Bits Bucket For April 28, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Huzzah! We really do have swine flu here in New Zealand - tests confirmed. I am sure that will do wonders for the real estate market.
I plan to start attending numerous open houses here in central FL while wearing my surgical mask, coughing and gagging furiously as I fondle everything within reach. That should set a good mood for the market in this area.
Don’t forget to borrow the house toilet and stink the place up but good.
Then give the real-turds the swirly twirl.
A royal flush for real-turds.
…it beats a full house, right?
…… of real-turds.
Barack Obama has test for virus
A MAN who shook President Barack Obama’s hand in Mexico collapsed and died the next day with swine flu-like symptoms.
Archaeologist Felipe Solis, 65, met Mr Obama, on April 16, three days after the virus emerged. The White House said last night Mr Obama had been tested and was not in danger.
http://www.thesun.co.uk/sol/homepage/news/article2399368.ece?OTC-RSS&ATTR=News
That is incredible.
make sure you cough right on the fresh-baked cookies.
ROTFLMAO
Thank god I put the coffee down. For some reason that had me busting a gut laughing. I worry about homes with ‘fresh baked’ smells. What smell are they hiding? Same with open houses that smell too much like paint.
Got Popcorn?
Neil
I heard that Mexico knew about the outbreak around the end of march, but kept it quiet due to spring break. Has anyone else heard about this?
WaPo
U.S. Slow to Learn of Mexico Flu
Canadian Officials Knew of Rare Strain Before Americans Did
By David Brown
Washington Post Staff Writer
Sunday, April 26, 2009
U.S. public health officials did not know about a growing outbreak of swine flu in Mexico until nearly a week after that country started invoking protective measures, and didn’t learn that the deaths were caused by a rare strain of the influenza until after Canadian officials did.
(Cont’d)
Leigh
There are articles out there that link the swine flu to Smithfield swine feeding operations (which include nasty manure lagoons) in Mexico, and that Mexico had been keeping an eye on it. The liberal political sites are covering it because it’s ammo in the fight against factory farms.
However, I did NOT hear anything about spring break. More like they didn’t know what the sickness was.
On a side note, I also read that family members tend to catch viruses more easily because families have similar genetics, so the virus doesn’t have to adapt to radically different immune systems. This may — but nobody knows yet — account for the faster spread of the virus in Mexico.
Mexico is now blaming the US.
Mexico, where the number of deaths believed caused by swine flu rose by 50 percent on Monday to 152, is suspected to be the center of the outbreak. But Mexican Health Secretary Jose Angel Cordova late Monday said no one knows where the outbreak began, and implied it may have started in the U.S.
http://finance.yahoo.com/news/Official-US-flu-victims-may-apf-15055209.html?.v=33
Must be the CIA. After all, they introduced the AIDS virus, didn’t they?
From the Mexico City Fake Press:
Jose, the Minister of Health, was quoted in a recent press conference, “The swine flu is a mutated version of a disease that started in the US; the subprime contagion. The disease initially started out affecting low income families, but rapidly spread to those with higher incomes. It targets those with weak mathemetical systems. The more lethal version of the contagion occurred when a vactioning US Banker suffered injuries from patting himself on the back for a bonus well earned.”
There are articles out there that link the swine flu to Smithfield swine feeding operations (which include nasty manure lagoons) in Mexico, and that Mexico had been keeping an eye on it.
It recall reading about some unpleasant and mysterious events in waterways, I can’t recall if it was fresh or salt, with algae blooms, massive fish die-offs, and, when researchers got in boats and started hanging around fiddling with the water, they too started sprouting skin lesions and having blackouts and stuff? This was on the east coast, I think, was it one of the Carolinas?
Anyway, the mess was eventually associated with a jumped up strain of ‘Pfiesteria’, an organism that possibly got a big kick-start and hyped-up toxicity from it’s origins in local swine manure lagoons.
Guess I’ll wiki it.
If you’ve ever seen a manure lagoon, you’ll have a hard time believing there could be that much poop in the world. They really are awful. First time I saw one it was a reminder that giant agri-business has some deeply unpleasant side-effects.
ISTR that was on the eastern shore of the Chesapeak Bay. Of course over there you’d blame Purdue rather than Smithfield for all the poo.
This was on the east coast, I think, was it one of the Carolinas?
North Carolina has had ongoing problems with hog farm runoff for decades. My uncle used to be involved in prosecuting factory farm violations in NC, and had stories that were pretty scary.
“It recall reading about some unpleasant and mysterious events in waterways, I can’t recall if it was fresh or salt, with algae blooms, massive fish die-offs, and, when researchers got in boats and started hanging around fiddling with the water, they too started sprouting skin lesions and having blackouts and stuff? This was on the east coast, I think, was it one of the Carolinas?”
You may have read this article, Oly. I highly recommend it to others as well.
http://www.rollingstone.com/politics/story/12840743/porks_dirty_secret_the_nations_top_hog_producer_is_also_one_of_americas_worst_polluters
Just wait until swine flu his Las Vegas.
Mortgage Modification Bill Faces Trouble in Senate…
By Renae Merle
Washington Post Staff Writer
Tuesday, April 28, 2009
Days before an expected vote, Senate leaders yesterday touted their version of a proposal to allow bankruptcy judges to modify mortgages, but have yet to secure the support of the financial services industry and face fierce opposition that could derail the proposal again.
Senate Majority Whip Richard J. Durbin (D-Ill.) has been negotiating with Bank of America, J.P. Morgan Chase and Wells Fargo for weeks. They are facing increasing pressure to conclude negotiations before a Senate vote later this week, but talks continue, according to Senate aides.
“I hope we can muster the courage and find the votes, although I know it will be hard,” Durbin said on the Senate floor yesterday. Durbin has been pushing the measure for more than two years. “It’s hard to imagine that today the mortgage bankers would have clout in this chamber, but they do.”
Under the measure, a key part of President Obama’s housing plan, a bankruptcy judge could modify the terms of a troubled mortgage, including lowering the principal owed by the borrower. It’s a process known as a cramdown. Citigroup backed the proposal earlier this year, giving it momentum. But the legislation has been stalled in the Senate for more than a month. It passed the House in March.
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Despite the ongoing negotiations, Senate aides said the section covering bankruptcy modification is near completion. It would weaken the bill by requiring homeowners to be two months delinquent and have an outstanding balance of less than $729,750 to qualify. If a bankruptcy judge lowers the principal balance, the borrowers would have to split any profit with the lender if they sold the home while still in bankruptcy proceedings.
The current proposal would also restrict the ability of homeowners to receive a bankruptcy modification if their lender has offered them a loan modification similar to those in a government program being put in place. “This amendment limits assistance in bankruptcy to situations where lenders are so intransigent that they are unwilling to cooperate with the foreclosure prevention efforts already underway,” Durbin said.
The negotiations are focused on other parts of the legislation, not the bankruptcy-modification provision, according to Senate aides. “We have come up with a bankruptcy proposal that is so air tight, we’re confident in the proposal,” one of the aides said.
Anyone in the coastal areas of CA finally starting to notice rents dropping from asinine to merely ridiculous? Yeah, a few years ago in CV area of San Diego, you couldn’t possibly find a liveable 3br for under 2500, now there are some asking around 2000. (Of course there are still many delusional whack-jobs asking prices from a few years ago). In fact some of the apt complexes have dropped their 2brs from 2200 to 1700, less than prices from 10 years ago. The fact that this is happening during the peak rental season of April is very encouraging, hopefully by fall things will really start to fall apart.
Maybe you did not catch my post. I live a mile and a half from the Pacific ocean in a 1 bedroom unit and just signed a new lease at 20% less. I took a 6 month lease.
And like you, I think rents are going to fall further this Fall.
Rents are plummiting in the South Bay part of LA.
Oh yea… that’s because employment is plummeting.
But home sales are seasonally insane. A friend just listed a home for what my wife and I thought was $70k more than market. It sold in 2 days with 3 buyers submitting bids.
Oh, the friend didn’t want to sell, but is getting married (to a man who has a larger home with a smaller mortgage) and is a bit nervous about employment. I’m happy she is walking away with her down payment and a profit; but I remain surprised at the selling price (even if it is a great neighborhood and a dang pretty home inside and out). Oh, about 1.5 miles from the beach too.
Got Popcorn?
Neil
Contracts are one thing, closings are another. Please update us either way, as both data points are interesting (to me, anyway).
The house across the street from us went on the market at $269,900 which is about $125/sq. ft. I didn’t think it would sell but it did, and we have new neighbors. I’m trying to find out what the final sale price was.
Hey Cowtown:
Why didn’t you call yourself “Doo-Dah?”
Cowtown,
You’re in Wichita?
I’m still hoping for things to start rolling along in NYC. Would be great to be able to stash more cash every month.
Already has. Rents are down almost 30% on the UWS (= upper west side.)
In my apartment building (about 65 units), two units on my floor vacated over the weekend. This is the second time the unit across from me has vacated in 18 months and for the other unit the second time in 6 months. The U-T had a couple of graphs last week that were interesting. Rents have gone up about 50 percent in the past 5 or 6 years while the vacancy rate has gone up from around 2 percent to 5+ percent. Rents that would’ve have been around $1000 per month in the late 90’s have gone up to around $1600 per month, for example.
Given the increase in the supply in housing and the increasing rental vacancy rates, I’d expect a rather substantial decline in rents, maybe to pre-2000 levels. What I’m less clear about is whether people will have to move from one property to another to get the lower rents, or whether one can get much of the benefit of the declining rents by staying in place and negotiating a lower rent each time the lease comes up.
This should put quite a squeeze on property owners that bought near the peak of the bubble either to keep the properties as rentals or to do condo conversions. I expect one of the challenges for renters will be to find properties that are still adequately maintained in a period of declining rents. This was a big problem when I was living in Norman, Oklahoma in the late 80’s.
You absolutely HAVE to move to get the lower rate. The discounts are steeper because you get to negotiate with different people.
Uncertainty premium.
“You absolutely HAVE to move to get the lower rate.”
That should be good for those selling boxes and renting trucks for local moves. It’s going to take years of churn to get rents back down.
Will there be a point where it will be cheaper or otherwise more advantageous for landlords to offer more substantial rent decreases to existing tenants instead of spending the money and effort to continually turn over units?
We just renewed our lease in Huntington Beach and for the first time in 5 years, the landlady did NOT raise the rent.
Even here in the mad land of Maryland, rents are finally starting to fall or at least flatline. My lease for next year is the same price as my lease for this year - yeah!
Of course, I could go house-shopping from the wonderful array of disgustingly overprices houses that fill this state like wind-blown trash in a gutter, but why bother? People paying $300,000 to $400,000 for “starter townhouses” = a housing market in bad need of a correction!
All of this is contingent on throwing all the second mortgage holders under the bus.
Sorta like the GM and Chrysler bondholders. And we know how well that process is going.
Home Vacancies Rise in U.S. to Record Amid Recession (Update2)
April 27 (Bloomberg) — A record 19.1 million homes stood unoccupied in the first quarter and the U.S. homeownership rate fell as the recession sapped demand for real estate.
The number of vacant homes, including foreclosures, properties for sale and vacation properties, jumped from 18.6 million a year earlier, the U.S. Census Bureau said in a report today. Households that own their own residence declined for the third straight quarter to 67.3 percent.
The U.S. financial crisis and falling home prices have shattered the confidence of homebuyers. The percentage of people who said they plan to buy a home in the next six months dropped to a 26-year low in March, according to the Conference Board in New York. Job losses will continue to erode real estate demand, according to an April 23 report by Mark Fleming, chief economist for First American CoreLogic Inc. in Santa Ana, California.
“We expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices,” Fleming said in the report. “Decreases are now being driven by rising unemployment and a high volume of distressed home sales.”
The percentage of all U.S. homes empty and for sale, known as the vacancy rate, fell to 2.7 percent in the first quarter. It hit an all-time high of 2.9 percent in the first and fourth quarters of 2008, the Census Bureau said.
Giving Up
The vacancy rate fell as the number of homes on the market declined because they were sold or because their owners gave up trying to market them. The inventory of homes on the market averaged 3.7 million in each of 2009’s first three months, according to data from the National Association of Realtors. Last year, the monthly average was 4.2 million.
There were 130.4 million homes in the U.S. in the first quarter, the Census Bureau said. In addition to the 2.1 million empty properties for sale, the report counted 4.2 million vacant homes for rent and 4.9 million seasonal properties that are only used for part of the year.
Foreclosures are included in a part of the Census Bureau that also includes vacation homes intended for year-round use and homes that are unoccupied because they are under renovation. There were 7.9 million such properties empty in the first quarter, up from 7.5 million a year earlier, the report said.
Foreclosures could also be counted as vacant homes for sale or rent, or as owner-occupied properties if lenders have not yet evicted previous owners, the agency said.
This video shows incomplete new homes being torn down.
http://www.youtube.com/watch?v=qvrc7×3Amps
OK todays thought:
What would you do with all the vacant houses?
Change zoning laws so you can have a rooming house or make a MIL apartment?
Give Immigrants a green card if they BUY with 25% down in those zombie developments only?
“What would you do with all the vacant houses?”
This is a shovel-ready project. Got bulldozers?
Buy one for a dollar and just burn it for the hell of it?
That’s what I was thinking.
As I have suggested before, find an isolated development out in the Mojave somewhere, surround it with razor wire, guard towers, searchlights and minefields, and turn it into a prison for (hopefully) all the fraudster/crooks from the IBs, Mortgage business, etc,etc.
I nominate Snake Pliskin to be the Warden.
“Escape from Barstow/Victorville”
Brain: Swear to God Snake, I thought you were dead…
Snake Plissken: Yeah, you and everybody else!
Rooming houses would overwhelm the infrastructure of most new housing developments I have seen. The houses are put soo close together you could only park one car out front.
Whoh, a silver lining to those postage-stamp front lawns. And no room to drive the Ford F250 to the back lawn.
Film action-movie scenes with whole neighborhoods blowing up.
Toothpicks.
But doubling (or tripling or whatnot) up in existing housing just means a GREATER oversupply.
“A record 19.1 million homes stood unoccupied in the first quarter and the U.S. homeownership rate fell as the recession sapped demand for real estate.”
What’s wrong with this picture?
National Public Radio
People & Places
More Families Find Themselves Homeless Amid Economy
Tell Me More, April 27, 2009 · Families are the nation’s fastest growing segment of the homeless population, according to the National Coalition for the Homeless. And with the economic crisis, particularly the rising rate of foreclosures and unemployment, it’s a trend that might continue. Annice and Edwin Greene, a married couple with children, live in a Virginia homeless shelter. They explain the difficulty of raising a family in a shelter and their plans to get back on their feet.
Good question. Will suburban localities allow the market and non-profits to recycle those homes?
No one talked about the “homeless” in the 1950s and 1960s. The reason is that the suburbs were exploding, leaving the cities and their older housing stock cheap and available.
