Bits Bucket For April 17, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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http://www.honoluluadvertiser.com/article/20090416/NEWS01/904160361
I guess all those “rich” people stopped making their mortgage payments….. bbbut…. wait a second. Someone said rich people pay cash…..errrr….
I wonder what the next lame excuse will be from the housing spinmeisters and deniers
What a curious byline! Are North Dakota and Hawaii both real estate investor havens?
Posted on: Thursday, April 16, 2009
Hawaii foreclosures soar 503% in March
Increase in March was 2nd only to North Dakota, which saw 563 percent rise
That’s not a byline, the byline is the line which says who the story’s by. Hence the name.
I forgot to caption my first post…. here it is..
“Hawaii foreclosures soar 503% in March”
Hawaii is an interesting case, and shows something that history will sort out about the housing bubble. Really long time readers will remember that I posted numerous signs of a breakdown in the various Hawaii markets back in 2005. Then the mainland came apart, and Hawaii floated along. IMO, there was definitely a bubble there, so what explains this? Is the reporting accurate or complete? Are the markets so small that statistics aren’t readable?
And with the UK and Australia; these markets were often the subject of HBB posts in 2005, but then had a bounce, whereas the majority of the US went over the falls and never stopped. But, every market that was a part of the HB has seen the same outcome eventually. North Dakota; who would have known? A reader at the HBB Forum, for one.
Bubbles have historically been characterized by amazing bounces on the way down. My favorite is the South Sea Bubble. The story goes that Sir Isaac Newton made a fortune and sold it before the bubble’s first big leg down. But then he reinvested it in the bounce and lost his shirt. Beware of bouncing bubbles!
It is difficult to think of these Fathers of Science types as opportunistic and greedy investors. I will just tell myself that Newton was only seeking profits to help fund his science experiments.
“these markets were often the subject of HBB posts in 2005, but then had a bounce”
Interesting…. That would explain why my deluded brother residing in HI returned to the mainland in Q3 2006 babbling like an idiot about his 200k house being “worth” 1 million. Considering I’ve been a bubble believer since 2004 and an adherent to this blog since day 1, I was completely dumfounded after hearing his millionare rantings. Hell…. by 2006, our discussions on this blog were old hat.
Ah… North Dakota! Where the land is “too thin to plow and too thick to drink!”
North Dakota only had 53 filings, while Hawaii had 724, so it didn’t take many houses to push ND up over 500 percent. I my opinion, the most telling statistic is Households per filing. Here Nevada is the big winner (loser?) with 1 filing for every 56 households, while California is right behind with 1 filing for every 123 households. The number of filings for both states leave Hawaii in the dust.
I’m not trying to dismiss Hawaii’s numbers, but I cannot imagine what our neighborhood here in Louisville, KY would be like if 1 in every 53 homes were foreclosed in one month!
What is interesting about the UK is the commercial properties went down first (cap rates rose), well in advance of the US, followed by the UK residential markets. Residential stayed stronger for longer. In the US, the opposite was true. Commercial will follow residential down (first with cap rates rising, then with rent erosion).
If you want a clue where the US is going for commercial properties, look to the UK. If you want to see what will be happening in the UK residential market, look to the US…
In the UK, there are no non-recourse loans. Your choices are personal bankruptcy, and/or exile.
Man how many realrtuurds have we met over the last few years where we would love to see them forced into this option
———————————
and/or exile.
“But, every market that was a part of the HB has seen the same outcome eventually.”
Not true. Eureka, Ca/Humboldt county is an obvious exception. It has held pretty firm (down a modest 10-15%) when the rest of the state is down 50%. Of course, because of this, I’m trying to move out since I refuse to pay prices in this $hit hole that are higher than San Diego–without the nice beaches, good weather, new homes, big city amenities, jobs, et al.
Just so North Texas isn’t left out of the foreclosure parade:
Dallas-Fort Worth home foreclosure filings rise to record high
07:22 AM CDT on Friday, April 17, 2009
By STEVE BROWN/ The Dallas Morning News
stevebrown@dallasnews.com
Home foreclosure filings in the Dallas-Fort Worth area have risen to a record high, with more than 5,500 properties facing forced sale next month.
The number of houses threatened with foreclosure in May rose 25 percent from a year earlier, breaking all previous records, according to statistics released Thursday by Addison-based Foreclosure Listing Service.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/041609dnmetforeclosure.dff07822.html
Does anyone else notice a surreal MSM blitz of spinning/fabricating postive news in a fanatical manner every day? I get the impression that this is all part of one last-ditch effort to save the bubble and hang on to the good times. How much longer can it last? I think that in a matter of days the banks (or AIG) will need more bailouts and that will expose the farce. Reality will prevail.
Spot on, pressboard. Propaganda finer than the Pravda of yore.
Eta nyeh Pravda.
A play on words in the pre-glasnost USSR about the the 2 main daily newspapers went like this:
Pravda nye Izvestia (Truth, not News)
Izvestia nye Pravda (News, not Truth)
It really should replace “E pluribus unum” as our national motto.
I noticed that about a week ago. Interviews with the new lucky owers of a condo in Mattapan (Duck, cover, and run for your life hood in Boston), and how the money that they “saved” by buying now instead of a year ago (sigh) was going to be used for private schools instead of the public schools. I think that the article is still available in the glob.
Then on the same day CNN carried a story of happy buyers in Miami buying foreclosures. One woman bought a foreclosure for 80K that sold before for 450K…
I think that these are the second wave knife catchers (the first ones are the ones who bought last year, and the year before, when it was obvious to anybody that prices were correcting, and are sans a couple of limbs by now).
With foreclosures doing a 40-50% jump YOY, I expect prices to keep on dropping, and keep on feeding the cicle.
Unless we stop selling houses to each other, and start producing a LOT of products/services that the rest of the world wants or NEEDS, we are going to continue to drag this out. I also believe that this Green trend, is just a marketing ploy. If you trully want to be green, stop consuming products, food water and energy. Plant your own, have a well, and work from home, maybe install some solar panels, and try not to run the Cray computer from it.
Pinch, I was just telling a friend yesterday about how the go green campaign is a marketing ploy. You are right, there are all kinds of things one can do without spending money on the crap the corporations are trying to sell.
A large number of people that should know better fail to recall that the three legs of living “green” are
Reduce
Reuse
Recycle
In that order of impact.
Unfortuantely, if you’re trying to sell something, you need to get people to forget the first two. Such as with bottled water. I can only imagine the conversation between upper management and the green marketing guru at a bottled water plant.
Management: “Look, we want to be green. What to we put on the bottle?”
Geen Marketing Guy: “Don’t buy this?”
Management: “Won’t work.”
Green Marketing Guy: “Buy this, then fill it with water from the tap when empty?”
Management: “Won’t work.”
Green Marketing Guy: “Please recycle?”
Management: “Yeah! And print it really small!”
It’s also about control.
I fully expect attempts to limit our ability to live our lives as we see fit through “carbon caps” or some other nonsense. It’ll either be directly - you get 20 gallons of gas per month, comrade - or indirectly - gas will cost $10 a gallon - but the goal is control of the masses. And, as in the housing bubble, if you can get the masses to destroy themselves by putting on the yoke of slavery, things go a lot smoother for those in charge.
+11ty billion
Most people would be amazed at home much energy it takes to recycle things, and greatly underestimate the savings from simply buying and using less stuff.
And for that matter how much extra energy and other resources it takes to produce supposedly “green” things - like hybrid cars and organic foods.
For the former (hybrid cars) there is a crossover point - the energy saved eventually exceeds the extra energy spent creating and disposing of the hybrid components (e.g. lots of extra nickel in the batteries). However in the end there is not much energy savings at all. (It’s a very debated subject)
However organic foods are a *huge* energy waster, because it takes a lot more energy to produce them since the yields are so low. They may be more healthy (that’s debatable) but they’re definitely not good for the environment.
I think the last time I bought plastic bags was when the TSA rules about having your liquids/gels/etc. in a one quart clear bag was implemented. I bring lunch to work. I use plastic bags most days of the week. But I reuse them. Why on earth would I throw it out? It doesn’t have a hole in it. It just has a few crumbs or drops of water on the inside. Dry or wipe and reuse.
By the way, I didn’t start doing this because I was so hyped up about the environmental effects. I am just a cheapskate.
Same here.
Exactly. IMO, green is the new red.
‘It’s also about control.
I fully expect attempts to limit our ability to live our lives as we see fit through “carbon caps” or some other nonsense. It’ll either be directly - you get 20 gallons of gas per month, comrade - or indirectly - gas will cost $10 a gallon - but the goal is control of the masses. And, as in the housing bubble, if you can get the masses to destroy themselves by putting on the yoke of slavery, things go a lot smoother for those in charge.’
Reminds me of the charge of how things get taken away because a few ruined for the rest. Well, cheap gasoline, good times with abundant jobs and housing prices going up and all that got done to death somehow. Maybe. I am wondering what I did wrong. You know, like when parents get divorced and the kid is convinced he/she caused it. I kick myself for not saving as much as I could, but this is a wake up call if we get another chance at prosperity. I do not know how the process will get scaled up for the general population if we are trying to correct our over-indulgences in consumption.
My 8 year old boy was telling me the other day about all the Earth Day activities at his school. I quietly tried to explain that not all of what these people say is true. He asked why do they do that. I explained because that is their job. He said, “They lie for money?”
Out of the mouth of babes.
Lots of those kinds of dilemmas having a kid in Boulder. So far I’ve just let what happens at school stay at school with my 8yo. Eventually we’ll have to have “the talk”, though.
My 10yo spends much time studying Cinco de Mayo at school.
The U.S. Civil War gets shorted.
(She can, however, cheerfully recite the preamble to the Constitution by memory. I thank Leapster game cartridges for that.)
Leapster? We didn’t need no stinkin’ Leapster. School House Rock helped quite a bit too.
“I’m just a bill. Yes, I’m only a bill. And I’m sitting here on Capitol Hill. ‘Cause its a long long way to the Capitol City….”
Her current enthusiasm is memorizing Taylor Swift lyrics, making the Leapster days a fond memory.
(Humming along with Bill…)
“Conjunction junction, what’s your function?”
Now I’ll have that running through my head all afternoon.
“Conjunction junction, what’s your function?”
Now I’ll have that running through my head all afternoon.
Now I will, too.
Thanks a LOT.
I agree about the green trend becoming just another marketing ploy, and that really is saddening. Does EVERYTHING have to be about selling stuff to people?!
Yes, if they can commodify Hip Hop and sell it to the masses, then doing so with green technology ought to be a walk in the park.
Word!
Respect!
Hollah!
“Does EVERYTHING have to be about selling stuff to people?!”
We’ll have none of that anti-capitalist, socialeest/commie talk around here MISSY!
I think it will take much longer than a few days. That’s why they changed accounting from mark-to-market back to mark-to-fantasy, plus all the cash that got chanelled through AIG. Everybody is cooking the books in grand fashion and politicians and the media are cheering it on. I am 100% in the market right now. Of course this thing could turn on a dime once the swindle is exposed. I believe that the governing elite is interested to keep this going as long as possible. The earnings will continue to beat expectations this season and happy days are here again…for now.
The swindle HAS been exposed, but the MSM is not about to focus on it.
GS = Goldman Sachs
GS = Goon Squad for the Fed and Treasury
GS = The PPT in action
GS = HQ for the Boyz (”Megabank” as Prof. Bear calls them)
Megabank, Inc rules the country!
Money talks, b*ll***t walks.
I’ve loved these days
Now we take our time … so nonchalant,
And spend our nights so bon vivant.
We dress our days in silken robes,
The money comes, the money goes …
We know it’s all a passing phase.
We light our lamps for atmosphere,
And hang our hopes on chandeliers.
We’re going wrong, we’re gaining weight,
We’re sleeping long and far too late.
And so it’s time to change our ways …
But I’ve loved these days.
Now as we indulge in things refined,
We hide our hearts from harder times.
A string of pearls, a foreign car
Oh, we can only go so far on caviar and Cabernet.
We drown our doubts in dry champagne,
And soothe our souls with fine cocaine.
I don’t know why I even care
We’ll get so high and get nowhere.
