mentioned, and even Geithner said he was ‘quite open’ to making IMF drawing rights a new currency standard.
I think that’s all just to get people thinking about a new reserve currency - no flickin WAY the Chinese, the Russians, the Persian Gulf gonna trust the IMF, right?
Meanwhile, China has established currency swaps with Argentina, quite a few Asian countries, Russia…I understand the US offered Argentina yuan-to-dollar swaps to counteract this, but not sure how much good that will do since the Chinese might be pretty forceful in insisting on their currency being used for imports. I believe they already insist that Mexico pay in yuan for theirs…what do you think?
This is why we’ll be looking to invest in Chinese currency later this year…we reckon China is pretty much positioning itself to be the Reserve Currency for AT LEAST the Asian-Pacific region. And Russia has been talking a fair bit about making sure the ‘new currency’ is pegged to something like gold, from what I hear.
Dunno…as a secretary, me and my husband are just trying to keep our eyes and ears open. What do you think? Who cares what propaganda the government chooses to publish (or not publish)…by the time they get around to telling us, we’d better already have it figured out.
Renfield,
I think you are on the right track to follow the currency markets closely. It really is the best defense. I used to watch this stuff on my money and metals blog, but with this new business, I don’t have time anymore. I agree that the US reserve currency situation is in serious question, and it was always just a matter of time.
But here’s the thing; back in the 80’s, when such a turn in affairs would be mentioned, people in the know would whisper that if that happened, it would be a disaster for the US economy. So now that we stand on that brink, will it be?
One thing for sure, something big is going to happen.
Funny you mention Greenspan…I’m reading “The Age Of Turbulence” this month.
Ben, You call them foolish, I say FRB govs are the shrewdish gang of thugs on the planet, yet posing as foolish and out of touch with reality. Is not their real goal to establish and maintain the dollars reserve currency dominance at any cost? Don’t wage substitutes such as credit cards help to achieve that goal? Does not increasing volume and velocity of the US dollar advance their cause in addition to maintaining $$$ flows to the US Treasury?
I contend the banking crime syndicate knows exactly what they’re doing. Holders of US dollars are merely collateral victims in their war with currency printing, citizen enlaving thugs of Asia.
exeter:
I agree that the CBs know what they’re doing, just not telling or playing dumb depending on what keeps people quiet. And agree that the FRB’s “main goal” IS to maintain the USD as Reserve Currency, b/c if that doesn’t happen then the US has a very “interesting” future.
However, I think their power to do this is running out. The US is a creditor nation, and to countries who are more and more openly talking about a post-USD-reserve world…and in fact, who are taking steps as far as I can see, to realise such a world.
There is only so long the US can basically hold, say, China to heel by the threat of their own $ holdings…without a positive solution BEYOND the status quo, which Geithner & Summers have yet to mention, I don’t think their best efforts even will last to the end of the year.
I am wondering how an ‘Amero’ regional currency would affect the countries involved. Would this benefit the US? If so, it would be good for both the CBs AND the citizens to begin thinking about it now rather than ‘trust’ that the power of the Federal Reserve can sustain what much of the world seems to be seeing as unsustainable. I think the US may be on the road to collapsing under its debt if they don’t change course very soon.
It’s amazing how few economists are willing to question basic assumptions about central banks. Presumably, the question was answered because economies grew and have been so successful…until they weren’t of course.
Rather than seriously reexamine what are clearly flawed models, we are being forced to swallow the idea that the economy is in bad shape because people are afraid to spend? Or because Wall Street bankers were corrupt and greedy. Very few seem to talk about debt levels, capital distribution (gini coefficients), and asset inflation as negatives in a steady state economy.
Anyway, kudos to you Ben for continuing to be a thorn in their side. Waving their credentials around doesn’t mean anything when they can’t acknowledge the fact they simply got it wrong.
“It’s amazing how few economists are willing to question basic assumptions about central banks.”
They may perceive a risk to their job security for raising difficult questions about the Fed. One of the best ways to encourage people to keep their mouths shut is to create the perception that speaking openly might jeopardize their future job security.
So much for transparancy.
What does Megabank, Inc have to hide? Many of them are nearly down to penny stock levels already, anyway. I guess some of the Megabanks which have not been hammered yet by investors should have much lower stock market valuations, judging from the “need” to pass a new mark-to-myth accounting rule coupled with a veil of secrecy over stress test results.
Don’t worry — short sellers are smart, and will figure out how to make money off these inflated pictures of market value. The only folks who will get hosed will be bovine-brained greater fools.
That veil of secrecy has a Nixonian feel to it. Not that the current President is paranoid, but perhaps he is quite the emerging control freak. What gets my goat: These are PUBLIC monies we are talking about. Hey, “The truth will set you free.”
My hypothesis about the operation of the US government since the Reagan era is that open taxation (the kind R-can politicians like to target in their campaign rhetoric) has been replaced by stealth taxation through crisis intervention. Whenever a financial crisis has played out, from the 1987 stock market crash through the current so-called credit crunch, the Fed has intervened by running the printing press on full blast (as they are currently), justifying the action as necessary to prevent the financial system from failing. At the end of the crisis, deep pockets can pick up assets at fire sale prices, and the huge amount of liquidity pumped in to mitigate the crisis translates into future asset price inflation. At the end of the day, wealthy folks see a big asset price wealth effect and those of lesser means who are owed fixed- or near-fixed dollar obligations (e.g. retirees and blue collar workers) see their wealth inflated out from under them to pay the inflation tax.
This is just my hypothesis here — I have no way to prove it
+50
PB - you didn’t answer my question the other night. You’ve read “The Creature” recently - right? Sure sounds like it.
You’re right on BTW - almost. The crisis intervention itself isn’t the new form of taxation. It’s the consumer debt inflation that’s the new tax - the crisis intervention is a way of preventing them from having to give the tax back to us, in the form of deflation.
We were taxed to death in the 1997-2008 period, without realizing it. Just look at bank profits during that period. Insane. Will there be a corresponding and equal loss period to even things out? Not even close.
I’ve become annoyed that the banks employees (that is, executives) are rushing to return the government strings. Seemingly just because the government let them delay the accounting rules that would indicate how deep in the hole they are (or were before the rules change was scrapped).
So now that we’re off the hook again… Party On Dudes!
G’day Cat, thanks for the info and welcome to Ben’s
blog, the best of the best.
G’day Rancha.
I’m quite tickled to be able to post the ‘regulars’ on here, for once…! It being the Easter weekend and all. You have a permanent sound image in my head saying ‘Bend is Bust’ cowboy Oregonian twang and a guitar.
Happy Easter Cat!
Leigh
And to you too, ma’am…
(When talking to a ex-military lady with guns, it is appropriate to ensure that respect is communicated at all times.)
PS: You may be partially responsible for my shocking my Aussie husband by suggesting that a shottie might be quite desirable for when we do move out to the beautiful, isolated, stix…
Is anyone else hearing an Australian accent everytime Cat posts?
Welcome to the wonderful, wacky, weird world of posting! Thanks for the Down Under update and please keep the international housing bubble news flowing.
“Welcome to the wonderful, wacky, weird world of posting!”
And YOU win the American alliteration au courant award of the abode-airball alumnus annals.
(I’m a sucker for similitude starts…)
We are not alone.
Aso’s Stimulus Plan May Spur Economy at ‘Massive’ Future Cost
April 11 (Bloomberg) — Japan’s record 15.4 trillion ($153 billion) stimulus package may give a short-term boost to the nation’s economy, while leaving it saddled with a debt burden that will smother future growth, economists said.
The plan unveiled yesterday by Prime Minister Taro Aso, who faces elections this year, is aimed at creating jobs in an economy heading for the worst recession since 1945. Equal to 3 percent of gross domestic product, the measures will add to debt that the OECD already forecasts will rise to 197 percent of gross domestic product next year.
“The stimulus will probably prevent Japan from falling apart in the short term, but it will leave a massive bill for the future,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo. “The package doesn’t do anything to promote a sustainable economic recovery.”
Yes misery loves company, don’t you know?
April 10th, 2009 by TCPalm.com
Along with status and prestige, Treasure Coast celebrities and CEOs bring in beaucoup bucks to the local tax collector’s offices.
Pop star Celine Dion just shelled out $171,040 in property taxes for her 3.7-acre oceanfront Jupiter Island estate on the 200 block of South Beach Road.
Dion’s estate, which is registered under her Montreal-based company Renlec Management Inc., is on the same street as Richard Fuld Jr., the former chairman and chief executive officer of Lehman Brothers. He changed ownership of the $13.3 million Jupiter Island home on 265 Beach Road exclusively into his wife’s name almost two months after the company had the largest bankruptcy filing in U.S. history.
Public records show the couple plunked down $197,194 in property taxes on Nov. 11.
Professional golfer Greg Norman, who slashed the price of his famous barrier-island estate from $65 million to $47.5 million last year, also shares the same ZIP code as the Fulds and Dion. Tax records show Norman paid a whopping $326,751 in residential taxes last January on his 8-acre property, named “Tranquility,” at 382 South Beach Road.
Tiger Wood’s 12-acre site on the 400 block of South Beach Road still is under construction, but his future property taxes could beat out Norman’s bill in the future.
County records show Sand Turtle LLC, the entity registered as the owner of the Woods property, paid a $70,744 tax bill in November. Woods is building a 10,000-square-foot, two-story home with an elevator, guest house, guardhouse and boathouse. The property stretches from the Intracoastal Waterway to the Atlantic Ocean.
Taxes seem a little more reasonable in Indian River County. Author and journalist Carl Hiaasen and his wife Fenia paid Vero Beach their $16,988 property tax bill on Nov. 5.
“Celebrities are regular people who want to have regular lives and moving outside hotbed areas like Los Angeles or Miami allows them live normally, go to the market normally,” David said. “In suburbia, they can at least try to provide a more normal life for their family.”
Burt Reynolds paid $48,730 in property taxes on Dec. 3. His Mediterranean-style, 12,500-square-foot, waterfront home in Hobe Sound is listed for $8.9 million with Rob Kairalla with JIC Realty Inc.
County records show Grammy Award-winning singer Gloria Estefan and her husband, producer Emilio Estefan Jr. paid $15,795 in property taxes for a large oceanfront estate in the north barrier island in November.
WEALTHY TAXPAYERS
Here’s what some Treasure Coast celebrities and CEOs are paying in property taxes:
MARTIN COUNTY
• Singer Celine Dion/Renlec Management Inc.: $171,040
• Professional golfer Greg Norman: $326,751
• Professional golfer Tiger Woods/Sand Turtle LLC: $70,744
• Former Lehman Brothers CEO Richard Fuld Jr. and his wife Kathleen: $197,194
• Actor Burt Reynolds: $48,730
• Former NBA great Michael Jordan/Bull & Bear LLC: $38,217*
* Property is on the Jupiter Island/Palm Beach County border
Ahhhhh, they can afford it. We pay them big bux so they can pay us high taxes. At least they’re PAYING taxes, right? I hear some rich folks try to get out of doing that!
Maybe California should try to attract some of those high-tax-paying celebs down there to help them out…oh, wait.
“Pop star Celine Dion just shelled out $171,040 in property taxes for her 3.7-acre oceanfront Jupiter Island estate on the 200 block of South Beach Road.”
He. he, he, he…..
I walked many a times in front of her house on the beach side.
Swam in deserted beaches, watched giant turtles swim close to me, saw hatchlings slowly and painfully making their way to waves that would roll them over and over and swallow them, sat on a dune watching the big fish chase the school of small fish unto the shore.
My cost: $1350 /month.(rent)
Saw some of the same turtle hatchlings there, quite memorable. Had gotten a room on the ocean the night before a shuttle launch. I can still feel that roar, too. Little homesick, as I await the dust storms.
I saw this article yesterday and almost posted it. I’m glad I waited because it goes so well with your post.
State report says comedian Sinbad, singer Dionne Warwick among California’s top tax scofflaws
SACRAMENTO, Calif. (AP) — California’s budget deficit would shrink by nearly $5 million if singer Dionne Warwick and comedian Sinbad Adkins would pay their taxes.
They are among the state’s biggest tax scofflaws, according to a report issued Thursday by the Franchise Tax Board.
Sinbad owes $2.5 million in personal income tax while Warwick owes $2.2 million, putting them in the top 10 of the state’s 250 worst tax debtors.
Debtors can get their name off the list by paying up or agreeing to an installment plan. Board spokeswoman Brenda Vote says she cannot discuss individual cases.
Warwick’s spokesman, Kevin Sasaki, says the singer has been working with the board to pay her outstanding taxes. He did not know how much money had been repaid.
A spokeswoman for Sinbad declined to comment.
Taxes are for the little people.
I think Bono, Springsteen, Streisand, and Madonna would agree. They know how to maximize their tax profile. For Bono, doesn’t Ireland have special tax breaks for artists?
Madonna’s “Ray of Light” foundation holds “tons” of stock in big carbon footprint industries such as Weyerhaeuser, Alcoa, Ingersoll Rand, and several others associated with oil exploration, digging, and rerfining, including BP and Schlumberger.
I guess the inconvenience of the expenses of being good to the earth is only for the little people too, not the enlightened self-appointed elite socialists.
Not wanting to split hairs, but Ingersoll Rand does not have a large carbon footprint.