For example, as the old hotels near Penn Station in New York became abandoned by normal travelers, poor and disabled people living off a few nickels of public assistance were able to rent individual rooms for nothing and cook off hot plates. There were similar niches all over the country.
“Trailers, for sale or rent, rooms to let 50 cents. No phone no pool no pets.” An “8X10 four bit room” could be had for “two hours of pushing broom” in much of pre-WWII America.
Now move beyond all the vacant homes to all the vacant rooms, given the six bedrooms and five bathroom homes built in the middle of nowhere.
Five years from now, this may be the only problem we DON’T have.
It’s like the situation with “private vacation rentals” that I mentioned the other day. Everything has been turned into a commodity. The common sense thing would be, why not rent out private rooms, so travelers who don’t care about huge hotel lobbies with humungous flower arrangements, seven pillows per bed and air that has been subtly perfumed with “Marriott” or “Hilton” scent (this is being done, for real) can still show their kids the sights. Complicated and subtle systems are in place (incl. of the marketing, i.e. brainwashing kind) to shape perception of reality, which people then take “as” reality. But G0d forbid to approach things with simple common sense.
Many people dream of opening up a small bed & breakfast. Most find out its a hella lot of work.
“Will suburban localities allow the market and non-profits to recycle those homes?”
The problem, which I largely ascribe to the folly of myriad government-provided housing subsidies, including the $500K capital gains exclusion, zero-downpayment programs, mortgage guarantees, interest rate subsidies, and mortgage interest rate deductions, to name but a few. Coupled with the strong fundamental effect of baby boom demographics, US home price appreciation was generally on steroids pretty much for the entire period from 1945-2005.
So long as home price appreciation was guaranteed, it made perfectly good sense to follow the UHS mantra of stretching one’s budget to “buy the biggest home you can ‘afford’”, as the incipient appreciation in market value would pay for the large share of the homes’ market value which the buyer’s income was unable to fund. Now that home price appreciation is stuck in reverse, the logic of supersizing one’s domicile no longer computes.
Not making a political statement, but didn’t the Reagan administration close down a large number of publicly-funded insane asylums (a la Cuckoo’s Nest)? The residents were forced out onto the street creating an instant and very unstable homeless population?
Thousands (that right, thousands) of mental hospitals both in- and outpatient were closed across the country in the 80s.
Most patients were forced not only on the street, but straight to jail because they could not cope with the manic pace of everyday life.
Where I live, a handful of mentally ill people are killed every year by the police.
“..that’s…”
Sheesh.
“No one talked about the “homeless” in the 1950s and 1960s…”
The majority of homeless have serious mental problems and/or substance abuse problems. In the 1950s and at least the early ’60s, those with serious mental problems were still housed in state hospitals, and drug abuse had not yet exploded. That’s why no one talked about it. It was a very small problem.
BTW, it was a court ruling that said you can’t keep mentally ill in a mental hospital unless you can prove they are an immediate threat to themselves or to others.
I went to “The Soloist” the other night. It’s based on a true story. LA journalist Steve Lopez (Morton Downey Jr) wrote a series of columns and then a book about his friendship with Nathaniel Ayers (Jamie Foxx), a music prodigy who became homeless due to mental illness.
In an All Things Considered interview, the director talks about his choice to use real homeless mentally ill people in the film:
“…the director went back to the studio and told executives that they had to figure out how to include about 500 Skid Row residents in the film…”
http://www.npr.org/templates/story/story.php?storyId=103124834
Fresh Air has recently replayed a 2008 interview with Steve Lopez.
It’s a pretty good film, despite a couple of rather derivative artsy-fartsy elements.
I saw the trailer for this movie, Based on your review, I’d like to see the film as well. I can look past the derivative artsy-fartsy stuff because I used to be an artsy-fartsist.
Is Steve Lopez the guy from Cali who did a column at the Philly Inquirer for a few years?
He was at the Inquirer for 12 years before moving to LA. I’ll post a link to a 2008 Inquirer interview with him.
Here’s the PI link:
http://www.phillymag.com/articles/exit_interview_steve_lopez/
As a former artsy-fartsist, let me know what you think about the film. Most of the reviewers liked one of the artsy-fartsy elements and objected to another, while my reaction was opposite.
The use of the real homeless people made for quite interesting scenes.
Frontline on PBS tonight had a good documentary - The Released - on the chronic mentally ill revolving in and out of prison and jail, with limited community facilities available and the limitation of services offered by state psychiatric hospitals in recent decades.
http://www.pbs.org/wgbh/pages/frontline/
man I stayed in a few of those places back in the day. SF and Hollywood, and I looked at a lot more when looking for rentals. Yeah, they were older hotels or apt buildings downtown, go down the hall to use the bathroom. Cook on a hotplate. Murphy bed. And the smells. Ohhh, the smells…I didn’t drink in those days so I really noticed things.
Dumb question of the day:
Why would anyone in their right mind buy a home now if they knew they could get one for a lot cheaper next year?
“We expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices,” Fleming said in the report. “Decreases are now being driven by rising unemployment and a high volume of distressed home sales.”
Because most people are not “In their right mind”?
Also, most people don’t understand the effect of leverage. If you put down 20% and prices drop an additional 20%, you’ve had a 100% loss! Most people don’t/can’t do the math to realize that the leverage involved with buying a home multiplies the effect of price changes (up and down).
Having a 300K purchase that’s 80-100% leveraged move against you by 20%+ is simply NOT something that the middle class of this country can withstand. The banks want them to think that they can take the loss; but, in fact, losing that much money, for most people, will change their financial outlook for the rest of their lives.
Michael:
That is very succinctly put.
It should be copied and pasted as a public service and launched into the internet ether as a community service.
Well done.
Surgeon General’s Warning:
Purchasing a home with a high degree of leverage can be dangerous to your household’s financial health.
Interesting thought… And really not a bad idea at all!
Except since the subject is financial rather than physical health, shouldn’t it be mandated by the Secretary of the Treasury?
It’s hard to see Geithner coming through on that one…
I would say that the stats released last week showing a decline in Americans moving shows more people are aware or at least subconsciously aware of whats going on.
I thought Americans moved for jobs — upwardly mobile. No jobs to promote into, hence no moving. Even if housing was stable.
You will begin to see how the housing boom masked the real decline in J6P’s wages and opportunities.
Americans have always moved for jobs but it hasn’t always been “upwardly mobile”.
I have a co-worker whose husband is unemployed. He is a master electrician in his mid-50’s. 10 years ago he was making 75K/year running a crew of electricians for the company that handles facilities for Kennedy Space Center.
When a new low-bidder company came in he was canned. So he “started-over” with a development company making $55K running crews for housing projects (that was in 2004). In 2006, he was let go for lack of work. He was out of work for a year when he finally got a job stringing wire for $12.00/hour part-time.
Right now there’s no work at all. He is screwed and he knows it.
It is all part of the US propaganda promoting consumerism and the ingrained socioeconomic egoism of living as well as, if not better than the Joneses.
Newsflash: The All American Jones family just went bankrupt and quietly slipped into the night with a rented U-haul, destination..unknown.
Ben..sorry about using the Jones family name reference, present company is excluded and noted from above sad example and state of American housing affairs.
Hey, just don’t accidentally call him a ‘boob’ and you’ll be okay. I set the bar pretty low for everyone yesterday :/
We’ve all done worse.
Relax already.
“Also, most people don’t understand the effect of leverage.”
Exactly! Put down 20%, and a 23.4% loss (projected at the current rate of decline in the Case-Shiller index) coupled with 6% thrown away to the REIC on transaction costs leaves you with a 109.4% loss on your investment after one year! In other words, you lose your full downpayment, plus an additional 9.4%; talk about throwing money down the drain!
Dang! I miscalculated:
-(23.4+6)/20*100 = -147% — i.e., you lose 100% of your initial investment (aka downpayment) plus an additional 47 percent.
The beauty of leverage becomes very ugly on the downside of a boom…
There’s never been a better time to lose approximately 10% per annum!
Dang! I miscalculated … you lose 100% of your initial investment (aka downpayment) plus an additional 47 percent.
Ah, well. I’ve been told it’s still the opportunity of a lifetime.
And that’s exactly the math that the REIC hopes that you can’t/won’t do. Home prices are expected to fall at least an additional 10%, and yet, somehow, they still cry out that it’s a good time to buy.
Let me make it very simple, unless you’re rich, you cannot afford to buy into falling markets; who can afford to lose that kind of money (except for the rich)?
When prices are falling, it’s not a good time to buy; it’s pretty simple. When the fall far enough, the investors will come in (because they can cash flow the properties) and stabilization will begin (but it will take years for that stabilization to really take hold).
Until then; this isn’t a market for Joe and Sally homeowner; you’ll get CRUSHED by the effect of the leverage. Unless you have a secret desire to see what it feels like to lose 100K+, you need to sit this one out!
I am not advocating making a bad financial decision. How ever when some body is ready to buy they are mature adults and hence should be able to figure out the risks versus rewards. If I am prepared to buy well below my means and should I need to sell a 20% loss on a median house in not that much. I know renters who will throw a down payment on a European vacation. Let’s not say all renters are poor and hence can’t not afford a financial loss. Some renters are very rich and chose to rent.
If we looked at life this way from a conservative (Chicken Little) point of view we will never invest, buy, or start a business among other things in life. A little risk taking is an essential part of life.
“And that’s exactly the math that the REIC hopes that you can’t/won’t do.”
And that’s exactly why I spelled out the math right here for everyone on the planet who passed grade school arithmetic to see. This is not rocket science, folks
“A little risk taking is an essential part of life.”
And dumb risk taking is an essential part of losing your shirt.
RE: Dumb risk taking
My impression is the Fed’s “model” (I put it in quotes because I don’t know whether they ever bothered to formalize this folk wisdom) makes no distinction whatever between stupid risk taking and smart risk taking. All risk taking is good, including the purchase of a house you cannot afford.
So long as there is leverage, money flying around to pay fees, and inflation, the FED is happy with it.
unless you’re rich, you cannot afford to buy into falling markets
The rich don’t get rich by buying into falling markets.
An important point, IMNSHO.
Rich don’t get rich without declining to buy a lot of stuff.
Rich don’t get rich without declining to buy a lot of stuff.
Rich get rich by taking a risk. No risk no reward. If you don’t take a chance you don’t have a chance
Touché.
“Rich get rich by taking a risk. No risk no reward. If you don’t take a chance you don’t have a chance”
Formerly rich people in many cases recently lost their shirts in many cases by taking what obviously appear in retrospect to have been dumb gambles. With no discrimination between sensible and foolish risks, you don’t have a chance, either.
If you still don’t get my drift, then consider walking to the edge of the nearest cliff and jumping off. The ride will be risk-free until you hit the ground below.
Formerly rich people in many cases recently lost their shirts in many cases by taking what obviously appear in retrospect to have been dumb gambles. With no discrimination between sensible and foolish risks, you don’t have a chance, either.
I am advocating a smart calculated risk. You are defending against a dumb ignorant risk. The risk people perceived to be sensible turned out to be foolish. Perhaps we are at the opposite end of the spectrum.
In my professional life I see very smart educated experienced people make really dumb moves. Perhaps they are good at what they do but are not a good judge at calculating a good risk versus a bad risk. How ever the ones who do venture out and take a cautious calculated risk are rewarded. In many cases it changes ones life. I also believe it is much harder to make a living. It is much easier to make money. Most people are risk averse so they settle for making a living.
Btw Professor I always enjoy your comments. I have learned a lot from you. Thank you
SUGUY —
No offense intended; if you read my comments, you know by now that I enjoy stirring the pot. But for the record, I agree with your main point — nothing ventured, nothing gained / no risk, no reward — but I also believe that our top policy makers some how fail to grasp the difference between smart and dumb risk taking. For instance, encouraging households to buy houses at inflated prices in the current environment is akin to twisting arms to commit financial suicide. Vernon Smith recently opined in the WSJ Op-ed pages that households purchasing houses at the onset of the Great Depression was a key factor that made the situation worse, a lesson that was apparently lost on the current generation of economic policy makers.
“Why would anyone in their right mind buy a home now if they knew they could get one for a lot cheaper next year?”
Or a lot cheaper the year after. The reset chart peaks in the summer of 2011.
combo.
You are assuming they actually “pay” for it.
Oh, but haven’t you heard? The consumer confidence index jumped more than 10 points this month! Everyone knows the recession is over and good times will be at hand soon! /sarcasm off
That bump was so predictable, it wasn’t even funny. Spring 2009 is a watershed - either things snap back - or we sail deeper into uncharted waters.
The summer will be very interesting.
And if we do “snap back” it will only be the last bit of sunshine before the storm clouds roll over the land for a long, long time.
A nation in debt over its head on every level that produces nothing except more debt and toxic financial products cannot just keep spending away, pretending that everything is fine. Even if the delusions continue, they are just that - delusions.
As long as China is willing to buy our debt in exchange for their manufactured products, I don’t see why it has to end. In fact, if I were China and wanted to destroy the United States economy, I would continue to do it for as long as possible.
Thank God the Chinese like us a lot.
Long lines at Wal Mart: China’s umbilical cord.
For the second time today I am reminded of my paranoid fantasy - that the agricultural Midwest will be converted to enormous pig farms to provide pork to China, which won’t have to be any more concerned about the pollution than the US shopper for cheap goods has been about pollution in China.
PB, Michael Fink and combo
You’re all missing the point.
“Why would anyone in their right mind buy a home now if they knew they could get one for a lot cheaper next year?”
If it’s a free option, I would.
“Also, most people don’t understand the effect of leverage.”
Actually, Michael, most people I know understand perfectly this concept of leverage.”
In fact they understood it better than me.
They bought in 04/05 with 100% and even 104% financing.
I did not.
I’ve paid cash.
It was I who was the fool.
(I did not lose money)
My point was this housing decline thingy won’t be ending next year.
So, let me get this straight.
In real terms, I agree: in inflation adjusted dollars housing prices will continue to go down for many years.
We got that out of the way.
Now, if someone gets infinite leverage (a free option to buy)
and there’s even the remotest chance of inflation, would we not agree that buying makes sense? (moral considerations not withstanding)
That is why in 2005 it was not gambling to buy with no money down in a nonrecourse state because there was no downside if housing tanked (albeit poor credit), but a lot of upside if it went up. I would be surprised if they are still making no money down loans in nonrecourse states. I think in most areas you have to but a sizable down payment down. Thus, you are both correct.
I donno…there’s still lots of stupid lending going on here in Cleveland. One of my wife’s friends just got approved for a $150k loan on a monthly income of $1250.
Ugh.. How on earth can you even pay a 150K loan on 1250/mo? The carrying costs are typically 1% of home value (I’m assuming this is a no money down loan), so 150K home would imply a monthly carrying costs of ~1500/mo.
That’s a truly insane loan, 1250/mo should not consider homes priced >50K.