We’ll have to change our jaded ways
But I’ve loved these days.
So before we end and then begin
We’ll drink a toast to how it’s been
A few more hours to be complete,
A few more nights on satin sheets,
A few more times that I can say …
I’ve loved these days.
- Billy Joel
Now is the winter of our discontent
Made glorious summer by this sun of York;
And all the clouds that lour’d upon our house
In the deep bosom of the ocean buried.
…
And therefore,–since I cannot prove a lover,
To entertain these fair well-spoken days,–
I am determined to prove a villain,
And hate the idle pleasures of these days.
-Richard III (Shakespeare)
Group think is alive and well in the media. That said, reading, understanding, and explaining footnotes in quarterly earnings reports is either beyond the reporters, too complex for the time or space their producers or editors have given them, or just not what everyone else is saying. These guys don’t get paid for making better predictions about what the current news means for the long term (or next week) no matter what John Stewart says. They are paid to get eyeballs on print ads or TV comercials.
We are going to have to be satisfied with being right ourselves without lots of confirmation from the MSM - that is one of the things you get from an internet community. That being said, Krugman’s column today basically says, “not so fast this isn’t over yet.” He mentions, among other things, that the commercial real estate market is on the brink, people were still getting laid off a year and a half after the last recession ended, and that this recession has about zero chance of being a V shaped recovery.
Sounds about right to me.
The sad thing is that we’re going to see a V shape in the stock market indices, and people will point to that and say “See! I told you so!”, not realizing that the stock price gains aren’t gains of stock value, but rather prices rising to offset the falling value of the dollar.
About 2 years from now people will start wondering why the dang unemployment problem won’t go away, as it gets further and further disconnected from stock market gains.
Here’s my prediction - we’re in for a very long period of stagflation. Something that will make the 1970’s look like child’s play.
I’ve been saying THIS for WEEKS now!!
“V shape in the stock market indices, and people will point to that and say “See! I told you so!”, not realizing that the stock price gains aren’t gains of stock value, but rather prices rising to offset the falling value of the dollar.”
This is so obvious.
And it is logical. (see post below)
“the falling value of the dollar”
Give some examples of this, if you please. It is not so obvious.
The Stock Market, for starters.
There’s no indication of any increase in value (earnings), yet prices have increased by 20% in the last month.
The rest is yet to come - it hasn’t started yet. So the stock market is really just acting as a leading indicator.
Right now the dollar has the headwind of deflation from the depression itself, mostly from the unwinding debt. When the unwind gets towards its completion (hard to say when), the headwind will be lessened, and inflation will start up in earnest, because dollar creation will still be ongoing.
I quoted packman.
However, I can only answer for myself.
My understanding is that it’s forward looking.
I’ll try to make it obvious.
In 04-05 it was “obvious” to me that it was a housing bubble.
Actually, in late 03 I thought it was already insane.
Keep in mind that before 1997 nobody was buying to be upside down cash flow.
In fact, “upside down” meant negative cash flow in my neck of the woods.
By 03 it was just plain silly.
Thus what was “obvious” to me, long before I stumbled into this blog, did not manifest itself until later.
__
Now, what makes it “obvious” now?
Do I have a crystal ball?
No.
sarcasm
Maybe Geithner, Obama and Bernake will do the right thing and stop giving trillions to the markets and hedge funds.
/sarcasm
How “obvious” do you want this?
If it helps, I posted below a connect the dots type of “obvious.”
As bad as everyone thinks the US dollar is, every other foreign currency is worse (Canadian dollar is worth $.82 US now. It seemed like only a short while ago it was worth $1.02.).
I would say the changes in accounting rules have a lot to do with the stock market going up.
This unwinding of debt thing, are you thinking that is just about over, that because the stock market is up so freaking much that we will be back booming and borrowing and spending like drunks in about five months? Cause I can hold my breath for that long!
I have in mind the bounce that the stock market took after the ‘29 crash, and then the next one further down, and &etc. and also in mind that this debt bubble was much bigger than that one.
I agree they’re hiding lots of losses. I think it’s a combination. In reality I think banks’ balance sheets are indeed improving, or perhaps not improving but lets say “not as bad as they otherwise would be” due in part to the Fed/Treasury pumping, e.g. the $9.9 Billion gift
they got from the Treasury yesterday.
If the banks weren’t getting these gifts (and if they weren’t also fudging their numbers) then their stock prices would be way lower than they are. They also wouldn’t be loaning out as much money as they are (despite loans being down), which means a lot more companies would be going bankrupt right now, and thus *they’re* stock prices would be falling faster than they are.
“I have in mind the bounce that the stock market took after the ‘29 crash, and then the next one further down, and &etc. and also in mind that this debt bubble was much bigger than that one.”
Maybe. The money creation is a *lot* greater this time though. The Fed/Treasury didn’t do much in the 3-4 years after the 1929 crash, which is why it fell so far (almost 90%).
I do think that we’re in for another leg down - probably this fall, maybe sooner. However the stock market definitely won’t fall as far as it otherwise would without all this pumping, even though I think other factors like unemployment won’t be helped much by the pumping.
I think a big part of the bounce in the stock market is desperate portfolio managers having to do something to earn their oversized paycheques. It’s okay for individual investors to sit on the sidelines, but not so much for the ‘professionals’. I’m sure we’ll have lots of irrational rallies led by these idiots.
I don’t expect we’ll see the 90% drop of the Great Depression.
The market will bounce around for years in a steady range (but under 14,000), which is great for those who live on volatility in the markets… bad for everyone who believed their “investment manager” who told them that “buy and hold” would work!
Unfortunately, the stock market will become increasingly disconnected from reality thanks to various scams (TARP, mark-to-myth, etc.) and will at the same time be held up as “proof” of the recovery. The utter lack of jobs and eventually downward slope of the dollar will be ignored.
I really believ its payback time at Goldman. Geitner (Eddie Haskel ) along with Obama, now are requiring Goldman’s plunge protection team to buy in big time.
The glimmer of hope Obama see’s is GoldmanSachs at work!
This will be another “jobless recovery.”
I hate that term since it is nonsense. It is like saying somebody “recovered” from an illness, but is still sick, or that a company “recovered” from problems, but is still broke.
How many “jobless recoveries” are we going to have until there are no real jobs and people just sit around and watch the market zoom upwards (and the dollar plunge downwards) in their spare time?!
That depends. How many corporate prisons can we build?
Group think is alive and well in the media.
Groupthink is alive and well everywhere. What else explains the people who pulled the lever for such appalling “leadership” choices as Obama/Biden and McCain/Palin?
The real estate development / housing/ mortgage industry was THE SOURCE for so many political bribes, so much graft, and corruption. You have to understand the mentality of politicians; their gravy train fell of the track and over the cliff, but they are determined to pretend it’s still chuggin’ along.
“Does anyone else notice a surreal MSM blitz of spinning/fabricating postive news in a fanatical manner every day? ”
___
I think you have this 100% backwards.
The sense of unreality is watching what the FED and Tres have done: pour trillions of dollars into the financials and markets.
The sense of unreality is watching quantitate easing when I thought it was an empty threat.
But that is reality.
After the trillions have been poured in, it is entirely logical that the markets have risen. This IS reality.
“Markets are never wrong - opinions often are.” JL
And Not a Dime for the little people…….NOPE NO Bailouts or Loan modifications for ME…..instead banks jack up fees and interest rates to cause more defaults…Its almost perverse to think the Fed will cover these losses
Hey Polly..lawyers… if the Fed covers the Credit card losses can the banks sick the collectors on me and get double the money?
———————————
The sense of unreality is watching what the FED and Tres have done: pour trillions of dollars into the financials and markets.
It would depend on the terms of the program that the Fed used to do it. There was an article in the Times yesterday I think. Couple that owned a gym somewhere in flyover country. Borrowed $10M to do all sorts of upgrades - spa, juice bar, etc. They got into trouble and missed a few payments. Bank failed. Loan got sold to a new bank. Since it was a non-performing loan, the new bank got rid of it to a vulture fund. Fund is forclosing on them and will sell their business. They thought they could borrow $6M and offered that plus another $1M at a future date to prevent the forclosure. Someone in the chain said no (I don’t remember who).
They are pissed and whining, but one (I think it was the him not the her) did admit they over borowed to expand. Article said there was still plenty of business in the facility, so it has some value as a going concern, just not enough to cover expenses that include servicing a $10M debt.
They made a terrible business decision. Tough.
So, in an FDIC sale of a bank, the new banks is not required to do work outs with non-performing loans. They probably have to leave performing ones alone if there is no provision for modification of the terms already in the loan. Terms of credit card debt are almost always modifiable whenever the owner of the debt wants to. So, if the debt is purchased or sold, that ability to change terms would go with the contract, unless the program under which the new person bought it made them promise not to do that.
Contract law is messy. Always has been, always will be.
Polly, I’m confused. Are you saying people should actually have to suffer consequences for their bad choices?
That is SO heartless and un-American….
Only if you’re not part of the secret country club.
NYC
I found a pamphlet at the library recently saying that people qualified for a $250 stimulus check through social security. Wow, I think, maybe my ship (or canoe) has come in. The fine print says you have to be collecting SS or Vet benefits already to get the U.S. government check in the mail.
I’m not retired, disabled, a military veteran, upside down on my bills, bleeding or otherwise separated from any entitlements. I get 1 percent in a savings account. We don’t get tax refunds, and the AMT ensures we are at, well, the higher end of taxpayers.
Philosophically, this is a good problem to have.
When I am less charitable, my teeth clench at the wealth re-distribution.
I digress.
Nah…the way the banks are going to make money on you is to raise your interest rates or allow your to pay off your credit card and because you aren’t carrying a balance then charge you an annual fee and if you cancel your credit card, your FICO score will be affected…It’s better than the mob.
Better than the Mob? My dear, they ARE the Mob.
The basic proposition is this:
Q. Where do all these trillions come from?
A. Borrowings by the Treasury, meaning the taxpayer is responsible to pay, through the Federal Reserve, meaning a private bank gets paid interest and is guaranteed the principal by the U.S. Govt.
Q. Why was it necessary to borrow trillions, bailout losing corporations, and absorb toxic debt and worthless securities?
A. Because the private bank was assured to make huge sums of money for years to come.
Q. Why was it necessary to do it now, and so fast?
A. Because with the change in Administrations, a gullible public would accept the pretext that it was all part of the “hope and change” they were expecting.
The MSM was pressed to provide trivial distractions.
Result: The Megabank wins huge; the taxpayer gets screwed forever.
“Does anyone else notice a surreal MSM blitz of spinning/fabricating postive news in a fanatical manner every day? I get the impression that this is all part of one last-ditch effort to save the bubble and hang on to the good times.”
I think it’s all about “containment”. Notice the U.S. car companies haven’t been in the news over the last few days, but the banks huge Q1 profits are all over the headlines. Not a lot about the foreclosure moratorium being lifted, but lots about “glimmers of hope” blah, blah, blah. J6P is being spoon fed the news so as to not cause a total panic, and besides, the sheeple need to keep paying their bubble mortgages for as long as possible.
Yep - it has been pure spin for the past month or so.
Every bank that claims a “profit” by simply reporting what’s left of the TARP money after they loot the rest.
Every “better than expected.” earning report when the expections were basically lowered to nearly nothing.
Every horrible job report that is “better than expected” and then later, quietly revised to be even worse than before.
And the market just keeps going up.
They have to keep the lie going since the alternative is people living within their means, which means we need jobs, not credit, and they don’t want that since they’d have to pay people here more than slave wages. Also, they need to make Obama’s first 100-days appear to be some sort of miracle because to allow reality to take hold would be politically incorrect.
James Kunzler has been saying for a while now that the sewage is going to hit the turbine blades around Memorial day and I think he’s really on to something.
News on the ground is bleak, EVERYWHERE, among everyone I talk to yet the PTB keep blowing money scented smoke up everyones A$$es.
Something WILL blow. Everyone on this blog knows it’s not a matter of IF, but WHEN.
They’re turning the Spring bounce into the Mother of all Recoveries.
They want to call it an Obama/Geithner recovery and credit the Bailouts, even if the only real remedy is tincture of time.