They mainly manufacture energy efficent air conditioners, door locks, and compact electric vehicles.
They also went to the islands so they wouldn’t have to pay US taxes … got away with it too.
Thank god for SOH. So, Michael Jordan pays 40K a year in property tax (which I would venture is because he has SOH protection) and my neighbors pay 10K a year. Does anyone see anything wrong with this picture? I would guess that Michael’s house is significantly more then 4X the value of the homes in my neighborhood, at least I would hope so!
I’ll bet anything that you can look down that list, order it by taxes paid, and quickly figure out who bought when. What a system we’ve got down here; I saw a reports a few months ago that someone on PBI has 100K/YR in SOH savings because of the sheltered taxable value (about 10 million dollars). Save our Homes, the ultimate subsidy for the rich.
Every time we think about remaining in Florida by way of buying a house, we calculate the property tax and the thought dies. Renting here is so much cheaper than owning, I’m surprised that what little sells, does.
At any rate, long ago here many of us, including myself, figured that prices would eventually get back to the 1998 level. It may have to overshoot that, to get this inventory off the market, because the tax rates and insurance premiums are taking such a large bite out of everyone’s monthly cash flow.
“the tax rates and insurance premiums are taking such a large bite out of everyone’s monthly cash flow.”
Yup
This mansion has been on the market for a long time. The asking price is 700K. I bet this has the possibility to sell around 500K,which by the way is the highest price being paid, for newer 4000 - 6000 sqft houses built after 2000 in nice neighborhoods ( swimming pool and tennis courts included). If you hate nice weather, like cold long winters, tons of snow and very little sunshine this might be the place for you. Your real estate taxes however could double within the next 10 years thanks to NY state generous welfare giveaways.
http://www.brzostek.com/cgi-bin/htmlos.cgi/004936.2.3789166432017103456
That place needs the headache ball….. a bic lighter would serve just the same.
You know, since most of those furnishings were designed to go with the house, and it would cost a fortune to furnish that barn, I would sell them with the house in order to move it. It might be a tipping point for some people to conclude a sale. It would be for me. That being said, I believe I can honestly say we have nicer tudor turn-of-the-last century auto baron mansions here in Michigan. I’m not so sure that I like the stone they used in that NY thing. I like brick and stone combined better.
Does that $700K include the 62 acres? Something doesn’t seem right. Look at the interior and exterior photos:
http://www.sangermansion.com/interior.htm
http://www.sangermansion.com/exterior.htm
Does Waterville suck or something? Given the estimated replacement cost for the buildings, wouldn’t the owner be better off donating this place to the town, maybe for their new city hall + library + whatever else?
“Does that $700K include the 62 acres?”
Considering dirt isn’t worth anymore than $1000per, why wouldn’t it???? Is there gold underneath the topsoil in that particular location?
I dunno - that is an enormous house, for 700 minus 62. It just looks like a place somebody rich might want as a getaway. Put another way, I can’t recall ever seeing a habitable place outside a ghetto on offer for less than 10% of its replacement cost.
“I dunno - that is an enormous house, for 700 minus 62.”
You must be one of those shell shocked refugees from the Real Estate War waged on the west coast. You clearly have no idea the quantity of industrial era shacks of that size strewn all the way from Michigan to Maine. These places are nothing more than moneypits planted where it’s a miserable climate for 9 months out of the year. I imagine 700k would be cheap if it were on the west coast.
Wow, it says it’s going to Auction. I gotta say, I had to look at google maps. That’s in the middle of nowhere.
Yes, what Exeter said. I’ve seen the Parfet (Upjohn) family mansion sell for pennies on the replacement-cost dollar in Kalamazoo in the eighties, and it was a beauty. There are a few others around which you can barely give away, as well, up in Bloomfield Hills country. There’s one that was ( I think ) a Ford family “country” home built in the 20’s on a lake which has been for sale for years (at least 7 ) in the $8m range. I doubt it ever sold. Just beautiful, but a bitch to maintain ( think leaded glass and slate roof ), and heat in those Michigan winters ? Oh my, what a cost. My sister is an archie for a major university and was in charge of redoing the slate roof of a major set of famous academic buildings. (I’d give all the details since there are some alums on this board but this is a little too public ). The copper trusses that held up these super-heavy roofs were rotted out. She said it was unbelievably expensive to design and build a new support system for the slates, but had nothing but admiration for the original architect. I can’t imagine what it would cost a private owner. That being said, the physical plant looks like it’s in pretty good shape for a money pit. I have to admire the owner for keeping it up so well. Too much of a burden to go on with it, though, I would imagine.
Whoa. I shoulda kept my rhetorical question to myself! I wouldn’t live north of NC for any reason, so I suppose I shouldn’t be asking questions about Yankee houses. Not counting on reciprocity, though.
Well step up to the rhetoric and put your money where your mouth is if it is such a bargain. I detect an absence of knowledge and undying speculation in your post that elicited my response. I’m fed up with the ignorance in the marketplace and it was ignorance and loose money that drove the bubble. Clearly, one of those is still alive and well.
I checked Google Maps. I’m not sure that Waterville IS a town. It’s 3 streets, not even enough for a Wal*Mart. About the only thing you could do is make it a horsey estate for some washed-up movie star or a rehab camp. Might be a good commune too.
I thought I posted a reply, but anyway,
This place is an oddity. It’s too big to be a regular residence, too small to be a commune, too out in the stix to be its own destination, and Colonel Sanger owner was too obscure for the house to have any historical value. It may work as a bed and breakfast, but $700K is too pricey for that. At most, it could be some rich recluse’s personal Dickensian estate, the type with servants and horse barns and governesses for the children.
I lived in Rochester for a number of years during and after graduate school. In that area, the winters are cold, windy and start in October. That house is made of stone. Stone is a fabulous conductor. We can see when the house was built. It has no insulation. We know that heating oil is the fuel of choice in the NE. I doubt pot bellied stoves ever made an appearance in these rooms.
So, for nine months of the year, the house sucks up the feeble efforts of the heating system. For a stone house, in that area, that is 1500 - 2000 gallons per month.
One heck of a nut, on top of the prospective taxes and maintenance. It is a real pain to find people to repair slate roofs and redo the solder in warped stained glass windows.
It’s too far from Bloomingdales for the Long Island JAPs. It’s too far from the Hamptons for anybody else. There is nobody to show off to.
The only use I can see for it is as an Armed Forces training center. GIs, Marines, Navy and Air Force enlisted - and their officers, to a real degree - don’t get to complain if they freeze when out on training.
Too bad, really. The follies of one age do not translate well into the next. Let that be a lesson to us all.
Atlanta update. I’ve not posted in a while, but saw some recent threads on Atlanta.
While Atlanta has not had the price bubble to the extent FLA, AZ, NV, the West coast and the Northeast have, we still did have some above normal price increases especially in the face of massive new building outside of the Interstate 285 Perimeter. While Atlanta remains a growth city to some degree, way too much housing and lot preparation/permitting occured 20-30-40 miles out to the point we have we have well over 1 year of inventory (metro area wide) and a 12 +/- year inventory of lots!!
A few more points to understand. Atlanta’s averages/median prices are relatively modest, especially for a city this size. However, the market is bifurcated into neighborhoods in which you would want to live and those in which you would not want to live. Of course, there is a middle ground as well, but not as much as other cities, particularly inside the 285 Perimeter. It seems that either you are in an area where the median is $50K or it is $400K. And there are gentrifiying cross-over areas, some of which have done pretty well (Grant Park, though that may be at risk now) and others not so well (Atlantic Station).
The bust began here 2 years ago, outside the Perimeter as one would expect, where much overbuilding occurred. It also then spread to closer in, but lesser quality areas in 2007. Now the wave is hitting the best close-in areas highlighted in some earlier posts - Inman Park, Ansley, Va Highlands, Morningside, Buckhead areas, though while there is a 25% or so sales slowdown, prices have only dropped 0%-10% in some of these areas to date. When one moves to Northern Buckhead and the next ring out (supply is greater and less of that 1920s-30s charm…these are 1950s-60s houses) you see 10-15% price drops. Go outside the Perimeter and in the good close to Perimeter areas you see 20% price drops. Go further out and you see 25%-35% price drops (why pay to own a depreciating asset 20 miles and 1+ hour from work where builders can deliver an infinite supply in the future). The other thing that may have people thinking about these far out areas being not so good was the gasoline shortage we had for several weeks last Sept. When you get to 5-10 miles outside the Perimeter and beyond, supply is essentially “infinite” and it is doubtful that many of these areas will see 2006 pricing again for a long time.
2011-12 may be the bottom here….my guess is the following.
Great inner areas - -10%-20% and these will recover by 2015-18.
Slum inner areas - -10%-50% depending upon run up this decade and price to rent and rent stability.
Gentrifying inner areas - -20%-40% and some of these may recover by 2020 or so - or before that if we have an energy crisis (actually I expect these areas to recover and more of the suburbs to replace them as the slums of 2020). Grant Park may recover and may not go down that much compared to others. Atlantic Station may never recover 2006 prices, but may be a better area by 2020 or may be newer construction slum, who knows?
Good areas near the Perimeter - -20%-30% and these will recover by 2015-20.
Areas 10-15 miles out of the Perimeter - -40% and these areas may not see 2006 prices for a long time. Some will become slums.
Areas 20+ miles out - -50% - little to no recovery, perhaps some limited areas will see some recovery …some will be abandoned or become slums. Some gated community areas may recover that are near the lakes and / or are good mountain / hill country resorts.
A liquid fuels energy crisis will crush the last two areas even further, except possibly some wealthy enclaves.
Another trends is that a good percentage of the late Gen X and Millenial generation seems to prefer living in town in the gentrifying areas with asperations to live in the really good inner areas more than living in Cobb or Gwinett county suburbs.
Army No Va
Army - thanks for the update. We have been scouting the 40+ miles-out areas for four years now and finally are seeing some really serious price cuts. We stay away from Paulding, for example, because so much seems to be belly-up that it is hard to imagine how the local govt can cope without crushing tax rates. We’d look in Villa Rica, but we don’t need schools and the school tax reportedly is high there. And we were very surprised to see a lot of ghost towns out past Cumming.
An agent we’ve worked with most of this time just didn’t want to believe my predictions, though she has been very polite about it and patient. Finally, she sees that it is true. What’s most puzzling is that RealtyTrac, to which I subscribe, does not show a fair number of foreclosures-in-process that our agent or another Web site tell us about. Makes me wonder if the lenders are trying to keep it quiet.
I think there are two types of phantom inventory in the area, and neither is counting on the other popping up in listings. One is the large number of hopeful sellers who pulled their listings when they couldn’t get offers anywhere near their wishing prices. The other group is the owners, of foreclosed properties, that have not listed them either because of overwhelming volume of work or a desire to dribble the properties onto the market in the false hope of not imploding prices.
The cut of 50% is what I need to see, to get off the dime. Much of that is because I agree with you that prices out there will not recover for a long, long time and I want to minimize my loss, should I need to re-sell.
Army - BTW - would you mind pasting your post in the GA thread in Ben’s forum? That way, people interested in GA will find your observations if they don’t happen to tune in here this weekend. Or I’ll be happy to do it. Thx.
I did post it.
Thanks.
Hey Muir:
What is the smallest place I could rent on Jupiter Beach, and for how much? Illinois born, then Tampa boy 5 years, back to Illinois to care for Mom until she passed, hate it here. Want to go back to Florida, and was just wondering…Crime must be low re Jupiter Beach, right?
Thank you for your time if you reply. Happy Easter to the gang (Hey Palmy), at HBB!!!!
325 Beach Rd 33469
$1300
2/2
You are living in an Island.
Here are the coordinates
26.75.15N
80.04.39W
Awesome beauty!!
You see the lighthouse every night lit up.
I swam both sides, the intracostal and Atlantic!
(hopefully the blockers let this post through)
To all HBBrs watching today.
This is the most undervalued area in the State.
Hobe Sound, Tequesta/Jupiter(close to the water) and Juno Beach.
I do not mean what it costs, there where discussions here years ago on price versus value.
What I mean is that relative to the value offered by living here, it is underpriced.
I never locked my door to sleep.
My landlord left his keys in the pickup.
Ferraris at the hardware store.
I’d put on my swimming mask, walk 20 feet (for real) jump in the water and go look at start fishes, little eel like things and schools of fish. (Hi Oly)
Hi!!
*excitedly and accidentally spits out lollipop again, from having discerned secret Muir message *
Nah
No secret message.
Just wanted to share with you all the creatures that I play with.
Alas, no frogs.
Hope you caught my turtle stories above.
(Of course, a manly, manly man such as I could never admit to the joy of watching such wonderful creatures and the wonderment of seeing baby greenback turtles making a valiant effort to make it to the sea and nudging the little one and standing by giving it shade and protecting it from a seagull. Such a manly man as I could not do that.)
Such a manly man as I could not do that.
Heavens, no! Jeeze, like, as if!
You surely just stood there growing curly chest hair and belching and other manly stuff, in your Speedo’s and Hooter’s Club t-shirt.
….Hahahha! WhatEVerrrrrr!
I bet you were all dashing around the beach and picking them up tenderly and urgently running them back and forth to the waves, like a courier service, a buncha squirmy midget turtles clasped in your manly paws, and you were hopping up and down shouting encouragement, and shouting at seagulls and throwing rocks, and then when they allllllll, the baby turtles, got into the sea, I bet you were totally worn out from excitement and exertions and had to go home and have a nice, long, afternoon nap on your couch*.
