Bits Bucket For May 13, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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View the HBB Photo Gallery *updated 4/13/2008
BTW, I should be back home from internet no-mans land tonight, and get back in the swing of things. For those who have been asking, I plan to be in San Diego the first or second weekend of June. Also, everyone who was due a T-shirt from me should have it by today. If you haven’t, or if I got the size or color wrong, just let me know and I’ll send you another one.
Right across the street from this little motel I’m in, is this place. Ha!
http://www.risingbidrealty.com/
“Give us a hollar with any and all of your real estate needs. ”
I believe the term is HOLLAH not hollar.
Yeah, and Arizona’s West Coast? It was 110 here yesterday, I bet.
Well it was 106 here in sunny Mesa, AZ yesterday. June/July/August ought to be nice and toasty.
It was 100 here in Tucson. Should be about that warm today.
Oh, and since you’re all waiting for the latest on the Neighborly Extortion Front, here’s the latest…
The plumbing guys finished work on my water line yesterday. And the city inspector approved the job.
The neighbors to the west have been on their sparkling best behavior since Monday evening. I’ve heard no further attempts to harass my plumbing guys or to get me or the plumbing contractor to pay for the repairs to their electrical system.
Speaking of electrical stuff, I was on the phone with my electrician last night. He’s coming over to estimate a job on Monday. We were discussing the neighbors, and how silly he thought their extortion attempt was.
About a half hour before I took Bryan the electrician’s call, I was outside doing post-water line yardwork in the back. I heard one of Monday’s drunken brothers in his front yard. He was whining about his residence’s lack of power to one of the college kids from across the street. She was all too eager to make the sympathetic noises he was seeking.
Me? I was tempted to put my rock rake down and call BS on his play for sympathy. But I restrained myself. Instead, I went in the house.
Fast-forward to the completion of that phone call from Bryan. What should I see outside my neighbors’ house but a big ole Tucson Electric Power truck. It was there for about a half hour.
I don’t know if the TEP visit restored the power, but I do know that there has been no further trouble from the Western Front.
This whole saga reminds me of a quote from that great sage, John Wayne:
Life is tough, but it’s tougher when you’re stupid.
Take that, neighbors.
It was 100 here in Tucson. Should be about that warm today.
So the ice finally broke on the Santa Cruz, eh?
…but I do know that there has been no further trouble from the Western Front.
So glad. I was half afraid that I was going to look at the online Tucson Citizen today and see how some idjits had got themselves kilt by ol’ Arizona Slim over some water rights.
But it’s a dry heat. I’ll take a 110 degree July day in Phoenix over a 90 degree day in Miami/Houston/Atlanta.
Drop your brain in a heated frying pan: it’s a dry heat!
I know Ben that this is not a complaint, as any true blooded beer drinking fella knows that is something to cheer about!
I think they want a dollar. like strippers.
I spent 6 months in 2002 wiring the high school there in Bull Head city.
I looked at houses 4bed 2 bath a block from the river and thought they were overpriced at $60000 in a new subdivision. In the $200s is wishing indeed.
200K? Jeebus, I look after foreclosures that were loaned a lot more than that. Some pretty high end stuff. There are a lot of golf course places, and retirees everywhere. Brookfield is here, one of the dumbest builders in the world. Long time readers may remember their subdivision in Cornville was the subject of the very first photos in the HBB gallery.
Just across the river is Laughlin NV. A cliff face of casinos. It’s like Vegas, but not very fun and hotter.
Ben, are you in the PP business? I am thinking about starting one here in FL. -carl
Boy are teenagers bored in Laughlin. I met a few while getting my tire fixed once in Bullhead. The overbuilding is so obvious there because the river and casinos are the only draw. The biker weekend is kinda interesting if you don’t get shanked.
RE: The biker weekend is kinda interesting if you don’t get shanked.
You’ll only get shanked if you’re a stone drunk, tough-guy who goes up to some 1%’er to lay on some commentary about what a bunch of wusses bikers are.
Oh, yeah-and don’t take pics of any 81’s.
I just saw a nice 1600 sq.ft. house in Las Vegas for $82. per foot…
Traveling again scdave?
“Be well, do good things, keep in touch”…there now you just like family!
Notice any Canadian speaking people look at the window postings of real estate storefronts?
“Rising Bid Realty”
Could you slip over at night and fix their sign by replacing ‘Bid’ with ‘Commission’?
It’s too high up, but that’s a good prank. I like pranks. However, I have to come out here once a month, so we’ll find out if they end up with a big “We Sell Foreclosures” banner like half of the RE offices I see.
I’ll get a photo before I leave this morning.
Ben Jones, a prankster. Who’d have thought?
The math building on campus was covered with tiles in different shades of blue. One night a bunch of us built a shower head out of scrap wood, chicken wire and tin foil, oh, and duct tape, and hung it off the roof. It was still there a few days later. We saw a bunch of the math profs laughing and pointing it out to each other. That was a good one. I think the people who were drunk enjoyed it even more.
I don’t know if it counts as a prank, but I had to sit and take notes at a Senate Finance Committee hearing yesterday, and today I have a sore throat. Maybe I should turn myself in as a possible swine flu case and tell them where I was yesterday?
Back when you had to register for classes in person by carrying your class schedule around, some friends of mine conducted the following prank at the University of Maryland. They set up a table in a hallway (outside the gym IIRC) between two different parts of the registration process. They had a little light on a stand. When a student walked by, they have them put their hand below the light, turn on the light, take their paperwork and make a production of initialing it and send them on their way. This continued on for an hour or more until the line to be processed by them backed up to the top of the stairs and somebody was sent to see what the holdup was.
Hey polly,
That building wasn’t known as the “Shower Towers”, was it? Sounds very familiar…
MrBubble
Yup. Thankfully destroyed in the library expansion. Do you have a Kemeny story?
I was not sorry to see them go. No Kemeny stories. Took a few calculus classes and Psyche Fun in the Shower Towers, but not much else. Now if they could just do away with the Choates. Horrid, horrid 1960s gerbil habitrails!
Choates are horrible but at least convinient. Well, better than the River Cluster anyway. I was in mid-mass, then in my house (co-ed). We got Professor Kemeny to come to a faculty dinner once. He was a hoot.
Choates are more convenient than the River, but that’s not saying much. I did some time in Mid-Mass as well. Good times. Believe it or not, I still work with my undergrad thesis advisor…
And I’m still in touch with my fave undergraduate prof, though I haven’t contacted him for a while. Possible appearance of impropriety thing with the job, but the conflict is over, so I could probably send him an e-mail…
Alum people want me to mentor a rising sophomore during a summer internship in DC. I’m working on a list: Don’t wear flip flops around the office all day, don’t ask people to take you with them to bars after work since you are under 21, don ‘t download twitter on your office computer…
Best prank I ever did was a balloon hidden in a cream cake that had to be sliced for a birthday celebration… talk about fragmentary explosive!
“…I like pranks.”
So, you & I follow in footsteps of our Master: Sir Greenisspent
Foreclosures. It’s what’s for dinner.
http://news.yahoo.com/s/ap/20090513/ap_on_bi_ge/us_foreclosure_rates_1
“First-quarter home sales fell in all but six states — Nevada, California, Arizona, Florida, Virginia and Minnesota — where buyers have been able to grab foreclosed homes at discounts, the realtors group said Tuesday.”
I wonder why they used the word ‘grab’ above? When I grab something, it’s usually a hasty act as apposed to one I think about. Like grabbing a burger and fries for lunch because I was too rushed to pack. No biggee. It’s almost as if they want people to buy a house without thinking it through.
Or grabbing a stingray while swimming in the ocean.
Crikey, that’s a nasty shelia!
(ewwwwwwwwwww, R.I.P. Steve)
Try not to grab yerself a falling knife.
“Nevada, California, Arizona, Florida, Virginia and Minnesota…”
One of these states is not like the other. Until it is. Welcome to the third world, Minnesota!
You mean it isn’t different here after all?
Woo! Arizona! Yay, Grand Canyon State!
NYC Boy should be here to see that.
It’s slow today so I stumbled over. I see my name here so I thought I’d reply. I’ve been busy lately working on some special projects. I have been trying to concentrate my focus, and anger, on those things.
Who would have thought that Minnesota, that coastal state, would have been a big player in the Housing Mania? NYCityBoy would have. The bubble was massive and it is bursting loudly and clearly.
- The house next to my sister recently went into foreclosure. It was listed at $159,900. I think it sold fairly quickly. That house was sold in 2004 for $249,000.
- A house down the street from my boyhood home was recently on the market. It sold fairly quickly. The price in 2005 or 2006 was right around $200,000. It was listed in 2009 at $135,000.
- My former co-worker bought in 2005. I would guess he’s $75,000 underwater and counting. By the time it’s over I expect him to be $125,000 underwater, or more.
There are foreclosures everywhere. Inventory is down but I think that is part of banks holding stuff off the market, hoping to get their own bailout. Houses are selling that are priced right, like the $135,000 listing I mentioned. That is 1,700 square feet. It didn’t make sense at $200,000 but it makes pretty good sense now.
My head nearly exploded this morning. AM New York has a headline of “Buy or Rent?” on today’s free paper. Of course I crossed out the word “Buy” and turned it to “Rent or Rent?”. The paper gave some tips for renters. You are not supposed to lowball on your rent offer. That might destroy goodwill. You should not ask for more than a 10 percent reduction in your rent. You should be happy with a $75 - $100 reduction. I am not making this up.
I say “#@$% you” to AM New York. We had our lease negotiation recently. I didn’t follow any of those rules. I asked for a 20+ percent decrease. I settled on about a 15% decrease. That is $400 per month less. I didn’t worry about offending the management company. In fact I went out of my way to offend them. If they didn’t like it, too bad. There are plenty of other options.
So, I got nearly 15% off and I live in a pretty “trendy” Manhattan neighborhood. You should see the deals you can get in The Financial District. Apartments that were $2,700 per month are now less than $2,000 per month. The inventory keeps coming on. I want to know what they were smoking in Clinton West, Hells Kitchen to you and me. Whoever funded those towers on 42nd Street, west of the Port Authority Bus Station deserves a real beating. And a beating they shall get.
Minnesota, and the rest of the nation, is nowhere near done with this pain. Well, it’s back to my hole. Maybe I’ll have something to share with everybody before we celebrate our Independence Day.