I suspect the bailout’s timing was purposeful to coincide with Spring recovery, to justify more bailouts in the future because this one will have such great “results”.
Look for more cash injections this Fall…
…tincture of time.
nice…
I got a question.
If a responsible homeowner did everything right with putting 20% down and a 30 year fix mortgage on a house and the appraised value is lower than their mortgage, is it right for the homeowner to take advantage of the new stimulus bill coming out in May and refi into a lower mortgage?
Yes.
Then why can’t I? I’ve been rejected. I’m paying 7%.
Roidy
1. It starts in May
2. It must be insured by Freddie or Fannie.
3. It can’t be a subprime.
4. You must be living in the home, no 2nd home.
5. Try again in May.
You also have to prove financial distress. I have no idea what the benchmarks for that are or if they were just part of the marketing campaign for the bill and not actually a part of the bill itself.
After all, we can’t help responsible people. Silly Rabbit.
Once all the responsible people are destroyed paying for the irresponsible, we can “reset” into a beautiful system where nobody needs to work, money rains from the sky, and we spend all day swapping houses and stocks at every increasing prices while never paying for anything. It’ll be fun!
Also…beware of points. My brother refied out of an ARM so he could fix the rate and he paid almost 2 points for the lower interest rate.
True Communism! Just disregard those mass graves of the Ron Paul supporters.
If there is no fraud,misrepresentation or manipulation, it is not unethical to take money or savings people want to voluntarily give you. If you are concerned with whether you are a drain on, or contribution to, society in connection with such payments or windfalls, you are the one that controls how such money or savings are spent, but that is always the case.
Define “right”. Use that definition the same way for the two times you used the word. You’ve answered your own question.
Yes, of course it’s the right thing to do. I try to tell people all the time, money has no morals; you’d be a fool not to take advantage of every crazy government plan that comes out for which you can qualify honestly (I do think it’s wrong, for example, to hide all your income to get welfare; however, as long as you play by the rules, it’s all fair in love and war).
I’ve been a few arguments on this board over encouraging people to walk away from homes, and been told several times that it’s not the “right” thing to do. Morality can be argued all day, but there’s little question, from a financial perspective, many people are making the wrong decisions when it comes to their financial future. You have to take advantage of every single possible thing you can to ensure your financial stability.
Michael Fink,
One of the best posts I’ve seen here ( or -anywhere- for that matter ) in a long, long time. One of the things I’ve tried to share over the last few days is that I don’t have a problem with the moral argument we should be trying to help everyone raise their standard of living, it’s just that unless we’re willing to shut down the loopholes that invite and encourage financial self-exploitation, what’s the freakin’ point?
I don’t have a ‘thing’ against migrant workers, but putting them in 3/4 mil. homes ( for awhile ) isn’t helping their cause in the least? Nor is having ATM-like access to your home’s equity for people of -any- social class.
I think you could expand that to say that the law has no morals.
I remember when Texas was executing someone a few years back and the Supreme Court ruled that the guilt or innocents of the individual had no bearing on whether or not Texas could execute him as long as due process was followed.
I’m sure that is an accurate assessment of the law in Texas, as it is in many states with the death penalty.
It is also evil.
I think you could expand that to say that the law has no morals.
Is the converse, you can’t legislate morality?
I still remember being stunned by that ruling. “Justice” has long been absent from our justice system - it’s all about “process,” which means an employment and enrichment system for judges, prosecutors, lawyers, ballifs, etc. While I believe in swift, summary execution for criminal predators, nothing is more awful than executing or incarcerating innocent people - and I’m guessing our penal system has many tens of thousands of innocent people languishing in it because “process” was followed, but justice was missing. Anyone who has ever had jury duty can tell you that IDIOCRACY means judicial travesties are commonplace given the prevalance unscrupulous prosecutors and lawyers who can easily manipulate the mouth-breathers in the jury box. This may sound like heresy, but we really should have a minimum IQ and life-experience requirement for would-be jurors, and jail those responsible for locking up or executing innocent people through willful negligence or worse.
It isn’t called “Criminal Justice” for nothing!
I agree. This is a great post.
I consider myself a moral person. But a contract is a contract, the law is the law, rules are rules, and a deal is a deal.
If it is within the contract and the law it’s part of the deal.
When I signed my mortgage papers, the deal was (in short) I pay the money back according to schedule, or the bank takes my house. What is immoral about me walking away and giving back my house? Isn’t that the deal upon which we agreed?
Cassandra,
Well exactly. No Ruby Ridge-like “stand-off”. No barricading, just hand over the keys please!
Again, back when home ownership in and of itself was an actual leg up into joining the middle class, well how can you argue against that? When it somehow became perverted into exploiting ( or… encouraging self-exploitation ) what are to we make of ‘that’?
There’s a reason dad’s don’t provide stacks of Penthouse’s and Family Size jars of vaseline to teen-age boys. That’s not to say they can’t get their “hands” on some eventually… but again, is it something we want to create easy access to?
If you feel guilty for sponging on the taxpayer’s dime, then do the re-fi, take the money and invest in the stock market, or buy something cool but unnecessary. You’ll be helping the economy just as much.
GMAC Follows Wells Fargo Into ‘Warehouse’ Mortgage Resurgence
By Ari Levy
April 17 (Bloomberg) — GMAC LLC, the auto and home lender that required a $6 billion government lifeline last year to stay afloat, said it’s taking advantage of record low interest rates by issuing more loans through independent mortgage bankers.
About two-thirds of GMAC’s mortgages are being originated by correspondent lenders who are financed by so-called warehouse loans, said Thomas Marano, chief executive officer of GMAC’s Residential Capital LLC unit, in an interview yesterday from New York. The company hired Adam Glassner from Bank of America Corp. to run the warehouse business about two weeks ago, Marano said.
“What we’re able to do is provide funding to the midsize mortgage banks out there to reach more consumers and give them a more competitive price,” said Marano, who spent 25 years at Bear Stearns Cos. before joining ResCap in April 2008. “We’re looking to do it in a meaningful way,” he said, declining to provide a dollar amount.
Wells Fargo & Co., the second-biggest U.S. home lender, is in the process of opening a warehouse unit, two people familiar with the matter said this month. GMAC and Wells Fargo are filling a void left by banks including JPMorgan Chase & Co. and PNC Financial Services Group Inc., which exited the business this year.
The number of warehouse loan providers dwindled to fewer than 30 in 2009 from 115 four years ago as the credit crisis forced banks to close or scale back, according to the Warehouse Lending Project, a Washington based non-profit.
GMAC Rescued
After reporting five straight quarterly losses totaling $7.9 billion, Detroit-based GMAC was bailed out by the U.S. government in December as part of an effort to save General Motors Corp. The agreement enabled GMAC to convert into a bank holding company, access the Treasury’s rescue program and fund more home loans using bank deposits.
Mortgage lending in the U.S. picked up in the first quarter as the Federal Reserve started buying loans from Fannie Mae, Freddie Mac and Ginnie Mae to allow banks to cut rates. The rate for a 30-year loan fell to 4.82 percent this week from 4.87 percent a week earlier and dropped below 5 percent this year for the first time since Freddie began collecting records in 1971.
Loans from GMAC backed by Fannie and Freddie rose 14 percent from the previous period to $6.47 billion, trailing the industry, which surged 90 percent to more than $250 billion, according to Inside Mortgage Finance. GMAC was the seventh- biggest producer of residential mortgages in 2008, the newsletter said.
“I don’t want to say that everything is fixed and right with the world but what you’re starting to see is the fruits of an organized effort,” said Marano.
wmbz,
And you’ve no idea how much this saddens me. This is EXACTLY the conduit we need to shut down! I mean, this IS how all these d!ckheads got into trouble in the first place isn’t it?
“I mean, this IS how all these d!ckheads got into trouble in the first place isn’t it”?
YEP, and GMAC is back to making auto loans to folks with credit ratings under 620. These clowns just don’t know any thing else to do. They want so much to turn back the hands of time… Much to late!
“I don’t want to say that everything is fixed and right with the world but what you’re starting to see is the fruits of an organized effort,” said Marano.
Organized, as in “organized crime?”
Gotta reblow that Bubble! Get people back to buying things they can’t afford!
Hmmm, make loans (with onerous penalties) to people who don’t have jobs that pay a living wage?
Yep, the Mob runs our financial system.
Lew Perlman (the boy band mogul) does a mini-Madoff on Tampa Bay area retirees. Except, this is real insult added to injury, where people who were wiped out, are getting demands from bankruptcy court to return any money they may have taken out prior to the wipeout. While taxpayers fund criminal organizations like Goldman Sucks and conmen get their bonuses. Burns my naked patootie.
http://www.observernews.net/artman2/publish/Top_Stories/Investors_Ordered_to_Pay_Money_to_Bankruptcy_Court.shtml
Yeah, I’ve wondered the extant to which those who lost with Madoff will demand this. Since it appears that Madoff was running a ponzi scheme, and not simply a money losing investment scheme, all returns that people have pulled out were, in fact, stolen from investors who DIDN’T pull their money out. Sounds like a big class action to me. Just like buying a stolen car, even if you thought it wasn’t stolen, you don’t have right to keep it when the fact that it was stolen is discovered.
Since Madoff faked his records, I guess you will have to rely on people to voluntarily give back money they received. Going back to the 80s would not be doable.
skroodle,
I’m by no means an expert in forensic accounting but I think in this case it’s pretty simple. There will at least have to have been ’some’ record of their initial investment!
Then just calculate their purported “returns”. Clawbacks are a b!tch, ain’t they?
I have not heard any reports of the DA finding the “real records”, just made up ones that were able to pass SEC audits. Who knows if he even used his clients real names? The list from the newspapers was self reported.
If there were real books being kept, I am sure Madoff destroyed them to protect his family and employees.
I understand his brother is in trouble only because of a single check issued in the 80’s to an investor.
“self reported”
Well therein lies the key. If you’re making a claim against him, what was the amount? Where is the check?
Oh… you don’t want to invite the possibility of exposing yourself to a clawback? Then thanks for playing and come back real soon! And I guess you won’t be writing off those losses either?
Maybe this could be used as a precedent to claw back bonuses from execs. They used fraud to produce inflated profits which in turn led to inflated bonuses. What’s the chance that a law that hurts the little guy can be used on the big guys too?
“What’s the chance that a law that hurts the little guy can be used on the big guys too?”
If polly’s reading, I’d like to get her take on this.
I think you would have to “follow the money” and see where the big guys ill gotten gains actually went.
If some went to campaign contributions to political parties or individuals, then I would say its pretty much a non-starter.
Nice idea. I wish it could really work, but I bet it won’t. The bonus pools are almost certainly created each year by the Board at some vote or other. If they vote for it, the pool exists and it distributed under the rules the company already has in place. There is no law that controls it.
There is a chance that they have guidelines in place saying that the total bonus pool should be somehow related to profits. If they do, the profits they use will be the ones shown by the company’s audited finnacial statements. As long as the profts were real according to accounting standards in place at the time, it doesn’t matter that they are based on having taken risks that will cause those profits to disappear later.
Now, the reason the Madoff withdrawers may be subject to clawback, is that there is a law in place that requires it when this sort of fraudulent scheme is in place. The phantom profits of the banks were fraud in the “spirit” of the word fraud, but not in the real legal sense. The fraud happened much further down the food chain, and like it or not, the actions of some high school educated mortgage broker filling in an application form calling a $25K a year janitor a $125K a year sanitation consultant is not attributed to the investment bankers. Honestly, I’m not sure that they really have even non-binding guidelines in place defining how the bonus pool has to relate to audits profits. If they did, they couldn’t just keep increasing the percentage of profits that go to the bonuses year after year without recrafting the guidelines. Much easier for the execs to just keep upping the proposed amount and see if the Board ever says no.
So, difference is that the bonuses are based on private contracts controlled by the rules the company has in place if any. The Madoff thing has actual rule of law behind it. Until people start to demand that the Boards of Directors represent their interest, nothing will change. Unfortunetely, unless you are Waren Buffet, you don’t own enough shares to have any real say. Only people who could start this are the folks who are in charge of the really big mutual funds and pension funds. Guess who their friends are?