*And furthermore, when you had your nap on the couch I’m gonna surmise that you covered yourself with an afghan your gran crocheted you a long time ago in college** and that you take good care of.
**But now I’m just getting fanciful, I know.
Anyway, that’s a super story, Muir. And thanks for the images.
Muir,
What part of FL do you live in? I’ve forgotten.
Now in Miami.
It’s raining right now.
Was not able to see anything outside.
Impressive white sheet of rain.
And this from the 19th floor.
Usually, I see the bay, cruise ships, sailboats on one side.
And on the other balcony, I can see the airport and in the distance just about all of Miami (including it’s two highest peaks, both landfills)
Day before yesterday was spectacular!!
As the sun set, you could see it’s reflection glimmering on the sea of glass of skyscrapers, and, a full moon was out shinning resplendently at the same time.
The sky was lit up like fireworks, every hue of pink, purple and aquamarine.
Two more banks bit the dust yesterday, according to FDIC press releases. the interesting thing is that no buyers was found for New Frontier Bank and instead doing a Indymac-redux, where they ran it as a federal bank for as long as it take to find a buyer, they decided to set a 30 days limit and just return all the depositor’s money + interest up to the insured limit.
The first failure was Cape Fear Bank in North Carolina, and the second one was New Frontier Bank in Colorado. The New Frontier Bank closure was actually a little more fearful. The FDIC wasn’t able to find a buyer. However, instead of closing the bank immediately, the FDIC created a bank that will only exist for 30 days. During this time, customers will be able to access insured deposits in their checking and savings accounts. This is intended to give customers time to find a new bank. For customers with CDs or IRA CDs, the FDIC will be mailing checks of the insured deposits. According to the FDIC FAQ, checks will be mailed on Monday, April 13. All interest on insured deposits accrued through today (4/10/09) will be paid.
“First Federal is assuming all of Cape Fear Bank’s $403 million in deposits and buying about $468 million of its $492 million in assets. The FDIC will retain the rest of the assets to sell later.”
This is a clip from an AP article that stood out to me. So the FDIC is allowing the buyers of failed institutions pick and choose what assets they willing to take and leave the toxic ones for the taxpayers. Insanity!!!!
I’m sure the FDIC is getting the best deal it can. Potential buyers bid on how much of the toxic they are willing to take. Whomever will take the most, wins.
Would you prefer there was no buyer and the FDIC had to liquidate it all, piece-by-piece, without the goodwill associated with the deposits?
“Would you prefer there was no buyer and the FDIC had to liquidate it all, piece-by-piece, without the goodwill associated with the deposits?”
No, but I was under the assumption that a buyer of a failed bank would have to take all the assets and deposits as part of the sale. Since thats not the case, the banks that dident drink the koolaid stands to substantially benefit from this mayhem.
I have a question though (I hope its not to asinine), quite a few of the HELOC loans made will never be paid back, what happens to those assets if there are no buyers? Is/Has the Government set-up a program for the FDIC to dump these unsalable assets into?
Max Cady was hiding on the Cape Fear Bank’s driveshaft
Depends on who you liked more as Max Cady; Robert Mitchum or Robert DeNiro
Depends on who you liked more as Max Cady; Robert Mitchum or Robert DeNiro
THIS is probably the most serious and significant question ever posed on the HBB. Forget all that dumb housing stuff.
…I’m going to have to think about this question, and I’m going to break with tradition and, yes, actually ‘think’ before I say anything.
“Depends on who you liked more as Max Cady; Robert Mitchum or Robert DeNiro’
That’s a girl “trick question” ?
Bob Mitchum was a fairly cool mocho actor guy but he had to work to act as the villian. Robert DeNiro is a real cool villian that has to work to be an actor
Ever see “The Night of the Hunter?” He played an excellent villian. Didn’t seem like he had to work too hard. He was a great actor.
For all you Lost fans, remember Charlie with his tattoos of love and hate on his hands. In “The Night of the Hunter,” Reverend Powell has love and hate tattooed on his hands.
cougar, one quickie:
When a bank such as those two fails, how significant is it?
We are pretty much stuck with the “Big Fat Four” here…and Canada has the “Big Deep Six” or some such. I hear the States has a plethora of small banks many of which serve something like 326 people each and give you lots of choice, although they aren’t as well “supported” by the government?
Are these significant failures, and what does it mean to the economy?
I am not very familiar with American banks other than the usual suspects (Citi, BOA, etc.) and not sure what context to put it in when I hear something like this.
These two are very small banks so it is no big deal per se. However, even the FDIC itself said the # of such bank failures will escalate this year and I have seen estimates from others for more than 1,000 bank failures between 2009 and 2010. So far this year we had 23, including these two. However the FDIC has unlimited credit line from the Treasury so they can just print as much money as they want to make good on the deposit, while screwing the dollar holders to kingdom come.
We recently had an article in the local paper, the Olympia, about our Venture Bank. I meant to post it but forgot, alas. They operate in Thurston (where I live) Lewis, Pierce, and King counties here in WA.
Evidently they made lots of loans to builders, both residential and commercial. Shucks, ’cause it turns out we’re NOT ‘different here’, after all…who knew?
The FDIC gave them until April 15th to raise capital by selling new shares—ooooh! Ooooh! Can IIIII buy some?
Or accept the sale of Venture to another bank.
Dutch bubble update:
I haven’t visited for some time because a Dutch housingbubble blog has started to flourish, and it’s taking me too much time to keep up with everything. I try to visit here from time to time, to learn from the US experience and present some juicy bits from over here.
The Dutch bubble burst seems to be official now, probably the last one to go in Europe. The realtors say national homeprices declined 3.1% compared to last year, down from 251.000 to 218.000 euros. This is not a typo, I guess most readers already know how this works. In some of the big cities the pricedrops are bigger, partly because hardly anything in the higher priceranges is selling. Sales numbers were up slightly from last month, but still near an all time low. Inventory for sale is about 15x monthly sales (it was 2.3x a few years ago). Of course ‘there never was a better time to buy!’.
In january the national average asking price for homes was nearly 300K euro, with average sales price now 218K one can smell trouble in the air … Price reductions are very frequent now (more than 1/3 of homes on sale had their price reduced at least one time) but it doesn’t seem to make much difference; the market is dead.
The RE mob is whining everyday for more government support, but despite many proposals not much has materialised - probably because the government is in severe financial trouble from bailing out big banks like ABNAMRO and ING (ING Direct parent company). They made a symbolic move by making the HMD for mortgages over 1 million euro a bit less attractive.
Local governments are building funds that will buy up homes that are ‘impossible to sell’ (obviously, that’s nearly all of them) for 90% or 95% of the appraised value of last year. This enables the owner to buy a new home or exit their flipping gamble without risk. After a few years (possibly a few years of renting out the homes), the government is going to sell all these homes at a profit, with the previous owners getting 50% of those profits. Local governments are doing this because their income depends on new home sales (land sales). When the market is locked like now they don’t get any money, so they are eager to risk taxpayer money on the idea that homesprices will start rising again after a quick dip. Of course if it doesn’t work as predicted the taxpayers have to cover the loss (but the risk is never openly mentioned).
Realtors yesterday suggested a special fund for everyone who owns two homes: many Dutchies do, because tax/mortgage conditions encouraged them to keep the second home for a few years until someone meets their wishing price, instead of selling it right away at a discount. Many people now get in trouble because unemployment is rising, credit conditions are tightening for the most leveraged loans and long rates are rising slightly. Some people are getting the message that without heavy discounts most of these home will never get sold. The realtors now want the government to guarantee every homeowner the price they had in mind for their home when buying a new one. So when someone purchased a second home last year, the government will guarantee them what the home was supposed to be worth last year, at the top of the bubble. If that is not possible, the government should offer these people a free loan for the second home for the next five years, so they can all sell at a profit in five years when the next bubble has started.
The idea of course is that no Dutch homeowner can ever loose money when selling a home, the profit must be 100% guaranteed (for homes below 260K euro, this is almost sure already because of the National Mortgage Guarantee). Probably the most outrageous idea ever, the US realtor mob could learn something here
On another note, earlier this month it became clear that at least one Dutch bank has been handing out I/O, 200% mortgages on a pretty big scale; probably most of these loans are covered by a government fund in case of default. Although the fund conditions rule out 200% loans, reality is that until now they have always paid out in such cases. This spells severe trouble for the Dutch taxpayers.
Incomes in Netherlands increased nearly 4% from last year, and inflation is running at around 2% (instead of the lowest, the Dutch now have the highest value in the EEC-euro zone). Unemployment is accelerating but most people are not yet feeling the pinch, because government salaries keep going up and most of these people are still spending like nothing happened. Shortterm rates are near alltime lows, you can get a homeloan for around 2% now (because of the HMD the effective rate is just 1%). Despite all these factors that should support the market, the crash seems to be unstoppable now.
I expect Dutch homeprices to decline by 50-80%, but it will probably take many years before the bottom is in.
Dutch housing bubble blog and no LINK???
I know it’s a bit of an obvious question, but isn’t Netherlands debt already something like 60% of GDP? How would they finance all this housing support, or does anyone mention this in the MSM there? I don’t know what the tax level is but judging from the current instability of the Euro and the threat to the PIGS governments, the Netherlands government (or SOMEONE) should at least be mentioning this…? Even if it’s only the opposition party…?
the Dutch mortgage debt was 120% of GDP early last year; it is growing at staggering rate, so probably over 130% now. They say this is the highest percentage in the world. The press does not want to talk about it and politics avoids the subject whenever possible. Or they say it is no problem at all, because the mortgage debt is backed by the value of all Dutch homes (after a 600-1000% runup, that’s a solid backing …).
The national debt was relatively small until last year, but has now jumped because of the banking bailouts. In october 2008 the government was projecting a 1-2% budget surplus for 2009, the latest estimates say there will be a 3-4% deficit; quite a change. For 2010, the budget deficit is projected to be 5.5-6%. But projections have proved to be far too optimistic every time again, so things will probably turn out even worse. EU rules allow for a 3% budget deficit.
And of course, it’s different here; most of the sheeple are still convinced that the Dutch housing market is entirely different from the rest of the world. The media is also broadcasting the message that nothing is wrong, and after a small dip the price surge will continue. But I guess some homeowners are starting to worry privately about getting that second or third home sold … and one should not even talk about all those foreign properties (e.g. on the Spanish Costa) financed with Dutch home equity.
“the Dutch mortgage debt was 120% of GDP early last year; it is growing at staggering rate, so probably over 130% now.”
Hoagie cheezwiz cripes all-nighty!
OK, that shuts me up for a minute while I try to picture it…
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.
.
.
I guess I can understand the MSM not mentioning it; here they don’t mention private debt levels either. What I can’t understand is why we’ve been hearing ad nauseam about Eastern Europe and the PIGS and Germany pulling out…and not a word about Netherlands, home of ING. So I guess you’re saying there’s no plan at all…I wonder how their bond auctions do, and how soon will they start quantitatitati…err, counterfeiting. Oh, wait, they can’t do that with the EU, can they?
I wonder what happens when their bond auctions fail, as I would think they must…of course as you know I’m no economist so I guess I’m missing something fairly major. What’s the logical result of this?
The Dutch government is still able to auction their short term debts at extremely low rates (below 1%). But rates on longer maturity debt have jumped about 0.6% from a few months ago, due to all this extra money sloshing around. Ultimately it is an Euro thing, but the market is now treating all the euro players separately and starting to price in risk of a break away from euro currency or other calamities. Rates on some Club Med treasuries are already close to 1% higher compared to Germany.
Most EU countries have their own problems. The Club Med countries often have huge national debt loads; the Dutch have a smaller national debt but an epic housing bubble and an economy with far too much ‘financial services’.
And ING: they are toast, I’m sure. Last thursday there was lots of news about ING selling of some limbs to stay in business (officially because it was demanded by EEC rules but I don’t believe that for a minute). I think they are also in the process of selling ING Direct, but don’t have the latest details. ING is clueless; and they still have bonuses that are way bigger than those at AIG …
nhz, where’s the link to the Dutch blog?
actually there are a few housing blogs now, but this one has started to attract significant attention:
http://www.huizenmarkt-zeepbel.nl/
of course it’s nothing compared to Ben’s blog, but you have to start somewhere, and who knows in 1-2 years time …
nhz, i always enjoy your updates. Hope you will still find the time to visit us in future.
Great little article, with a few charts, on why the PPT is now running out of room as it is largely playing in the equity markets with itself, under the psuedonym “Goldman Sachs”:
Goldman has recently gone to Federal Court in an attempt to shut down the website where this appears.
Friday, April 10, 2009
The Incredibly Shrinking Market Liquidity, Or The Upcoming Black Swan Of Black Swans
by Tyler Durden
“Anyone who is doing anything sensible right now is either losing money or is out of the market entirely.” These are the words of a quant trader, who is seeing something scary in the capital markets. Scary enough to merit a warning that we could be on the verge of another October 87, August 2007, or January 2008.