I downloaded the NAR spreadsheet so I could do some different sorts on the data. I took their 2006 median numbers against the 1Q2009 median numbers and calculated the declines. The worst ten areas and their declines were:
Cape Coral-Fort Myers, FL: -67.4%
Riverside-San Bernardino-Ontario, CA: -57.0%
Akron, OH: -56.3%
Sacramento-Arden-Roseville, CA: –54.8%
Sarasota-Bradenton-Venice, FL: -53.6%
Lansing-E.Lansing, MI: -52.4%
Phoenix-Mesa-Scottsdale, AZ: -51.8%
Las Vegas-Paradise, NV: -51.1%
Los Angeles-Long Beach-Santa Ana, CA: -48.1%
Cleveland-Elyria-Mentor, OH: -48.0%
Some areas have shown increases over that same time, including six in double digits:
Farmington, NM: +11.0%
Salt Lake City, UT: +13.3%
Bismarck, ND: +13.6%
Binghamton, NY: +13.8%
Beaumont-Port Arthur, TX: +14.6%
Cumberland, MD-WV: +20.1%
NAR didn’t supply all the necessary numbers for the following areas. There were no numbers at all for Detroit and Nashville. For Detroit it’s obvious why there aren’t any. But Nashville?
Baton Rouge, LA
Boise City-Nampa, ID
Danville, IL
Detroit-Warren-Livonia, MI
Kalamazoo-Portage, MI
Manchester-Nashua, NH
Nashville-Davidson-Murfreesboro, TN
Richmond, VA
Saginaw-Saginaw Township North, MI
Tulsa, OK
It’s slow today so I stumbled over.
Good to see you back, NYCityBoy. You should visit more often. We need more anger in the mix
The Beaumont-Port Arthur area has been affected by several hurricanes over the past several years.
NYCityBoy,
I’m glad to see you stumbled over here for a visit. Please don’t stay away too long.
“Inventory is down but I think that is part of banks holding stuff off the market, hoping to get their own bailout.”
Bingo, NYCB! I agree it looks like these banks are keeping their shadow inventory hidden under the rug holding out hope for a bailout offer from the Fed/Treasury. The housing market has only been crashing for three or so years now, so I am sure a bailout that dumps the myriad foreclosure homes currently owned by private banks onto Uncle Sam’s tired back is forthcoming any day now…
Baton Rouge, LA
Arm-pit of the world !!
“special projects”
What’s her name NYCityBoy?
Hi NYCB, was thinking of emailing you to tell you that the number of commie pinkos here really is quite small (you mentioned them off-line as part of the reason for your disappearance)…but here you are! and your stories of low NYC rents make me wonder if I should take a look at living there. Only, I’ve forgotten to how to be Urban.
“commie pinkos”
The lunatic fringe is what give this blog pizazz.
Wonderful to see a post from NYCityBoy, and just as great to read about the fall of Manhattan real estate.
How about grabbing some fries right out of the boiling vegetable oil with your bare fingers?
Never tried that, though I’ll guess it’s about as painful as buying a grossly overpriced house.
Some editor finally got sick of “snapped up”.
Same story from a different source: Foreclosures: ‘April was a shocker’
By Les Christie, CNNMoney staff writer
NEW YORK (CNNMoney) — Foreclosures in April exceeded even March’s blistering pace with a record 342,000 homes receiving notices of default, auction notices or undergoing bank repossessions, according to a regular industry report.
One of every 374 U.S. homes received a filing during the month, the highest monthly rate that RealtyTrac, an online marketer of foreclosed properties, has recorded in four-plus years of record keeping.
“April was a shocker,” said Rick Sharga, a spokesman for RealtyTrac. “I would have bet on a dip because March foreclosures were so high.
Instead, filings inched up 1% from March and rose 32% compared with April 2008.
There were 63,900 bank repossessions, the last stop in the foreclosure process. More than 1.3 million homes have now been lost to foreclosure since the market meltdown began in August 2007.
The good news is that at this rate every home in the nation will have received a foreclosure notice, on average, during the next 3 years.
If we assume that each property will only get foreclosed on twice in this downcycle we are only 5-6 years from the bottom.
Green shoots!!!
What value, if any, would an ongoing ratio of new unemployment applications -to-foreclosures provide? Currently about 2-to-1 on a monthly basis.
What is the historical rate measured against recessions?
Overheard in a supermarket line in Queen Creek, AZ:
Wife: “…… and i think it was a house on fire”
Husband: “Smelled like burning equity”
I busted a gut, maybe you had to be there…..
I wonder how many “mysterious” fires we will see this year. Not too many I suppose, seeing as people can just stop paying mortgages and seemingly live in the house forever. I guess the mortgage companies would rather not have an empty house, take 20 minutes to look at forclosed homes around the valley and you discover most of them are missing an A/C unit. I wonder where all the A/C units have gone to….
“Smelled like burning equity” - too cool!
Anyone see the Madoff program on Frontline last night? Wotta mess. The guy sure knew how to use intimidation tactics.
I’d like to see that guy get a massive testosterone panting cell-mate… that’s what I’d like..
I’d also like to see his victims be given the opportunity to piss on his face as he kneeled before them as part of his sentencing… now, wouldn’t that be something…
OK, chill a lil matthew…
roger Ben… Madoff ain’t my favorite guy..
Look, Madoff is a small fries. What he’s done is like stealing a candy bar versus the full scale bank robbery commited by Paulson, Geithner, Bernanke, Dodd, Schumer, Frank, etc.
He ripped off $50 billion, big deal. Those other guys made off with trillions and they’re still free and working on stealing even more money. Gotta put things into perspective.
Mike, you are sooo right.
There pushing the Fractional Banking Tax payer obligation to the point that were all going to get our 5K a month paychecks and at 65% Tax rate that wont even cover the interest on the debt obligation. Starvation is the new Black-2011.
Mike’s gotta a point there.
Anyone watch Jon Stewart a couple nights ago?
Author, Frank Partnoy wrote the book “The Match King”.
about the first and real ponzi guy and the originator of some of our Wallstreet derivatives etc today. Sounds like a really interesting story about this guy who cornered the market around the world on Matches, those cigarette lighter thingies of the past!
Don’t know why my mind automatically jumped to “The Match Girl” by Hans Christian Anderson.
+1, Mike.
Maddoff’s “victims” were greedy people who knew fully well what was going on. Maybe not all the details but they knew something fishy was happening and didn’t care.
Look, if someone came up to you and said they could give you guaranteed 10% a year returns on your investment when a CD is offering 2%, wouldn’t you suspect something fishy going on? I sure as hell would.
It’s not like Madoff was ripping off 70 year old grannies living on Social Security. He was ripping off people with 7 or 8 figures net worth who liked the idea of hangin’ with the big boys of Wall St and being part of the coolest club on Wall St.
I have as much sympathy for his victims as I did for the Enron employees who put 100% of their 401k in Enron stock. Stupid is stupid.
Many of the Enron employees had no choice as their companies were bought out, the 401ks were transferred and they had no chance get out without quitting their jobs.
skroodle,
It was actually worse than that. Just prior to the collapse, mgmt made the command decision to “change 401k providers” so while in transfer, employees had no access to their accounts.
All coincidence of course.
I thought the wealthy always made better returns on their investments than the proles? I was always under the impression there are doors with much higher returns open to those with large sums of cash to invest.
Efficiencies of scale, perhaps?
There was a story a while back about how Madoff investors knew he was doing something shady……Rumor Control was circulating the story that it was insider trading, so they all figured they would just go along for the ride.
They didn’t have a problem with someone geting hosed, until it was them…….
My “Sympathy Gage” for Madoff “investors” is pegged on ZERO.
The “victims” on the PBS show came off as pretty knowledgeable about how investments worked. When they talked about “preloading” or what ever it was called where Bernie could see the big trades coming through his market makers and take advantage of it, it all made sense to me.
All the victims thought Bernie was breaking the law and they were OK with Bernie doing it as long as they were making money. When it turned out he was breaking the law and they didn’t make any money, then they started crying “I was a victim, please help me get my money back”.
When the Benies guy said he never asked Bernie how he could guarantee 20% year in and year out, you could tell he was lying his pants off.
There were a lot of crooks, Bernie is just the one that confessed.
agree.. still would like to pee on him though… just for the fun of it..
It’s called frontrunning and is why I have almost no pity for his victims.
“frontrunning” - thats it, thanks, I couldn’t remember.
Bill Singer at RR/BD Law could define it better perhaps but it’s part of a general sub-category of securities infraction called “Front running & Free riding” as they’re often related so they are spoken in the same breath.
As in, a trader with a “new account” ( so $’s on deposit yet ) at an unrelated firm, accomplishes his “front running” trade w/ no real dollars at risk.
“It’s called frontrunning and is why I have almost no pity for his victims.”
+1. At least for the share of “victims” that thought Madoff was up to something shady, but were fine with it as long as they could have a share of the ill-gotten gains. They deserve what they got.
For any who didn’t think Madoff was up to some funny-business, I sympathize with them.
Only victims I feel sorry for are the ones that didn’t even know they were invested in madoff. Some folks invested in hedge funds that turned out to be feeder funds. Is there some way they could have known?
They thought they were paying Madoff a hefty commission to give them ‘plausible deniability’ of the illegal stuff Madoff was doing, so they didn’t look to closely at the books to see that Madoff was just ripping them off.
That is a Genius Scam. Madoff just didn’t leave town when he should have. Six months earlier he should have packed a bag and an enormous trunk of money and ran off to some place with no extridition treaty.
New York Times has a new story about huge chunks of money being withdrawn just a few months before he went down.
http://www.nytimes.com/2009/05/13/business/13madoff.html?ref=business
Oops. Not that new. It was from yesterday. Let the clawbacks begin.
agree.. still would like to pee on him though… just for the fun of it.
It’s called frontrunning and is why I have almost no pity for his victims.
No it isn’t. It’s called (something) showers, I think.
HI Aretheycrazy!
“Let the clawbacks begin”
No argument there. Although it was unfair to some of his west coast clients ( new money of no consequence to NY’s ) but he took their money, well, because he ‘could’ were taxed on phantom profits that were “re-invested”!
There’s… a laugh. Those folks need a break. The rest..?
They weren’t taxed on phantom earnings, they were taxed on actual earnings that they immediately gave back to the guy who was scamming them. If they hadn’t ‘reinvested’ the money, they would have had it. The profits were scam driven profits, but if they hadn’t doubled down with them, they would have had them.
Consequently, they deserve zero taxes back.
sfbubblebuyer,
I was just trying to be generous once in awhile..? IIRC the State of CA basically told them the same thing. Asking ‘them’ for money at this point is about a joke anyway…
It did strike me though that Bernie ‘did’ treat his West Coast clients w/ even more indifference. I mean if they were bad mouthing him or whatever, why would he care?
His primary focus was keeping people w/ access to the media happy.
Hey Desert. Are we happy that all the rich retirees have left the desert. All of the sudden about 10 days ago - poof! Not ready for the hellahot, yet, but not too bad.
Made-Off: his accountant said that Made-Off believed: “Investment bankers & large banks are destroying America…”
Hey Jas Jain & aladinsane, you think Bernie is on to something?