To attack this from another angle, it could be argued that there was fraud going on within their organizations, and as the head of the organization they are responsible.** It should have been pretty obvious to these CEOs (and CFOs) that there wasn’t a sudden 200% increase in the number of people who could handle major mortgages. Any company that fired a whistle blower had reasonable cause to question the numbers. Their job as financial stewards is to recognize this kind of crap and deal with it. Clawing back bonuses and pay from negligent CEOs to help make shareholders a little bit more whole doesn’t seem like a stretch. I mean, if a plumber screws up and floods the basement, they just don’t say “oops” and collect their pay.
** As a soldier, this is big. If my subordinates screw up, then I screwed up too. Period. I take the first round of shi… er stuff and pass along what is justified.
Polly:
This is what i have been saying for years in order for a scam to work you need to hire the dumbest people you can find on the front lines..
==============================================
the actions of some high school educated mortgage broker filling in an application form calling a $25K a year janitor a $125K a year sanitation consultant is not attributed to the investment bankers
Al,
And it’s happening at so many levels. Our LBF ( local bank failure ) has created so many scenarios where Officers & Directors have seemed to have landed on their feet quite nicely thank you very much!
One ( the former bank prez ) has landed a cushy position as a ( get this ) “consultant” with a 75 y.o credit union here in town! Perhaps with his newly found employment he can begin making the shareholders whole? LOL!
It just saddens me deeply that any benefit the local shareholders rec’d was purely coincidental. “Hey, have you SEEN “our” stock price lately!?” ( Yeah, whatever dude, I’m getting mine through salary & bonuses and rubber stamping my OWN speculative loans, I’m tickled for you that the “stock price” is going through the roof… )
If Chrysler was really on the brink of BK, why would they get hundreds of millions more?? Has the decision already been made to keep them on life support??
http://www.detnews.com/article/20090417/AUTO01/904170381/?imw=Y
Perhaps this has been asked and answered elsewhere, but what exactly does Fiat hope to get out of a merger/takeover of Chrysler when Daimler/Benz got hosed so badly just a couple of years ago?
While passing through Metro airport earlier this week, I picked up a copy of Detroit Business in which the editors claim that the country owes the auto industry a bailout (surprise, surprise). To an outsider who has no ties to the industry, this sounds like the people left on the Titanic indignantly claiming that the White Star Line owes them a seat on the lifeboats as the ship goes down.
Fiat hopes to gain access to American taxpayers for more Bailouts when their Franken-car-company merge with Chrysler fails. After all, just depending upon the Italian taxpayers might not produce large enough bonuses for those in charge!
But the real question is what will happen to the Genius, the Right-Hand of Welsh, Nardelli? After destroying two companies, he’s clearly ready for greater things? Maybe he can run Goldman Sachs into the ground?
I am continually amazed at this attitude that the rest of the country “owes” it to the auto companies to keep them alive. A few have even claimed it’s critical to the “defense” of the country in case we have a big war someday. Like the military doesn’t have any ability to make anything already.
Even some of the more critical columnists of the auto industry have this attitude. It’s appalling, to me anyways.
Yeah, I get a hoot out of those “arsenal of democracy” defenses of the GM/Chrysler bailout. You see that alot on various boards.
Hello people, nuclear age! It’s either assyemetrical like Iraq or we all make like little “glow” worms. There ain’t gonna be any Kursks, Normandys, or Bastognes the next time around.
Chrysler sold off it’s tank manufacturing busienss in 1979. Lets face it, a large percentage of defense contracting is done by specialist defense contractors. Whose core competency is… getting defense contracts. Which is a very different business than selling cars (or blenders or what have you). Besides, for the forseeable future, our conflicts will be either short, violent conflicts where we trounce other militaries, or long asymetrical conflicts where we struggle to find an elusive enemy (or both, like Iraq)
Now an argument CAN be made that the barriors to entry into the car manufacturing business are still high enough that it would be a bad thing to allow all the U.S. manufacturers to go toes up. In the not to distant future, we may be forced to have our exports and imports at a near parity. This would be much more difficult if we have no domestic car manufacturing business.
Didn’t you know? In this country, you are rich because you deserve to be rich and poor because you deserve to be poor.
And if you suddenly find yourself poor after being rich, you deserve help, but if you find yourself poor after being middle class (or poor most of your life due to events beyond your control), you deserve nothing.
I smell a pullback imminent for the market, time to sell short-term puts on SDS & TWM to capture upside volatility and decay. Too many bulls out there and too many bears being flushed out.
This bear was flushed in Jan of 2007. I want a real recovery to start before I get all optimistic and start growing trees to the sky.
Roidy
P.S. I’m just really frustrated today.
P.S. me too. It just all looks phantom to me.
Wait for ‘GM’ day. I’m betting the mark goes down 500 points after that event. I guess that’ll probably happen in the beginning of June.
“I’m betting the mark goes down 500 points after that event”
I’ll bet that it will go up 500 points, since the market seems to have decoupled from reality! Ha!
Why would GM day mean a thing. Every conceivable bit of bad news is already “priced in”. Anything less than the apocolypse is a cause for a rally.
Agreed, GM BK will be non-event.
That said, it’s important not to give the PTB too much credit or ascribe to them too much power. After all, they are going up against the forces of nature here.
Sooner or later, one of the da boyz is going to drop the soap.
You know what. On reflection, I’m thinking the BK of GM will be a big deal even though it shouldn’t. It shouldn’t make a big impact because it’s both obvious and inevitable. The GM BK boulder has been rolling down the hill for quite some time, so why shouldn’t we expect it to hit the bottom?
But, emotions will rule day. For many folks, losing this icon will set them off. The big players will run for the exits on the assumption the little players will panic. The illusion that everything will work out fine will be shattered. Darth, I agree.
Won’t happen - GM will not be allowed to fail.
In fact, I’ll go out on a limb here and say that NOTHING that could trigger a panic will be allowed to fail from this point on unless some force more powerful than the FED and their banker buddies forces an event. They will do whatever it takes to get people back to spending more than they make, no matter how many jobs it costs, how badly it damages the dollar, etc. It doesn’t matter - their scam (also known as our economy) requires an ever-increasing amount of debt to keep the leveraged/Ponzi game going. Letting big companies like GM fail would cause panic, so they just won’t let it happen.
GM will be TARP’ed in some form or another… maybe they’ll be sold off or split up, maybe they’ll start making some sort of “green” version of the Yugo as we slide into the glorious realm of failed “socialism,” or maybe they’ll become a front for cheap, junk cars from China. Whatever the case, be assured that we’ll here that “all is well!” with regard to them for years to come.
Prof. Bear posted this a couple of days ago and it has now appeared on the front page of Yahoo.
Traders, Not Investors, Fueling This Stock Rally: NYSE Chief
http://finance.yahoo.com/news/Traders-Not-Investors-Fueling-cnbc-14957098.html?.v=1?sec=topStories&pos=1&asset=&ccode=
Dutch bubble update:
it is becoming clear now that the Dutch also have loads of subprime mortgages, issued and securitized by Dutch DSB Bank. The banks owner (Dutch version of the Tan Man) became filthy rich with personal loans and likes to portrait himself as an art lover and most of all an avid soccer fan (he owns one of the top soccer clubs and a soccer stadium). Over the last years his bank (disguised as many internet loan companies) has been pushing ARMS with up to 200% loans at sometimes over 10x income. Most of these loans were securitized and sold to other banks, so DSB itself has little risk (and probably most of the risk will be paid by Dutch taxpayers).
The Dutch financial authorities have been ‘investigating’ DSB for years but remained silent until today, without a doubt because the guy has some very good political connections (the former Dutch finance minister Zalm was president of his bank for several years).
The Dutch government announced today that from now on it will assume the full downside risk of all mortgages that are sold with the National Mortgage Insurance. This is a ‘free put option’ for homeowners that can be used for mortgages up to 265K euro. Over 75% of current Dutch mortgages include NHG - the insurance covers any potential loss of the homeowner when he has to sell the home (except if the sale can be blamed on the homeowner).
Up to now local government was responsible for the downside risk on these mortgages - which didn’t materialise yet, because over the last 25 years prices only went up. Officially local government is still responsible for the risk on all older mortgages, but for sure this risk will be transferred to the taxpayer as well in the near future.
Sounds like there are some bills with lots of zeros on them in your future.
w’ll have to see - Netherlands is still considered one of the more solid Euro countries. But I wouldn’t be surprised if it turns out to be the next Iceland
Hyperinflation for the win!!!
I wonder why Bubbles Ben Bernanke at the FED hasn’t thought of this idea (yet) - just print infinite money and we can all be rich!
Hwy may have to reconsider the 1991 Camry hand-me-down to Mr. Cole
$5,000 Vouchers
Consumers would receive vouchers worth as much as $5,000 for trading in models from 2001 or earlier for a new vehicle, under the legislation Sutton proposed March 17. The program may spur sales by more than the 21 percent increase witnessed in Germany in February, Sutton has said.
U.S. ‘Cash-For-Clunkers’ Proposal May Cover Cars From Overseas:
By John Hughes
April 17 (Bloomberg)
Great, another never ending subsidy paid by the taxpayers. Once implemented, it will be a crutch the automakers will depend on forever.
Let me tell you how this really works as this is the program in Texas:
The dealers snap up all the vouchers. They’re not supposed to but they have their ways.
As an individual, you apply only to find out there is 1 a year waiting list. But you need a newer car now as your 10+yo beater is killing you in repairs. So you take your chances and go to the dealer. (just as an example. I know there are upteen different ways to buy a car… but without the official voucher actually in your hands, you ain’t gettin’ squat)
The dealer sandbags you on your trade in (far less than the voucher), writes you a subprime loan… then takes your car and gets the $3000 from the state.
This is really a subsidy for the DEALERS. And you just got screwed TWICE.
Is commercial real estate a time bomb?
“Losses in commercial real estate will rise across the financial sector throughout the year,” said Keith Hembre, chief economist with First American Funds in Minneapolis. Hembre said that banks have an estimated $1 trillion worth of exposure to commercial real estate.
Talkback: Are bad commercial real estate loans the next shoe to drop for the economy?
That’s about half as large as exposure to consumer residential loans — but still a very significant risk for already bruised banks.
http://money.cnn.com/2009/04/16/markets/thebuzz/?postversion=2009041706
i believe it’s coming very soon to a theater near you.
http://www.lasvegassun.com/news/2009/apr/17/lv-braces-commercial-foreclosures/
I heard a interview with a very wealthy (Multi Billionaire) investor on CNBC yesterday and he was suggesting that buying into LV City Center @ 30 cents on the dollar was the buy of a lifetime…Reason; It is a once in a Century construction project that may never be replicated…
Is not the General Growth Bk the canary in the coal mine???
Hard to consider the 2nd larges mall owner a canary?
Pffftt. It ‘would’ be a problem if the banks were actually considering lending to these guys? Right now the basic assessment of CREIT’s is that they’re throwing the shareholders under the bus by suspending or seriously curtailing the dividend payments rather than confront those mean, awful bankers!
Is commercial real estate a time bomb?
Read the front page of yesterday’s San Francisco Chronicle… I had to read it twice to let it sink in…Frightening….
Inside info on one of Germany’s major equipment manufacturers/exporters.
Orders are down over 60%.
“This is the worst downturn in 100 years.”
“F%@*ing Americans caused this.”
Welcome to globalization.
Some say that the GD was way worse for the exporters. I’m believing it. Germany didn’t even get to have a RE Bubble party.
“F%@*ing Americans caused this.”
Welcome to globalization.
Yep, globalization. Worst. Idea. Ever.
Of course, Americans are always to blame for everything that happens on the planet. Like other countries aren’t able to determine their own actions.
“Like other countries aren’t able to determine their own actions.”
Not according to Kissinger.
Ask Allende.
Really.
Don’t get me started on Henry K.
As for Allende, one of the failings of decent men is that they do not know how to handle evil men, or if they do, don’t have the stomach for it.
Governing is dirty work.
As Allende, according to KGB records, was a Soviet asset, he could have asked for help from the experts. Perhaps even the Russians didn’t think him up to the job.
Austin,
He had Cuban advisers.
Very good ones.