And there are those of us who worked hard, paid extra on their mortgages, paid cc off each month, own their cars and have good jobs and credit ratings. So now in a rough economy my business is hurting but I am holding my own. I tried to combine and refi two small loans but Wells Fargo Bank denied me a refinance. 1/2 of a debt they ALREADY carry but at 9.5%! It took 3 months of me bringing them forms. Two of my employees lost their jobs yesterday. Playing by the rules DOES NOT PAY. I am going to intentionally default on the one loan that Wells Fargo holds. It is under my company name and is unsecured.
I have had it!
Wells Fargo has been the most customer “unfriendly” bank I have ever known! It’s astonishing in a morbid sort of way.
Short sightedness to the Nth degree.
Honestly? I think that people have an unreasonable dread of moving. Confronting all your stuff is a big deal for most people, and if you are already occupying a house, it must be overwhelming. Even if you assume that people will not make any hard decisions about stuff (furniture, hobby supplies, clothes and shoes, etc.), just confronting your paper records is a big deal. I am much better than most and it gets away from me on a regular basis (guess what I did for a large chunck of last weekend).
And most people do have to confront the stuff because they can’t afford to move it all. It costs and you have to be able to pay for the move. Heck, you even need cash for the tip. And getting help from friends is worse. People keep up a veneer of some kind in front of friends, even very close friends. Think about the people who have all this stuff and are even a little embarrassed by it and then think of how it would feel for them to expose their crud to all their friends to get help moving. So you are dealing with eliminating a huge amount of stuff too.
Heck, the whole process seems overwhelming to me and I’m in a two room apartment - admittedly a two room apartment with 15 filled bookcases, but still.
We hope to move in about 2 years. I am going through our stuff now. Everything possible is going now. I told my husband that we can even dump my parents’ bedroom set(60 yearsold and solid wood) if necessary. That surprised
him. Important papers and photos go on flashdrives, at leasttwo copies. Books- only absolute favorites and needed reference material.
It’s made an incredible difference in our budget as well as the time it takes to do house work.
“Important papers and photos go on flashdrives…”
You may as well just throw them away. In 10 years it will be as if you stored them on 8-inch floppies.
“You may as well just throw them away. In 10 years it will be as if you stored them on 8-inch floppies.”
Yes, but if you remember to upgrade the technology every few years you’ll be fine. You don’t think anyone out there moved stuff from an 8-inch floppy to a CD to a DVD to a flashdrive to an online backup site? Heck, I’ve done that with some of my old schoolwork.
Now the problem is remembering to update the stuff…
Call me Old school….but even as a DJ i wouldn’t trust a computer at someone wedding….i make MP3 cd’s with 100+ songs on each and a copy to play back to back….
You still need the originals of your birth certificate SS card high school college diplomas transcripts, legal papers…Title to the car etc marriage/divorce papers….but then Back it up on a cd or dvd flash drive…heck keep old apartment leases you never know 5 years down the road the low life landlord sued you after you moved out of state, and you have a bill collector callingr you
—————
Important papers and photos go on flashdrives…“You may as well just throw them away. In 10 years it will be as if you stored them on 8-inch floppies.
Don’t bother donating books to your local school district, especially middle and high schools.
They don’t read books that aren’t directly related to the “No School Left Behind” curriculum.
Melville, Steinbeck, Hemingway, Richard Wright, Kafka (or even Keegan, B.H. Liddell-Hart, Clauswitz or Shirer) ……….who needs to read those old losers?
I’m sounding more and more like the “I can remember when that wasn’t there” guy.
I once tried to enroll in a state history course at the U of Florida evening school.
Twasn’t offered.
Now, if I wanted The Post-Revolution Impact of Cuba in American Thought, or 19th Century Legacy of Women in the Canning Industry, or, Early Leaders of the Abortion Right’s Movement, they were ready to swipe my credit card.
There was a fine used bookstore in nearby Micanopy, where students and profs got better trade-in values. I went there instead.
Just wanted a regular survey history course.
I dunno, last time I moved I spent a 3 day weekend packing and paid movers $2000 to load, drive and unload, followed by another 3 day weekend of unpacking.
This was for a 4 bedroom 3000 sq ft house.
I wouldn’t say moving is fun, but it’s not the nightmare most make it out to be either. And the added benefit is you get to throw out a lot of junk.
I just moved from a 2BR apt to a house. I had about 8 filled bookcases and desk, a bunch of computer equipment, some mountain bikes, some camping equipment and a lot of kitchen equipment (cooking has been a hobby since childhood). Other than that not much else…
I was able to fill a 3BR house that was twice as big as the apartment very easily, but I love having the space and now have a dog, a garden, washer/dryer and can work on my bicycles. The main thing I have gotten rid of is old clothes and papers.
I hate moving. But it does help winnow the wheat from the chaff.
Why would anyone in their right mind buy a home now if they knew they could get one for a lot cheaper next year?
Relentless propaganda probably has a big role. The UHS cabal and main stream media. Today’s example of spin:
NY Times
April 29, 2009
U.S. Home Prices Continued to Decline in February
By JACK HEALY
It was the thinnest of silver linings for America’s housing market: The stark decline in home prices leveled off a bit in February, according to data released Tuesday.
Housing prices are still falling across the United States, but for at least a month, the downward trend did not pick up speed, according to the Standard & Poor’s Case-Shiller Home Price Index. In February, the price of single family homes in 20 major metropolitan areas fell 18.6 percent from the year earlier, compared with a record drop of 19 percent in January.
——
This sort of thing really annoys me. The reader is meant to assume that prices have leveled off, when really it is only that the rate of change in prices might be leveling off (still got slightly steeper, from 18.6 to 19 percent).
HaHaHaHaaaaaaa! They are bulldozing a few houses in a failed CA subdivision on youtube. Nice! Hopefully the link goes through.
http://www.youtube.com/watch?v=qvrc7×3Amps
Personally, I find this VERY refreshing! Stop the problem before it starts. At least we don’t have an FB in the mix adding to the financial woes/victims.
This-is-containment! Right where it belongs, between builders and their risk-love-con-men lenders. Good riddance and keep that diesel humming! Step aside boys, we’ve got homes to plow under!
Why? Someone could have bought it for pennies, finished it, and had a place to live at a reasonable price?
I agree, it seems very wasteful.
“Why? Someone could have bought it for pennies, finished it, and had a place to live at a reasonable price?”
And that is what they will prevent, no matter the cost.
“a place to live”
WHERE!? In the middle of an un-commutable freaking desert? You ‘did’ watch the video, right? There’s plenty of vacant homes, and I agree, we need to find their highest utility, even if it means “giving them away” to homeless people.
Pulling the windows and copper wire out of these things is something we here have long predicted. We’ll have our hands full keeping “growers” and squatters out of the completed abandoned homes as it is. Why make more?
“They are literally destroying model homes here in Ca because they can’t sell them and they don’t know what to do.”
They know what to do (lower the price). They just don’t want to do it. They’re basically suggesting that these homes are worthless, but they won’t give them away (literally) So what’s next? They still own the property don’t they?
They don’t want to lower the comps, either for their future selves or for their buddies.
It wouldn’t surprise me if they removed the fixtures and copper from the house, tear down the drywall, and then claim the inflated price (including the now non-existing copper and fixtures) as a tax write-off. They might not be losing any money at all.
Beware the Mainstream Media’s Skewed Agenda… Columnists or Salesmen?
Catchy headlines touting perceived “cheap” real estate in desirable locations…
It’s what I’d expect from Craigslist postings from real estate brokers and desparate home owners in need of a sucker… err buyer to unload their overpriced shoebox on.
My main issue with these types of articles from the mainstream media is that they are more akin to advertisements than true journalism. Unfortunately a lot of the general public has developed a trust for “certified” newspaper writers when in reality, these people seem to always have a hidden or not so hidden agenda for their pieces.
http://tinyurl.com/csr75c
The capital well is running dry and some economies will wither.
The world is running out of capital.
We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere.
By Ambrose Evans-Pritchard
Last Updated: 8:49AM BST 26 Apr 2009
Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.
Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.
Commerzbank said every European bond auction is turning into an “event risk”. Britain too finds itself some way down the AAA pecking order as it tries to sell £220bn of Gilts this year to irascible investors, astonished by 5pc deficits into the middle of the next decade.
US hedge fund Hayman Advisers is betting on the biggest wave of state bankruptcies and restructurings since 1934. The worst profiles are almost all in Europe – the epicentre of leverage, and denial. As the IMF said last week, Europe’s banks have written down 17pc of their losses – American banks have swallowed half.
“We have spent a good part of six months combing through the world’s sovereign balance sheets to understand how much leverage we are dealing with. The results are shocking,” said Hayman’s Kyle Bass.
It looked easy for Western governments during the credit bubble, when China, Russia, emerging Asia, and petro-powers were accumulating $1.3 trillion a year in reserves, recycling this wealth back into US Treasuries and agency debt, or European bonds.
The tap has been turned off. These countries have become net sellers. Central bank holdings have fallen by $248bn to $6.7 trillion over the last six months. The oil crash has forced both Russia and Venezuela to slash reserves by a third. China let slip last week that it would use more of its $40bn monthly surplus to shore up growth at home and invest in harder assets – perhaps mining companies.
The National Institute for Economic and Social Research (NIESR) said last week that since UK debt topped 200pc of GDP after the Second World War, we can comfortably manage the debt-load in this debacle (80pc to 100pc). Variants of this argument are often made for the rest of the OECD club.
But our world is nothing like the late 1940s, when large families were rearing the workforce that would master the debt. Today we face demographic retreat. West and East are both tipping into old-aged atrophy (though the US is in best shape, nota bene).
“Today we face demographic retreat. West and East are both tipping into old-aged atrophy (though the US is in best shape, nota bene).”
And overpopulation is wrecking the environment to boot.
I look at what the U.S. has done, and I wonder “where else in the world should I put my savings.” I look at the rest of the world and conclude “nowhere.”
“Today we face demographic retreat. West and East are both tipping into old-aged atrophy”.
Ireland will be interesting because they have a very young population.
Ireland’s population is also made up of a huge percentage (10%+) of immigrants.
Kyle Bass ( like a lot of good folks here ) was being soundly laughed at, that is until his positions in CDS started paying off in spades.
I imagine like us, he looked at many of these nation’s debt as a percentage of GDP, gasped, puked and braced for the worst.
In several previous generations, the young Irish population, faced with dismal prospects at home, flooded the US, Canada, and Australia in search of more opportunity.
Ireland’s population outflow reversed during the real estate boom years — will it reverse yet again? Youth alone is not enough to save a nation-state.
“overpopulation is wrecking the environment to boot”
One has nothing to do with the other. Pollution wrecks the environment– temporarily. Some people sometimes pollute and sometimes people clean up pollution and sometimes it goes away on its own. So-called “overpopulation” really has to do with heavy-handed government causing difficult living conditions.
““overpopulation is wrecking the environment to boot”
One has nothing to do with the other.”
I’ve got to disagree. People consume and use energy, both of which pollute. Some are worse than others, but every extra human adds a bit to the mess. I won’t pretend to know the exact carrying capacity of the earth, but she’s got one.
Overpopulation causes scarcity.
Scarcity fuels terrorism.
Terrorism leads to war.
And war causes pollution, wrecking the environment.
Of course that’s not the only way overpopulation wrecks the environment.
Well… a team of nuke scientists ‘could’ decide to rain down warheads on their own planet even if they were it’s -only- ( very bored ) inhabitants?
OTOH, could the earth sustain -double- the occupants if each of us consumed ‘only’ what they produced themselves locally?
Seems to me there’s a balance there somewhere and… I happen to believe extremists would be raising a stink -regardless- as to their access to ample resources? Hence the term “extremists”.
I would argue that government fuels terrorism to justify war to kill populations to increase power.
“Overpopulation causes scarcity.”
Complete and total BS. If you could travel back in time to when there were only 1 million people on the earth, do you think you would be able to get more or less of the goods and services you want?
Have you ever heard of Julian Simon?
“every extra human adds a bit to the mess.”
Don’t some humans make careers out of cleaning up messes, and finding cheaper, more energy-efficient ways to do things?
Human beings are just another animal in the environment. Increasing the number of humans will invariably affect the population of other species in a negative way with the exception of those with a symbiotic relationship (like rats).
Overpopulation is the point where you make a value judgement that your quality of life is lowered as a result of the crowding out of other species.
Many folks could care less about other creatures. Maybe most.
Overcrowding does fuel scarcity, especially when you have a small oligarchy that owns everything because of old contracts and political ties that serve to consolidate their power. [think of water rights]
Overcrowding does not fuel scarcity if there is a redistribution of resources (horror!) or change in consumer preferences that make the resource obsolete, or new technologies that are freely available to all that mitigate the effect of scarce resources. [think of wired communication services]
“Overcrowding does fuel scarcity, especially when you have a small oligarchy that owns everything”
Bingo. It’s the political structure, not the number of people, that causes problems.
LehighValleyGuy:
So you think nothing happened between the time there were 1 million people on earth and now? We have advanced in many ways, but there are limits.
The problem is that we are living on borrowed time. Our ability to provide food to the 6+ billion souls is heavily dependent on oil as feedstock for fertilizer. We have overfished. We have depleted groundwater. You may argue otherwise but we have benefited from fast-melting glaciers.
Yes we can be smarter with agriculture and water use (and some humans can plain eat less). But we need all the improvements in efficiency just to pay for our excesses so far.
So unless you are some kind of religious nut-case who thinks “God will provide”, better appreciate the definite threats of overpopulation.
Futures for the Dow Jones industrial average, the Nasdaq 100 and the S&P 500 share indexes are down 1.3-1.7 percent, pointing to a sharply lower start on Wall Street.
U.S. regulators have told Bank of America Corp and Citigroup Inc they may need to raise more capital following stress testing of the two banks, the Wall Street Journal reported.
The shortfall amounts to billions of dollars at BofA, the paper said on Tuesday, citing people familiar with the bank, adding it is likely the Federal Reserve will have determined other banks might also need more capital.
___
The worm has turned!
___
___
“To whom do lions cast their gentle looks?
Not to the beast that would usurp their den.
The smallest worm will turn being trodden on,
And doves will peck in safeguard of their brood.’”
I guess the downside of being “too big to fail” is that when the government runs you into the ground with forced mergers you can’t sue without losing your lifeline and destroying your company.
Bah. The worm is still lying passed out in its own filth.
Rough night in Mexico with a bottle of Mezcal and a case of the sniffles?
Planes arrive daily direct from Mexico at Fresno International Airport. Arriving passengers tote food, mostly produce, that is disallowed by the USDA because of phytosanitary regulations.
The guavas and melons often have worms, though they get a fancy name: larvae.
Having seen guavas first hand, I can confirm that there is not one without a worm, it is what makes the guava “interesting”…
bink,
LOL! Yep, just ‘another’ thing to regret the morning after. And why is my lucky condom -still- in my wallet?!