It was pretty interesting to put faces with some of the names I had read about in the paper.
When the first guy talked about how Madoff promised 20% returns way back in 1990 it really showed this had been going on for a long time and Madoff spread a lot of money around even back then.
And when the inteviewer asked him “didn’t you ever ask Madoff how he did it?”. “No, of course not”. It was obvious he was playing for future court cases.
I saw that. It was interesting. That Bienes guy made me laugh. He was trying to lay it all at the feet of Madoff even though there is no way he didn’t know he should be licensed. Who cares what Madoff thought about it? His reaction to the queston should have been all the information Bienes needed. He was in on that scam and should end up in jail, too, IMHO.
RE: Anyone see the Madoff program on Frontline last night? Wotta mess. The guy sure knew how to use intimidation tactics.
I saw it. The only thing I came away with, was you don’t need to have a lot of brains to have money, but only a lot of greed to watch it get flushed down a financial scam rathole.
I think the trustee guy, Irving Picard, is doing a hellava job with his clawbacks. Right now, according to the WSK he’s stickin’ it to Jeff & Babs Picower for the return of $5.1 billion earned off returns of like 950%.
Gonna just break my heart to see all those feeder fund crooks and their spoiled brat offspring get knocked off the Rich and Famous lifestyle pedestal which was all financed by a conspiracy of insider theft and fraud.
All these people remind me of the guards at Nazi concentration camps, who upon getting caught told the tribunal court they didn’t know what was causing the chimneys to smoke.
…all those feeder fund crooks and their spoiled brat offspring get knocked off the Rich and Famous lifestyle pedestal…
That’s a fascinating thought. That’s the kind of stuff that great fiction is made of.
Frontline’s “Inside the Meltdown” is available for online viewing on pbs.org, and airs again May 19th.
One piece of info surprised me - Frontline reported SEC didn’t just miss the Madoff crimes, they said SEC investigated and “officially cleared” Madoff in 2006 - something I did not know.
Unrelated to the Frontline reporting is a US News Article March 2009:
The new SEC chief, Mary Schapiro, a respected advocate of financial industry reform, has already made it clear that Wall Street’s go-go days are over. “The world has changed dramatically in the last year,” Schapiro said at a hearing on Capitol Hill last week, asking Congress for broader authority to supervise the financial industry. “There will be no sacred cows.”
I find it troubling that Schapiro is passing the buck already - saying SEC needs more authority to do its job. Even when SEC had authority to investigate, as in Madoff case, they failed.
The same US News article reported “SEC was afraid of Madoff and that SEC inter-office turf wars also impeded Madoff investigation.”
Broader authority isn’t going to help those issues.
The only thing that would make the SEC afraid of Madoff, is political corruption. The only person/persons that could threaten SEC officials are paid off politicians or they were paid off themselves. This is disgusting- we need some prosecutions.
Yes, this article points to SEC lawyers who “take their Rolodexes with them” once they move onto high paying jobs on Wall Street.
http://www.truthout.org/020509N
Considering how much shadow inventory is reportedly held off the market by the likes of the zombie GSEs, it is amazing how fast home prices keep dropping.
County home prices down as in most metro markets
By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. May 13, 2009
…
The latest median price for single-family resale homes in San Diego was $323,200, down 29.6 percent from the first quarter of 2008. San Diego ranked the 11th most expensive city in the country and 17th in terms of year-over-year price drops.
By comparison, San Diego was the nation’s fifth most expensive market just three years ago, before prices began their fall from a 2006 peak of $601,800, a decline of 46 percent, according to the association’s numbers.
Nationally, home prices have fallen 23.9 percent, from $221,900 in 2006 to $169,000 in the most recent quarter.
When I was in San Diego in 2005 a cabbie (African immigrant) told me that he lived with his wife and two other families in a 3br apt. He said that everybody that he knew lived at least 2 families per apartment. This was my first realization that the bubble was more than just price appreciation. It’s a major reason that I didn’t even consider accepting several job opportunities in southern CA after grad school. Or DC for that matter.
Oh Neil, are you reading capitulation right now in the heartland? Didn’t you predict Spring 2009 as the beginning of capitulation?
I think you nailed that sucker.
Good memory. I predicted April of 2009.
But I wonder, are we in a zombie, life supported Panic (stage prior to Capitulation? I’m not seeing some of the signs I was looking for (hence why on my blog I haven’t declared it). I think we’ll have to get through this ‘oh so strong’ seller’s season to really show the panic.
BTW, I’m particularly proud of my latest blog entry. It took a lot of time to compile the data (the CAR doesn’t exactly publish it in a friendly manner for graphing).
Got Popcorn?
Neil
It’s the enormous “stimulus” measures that are keeping the flame alive. At most they will delay things for another year or so.
Neil, great work on the charts, very well presented.
Good graphs, good job. But which bears thought the slide would be as rapid as the run-up? I didn’t hear that argument very often. More like “Prices are sticky on the way down” –which is very much what we’ve been observing.
There were quite a few who theorized that after the stickyness, the price drops on the downside would mirror the upside.
Instead, two different slopes. Anyhow… The main point is that the graphs show that this is far from over. The changes the NAR has touted have been nothing but either seasonal blips or noise.
The sales rates in those zip codes are absolutely imploding. In other words, in the standoff between buyers and sellers… buyers are tired of playing the game and have moved off the playing field.
Got Popcorn?
Neil
$323K in “San Diego”….what does that translate to in real world buying power….ie what will it take to buy a 4 bedroom house, with some land in a neighborhood where I don’t need to wear a bullet proof vest after dark.
“By comparison, San Diego was the nation’s fifth most expensive market just three years ago, before prices began their fall from a 2006 peak of $601,800, a decline of 46 percent, according to the association’s numbers.”
That figure is extremely skewed by the low end of the market. The upper end of the market is dead here in SD.
Hey PB,
My parents’ house zillow value in Fresno, one of the ground zero bubbles, keeps deflating. Was zillowed once as high as $274,000. In January of this year about $150,000. Today’s zillow value is $120,000.
Sole in 2001 for $75,000. Buyer put a lot of work into it and I now think he’s lost his gain, and then some.
Median household income in 2007 was $50,000. Assuming that it has gone down, we should have about 10% further to fall in order for median home price to equal 3X median income = affordable housing.
“We’ve never seen two consecutive months like this,” said Rick Sharga, RealtyTrac’s senior vice president for marketing. “It’s the volume that’s surprising.”..
It has always been amazing to me as to the level of denial that exists in this industry… is it denial or is it ignorance ? denial or complete horse-sh…?
I know it’s utter horse-sh… for the sharlatans in the industry (and there are many), but I also know that this industry is rife with total finacially clueless jackassess..
Have you ever witnessed an avalanche, Rick? Volume tends to increase as the mass of debris approaches the bottom of the mountain.
Doesn’t velocity increase as well? Something about 32ft/sec/sec? Can a bailout stop an avalanche? Maybe: Think snowfence made from freshly-printed hundred dollar bills woven together loosley and bonded with politician saliva.
Right — increasing volume and velocity, resulting in a cascading
debris flow that levels everything in its path.
and bonded with politician saliva.
Press, you have a nice turn with words!!
sativa? -
Kind of reminds me of a cartoon showing a small snowball rolling down the hill getting bigger and bigger, picking up everything that’s in its way.
PB
You made some good comments yesterday. One was about the financial motivation of government-tethered banks unloading REO inventory - they don’t have any. Compared to a usual banking repossession.
I now wonder whether the government has a plan to work the inventory back into the retail market… avoiding an avalanche. The tax credits, sweetheart deals to brokers and wholesalers can only absorb so many, I suppose.
There seems to be a correlation here (Central Calif.): the more higher-end a REO house home is, the less likely it is being marketed publicly.
They do have one big motivation - carrying costs. Normally this would be more than enough for them to unload REO hot potatoes as fast as they an.
That motivation however is offset however DC deals - current workings and even potential deals in the future. They’re finding that to be a very deep well. The more losses the banks pile up, the more likely they are to extort money from DC. Or I should say extort from the American citizens via the DC vacuum, by threatening the downfall of the economy if their demands are not met. Then they act like they’re doing us a favor by foregoing 10% of their bonuses, when in reality we should be stringing them up to the nearest tree.
well said..
Thanks, though I wondered if there was any end to the artificial life support systems for banks. As it is, it seems those carrying costs don’t make much difference.
“They do have one big motivation - carrying costs. Normally this would be more than enough for them to unload REO hot potatoes as fast as they an.”
Would mass squatting force their hand?
Those are called ‘pocket listings’. The sweetheart bargains.
desertdweller, you mention a perfect example of why this recession may be worse than all the others.
Smart wealthy people make money no matter what the state of the economy and having inside deals is usually one the reasons. In this case, foreclosed holdbacks (pocket listings) that are offered only to a select few.
Now think of other things (markets) this situation can apply to and you can see how “market fundamentals” can get badly skewed.
This is also why the truly wealthy have as much concern for the rest of us as you do the guy on the corner with the squeegee and a dirty rag who will wash your windshield for pocket change.
Gah! My syntax stinks! (I never could proof read my own stuff)
“They do have one big motivation - carrying costs. Normally this would be more than enough for them to unload REO hot potatoes as fast as they an.”
Would mass squatting force their hand?
Not if the mass squatting was somehow paid for by the government; e.g. in the form of damage writeoffs and/or section 8 renting. I wouldn’t put it past them, in the least.
“Not if the mass squatting was somehow paid for by the government; e.g. in the form of damage writeoffs and/or section 8 renting. I wouldn’t put it past them, in the least.”
I was meaning mass squatting without government involvement. Decrease demand for rentals driving down rents and encourage lenders to sell REO faster for fear that squatters will damage the property driving down prices of houses.
Good question re REO factors.
We did learn today what a “pocket” listing is.
Foreclosure-related notices to U.S. households:
March 340,000
April 342,000
Annualized rate (assuming this pace continues or increases for the next little while) = 6*(340,000+342,000) = 4,092,000
How soon is it again that AG sees a housing bottom?
Well this goes to our inflation/deflation discussions.
So a huge amount of debt is going bad.
A huge amount of shadow inventory sitting just off the market. Banks are clearly overwhelmed.
Government is talking about raising taxes on the remaining workers health benefits to pay for the rest. Not sure if this is deflationary but O is negotiating with providers to lower costs.
The rules on mark to market are changing.
All that makes a huge amount of noise into comparing M0 -M2 -M3 numbers.
I was initially misled into thinking that O was negotiating w/ health-care providers to “lower” costs. Not so. Their Great Big Offer is not to lower costs, but to lower the rate of increase of costs. That “lowering by 1.5% per year” just means that they are making it a goal to lower the rate of health-care inflation from 6% per year to 4.5% per year…and they get ten years in which to accomplish this great big decrease. YAWWWWN !!!