The implication is that Goldman Sachs, due to its preeminent position not only as one of the world’s largest broker/dealers (pardon, Bank Holding Companies), but also as being on the top of the high-frequency trading/liquidity provision “food chain”, trades much more often for its own (principal) benefit, likely in tandem with the other top dogs on the list: RenTec, Highbridge (JP Morgan), and GETCO. In this light, the program trading spike over the past week could be perceived as much more sinister. For conspiracy lovers, long searching for any circumstantial evidence to catch the mysterious “plunge protection team” in action, you should look no further than this.
link:http://tinyurl.com/cmgofx
“Goldman has recently gone to Federal Court in an attempt to shut down the website where this appears.”
Leave it up to Megabank, Inc to try to take away America’s First Amendment rights to free speech. It won’t work, and even if they succeeded in the censorship effort, it would not change the underlying economic reality one iota.
“Tyler Durden”
Love the Fight Club reference.
Just heard a great line on Daily Show with John Stewart… Our economy is Tinkerbell. Stop believing and it dies.
That book by that Cohen guy (House of Cards??) sounds like a must read……has anyone here read it yet??
Or is it more like Catholicism: Stop believing, and we all go to hell…
Lol.
Or the X-Files…only the nutjobs believe.
For nhz……..a Detroit welcome for a couple Dutch reporters:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20090410/METRO/904100421/&imw=Y
thanks, interesting; VPRO are the only good guys on Dutch TV! They are a small outlet, but they have lots of interesting stories about the economy (featuring Jim Robers, Peter Schiff, Roubini etc.), energy crisis etc. and they did discuss the housing bubble previously (although not recently AFAIK). They often try to present the minority view, or look at things from an unusual angle.
There was a TV documentary a few months ago about Detroit and its housing troubles, I think also from VPRO.
I will check their web reports next week
Why in the world were they hanging out around the Brewster projects ? I wasn’t aware anyone was living there anymore. I’m glad the reporters were all right, but that’s just plain funny. This isn’t Amsterdam or Berlin, folks, this is DETROIT. Nuff said, I should think.
I just want to hear what others had seen/heard about the Alt-A reset. I read somewhere that the peak of Alt-A reset is this month. So far, I haven’t found anything on those data.
See p. 47 of this report:
Exhibit 42: Adjustable Rate Mortgage Reset Schedule
If I read the chart correctly, the second ARM reset tsunami crest is scheduled for 44 months after January 1, 2007:
January 1, 2007 + 36 months = January 1, 2010.
January 1, 2010 + 8 months = September 1, 2010.
Don’t expect the high end markets to bottom out until after the 9/1/2010 second ARM reset tsunami crest has passed.
thank you.
boy, I swear it was April of 2009. Maybe I misintepret the data.
The Credit Suisse guy on 60 Minutes in December 2008 said $5 billion in resets are due to start now in april and by January 2010, $10 billion in resets.
I will go along with the Professor, since I see nothing happening now, and I have been expecting this “other shoe to drop” loudly now.
My only questions are (1) what unannounced or vaguely-described measures the Obama economic team may be taking to offset the scheduled crash of the high end due to prime and Alt-A ARM resets, and (2) whether any such measures will work.
If market forces were allowed to play out on schedule, a high-end crash would clearly be in the bag. I personally see no rationale to justify policy intervention to save the skins of greater fools’ who bought high-end homes well beyond their means. But I also have no reason to believe that a lack of a valid policy rationale would stop inappropriate interventions from occurring on grounds of political expedience or desperation.
Whatever measures this “enlightened” administration make will have unintended consequences. Big government types always think they cover all bases in their drive to a central planned economy.
I have a very slow computer so could not quickly open the pdf file in your link above. So here’s what I have:
Here is a link to the Option ARM + Alt-A, plus Subprime resets on a graph:
http://singaporewatch.org/2008/12/17/alt-a-and-option-arm-the-2nd-wave-after-subprime/
It shows that Alt-A resets certainly are higher in 2010 than in 2009 and the 2010 peak is in September. But it also shows the worst will be 2011. Not only that, but the combined Alt-A and Option ARM resets will be far worse around June of 2011 if you take it on a monthly basis, than any month since early 2007. It’s going to be the mother of all reset months.
And if you do a visual calculation of the area under the bars on that chart from now to about April 2012, it means a lot more pain ahead. Like Charles Hughes Smith said years ago and like Ben Jones said all these years, it’s going to also ripple into the stock market still.
The Credit Suisse guy on 60 minutes in December 2008 thought at that time the stocks bottomed, and factored in the upcoming ALT-A and option-Arm resets.
Yet lots of small businesses also took out ALT-A loans.
Anyhow this supports a lot of HBB bloggers’ opinions for the last few years that the bottom in RE won’t be seen before sometime in 2012.
Big government may be the only recourse left after the disastrous “deregulation” from the past 8-10 years.
I find the people especially critical of the past 90 days were the same ones silent or defending the PTB of the past 8 years. Man up and admit that your boys caused this crisis, instead of pretending that you are a non-partisan when the inconvenient truth of what the Gipper Revolution hath wrought.
Not me. I turned against GWB in his second term. I did like the tax cuts the Congress enacted in 2001 and 2003.
Don’t be shallow NSO.
Hmm I thought there was large tranche in 2009 and an other in 2011 ?
Ok before we focus too much on this so-called second wave of reset, if this is going to be anything like the subprime ARM reset back in 2007 and 2008, then much of the defaults are already occurring right now, you don’t have to wait until 2010. The subprime ARM FBs started defaulting before even the reset took place, something like 51%. Thus you don’t have to wait until the interest rate to go up before the FBs bail. I don’t know if the ALT-A or Optional ARM FBs will be following the same path, but I have a suspicion that they will. Hence I don’t buy the big-bang reset-default wave come Oct 2010 or whatever, I believe it would take place over the months to come.
Point taken, but many of these properties are sitting in limbo status off market. I still am expecting a dumping of high-end properties on the market and a capitulation of prices. We are not there yet, at least in my zip code (92127 Rancho Bernardo West). For example, the median used SFR sale price is stuck at around $700K or so, while the median list price is stuck at $1,154,000 — suggesting roughly a $450,000 gap between median bid and asked prices. I don’t believe this can persist indefinitely, as sellers in the upper half of the list price range have temporarily priced themselves out of the market.
PB,
Why do you specify high end markets with the 9/2010 ARM crest and not all markets?
Don’t get me wrong — I expect all markets of lesser value to get crushed when the high end collapses, as homes in, say, La Jolla, will always sell for more than homes in, say, Rancho Bernardo, other things equal. But the high end collapse will be the root cause.
The high-end collapses last because they have the strongest hands but they collapse the most dramatically.
The buyer base steadily erodes because housing at the end of the day is fungible, and people are always willing to do a “slightly” extra commute. So you get this pattern radiating outwards ever so slightly followed by a total collapse.
That’s what happened to Park Ave. and Pacific Heights last time and this time will be no different.
“The high-end collapses last because they have the strongest hands but they collapse the most dramatically.”
You are killing me — how will I ever be able to contain my eager anticipation for this eventuality? There will also be another great opportunity ahead to mock those who are suggesting the housing market will bottom out by year-end 2009. I am hoping the career of at least one more big name economist who called too many false bottoms in housing goes the way of David Lereah’s and Gary Watt’s before this epic housing crash is over.
Thornburg? He’s been sounding somewhat mainstream these days.
Thornburg? He’s been sounding somewhat mainstream these days.
Not sure if he was referring to Thornberg, but I remember a high profile Thornberg quote mid 2006 predicting a Boston stabilization and upswing trend of sales and prices. He knew better, but was placating something or someone imo. Vetting Thornberg is a good idea.
This week’s edition of John Mauldin’s “Thoughts from The Frontline” has a chart on the resets. From the chart it looks as if the peak occurs in late summer of 2011.
For a link go here: http://www.frontlinethoughts.com/printarticle.asp?id=mwo041009.
Combo - thanks for that. Mauldin’s article confirms what I have suspected from a few months of following foreclosures in RealtyTrac: - a large number of foreclosures are happening but the foreclosers appear to be keeping the properties off the market for a long period of time. We see this much more in Georgia than we do in Florida and don’t have a theory why.
“Why” as in, why Georgia and not Florida. It’s pretty easy to conclude why it takes so long when it a property is foreclosed, empty and not listed - either bureaucratic backlog or the “pig in a python” that Mauldin mentions.
“…but the foreclosers appear to be keeping the properties off the market for a long period of time.”
I suspect many of these are either holding out hope that a bailout of some kind will allow them to unload these properties on some other bagholder, or else they are hoping for a market turnaround before they have to dump them at fire sale prices.
I am hoping for and expecting capitulation at fire sale prices before this is over, similar to the Japanese experience.
I agree that Mauldin’s chart suggests the second reset tsunami crest does not occur until late summer 2011. I am not sure on the reasons for the discrepancy with Ivy Zelman’s chart, but I will say that both charts suggest the high end crash will not finish playing out until well past mid-year 2010.
My NOD numbers for 93552 took a big jump up in April, so maybe we are seeing this get started. Another possibility is that the jump is the backlog from foreclosure moratoriums from ‘08.
If the 2 waves join in amplitude, look out below!
Dude - good point - I forgot about the moratorium. I’ll be interested to follow RealtyTrac and see if NOD/foreclosures spike beginning this month. From our own sleuthing, we know of at least six houses that are in foreclosure and not shown, and this is from just a couple of neighborhoods.
One of my best friends owns a house a few miles from me. Technically, I guess. With my advice, he stopped paying after his third or fourth HELOC. At last count, he owed over $400k on a rental worth $300k with a negative cash flow of $800 per month.
Still more hidden inventory - has never shown up on Countrywide’s website, even though he stopped paying eight months ago.
How many more like this? Tip of the …..??
Wow, lots of international comment. Thanks guys.
Whither Hoz?
Be well.
Is Hoz still alive and well, and just retired from posting, or have health issues (or worse) sidelined him? We miss his insights and humor (and even his occasional insults, at least in my case
).
or have health issues (or worse) sidelined him?
It was an ‘or worse’.
Can you share your references? If it was truly “or worse”, I would like to know something about the man who shared so many insights here. In particular, I have always wondered what life experiences provided him with his wealth of knowledge. I will always feel indebted for his willingness to share so many pearls of wisdom with us.
+1 on this.
If true, I would be extremely sad. I loved arguing with him, and would miss that level of engagement.
voz posted a couple of weeks ago hoz was in the hospital (voz please correct me)?
Hoz I miss your postings. Please get well.
Another best-wishes from me. Hoz has been around forever.
People who think they know everything are a great annoyance to those of us that do.”
Isaac Asimov
-I can only speculate what happened to Hoz. I speculated that he was ill. I will most likely never know what became of him…
Isaac stole that from me.
If you’re out there Hoz, you are missed and I hope you are well.
“Jesus, like a shepherd, gave guidance to his flock. What great compassion he must feel in our time, too, on account of all the endless talk that people hide behind, while in reality they are totally confused.”
-Pope Benedict XVI said in a darkened Basilica in Rome…
love triumphs life
More headlines today about Chinese Drywall
http://www.newsvine.com/_news/2009/04/11/2670260-ap-impact-chinese-drywall-poses-potential-risks
This could further erode the “value” of recent construction….
That was some article.
The federal government does not regulate the chemical ingredients of imported drywall. Plasterboard Tianjin said it has been making drywall for 10 years in accordance with U.S. and international standards. Another Chinese company facing lawsuits, Taishan Gypsum Ltd., also insists that it meets all U.S. standards.
Some people here decry
bigany government, when clearly there was a failure to regulate the content of drywall, unlike in America. Better living through letting construction supply companies police themselves, I guess.This stuff is all over Port Saint Lucie Fl. according to someone I talked to who worked at a building supplier through the boom years. I also talked to a drywall hanger who had removed all the drywall from a home in Ibis a community in Palm Beach Gardens Fl. and replaced it after all the copper and insulation had been removed and replaced, all the trim and cabinetry had been rmoved before he got there. This is going to be ugly.
Luckily we don’t use drywall here in China - it is all concrete/cement/brick. Real solid stuff - that’s the way houses should be built. Remember the 3 little piggies. American houses (and now I learn Aussie ones) are built like disposable razors.
Concrete keeps the noise out but makes for very poor insulation and large heating/cooling bills.
Interesting: On the travel channel, “Inside the World’s Mightiest Bank” they show the printing of paper money (US Currency). Yes, I knew it costs the same to make a $1 bill as a $100 bill. But at what cost? The show says it costs 4 cents ($.04) to print any of those bills.
*gasp *
Really?
Why, it’s like…it’s almost as if…dare I say it…almost as if these ‘dollars’ of which you speak are little more than paper with some ink on them…
(Hahah! I’m funny today.
)
“It’s almost as if… these ‘dollars’ of which you speak are little more than paper with some ink on them…”
Well now, this was true of a previous Administration’s money. In those days, he who cannot be named ,simply “decided” they were worth the numbers printed on them.
How awful.
Today, the current Administration “hopes”
you are happy with them and the “change” you get back from the cashier. Huzzah!
This is a CRITICAL difference - the NY Times, Charlie Rose, AND the Dixie Chicks have spent hours and hours explaining it in great detail so that no one can ever forget - never again!
(You may now kiss that frog, if you still want to, or just have a beer.)
We did get change, even in the short 90 days we’ve had so far. The previous administration did such an abysmal job that the current one can only pick up the pieces and drop the most disastrous policies. For instance, I don’t think our current Veep will be starting another war trying to enhance Halliburton’s stock price from his undisclosed location.