Yesterday, the Massachusetts House of Representatives passed bill to increase the state sales tax rate from 5.00% to 6.25%. For those without a calculator handy, that is a 25% increase in the sales tax rate.
Any other states trying the same economic theory of “blood from a stone”, or is it only the blue bloods on Beacon Hill?
I think the only thing keeping PA from similar measure is a big percent of our state’s population lives within a stone’s throw from a sales tax-free state: Delaware.
Massachusetts has the same situation with New Hampshire. Of course, it hasn’t stopped Massachusetts officials from suing firms that have locations in both states. The suit is to collect sales taxes on slaes to Massachsuetts residents that purchase and receive goods in New Hampshire.
An example of past practice is that if you were a MA resident, but purchased an item from a multi-state store in NH and picked up the item in NH there was no tax. But if you purchased, say, a tv in NH but had it delivered to MA AND that store had a MA location, you paid tax. Now MA is insisting on collecting the tax in both cases.
As I recall, you have to pay sales taxes on any items that are taxable in MA, regardless of where they were purchased. There is a line item in the MA income tax return were in theory you have to declare the items purchased out of state, and not paid taxes on. This would include that TV that you bought in NH, and transported to MA.
Just that nobody does it, does not mean that the law is not on the books. I rarely purchase many things anyway, so a sales tax would not impact me in a big way, as much as lets say, a gas tax…
True. Of course, the fact that it is rarely enforced makes the selective enforcement of the law appear even worse.
They’ll start retroactively enforcing it on all big ticket items bought with credit cards. Hell, why not start doing it with everything bought with a credit card out of state?
I believe it is already in the works in order to implement internet sales tax.
Lots of states have these. It is called a “use” tax. New York used to send revenue officers to the Elizabeth, NJ IKEA to take down liscence plate numbers. Since the salse tax in the NJ enterprise zone was only 3%, they expected people to pay the difference between the 3% rate and the 8% rate to New York.
Oops. Whyoung beat me to it. Sorry.
Anyway, if you look at a state tax form and it has a line for “use” tax that is what it is for. The idea is if you use an item in the state and didn’t pay sales tax on it, or paid less sales tax on it than you would have had you bought it in the state where you are using it, you have to pay up.
Enforcement is nearly impossible. Theoretically, you could do it through credit cards, but you would never get the law passed. Not in a million years.
A few years ago NY monitored cars with NYS plates in New Jersey parking lots and sent the owners letters about their obligation to pay tax on their out of state purchases.
http://www.nytimes.com/1993/04/11/nyregion/update-tax-collectors-and-ikea-store-declare-truce-on-advertising.html?n=Top%2FReference%2FTimes%20Topics%2FSubjects%2FA%2FAdvertising%20and%20Marketing
Heinous.
I posted once about a PA woman who was busted by state cops for crossing the border to buy ONE bottle of wine in Delaware.
The way to get around license plate monitoring?
Ride your bike.
How were those NY State letters received by the recipients?
Answer to my question was in the article.
Arkansas state guy (attorney general or head of DFA or something) a few years ago was contemplating how to get sales/use tax on RV’s. It was known that people would buy them and register them in Oregon with a PO Box but lived and used them here.
So he had the idea of going to a Razorback (state college team) football game. Wrote down the Oregon plates and billed the owners.
bluprint,
Back in the mid 90’s there was an Oregonian RV dealer that got busted for that big time! I can see them coming down on anyone that is promoting that, but you can’t stop people from coming here?
I’m sure even if pressed, they’d all say they were moving here F/T.
No, it’s Deval Patrick to the rescue. After all, he has a huge consitutency of victims that have to be taken care of. I’m not saying Patrick is a bad guy, I’m just saying he was an activist attorney who made his bones defending the downtrodden. There is definitely a place for people like that. However, when you’ve got a hammer, everything looks like a nail and he brought his particular hammer to the guvner’s office. Somebody give the man a new set of tools.
Last week our county assessor (Cook county, Chicago) actually suggested cutting the state’s portion of the sales tax from 5% to 3.25%…….BUT……..he wants to extend the sales tax to cover groceries and services.
Right now we have a 10.25% sales tax, but our county president, Urkel, said he’d like to shave .25% off that…for now.
No need for excitement though, just more reasons to cut back on spending, and refocus on the important things - like survival.
At least Massachusetts doesn’t tax food or clothing. Cook County, Illinois does (2.25% tax on food).
Just about everyone I know drives the extra half mile up to Lake County to fill their gas tanks. If Cook County applies any more taxes on groceries, I’ll buy those in Lake County too.
“our county president, Urkel”
I just KNEW he looked familiar, but couldn’t place him until now. Hahahahaha!
“Did “I” do that?”
BUT……..he wants to extend the sales tax to cover groceries and services.
Man, if that happens I think some local businesses will see a significant drop in revenue.
Don’t grocery stores operate on a net margin of something like 5 or 6%? That’s not a business where you want to have your legs cut out from under you, not when Lake Co., DuPage Co., and Indiana are within easy striking distance of anyone with a car. Which brings me to another point — if they raise taxes on groceries and services, it’s poor people who disproportionately take it on the chin.
In Onondaga Cty, NY we pay a total 8% sales tax which is 4% local, 4% state. The state reduced their rate by 1% in 2004 although the local rate was lower at that time.
Taxachusetts lives on. Drive more people out of state.
Alaska has no sales or income tax, and we get a yearly subsidy just for being residents of an oil rich state with a low population. Our property tax mill rate is in the median of the 50 states. We attract more Federal spending per capita than any other state, and it is far more than what we pay in Federal taxes.
Despite that, we have a lot of local Republicans who perpetually threaten “revolts” and “tea parties” because they find any and all taxes unacceptable. Some of the fringe ones want to secede from the USA so they don’t have to pay Federal taxes at all. I think there is a fantasy that money grows on trees and any government is bad, except when they use their political and family ties to secure govt contracts and federal dollars for their friends. Then they are the biggest socialists in the Universe.
So excuse me if I cast a cynical eye towards people who scream about “tax reform”. I need to look closely at who is doing the screaming and what their sacred cows are before I indulge a knee-jerk response about whether or not to support them.
I am just thankful we have a democracy, because otherwise the majority of people in this country would have nothing.
Add Cali to the list. LA county sales tax is now pushing 10%.
“Monkeys spend all their time picking bottoms. I refuse to pick bottoms as I don’t live in trees,” he said.
http://www.cnbc.com/id/30447441
Old saying: Men who pick bottoms have very smelly fingers.
Old saying: Men who pick bottoms have very smelly fingers.
Which should answer your rhetorical question above regarding why people buy houses today knowing they will be cheaper next year…
Have you ever thought about the phrase “high paying manufacturing jobs.” It seems to be taken as a simple truth, that manufacturing jobs should be high paying. But why?
1. They’re hard work. I believe this to be relatively true, but there are lots of jobs that are harder and pay less. And depending on the particular job, some aren’t that hard at all.
2. The jobs require skill. This varies a lot from job to job, but the skill required is not particularly greater than many much lower paying jobs.
3. Unionization. Some would claim that the presence of unions in manufacturing jobs has pushed wages higher for both unionized and non-unionized workers. This makes sense to some extent, but it doesn’t explain the inability of unions to make much headway in the retail sector.
4. Profits + unionization. This is why I believe manufacturing jobs were highly paid. In the early portion of the industrial revolution there were large profits, which the unions forced the owners to share. Barriers to entry kept competition from eroding profit margins. Retailing has never seen profits like manufacturing did; too few barriers to entry, so unions couldn’t force retail owners to share non-existent excess profit.
Of course the rest of the world learned to make stuff, and to do it reasonably well. With increased competition, profits fell and manufacturing companies moved production to lower cost venues. Knowledge based jobs (engineering, tech, finance) are facing similar pressures.
Thoughts?
In NYC we always had LOW PAID manufacturing jobs — garment workers, electrical assemblers, toy makers. The lowest manufacturing wages in the country.
And yet those with a certain political perspective continued for decades to assert “high wage manufacturing jobs” were the solution to everything as a mantra, because manufacturing jobs were high union dues and political contribution jobs if not high wage.
Kind of like “seniors on fixed incomes.”
Let’s just say having the govenment forcibly allocate resources based on things true in some places and not others, or true in the past but not the present, is not a good idea for those not on the receiving end.
2. The jobs require skill. This varies a lot from job to job, but the skill required is not particularly greater than many much lower paying jobs.
If Boeing hired a bunch of Wal*Mart employees, move them to Tacoma and had them building 787s the next day would you really want to fly in those planes?
That’s why I mentioned it varied from job to job. While some manufacturing jobs should have high pay commensurate to skill level, it doesn’t explain why all manufacturing jobs would be highly paid.
It could also be argued that if you took a bunch of retail employees, trained them appropriately (vs starting work the next day) that they could make a quality product.
The place I work for goes begging for qualified staff (manufacturing). The guys who are sent out to the four corners of the globe can rack up the billable hours, get paid travel time and do quite well for themselves.
So do the shop guys. These are all relatively stable guys, most of their wives work, and AFAIK, haven’t gone crazy with cc debt. They are the backbone of the company, which recognizes this fact, and are compensated accordingly.
Not a union shop.
I don’t know what the point of this post is except they may be called high paying manufacturing jobs relative to college degreed jobs. (IOW you can make decent money without going to college.)
Phillygal,
It sounds like your workplace is one of the cases where skills in high demand = high pay. The fact that it is manufacturing is coincidental. Sounds like a good place work too.
The point I’m getting at is that the notion that manufacturing is always highly paid doesn’t make sense (though commonly accepted). If it’s a hard job, pay should go up. If it requires a skill set that is relatively scarce, pay should go up. If anyone can do it, pay will be low.
I wasn’t thinking much about college degrees when I wrote my post, but it’s worth a comment. College degrees just gives you a set of skills (maybe). If there are 1000 business majors applying for 700 jobs, the degree doesn’t mean so much (I’m sure there are lots of financial types out there that understand this one.)
Yes, there are a number of good manufacturing jobs — for skilled machinists or fabricators, for example — that pay well and won’t go away for the foreseeable future. But those jobs don’t really scale up to create a massive manufacturing sector, either.
machinists, that’s who work here.
I didn’t want to give away too much, but you nailed it.
Also Skip said something about retail people putting together an airplane…not too far from reality. BF works at Boeing, (defense). He told me some of the guys coming online to build Chinooks are, well…lacking. So no, I wouldn’t want to board a commercial airliner built by unskilled laborers, and our military personnel shouldn’t have to either.
I believe Henry Ford is the one who set the standard of paying his employees enough to afford to buy one of his cars. This was long before unions.
You might also consider the turnover rate. Retail can run 300%+. I believe that was Ford’s number one concern.
And face it, if I am paid the same amount of money to work in a Barnes & Noble in a temperate building stocking books and helping people, why would I want to work in hot/cold/dangerous/smelly manufacturing plant running an arc welder or putting engines together?
Just to clarify, I’m not suggesting all manufacturing jobs should be paid retail type wages. Some probably should, others certainly not . At the same time, there are retail jobs that should be paid a lot higher wages given the demands of the job. Unfortunately, most retailers don’t have much wiggle room to pay more because profit margins are too tight. I think manufacturing is becoming more like retail; tight margins and thus inability to pay decent wages.
See measton’s first para below. I think maybe he’s hitting on a big picture version of what I started. I’m going to be thinking on that one for awhile.
Arguing over what people *should* be paid is an entitlement attitude. It is like arguing over what the price of gas *should* be. All over the world people are working hard to feed their families. They will do what ever produces the best return for their time and prices are what they are.
When you start using “reason” to “fix” prices then you start to undermining the function of the price system (supply/demand).
The trick to getting “rich” is to have capital and employ it in such a way that it benefits others the most (fulfilling their needs/wants the best) and as a result your wealth will increase.
Good comment, VT Dan.
Also, I think many people talk about what they “should” be paid in a relative manner - ie compared to management, owners, etc. Most people aren’t willing to work to fix an apparent inequity, though - if they really are worth more, either they can find a job elsewhere, or need to strike/quit/etc to pressure their employer. Instead, they simply rationalize what they deserve rather than take that risk to “prove” it.
VTD,
When I say should, I’m talking more in terms of supply and demand. A particularly crappy job would tend to attract less people to work it. Maybe this doesn’t apply so well in a global workforce.
Al,
Exactly, and unlike X-GSfixer, they really don’t have to understand the entire “system” to install a gyro or a compass or buck rivets?
Even at that, the mil. has taken country boys and taught them everything they need to know in about 3 months. Kids that have never worked on anything more complex than a combine. And how many of those Walmart greeters -used- to work at Boeing?
The problem in my business (and a lot of others) is that a lot of the operators look at the maintenance end of fixing their airplanes as “overhead”. That is, until something happens, and they find out what crappy maintenance and/or procedures REALLY costs……if they are lucky, nobody is killed or hurt in the process.
Google “NASCAR NTSB” for a recent example.
Even something like incomplete/screwed up maintenance logs can make a half million dollar difference in the resale price of one of these airplane.
This is what really pi$$es me off about working in this field. Nobody wants to spend the time/money to do things right, but EVERYBODY has double the money to fix the problems after the fact. Then they bitch about that, too.
You’ve just described our entire society.
An ounce of prevention is worth a pound of cure… unless you deal with idiots.
Three months is a lot of training.
Three months more than I was ever given when I worked retail.
..or anywhere else that I’ve ever worked.
“If Boeing hired a bunch of Wal*Mart employees, move them to Tacoma and had them building 787s the next day would you really want to fly in those planes?”
They give them a month’s training…otherwise, there’s little difference. It’s a command and control company…they don’t like employees that can think for themselves. But then, neither can the management.
Thoughts
Yep, globilization in a world of limited natural resources and demand leads to a race to the bottom for every job except for those who control said resources money and markets.
I’d say it is just assumed that wallstreet and CEO’s should make 400-1000x the average worker. When 30 years ago the ratio was under 50 and it is much lower in Japan. We should also note that it is just assumed that the elite should pay lower effective tax rates then said manufacturers.
CEOs and other higher managment. Big need for a reality check in that class.
Theory: These people make big decisions and require considerable skill to make those decisions. There is a lot of risk, as bad decisions could end a career and destroy a company. Pay should be commensurate.
Actual: These people make big decisions, but often enough seem to have little skill in making them. There isn’t much risk, as bad decisions get covered up, paid for by shareholders or in the case of really bad decisions, paid for by the tax payer. Pay is through the roof because it’s determined by a bunch of your buddies, for whom you have a say in their pay.
It’s not that we are paying too much for brilliant CEOs.
Like soccer moms think of their kids, all CEOs think that they are all “above average”. The reality is that maybe one in a hundred make that grade.
We are paying too much for self-serving/mediocre/stupid- on-it’s-face decision making.
Exactly… unless you own capital your labor is competing against an increasing population and automation. The elite already own the whole world.