AG… a sage, a genius, an American hero….. ya, righto…
Now there is a stooge worthy of your vitriol - much more so than lil’ Bernie.
I’d pee on them both, but would start w/Bernie for the way he treated his employees… At least I don’t see AG doing that..
Mathew, you must be hydrating alot today!
I noticed Greenspan said “seeds of a bottom”. You have to wonder at the stabilization in rate from month to month. It is selling season so that might help but also could be something else limiting foreclosure rates. Might be the banks are still overwhelmed by the sheer number, might be some regional where certain banks are just getting hit with the volume. Could also be that as the banks face insolvency, employees are fleeing, making processing less efficient.
I’m looking at this big mess and wish somehow we had just turned away back in 2000-2001.
I’ve got a long term govt contract job… don’t know how secure that is. Cutting expenses to the bone to buffer for this.
Only going to get uglier.
“seeds of a bottom”.
If it is anything like bamboo, we won’t be seeing anything sprout for a few yrs. Or if it is anything like my vegs this yr, some sprouted, some sprouted-fell over=died, a few are producing a little bit. Which seed is going to be the bountiful winner?
But with the economy and the idiots running it into ground, and greedy thieves…those seeds just might be ‘old maids’.
OK muggy. What’s the plan today? Buy the dips? Geithner says we are out of the woods and ready to party!
Is it the drop in foreclosure notices, the increase in retail prices or the end of home price declines that has Geithner all McOptimistic?
I think he heard about the candy crapping unicorn.
Just out of curiosity, who confirmed it was candy?
Marketers with a blind taste test. Of course, they used a jar of fossilized candy rocks, those weird ribbon things, and cough drops that your find in old folks home as the comparison.
Given the choices, I can see how you might think unicorn poop was the candy.
PB,
It’s in ways an idle threat to say they’re moving forward fairly quickly on the “server process”. You mean you’re actually moving forward on foreclosing on a home in Phoenix, “owned” by some specuvestor from L.A that you haven’t had -any- contact with in a year and half?
Got it.
From wisconsin.
The Good news: States home prices are HOLDING.
The Bad news: States HOUSES aren’t SELLING.
Hummmm
“The drop-off in home sales in the first quarter was worse in Wisconsin than the nation as a whole, but the prices of homes held up better here.
Data released Tuesday by state and national Realtors organizations show sales of existing homes fell 22.6% in the state compared with the first quarter of 2008. Nationally, home sales were down only 6.8%, which was attributed to growth in the western U.S. from sales of deeply discounted and foreclosed homes.”
uh huh
…”Malkasian said a more-current localized report issued Monday by Metro MLS Inc., which tracks property sales by Realtors in southeastern Wisconsin, might have offered a peek into the future. MLS found that home sales in the metro Milwaukee area fell about 2% in April, the smallest monthly drop so far this year. He said the first quarter might have been the “dark corner” of the recession and normality may be returning.”
Return from the Dark Side ?…Oh…goodie
“In January we were on life support. Now you’ve got a pulse,” Malkasian said.
It LIVES !…it’s ALIVE Igor !!!
http://www.jsonline.com/business/44790992.html
Igor: Dr. Frankenstein…
Dr. Frederick Frankenstein: “Fronkensteen.”
Igor: You’re putting me on.
Dr. Frederick Frankenstein: No, it’s pronounced “Fronkensteen.”
Igor: Do you also say “Froaderick”?
Dr. Frederick Frankenstein: No… ”Frederick.”
Igor: Well, why isn’t it “Froaderick Fronkensteen”?
Dr. Frederick Frankenstein: It isn’t; it’s “Frederick Fronkensteen.”
Igor: I see.
Dr. Frederick Frankenstein: You must be Igor.
[He pronounces it ee-gor]
Igor: No, it’s pronounced “eye-gor.”
Dr. Frederick Frankenstein: But they told me it was “ee-gor.”
Igor: Well, they were wrong then, weren’t they?
Igor: Well, they were wrong then, weren’t they?
Frau Blucher?!
“Abbie-……somebody”
“Abbie-who???”
“Abbie-normal, I think……..”
SFBaygal…movie quotes posts are okay but no more songs. I’ve been butchering ‘It never rains in Southern California’ since you last posted it WEEKS ago!
My neighbors are threatening to pay the local SWAT Team for a shower side job if they hear anything resembling…
Got on a board a west bound 747
Didn’t think before deciding what to do
All that talk of opportunities, TV breaks and movies
Rang true, sure rang true.
Seems it never rains in Southern California
Seems I’ve often heard that kind of talk before
It never rains in California
But girl, don’t they warn ya
It pours man it pours.
…One More Time ..BLAM !
“Is it the drop in foreclosure notices, the increase in retail prices or the end of home price declines that has Geithner all McOptimistic?”
Maybe it was the drop in retail sales.
Muggy can’t come to the HBB right now as he’s busy watching the ticker.
Lol, I’m in meetings all morning! GAH!
Dilbert fan? -
“OK muggy. What’s the plan today? ”
I dunno, change some diapers, take a nap, grade some papers, maybe take a short hike if the weather holds out…
That sounds like the life! It’s bizarre, but I miss changing diapers, now that none of my kids wear them any longer…
PB, I have the slideshow desktop on one of my laptops, and it cycles through all of our photos, and I simply cannot believe how fast it’s all going. Amazing.
It is pretty crazy how fast things go by, huh?
However, there will be stages that seem to last much, much longer.
ah yes, the notorious TEENAGE years…
You’re crazy. One ofthe worst things about babies is changing diapers. And I went the disposable route.
It’s different for moms. As in too many diapers.
“It’s bizarre, but I miss changing diapers”
You’ll make an excellent baby sitter - errr I mean grandfather.
You could volunteer at an elderly care center, PB…get your fill of diaper-changing that way
I suspect I will somehow survive without a diaper-changing fix until my kids get married and bring me grandchildren.
I always change my diapers before any hike too.
Bet the Farm muggy. “Qui audet adipiscitur”
“He who dares Wins” was the motto of at least 9 elite SOF units and should have been the epithet of on the tombstones of at least a million Wall Street gamblers.
“Qui audet adipiscitur”
Let it ride!
O.k., seriously, Geithner seems determined to cram unicorn bux down everyone’s throat, but nobody wants it… it’s like the end of Reservoir Dogs — he’s both life and death. At some point someone will pull the trigger, then it will just be body-sorting.
I’m still in camp combo. Everyone wants cash, and nobody wants debt, because debt is being optimistic about the future, and I’m not seeing a lot of love for the future right now. The Fed just wants to cram more debt.
Am I doing o.k.?
Depends. Have you enabled margin on your trading account? You should consider doubling down on those picks you listed yesterday.
Did it once, and only once!
Wall Street Journal
* MAY 12, 2009, 2:00 P.M. ET
Home Builders Fall As Report Details Foreclosure Interest
By Dawn Wotapka
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)– For home builders grumbling that foreclosures are stealing business, the National Association of Realtors just gave them more to complain about.
Tuesday, the trade group reported that buyers sought deeply discounted distressed sales - foreclosures and short sales - which made up nearly half of the first-quarter’s transactions and dragged down median home prices in most markets.
Builders, already struggling to sell homes during the worst downturn in decades, are finding foreclosures stubborn competition. The flood of bargain-priced inventory - distressed homes typically sell for 20% less than traditional units - is forcing the sector to build smaller and cheaper inventory and to play up its warranties.
“…is forcing the sector to build smaller and cheaper inventory” ?
Well this might actually be so, from what I understand Canadians aren’t as pretentious as there southern English neighbors.
Fewer people there can afford McMansions. But just drive the outskirts of Toronto, Calgary, Edmonton, or within Vancouver - you’ll see some horribly excessive housing. The aspiration is there.
My favorite development was north of Toronto. These enormous 2-story homes were gray brick cubes, at least 3000 sf. A nice forest had been razed throughout the development, so the neighborhood looked like cinderblocks dropped in a clearcut. It was an hour drive to downtown without traffic. Banners chirped “From the mid 700s” a year ago.
A carpenter friend of mine told me the developer forgot to anchor the roofs to the the houses. When it was windy, the roofs would flap upward ever so slightly. (As someone famous once said, “Bwahahahahhahaha!!!!!”)
I’ve been bouncing around Ontario my entire life and haven’t seen a small detached house being built in the last 10-15 years. Some smaller row or semis however. Either way, I’d agree with AK-LA in saying the pretention isn’t much different, though I’d say just as many can afford McMansions (median incomes are roughly the same).
That would really be cool if those houses were in Florida.
The homebuilders will soon be offering to build accomodations consisting of tool sheds and dog houses for the growing pool of indigent buyers. “Our Blue-Tarp special has seen an uptick in interest as we have for the last time approached the bottom” says Bob Toll as he calls a bottom for the hundreth time.
I was actually pondering living in one of those steel buildings, or perhaps a commercial building.
I thunk retail was coming back, as consumers were all McOptimistic again, seeing green shoots and all?
Wall Street Journal
* MAY 13, 2009, 8:58 A.M. ET
Retail Sales Post April Decline
By JEFF BATER
WASHINGTON — U.S. retail sales fell a second month in a row during April, beaten below expectations by a recession that’s cost nearly six million jobs.
Retail sales decreased by 0.4% compared to the prior month, the Commerce Department said Wednesday. Economists expected an increase of 0.1%.
Sales in March were revised down, decreasing 1.3% instead of 1.2% as previously reported. Sales rose in January and February, after sliding six straight months.
AND, That is the bogus, padded, tweaked, f-ed with number with the lipstick and all…
Maybe I’d shop more if stores carried anything I wanted. Nope. We’re reducing possessions not acquiring more.
beaten below expectations by a recession that’s cost nearly six million jobs
I thought that jobs didn’t matter, and that the American consumers were “resilient” or something like that.
Jobs don’t matter so much as the debt. By contrast, in the early 2000s, many more out-of-work Americans lived off their home equity loans, which is rather difficult if your mortgage is severely underwater.
While anecdotal evidence suggests some improvement in sales in recent weeks, “to offset the plunge in wealth, the household saving rate still needs to double from the current rate of 4 percent,” Dales wrote. “With falling employment hitting incomes, this can only be achieved by a further retrenchment in spending.”
That should do wonders for all types of spending. Should the “experts” be so confident a bottom is near?
These “experts” must behave very, very badly. Their bottoms keep getting spanked.
What’s worse are some headlines reading “Surprising Drop In Retail Sales…”
“Surprising?” Really?
It’s gonna be a long recession.
I suppose it is better to shut the barn door after the horses have run away than to leave it open forever.
Wall Street Journal
* MANAGEMENT
* MAY 13, 2009
U.S. Eyes Bank Pay Overhaul
Administration in Early Talks on Ways to Curb Compensation Across Finance
By DEBORAH SOLOMON and DAMIAN PALETTA
WASHINGTON — The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.