You are right, we did get change. Guantanamo is still open, soldiers are still dying in Iraq, and the national debt will double in the next ten years!
Way to go Barry! He’s way better than the shrub. You keep cheering for your team and the ‘pubs can cheer for theirs and the country can continue it’s long march into the dustbin of history.
(disclosure) I voted for neither.
The current administration has been a total, unmitigated, abject failure at every single thing it has attempted, except for spending money they don’t have, at the fastest rate in all of history. You will notice there are always two reasons the current admin says or does anything:
1. The pretext (good intention) which makes it palatable to the gullible public, and,
2. The real reason.
Today, the current Administration “hopes”
you are happy with them and the “change” you get back from the cashier. Huzzah!</i?
Ahhhh…?
This is a CRITICAL difference - the NY Times, Charlie Rose, AND the Dixie Chicks have spent hours and hours explaining it in great detail so that no one can ever forget - never again!
Ahhhh…? Dixie Ch…? Yes, I recall them. I was disappointed in their actions, as it happens, at that time. It was disrespectful.
(You may now kiss that frog, if you still want to, or just have a beer.)
Okay, I will.
And thank you, dear well-wisher, and fellow American compatriot. This is just what I like to see.
Happy Easter weekend People !
The folks are spending money on groceries. Stopped by supermarket to pick up some supplies. Total madhouse, inside and out. I have never seen it so busy, somebody is going to really eat well.
Stopped in another store. All the girl employees were wearing big pink Easter Bunny ears. One of the girls I know dared me to wear a pair as I shopped the aisles with my cart. I’m 6′ 1″, 195 lbs and a macho type guy but what the heck. The little kids loved it, moms laughed and everybody was happy until the store manager stepped in front of me, gave THAT GLARE, so I surrendered my Rabbit ears and moved on. Sheesh…lighten UP lady!
10-20 in the slammer for trying to impersonate the Easter Bunny, bubba…
If a customer wants to wear some Easter bunny ears, then the manager should say, ” Happy Easter” and “Is there anything I can help you find”, and then move on to the next customer, with THAT SMILE. I think that the way she treated you was terrible.
Yeah, but come on here, Silverybacky, you and me don’t know what Mikey looks like, but I bet it ’soothing’ is not part of the description.
The good thing here is, Mikey didn’t bite anyone, so that was good. That was quite mature, even. Good job!
Probably the store manager was just reading from the rules, and had refreshed herself in the back room before marching out to confront our guy Mikey. How far down do you have to read before you get to ‘Rules for Giant Guys Wearing Easter Bunny Ears’?
….
Oh, my god! There’s another bat out there, spindling through the trees!
What ARE you, mikey, you the ‘bat whisperer’?
I’m outta here. I’m gonna go eat Cheetos and watch History channel now.
Happy Easter weekend People !
Wow…the folks are spending money on groceries. Stopped by supermarket to pick up some supplies. Total madhouse, inside and out. I have never seen it so busy, somebody is going to really eat well.
Stopped in another store. All the girl employees were wearing big pink Easter Bunny ears. One of the girls I know dared me to wear a pair as I shopped the aisles with my cart. I’m 6′ 1″, 195 lbs and a macho type guy but what the heck. The little kids loved it, moms laughed, dads grinned and everybody was happy in the cabbage patch until the store manager stepped in front of me, gave THAT GLARE, so I surrendered my Rabbit ears and moved on. Sheesh…lighten UP lady! Nice day…had fun.
Ah…?
192 lbs, air freight, I thought I heard earlier.
Unless you got fatter from eating Easter Bunnies?
But that could well be. And this is entirely excusable, because as we know, Easter Bunnies are fatter than regular bunnies, having access to chocolate eggs and all.
PS. That store manager is never going to get a visit from the Easter Bunny. It’s just one of those facts no no one can help. Probably Santa shuns them, too, and also the Tooth Fairy, AND their Mom! I mean, jeeze, man! Who doesn’t love a giant man in bunny ears with a shopping cart!?*
*falls off chair laughing. *
*That’s rhetorical. Oddly enough, many store managers do not.
Which is something I imagine Mikey has discovered all by himself in his crossings upon the face of America.
(But I’m laughing with you; not at you, okay?
So don’t come kill me, giant man in bunny-ears )
Hey..I had fun with the Bunny Ears episode as the kids and their families just had our monster village Easter Egg Hunt across the street from the store.
In the store, this tiny, shy girl tugged my pants leg and started talking to me in this very soft child voice that I couldn’t understand at all. Her not much older brother, translated that she wanted to give me some of her Jelly Belly jelly beans. She gave me four Jelly Belly’s, changed her mind, took one back, so I got three Jelly Belly’s. Those little kids touched my heart
Olygal, as to my weight, it often fluctuates as per how often, long and hard I lap swim.
PS:..and how much and many steaks, fresh baked cakes and bread I devour
Don’t you just love it when kids do that. I loved it when my nieces and nephew would share and then at the same time realize maybe just maybe I shouldn’t share to much
Yep…little kids are really funny and something special that way
sorry about the the double post..been having trouble with Ben’s AZ Purple Haze filter lately.
You and me both buddy.
Daytona Oceanfront Condos Auction - 2 BR, 2K sq ft from $255K
http://tinyurl.com/dmcmkx
NOT as good a deal as the one Muir has, on Miami oceanfront for $1500.
I know a lot of folks are happy in FL. I am holding out for 40 acres and a mule somewhere. When I cash it in, I dread being on the hook for random assessments, meth-fueled town fathers, and fees over which I have no control.
Of all wienies, I am the queen.
I’m not sure I understand your post, but I’ll be in Daytona in a few weeks. I’m sure I’ll be underwhelmed with it like most of Florida.
I live in the Daytona Beach area and I will tell you that Daytona is about as big of a dump you could ever find on the beach. Armpit of FL if you ask me. These condos will not sell at even the reduced opening bids.
Muggy - didn’t mean to be unclear, or coy. “Here is info about a Daytona oceanfront condo auction. Condos are not my cup of tea, esp. in places that have ferocious taxes. I am the world’s most risk averse cheapskate, hence am content to look for 40 acres and a mule in a low taxation place. Just in case anybody here is interested, here is the link.”
The reference to meth fueled town fathers was meant to snark at the alacrity with which the FL town govts appear to have sold out their citizens’ interests to the developer lobby.
Sorry.
Lol… Got all that, but the wienies?
Havent got the courage, yet?
Basic Beach Front Dump…..dont matter the beach…150k.
The big batchelor pad…2001.
IIRC, average direct oceanfront condos (not the side-view or west-view ones) in Daytona ran right at $100/sq.ft. in 1998. New and/or fancier complexes got more, but I think max. 50% more. So if you can get one for the minimum bid and it has a good view, it might be a decent deal. Floors 3-5 generally are best, IMO, because you see the beach and the people and the water (it depends on the setback). From high floors you see only water, unless you walk out to the balcony. Always sit in a chair in a logical place in the LR to catch what will be the view you’d own. Personally, I’d avoid the bottom floor or at least get your insurance company to tell you you can get insurance that includes water intrusion. Ground floor units and I think second-floor ones may well be subject to higher premiums or possibly ineligible for certain coverage; this is for your stuff. The interior walls and fixtures should be covered by the condo’s master policy. Ask everything. And be wary of the condo fees - in recent years many condos started out with very low fees, because the developer set them. But FL has a rule that requires a sinking fund of reserves unless XYZ happens, and it is very possible that the fees could double or triple after the first year or two.
This is a promising development. Perhaps we could export senior managers of failed US banks to terrorist nations, where they could set up self-destructive banking systems destined to fail in the same way as the US banking system did.
Financial Times
US prepared to oust bank chiefs
By Demetri Sevastopulo in Washington
Published: April 5 2009 19:38 | Last updated: April 5 2009 19:38
Tim Geithner warned on Sunday that the US government would consider ousting board members at American banks as a condition for giving the institutions “exceptional” assistance in the future.
The Treasury secretary said the Obama administration would be prepared to force out senior management to protect US taxpayers, and ensure accountability, as a condition for providing money to help banks restructure. “If, in the future, banks need exceptional assistance in order to get through this, then we’ll make sure that assistance comes with conditions,” Mr Geithner told CBS television.
One would think firing the CEO and replacing the board would be like, the first thing to do in these cases, no?
No kidding! Hopefully Little Timmie has the cojones (stones) to back up his words with action.
I am becoming more optimistic with the cracks in Megabank, Inc’s corporate governance increasingly coming to light in the MSM. Perhaps internal conflict will suffice to bring down these rotten structures before OBwan’s economic team has to man the wrecking ball. Here’s to hoping Megabank, Inc self-destructs before it brings down the entire global economy!!!
Financial Times
Citi investors urged to oust directors
By Deborah Brewster and Saskia Scholtes in New York
Published: April 10 2009 18:46 | Last updated: April 11 2009 01:48
A leading proxy advisory group has recommended that shareholders vote against re-electing half the board of Citigroup, including the bank’s chairman, Richard Parsons, because of the directors’ failure to maintain risk controls and hold the line on executive pay.
Glass Lewis advised shareholders to withhold votes from seven of Citigroup’s 14-member board: Michael Armstrong, the former chief executive of AT&T; Alain Belda, the chairman of Alcoa; John Deutch, the former director of the Central Intelligence Agency; Andrew Liveris, the chief executive of Dow Chemical; Anne Mulcahy, the chief executive of Xerox, and Judith Rodin, the president of the Rockefeller Foundation.
Great news from the San Diego used home market: There is fairly convincing evidence on the MLS that irrational exuberance is giving way to affordable pricing, at least at the low end of the market. For example, there are now over 200 homes listed at $80,000 or lower — something one could not have found circa 2005. Some of these homes are priced at under $80/sq ft, which calls into question the many San Diego used home listings stuck at prices above $200/sq ft. Good luck at extracting 2005 prices out of today’s buyers!
Another interesting factoid from the San Diego MLS: There are only 13,107 SFRs and condos listed for sale, which is far lower than levels seen during the red hot spring sales season in recent years. It is quite surprising that there are so few homes listed for sale, given the huge number of homes going into foreclosure, short sale, etc. I guess the would-be sellers holding latent inventory off the market believe they will do better by holding out until the market turns around, rather than selling right now at fire sale prices?
“latent inventory”
I have been seeing this much more frequently these days. It strikes me as something of a bookend to the last days of the mania when people wouldn’t bother with the MLS, because the home sold anyway within hours of the sign going up. Now it is a case of, it won’t sell anyway so why bother.
We went out this morning with our Lock Box Opener(tm) to see a property and found that the listing agent had lied about access. Apparently since the house is a bit out of the way he hadn’t had anyone actually go see it!
Sell — Every — Rally!!!!!
COMMON SENSE
Rally indicates it may be time to sell
By James B. Stewart
WALL STREET JOURNAL
2:00 a.m. April 12, 2009
The stock market rally finally showed a bit of staying power. The Nasdaq composite pierced my selling threshold of 1,585 late last month and rose even more the first few days of April. That gave me the chance to raise some cash.
It isn’t like I didn’t have plenty of warning, since I’d failed to act the two previous times the index hit the selling trigger. Not only did I get another opportunity, but by the time I sold, the Nasdaq was above 1,600, giving me an added bonus.
Even with last week’s pullback, which I consider healthy, it may not be too late to do some selling if you’ve procrastinated even more than I did. Note that I am being careful to avoid the phrase “take some profits.” As I’ve just experienced, with the averages as depressed as they’ve been in this bear market, selling after a 25 percent rally can also mean realizing some losses.
I sold the shares (or in some cases, wrote call options) that had gained the most since the market low of March 9. These are not necessarily the stocks I owned with the largest unrealized gains. Whether I was selling at a profit or loss is irrelevant. To the extent I realized losses, they’ll come in handy next year at tax time.
I find that many investors are reluctant to realize losses unless it’s December, when they’re looking for losses to offset their gains.
But just because a stock was high at some time in the past, perhaps when you bought it, doesn’t mean it’s headed straight back up. It may never get there again. Barring extraordinary circumstances, all I look at in deciding what to sell is a stock’s performance in the most recent rally.
Yep.
PB,
I’m still mostly in the red, but most of that stuff is in 401ks and IRAs that I don’t need to draw from for quite a few years. Recent purchase of 1700 shares of my own company stock (March 2) is at a 70% gain in one month, but I am consistently against incurring capital gains taxes for the next ten years, even long term capital gains. I am actively and conscientiously opposing funding this current regime just as I actively and conscientloutly opposed funding the previosu regime (got that NSO?) - both regimes practicing economic fascism and increasing at a greater and greater rate with time.
For all my investing outside the 401k and IRA I’m actively funding, less than 15% goes into equities every month anyway. The rest goes into Savings bonds, 52 week T-Bills, TIPS, and municipal bonds.
So, you’re only “financing” the administration, rather than “funding” it. Interesting.
Savings bonds, 52 week T-Bills, TIPS, and municipal bonds
It’s a loan from me. I’d rather be a creditor than a debtor. Thanks for paying my interest.
BTW: I voted for Ron Paul and will continue to vote for any candidates who campaign for a gold standard and small government.
Brrrrrr!!!