Property Tax = Ownership of your Land
Income Tax = Ownership of your Labor
Sales Tax = Ownership of your Products
Personal Property Tax = Ownership of Personal Property (Capital Equipment)
Inflation = Ownership of Your Money
Regulation = Ownership of Your Life
Truancy Laws = Ownership of Your Kids
In such an environment you cannot “get ahead” without earning their “favor” which can be removed if you ever “get out of line”.
Underground economy is the way to go. You can earn 50% your current income and have a better standard of living.
Much of marketing, branding, product strategy, design and manufacturing prototype are done in US - and that is where our sweet/competitive spot is. Once the product and process become turnkey however, off it goes to other lands for routine production whenever there is an off shore advantage, which is most of the time. What do people want? Keep Mfg in US but have no sales, either because the price or order to ship time is not competitive with other global suppliers of that product?
Many companies are getting out of the mfg biz all together. They buy their Finished Goods from the suppliers/manufacturers closest to customer to minimize costs and order to ship time. Edge then becomes who has the best business relationships, flexibility, distribution networks, and the best, fastest, cheapest supply chain/demand models and systems. Interesting times.
The train left the station long ago for those still crying in their beer over lost US manufacturing jobs. Lots of good paying jobs here though, and no other country has as diverse and strong industrial sector as US - even taking away the 20% GDP that WAS dedicated to R/E, Credit Card, and supporting Finance industry.
“Much of marketing, branding, product strategy, design and manufacturing prototype are done in US”
Not true about design and manufacturing prototypes anymore. Thought the U.S. still has a few really great design shops. Tons of design and especially manufacturing prototypes a very quickly moving to Chindia. Design is expensive and Chinese are cheap. A lot of companies don’t have the manufacturing skill anymore to even prototype here.
Design requiring source creativity is still here.
Many companies are getting out of the mfg biz all together. They buy their Finished Goods from the suppliers/manufacturers closest to customer to minimize costs and order to ship time. Edge then becomes who has the best business relationships, flexibility, distribution networks, and the best, fastest, cheapest supply chain/demand models and systems.
Ask yourself how a company like Philips Lighting can be profitable while manufacturing in the US and Europe, among other locations? The answer is automation, technology, and productivity… I worked for a manufacturer that was acquired by Philips. Prior to the acquisition, they were profitable every year since about 1914, with the exception of 2001 (due to 9/11). They maintained production facilities in Canada, the US, and Mexico.
How did they compete? They squeezed suppliers relentlessly and had a “cost-control” mindset. They invested heavily in automation and technology to improve productivity, from better ERP systems to automated assembly/finish lines. Their engineers actually innovated both in product design and improved production processes and techniques. They also didn’t compete solely on price, and in fact were often the more expensive product. In this case, the quality or perceived quality gap between the low-cost provider and high-cost provider was quite high. The marketing and sales divisions frequently took advantage of that fact to win deals and grow business. Competing on price alone is insane… you have to compete on value. Those that do so effectively will continue to be profitable regardless of where they manufacture.
Here’s an interesting article I just finished reading about U.S. manufacturing:
Overseas manufacturers losing price advantage
About 18 months ago, a plastics factory in Santa Rosa started getting inquiries from small U.S. companies looking to bring some manufacturing back from China.
The inquiries to Wright Engineered Plastics started amid soaring oil prices. Even after oil went down, the interest continued as raw plastic became more expensive in China while the local firm’s material costs dropped, helping offset the advantage of lower overseas labor.
http://tinyurl.com/cxllz3
Re unionizing retail: I believe this cannot happen because retail is the most commoditized of commodity jobs. The market participants, as it were, are highly fragmented and can be made more so by punitive reconfiguration of hours. Both information and hours asymmetry are in the hands of management.
So. Is there a union drive suspected? No problem. Identify the participants - easy to do, as commoditized employees will sell out their fellows for an unhampered 15 minute break - and reconfigure their hours. State law requires an eight hour break between shifts? No problem. Your new hours for this week are 6 am, 7 pm, 8 am, 9 pm, 10 am and 11 pm. By the way, you work five hours per shift, so no benefits.
That’s why retail is not unionized. It is too easy to impose punitive measures that further fragment the workforce.
I worked at Home Depot a long time ago. I got a new manager that didn’t like me. She started scheduling me 10am-4pm a day 7 days a week to get rid of me.
While highly educated and skilled individuals should always earn more than their counterparts, too little attention is paid to the one thing that every working individual sacrifices on an equal basis; their time. When we, as a society, fail to place sufficient value on this most important sacrifice, it is an insult and a disservice to the entire human race.
At some point we have to recognize not that every person is “college material”. Indeed, some folks are just plain stupid. Genetics. Sucks.
So is it okay to leave these folks in misery?
No, let’s give them foodstamps and medical so they can have 8 babies that in turn will be unable to provide for offspring they produce.
Idiocracy.
Bottom line:
Our economy is 75% retail driven. You can argue about pay all day long, but if our citizens, er, consumers can’t afford to purchase, we’re dead meat.
J6P makes this economy turn, not the Master(bator)s of the Universe.
But what the hey, “Let them eat cake” is a lesson the PTB never seem to remember.
I have no problem with smart (as in intelligent, thoughtful, well rounded and long sighted) people becoming wealthy, but that isn’t the way the world really works. Greedy, aggressive, short sighted morons are the norm. Almost sociopathic. And that’s being nice.
You’re pretty much right on, except it was partly that the rest of the world’s manufacturing capacity was decimated in world war II (Germany, England, Japan and Russia all had massive bombing and fighting) so the US factories earned monopoly rents which resulted in high profits and union required high pay while the other nations rebuilt.
Germany has far higher unionization levels and pay in the manufacturing sector relative to the U.S. and have done a fine job of maintaining their manufacturing ability.
I think what has really damaged the U.S. is the parochial nature of American management and the highly adversarial relationship between labor and management in the U.S.
You forgot to add, that the bombed countries were forced to become more modern. The U.S. in some areas did not. Hence the loss to other countries.
Yah…
Since capital gains taxes have dropped down to zero, it would be better to lay off all of our police officers, close down our schools, and let our kids get their education from Twitter and My Space.
From Muggy
http://www.newsday.com/news/local/ny-liteac1812665687apr18,0,2413215.story
“One of those teachers, who has taught science in Central Islip since 1967… In addition to his teaching salary last year of $146,587, he also received $55,455 in stipends for coaching three swim teams and supervising a summer Learn to Swim Program.”
Could always look at how the money is being spent. Naaaah
Better raise taxes
Wonder if that is true of every teacher in every district in the country?
Everyone forgets that a teacher’s salary is based on a 9 month school year. True, some teach summer school, but they don’t do that for free.
Back when I was in school, about every teacher had a pretty decent part time gig (house painting, landscaping, golf pro, etc.) going during the summer. Never had to advertise, a lot of people looked at it as sort of a civic duty to hire them.
“Wonder if that is true of every teacher in every district in the country?”
146K is way, way over the national average. The New York teachers union is out of control.
I WANTED to work 80 hours a week so my pension would be based on my last 2 years earnings
But this DANG HEART SURGERY got in the way….and don’t forget little taxpayers
YOU are paying for this TOO!!! BWAHAHAHA!!!!!!
————————————————————–
“The thing that they don’t fully understand is that I was involved in so many activities,” he said. He has been out of the classroom since February recovering from heart surgery, but hopes to return in June to finish the school year before retiring.
Alternatively, eliminate redundant programs, freeze salaries, etc. Think of it this way: the population in Massachusetts has been roughly stagnant since 2000. Yet during the boom, the Massachusetts expenditures grew at the same rate as the growth in revenue.
Why did the budget grow during that period? Becuase the tax money was available.
With the swine flu heading our way, that may become a reality faster than you realize.
Paulson’s ‘Gift’ to Lewis Delivered at Gunpoint: Caroline Baum
Commentary by Caroline Baum
April 27 (Bloomberg) — Oil and water don’t mix. Neither do business and politics, a truism becoming increasingly obvious with each new government initiative, or the exposure of fissures in the old ones, to save the financial system.
The latest example of what happens when the business of government is business was last week’s release of testimony from Bank of America Chief Executive Officer Kenneth Lewis to New York Attorney General Andrew Cuomo. In it, Lewis says he was strong-armed by former Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke to seal the deal to buy Merrill Lynch without telling his shareholders about the brokerage’s mounting fourth-quarter losses, which came to $15.4 billion.
According to the letter Cuomo sent to Congress and regulators, Lewis wanted to invoke the “material adverse event” clause to back out of the merger, but the bazooka-toting Paulson told him to stay mum and threatened to give him and his board the boot.
Paulson said via a statement that while the words were his, the sentiment was “what he knew to be the Fed’s strong opposition to Bank of America” backing out of the deal.
“No one at the Federal Reserve advised Ken Lewis or Bank of America on any questions of disclosure,” said Fed spokeswoman Michelle Smith.
Pop-quiz question: Does this threat strike you as something that the soft-spoken Bernanke would say? Or is it more in keeping with someone who told nine (now eight) banks they had to take money from the Troubled Asset Relief Program so the public couldn’t distinguish the good from the bad and then had the chutzpah to tell them how to use it?
Right. Let’s move on.
It reminds me of the Soprano’s
If he didn’t play ball, he might have ended up “hanged” by “apparent suicide” in his basement! Dats how dah game works!
Don Paulsoneone made him an offer he couldn’t refuse.
“…….he told him that his brains, or his signature would be on the contract……”
I feel “The HousingBubblefather” coming on…….
“Leave the house……take the cannoli”.
“Leave the house……take the cannoli”.
Hahahaha!
Ahhhh, ‘The Godfather’….*sighs happily *
I do that one sometimes, and I also do a good Clemenza making spaghetti sauce: ‘The secret is the sugar..’ I do that one whenever I make spaghetti, whether or not I have an audience, I enjoy it so much.
But, not to be immodest, I totally ROCK at doing the Godfather Himself explaining why he won’t get into the drug trade. I can get all jowly and wheezing lightly and everything.
WaPo
Feds Charge Metro Dream Homes Officers
“What ever happened to Andy Williams and Metro Dream Homes?” I’ve heard that question countless times from former participants since Maryland authorities shut the operation down in August, 2007. That shutdown came only days after the second of two columns I wrote questioning how the organization could pay off participants’ home mortgages in seven years or less, as promoters promised. The program was marketed mostly by word of mouth, through families, church members and other people in a position of trust, and many participants were left with mortgages they could not afford.
Though Dream Homes operated in several states, it was particularly active near its D.C.-area base, with many participants in Prince George’s County, the District and Fredericksburg.
Now we know what happened to Andy Williams. As Henri Cauvin reports for The Post, Williams and three other top Dream Homes participants have been indicted by a federal grand jury in the alleged mortgage fraud scheme, which the Justice Department says was worth $70 million. (cont’d)
Leigh
Forget the Pig Plague.
When might it be time to look at border control ?
Gov’t: Stern border enforcement not yet necessary April 28, 2009 8:40 AM ET
All Associated Press newsWASHINGTON (AP) - The Obama administration on Tuesday staunchly defended its “passive surveillance” policy on the emerging swine flu threat, saying that its measured, cautious border monitoring makes sense.
Homeland Security Secretary Janet Napolitano declared that more draconian enforcement steps are not yet necessary, even as she acknowledged that officials “anticipate confirmed cases in more states.” She reiterated President Barack Obama’s stance that people are justifiably concerned but need not be alarmed by it.
I am not alarmed by swine flu, but I am concerned with the constant arrest of illegals who drive without a licence or insurance and then go load up the grocery cart and pay for it with the red white and blue food stamp card.
You might want to worry about the ones that handle the food at your favorite restaurant.
For those still on the fence about starting a garden or doing all your own cooking at home…could you think of a better reason to start now?
Unfortunately, our nation of “inclusion” won’t secure its borders until… the horrific happens. Maybe not even then. Might get a commission, the President may widen his bridge-building travel plans.
Flu pandemic? Epidemiology ain’t my ball of wax, but that science seems to be able to measure the past better than explaining current events.
But it doesn’t stretch the bounds of common sense to understand that the nation’s enemies, and we do have them, will strike again hard.
I remember prior to 9/11 two or three talk shows where they discussed putting secure doors on the cockpit. Airlines screamed bloody murder about how much it would cost and how it would scare customers. It would me nice to just once have a business interest concerned about their and America’s long term interests. The just can’t seem to see past the current quarter.
If Bush had said, “Tough. Do it or sell your planes to someone who will.” the whole thing would have been over in 2 minutes. He didn’t.
Just read it this morning.. UAW to be majority owner of Chrysler.. Is Chrysler the next The Twentieth Century Motor Company?
Latest Case-Shiller shows home prices still dropping, but pace of decline not a record (slowing) this time:
NEW YORK (AP) — A widely watched housing index shows home prices dropped in February, but for the first time in 16 months the decline was not a record.
The Standard & Poor’s/Case-Shiller index of home prices in 20 major cities released Tuesday dropped by 18.6 percent from February 2008, slightly better than the 19 percent in January. The 10-city index slid 18.8 percent, compared to 19.4 percent the month before.
But the good news was mixed. All 20 cities in the report showed monthly and annual price declines, and half recorded annual records. Prices fell by more than 10 percent in 15 cities.
Prices in the 20-city index have plunged 30.7 percent from their peak in the summer of 2006, and the 10-city index has lost more than 31.6 percent.
It’s useful to see it in table form (going back to Jan 2007 - the first month of YoY price declines (data is 20-city composite):
Month Index %fm peak %YoY
1/2007 202.31 2.04 -0.06
2/2007 201.57 2.40 -0.80
3/2007 201.01 2.67 -1.30
4/2007 200.54 2.90 -2.09
5/2007 200.12 3.10 -2.79
6/2007 199.44 3.43 -3.36
7/2007 198.72 3.78 -3.78
8/2007 197.37 4.43 -4.27
9/2007 195.69 5.24 -4.91
10/2007 192.98 6.56 -6.05
11/2007 188.94 8.51 -7.68
12/2007 184.96 10.44 -9.03
1/2008 180.68 12.51 -10.69
2/2008 175.96 14.80 -12.71
3/2008 172.20 16.62 -14.33
4/2008 169.98 17.69 -15.24
5/2008 168.60 18.36 -15.75
6/2008 167.77 18.76 -15.88
7/2008 166.36 19.45 -16.28
8/2008 164.64 20.28 -16.58
9/2008 161.64 21.73 -17.40
10/2008 158.09 23.45 -18.08
11/2008 154.51 25.18 -18.22
12/2008 150.57 27.09 -18.59
1/2009 146.35 29.14 -19.00
2/2009 143.17 30.67 -18.63
So a *slight* decrease in rate of decline.