The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance.
Administration and regulatory officials are looking at various options, including using the Federal Reserve’s supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.
Among ideas being discussed are Fed rules that would curb banks’ ability to pay employees in a way that would threaten the “safety and soundness” of the bank — such as paying loan officers for the volume of business they do, not the quality. The administration is also discussing issuing “best practices” to guide firms in structuring pay.
I tell you how to fix some of the mess there on Wall Street, we need to up the ante (heavily) in terms of punishment for fraud and breaking SEC trading laws, especially when that fraud or SEC violation disadvantages the public interest…
Commit trading fraud or and break and SEC rule and you will loose your trading license for a period of time… period… that applies to your entire firm of employees.. Make the investment houses and traders police themselves… make the pain high enough that they dare not break the law or commit fraud…. ..
At present, the risk - reward ratio for committing fraud and violating SEC rules is out of whack… that’s why it’s done time and again because it’s worth the risk to those investment houses and firms… too much onus on the SEC having to catch the perpetrators… baloney… make it real, real painful to break the law… let them invest in their own internal audit staffs as opposed to that being on the tax payer’s dime.. . up the ante…
Step 1. Stop giving the Fed money
Step 2. Let investors eat their losses
Step 3. Change the 401K laws so investment options are not limited to money market funds/company stock exc
Step 4. Raise taxes and cut spending to service the debt
Step 5. slap a liberal
Step 6. Stop guaranteeing the GSE debt
Step 7. Put hard reserve requirements in place and end sweeps on demand accounts
HEY, JAMES.
Erase that #5. Now. I don’t like that one. I say, if anyone, slap a politician. Start with congress members, Mary Bono for one then continue.
Heeeeeeeeeeeeerrrrrrrrrrrrrrreeeeeeeeeee’sss Cheney:
“Where is the liberal b@stard, I’ll slap ‘em, then I’ll paddle ‘em…’till they can’t stand!”
Run Hwy, run!
“Liberal” is a very relative term. It means different - and actually quite opposite - things in different times and different places. The U.S. media has generally placed the entirely wrong label on it. Political party-wise it’s traditionally been most closely associated with Libertarian (thus the name), however nowadays Libertarian is often labeled as “conservative”, with “conservative” and “liberal” supposedly being at opposite ends of the (IMO very invalid and contrived) political spectrum.
http://en.wikipedia.org/wiki/Liberalism
Step 5. slap a liberal
What about the conservatives who got their base so wound up about gay marriage, stem cell research, late term abortion, gun control and terrists that the howling drowned out any reasonable voices in the last 8 years?
“Step 1. Stop giving the Fed money”
Do you propose to take away their printing press? Because nobody has to give them money — they are perfectly capable of creating it on their own.
When the insiders and the politicians are being handsomely rewarded by the insider breaking the rules what makes you think the politicians will change the rules. I think the financial industry is in business to rob steal, and scam the public. They have bought out the govt. Thanks for your wishful thinking.
I’d add: “and your hand, too!”
“…The administration is also discussing issuing “best practices” to guide firms in structuring pay”
There’s that word again: “Professional”
“Administration in Early Talks on Ways to Curb…”
Old Cuban saying: “journey of 90 miles begins with first paddle”
PB,
One needn’t be employed by Mega Bank to delve into ‘those’ issues. Our local bank ( Bank-Implode entry #14 ) with all of (3) branches ran ( or claims to have ran ) into the pitfall of compensating loan peddlers based on quantity, not ‘quality’.
Ahem, changing their payout structure after the horses were out, didn’t save the bank. I just don’t understand how they intend to make it applicable to spread banking as well as WS?
How are bankers going to be able to support $1m apartment prices in Manhattan if their pay gets linked to performance?
$1m apt in Manhattan? Dude, that’s only MIDDLE CLASS in Manhattan, not banker class.
Call me silly, but I have way more problems with the shady ethics of those in the financial industry than with their level of compensation.
So, why is their pay the focus of the pols - and not their behavior?
(I know the answer, and so do you)
The way pay is structured certainly contributed to the bubble and subsequent collapse. Wallstreet had every incentive to manipulate the system for short term gains knowing that they didn’t have to worry about the losses. I was watching Taleb on Youtube yesterday saying the same thing. The government can’t demand that companies change their pay practices but they sure as hell can change the tax code. For starters wallstreet should pay the top income tax rate for all of their income. I’d be willing to give them a brake on some of their pay if it is structured so that it supports long term thinking. They could get stock in their company each month that must be sold in exactly 5 years, no timing the market. Also no taking loans out against said stock (Ken Lay plan), and no shorting your own company. If you buy stock in your company it also must be held for a fixed number of years and it can’t be purchased in one lump sum or sold in one lump sum or else you pay income tax rates on the sale. If they want long term cap gains rate they have to purchase it over the course of a year. ie you want to buy 120,000 dollars of stock you buy 10,000 each month for a year. Insiders should be handicapped and penalized for insider trading.
Brake shoe or brake disc?? -
because their lousy behavior is tied to their generous pay packages… after all, they are smarter than the rest of us, so we just need to deal with it…
Putting a cap on someone’s compensation will not improve their behavior. This debate over compensation is yet another wasteful distraction.
edgewaterjohn,
Unfortunately… BINGO!
Besides, most of these guys are so far gone mentally, there’s no bringing them back into the fold. So what’s the point? Take away the housing boom from Nardelli’s Home Despot, and what do you have?
Most of the issues *measton addresses are ( or rather ‘were’ ) real concerns -before- the introduction of Reg. 144. From a “retail” perspective ( believe it or not ) the securities industry is squeaky clean! The problem is they’re feeding the retail brokers CR@P product to put in the pipeline for retail investor consumption.
As James notes above, I’m all for having a -very- selective offering for 401k consumption. And if no one has an interest in conforming to that, then fine, money market it is.
Fraudsters will follow the money. Turn off the money spigots, and the fraudsters will go find something else to do. Personally, I’d rather them be out of finance and in something more obviously a hustle, since the average idiot would then have a slightly better shot at seeing the fraudsters for what they are.
U.S. Retail Sales Unexpectedly Fall for Second Month
“Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating that the rising unemployment rate is prompting consumers to boost their savings.
The 0.4 percent decrease followed a revised 1.3 percent drop in March that was larger than previously estimated, the Commerce Department said today in Washington. Excluding auto dealers, sales fell 0.5 percent.
Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for years, analysts said. As long as the biggest part of the economy is constrained, any recovery from the worst recession in at least half a century is likely to be subdued.”
It’s lucky for us that we are not a consumer based economy.
Oh, wait …
combo,
On the resets of alt-As etc, any data on “bank re-modifications?”
p.s. This round is yours.
What round is this?
No COLA(cost of living allwance) for Social Security for receipients for the next couple of years. I believe it was on ABC, but I don’t have the link. The Fed says no Inflation !!
Yeah..that should really slow the expected Flood of those Rich Retiring Boomers coming to your sunny hometown, located at the center of the Universe, to purchase those surplus 700k plus POS McMansions a little.
Scratch Plan A Wilie….Contact Acme and purchase “Get Rich Quick” Scheme Plans B…C…and D
Beep, beep
meep meep. Saw 3 of them last night around dusk.
When I was driving the backroads of Phoenix to Tucson years ago, I would have roadrunners running along side of my little pickup truck. Loved the company.
I’m one Boomer who’s glad he saw the crash coming and sold off his overpriced place in May 2006. I wonder what the other guys in my cohort were smoking.
Seriously - If people don’t have massive credit available and houses to use as ATMs, how will the spend enough to keep the economy running?
We COULD give people reasonable living wages which would encourage spending and therefore create jobs, but that’s just damn socialeest/commie talk!
What we’ll probably do is pass the Retail Stimulus and Recovery Act which requires J6P to make a minimum monthly retail purchase as means tested to income, with subsidy assistance if needed along with subsidiary special programs, which will encourage private enterprise to offer training on how to game, er, maximize the system along with new courses at the local CC to train the new bureaucrats needed to administer the programs.
“Idiocracy” was a documentary.
You have two kidneys, don’t you?
“U.S. Retail Sales Unexpectedly Fall for Second Month”
Yup, I wanted to buy SZK, but you need a margin account. Not quite there yet.
We did our part for the economy and were amazed.
The adage holds, ‘those who have money, make money when things are bad’… (or get more for the buck)
bought 4 pr trousers, 4 shirts, 2 pr men’s shoes, one sport jacket. Under $300.00. Went in with all cash. Their eyes when you roll out cash….
That is it for a few yrs, again.
frugality.
See it is easier to keep new clothes clean and fresh looking if you eat in your underwears, hahahaha. JUST kidding.
Just had a brick planter installed and professionally landscaped for half price. Cash is king!
“Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for years, analysts said.”
How is it that the fall in retail sales was unexpected? Oh yeah — psychobabble economists don’t believe in budget constraints. If everyone is all McHappy and McOptimistic again, then they can think their way into prosperity and start spending money hand over foot again like back in 2005…
PB,
That is so… funny? How many ‘here’ felt like things couldn’t possibly be better than 2005? How many here felt like they were “on top of the world” in ‘05?
How many of us were primed for a spending orgy, and other than a subscription to MEW Lifestyle Magazine, WTF ‘else’ was so great about 2005? But it seems like the year most in this country aspire to return to. I mean other than the first White Sox WS Championship since..?
“…may limit consumers’ ability to spend for years…”
Duration. Duration. Duration.
How much longer can the candle shoppe owner keep meeting payroll with her AMEX card?
John, John, John…
It’s “Ye Olde Pirate Candle Shoppe and Scrapbooking Emporium.”
I think they sell $300 jeans that don’t look good on anyone too, but it didn’t make it into the name of the store.
And places like “Sweet Nothings Lingerie and Wedding Boutique”, right in our dear Ben’s backyard, in Flagstaff.
LOL! I just heard on my favorite local radio station about a scrapbooking store grand opening. The 1st thing I thought of was Chris Rock’s shtick “Grand Opening/Grand Closing”. I’m guessing hubby or sugardaddy is funding this retail genius as I don’t think banks are doing many HELOC’s these days.
The sad part is “payroll” is her daughter who could no longer make it as a real estate agent. The daughter of course has 2 kids and an ex who abandoned her after he found out she heloced $150K out of the house to buy the Lexus & all the “Gap for Kids” crap.
Now Grandma is really sweatin’. Hehe!
“Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating that the rising unemployment rate is prompting consumers to boost their savings.”
I love how the bad news is always unexpected. Dropping retail sales and record foreclosures….sure looks like “stabilization” to me.
I work in downtown San Francisco in the Union Square area and the stores are basically empty whenever I walk around. And hardly anyone is carrying shopping bags, so there aren’t any “green shoots” in my neck of the woods.