Pension freezing likely to speed up
THE WALL STREET JOURNAL
2:00 a.m. April 12, 2009
The number of U.S. companies freezing their pension plans this year will represent the tip of the iceberg compared with the volume in years to come, pension experts say.
Although some well-known corporations already have frozen their pensions – including Motorola Inc., newspaper publisher McClatchy Co. and insurer Aon Corp. – there hasn’t been a deluge of such decisions, which keep employees’ earned benefits intact but effectively bar workers from accruing more in the future. Actuaries and pension consultants said many companies are so focused on resolving their overall business issues in the current economic climate that they’re unable to focus on major, permanent shifts in employee benefits right now but probably will re-evaluate their commitment to pensions next year.
“When you look back at the last bear market, from 2000 to 2002, the bulk of the uptick in plan closures and freezes happened after 2002,” said Michael Archer, chief actuary at Towers Perrin. “Companies had to deal with their immediate business issues first before addressing longer-term benefit planning.
“Right now, most companies are saying, ‘Yes, pension issues are a problem, but we’re not looking to close or freeze plans right away.’ It’s in 2010 and 2011 where we could see higher activity and get a better handle on the long-term effects of the downturn.”
What is going to happen to CALPERS? I think they lost 25% (at least) but have yet to reduce the define benefit or increase the rquired contribution??
Uncle Subprime Sam’s loans are going delinquent faster and faster. But not to worry, as the unwitting owner of dollar-denominated obligations stands ready to have their wealth diluted away in order to make good on Subprime Sam’s FHA guarantees.
Delinquency rate climbs on FHA-backed loans
THE WALL STREET JOURNAL
2:00 a.m. April 12, 2009
Home mortgages insured over the past two years by the Federal Housing Administration are falling into delinquency at a faster rate, adding to risks that could prompt the agency to request an infusion of taxpayer funds.
Nearly 10.2 percent of borrowers who took out FHA-backed loans in the first quarter of 2008 had missed at least two consecutive monthly payments within the first 10 months. That was up from 2007, when 9.4 percent of FHA-backed borrowers missed payments within the first 10 months.
Analysts often track loans made in a particular year, or “vintage,” to better gauge the future performance of the entire portfolio. About 12.3 percent of loans made in 2007 were seriously delinquent – 90 days or more late – in February 2009, for example, including 4 percent that were in foreclosure or bankruptcy. The 2007 delinquencies helped to boost the overall delinquency rate on FHA-backed loans in February 2009 to 7.46 percent from 6.16 percent a year earlier.
Luckily, retail sales are decoupled from the housing market. (OK, I just made that up, but most of the MSM commentary I read about the economy these days sounds like it was made up, too.)
The comment about back-to-school sales is pretty stupid. Ever hear of seasonality, Billy Boy?
Continuing slide in retail sales seen
REUTERS
2:00 a.m. April 12, 2009
U.S. retailers will continue to face difficulties in the second quarter as both traffic and sales levels are expected to post steady declines versus the same period last year, according to retail research and information company ShopperTrak.
Retail sales are expected to slide 2.4 percent in the second quarter, according to the company’s National Retail Sales Estimate, ShopperTrak said Friday.
Total U.S. foot traffic for retailers will fall 13 percent in the second quarter, according to the company’s Retail Traffic Index.
Shrinking household wealth, rising job losses and consumer confidence lingering at near record lows have curtailed spending.
“Unfortunately, the sales and traffic declines we’re anticipating for the next three months aren’t a real shock to retailers as the economy remains in the doldrums, and both retailers and consumers alike feel the pinch,” Bill Martin, co-founder of ShopperTrak, said. “Looking ahead, the third quarter should get a slight boost from the annually solid back-to-school shopping season and, as always, the fourth quarter will benefit from the holidays, but our data seems to support the thinking of most economists, which is real recovery most likely won’t begin until early 2010.”
Well if the gov’t wasn’t in such an all-fired hurry to get people into, and keep them in, mortgages - maybe the peeps could do some shopping?
Apparently our top economic leaders somehow forget about the existence of a household budget constraint once they leave the classroom. This is very odd, IMO, as any of these big name professors turned top policy maker must have taught the basic consumer expenditure allocation problem to legions of graduate students over the years.
One of my accidental landlord friends got schooled in bubblenomics this week:
He bought in ‘04 for $145k, tried to sell in ‘06 for ~$180k, took the accidental landlord route “only until things bounce back”. Last week his former neighbor shared with him some comps she had run this January - his unit’s comps were $80k - $90k.
This is one of the fellas that laughed in Oct. 2007 when I told them this area would go down 50% or more.
Did you laugh loudly when he told you this? Or did you restrain your cackles?
I restrained them, cuz I think we’re about to blow through 50% here.
Weakling!
Sen. Schumer warns NY homeowners of refinancing dangers, with ‘predators’ still offering scams
NEW YORK (AP) — Sen. Charles Schumer is warning homeowners who are taking advantage of low mortgage rates by refinancing that they should beware of predators.
The senator says they’re the same predators who pushed subprime loans that contributed to the economic crisis.
With mortgage rates at historic lows, hundreds of thousands of homeowners are eligible for refinancing in New York state alone.
The senator says misleading offers include lures such as no down payments or closing costs, limited documentation or low credit scores. Schumer says such offers can come with hidden fees and clauses and floating interest rates that can wipe out any savings from the refinancing and even cost the homeowner more.
NYAR warns NY homeowners of political dangers, with ‘senators’ still offering scams.
No, seriously? Schumer? AFAIC, he can go straight to ____.
Hrmm, no Bits this morning…
Looking for a few brave, computer-savvy folks who run Firefox 3 to browse the HBB. Started work on a plugin to help with reading the blog/identifying new posts. Could use some testing help as I work on it - functionality is very basic at the moment.
Drop me a line if you’re interested and feel capable of manually installing the plugin files. drumminj yahoo.com
No takers? I think I can get it set up as a package that firefox will recognize…
It’ll:
* show the # of new comments on the main page (where it currently shows total comments)
* hilight the top row of “new” posts to make them easier to identify
* scroll to the first unread post (assuming you clicked on the “comments” link from the main page).
I was happy just to have a project to work on, and it’ll make my life easier, but it sounded like other people would be interested in such a tool…
Wow, how’s this for a slaughter: median price drop from 2006 to end of 2008: 54%. Expected further drop (from the new median) before bottoming: 41%.
Where? Palm Bay, Florida, south of Melbourne.
Running the numbers, $300,00 at peak would end up as $138,000 at YE 2008. Then $138,000 to bottom would end up as $81,000. In reality it’s probably not quite as simple as that, but plenty close enough. “Walkin’ to New Orleans” might become the theme song over there.
Link is from a January Forbes article that I must have missed
http://finance.yahoo.com/real-estate/article/106422/America%27s-Weakest-Housing-Markets
It’s a gorgeous day in New York, and I was walking around Riverside Park on the Hudson. On the walk home, I was approached by this 60-ish year-old woman dressed in that “ol’ school” black-dress-and-hat New York look possibly coming back from Easter service.
She approached me and asked me if I had a quarter to spare. It was certainly the last thing I expected from someone like that. I thought she wanted directions or something.
That’s when the whole tragedy hit home for me.
“My gawd, what have we wrought?”
That’s a sad story. Especially sad on such a joyous day as Easter Day should be.
What did you do?
I was so taken aback I didn’t know what to do. I was completely nonplussed and then after a bit I said “Sorry” and she slunk away.
It was tragic. I can’t get it out of my mind now.
Don’t let it ruin your day. She will approach others and the masses will determine the overall just response.
What on earth can you do with a quarter in NYC???
I have a vivid memory of having to practically step over a woman sleeping on the subway steps in NYC as a young man in the 60s. The image is still with me.
You were unprepared today. Next time not so unprepared. Be caareful in charity though, that it isn’t misapplied. I’ve grown to test those begging before being generous. If it’s a train ticket or a meal they claim to need, that is what they will get.
25c? Black dress? Be careful there, you are an easy psychological target.
A nurse I knew in DC that wanted to see a movie after diner at an upscale theater and both of us were well dressed. It was a first date and I really didn’t know her very well.
We had a wait in line outside and I noticed a sort of homeless looking guy and a poorly dressed girl sitting on the pavement. I told the nurse excuse me a moment, left the line and went over to talk to them. After a few minutes of conversation, I pulled out $20 and scribbled my home phone number on a card and gave it to his girlfriend and returned to my date.
She went totally ballistic giving me her very loud evidently standard, well rehearsed lecture about helping “beggers and those type of street people”. She then lashed into me for leaving her alone in the line and embarassing her in front of everybody by going over there to talk to them and giving them that much money.
I told her the guy had was a combat veteran, that he had a Bronze Star, two Purple Hearts and he had a drug problem and was down on his luck.
Ms Super Nurse date snapped “So what..all those people have a good story !”
I then advised her ” That man was once a very brave US Army Airborne line Sergeant whose squad who left the relative safety of a company to rescue me and two others when we were all surrounded by a hard-core main force VC battalion. That, but for the Will of God or something, could have easily been me sitting on that curb all messed up instead of him”.
I then turned and left her standing in line open-mouthed with those well fed and dressed people waiting for a movie, caught up with my old friend and had coffee and talked with them about getting some VA help while they ate.
I too am a softie for vet that is looking for a handout. I was in the Army just after the Vietnam War. 1975-1978. I could see at that time some of those men were going to have problems.
Yeah BayAreaGal…and unfortuately, it’s going to be real tough on some of them and their families with all these mutiple combat tours.
C’mon, Blue-y, nobody would call me a softie. I’ve seen more than my share of NYC scams.
Something about this was different. Of course, you could argue that that’s the whole point. That’s what they do.
My only retort would be I’ve only seen something like this once before. A situation so obviously out-of-whack that it is unlikely to be a scam.
FPSS, I was going to point that out to Blue Sky about you. However you did a much better job than I could :). I know you have seen your fair share of scams and cons.
They say “you can’t cheat an honest man.” BS
Red flags is all I’m saying.
It’s hard to starve in NY if you’ve your wits about you, even if not.
25c please is a lie.
The image you have stuck in your head is a based on a falsehood.
There will be time you can do your good deed. Pick carefully is all.
Too many good people are going to go down because of this. I have friends and family that had nothing to do with this and they are scared and hurting.
If they had “nothing to do with this”, what would they be scared of?
debt
hand to mouth
grow or die
everything to do with this.
I have a friend who has been making six figures for the past ten years running his father’s business. His sales are off so much he is scared and hurting. He maxed out his credit line last year when things were still going up. Mortgaged to the hilt.
At least he can go for a ride on his Harley.
I have a relative;
Who has saved
No debt
Possibility of being laid off
No mortgage
Not anything to do with this is scared.
Not anything to do with this is scared.
huh?
Sorry Montana;
What I should have said is, my relative had nothing to do with what is happening right now, has done everything right and still is scared.
Maybe he should read this blog!
Knowledge is the antidote to fear.
Are you sure it wasn’t Bernie Madoff’s wife?
It’s a rainy, rainy day in Olympia, which means I will have to move my Easter Egg hunt inside, but that’s okay. Daffodils are blooming white and yellow, and purple grape hyacinths and the weeping cherry is popping out with pink buds and it all looks lovely in the rain.
Even better, gonna be some stream-typing in the area this week, so I want looooooots of water handy. This rain is a lucky rain!
*chants loudly ‘rainrainrainrain…’ *
Now I must decide what glaze to use on a large ham. I love ham!
* chants loudly ‘hamhamhamhamham…’ *
I think I’ll just make something up, with orange marmalade, because I got some on sale at the Grotlet.
*goes back to chanting loudly ‘hamhamhamhamham…’ *
What? No lamb?!?
I recommend an citrusy glaze with oranges, a touch of red-wine vinegar, olive oil and perhaps some fresh thyme.
If not thyme, then some ground cumin and red-pepper flakes.
Say, how about all of you talk about your Easter Traditions!
I love to hear about family traditions.
My clan has lots, partly because my gran is German, and evidently Germans just adore Easter and associated traditions—at least that one sure does, although I don’t know if she’s representative, being a rather unique personage—and then of course it’s fun to make up your own.
I felt a bit nostalgic this morning, thinking about how if I was in Utarr I’d be sitting with sisters at the long wooden table at my mom’s house, labeling the candy eggs and treats and then me’n Rachel would hide them away, and we’d be making the lucky red eggs in green herb noodle nests, and the braided loaf, and arguing about how to cook the ham, and all that stuff.
Hahaha! One time Mary decided she’d be the one who supplied the candy for the Egg Hunt, and even do all the hiding, so then we all busted out of the house shouting eagerly and waving our baskets and tripping each other and we pounced upon the bright plastic eggs….only to be confronted with carob peanuts, organic raisins and baby carrots, and some sublimely nasty sea-kelp agar and honey wad thingies. Goodness, the Easter Bunny got some absolutely hideous PR on that day. And the dreadful language that wafted upwards to Heaven surely made Sweet Baby Jeebus cry and cry, and right after He got resurrected, too!
Deplorable.
If you want edible died eggs:
yellow - turmeric
pink - purple cabbage and vinegar
blue - purple cabbage
Yep, all organic.
Do you eat the shells? :-0
Trying that emoticon again:
C’mon - you shell them first and then dye them.
Red onion skins (lots) = blood red
A very Happy Easter to one and all from sunny Deeeetroit, Michigan!!!!