Caveat - YoY numbers can actually be slightly misleading actually, in that it will actually lag actual changes on average by 6 months. So for instance if hypothetically February was actually flat relative to January (even if seasonally-adjusted), there would still be a large YoY decline (in that case 16.83%). The same happened on the front end - even though actual price declines started in August 2006, the YoY values didn’t show a decline until January 2007.
So YoY has the benefits of canceling out seasonality and also monthly anomalies, but the pitfall of 6 months average lag.
I mentioned it below, but post has yet to arrive. Cleveland joined Detroit in the cities that now officially have home prices lower than they were in January, 2000.
They’re looking for a third member of the group, with Pheonix being the next closest at 111.89. Pheoniz set its own mark this moth, officially getting to a median prices less than half the peak Pheonix C-S number of 226.51.
My bad - while Pheonix is officially the only member of the “half-peak club”, Altanta is the next closest to being in the “sub-2000″ club at 106.65
Yeah it’s amazing looking at the various cities. So far the least-bubbly (for the most part) of Detroit and Cleveland are the two that have fallen below 100. The bubbliest cities though are plummeting fast as well, and will all be there soon enough.
The two best-off cities (so far) - surprise surprise - are NYC and DC.
I have been following CS for a while now and here is what my numbers show for LA and Phoenix:
Los Angeles: Back to August 2003 Prices, 40% off peak, and still 14% overvalued relative to inflation.
Phoenix: Back to Feb 2002 Prices, 51% off peak, and actually 9% undervalued relative to inflation.
I actually think AZ may be close to a bottom, although we all know they are overshooting to the downside. There is a chance they go below 100 on CS (currently 111.89) but that is about it.
I also think LA will go under 100 also, but that is taking longer. Clearly AZ and NV are leading the way down, but CA is not far behind.
Good point about lag. What data references do you think are the best for identifying early trends?
There really isn’t any reliable source that I know of. The problem is that any “early indicators” would be by definition short-term data, and short-term data tends to both:
A. Fluctuate - due to short-term affects like new housing stimulus, foreclosure moratoriums, etc. and
B. Have a significant error factor, due to the nature of just having a smaller amount of data to work with
Short-term trends definitely aren’t meaningless, being that all long-term trends are actually the sum of short-term trends, but believe them (or act on them) at your peril.
With regards to the Case/Shiller data - personally I do think that we are starting a slight “flattening out” (such as it is) trend, for several reasons:
- The housing stimulus will have at least some effect.
- I’m definitely seeing a flattening in some areas that were leading areas also on the frontside - e.g. my area (suburb of DC)
- It makes sense that as home prices get closer to “normal” levels (still a ways to go but we’re getting there) that they would begin to flatten.
- This winter was *horrible* due in part IMO to the fall’s stock market crash - lots of people I’m sure were “waiting it out” to see what happened with that. Being that things have stabilized (at least on the surface), it stands to reason that people would start buying some that otherwise were holding off.
However that being said - the flip side is that foreclosures are ramping back up as the moratoriums are lifted. I think there will be some lag to that effect on prices - which is why I think that this fall and winter will be another bad one, after a relatively mild spring and summer housing season.
In the end - I see a slowing decline starting right about now, but a longer decline (even in nominal terms) than most people, even many on this blog perhaps. I think prices will continue down still for 3-4 more years in nominal terms, though inflation is the really big wildcard. In inflation-adjusted terms it’s really hard to say - anywhere from 5-10 years for a bottom, maybe even more.
“In the end - I see a slowing decline starting right about now, but a longer decline (even in nominal terms) than most people, even many on this blog perhaps. I think prices will continue down still for 3-4 more years in nominal terms, though inflation is the really big wildcard. In inflation-adjusted terms it’s really hard to say - anywhere from 5-10 years for a bottom, maybe even more.”
In the two past US property bubbles, we saw at least one major 3 month upturn during the steepest slope of the decline. It was a true sustained upturn in real national house values and not just a slowing decline as we are seeing now. These upturns took place about half way through the steepest parts of the declines, so if history matters, once we see a true upturn, we are only halfway through the free fall section. Your 10 years seems reasonable.
So a *slight* decrease in rate of decline.
Hmmm… but February data is a three month average…
We’re entering the seller’s season. It should slow for a bit… then plummet.
The question is what level will we stabilize at? Look at Case-Shiller back to its start. Its scare in the 1920’s and 1930’s…
Got popcorn?
Neil
“We’re entering the seller’s season. It should slow for a bit… then plummet.”
YoY values remove seasonal affects. So while yes prices may (and probably will) plummet again in the fall, YoY% numbers will not, since prices also plummeted (really, really plummeted) last fall.
I think some markets might be getting close to a near term bottom, but I just don’t know if it is a dead cat bounce.
In some markets it will clearly be a DCB but I don’t know about all markets. I also think you cannot look at a big area like LA or Phoenix as a whole. It is different when you look at price ranges, and specific neighborhoods. For example, in the higher priced areas near Phoenix (Scottsdale) and Los Angeles (Beach areas), prices still have a long way to go. But in the lower priced areas (FHA limit and below) I think we are closer to a bottom. That is because credit is still flowing at the lower end.
I also think when we see the median prices going up, it will signal that the higher priced areas are crashing more. That is because they will make up a larger % of closed sales. Right now there aren’t many sales because sellers in the upper end are still dreaming. When they wake up the median goes up.
Disclaimer: I was very wrong regarding how high the market could go…so I am probably wrong calling a bottom too.
My suggestion is to graph the YOY change of the Case Shiller numbers. The “Flattening out” that so many in the MSM are seeing is only a levelling of the rate of change. For example, Boston has flattened out - to a fairly constant -7.00% to -7.50% year over year change. That isn’t a bottom of a housing market, it is just a first derivative of zero. Just because you hit terminal velocity doesn’t mean that you’ve hit the ground.
Ask and ye shall receive
Actually I think this is more like what you were asking for.
Bloomberg
Milan Police Seize UBS, JPMorgan, Deutsche Bank Funds (Update1)
By Elisa Martinuzzi
April 28 (Bloomberg) — Milan’s financial police seized 476 million euros ($620 million) of assets belonging to UBS AG, Deutsche Bank AG, JPMorgan Chase & Co. and Depfa Bank Plc as part of a probe into an alleged fraud.
The police froze the banks’ stakes in Italian companies, real estate assets and accounts, the financial police said in a statement today. The assets seized yesterday also include those of an ex-municipality official and a consultant, the police said.
The City of Milan is suing the four banks after it lost money on derivatives it bought from the lenders in 2005. The securities swapped a fixed rate of interest on 1.7 billion euros of bonds for a variable rate. The city said it was losing 298 million euros on the securities as of June. Milan is among about 600 Italian municipalities that took out 1,000 derivatives contracts worth 35.5 billion euros in all, the Treasury said. (Cont’d)
Leigh
Excellent! I hope this is the start of a trend!!!
The same id-jitz that were making the decisions to go “all in” to the CDS/derivatives market, are the same ones that pronounced outsourcing and globalization as the greatest thing since sliced bread.
When the great “hard asset” grabs start, I guess we’ll find out how smart that decision was…….
http://seattle.craigslist.org/see/for/1143707149.html
Pot Still - Full Distilling setup - $160 (Auburn)
——————————————————————————–
Reply to: sale-pqkcp-1143707149@craigslist.org [Errors when replying to ads?]
Date: 2009-04-27, 11:26PM PDT
Brand new pot still I just finished. You can use it for whatever you like. Distilling vinegar, water, hard alcohol / moonshine or fuel. Just know the legality of what you’re doing. Everything was put together using silver solder, non-toxic flux, and was cleaned after every use. Comes with everything needed to operate, hoses, thermometer, stock pot, ect. Unlike the other reflux stills I’ve been selling, this one follows the alcohol curve when it comes to distilate output. For more questions just shoot me an email. I also build custom stills to order. See http://seattle.craigslist.org/see/sks/1137291202.html
If it helps make the sale, I can show you how to use it, fermenting basic mashes, the steps to getting an ethanol for fuel permit from the ATF and Washington state, drying methods, filtering methods, and all other steps for making a quality product. I’ve been doing this for a while, and can tell you more about distilling than you’ll ever want to know.
Leigh
I bought a distilling apparatus from a Mom-and-Pop mail-order place in Canada a few years back. I’m not interested in alcohol, I was trying to see if I could distill drinkable water from sea water as an experiment. I could never get the thing to work well. The small amounts of “fresh” water I got weren’t salty but still had a sea-water taste. Some day I’m going to try to build my own setup from scratch.
I sooooo know what I’m going to be doing with my apple culls and currant crop this year. (Got an old wooden wine press a few years back, that puts out a LOT of juice and leaves all those mashed apples in the bucket–which I normally just give to the horses and the piggy. This year, it’s MY turn….)
Look for my email in response to your CL post.
Sorry if this is a double
Forget the Pig Plague
When might it be time to tighten our borders ?
Gov’t: Stern border enforcement not yet necessary April 28, 2009 8:40 AM ET
All Associated Press newsWASHINGTON (AP) - The Obama administration on Tuesday staunchly defended its “passive surveillance” policy on the emerging swine flu threat, saying that its measured, cautious border monitoring makes sense.
Homeland Security Secretary Janet Napolitano declared that more draconian enforcement steps are not yet necessary, even as she acknowledged that officials “anticipate confirmed cases in more states.” She reiterated President Barack Obama’s stance that people are justifiably concerned but need not be alarmed by it.
I am not alarmed by the wine flu, but I am alarmed by the number of illegals that are arrested every week for driving without a valid drivers licence or insurance, get out, go to the grocery store and load up their cart to feed a family of five and pay for it with their red white and blue food stamp card.
No good collapsing housing market…… it’s that damn swine flu causing the housing market collapse….. yeah that’s it.. And if it weren’t for all that snow last winter too…. yeah…
Hobbes: A new decade is coming up.
Calvin: Yeah, big deal! Hmph. Where are the flying cars? Where are the moon colonies? Where are the personal robots and the zero gravity boot, uh? You call this a new decade?! You call this the future?? HA! Where are the rocket packs? Where are the disintegration rays? Where are the floating cities?
Hobbes: Frankly, I’m not sure people have the brains to manage the technology they’ve got.
Calvin: I mean, look at this! We still have weather?! Give me a break!
(insert reference to disease, war, etc. in that last comment as desired)
“We saw the problem coming. And we expected the government would do all the wrong things – which it has. But we never imagined that they’d do so many stupid things all at once.” `~Bill Bonner
Case Shiller numbers out: despite the news media proclaiming all as well and the decline is over because the Month-to-Month decline was only 2.2% and the YOY decline was only 18.6%; a close look reveals the following.
A YOY decline of 18.6% is still huge. Think of it this way: if you bought a $300,000 home in February 2008 with 20% down and go to sell today, your proceeds from the sale are about zero once transaction fees are accounted for - and you paid $60,000 plus interest to live in that house for a year.
Also, Cleveland joined Detroit in the Facebook group “Cities in which home prices are less than they were January 2000″.
“…Month-to-Month decline was only 2.2%…”
A one month decline of 2.2% occurs at an annualized rate of
((1-2.2/100)^12-1)*100 = -23.4 percent. If you bought a home now for $200,000 and prices continued falling at this pace for the next year, your household net worth (assuming other things equal) would decline by
(23.4 + 6)/100 *200,000 = $58,800 (including a 6 percent transaction cost fee flushed down the REIC toilet), which is above the 2007 US median household income of $50,233.
Try not to catch yourself a falling knife.
I also note (similarly to an example posted above) that if you made a 20 percent downpayment ($40,000), you would lose your entire investment and more in the first year of membership in the Ownership Society.
“…you would lose your entire investment and more in the first year of membership in the Ownership Society”
LOL
That was funny…and true!
Regarding this artlcle posted the other day - about the IMF “printing” money - being that the IMF doesn’t actually have paper currency (unless I’m mistaken, it’s all just Special Drawing Rights - convertible to other currencies) - it seems we’re now transitioning to full-blown virtual money, not even given the courtesy of being represented by paper.
Thoughts?
Has anyone looked into the feasibility of obtaining SDR’s - or is this just reserved for a select few at this point?
THE GREEN SHOOTS ARE BACK!!
I thunked Mr Market had developed a nasty case of pigman flu, but I guess he has recovered more rapidly than expected.
And,
http://www.bloomberg.com/apps/quote?ticker=SPCS20Y%25%3AIND
Just look at that graph!
What a beauty!
“In a sign of changing times, movie studios have recently been demanding that actors reduce their upfront salary guarantees by as much as half and instead participate in back-end profits if the movie is a hit.
The days of huge advances for musicians have also largely ended as sales of compact discs have plummeted and digitally downloaded tunes have failed to make up the difference.”
http://www.google.com/hostednews/ap/article/ALeqM5juKCLy9sADbj7b7goNJN4fR4uzYwD97R57M80
People in the know never make a deal for profits from a movie(eg Winston Groom who wrote Forest Gump was no doubt surprised when the movie failed to make a profit and his portion was $0), its always a deal for the gross.
The studios and distributors seem to be doing just fine though. It’s the artists who take the hit.
As someone who works in the home entertainment division of “the industry”, you are wrong. Studios revenue is down significantly, and the distributors are on the edge of bankruptcy.
Well, this is one case I’m glad to be wrong then. I am frankly surprised the artists are doing better than all of them. That’s the way it should be, IMO.
Also, as a member of the “industry”, how do you explain the fact that studios always seem to generate zero profit on movies like Forrest Gump or Superbad or whatever, despite breaking box office records in their genre?
If you have ever worked in cost accounting, you know that you can make any one single “project” profitable or a loss depending upon where you put the costs. For example, the “movie” portion of Forest Gump could be encumbered with all of the advertising and marketing, which totally wipes out the box office. Then the DVD release needs much less advertising while generating roughly the same revenue, making it insanely profitable. Hollywood is about creative accounting, and that is what keeps accountants and lawyers on both sides fat and happy in all economies.
I suspect it’s a bit like book publishing, where the author gets a very small percentage of the profits, which can mostly be folded into some kind of expense or other and turned into costs.
IOW, you’re initial assessment was correct.
I have a writer friend who has to pay his own way to book signings, as well as do his own marketing. This is getting more and more common. They play on the “glamour” of being a published author. Let’s see, he gets a supposed 10% of the book’s profit (and most authors get only 7%), the book sells for $19.95, that’s almost 2 dollars for him, but the publisher has to give half the book’s cover cost to the bookstore, which means now we’re at $1 for the author, take out the print costs, the cover artist costs, the layout, the bit of marketing they do, and you’re down to about a dime a book.
There’s a reason it’s called starving artist. And there’s a reason more and more artists are starting their own companies.
Follow-up article from yesterday’s post.
Recriminations after lower Manhattan jet flyover sets off panic, memories of 9/11
NEW YORK (AP) — It was supposed to be a photo op that captured images of an Air Force One plane with a majestic Statue of Liberty in the background. Instead, it turned into a public relations nightmare that led to recriminations from the president and mayor and prompted thousands of others to ask, “What were they thinking?”
http://finance.yahoo.com/news/Recriminations-after-NYC-jet-apf-15053336.html?.v=1
I cannot remember who quoted this as
“felony stupidity”.