He did not follow their advice.
(of course, this doesn’t change anything, the US had it’s assets, the Soviet Bloc, East Germans, Cubans had theirs.
The taking responsibility part is a big piece of this particular picture. The company doubled its manufacturing capacity in 2008 and is now in the middle of a further increase of 50%. All financed.
Skyrocketing fixed costs in the teeth of the Mother of all Contractions. And they blame the Americans.
Debt is doom.
Of course, Americans are always to blame for everything that happens on the planet. Like other countries aren’t able to determine their own actions.
Yes, we make convenient scapegoats, despite the fact that anyone who could was taking advantage of the credit expansion. How did Germans think they were selling all those Audis and VWs, exactly?
Consumption only goes up?
Germany is an economic parasite. They benefit from AIG bailouts and our economic stimulus, but wisely don’t spend money of their own. They will come out on top.
At least they aren’t sucking $3 billion a year from the U.S.
And since when is being prudent parastic?
If they were helping to prop up AIG (which their banks overpartook of that particular porkpie), I wouldn’t have said that. I do think they are parasites…they want us to bail them out, only indirectly.
Since when is being parasitic imprudent?
Since when is being parasitic imprudent?
Only when one kills the host organism or drains it dry. Then, by definition, one has failed as a parasite — unless there is a nearby host with whom one can begin anew …
We gave marine support to abusive latin american dictators in the 80s in exchange for their allowing us to extract precious medals and other resources.
Many of the problems in the world are, without a doubt, absolutely, our fault. Your argument should be, “more powerful countries will always exploit less powerful countries. We do it gentler than most.”
I’m not entirely sure about Germany not having a RE party… Friends bought a 2 bedroom flat in a town about an hour commute from Stuttgart for over 300,000 Euros. On their income that is about 7X income… maybe not as large a bubble, but concerning never the less…
Jingle Mail is the top article at M S N B C dot com:
——————
Some homeowners see giving up as best option.
In decision balancing stress and credit score, an Atlanta couple walks away.
By Jane Hodges
ms nbc dot com contributor
updated 7:40 p.m. ET, Thurs., April 16, 2009
Teresa Bondora and her family abandoned their two-story brick home in Atlanta rather than fall behind on their mortgage and $30,000 worth of home renovation debt.
The decision was tough for Bondora, a home-schooling curriculum developer raised to believe that preserving good credit and paying bills on-time were key adult responsibilities.
Bondora isn’t the only homeowner making an about-face in her approach to the stigma of foreclosure; if anything, homeowners like her see that efforts to prevent foreclosure may make them more financially vulnerable than succumbing to it and starting anew.
…
What’s become clear, however, is that the tough U.S. housing market has changed the way many homeowners look at debt and the stigma of struggling with it. Like Bondora, many homeowners, even now, are grappling with this question: Is it better to try to make unaffordable payments to hang on to a home that’s lost value, or to take the hit of foreclosure or a short sale but preserve cash in a recession?
…
“Walking away is a business decision, not an emotional decision,” Maddux says. “It comes down to surviving. People are realizing, ‘I can’t sustain this anymore. I have to cut this off before it impacts the rest of my life.’”
——————
It used to be that people did what they could to stay in their homes because they promised they would pay that money back, and darnit they were gonna do it.
No longer. People are now abandoning their down-home values to save themselves. And honestly, in the face of bonuses and bailouts and mortgage buyouts, do you blame them?
“It used to be that people did what they could to stay in their homes because they promised they would pay that money back, and darnit they were gonna do it.”
I challenge that conclusion about motivation. Alternate thesis:
The general housing market never collapsed before, in our lifetimes. People had equity that they fought to keep.
“The general housing market never collapsed before, in our lifetimes. People had equity that they fought to keep.”
Yep, and that equity wasn’t just from appreciation. It came from a 20% down payment and making a full principle + interest payment every month.
It’s a whole different ball game when you’ve got your own money at stake, versus 100% leverage.
A-greed.
Businesses stiff creditors all the time, and the bubble made loans available to households on terms that had previously been confined to businesses. The results are the same.
Most businesses take into account that perhaps a small percentage of their receivables are uncollectible. In our case it is less than 1 percent. Banks on the other hand have a huge percentage of bad debts.
The general housing market never collapsed before, in our lifetimes. People had equity that they fought to keep.
I think it was deeper than that. A generation ago, people had a sense of connection to their neighbors, neighborhoods, and communities, and a sense of shame. Walking away would have brought disgrace and represented an acknowledgement of bad decisions and failure. Now people don’t know their neighbors, and it’s purely an economic decision, with no sense of shame that would lead to a “quiet desperation” struggle to persevere and overcome rather than throw in the towel.
“And honestly, in the face of bonuses and bailouts and mortgage buyouts, do you blame them?”
No. It’s a completely rational response.
And this country is likely doomed because of it.
Sad but true. The worst aspect of this economic downturn is that Washington and politicians all across the spectrum are telling FBs and failing enterprises, “It’s not your fault.” Like hell it’s not. People expect the Nanny State to step in and provide, no matter what. But a State that promises “security” can only do so at the expense of freedom - including freedom to fail if you make bad decisions.
“The general housing market never collapsed before, in our lifetimes.”
When were you born, 1994?
Google “Savings and Loan Crisis.” After that “Resolution Trust Corporation”
http://www.msnbc.msn.com/id/30235263
“Some homeowners see giving up as best option”
Here’s a vomit inducing snippet-
“Teresa Bondora and her family abandoned their two-story brick home in Atlanta rather than fall behind on their mortgage and $30,000 worth of home renovation debt.”
$30k of worthless “upgrades” that presumably provides no additional functionality to the structure, i.e, trash the formica for granite, dump the white appliances for SS, etc.
Yep….. 30k well spent……… a$$wipes..
At least they get to keep the car, or whatever toys they bought, with the money they claimed was for home renovations.
These people watch too many eff’n movies and too much eff’n TV.
I think you have a point there. Most of the folks I know who are in big trouble use the TV as their main information and entertainment source.
Both my sets of in-laws seem to think that you can work 30 years saving around 10-15% of base salary and then live another 30 years from that money - it just doesn’t make sense. No amount of “compound interest” will make all the products and services you’ll need available. All along it was an inflation illusion. Now they’ve given up lucrative careers and traded them for $10 / hour retail - when they can get it.
People need to get over these “investing” delusions and realize that a penny saved is not a dollar at retirement. If you can’t afford to save 50% of your income you need to work longer than you’re going to be retired. And having the house completely paid off should be #2 behind having a big cash nest egg.
Add to that investment pipe dream of your in-laws that the delusion that a house is going to finance early retirement in shangri-la was just that….. a delusion. Given the fact that inflation adjusted housing prices were flatter than a pancake for over 100 years from 1890 to about 1998 when all this nonsense started, it really takes some arrogant self-entitlement to expect to “profit” off a traditionally depreciating item like a house.
…and when you explain it just ain’t working out that way, they shake their heads in pity because you don’t understand finance and investing and stuff like that. LOL
That’s an awfully bold statement, with you not offering much to back it up.
If they make $40k a year, and save 10% for 30 years @ 6% a year, that’s $670k.
If they save 15% of $40k, that’s about a million.
Now you may poo-poo $1million 30 years into the future, but the last time I checked, only about 13m in a country of 300m have that much. I’d say it’s better than nothing. 50% @ 6% would be about $4mm, which puts you in the top 1.5m of 300m in the US. That’s even better, but hardly necessary to survive in old age.
You got that right, Edgewaterjohn. People want and expect to be passively entertained, and passively informed. Thinking and digging out real truths and real information is just too damned taxing for them, when ole Jim Cramer or Dan Blather or Faux News will tell them what’s what. Expect that the corporate cartels who OWN those networks are not about to let the talking heads cast asperations on those same cartels, or say anything that might anger their advertisers. However, now that millions of such sheep have a dawning recognition of how bad they’ve been fleeced, they just MIGHT be more inclined to take a more active role in seeking out the information they need to make informed decisions - and with few exceptions, it ain’t coming to come from their Tee-vee or local fish-wrap.
Nope. They won’t.
You have serious anger management issues. I don’t believe you were spanked enough as a child or adult.
Go get ‘em boi!
LOL
I was spanked frequently as a child and I’m always looking for an @$$ to kick. [Gadfly for the block, Alex.]
I mystified am by macro guys who get all jizzy over data blips. One week’s blip does not make a trend.
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* April 16, 2009, 12:01 PM ET
Jobless Claims Suggest Recession’s End Could Be Near
By Kelly Evans
Amidst all the data, models, and sophisticated tools that today’s economic forecasters have at hand, there’s one simple series with a pretty impressive track record for predicting when recessions are coming to an end: jobless claims, a weekly tally of how many new claims Americans are filing for unemployment benefits, released every Thursday by the Labor Department.
Jobless claims have risen sharply during this recession, but shown some stabilization lately. Last week, newly filed claims plunged by a seasonally adjusted 53,000 to 610,000 – which some cautioned was a quirk of the timing of the Easter holiday – and the four-week average of new claims fell by 8,500 to 651,000, the series’ first decline in three months.
Forecasters love tracking jobless claims because they’re a timely read on the labor market, but also because they have historically been a great way to determine when declines in economic activity are nearing an end.
Robert J. Gordon, an economics professor at Northwestern University who sits on the committee tasked with dating recessions, is one who finds enormous value in this series. Going back to the late 1960s, he has found that the four-week average of new claims peaks about a month before the declared end of recessions with remarkable accuracy.
As of right now, the four-week average claims series peaked at a level of 659,500 in the week ended April 4. If that number holds, based on the series’ past performance it would mean the recession ended somewhere between late March and early May – a far more optimistic read on the economy than any consensus forecast (the latest WSJ survey of economists shows on average they expect the recession to end in September). “The end of the tunnel may only be weeks away,” says Mr. Gordon.
Of course, that’s a pretty big “if.” First of all, the current recession – which began in December 2007 – has been longer and by many measures more severe than any other postwar recession, so it remains to be seen whether jobless claims will have the same predictive power they’ve shown in the past. Secondly, the weekly series is volatile and could well keep rising as the nation’s unemployment rate, now 8.5%, heads towards the double-digits many expect.
“A clear down-turn in claims would be a strong signal of a turn in the broad economy, but we think that is still a few months off,” said Ian Shepherdson, an economist with High Frequency Economics, in a note following the release.
The prior weeks keep getting revised up, this one will too.
The domestic news bylines put a much more positive spin on the US employment situation than does this one.
* International Edition | Friday, April 17, 2009 9:59 AM EST
International Business Times Finance
Unemployment claims surpass 6 million
16 April 2009 @ 05:36 pm EST
The U.S. government reported on Thursday record numbers of people receiving unemployment benefits as the total jobless count exceeded 6 million for the first time – again dimming hopes of seeing the end to the recession.
The labor market is expected to remain weak for the majority of this year as companies are reluctant to hire new workers until signs of economic recovery are clearly evident.
Excellent!
With fewer workers, this will make companies leaner and meaner!
Except that nobody can afford to buy what they produce.
Oops.
That’s the end game of slave labor. Great Free labor now who do we produce for??
Better late than never.
THE FED
Yellen says policymakers need to pop bubbles
By Laura Mandaro, MarketWatch
Last update: 8:01 p.m. EDT April 16, 2009
SAN FRANCISCO (MarketWatch) — San Francisco Federal Reserve President Janet Yellen said late Tuesday that central banks need to deal with bubbles in asset prices before they get too big, although monetary policy may not be the best tool for the job.
Letting them go unchecked “can lead to grave consequences,” she said in prepared remarks for a conference held in honor of economist Hyman Minsky in New York.
“Episodes of exuberance, like the ones that led to our bond and house-price bubbles, can be time bombs that cause catastrophic damage to the economy when they explode,” said Yellen, a voting member this year of the Federal Open Market Committee.
The FOMC has cut interest rates close to 0% and, by buying up debt and making special bank loans, has pumped about $1 trillion into the U.S. financial sector. It meets against next week.
“I would not advocate making it a regular practice to use monetary policy to lean against asset-price bubbles,” she said. “However, recent experience has made me more open to action.”