Confessions of a real estate agent
They shoot real estate agents, don’t they?
http://tinyurl.com/dl3wqq
SFBG - that is pretty funny and nicely written.
WSJ
* BUSINESS
* APRIL 11, 2009, 1:50 A.M. ET
Sales of Luxury Goods Seen Falling by 10%
By VANESSA O’CONNELL
Sales of luxury goods, everything from apparel, to jewelry and leather goods, could plunge globally by 10% this year to about $201 billion, according to a new estimate.
The forecast, to be released Tuesday by consultants Bain & Co., widens the decline that Bain had forecast just five months ago. Last October, it predicted a 7% world-wide sales drop, citing the economic downturn.
Bain now expects luxury-goods sales will drop as much as 20% in the first two quarters of this year before stabilizing in the second half.
Claudia D’Arpizio, a Bain retail consultant based in Milan, said luxury shoppers are switching to lower priced items from their favorite brands. “The situation now is a little bit worse than what we thought it would be back in October,” she said.
Bain produces one of the few market forecasts on luxury goods. The latest revision lowered its estimate for 2008 sales.
The U.S., which accounts for roughly a third of luxury-goods sales, is one of the worst-hit markets. Bain expects U.S. sales of high-end clothing, accessories, tableware, cosmetics and jewelry will drop by 15% this year. That compares to expected sales declines of about 10% in both Europe and Japan.
Apparel is expected to suffer the most, declining 15% globally from a year ago. “What is happening in apparel is that shoppers are more and more looking for value,” Ms. D’Arpizio said. “Some are mixing and matching expensive items with cheaper clothing. Others are waiting for markdowns, and looking for high discounts,” she added.
Family finance rule Numero Uno: Don’t buy real estate when prices are dropping at the fastest rate in history.
Wall Street Journal
* APRIL 11, 2009, 11:20 P.M. ET
Money Matters Can Make or Break a Marriage
By JEFF D. OPDYKE
Even in the best of times, couples regularly argue about finances. But at this juncture, when so many Americans are feeling stung and frustrated by a weak economy, a housing-price collapse, and a stock-market crash, it’s particularly critical that newlyweds — and even long-time spouses — are on the same page when it comes to money.
Of course, that’s not always the case, because not everyone is knowledgeable about money.
Sure, most people reflexively think they understand money, because just about everyone has been handling cash in some fashion since grade school. More likely, though, they have a basic understanding of spending, which is why so many households are in such dire straits these days.
I think the Fed deserves a large measure of “credit” for destroying America’s saving ethic. Stimulus is all about encouraging households to spend, spend, spend away whatever fleeting measure of financial stability remains. Hair-of-the-dog financial rescue packages are predicated on the assumption that drinking a bit more of the demon rum which led to the severe hangover will somehow cure it. The ever-present threat of high future inflation coupled with paltry returns on savings equate to very strong disincentives to save. All acts of
financial prudence must be punished!
Real interest rates on savings have been negative as long as I’ve been around. Still, I’d rather have savings even if the interest rate is zero. It is insurance against having to go into debt for necessities. Debt is slavery.
I think the Fed deserves a large measure of “credit” for destroying America’s saving ethic.
and the gov is responsible for destroying the work ethic. They have devalued work, by outsourcing and w immigration. They reward those who gain wealth via manipulation of money, people, and natural resources via gov while penalizing those who create and work. Even engineering and science will be destroyed before this is all over. Only the manipulators will be left standing.
to the Professor: “All acts of financial prudence must be punished!”
to Blue Skye: “Debt is slavery”
to measton: “They have devalued work”
Amen, Amen, Amen!
I will add these three comments to my Bible. I shall ask The Church to cannonize them. Lastly, and most importantly, I shall seek to mandate these holy teachings in all schools.
These three comments pretty much say it all, in my most humble opinion.
Olympiagal: If I could beg a favor. I would now appreciate another reading from 2 Cosmopolitans.
Many thanks, in advance.
While MSM-cited economic experts are reassuring everyone that the economy will bottom out by year-end 2009, economic historians with secure academic posts are noting that the recent severe decline in global trade has played out at a much faster rate than a similar decline at the onset of the Great Depression.
Another top academic economist, Vernon Smith, recently opined in the Wall Street Journal that households making leveraged purchases of homes during a severe economic downturn was a key contributing factor to the depth and duration of the Great Depression. This should give policymakers who are currently encouraging US households to purchase homes at high prices (thanks to artificially low interest rates) pause to reflect. Will they be held culpable if this policy sinks many more US households into unrepayable debt than the ones already in that position?
It looks to me like the economic cheerleaders are whistling past the graveyard, but they claim to be the experts, not I
New York Times
Off the Charts
Trade Is Falling Fast Across the Globe
By FLOYD NORRIS
Published: April 10, 2009
THE plunge in world economies that accelerated last fall is now reducing the volume of world trade at the fastest rate seen in decades. But February trade figures released this week by several countries provided tentative signs that the fall may be starting to slow.
The total value of exports shipped by 15 large exporters in February was nearly a third lower than in the same month of 2008 — a rate of fall much faster than anything seen in recent recessions.
“World trade is falling much faster now than in 1929-30,” two economists, Barry Eichengreen of the University of California and Kevin H. O’Rourke of Trinity College in Ireland, wrote in a paper released this week titled, “A Tale of Two Depressions.”
“That is highly alarming,” they added, “given the prominence attached in the historical literature to trade destruction as a factor compounding the Great Depression.”
Business Standard
Monday, Apr 13, 2009
Baltic index loses last month’s gain
Abhineet Kumar / Mumbai April 10, 2009, 1:08 IST
The Baltic Dry Index, the global benchmark for freight rates of dry bulk carriers, has lost 36 per cent in the last one month to reach 1,463, reversing the rise it saw in the previous month, giving hope of a freight rate revival to the shipping companies.
The index, which touched an all-time high of 11,793 on May 20, 2008, started sliding following the global economic slowdown. It touched its 22-year low of 663 in December as steel producers cut down production. Even the world’s largest steel maker, ArcelorMittal, breached contracts for shipping cargoes during that period.
The index started seeing a revival since February, reaching 2,298 on March 10 as some Chinese steel producers started stocking iron ore before the end of the financial year. But the revival has proved shortlived as the index has again lost. “Employment for ships will fall; things are very difficult for dry bulk carriers,” said Vikram Suryavanshi, an analyst with Karvi Stock Broking. “We cannot expect the index to recover fast following the credit crisis of such a big magnitude,” he said.
PB - thanks for the link (not that it will make me sleep any better). Those graphs are eye-popping.
Todd — YOU ROCK, BROTHER!!!
Forbes dot com
Man Friday
The Housing Crisis Isn’t A Crisis
Peter Robinson, 04.10.09, 12:01 AM EDT
Stand back, says Todd Zywicki, and let the markets clear.
Law professor Todd Zywicki of George Mason University is composing a book, Bankruptcy Law and Policy in the Twenty-First Century, in which Zywicki picks a couple of fascinating fights.
One involves former Fed Chairman Alan Greenspan; the other, the entire band of academics, former business executives and career bureaucrats who make up the Obama administration’s economic apparat.
Zywicki’s altercation with Greenspan requires a word of background.
After retiring from the Fed in 2006, Greenspan enjoyed the kind of semi-divine status that used to be reserved for Roman emperors. Then a number of economists, notably John Taylor of Stanford, began to argue that the monetary policy Greenspan pursued from 2001 to 2004, when Greenspan expanded the money supply dramatically, represented a proximate cause–maybe even the principal cause–of the housing bubble.
Last month, Greenspan descended from his plinth to defend himself. As Fed chairman, he had only lowered short-term interest rates, he argued in the Wall Street Journal, not the long-term rates on which mortgage prices are based. “No one, to my knowledge,” Greenspan huffed, “employs overnight interest rates–such as the Fed Funds rate–to determine the capitalization rate of real estate.”
Enter Todd Zywicki.
“What Greenspan overlooks,” Zywicki says, “are adjustable-rate mortgages. ARMs are really sensitive to shorter-term interest rates.”
“Look at the data going back to nineteen-eighties,” Zywicki continues. “When the spread between regular mortgages and ARMs is less than about 150 basis points, people tend to take out regular mortgages. But when that spread widens, they switch to ARMs.
Related Stories
“What Greenspan did was artificially drive down the prices of ARMs, widening the spread. Low interest rates on ARMs enabled ordinary Americans to get bigger mortgages than they would otherwise have believed they could afford. That pushed up home prices. And that created the updraft that brought in speculators.”
From loose money to cheap ARMs to rising housing prices.
“Nobody acted nefariously,” Zywicki says. “Greenspan was trying to save the economy, not wreck it. But he still created a bubble.”
This brings us to Zywicki’s disagreement with the Obama administration. Treasury Secretary Timothy Geithner, Director of the National Economic Bureau Lawrence Summers and the other adepts in the administration all argue that the bursting of the housing bubble amounts to a national tragedy. According to President Obama himself, the “crisis” is “unraveling homeownership, the middle class and the American Dream itself.”
Zywicki’s reply? Nonsense.
Greenspan applauded the “innovation” in financial products, and recommended ARMs:
http://www.usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm
Success has a thousand fathers, failure is an orphan.
Everyone can relax now, as the financial geniuses who write for TIME Magazine have declared an end to the banking crisis.
TIME
More Quickly Than It Began, The Banking Crisis Is Over
By 24/7 Wall St. Friday, Apr. 10, 2009
Investors find it disconcerting to see the stocks in the huge financial institutions that are at the foundation of the global capital system trading up and down 25% a day, and, in some cases trading in the pennies. Banks became the visible and ugly wound that reminded Wall St. each day that it had torn down what it spent decades building, which was a money-making machine driven by leverage and the cleverest synthetic financial instruments the world has ever seen.
But, the great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month. Most analysts believe that mortgage-backed securities which included packages of subprime home loans failed when mortgage default rates went up and housing prices raced down. That is only partially true. Banks made a tremendous series of ill-advised loans to private equity firms, hedge funds, commercial real estate holders, and the average man with a credit card balance which he cannot pay. (See pictures of the top 10 scared traders.)
When people look back on the near-collapse of the banking system they may say that the Congress and Henry Paulson threw enough money into the path of the oncoming failure of the credit system to slow it down so that the government could properly go through the process of guaranteeing parts of the balance sheets of firms including Citigroup (C) and Bank of America (BAC). The initial TARP may also have provided time for the new Administration to put together its widely hailed bank “stress test” program meant to determine which of the big financial institutions have dysentery and which do not. Finally, the hundreds of billions of dollars that went into the largest banks late last year allowed Secretary Geithner to produce his public/private partnership to buy toxic assets off of bank balance sheets.
All of those plans, no matter how well-intentioned they may seem, are unnecessary now. Wells Fargo (WFC) indicated that it made about $3 billion in the first quarter of the year and declared its buyout of the deeply troubled Wachovia to be a success. Wells Fargo (WFC) said that the low cost of money from the government combined with a surging demand for mortgages was all the medicine that it required.
Banks stocks reacted to the news, which took the markets completely by surprise, by driving up Wells Fargo’s stock by 32%. Bank of America (BAC) shares jumped 35%.
well, let’s give it the benefit of the doubt for crying out loud. I mean what with all of the TARP and bailout and FED money even I could make a profit. It could be over until, say, THE SECOND ARM RESETS OF THE ALT-A AND PRIME MORTGAGES! That ought to be a movie or book title. Where IS Stephen King in all of this by the way?
Thank goodness for Time Magazine.
Roidy
Business Week article: “Is A Housing Bubble About To Burst?” - July 19, 2004
http://www.businessweek.com/magazine/content/04_29/b3892064_mz011.htm
Just to counter the “No one could have seen this coming” bleats from the FBs and the financial industry executives.
There is a sidebar article, “It’s Now a Renter’s Market,” that rings true. It describes a Manhattan landlord that unilaterally dropped the rent by 20% and probably will retain the tenant. Had our landlord done that, we almost certainly not have looked around and found the place to which we are moving, of at least equal quality, at less than 2/3 the cost per foot.
Everyone who is renting should perform the following annual checkup a few months before your lease turns over:
1) Consider what reduction in rent for comparable quality housing would make it worth your while to move to another place from the one you currently rent (this is called your opportunity cost staying put);
2) Check what offers on comparable quality housing are available in the local rental market;
3) Plan to notify your landlord of your options in case they try to force you to pay more than the rent on your next best alternative plus your opportunity cost of staying put.
4) It is also worth considering your landlord’s opportunity cost of replacing you. If they would have a very difficult time finding another renter who would reliably pay whatever rent you are paying, then you can use this as a bargaining chip.
Lease negotiation in a worsening recession is a prisoner’s dilemma game.
Nash reversion = renter incurs opportunity cost of moving in order to punish numbskulled amateur landlord for failing to lower the rent enough to retain tenant in a falling-price/falling-rent housing market.
Cost of moving + Psychological cost = Very little in a deflationary environment.
Olympiagal you posted this yesterday about hoz:
“or have health issues (or worse) sidelined him?
It was an ‘or worse’.
”
Can you explain or expand on this.
Thanks
Easter is the last big chocolate holiday for Joseph Schmidt Confections.
Just when you think you’ve had all the bad news you can take, along comes the demise of Joseph Schmidt truffles.