Tickled my funny bone.
But seriously, people were running, yelling, calling 911!
There was one report calling for a class action suit!
Leigh
Had some laser fun last night, but unfortunately the point and shoot camera didn’t record video as well as my old one. The camcorder batteries were dead. “As the wealthy rob the young with more overpriced housing…” on a new 230+ unit apartment building. Right near a pretty well trafficked road in Norfolk VA. 2b/2b rent = $1740 a month at the new place. Median household income might be $45K? If I had bigger nads I’d let it run longer.
http://www.youtube.com/watch?v=K-6J_X_0CzA
Obama administration expands housing aid plan
Obama adminstration launches effort to aid troubled borrowers with second mortgages
The new plan aims to get rid of that roadblock, said two senior administration officials, speaking on condition of anonymity because the details were not yet public.
The administration initiative, funded out of $50 billion in financial rescue money, relies on a series of payments to mortgage companies as an incentive to modify second loans at lower interest rates. Mortgage companies would get $500 upfront for each modified loan, plus $250 a year for three years as long as the borrower doesn’t default.
Similarly, borrowers would get up to $1,000 over five years applied to the principal balance of their primary mortgage, and the government would pick up part of investors’ costs as well. Lenders would also be given the ability to remove second mortgages entirely in exchange for larger government payouts.
The administration also plans to give mortgage companies $2,500 payments to entice them to participate in the “Hope for Homeowners” program. It was launched by the government last fall but has so far has been a failure, proving unattractive to banks required to absorb large losses.
It was supposed to allow 400,000 troubled homeowners to swap risky loans for traditional 30-year fixed-rate mortgages with lower rates. Instead only a handful of borrowers have been able to qualify, and as of earlier this spring only one loan had completed the program.
http://finance.yahoo.com/news/Obama-administration-expands-apf-15054382.html?.v=9
“The administration also plans to give mortgage companies $2,500 payments to entice them to participate in the “Hope for Homeowners” program”.
Just a continual waste of time and money, so that means they will keep right on doing it. The Homeowners sitting around hoping, are SOL.
This is insane. You can kiss that 2500 goodbye. Buyers will never see a dime of it in any shape or form.
Swine Flu Case Confirmed In Orlando
Posted: 10:41 am EDT April 28, 2009Updated: 11:04 am EDT April 28, 2009
ORLANDO, Fla. — Eyewitness News has learned of Orlando’s first confirmed case of swine flu. According to the chief medical officer for Adventist Health System, Loran Hauck, the case was diagnosed Tuesday morning.
“A case was diagnosed here in Orlando today on a tourist from Mexico who came to Disney attractions two days ago to visit,” Hauck wrote in an email obtained by Eyewitness News.
No further details have been released, but Eyewitness News is working to learn specifically what days the tourist was at the parks and which park the tourist went to.
Details about the tourist, beyond being from Mexico, have not been released.
“A case was diagnosed here in Orlando today on a tourist from Mexico who came to Disney attractions two days ago to visit,” Hauck wrote in an email obtained by Eyewitness News.
Wow… think what happens when the first cases spread from London’s Heathrow airport…
Got Popcorn?
Neil
I’m going to WDW next week (business). Perhaps we should put a surgical mask on the Obama robot in the Hall of Presidents to set an example for everyone else….
“tourist”
Is that what they are calling illegals now????
To a virus, it really is a small world after all.
These guys must be taking lessons from Turbo Tax Timmay.
EU health chief: Call outbreak “novel flu” not swine flu so it won’t hurt pork producers
BRUSSELS, (AP) — The European Union says the swine flu epidemic should be renamed “novel flu” because the current name is misleading and could unnecessarily damage the pork industry.
European Union Health Commissioner Androulla Vassiliou says pork is safe to eat and has nothing to do with the swine flu outbreak. She says the “wrong connotation” contained in the name “swine flu” could hurt pork producers.
It’s been spotted in Israel. There’s a rumor kicking around the Internet that the Israelis call it “mexican flu” (I saw this on Digg.com, which loves to spread false rumors).
However, at least in Haaretz, they’re calling it the “Swine Flu”
(חזיר שפעת)
http://www.haaretz.co.il/hasite/spages/1081777.html
“Call outbreak “novel flu” not swine flu so it won’t hurt pork producers ”
They are correct on this, but novel is not the correct name. By traditional naming conventions this should be the Mexican flu, but we can’t have that when we are getting ready to pass an amnesty bill.
It’s the Mexican flu, pass it along.
I guess it’s time for me to stock up on my olive leaf extract.
Sounds like a good time to go rent Shaun of the Dead again!
Would 41 pct be considered a crash?
Research firm: Dubai home prices drop 41 pct in 1Q
http://finance.yahoo.com/news/Research-firm-Dubai-home-apf-15054201.html?.v=4
Wow.
Note that that 41% is one quarter - it’s not year-over-year!
I wonder how the Burj is doing?
Dubai is gonna be toasted to a crisp - you can’t build an economy on RE and tourism alone.
Shhh…, don’t say that too loud. I live in Florida.
I saw the king (or whatever hes called) interviewed a year or two ago on one of those news shows (60 mins, 20/20, etc). One thing that struck me is that he recognized they wouldn’t be able to maintain an oil-based economy and was trying to build something that would sustain beyond that.
It seems he did a piss poor job and obviously got caught up in the RE mania, but I really thought he had a chance of turning into a financial center (Singapore or even the Caymans) type of place.
I would give him (them) credit for that indeed, however they made the classic mistake of simply growing way, way, WAY too fast. True sustainable growth (ala Singapore, Hong Kong, NYC, etc.) has to be a lot more slow and steady.
Not that those cities haven’t had their own spurts - but they pale in comparison to Dubai. The main driver - the Jebel Ali Free Zone - was just opened in 1979, and was severely hampered by the 1991 gulf war. Dubai didn’t really get going until the 1990’s, and they were already creating the world’s tallest buildings, creating huge new islands, etc. based on an economy that was still very tenuous at best, and mostly based on bubbly industries.
“Note that that 41% is one quarter ”
PB, can we get an annualized rate on that?
98% ?
Consumer confidence soars in April
“It looks like the worst is behind us, but clearly we are not out of the woods,” said Franco.
Really?
http://news.yahoo.com/s/ap/20090428/ap_on_bi_ge/us_economy
Think this might be the result of fatigue on the part of the average Joe.
It’s like everybody has been a “deer in the headlights” for the last few months and sooner or later you have to snap out of it and move on.
Not that I think things are really improving, there’s more fun to come.
Bad for sales. People will start thinking there is hope, and stop spending up to their credit card limits in the expectation of certain bankruptcy.
Thus increasing reliance of the government doing so.
Gallows humor for the day.
So people are already talking about firms filing for Chap. 22, Chap. 33 and Chap. 44.
That’s Chap. 11 for the second, third and fourth time.
Love it…
Being a landlord is easy! Just sit back and watch the money roll in! Unless, of course, something goes wrong or you get a bad tenant:
http://www.sfweekly.com/2009-03-25/news/gathering-storm/
I used to know a guy whose mom lived like this. He was mortified to have any friends come by (understandably so). This was over 25 years ago. She still lives in the same house. I can only imagine how gross it is these days (especially since none of her kids live there anymore - it’s just her). When it comes time to sell that house, it’s going to take an expert to clean it out (and will probably need a good gutting).
What’s eating Gilbert Grape style cleaning?
OMG this article is unbelievable.
Any landlord can avoid this by paying a surprise visit to a prospective tenant, to sign off on a lease addendum, or whatever…just to get a feel for how the person lives. I had a LL come pick up their security deposit at my apt., I knew they were checking me out, but it was OK. It was around Christamastime and my place was all decked out.
A few years ago when I was “between jobs”, a friend told me about someone who needed help cleaning their house. He was willing to pay a pretty decent hourly fee. Evidently the guy was one of these hoarders. No garbage or dead animals about, just a lot of STUFF.
We started with his refrigerator. It didn’t take long after we opened the door for me to tell him: You need to take this refrigerator, tie it closed, and put it out on trash day. Even though it was chock full of food, condiments, booze, god knows what all, none of it looked consumable. I started checking dates on stuff when it was clear he didn’t like my idea of just throwing out the fridge and starting fresh.
He didn’t even want to get rid of sh!t that was long expired. When I realized he didn’t want to work with me, I cut our visit short. It would have been a total waste of time, and I’d rather go outside and eat weeds for dinner than have to earn money by helping a guy clean who really doesn’t want the help.
Reminds me of that show “Clean My House”, but these folks have taken it to a whole ‘nother level.
“According to a just-released citywide task force report on hoarding, there are an estimated 12,000 to 25,000 hoarders living in San Francisco.”
So a local gov’t had to commit resources to study slobs? No surprise, it’s logical behavior for the nanny state.
Are you saying health inspections are a waste of money?
Really?
I want a study counting the number of condoms and sleeping bags found in the Tenderloin District during the last fiscal year.
infrequently used sarcasm toggle/off.
Thanks reuvy, interesting article.
As Singer tells it, police broke in and found McCamant naked on the couch, surrounded by piles of garbage and insects. It smelled so bad, they believed she was dead, but as they approached, she sat up and screamed, “What are you doing in my apartment?
Wow.
‘Stuff’ fascinates me. What people have, why they have it, and what they want to have….
I recall the first time I went to MX for a humanitarian thing, the total perspective shift that smote me the first time I went to eat dinner with a family in the favela (slum) they lived in. Dirt floor, walls made of galvanized sheeting hammered to wood posts, chickens wandering in and out of the sheeting freely, they cooked on a fire-pit made from bricks and cement—I gotta say, those were the best tamales I ever ate—slept in hammocks made from fish net….and they had happy little kids, were dressed in old, holey but clean clothes, and they weren’t ‘poor’ so to speak, because everyone else around them lived exactly the same way.
I’m not romanticizing this—it sucked. I like clean water and hot baths and the amenities of civilization dearly, my point is, it astounded me how little stuff you really need to live on.
My wife and I are moving into another place this weekend. The place we found is owned by some people who are moving to Cali. I don’t know if they have tried to sell or just really want to be distant landlords, but anyway there it is.
So the lady (husband is already in Cali working) was just so excited about us. We didn’t lie on our app and we “are like them”. I don’t know what that means exactly, other than I guess we are working professionals who have excellent credit and are doing well financially. (also, they are guatemalan and I told her my dad was born in Cuba, so maybe they felt some affinity b/c of that.).
Anyway, she told us we can just do whatever we want, paint or drill holes for TV, she don’t care, cause “you know how to treat it.” She even hugged us before we left (after signing the lease) the last time we met with her.
Now, lucky for her my wife and I really will take care of the place. I’m kinda anal about doing repairs or any modifications correctly and generally don’t like to be “in the hole” in favors. I might even put in new carpet (been thinking about it), with her permission of course. In all likely-hood that place will be in better shape when we leave than it is now.
But I have a feeling they are going to get busted by some renters down the line. They are going to trust the wrong people and get taken advantage of and they will leave that place trashed. Especially being so far away.
GOP Sen. Specter plans to switch parties
http://tinyurl.com/d6uayv
BWHWHAHAHAHAHAHAHA!
“Senator Mitch McConnell of Kentucky, the Republican leader, called an emergency meeting of party leaders who had no forewarning of Mr. Specter’s plans.”
Better to announce it without warning than end up dead from an “apparent suicide.”
You have no idea how right you are about that one! I remember reading about the JFK assassination, and something like 95% of the people that were even remotely connected to Ruby and Oswald were dead within 5 years.
Plenty of apparent suicides, single car accidents resulting in death, etc. etc. etc.
Specter was smart to announce it like this IMO.
BTW, it is only a conspiracy theory if you don’t know the details. Once you do, it becomes obvious.
You may be onto something -Spector is 79 years old.
I know how old he is, but for even one vote you would be amazed by what some people will do.
He could easily live 5 more years, and that is a lot of decisions some people don’t want to see made for the blue team.
April 28 (Bloomberg) — Republican Pennsylvania Senator Arlen Specter, saying his party “has moved far to the right,” announced today he will seek re-election next year as a Democrat.
Specter, a moderate Republican, was one of three senators in his party to support President Barack Obama’s $787 billion economic stimulus measure. He announced his decision to switch parties in a statement posted on a Pennsylvania politics Web site and confirmed by his office.
The addition of Specter to the Democratic caucus, if combined with the seating of Minnesota Democrat Al Franken, would give the party a 60-vote Senate majority. Sixty votes are required to break filibusters in the chamber
Olympia Snowe, a Maine Republican who, like Specter, is a swing vote in the Senate, said the national Republican Party has become increasingly intolerant of moderates.
“You haven’t certainly heard warm, encouraging words about how they view moderates,” she told reporters today. “You’re either with us or you’re against us — it was not understanding that political diversity makes the party stronger.”
She said she had no plans to switch parties.
GOP is falling apart, at somepoint they will have to turn to the moderates for help. We can always hope.
Even though I’m a democrat, I don’t get respect for people who do this. Your convictions shouldn’t be a weather-vane.
It’s possible the Specter’s convictions are constant and the Republicans changed like a weathervane. Teddy Roosevelt, or perhaps Ike, wouldn’t recognize the Bush/Cheney/Rumsfeld style of the party.
Agreed. IMHO, T. Roosevelt & D. Eisenhower were the two best presidents, at least since the founding fathers. Neither would be a Republican today. While I am still a registered Pub, I’ve voted party line democrat for the last 2 elections. Not that I agree with them, I just can’t stand the Baby Jesus loves bombs and hates the goobermint crowd.
The Republicans were just as FUBAR in 2006, but were the majority party, and he wasn’t up for election.
Now he’s a minority member on all his committees, and he’s up for election.
He’s a Rat.
And to be fair, there are a lot of former Democratic presidents/Congressman that would puke at the current Democratic “leadership” in Congress.
To be even fairer X-GSfixer,
There are Republicans that used to belong to the Democratic party.
I’m still a (little “l”) libertarian with nominal Republican party registration, but I think the Republicans claim to represent libertarian views is a sham in recent decades. The Democrats are the only party that has “mostly” held on to their core values.
The Republicans lost legitimacy with the libertarian crowd by advocating government intervention not only to maintain social mores, but also letting government intercede in the economy, when it suits them and their lobbyists of course. Otherwise, they oppose anything that the evangelicals, Sarah Palin and Rush Limbaugh don’t approve of.
The GOP sellouts to religious nutcases are the real “weathervanes” here…I am thrilled to see this house of cards finally start to crumble.
“GOP is falling apart, at somepoint they will have to turn to the moderates for help.”
They may be falling apart, but getting rid of the likes of Benedict Arlen should help them start to pull back together.