“…rising unemployment rate is prompting consumers to boost their savings.”
How’s that for spin?
That’s like saying application of a tourniquet to an arm that just got cut off by a table saw is “boosting your blood supply”.
No fools - we’re not “boosting our savings”. We’re trying to prevent drowning from the massive debt that the government and banks are pouring down our throats.
BTW - I resent being called a “consumer”. Every time you do that you make me want to buy less stuff. Stick that in your pipe and smoke it.
“…rising unemployment rate is prompting consumers to boost their savings.”
How’s that for spin?
That’s like saying application of a tourniquet to an arm that just got cut off by a table saw is “boosting your blood supply”.
—————-
Well done.
I am humbled, sir.
I resent being called a “consumer”. Every time you do that you make me want to buy less stuff. Stick that in your pipe and smoke it.
I’m not a buyer
dammit, I’m a man..
(With apologies to Bob Seeger)
Why is it assumed the money is there, but going into savings? It seems to me that with layoffs and salary decreases, the money simply isn’t there to spend?
“Why is it assumed the money is there, but going into savings? It seems to me that with layoffs and salary decreases, the money simply isn’t there to spend?”
How much of it is servicing debt? Money that isn’t being spent isn’t necessarily being saved.
Agreed. Regardless of whether the money’s not there, or if people are servicing debt, or simply taking on less debt…none of that is “savings”.
Ugh.
It’s never ending!!!
Many in the real estate industry say that Congress should do more to stimulate housing demand.
“They need to go further,” said Robert Sibcy, president of Sibcy Cline Inc., a Cincinnati real estate agency, drawing applause from a crowd of real estate agents. “They need to do it for all buyers.”
Housing and Urban Development Secretary Shaun Donovan said the Federal Housing Administration soon will allow its borrowers to get short-term loans and turn the $8,000 tax credit into a down payment.
The tax credit, “is not only a tremendous opportunity for first-time home buyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing,” Donovan said, according to prepared remarks.
We’re talking about 6th grade level understanding of finance and economics here… Although I’m sure housing in Cincinnati is not nearly as bad as all bubble locals, this guy should be screaming to have Congressional support removed so that housing prices can reset in the bubble locals to historic norms so they can start to sell houses in Cincinnati again..
Sorry Cincinnati, it’s high housnig prices in CA, NV, AZ, FL and those places that are preventing sales in your area… there is only so much money and risk available to loan against residential real estate at the moment and the bubble locals are still hogging the bacon..
and given that the extended RE industry employs a lot of people when things are in balance and working properly, we need to get house prices to reset sooner to get people working again… then we need to cap price growth to prevent the next bubble… regional interest rates if necessary…
25% interest rates on mortgage loans in San Fran will bring prices back to earth where they belong and would have prevented all this hell to begin with.. AG was too busy writing his next book though..
“…then we need to cap price growth to prevent the next bubble… regional interest rates if necessary…25% interest rates on mortgage loans…”
I don’t believe any extraordinary measures are needed to bring prices back in line with incomes. Mr Market is perfectly capable of getting the job done, if only the myriad manipulative market interventions were eliminated, including the $500K cap gains exclusion, mortgage interest deduction, first-time buyer tax credit, Fed-engineered super-duper-stimulative low mortgage rates etc etc etc.
disagree… regional interest rates is needed I think to cap growth beyond the means of the public who live there… bubble economics works only half the time..
Ah! PB, now you are cutting into my business. My clients are in love with the mortgage interest deduction, even though a lot of them actually don’t itemize deductions. They just use the IDEA of the m.i.d. as a rationalization for borrowing at the insanely high rates I charge them. (Since the super-stimulative rates are not available to mobile-home dwellers.)
Of course I always hated the m.i.d. until I became a mortgage lender; that’s really why I had to go into the lending game. If you can’t stand the law, you can at least take advantage of it.
“Ah! PB, now you are cutting into my business.”
Your business would survive the elimination of the mortgage interest deduction just fine, after the period of adjustment of houses to price levels in line with after-tax income was done. In fact, your business might be better than ever in the long run, without bubbles to drive home prices skyward to levels that ensure a nasty real estate bust in the aftermath when few are qualified and interested in taking out mortgage loans.
“25% interest rates on mortgage loans”
I also note that despite the Fed’s frantic efforts to drop interest rates down to hyper-stimulative levels, going to quantitative easing when a 0% Fed Funds rate did not get the job done, they are still pushing on a string, as home prices are dropping at the fastest rate in U.S. history as a backdrop to the noise of endless jawboning about how the U.S. economy (and the housing market in particular) is about to bottom out. I guess so long as nobody notices how fast home prices are dropping, their credibility will remain intact.
Agreed. The evidence is indisputable. Let prices drop 50% and sales go up dramatically. Rather than focusing on trapping people in at inflated prices, and encourage a generation of stagnation, why not get back to normal growth? Let prices drop 70%, and they will have more work than they can handle. Also, think how much money the government can save on affordable housing. Rather than subsidize a 100k of a 300k condo, why not let its market price stablize at 150k. That 100k saved by the government can be applied towards health care. It’s a win win if the government actually cared a damn about affordable housing. The icing on the cake is that the prudent can retire earlier and less jobs will go overseas. What is wrong with a better America?
“Rather than focusing on trapping people in at inflated prices, and encourage a generation of stagnation, why not get back to normal growth?”
Being in utter denial about the inflation and collapse of the biggest housing bubble in the history of the U.S., politicians have no answer to your question, as they have not even considered it.
“The icing on the cake is that the prudent can retire earlier and less jobs will go overseas.”
I’m glad you brought this up, because I have so far heard no MSM-cited ‘experts’ address the connection between the Wall Street-engineered gutting of retirement savings and the need for older workers to clog the job market pipeline by hanging on to whatever employment they can continue for as long as possible. Consequently, positions that would normally be available to new labor market entrants are not opening. Constipated labor demand coupled with rapidly rising unemployment is a bad combination of factors.
I did read a story about possible layoffs at the Postal Service due to planned number of retirees not retiring because of investments cratering.
I think government employees might be the only ones able to hang on, as private employers are pretty good at getting rid of the older workers.
“…layoffs at the Postal Service…”
Yeah, I suppose they can’t all pilfer stamps.
I witnessed a postal worker in Norfolk saying to another customer that his retirement just got pushed way back due to 401k and other retirement savings going poof.
“…positions that would normally be available to new labor market entrants are not opening.”
Mr. Bear, the GOP has a whole list of workers who qualify for those positions, but first they have to put them through a training program that teaches them what that little basket being passed around in church is for & then later how fill out the application for their community gate pin number…which requires their drivers license number, social security card and Homeland security profile clearance documentation.
Do they still harvest peaches by hand in the South?
Professor Bear,
With all due respect sir, I had to endure a ton of comments about the oh-so-convenient collapse of retirement savings all during the Tech Wreck!
Was ‘that’ carefully engineered as well?
Price drops would help everybody — EXCEPT the big banks, because that would drop those toxic MBS assets from near-worthless to totally worthless. And we all know the banks are too big to fail.
bingo…. got that right… affordable housing is not the model the banks decided America needs, though… the model they decided for us all if for all of us to be in hock up to our eyeballs with mortgage debt payable to them, while they trade those inflated mortgage products on the free market and reap massive financial rewards…. yea, that’s the ticket.. that sounds like a good plan for America..
they decided for us all if for all of us to be in hock up to our eyeballs with mortgage debt payable to them, while they trade those inflated mortgage products on the free market and reap massive financial rewards
+1. We don’t care if the debt is ever paid back over 30 years, as long we can take our skim NOW, and our stock price goes up NOW…
F%&*#-ers need to fail, and deserve to fail.
“…the model they decided for us all if for all of us to be in hock up to our eyeballs with mortgage debt payable to them, …”
with foreclosure in store for anyone who cannot run fast enough to keep up with the endless, massive monthly payments.
I don’t get this whole “the banks decided we should be in hock up to our eyeballs” thing. The banks didn’t force anyone to buy anything or take any sort of loan. It seems the board has shifted focus away from all the stupid people that made stupid decisions, to it all being a plot by those in the financial industry to ruin the country. If people had made rational, prudent decisions - like most on the blog seemed to have, the banks couldn’t have really done squat.
I don’t get this whole “the banks decided we should be in hock up to our eyeballs” thing. The banks didn’t force anyone to buy anything or take any sort of loan. It seems the board has shifted focus away from all the stupid people that made stupid decisions, to it all being a plot by those in the financial industry to ruin the country. If people had made rational, prudent decisions - like most on the blog seemed to have, the banks couldn’t have really done squat.
Which is more likely:
A. A few people in key decision-making and money-making positions decide they want more money, and decide to enact policies to extract said money by new lending methods and regulatory changes, or
B. 500 million or so people or simultaneously get way more greedy and stupid than they previously were.
30 seconds for your answer.
atc,
It’s not a gun to the head situation of course, but a slow but steady guiding of attitudes towards a debt lifestyle. Many of us didn’t buy it, but they don’t need everyone to show a profit.
My wake up call came over a decade ago, when I heard a particular news report. The gist of it was that a retailer had made more money from its financing division than from actually selling stuff (might have been Sears).
Low Monthly Payments Forever
(I apologize to whoever said this first as I’ve forgotten and don’t have to slog through past BB, but it’s a damn fine slogan)
500 million or so people or simultaneously get way more greedy and stupid than they previously were.
Who said they became more greedy? Could it not be that they were just as greedy, but had new options placed in front of them? (ie the ability to borrow gobs of money at below-market rates)
“The banks didn’t force anyone to buy anything or take any sort of loan.”
I get confused whenever I hear this. I cannot for the life of me figure out how the future debtor was also the bank officer who made the final approval of the loan WITHOUT DUE DILIGENCE or the board of directors who APPROVED THE POLICY of loaning to a historically high risk market that traditionally NEVER qualified for loans or how those poor folks got the politicians and regulatory agencies to change polices or look the other way.
I’m almost sure the future debtor wasn’t able to those things. Could just be me.
I’m also pretty sure that the demand for CDOs with their sub prime time bombs wasn’t driven by the janitors and strawberry pickers of this country.
But then I hear statements like the above, and I get confused. Maybe it was dem damn po’ folks after all!
Who said they became more greedy? Could it not be that they were just as greedy, but had new options placed in front of them? (ie the ability to borrow gobs of money at below-market rates)
Yes. and…
I have no problem with greedy folks buying more house than they can afford.
I have no problem with banks making stupid decisions and taking huge losses when they make such loans.
What I have a problem with is:
A. The follow up - bailing out the banks who made the bad decisions, rather than letting them learn their lesson and go broke like the former homeowners are.