At the moment, U.S. markets are still dealing with the aftermath of the housing-price bubble.
Remember when the Fed could not see the bubble, but only some local froth? Their collective bubble vision appears to be improving over time.
Where I live, I see the “froth” in the horizon as far as the eye can see every day, it’s quite a sight.
What about the low-interest rate (AKA Treasury) bubble? How ya gonna pop that one Heli-Ben?
Print, print, print!
Money for all!
And all of it worth nothing.
Keep interest rates low forever.
“Yellen says policymakers need to pop bubbles”
Instead, they’re popping zits.
Stiglitz Says White House Ties to Wall Street Doom Bank Rescue
By Michael McKee and Matthew Benjamin
April 17 (Bloomberg) — The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.
“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”
The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.
“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.
The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. “The bank restructuring has been an absolute mess.”
… and when it fails, then what? We will get the washout. I really believe that the recovery will be signaled by CNBC and Bloomberg TV going tits-up. I am probably wrong, but it is a comforting thought. (I can’t wait to see Larry, Jim, Erin, Maria, etc. looking for a real job. Kewl. I’m even starting to feel stimulated this morning.)
Anyway, what the Prof’s are saying (Bear and Stig) is that we cannot have a recovery until two very important events occur: housing correction finds it’s own level, and the oligarchy of Wall Street - Washington is broken. If these two items do not occur, then we will look forward to a world wide recession that just will not end on it’s own. We will be able to do no more than we have done.
These kinds of downturns historically vary in effect depending upon the nation or country’s characteristics. Take China as an example. The talking heads claim that a 6% growth is a recession for them and China is very dependent upon exports to us. India is also. Both nations are experiencing a demographics problem with China’s being especially acute. Both have nuclear weapons. The implications are very bad.
My point is this: Our failure will have follow-on events that are serious, far reaching, and permanent. Look at the failure of the Great Depression. It sparked Nazism, Fascism, Bushido militarism (Japan), and an economic decline in the world that was only really remedied by WWII. The GD was it’s mother. It’s father were the failures of WWI. Specifically 1917 with Revolution in Russia, the refusal of a White Peace by the Western Allies, and Versailles in 1919.
The point is that it took the GD and that which went before it. Without that WWII would not have taken place. There may have been a regional war but no global war and 50 million dead.
It’s hard to really understand the future of this current failure. I mean who would have thought that in early 1929 we would be where we were in 1940?
If the grip of this oligarchy is not broken and these bad loans not directly dealt with, then we have already failed.
Roidy
P.S. On the bright side, I have the day off, my wife has the day off, pizza with anchovies tonight, a new Netflix movie on the way, and Ben & Jerry’s in the freezer. Life is good.
That was an articulate, persuasive and therefore pretty freakin’ depressing post, there, Roidy.
However, I am cheered up a bit by the thought of you and your wife enjoying pizza, movies and ice-cream, so thanks for adding that part at the end. Although you should have said what the movie was and the ice-cream flavor, because details are important.
I agree, the movie title is especially important. Then we can better tell if you will be in for a good evening or not.
Precisely. For example, if you happen to have ordered 10,000 B.C., then I can helpfully advise you to just grab the envelope and set the thing on fire quickly, the minute it arrives. If you don’t do this, you risk having your eyeballs sucked back into your head by your medulla oblongata, which will be willing to do ANYTHING to avoid watching it after about 2 minutes, or maybe less.
And think how icky you’ll look then, huh? Plus you’ll have to find your pizza by touch.
whereas if it is “One Million, BC” you get to enjoy Rachel Welch at the peak of her splendor.
Olygal,
I know it is depressing. It is, however, what I really think. I also know that the downside risks of this idiocy are smoothed over by our gov’t and completely missed by MSM. A general realization of where this could go will motivate the taxpayers and general public to force a break in the oligarchy. I believe in truth in analysis. Planning for the optimistic outcome is how we got here - more or less.
Roidy
P.S. Movie - Max (something about Hitler when he was art student in Vienna); ice cream - Cherry Garcia. My wife is a Dead Head, and I am addicted to ice cream, cherries, and chocolate. FYI
“I am addicted to ice cream, cherries, and chocolate. FYI”
Try some cherry cordial sometime if you haven’t already. Great stuff.
Nohow! I have Cherry Garcia in MY fridge, and was gonna eat it this weekend! 3 little tubs. They were on sale.
I LOVE cordial cherries. I got 5 boxes at Trader Joe’s last Christmas, the real kind, thinking they would last me a good while, and they did–if you count a week and a half as a ‘good while’.
Sigh.
Next year I’m getting a gross.
Also, I tried making them once, but I messed up the nougaty stuff you’re supposed to wrap the cherry in–it never liquified. Plus the chocolate shell looked like a rodent of some sort po0ped it out—all lumpy and misshapen. Maybe I’ll try again. Think of the glory!
Meanwhile Bushco and the Wall Streeters will be in their undisclosed locations eating popcorn and watching DVDs. The not-so-innocent public will get its just desserts, but I hesitate to say “lesson learned”.
Roidy, I’m afraid WW3 may well be the endgame.
People and nations just don’t lose a trillion dollars and then shrug it off while saying “Them’s the breaks.”
As for oligarchies, they don’t just turn themselves in and say, “Oops, we’re sorry. How can we make it up to you?” Nope, they go down HARD and cause much collateral damage. And it’s the ONLY way they exit the scene.
Now you have some idea as to why Putin got a bit “angry” with his oligarchs, eh?
The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”
Best quote of the day, hands down. What a shock to the system it will be to the lemmings who voted for a certain messianic candidate promising “Change” - something much needed after the epic incompetence of the Bush Administration - but now are discovering their eloquent champion [behind his teleprompter, anyway] is beholden to the same financial interests who bought and paid for the last administration. All you have to do to look at who financed his campaign, and that’ll tell you whose interests he’s going to looking out for - and it won’t be Main Street’s.
Yeah, McCain would have been a sooo much better choice.
From reading Sammy’s posts, I think he was a Ron Paul guy.
I’d like to take a moment to revisit this statement from those lying scummy pieces of trash at Goldman Sachs, from two weeks ago:
Bank Stocks Won’t Get Lift From FASB, Goldman Says
I think we’ve pretty well established where that commentary lies - in the toilet and triple-flushed. Probably needed a plunger the size of a 5-gallon bucket to get it down.
No hurry folks but I thought I might make mention that I noticed a large number of new REO listings in OR this week and I’d say at least two-thirds of them are priced under $100k and they’re some decent, livable structures… not junk.
It’s anyones guess if they’re worth that much considering the desolation and lack of wok in non-coastal OR but the price differential on what they were and asking is very significant… one case the price went from $269k to 98k…. It may be worth tossing a $50k smackdown to a humbled realturd. Given OR’s 12.5% unemployment rate, there is still significant risk with anything there.
Good news… I wish we could get decent price drops here in Maryland, but the Koolaid is still thick here. Just talked with a person today who claims “now is a great time to buy! because rates are low!” I started to try to explain to him the concept of low rates = high prices (and that doesn’t even get into the disgustingly high prices vs. incomes in this state), but he then said his wife “works in real estate.” and I gave up. No point trying to unbrainwash somebody like that!
‘I started to try to explain to him the concept of low rates = high prices (and that doesn’t even get into the disgustingly high prices vs. incomes in this state)’
It must be a violation of some law of thermodynamics somewhere, but could you imagine saving money, putting it in higher and higher yielding laddered CDs as interest rates rise and housing prices drop and having a nice down payment on a house someday? I just do not think I could convince myself to follow that savings technique on hope that houses would be affordable simply because I did something disciplined. There is always a Murphy’s Law clause. Who knows, maybe having a job will be the catch.
More fodder for Ben’s “mail in the keys” theory.
A good friend of mine bought a greatly overpriced 2 bd 2 ba condo in Gaithersburg, MD, in 2005 (suburb of DC about 45 minutes out, longer in rush hour). Paid close to $300k, I think. The complex was featured in a front page article in the Washington Examiner last week because the developer sold the remaining units in a deal with the county to some kind of low-income cooperative. Existing owners are livid about the perceived impact to their property values.
She said the mortgage & condo fees & taxes run her about $2500/month on whatever kind of mortgage she has. She figures her property has already lost $100k in value and that it won’t come back, so she contacted her lender (BofA) about a short sale - no dice. So she’s going to stop paying her mortgage, save the $2500/mo she is dishing out, let them foreclose, move back in with her parents and suck up the hit to her credit. She reasons that the credit ding, even for 7 years, is better than throwing away $2500 / mo for the next 7 years - she figures could buy just about anything she wants with cash. So she is perfectly capable of making the payments, but doesn’t see it as being in her interest.
And I’m sure there are lots and lots of people making the same kinds of calculations - those suburban developments are going to become neo-ghettos or ghost towns, or both.
Given enough hard evidence, any theory becomes accepted as fact.
I think we can count “mail in the keys” now as fact.
Yo! Things are getting fuglier!
Another reason not to buy when the crowd buys. A condo project turning into a slum. You don’t have control over who your neighbors are anywhere, but especially in a condoplex.
Only the genuine rich have the opportunity to buy something in such prime locations (ocean views) that it’s very unlikely the ghetto will move in next door.
Another good reason to rent!
Another good point.
I love the whole “real estate only goes up!” line because, by that logic, slums don’t exist! Slums turn into pits over time - we’ve all seen the once nice neighborhoods full of vintage houses that are now wastelands - and with this wonderfully screwed up economy and housing market, the slum is going to spread.
So she is perfectly capable of making the payments, but doesn’t see it as being in her interest.
And I’m sure there are lots and lots of people making the same kinds of calculations - those suburban developments are going to become neo-ghettos or ghost towns, or both.
I see no reason for a person in that position to make another decision, unless they’re willing to ride things out for a decade (or more, possibly). It’s not as if the lending institution has any loyalty or sense of moral obligation to its customer base.
Read the comments in exeter’s link (about 5 threads north). There are a lot more similar stories to that of which Rainmayun tells.
A few (who admit they can afford their payments) are walking away simply because they’re ticked off the bank isn’t giving them a lower interest rate. When will that kind of stuff will show up in the bank earnings?
Last time I checked, you can’t feed yourself with a FICO score, but $2,500/ mo. sounds like surf n’ turf to me.
Life’s too short to be a bank’s slave.
Nicely put, edge.
Life’s too short to be a bank’s slave.
The beginning of wisdom, and the banksters’ nightmare once the ignorant masses wise up to that fact.
Our Hawaii rent a boat captain was bragging in February how he was going to walk away from his Hawaii condo payment because the unit was upside down. He’s got property in Louisiana for his primary residence so it was a no brainer for him. And he’s already shopping the foreclosures for his next purchase.
CNN dot com
Experts: Some foreclosed homes too damaged to sell
Story Highlights
Many foreclosed homes are so damaged, they probably won’t be sold, some say
Researcher: One-third of foreclosed homes too damaged for standard financing
Many of the houses are “eventually going to be bulldozed,” researcher says
Mortgage Bankers Association says it has no hard evidence of such a trend
Yeah. This will end well.
Sigh,
Leigh
Yeah many will be bulldozed - but not until the next upswing. Otherwise who’s going to pay to bulldoze them, and what’s they’re incentive?
Until then they will be a blight.
See Detroit for example, which has the highest rate of foreclosures in the country I believe, or close to it.
On the other hand, see Detroit, where there are wide swaths inside the city limits that’re returning to grass and meadow and prairie — with or without the bulldozers to help.
I’ve seen pictures of at least one Detroit neighborhood that’s been sliding for a long time where you’d swear you were looking at a rural backwater, not a former city block.
We saw that when mapping Gary - whole blocks where the trees and bushes were reclaiming the streets. We could barely get through in some places. Blocks with one burnt out house when there used be dozens.
That’s America too.
…there are wide swaths inside the city limits that’re returning to grass and meadow and prairie — …I’ve seen pictures of at least one Detroit neighborhood that’s been sliding for a long time where you’d swear you were looking at a rural backwater, not a former city block.
These are very pleasing words to me.