I almost didn’t vote for Bush in ‘04 because of his support for Specter in his primary race against Pat Toomey.
He knows he doesn’t have a prayer of winning in the next PA republican primary. (senate)
His support for Porkulus alienated most of his republican and independent voters in PA.
Now this guy changed parties
By WILLIE HOWARD
Palm Beach Post Staff Writer
Monday, April 27, 2009
LAKE WORTH — Susan Stanton started work as Lake Worth city manager Monday more than two years after being fired from her job in Largo for announcing plans for a gender change.
The former Steve Stanton spent 17 years as city manager in Largo on the state’s west coast before being fired in a case that drew national attention and led Lake Worth and Palm Beach County to adopt code changes prohibiting discrimination based on gender identity.
Susan Stanton, formerly Steve Stanton, drew national media attention after being fired for announcing plans for a sex change.
Stanton, 50, was hired April 7 to replace former City Manager Bob Baldwin, who left Lake Worth in March to become city manager in Dania Beach.
Stanton is scheduled to attend her first city meeting at 3 p.m. at Compass, the non-profit gay and lesbian advocacy group that has a long-term lease with the city for its new headquarters on North Dixie Highway.
“A city meeting at a gay and lesbian community center….and it’s her first day,” said Compass CEO Tony Plakas.
Plakas said he was glad that the city commission did not let questions of gender identity stand in the way of their decision to hire Stanton and that Stanton was willing to choose Lake Worth.
Now I don`t care if gay or lesbian couples want to get married, none of my business. Heck someone could marry a horse for all I care more work for divorce lawyers. Lived across the street from an older lesbian couple for years and they were wonderful people and became very good friends of ours. I am sure Susan Stanton will be a great City Manager, cause I gotta admit what she did, took balls.
I am sure Susan Stanton will be a great City Manager, cause I gotta admit what she did, took balls.
Hahahaha! Nice one.
And I agree.
I wonder how much Specter’s net worth was enhanced by this announcement . . .
“He knows he doesn’t have a prayer of winning in the next PA republican primary”
Thank you, p-gal. This has nothing to do with anyone changing convictions, or– the MSM’s obsession– the idea that the Republican party needs to become more “moderate” (i.e. move to the left).
Plain and simple, Specter has been an impostor from day one, and now he sees that the game is up.
(PS. When are you coming down?)
I can’t see that Arlen Specter is an imposter. Ronald Reagan wouldn’t make the cut in today’s GOP. The GOP is farther to the right today than any party in the history of the U.S.
But if you take away cramming religion down our throats and their so called pro-life, their policies are the exact same as the current Congress - Democrat controlled.
The joke’s on the Repubs. Democrats at least are the better choice of people in Congress and the White house because they area at least for civil liberties. Republicans proved they are socialists who want to force their pukey religion on the rest of us and make women baby factories.
I’ve voted Libertarian 99 times out of 100.
The GOP abandoned their party and the KnowNothings, Plenty-plaints and empty skulls took over.
Pretty soon - the situation I told you about is getting a little clearer, it will free up some time for me.
Senate passes bill targeting mortgage fraud
WASHINGTON (AP) — The Senate voted Tuesday to hire hundreds more FBI agents and prosecutors to go after mortgage fraud, filling a personnel gap that lawmakers say has prevented the government from pursuing some 5,000 incidents reported each month.
The 92-4 bipartisan vote came as a House panel considered an anti-predatory lending bill that attempts to ban the type of subprime mortgage loans that contributed to the nation’s economic slide.
http://finance.yahoo.com/news/Senate-passes-bill-targeting-apf-15056489.html?.v=2
Wow. We all knew there were tons of fraud going on out there - but 5,000 cases a month is … whooo. And that’s just the *reported* cases.
So - do they plan to go after BofA, WFC, Chase, etc for the same thing?
Did I mention fraud is our largest industry?
I mean, lately?
Paging Paladin, paging Paladin. Haven’t heard from you lately. How’s the trials going?
The swine flu outbreak has set off alarm bells for the $770 billion U.S. travel industry, which one expert warns could become the “ground zero” of the economic impact from this latest health threat.
For instance, in the SARS outbreak of 2003, Freeman said travel to Southeast Asia fell between 20% to 70%, resulting in $18 billion in lost travel-related revenue.
Now SARS was much less contagious than the swine flu.
I’ve got the feeling this could be a black swan on black swan event.
About 2-3 weeks ago I heard a report from a DHS truck driver that was transporting many trucks of refrigerated “flu” to numerous US cities. There was significant detail and the report was believable. I took it with a grain of salt and decided to keep my eye out for outbreaks.
It is known that the powers that be wish to reduce the world population to perhaps 500 million people. An economic collapse is in progress and civil unrest is likely. A sudden pandemic would greatly help their goals by:
1) Creating an enemy for government to fight (other than TPTB)
2) Preventing organization of resistance (fear of spreading flu)
3) Provide cover for rounding up resistance by claiming they are “sick”.
I try to be very reasonable with everything and question everything. The evidence points to those in charge being power-hungry, crazy, and without any value on human life. If I was in their position and shared their goal of running the world, reducing world population, and preventing resistance this would be my plan. Much more effective than direct genocide and it has the added benefit that they get to play “hero” instead of villain.
Conclusion, this outbreak may be phase I to establish a “natural origin” for the disease before they release Phase II later this year. I sure hope this is not what they have planned for us, but it wouldn’t surprise me at this point.
“a DHS truck driver that was transporting many trucks of refrigerated “flu” to numerous US cities”
Wow, and I thought believing in Bigfoot was stretching it…
Problem with that theory is pandemic flues take the young and strong, leaving the old and weak and very young, those with lesser immune systems. What government would want that scenario?
If Rush Limbaugh and Sean Hannity get sick there may be a problem.
Lost, why does it work that way?
It’s one sick puppy, that’s why.
Nah, that’s what makes a flu pandemic. It takes the young and strong.
“Usually, influenza is more serious in the elderly and the very young, whose immune systems are weakers. However, pandemic flus, which are caused by novel new flu virus strains, are more deadly in stronger people (like young adults) than in the very old or very young, because it causes their stronger immune systems to overreact, called a “cytokine storm” — a major release of infection-fighting substances in the body that can, in large quantities, cause serious damage. This extreme immune reaction is what makes pandemic flu so serious, and is the reason it strikes so much harder in healthy young people. It appears that this new Mexican flu is killing young adults–people of the right age–which is another sign it could be dangerous. On the other hand, there have been no fatalities yet in the United States, which is a promising sign. It may mean there is some factor involved in the cases in Mexico that aggravated the disease, that wasn’t present in the US cases. Or it may mean that the flu spreading in the US is somehow different.”
www DOT seeingtheforest DOT com/archives/2009/04/on_the_swine_fl DOT htm
Main Entry: 1pan·dem·ic Listen to the pronunciation of 1pandemic
Pronunciation:\pan-ˈde-mik\
Function:adjective
Etymology:Late Latin pandemus, from Greek pandēmos of all the people, from pan- + dēmos people — more at demagogue
Date: 1666
: occurring over a wide geographic area and affecting an exceptionally high proportion of the population
According to the World Health Organization (WHO), a pandemic can start when three conditions have been met:[1]
* Emergence of a disease new to a population.
* Agents infect humans, causing serious illness.
* Agents spread easily and sustainably among humans.
A disease or condition is not a pandemic merely because it is widespread or kills many people; it must also be infectious. For instance, cancer is responsible for many deaths but is not considered a pandemic, because the disease is not infectious or contagious.
You don`t believe in DHS truck drivers ?
No, cause I’ve never seen one, have you?
To be fair he was an independent truck driver hired by DHS.
What does DHS stand for?
Department of Homeland Security
My BS detector is going off.
Honestly, I didn`t know what a DHS driver was. But now that I know I`ll be looking for one. I wish I had a smiley face to put here.
Bee ess detector is pegged.
Filter no likey initials for male bovine fecal matter.
Hey V-tech, it seems like a Tom Clancy “Rainbow Six” novel. Or “Moonraker,” the movie.
I don’t believe it though. Just another conspiracy theory.
Not to defend this theory because there is only testimony of one individual. I really dislike the derogatory use of the phrase “Conspiracy Theory” because it is a catch all phrase used to describe any theory that is different than the “government’s official story”.
To be fair, 9-11 is a conspiracy theory promoted by the government. WMD in Iraq was a conspiracy theory.
So, lets keep things objective and simply look at the evidence for what it is.
Even if the flu was not planted by the government, you can bet that the powers that be have a vested interest in *not controlling* the spread and encouraging fear to justify government action.
So objectively the CIA could have started the AIDS epidemic among minorities.
If you have read anything about the Spanish Flu, you know that it started mild and petered out, only to come back with a vengeance several months later. The first round was a mild version. The second round was deadly.
There is definite reason to be very concerned about this.
+1
This is what I see coming. Don’t look for more than 6 weeks lag though. International travel is very different than it was in 1918, this thing just needs to go around the globe once.
Additionally, I’m really hoping to catch version 1.0 and not 2.0.
I’ve told wifey that I’m going to need to kiss as many young Latinas as possible in the next couple of weeks.
Give this man a dumb fV*K comment of the year to even think of saying this?
“We will certainly need a few more months of data before we can determine if home prices are finally turning around,” said David M. Blitzer, chairman of the S&P index committee.
Home prices post 18.6 percent annual drop in Feb.
By J.W. ELPHINSTONE – 19 minutes ago
NEW YORK (AP) — In another sign the housing crisis could be reaching the bottom, home prices dropped sharply in February but for the first time in 25 months the decline was not a record.
The Standard & Poor’s/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008. That was slightly better than January’s 19 percent and the first time since January 2007 the index didn’t set a record.
http://www.google.com/hostednews/ap/article/ALeqM5jfUWTT51JjdBvNwgqAXDPT0Qw1YQD97RK3A02
I am glad FPL is gonna make money from the stimulus package.
FPL Group cites first-quarter surge, expects stimulus boost
By EVE SAMPLES
Palm Beach Post Staff Writer
Tuesday, April 28, 2009
JUNO BEACH — Even as demand continues to lag at its electric utility, FPL Group Inc. is expecting federal stimulus dollars and a new limits on carbon emissions to boost its bottom line.
During a conference call Tuesday to report first-quarter results, executives with Juno Beach-based FPL Group (NYSE: FPL) said profit for the year would be higher than expected. They increased adjusted earnings-per-share projections for the year - from the $4.05-$4.25 range predicted in January to $4.20-$4.40.
The outlook for 2010 also surged: from the previously announced $4.50-$4.90 per share to $4.65 to $5.05.
Executives pointed to the $787 billion stimulus package, enacted this year by President Barack Obama, as a main driver. The American Recovery and Reinvestment Act will extend tax credits for solar and wind projects by several years - a huge perk for FPL Group subsidiary NextEra Energy, the nation’s largest producer of wind and solar energy.
WASHINGTON – President Barack Obama has ordered an internal review to determine how the decision was made to send of one of his official airplanes on a low-flying photo op past the New York City skyline.
White House press secretary Robert Gibbs said Tuesday that deputy chief of staff Jim Messina will lead the review. Gibbs said the point is to determine “why that decision was made and to ensure that it never happens again.”
Gibbs said Obama was “furious” when he heard about the incident. Obama has called it a mistake.
Sorry, but I cannot slam Obama for this. Just like people argued that Bush couldn’t possibly know about everything that was going on, the same can be said about Obama.
No defence for this. No matter what was hammered home about ” the last eight years” September 11 did happen, and it killed three thousand people. Someone on Obama`s team did this and they are neither the best or the brightest. Deal with it.
Shall I remind you of this when you slam Bush in the future for decisions made by underlings?
Having your bananna bread and eating it too.
I was watching the movie The Perfect Storm a couple of weeks ago, and right before the swordfish boat sank they saw rays of light.
Wells Fargo CEO sees ‘rays of hope’ in economy April 28, 2009 9:37 PM ET
All Associated Press news SAN FRANCISCO (AP) - Wells Fargo & Co.’s chief executive says he thinks the 16-month-old recession may finally be nearing an end, but he still isn’t feeling optimistic enough to predict when the bank will be able to repay the $25 billion it owes U.S. taxpayers.
Insert oncoming train joke here.
Wall Street Journal
* OPINION: THE TILTING YARD
* APRIL 29, 2009
Why Congress Won’t Investigate Wall Street
Republicans and Democrats would find themselves in the hot seat.
By THOMAS FRANK
The famous Pecora Commission of 1933 and 1934 was one of the most successful congressional investigations of all time, an instance when oversight worked exactly as it should. The subject was the massively corrupt investment practices of the 1920s. In the course of its investigation, the Senate Banking Committee, which brought on as its counsel a former New York assistant district attorney named Ferdinand Pecora, heard testimony from the lords of finance that cemented public suspicion of Wall Street. Along the way, the investigations formed the rationale for the Glass-Steagall Act, the Securities Exchange Act, and other financial regulations of the Roosevelt era.
A new round of regulation is clearly in order these days, and a Pecora-style investigation seems like a good way to jolt the Obama administration into action. After all, the financial revelations of today bear a striking resemblance to those of 1933. In his own account of his investigation, Pecora described bond issues that were almost certainly worthless, but which 1920s bankers sold to uncomprehending investors anyway. He told of the bonuses which the bankers thereby won for themselves. He also told of the lucrative gifts banks gave to lawmakers from both political parties. And then he told of the banking industry’s indignation at being made to account for itself. It regarded the outraged public, in Pecora’s shorthand, as a “howling mob.”
The idea of a new Pecora investigation is catching on, particularly, but not exclusively, on the left.
It’s probably not going to happen, though, in the comprehensive way that it should. The reason is that understanding our problems, this time around, would require our political leaders to examine themselves.
The crisis today is not solely one of bank misbehavior. This is also about the failure of the regulators — the Wall Street policemen who dozed peacefully as the crime of the century went off beneath the window.
…
Now a different picture comes to mind. It’s Bill Clinton in November of 1999, surrounded by legislators of both parties, giving a shout-out to his brilliant Treasury Secretary Larry Summers, and signing the measure that overturned Glass-Steagall’s separation of investment from commercial banking. Mr. Clinton is confident about what he is doing. He knows the lessons of history, he talks glibly about “the new information-age global economy” that was the idol of deep thinkers everywhere in those days. “[T]he Glass-Steagall law is no longer appropriate to the economy in which we live,” he says. “It worked pretty well for the industrial economy, which was highly organized, much more centralized, and much more nationalized than the one in which we operate today. But the world is very different.”
It turns out the world hadn’t changed much after all. But the Democratic Party sure had. And while today’s chastened Democrats might be ready to reregulate the banks, they are no more willing to scrutinize the bad ideas of the Clinton years than Republicans are the bad ideas of the Bush years.
“We may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner,” Pecora wrote in 1939, “lest, in time to come, some attempt be made to abolish that post.”
Well, the time did come. The attempt was made. And we could use that reminder today.
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