B. The fact that item A is used to the banks benefit, knowingly and beforehand, such that in many cases the high-risk loans weren’t actually bad decisions at all because of the existence of the explicit and implicit backstops.
Therefore IMO the fault lies firmly at the feet of the enablers.
Those types are responsible are responsible for the horrible financial position of their respective companies.
That said, the individual is always responsible for his or her own debts. A few were lied to, but the vast, vast majority were not!
If they failed to consider the effects on their financial situation, or simply didn’t bother to look, they are deserving of no sympathy what so ever and have no one to blame but themselves.
Shame on the lender for not making sure the debtors could pay the money back; may they all go bankrupt…And shame on you if you borrowed money with ill faith. And I define ill faith as anyone who didn’t plan how to pay back the loan under their reasonably expected income. May you be forced to pay back the loan instead of forcing your losses on someone else!
MountainView, I hear all that, but you’re missing the point. Forget about sympathy/good faith/bad planning/whatever. Look at the present and the future. What if you just can’t pay? What if (à la Iceland) there is simply no reasonable way you can ever re-pay the loan? Then what? Do you get shot? put in jail? damned for all eternity? Or do you default, take the financial and reputational hit, and move on?
And does someone who defaults on a $200K loan deserve anywhere near the share of blame as the bankers and politicians who have created this disaster, and enriched themselves by amounts many orders of magnitude greater?
I was hearing the poor little victim line in my head…And the one thing we don’t have a lot of are victims!
They all deserve a fair share of the blame. They are all 100% responsible for their own actions.
The individuals should default. No choice in the matter and no reason to compound the errors of the past. But they aren’t a victim of anything but their own stupidity and greed. They should understand that they are leaving somebody holding the bag (mostly us taxpayers it appears). They should be hangdog about it for a while. Those who purposefully deceived should be up for criminal charges. Very, very, few victims here.
The bankers (at least those who can be shown to be in the know) should face personal financial ruin and criminal charges. They are also leaving somebody else holding the bag (you only get one guess, but I’m sure you’ll get it right!) No victims here.
And, yes, our lovely Congress critters in the know should at least be removed from office. Those that simply facilitated this environment should also be removed from office. I can’t really think of what we would charge them with, but ethically they belong in jail too. Instead they are busy trying to make the problem worse while blaming everyone else. Resisting the urge to spit on them here…
Unfortunately they are all counting on being part of such a large group of offenders that none but the very worst will ever be charged…And they are right. We might nail a few bankers, but are they really that much worse than the guy who bought a house with no recourse and no income, planning to gamble with the houses money, HELOC like crazy and then default the first time the wind changes? I don’t think so.
The worst think thing is that, economically, the crazy HELOC gambler who was willing to default with the first change of the wind WAS the smartest individual (emphasis) investor of us all. All he needed was a big pair and no conscious. He stole hundreds of thousands of dollars legally. He made all the people who acted responsibly (like me) look like chumps, and, in so doing, makes it much more likely that others will follow his example in the future.
Take the new FHA zero down plan (applying the 8K tax credit to the 3%). The smart play is to take this loan in a no recourse state. If the property value goes down, default, live rent free until kicked out and start over with the money you saved living rent free. If the property value goes up HELOC and default when the wind shifts. You win no matter what happens to the property value…The game plan still works and only my ethics stop me from engaging in this legal rip off.
“But then I hear statements like the above, and I get confused. Maybe it was dem damn po’ folks after all!”
Ecofeco — Awesome comments!!! We need to keep Megabank, Inc’s trolls at bay when they rear their heads on this blog.
What is wrong with a better America?
That paragraph should be force-fed to every politician, realtor and mortgage broker in this country.
Rich people deserve to be rich and poor people deserve to be poor and anything else is just damn crazy socialeest/commie talk and un-American!
Which of course puts a premium on… cash.
How did all those zero down loans turn out again? People must have very short memories.
“Housing and Urban Development Secretary Shaun Donovan said the Federal Housing Administration soon will allow its borrowers to get short-term loans and turn the $8,000 tax credit into a down payment.”
What a great idea! Because zero-down worked out so well for us the last time around… Oh wait.
“Housing and Urban Development Secretary Shaun Donovan said the Federal Housing Administration soon will allow its borrowers to get short-term loans and turn the $8,000 tax credit into a down payment.”
They just can’t bear to kill the beast, can they? With FHA loan losses going through the roof, there has to be some sense that they are only creating next year’s defaults. And as more first time buyers are led to the slaughter, those folks are taken out of the market for years once they do go belly up.
Uncle Sam’s Payday Loan Co.
amaaaaaaazing … truly amaaaaazing to me the stuff that is done to prop up housing prices… Whoever heads the RE machine’s lobbying efforts there in DC isn’t getting paid enough, that’s for sure…
Hey, somebody’s got to pay for those expensive political campaigns.
Hey Prime…it takes a little cheese to make the mousetrap work.
Speaking as a Cincinnatian…..
I don’t understand why this guy is complaining…
1) First, house prices in Cincy are down about 6% from peak. Not 20+% the rest of you have seen.
2) House prices only rose about 25% between 2001 and 2007 here.
3) The population of metro Cincy has been growing steadily at around 2%/yr for the past 9 years.
4) Job growth has stalled at the moment, but was increasing by about 1%/yr for the past 9 years.
yet……
Builders were building at a much higher rate than population/job growth. Those houses were selling.
So… coming off an era when house sales were growing much, much faster than the population/job market/household formation rate, what cause does this person have to complain?
Here is something that’s different about Cincy (and many other midwest cities) than all you coastal people…
we don’t have a coast. I’ve said it before, but I think it’s worth repeating. Without a coast, you pretty much don’t have anything to anchor a city to a specific spot. As a result, cities can move. Cincinnati is in the process of moving itself 30 miles north. Dayton, Ohio has been moving the city 20 miles south for the past 2 decades. The old downtown’s won’t completely disappear, of course, but all the job creation is being done in a satellite city 20 miles away. As a result, housing needs are different here. We have way too many houses in the cities and inner suburbs, but we don’t need them (they are small, run-down, and the neighborhoods are often falling apart). We often have a bit of a shortage in housing where the jobs are… in the distant suburbs and exurbs.
Downtowns here do not focus a city. Sure, there is some entertanment there (sports, cultural, etc) but you only go to those a couple of times a month. You can live 30 miles a way and drive in for those.
And downtown is not where the job growth is. It’s in the distant suburbs.
And downtown is not the bar/social scene either. Thing is, in a place like Cincinnati, most people are married by the age of 30, and most have children soon after. There isn’t a big supply of single professionals around to try to connect with. (i’m not single so I may not be as tuned into this as others, but from what I’ve heard and seen, that’s the case.)
A job market that grows 1%/yr does not attract a lot of young single people to it.
From what I’ve seen and read, this contrasts quite a bit with the big coastal cities.
CincyDad,
I really was waiting to see what ‘your’ response to all of this was going to be? I think Robert Cote` at Ex-urbanation would want to give you a great big hug!
The other factor is that MW towns in addition to being “restless” also don’t seem intent on “hemming” themselves in? When “men of vision” determine a direction for their coastal utopia, they’re permanently joined at the hip!
Particularly as they go about “fashioning districts”?
Urban sprawl is the unfortunate result of all the madness out here. It’s just so much more profitable to buy farm land and turn it into housing/commercial than it is to renovate what someone else built.
I keep reading about coastal neighborhoods ‘gentrifying’. Well, that just does not happen much around here. At least not in a typical lifetime.
Take Cincinnati - it has a district just north of downtown called ‘Over the Rhine”. Heavy German settlement there in the 19th century. Lovely architecture and you can practically walk to any place downtown. Well, it started going downhill about a century ago (accelerated greatly with WWI). it’s been the citie’s slum for the past 70 years, despite being some of the best real estate in the area.
The powers that be are just now getting around to some urban renovation of the area, but only the 10% closest to downtown.
Neighborhoods decline for multiple generations around here before anyone gets around to addressing the problem.
A micro version of this is happening in our little 150,000 people burg….
Downtown has a lot of office space, numerous little eateries catering to the lunch crown, retail limited to “during lunch” businessses (flowers, drug store, card shops etc. For whatever reason, all of the big retailers have decamped to the far west side of town, along with all the decent restaurants, hotels, etc……..and a big chunk of the non-government job sector.
Downtown is a ghost town after 6:00pm, surrounded by (mostly run down housing/businesses) for two miles in any direction.
CincyDad,
Likely Robert would “meh” all the endless hand wringing over Urban Sprawl. After a time, as people shift ( so do their employers ) as they gravitate toward where the people are at!
Awhile back an oil jobber explained that a mini-mart/gas station really only has years 3,4 and 5 for a sweet spot in any location. After 7, forget anything resembling growth. Traffic patterns shift, neighborhood demographics change. Why do we get so bent out of shape over this?
Lots of “men of vision” attempting to create the city in their ever-lasting image just won’t give up on the idea of leaving their permanent mark on the city. I say, why even worry about it?
Can anyone possibly develop a forecast or even a 60 day look ahead based on the swirl of $hit in the MSM relating to housing? Yesterday voodoo priest greenscam says we can see a housing bottom, today realtytrac claims foreclosures are accelerating, on the ground reports of FHA financed knifecatchers buying shacks and my own observations of REO disappearing (getting bought presumably) from bank rosters. Obviously the denial language of local realturds is discarded without any consideration.
Where is everyone at? Lets hear it B-Dog, packman, FPSS, GetStucco, etc.
(The parrot on hwy’s shoulder chimes in):
“Squuuuaaaaaak, Squuuuaaaaaak… less than 1 dollar”
“Squuuuaaaaaak, Squuuuaaaaaak… less than 1 dollar”
(parrot head bobbing up & down)
IMO:
- I think prices are indeed flattening *somewhat*, based on several factors - psychological “green shoots” thing, the various stimuli, and the foreclosure moratoriums.
- However prices will continue their regular program of plummeting this fall and winter, as the green shoots don’t take root, the moratoriums are lifted (already are) and the stimuli are just overwhelmed by the other factors.
- Next year who knows - since we actually are getting very meaningful price reductions, I think we’ll start to see true long-term flattening of prices; though it’ll still be “tailing off” relative to inflation for a long long time, and will overshoot by a lot.
You guys have all been reading this “green shoots” terminology crap all wrong!
mikey SAID …”The bad, greedy and mean people are were ALL $hitting GREEN”
Sheesh…I just HATE it when the MSM …totally misquotes my Words of Wisdom!!
iacta alea est
Most folks around, including myself, have been saying maybe later this year, but most likely next year. I sincerely hope I’m wrong, but I doubt it.
And you won’t know it’s the bottom because it’s liable to be flat for some time as well. So no meaningful recovery until sometime next year as well.