The only problem is that there are probably all sorts of toxic wastes in yards that were reclaimed. Someone in the 1960s changing the oil in their lawnmower dumps oil in backyard. House goes from middle class to slum for a generationa and a half. Then abandoned and reclaimed by nature. But carcinogens for generations to come. Multiply that by thousands. It’s a toxic landscape. If it all ever goes to something like farmland, it will be poisonous vegetables/fruits/wheat, or whatever can be grown in such a cold climate. The roadways (asphalt) could probably be torn up and remelted into asphalt in other areas or maybe turned into fuel? It’s oil-based.
Properly done, a big toxic cleanup crew should be in control and document all the spots they could not clean up while cleaning up the rest so that future generations won’t get poisoned.
“when mapping Gary”
edgewaterjohn - do you do google maps for you job? Or some other mapping service?
That has to be an interesting thing, especially in these times.
Hey, Oly, I keep forgetting to show you a recent picture of the lad. (Since you asked.)
Here you go:
http://rayonorlon.com/wp-content/uploads/2009/04/m-taxday1.jpg
I now return you to the previously scheduled discussion of urban decay …
The power of Mother Nature to reclaim her land should not be underestimated.
ET, edgewater, your posts bring to mind a show I’ve been watching lately, ‘Life After People’.
Do either of you watch that show? Any of you other HBBers?
Man, I get all excited and bounce up and down on the couch squealing with enthusiasm at the prospect!
Then I remember I, too, am a ‘people’ and I bounce just a bit less happily, but still…
What makes me happy about that show, and about your posts, is the thought that parts of the natural world can come back; it’s not ALL irrevocably destroyed, even in the hands of the pigmen. It’s not like a 300 year old oak can be replaced, but, I mean, edgy, you say there’s at least trees coming back, popping out of the streets as merry as you please—this is happy news to think of, for me at least. It means the pigmen didn’t get a total victory.
I first got sucked into bubble-watching several years ago because of the horrors I saw all the time, partly from my job, and partly because I have freakin’ eyeballs in my head: the wanton, rampant clear-cutting and paving over of wonderful old forests and farms, frog-filled wetlands buried under gravel, streams destroyed…this horrible ruination, and all in the service of greed, at the hands of wretched pigmen grubbing after money.
I was trying to make sense of how things were so out of hand, so utterly crazy. Then bubble-watching got fascinating for other reasons too, just the plain ol’ insanity of what I was seeing supposedly mature and technically non-ret*arded people DO, and predictions of how and why and when it would bust, all of that interesting stuff. But still the most important thing to me was always—how does this affect the natural world now and how will it later?
Lately I’m skipping around like Pollyanna on meth, I’m feeling so cheery and pleased. And ET, edgy, your posts give me just a bit more of a bounce for today’s frisky skipping episodes. Thanks.
Heavens bitsy! That is one adorable kid! I’m not sure it’s quite natural to be that cute. It hurts my eyes.
Packman,
1999-2002, I helped make the databases that feed those services. We had to drive every street in every town in the region.
I only wish I took photos, because we saw it all. Learned an awful lot about how and where people live - and what kind of housing stock is out there. The path that lead me to the HBB started there.
I only wish I took photos, because we saw it all. Learned an awful lot about how and where people live - and what kind of housing stock is out there. The path that lead me to the HBB started there.
I really wish you had taken photos, too. May I urge you to, henceforth, carry a camera around with you and take a zillion photos?
That’s what I do, all the time. Boy, do I have a lot of digital photos! It’s been a handy habit a number of times. I was down in south county going to a yard sale one Saturday and happened to see a bulldozer parked right in the middle of a whole pink-flagged bog. I hadn’t reviewed the project application or anything, I just happened to encounter this one by accident, off work time, while I was singing Toby Keith and going yard-saling. Luckily I had my camera handy, as usual, and I sent in the photo to the development dept and complained about it. Later, when the developer tried to claim he didn’t know it was a type 1 wetland, he just wasn’t terribly plausible. Hahahaah! Ahhh….I enjoyed that…
I hate developers. Have I mentioned that before? I can’t remember.
Oly, is this Life After People a series? Because I remember a special that started with the assumption that one day, all the people were just GONE. It went on to predict what would happen, and how long it would take. What shocked me was the notion that some of what we’ve created, such as nuclear reactors, could do a great deal of damage without us there to maintain it. Not to mention all the poor little house pets presumably locked inside their homes. I didn’t appreciate that part at all. The basic premise was kind of silly, as if a neutron bomb exploded over the entire Earth and poof! all the people simply vanished. Still, it was interesting.
The series I love is Planet Earth. It amazed me to see all the places still relatively untouched by human destruction, errrr I mean habitation.
Very good for the soul.
Luckily I had my camera handy, as usual, and I sent in the photo to the development dept and complained about it. Later, when the developer tried to claim he didn’t know it was a type 1 wetland, he just wasn’t terribly plausible.
Good for you! Making life miserable for developers is fun — and noble.
I’ve sen the ads for “Life After People,” but haven’t seen the show. The ads were a little too CGI for my tastes, but maybe I should check out the program after all …
Elanor, I think they’ve only had the premier of ‘Life after People’, but it’s a planned series on History channel. I’ve watched it a few times because I recently changed my cable so I get Discovery and History channel in HD! It’s super!
The premise IS a bit silly, I admit—for example, if everyone’s all of a sudden gone, then who the H*ell is that, calling on the phone, as it dangles there in the phone booth dramatically ringing? Huh huh huh?
But I thought it was interesting, and the visuals were neat, especially in HD.
Besides, I’m of the opinion that there are too many people running around, so a show that posits the vanishing of them wins my approval, and I’m fully prepared to suspend my belief.
“The premise IS a bit silly, I admit—for example, if everyone’s all of a sudden gone, then who the H*ell is that, calling on the phone, as it dangles there in the phone booth dramatically ringing? Huh huh huh?”
Automated marketing systems.
The greatest evil created in the last 20 years.
RE: Life After People - there’s a book that came out last year called: The World Without Us by Alan Weisman which uses exactly the same premise as the series.
I’d go as far as to say that they probably based the series on the book.
It possibly one of the most affecting books I’ve ever read - from what happens to a suburb over time, to what will really happen to al those nuclear reactors all over the place.
Well worth a read, if you don’t mind being scared out of your freaking mind…
Good for you! Making life miserable for developers is fun — and noble.
I think so, too.
What’s that one cliche? ‘Find something you like to do and you’ll never ‘work’ another day’?
S’True!
(Hey, you know what—I’m excited to think that I probably got a cliche right, for once.)
I do have to say, it’s a WHOLE lot funner lately. You can fight and fight with all your energy, with truth, justice and 200 freakin’ pages of state and county regulations allllll on your side, but the developers/builders had all the money.
And we know what that means–it means a Determination of Non-Significance and a wetland full of gravel, and no trees left standing, and a tacky pastel sign reading ‘Windy Maple Cove Estates, Low-$300’s’, is what that means. (Or, rather, meant.*)
Plus those developer/builder wh*ores vote and go bi*tch to the county commissioners all incessantly whining about ‘affordability’, and ‘people’s retirements’ whereas trees and frogs rarely make it to the polling booths and/or the commissioners offices with articulate counter-arguments.
But like I said: it’s a WHOLE lot funner lately. I used to hope justice would prevail, but instead it turns out market factors prevailed. Whatever. I don’t care. All I know is, I lovvvvvvvvve to see those wh*ores hurting.
*Past tense. HAHAHAHAAHAH!
I think they should put razor wire around some of these abandoned neighborhoods and turn them into McGulags for all the TARPheads who caused all this.
Dqnews has the California numbers out for March. Statewide, Southern California, and Bay Area. Prices are down 38% yoy, and flat from February. It should be a big news day for California.
The annual rate of California home price declines has stabilized just below 40 percent.
You have a flair for the understatement, Bear.
It’s kind of like terminal velocity.
You’ve fallen out of a plane and your decent has stabilized at 120mph. Time to break out the champaign, you really didn’t need that parachute after all.
Radar Logic data suggests San Diego home prices per square foot are getting very sticky at $190. Is it possible that the Fed or other central government price fixer is intervening in the market? With the nasty recession in progress coupled with myriad vacant homes soon to hit the market, I cannot imagine fundamental demand kicking the market at this price level.
“With the nasty recession in progress coupled with myriad vacant homes soon to hit the market, I cannot imagine fundamental demand kicking the market at this price level.”
Agreed. Many in Sacramento still jumping in, although this house could go a lot lower. Unless that March sales figure is a re-po. Bank re-pos and sales all look the same on Zillow.
5 beds, 4.0 baths, 4,260 sq ft
Sale History
03/20/2009: $824,837 *
08/10/2006: $1,400,000 *
10/22/1998: $340,000
03/09/1995: $330,000 *
By Aaron Smith, CNNMoney.com staff writer
April 17, 2009: 10:37 AM ET
NEW YORK (CNNMoney.com) — Unemployment rose in 46 states and Washington, D.C., in March, with Michigan leading the way at 12.6%, the government said Friday.
The most dramatic increase was in Oregon, which went from 10.7% to 12.1% - the second-highest among the states.
Oregon was followed by South Carolina, at 11.4% in March, and California, at 11.2%.
The Michigan job market has been hit hard by the battered auto industry. The Big Three carmakers have shed tens of thousands of jobs because of giant corporate losses and waning demand for vehicles.
In Oregon, employment is heavily reliant on the lumber industry, which has suffered from the decline in homebuilding in California and elsewhere.
Other states with double-digit unemployment include North Carolina (10.8%), Rhode Island (10.5%), Nevada (10.4%) and Indiana (10%).
North Dakota had the lowest unemployment rate at 4.2%.
Feh. Haven’t you read the other news today? The banks are not only solvent, but profitable again! The markets are back!
What do we need income for?
We need income to pay tax, silly.
“Oregon was followed by South Carolina, at 11.4% in March, and California, at 11.2%”.
Our poorest county, Allendale has now reached 23% unemployment. The hits keep right on coming.
What part of the state is Allendale?? That number’s as bad as Detroit’s.
It’s official: This recession is the worst in a generation in Wisconsin.( a couple of local re-posts)
The state’s unemployment rate rose to 9.4% in March, the Department of Workforce Development reported Thursday.
March unemployment skipped past February’s 8.8%, and surpassed the national rate for the first time since June 2007.
The U.S. unemployment rate was 9% in March
http://www.jsonline.com/business/43111002.html
With earnings down, Harley to cut up to 400 more jobs ( better order that Pig..oops Hog…NOW!)
http://www.jsonline.com/business/43090407.html
The Fed bought $1.503 billion in Treasury inflation-protected securities, its first buying of TIPS since the central bank kicked off the $300 billion buying program in late March. Market participants had looked for a size of $2 billion to $2.5 billion.
so … they are buying protection for the inflation that they are busy generating themselves?
Oh frickin’ irony! Wow.
Funny!
Seriously, the 10 year TIPS issued the other day have the fixed yield of 2 1/8%, which is fine enough for me to offset my other assets I regularly buy - gold bullion.
Hi Bill whats up in Cali,
I sold my TIPS and bought investment grade bonds from a vanguard fund really just A rated corporates at about 6% dividend.
I don’t know if selling the TIPS is a smart move but when I read ben bernake is buying treasuries to keep rates down I sold them. After they poped up.
Anyway back to work see ya.
Cactus,
I just started getting into Vanguard’s limited term tax exempt fund, VMLTX, which is 83% AAA and AA munis nationwide. With such safety as that, it has a modest yield of 3.2%. But better than losing principle. 21 years up and 0 years down.
You probably have the intermediate term corporate bond fund from Vanguard. I have the long term one, VWESX. Yeah, 41% A, 26% AA and 16% AAA. Has a 6.55% yield.
I’m leery of having too much assets in anything
Well, slowly but surely the honeymoon is fading for me and Obama. His decision not to prosecute torturers is a show-stopper for me. These people should be in jail, and trying to turn the page is reckless and dangerous. What has happened to the rule of law in America???
Outrageous.
Hurrah! It is good to see your eyes opening.
I think it would be very hard to prove they acted in an illegal manner and obtain a conviction.
If they had kept the torture video tapes as ordered by they Judge, it would have been extremely easy. They have had several years to “lose” and “accidentally” destroy all of the records.