Easter is the last big chocolate holiday for the sugary domed wonders that became a San Francisco tradition after confectioner Joseph Schmidt opened his shop in 1983. The Hershey Co., which bought Joseph Schmidt Confections in 2005, is discontinuing the brand and closing its two Bay Area stores - in San Francisco’s Castro neighborhood and San Jose - by June 30.
http://tinyurl.com/cvnj6a
I dunno. There seem to be a massive oversupply of chocolatiers on the street. It’s proliferated with the advent of the HELOC. Fine chocolate has become scarily mass-market. And with that, the margins have disappeared.
La Maison du Chocolat, Pierre Marcolini, Leonidas, Jacques Torres, Neuhaus, Godiva have sprouted across the globe.
On a totally mass-market level, Scharffenberger, Valrhona, Vosgues etc. are everywhere.
Is there really infinite demand for this stuff? As a total chocoholic, even I clam the answer is negatory.
Hershey has also closed Scharffen Berger.
I just saw that after I posted that.
California is too expensive a place to make mass-market products. It was moved to Robinson, IL.
Consumer frugality could become a habit
As more consumers scale back spending amid a lengthy recession, business analysts are starting to ask whether these cutbacks will turn into a lasting trend with far-reaching implications for the economy.
“Americans like to spend, but I don’t think they’ll be spending like they used to for the next few years,” said Ken Perkins of Retail Metrics.
How long the pullback lasts and how much Americans spend in the future will be among the key variables that shape the U.S. and world economies as they try to emerge from a deep global downturn.
http://tinyurl.com/ddebb7
Ben, hope you are having a relaxing good Easter with your friends and family.
MilwaukeeJS online…
CIB Marine’s future hangs in balance
Marine Bank’s owner doubts it would survive without swap
( they have lot of out of state loans including bigtime Florida exposures and I dumped them as one of my banks almost 2 1/2yrs ago)
The parent of Marine Bank may not survive unless holders of certain securities agree to restructure their investment in the struggling Pewaukee company.
CIB Marine Bancshares Inc. said in a series of regulatory filings over the past several months that it wants holders of its trust-preferred securities, which were issued earlier this decade to finance the bank’s growth, to accept preferred stock in exchange for the securities - a move that would bring badly
http://www.jsonline.com/business/42832012.html
Truth will out.
Financial Times
Greenberg joins critics of AIG’s banks pay-out
By Andrew Ward in Washington and Francesco Guerrera in,New York
Published: April 3 2009 03:00 | Last updated: April 3 2009 03:00
Hank Greenberg, the former chief executive of AIG, yesterday added his voice to growing criticism of the $50bn payout to large international banks as part of the insurance group’s federal bail-out.
Mr Greenberg, who built AIG into a global behemoth, said it had been a mistake for the government to wave through payments to banks such as Goldman Sachs of the US, Deutsche Bank of Germany and Société Générale of France in the wake of last September’s rescue.
Another bubble starting to form or the government trying to keep people buying houses?
New option for reverse mortgages
Program helps seniors buy homes
http://tinyurl.com/d6l96e
Tufts accepts 26 percent of pool, suspends need-blind admissions.
The Office of Undergraduate Admissions reported a 4 percent drop in applications this year but accepted 26 percent of applicants to the Class of 2013 — down less than 1 percent from last year, the Daily learned yesterday, the date by which all applicants were notified of a decision.
The admissions office also stopped practicing a need-blind admissions policy toward the tail end of the process, a decision that affected five percent of applicants, Dean of Undergraduate Admissions Lee Coffin said.
BWAHAHAHAHHAHAHAHHAHAHHAHAHAHAHHAHHHHHHHHHHHHH!!!
Well, the wife and I spent the weekend in Phoenix. We have been to there a couple times, but never in “area scouting” mode. Instead of looking at homes on this trip, we decided to just drive around and check out areas. It wasn’t comprehensive, but we did get a better lay of the land, so to speak. The purpose of our trip was to determine if we would consider Arizona on our short list, and if so, what areas we might be comfortable in. We also wanted to gain a little perspective so when we look at online real estate ads we will know about where it is at.
I know this is a very early and seriously uninformed view, but here are a few observations we made…
1. The State of Arizona has a different class of Mexicans than we have in California.
Yeah, I figured I’d blow the PC folks out of the water on the first one. Even though AZ has a high % of Mexicans similar to CA, I saw practically no graffiti, even in some of the cities a bit further south than we were interested in (Chandler, for instance). It seemed like AZ has more of the hard working Mexicans, while we in CA got the vatos.
2. Arizona has a speeding “camera” problem.
It is possible I got 1-3 speeding tickets, due to these BS cameras posted on the freeway all over the place. It used to be you just had to drive slower than the craziest guy on the road. What is this country coming to? I’ll know more in a week or so, assuming they can track me down!
3. Arizona is loaded with clean freaks.
Where do you people keep your trash? Because I didn’t see much of it on the roads. Talk about culture shock.
4. Arizona is easy on the eyes.
I must say the architecture throughout the state is standout. Even some of the McDonalds I saw looked cool. Arizona must have the most stunning architecture in the country. There is more artistic talent involved in your freeway overpasses than we get here on most buildings.
5. Arizonians have either lousy vision, or a lot of ex-Californians.
I can’t tell you how many people thought we were friends or family, because we’d pull down a street and they would start waving at us. It was somewhat uncomfortable, especially since i didn’t have the heart to tell them “I have no idea who you are”. But seriously, they are a friendly bunch!
6. Have I mentioned how damn clean the place is?
It’s almost freaky. Do humans actually live in this state.
7. The state becomes “culturally diverse” south of Tempe.
Okay PC crowd goes crazy again. I’m not saying the entire state south of Tempe is Mexican, but you could see the difference. But still, even the places I wouldn’t live in were still clean, and seemed relatively safe. Of course, the closer you get to Mexico…it only makes sense to expect more…Mexicans.
8. A lot of billions stolen by Wall Street found a home in and around Scottsdale.
There is a lot of wealth in Arizona. Even by California standards, there is a shocking degree of “look at me” in this state. Scottsdale, Paradise Valley, Cave Creek, and Carefree were amazing. Seemed like very nice places to us, assuming you could get past the rich assholes.
9. Did I mention those ticket robots on the freeway?
If 3 tickets show up this week I will not be surprised.
10. You will never go hungry in Arizona.
All the usual suspects were in AZ (Cheescake Factory, Claim Jumper, etc.) but I also saw a ton of restaurants I would like to check out. Seemed like a huge variety.
11. Arizona has some serious financial problems.
I had a chance to watch a weekly political show on TV, and the topic was the state budget crisis. It wasn’t pretty. But since I live in a state with a SHOCKING BUDGET CRISIS, somehow AZ’s problems seemed minor. But the state seems to be just as reliant on real estate and retail as California is, so there is a lot of pain being felt. Talk of big tax increases was not welcome.
12. Prices have a ways to go at the upper end.
While there are some good deals on foreclosures at the lower end, the prices in and around Scottsdale are just as outrageous as they are here in Southern California. But when I look at the Case-Shiller data, prices already seem to be below inflation here. But at the upper end, I still see another 20-30% needed to come off. The low end has been hit, and there are deals. But not much at the upper end. I haven’t looked at the median prices yet, but I suspect that we will know when the high end cracks because the median will start going back up. Once these higher end prices start selling (as they get cheaper) this should start to pull up the median. But what it really means is the lower end has stabilized and the upper end has gotten realistic. And because of this we are seeing more sales from the upper end.
I guess what I am saying is the median price, and the Case-Shiller index really do not represent the upper end of the market. The upper end is only now starting to weaken. And when the median starts to go back up, don’t interpret this to mean prices are firming on the upper end of the market. Most likely they finally caved, and now the sales data includes more upper end sales.
In conclusion, we definitely liked Arizona. It was a nice clean state, with friendly people and beautiful architecture. We definitely would be looking in the Scottsdale area, although prices have a ways to come down first. The infrastructure seems quite new, and except for those damn cameras, it is on our short list. Now we have to research all the other stuff, like taxes, schools, crime stats, college costs, etc., etc.
But it was a fun weekend trip and we enjoyed it. Our next trip will probably take us further north. We’d like to check out Prescott, Flagstaff, Sedona, and a few other spots. We might do that in the summer.
When I took a cr@p this morning, it came out in the shape of the current president. Then, it talked to me about “Hope Now”. It was a bit disconcerting at first but I just pulled on the flush.
When I just came on here I flipped all the way to the bottom and saw your post, and was going to warn you that bananarepublic wasn’t going to be too happy with you, then I saw who you were responding to.
I hope you didn’t call it Barry, you might be labeled a racist.
Thanks for the late night laugh!!!
I would never call my effusions by such a mundane moniker.
I called it Audacity Audacious Bling-Bling Pimpalicious V.
I have standards, you know!
I thought it would be in the shape of a unicorn or the former crappy prez.
No, the previous prez was yesterday’s stuff post lots of “liquidity”. You know how that makes it all wet and squishy? Well, that turned into the dubb-ya in the porcelain.
WOW you can make bowel movements sexy.
Hello b-republic,
My wife and I live in Mesa, moved here from Scottsdale.
We have visited LA and San Diego several times.
I agree with ALL your observations.
Those are the differences, along with, it is hotter and drier here in the summer.
I am originally from New York State. I much prefer the desert SW to the Northeast, any day.
Another good thing about AZ is if you live in the Valley, it is only a few hours drive to Prescott, Flag, Payson, or Show Low, where the climate is much cooler. These are great overnight or weekend trips. I encourage you to try some!
Hi Cobalt,
Thanks for validating some of our early impressions! So why did you leave Scottsdale for Mesa? How would you compare the two areas? Yeah, I know about the weather. I spent August in Phoenix on two occasions. One when I was 18. Door to door sales. It quickly turned into quest for water. It was blistering. I had never felt that type of heat before. Then I went to Orlando in August and felt ANOTHER type of heat. I’ll miss the So Cal weather, but not much else.
I’m originally from Ohio, but I have moved to California 30 years ago, when I was 15. So I know about the winters! But after living so long in California I am thinking somewhere else will be where I go to spend the rest of it.
Thanks again Cobalt!
Regarding robotickets. Just throw them away, especially if you live out of state. They must provide proof of service to take them to court.
Members of the Megabank, Inc cartel who took gazillions in bailout monies are repaying Main Street by sticking them in the arse with fee hikes. Why am I not shocked?
The banking industry has turned into a parasitic scourge which drains the life out of the US economy. It is time for this country to eradicate these leeches.
Wall Street Journal
* APRIL 12, 2009, 11:32 P.M. ET
Bailed-Out Banks Face Probe Over Fee Hikes
By DAVID ENRICH, MARSHALL ECKBLAD and MAURICE TAMMAN
The committee overseeing federal banking-bailout programs is investigating the lending practices of institutions that received public funds, following a rash of complaints about increases in interest rates and fees.
Since the Troubled Asset Relief Program was launched last October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized as predatory by consumer advocates. The TARP funds are intended to open lending spigots and make it easier for people to borrow money.
Last week, for example, Bank of America Corp. told some customers that interest rates on their credit cards will nearly double to about 14%. The Charlotte, N.C., bank, which got $45 billion in capital from the U.S. government, also is imposing fees of least $10 on a wide range of credit-card transactions.
Citigroup Inc., another recipient of government cash, is trying to entice customers to borrow at high rates. “You could get $5,000 today,” Citigroup’s consumer-finance unit wrote in fliers mailed to customers. The ads don’t disclose that the loans often carry annual interest rates of 30%.
The interest rates “compare competitively to similar offers in the market” and vary depending on the creditworthiness of borrowers, a Citigroup spokesman said. Citigroup has received $50 billion in capital from taxpayers, and the U.S. government will soon own as much as 36% of the company’s common stock.
“To continue to offer competitive products and services and responsibly lend in this current environment, we must adjust our pricing,” said a Bank of America spokeswoman about the company’s new fees and interest rates.
White House ponders: Are some hedge funds too big to fail?
By Ronald D. Orol / MarketWatch
Saturday, April 11, 2009 - Added 1d 13h ago
WASHINGTON - When the $9.2 billion Connecticut hedge fund Amaranth Advisors collapsed in 2006, securities attorneys jumped all over each other to express gleefully how the markets absorbed such a mega-fund failure.
In fact, the markets did soak up the implosion fairly well.
However, two and a half years later, policy-makers aren’t so sure the volatile and fragile markets of 2009 could handle another mega-hedge fund collapse.
In an effort to limit the fallout from any future major hedge fund collapse _ or private equity implosion - Treasury Secretary Timothy Geithner proposed on March 26 a framework for regulatory reform that not only included registration of hedge funds managers, but also called for new rules for buyout shops, venture capital and insurance companies.
Nevertheless, Geithner’s proposal leaves more questions than answers.
“Why should taxpayers pay for hedge-fund failures?” asked Georgia State University Business School Professor Vikas Agarwal who argues that already disgruntled taxpayers and legislators are sure to take issue with a government bailout of a major hedge fund.
I think this is an important article relative to all blogs and what’s left of freedom of speech here. I doubt that Implode-O-Meter is likely to be read by passing minors, for gosh sakes.
http://www.cjr.org/the_audit/scrappy_mortgage_blogger_fight.php
And people wonder why we post anonymously …