I mean, would anyone have been convicted for the abuses that occured in Abu Ghraib if not for the photos leaked to the media? Only 7 soldiers were convicted. None of them officers. Only 2 out of the 7 got jail time.
Help me out here. Did the people who held all the Japanese-descent CITIZENS OF THE US in detention camps during WWII get prosecuted?
A different set of circumstances, but I basically agree with you.
The policymakers and those who provided legal ground-cover for these policies (Yoo, Addington, et al) are the ones who should be prosecuted, not the personnel in the field following orders that were allegedly legal.
Please keep providing us with real-time updates on your progressive disillusionment, Banana. Nothing makes me snicker like watching the wide-eyed innocents who actually BELIEVED the Telepromptor-Reader-in-Chief’s campaign promises, as it dawns on them that they’ve been duped, again, by yet another sincere-sounding political flim-flam man.
Perhaps it’s time for bright people on the left to process the idea that people who think just like them might have to make certain concessions to reality when in power. But that would require them to accept that Bush wasn’t nearly as evil as they prefer to think of him as.
But that would require them to accept that Bush wasn’t nearly as evil as they prefer to think of him as.
I don’t think Dubya was ‘evil’. Well, maybe a little evil. But I’m a little evil myself, so that’s not what I objected to.
See, what IIIII objected to was him being a re*tarded m*eat-puppet.
Also, come to think of it, his ears bothered me.*
*Not really. I just said that idly, for fun. I don’t care about his ears.
NO bush is evil
I saw a documentary on the BAE bribery scandle in the UK. Pretty clear that the company was paying off Saudi Officials for military work. They bought Prince Bandhar a new 737 or something like that and painted it in the colors of the Dallas Cowboys for him. They had Blair and GW giving an interview when someone asked Blair about bribery in general and GW snickered and said “Gee I wonder who their talking about Tony”. It looked like a couple of teenagers snickering when a teacher asks them if they know who vandalized the school.
I think the war in Iraq also proves he was evil. It’s pretty clear that they knew Sadam had nothing to do with 9/11 and that he didn’t have any real nuclear capability (vs say Iran, Pakistan, N. Korea, Saudi Arabia ect). It was a pure oil grab that bit them in the A##.
I’m by no means on the left, but you’d have to have ideological blinders on not to see the sheer hubris and ineptitude that characterized the Bush Administration, or the greed and delusions that drive the neo-con hijacked Republican Party. What I’d like to see is people moving beyond pat definitions of “right” and “left” and start agreeing on some fundamental principles instead. Like, it’s profoundly immoral to pass this generations’ problems, and debts, onto future generations. And while there has to be some safety nets and regulation as part of the “general welfare” clause of the Constitution, the Nanny State has become too intrusive, all-powerful, and over-reaching.
What I’d like to see is people moving beyond pat definitions of “right” and “left” and start agreeing on some fundamental principles instead. Like, it’s profoundly immoral to pass this generations’ problems, and debts, onto future generations. And while there has to be some safety nets and regulation as part of the “general welfare” clause of the Constitution, the Nanny State has become too intrusive, all-powerful, and over-reaching.
Testify! TEST.I. FYYYYYYY….
*nods candy-a*ss tree-hugging’ Democrat head enthusiastically *
We’d all like to move beyond left and right, but “Moderate” has been outlawed.
Seriously, you should see the looks I get when I tell people I’m a moderate. The left think I’m copping out and the right think I’m copping out.
Oh and don’t forget they are still evesdropping on your conversations and blogs. So do not email LAD because he’s got right wing extremist written all over, especially the gold and stocking up on food part.
And yes I am a giant LAD fan.
Good for them. There is much to be learned here for anyone willing to tune in
How is this just now being discovered? I shoulden’t be at all suprised, but I am!!!
A.I.G. Chief Owns Significant Stake in Goldman
http://www.nytimes.com/2009/04/17/business/17liddy.html?_r=2&emc=eta1
Oligarchies are by definition, “inbred” in more ways than one.
But Paul Krugman throws cold water on the “green shoots and glimmers” everyone’s all excited about. He makes four key points:
Things are still getting worse. “The most you can say is that there are scattered signs that things are getting worse more slowly — that the economy isn’t plunging quite as fast as it was. And I do mean scattered.”
Some of the good news isn’t persuasive. Goldman’s “excluding December” quarter. Wells Fargo’s best quarter ever.
There may be other shoes yet to drop. “Even in the Great Depression, things didn’t head straight down. There was, in particular, a pause in the plunge about a year and a half in — roughly where we are now.” This is the critical one. House prices are still plunging. With the possible exception of China, the rest of the world economy is headed into the tank.
Even when it’s over, it won’t be over. Unemployment likely to keep rising right through 2010. “’V-shaped’ recoveries, in which employment comes roaring back, take place only when there’s a lot of pent-up demand.” And that’s not our problem. We’ve got the reverse: Too much pent-up debt. It will take years to work of the bad debts.
I’m still going to sit on cash. This fantasy stat bank bubble will pop just like housing did.
“Too much pent up debt”
By rescuing the big banks, the odds of debt workouts go down.
Mortgage rates go down to entice more new debt, credit card and commercial loan rates go up to lock in old debt.
When it comes to debt, weep for the future.
The Fed seems to believe they can engineer a recovery by stimulating demand through running the virtual printing press on high blast.
Oh, tout au contraire.
They are engineering a brilliant recovery.
Just like they did in the early 2000s, when they blew the housing bubble to gargantuan proportions?
Exactly.
Yes, I”m sure those that needed to profit in 2000, profited.
It’s good to be in the top 1%
I’d argue it’s the demand that’s virtual, not the printing press. No press, no demand.
Speaking of the “Law” of Supply and Demand, here’s an eye-opening article on the topic guaranteed to harsh your mellow:
http://www.scoop.co.nz/stories/HL0904/S00099.htm
John Kozy: The Flaw of Supply and Demand
[snippets]
‘The precise definition of demand is the number of people who are willing to purchase a product at a specific price. But this definition destroys the doctrine, because if price alone determines the demand, supply is no longer relevant even though the supply may influence the vendor’s pricing. The doctrine becomes a mere empty tautology. Furthermore is willingness to buy synonymous with buys? Isn’t it possible for a person to say, “I was willing to buy it, but I was too busy to get around to it”? But the real weasel word is price.’
‘The Law of Supply and Demand is an empty, tautological doctrine that is not supported by observations of the marketplace and merely serves as an excuse used by some producers to increase prices to the detriment of consumers. It is not an economic law; it is an economic flaw. It is not even a legitimate idea; it is a mere notion.’
‘I have often thought that classical economics is some variation of the game named Monopoly. The data used, faulty as it often is, can be likened to the sum of the dots shown after the dice are thrown, and the fiat money they measure value by is exactly like Monopoly money since it has no intrinsic value. The wealth that economists claim is created often vanishes in an orgy of destruction. And while these economists are having fun, people suffer and often die.’
This guy is about as wrong as one can be on this topic. He’s an idiot and has no business writing about “supply and demand.” In fact, he does a fair job of demonstrating how the model of supply and demand is so frequently misunderstood. Ironic considering what he was trying to discuss.
Plenty of problems with most things in the world, including with economic models and how they are (mis)applied, but this guy only demonstrates his own ignorance and nothing else.
And I really like how they call him “professor”. While it may be a mere honorific I suspect this is intended to provide him with credibility. He has a PhD in “Ph.D., Philosophy, Comparative Literature”.
Wow, that stuff is just breathtaking in its lack of understanding of how demand and supply work.
I’d pen a parody but it parodies itself!
I stopped reading in his second sentence. “Price alone determines demand”. No it doesn’t, therefore the rest of his logic is already flawed.
that stuff is just breathtaking in its lack of understanding of how demand and supply work.
I don’t find the lack of understanding nearly as breathtaking as the pretense. This guy signs his work “Professor”, pretending to be an expert on anythng he writes aboiut. He’s an idiot AND a liar and still gets published. wtf?
Anyone who signs off as Prof. or PhD in the mass media is almost, by defintion, insecure and an idiot and a liar.
I bet you there are dozens (if not more) PhD’s running around this blog none of whom actually advertise that fact.
Not a diss on PB, BTW (but then this is not the mass media either.)
PB,
FAIL
“With irredeemable base money, the proper combination of current monetary and fiscal policies ought to boost aggregate demand. The qualification ought reflects the existence of two possible exceptions. First, there is the possibility that perverse future
policies (future reversals of current increases in the stock of base money) could, through the present rational anticipation of these policies, negate what would otherwise be the expansionary effect of the current policy measures. Second, there is the possibility that
expectations of future contractionary monetary policy could undo the expansionary impact of current increases in the money stock, even when the authorities, unbeknownst to the private sector, will in fact not engage in such future behaviour. The expectations that matter concern the behaviour of the terminal money stock as the time horizon goes to infinity. Such incorrect expectations that cannot be refuted by observing actual monetary policy over any
finite time interval will be called incorrect but irrefutable (IBI) expectations.”
Willem H. Buiter
Revised 21-06-04
____
And, strangely, I do understand this.
Simple translation:
If I believe that they are capable of continuing to run the presses or, (greater fool theory) if I BELIEVE others will buy this argument, then (games theory) I will front run them and get rid of my paper money first; thusly, I played into their hands and was “stimulated” into buying.
They know EXACTLY what they are doing.
On Kudlow last night (I know, I know) an older guy named Gary Shilling was trying to say the same thing, and was being vilified for being so focused on the negative that he couldn’t see all the “good” going on around him.
Shilling is a bond bull. Been around for years. Unfortunately he allows himself to be used by a drug addicted corporatist like Kudlow.
I kinda thought you might like what he had to say. No??
Yeah. Shilling has been a housing bear for 2-3 years now.
MSNBC article can’t qualify for a mortgage re-do anyway loan to value is too far gone…
“It dawned on me that you have to save yourself before you sink,” Bondora says.
By the time her family mailed keys back to their lender during fall 2007 and moved in rent-free with friends, Bondora no longer cared about the fact she’d let her home go to foreclosure, nor did she care about the $15,000 property tax bill she got after relinquishing her property or the fact that her credit score has plummeted from about 690 to the 500s. The family escaped personal bankruptcy and will pay off their debt within 18 months.
In the hardest-hit areas of the U.S., such as California, Michigan, Nevada and Florida, new modification and refinancing options won’t necessarily help homeowners because “loan to value” ratios — which compare the loan’s size and the home’s value — are too high to qualify for the new programs, according to Rick Sharga, vice president of marketing at RealtyTrac, the Irvine, Calif.-based distressed property research firm.
Sooner or later everyone discovers that reason trumps emotion.
The wiser discover it sooner.
Yep. Though sometimes not without a lot of pain - e.g. a world war.
(P.S. didn’t meant to smile at the aspect of world wars. It was a wry smile.)
cactus …You article just proves how much people bought houses they could never afford and they no doubt bought the myth that it didn’t matter because appreciation could take care of any short fall they had . It is unfortunate that the mania was in real estate
and the fake inflated prices were so extreme to create massive high dollar loss . Combine this with the stock loss hit that most people had and many are just toast .
new modification and refinancing options won’t necessarily help homeowners because “loan to value” ratios …
I’m wondering if jobs might also be helpful?
Jobs?
That’s just damn socialeest/commie thinkin’!
Correction: Jobs for payment? Health insurance? WHY YOU SOCIALIST!!!
a href=”http://www.detnews.com/article/20090418/METRO/904180365/Abandoned+pets+overwhelm+Metro+Detroit+shelters”>Abandoned pets overwhelm Metro Detroit shelters Behind boarded doors of foreclosed homes, in Dumpsters and in parking lots are an unprecedented number of abandoned dogs and cats. Their owners, desperate and broke, have left the animals to die without food or water. Real estate agents and landlords are finding the once-beloved family pets in vacated houses all over Metro Detroit.
Meanwhile, more people who take their animals to shelters are telling workers they have lost their jobs and can’t afford to take care of their pets, or aren’t allowed to take them to the apartment they’ve leased after losing their house.
“This has really become an epidemic,” said Allie Phillips, director of public policy at the American Humane Association, from her office in Alexandra, Va.