I’m still with the Ivy Zellman chart. Defaults on Alt-A and Option ARMs will balloon in 2010-11, so no housing bottom till 2012, maybe even later.
That’s my story and I’m sticking with it!
Are people who bought Toll Brothers homes, only to later get foreclosed, more likely to rent or to live with their parents?
24/7 Wall Street
Will Renting Be The Undoing Of Home Prices?
Posted: May 13, 2009 at 4:12 am
CNBC ran a brief segment on the number of people who have decided to rent homes and apartments rather than buy them. The point of the reporting was simple. People who need to move out of their houses sometimes cannot sell them. Instead, they rent wherever they have moved and hope to sell their homes later when the market improves.
In addition, people who cannot sell their homes often rent them out to others to help cover mortgage and maintenance costs.
What has been lost in the review of home buying and renting habits is that some people who own a home will decide never to buy one again. The reaction to losing so much money on what is the largest investment many people will ever have will be, in many cases that they will not come back to the real estate market again. People who have suffered through anxious months not knowing if they will be able to pay their mortgages may decide that it is not an experience they want to repeat.
There are currently 3.4 million homes for sale in America. The average prices of these homes drops each month. Neither lower interest rates nor better prices are bringing buyers back into the market. Too many people believe that the market has not made a bottom. No one wants to own real estate that could lose another 15% of its value.
The renter does not have to lose sleep over the issue of whether his home will fall further in value. He does not have to worry about an ARM with an interest rate that might be set higher. Renters do not even have to worry about major repairs, the great enemy of the homeowner.
Renting was considered a fool’s way of living just a decade ago. A renter could not get equity in a property like the one that his homeowner friends had. A new house could double in value in ten years, offering the owner ready access to capital, a way to educate children and pay for vacations. With very few people willing to believe that those benefits are still a part of owning a home, the incentives to buy one have dwindled.
“Too many people believe that the market has not made a bottom. No one wants to own real estate that could lose another 15% of its value.”
Megabank, Inc’s worst enemy: People with common sense who think independently and act in their self-interest, like good capitalists.
“…think independently and act in their self-interest…”
That’s treason nowadays.
“That’s treason nowadays.”
Only legal if you are a top manager at Megabank, Inc.
Woof Woof, What Lassie, Timmy is telling lies again.
Geithner says financial system starting to heal May 13, 2009 10:26 AM ET
All Thomson Reuters news WASHINGTON (Reuters) - The U.S. financial system has completed a big part of the painful adjustment away from its excessively leveraged state, and lending is starting to improve, U.S. Treasury Secretary Timothy Geithner said on Wednesday.
Speaking to a group of community bankers, Geithner also said the government planned to reopen a $700 billion bailout fund to small banks once the larger ones repay some of the government money they received.
“We have already seen a substantial amount of adjustment in our financial system. The more vulnerable parts of the non-bank financial system no longer exist,” Geithner told the Independent Community Bankers of America.
He said there was still more restructuring ahead for the financial industry as a whole, “but a substantial part of the adjustment process is now behind us.”
Geez, when SNL is parodying the Treasury Secretary you know there is a credibility problem.
Does anyone have, like, maybe a million dollars I can play with for a few days?
LOL - Muggy your foray into the market couldn’t come at a worse time. Sounds like you’re already making good gains - which means you’ll be hooked, which means you stand to get *really* burned by the next sucker’s rally or by the true market bottom (whenever that comes).
Don’t underestimate the power of non-market-forces.
Must… touch… plate…
It burns!
LOL! Youn can set up a ‘practice’ account somewhere, and play with play money. What I wish I’d done, alas!
Who is this “youn” person appearing in my post? Actually I meant “you’n”. Or possibly “you”. Need….coffee….
Asking for OPM. It begins.
Now now, just because Muggy and Madoff have the same first letter does not indicate it begins.
I KNOW the true bottom of the market has not been reached. Here are the clear signals of a market bottom.
1. LongIslandLost sells a stock short or buys a short ETF.
2. LongIslandLost sells his current stocks.
Everything else is noise.
I was a very surprised that house prices started coming down before I bought a house.
Muggy,
Go set up those stop/limits I posted about yesterday. You must be up about 10% so put in an order to stop you out at break even and get you out at 25% or so up. You guessed right so play with the house’s money. I have often been up 10-20% on days 1-3 or 4, only to watch it deteriorate due to some gov’t intervention or some other external force.
OTOH - I just took a flyer on 25 F June $5 call contracts so I am probably not sane enough to offer any advice….
Hey RES, those can be set up after the trade? I’m up 13%
Yes, Google stop loss order and trailing stops.
Stop. Loss. Order.
Should be burned into memory like…
Must touch plate.
Truly.
Absolutely, I use TD Ameritrade. If you are using them I’ll post a quick cheat sheet. Otherwise, just look to see if you can do stop/limit order good until canceled (or day) at your set price(s) - up and down. I would think any decent on-line co would have this as a basic function/option.
You can also set “alerts” where they immediately e-mail you if they stock hits the price, but does not execute an actual trade. I use this if I know I will be around to receive it and act or when I start to out-think myself…
Stop loss to get you out at break even (keep in mind that this doesn’t always work as desired - E.g. stock gaps way down at the open and the order executes below what you bought it for).
Stop limit to get you out at +25% or whatever your profit target is.
Keep your foot in it, Muggy. Don’t lift. Titanic is settling once again and this time the water will rush in with more authority. See you in the silent deep.
My LL still hasn’t gotten an NOD. He stopped paying last November.
The FB tax relief expires 1/1/2010 as per:
(E) the indebtedness discharged is qualified principal residence indebtedness which is discharged before January 1, 2010.
Are we going to end up with a situation where people will be desperately seeking foreclosure so as to avoid the tax hit? If my LL get an NOD today the property is unlikely to be sold by the trustees before that deadline.
* this is for the retail thread.
We did our part for the economy and were amazed.
The adage holds, ‘those who have money, make money when things are bad’… (or get more for the buck)
bought 4 pr trousers, 4 shirts, 2 pr men’s shoes, one sport jacket. Under $300.00. Went in with all cash. Their eyes when you roll out cash….
That is it for a few yrs, again.
frugality.
See it is easier to keep new clothes clean and fresh looking if you eat in your underwears, hahahaha. JUST kidding.
Gosh, i hope you aren’t paying your LL any rent, or at least putting your rent into an escrow acct instead of his hands.
Good luck with that.
He’s a mench, said if he wasn’t paying neither should I. You must not read here much.
If I were the head of some of the other major consumer industries (auto, appliance, travel etc etc) I’d be pressing Congress to put housing back in it’s bottle NOW… Residential Real Estate has taken up too much of the American consumer’s financial pie for us to have a healthy / balanced economy… we all get there here on the HBB (I think?)… I suspect Congress and Obama and Geithner and the crooks on Wall Street all get that too (maybe? hopefully?), but are beholden to the RE machine to do anything about it…
need to get things back in balance or other industries will continue to starve, as the last thing that goes is the house..
I were the head of some of the other major consumer industries (auto, appliance, travel etc etc) I’d be pressing Congress to put housing back in it’s bottle NOW
Nope the HELOC money and wealth effect expaned these industries just like housing, that’s why they did not complain. When your house has fallen 100,000-200,000 and you had 40,000 down you don’t feel like taking that vacation, buying that new car or traveling.
Actually I’d almost say the reverse is true. The more home prices drop the better it’ll be for the non-housing industries, because that’s more people that give up and walk away from their stifling mortgages and do a “reset” on their finances, allowing them to spend more on non-housing things.
Equity extraction via HELOC is done no matter what - that’s out of the picture at this point regardless of what happens.
Only works in non recourse states.
Sure, but that includes the three largest-scale bubble states - California, Arizona, and Florida. (Nevada is recourse and very bubbly, but much smaller in scale than the others)
matthew, somebody IS beholden to somebody else, but who that is seems pretty murky right now.
As far as we can see, it’s the banks that are holding the entire world hostage at this point. And yet it also seems they’ve shot themselves in both feet.
During the S&L debacle, it turned out it was very wealthy folks with direct connections to government leaders. I won’t mention any (*COUGHNeil BushCOUGH*) names, but it went pretty high up.
Palm Beach County foreclosures soar, Treasure Coast defaults ease, RealtyTrac says
By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Wednesday, May 13, 2009
The pace of foreclosures soared in Palm Beach County in April but slowed in the Treasure Coast, RealtyTrac says in a report released today.
In Palm Beach County, 2,846 homes were in some stage of foreclosure, up 89 percent from March and up 44 percent from April 2008.
In St. Lucie County, 1,428 homes received foreclosure notices, down 5 percent from March and off 14 percent from a year ago. In Martin County, 219 homes were in foreclosure, down 16 percent from March but up 68 percent from a year ago.
Statewide, foreclosures climbed 75 percent from a year ago to 64,588. Florida had the nation’s second-highest foreclosure rate with one in 135 households receiving foreclosure filings in April.
Nationally, foreclosure filings rose to a record for the second consecutive month as banks boosted efforts to seize homes from delinquent borrowers.
A total of 342,038 properties received a default or auction notice or were seized last month, said RealtyTrac of Irvine, Calif. One in 374 households got a filing, the highest monthly rate since the property data service began issuing such reports in 2005.
“What you’re seeing is the inevitable result of severe job losses,” Nicolas Retsinas, director of housing studies at Harvard University told Bloomberg News. “Until we stem the job losses, we can expect to see continuing foreclosures.”
Sure didn’t take long after those banks had secondary offerings for the market to fall.
I like the theory you shared about this the other day, measton…
How many banks floated offerings at the peak? I heard a bunch announced, but don’t know how many of them actually occured already.
A quick search
Goldman Sachs - 5.75 billion in stock 2 billion sold in non fdic insured 5 year notes
WF plus Morgan stanely 12.6 billion in stock plus MS 4 billion in non fdic insured debt.
BOA 7.3 billion dollars of china bank
US bancorp 2.5 billion plus 1 billion non fdic insured notes
NY mellon 1.2 billion plus has started selling 6.3 million shares
Capital One 1.55 billion
BBand T 1.5 billion
Key Crop 750 million
Construction Bank 3.6 billion
Mission accomlished, at least until the next mission.
Wow, that is pretty incredible. How did Vikram Pandit miss out? Oops, guess the gubmint already owns too mucha that one. And whatta bout JPMorgan Chase? Hmm, maybe they had already done a secondary pretty recently anyway.
That was a sign to sell. That plus my fishing party two days ago where I heard various people talking about how they were making a killing in this market melt-up buying junk stocks like AIG and Citi. Then I knew the end of this rally was close.
Are you suggesting the “green shoots” were just a ruse to help banks dump overvalued stock on unsuspecting greater fools?
“I’m shocked to find
fraudgambling going on here.”The Chicago Way: (now playing in theaters nationwide)
Cook County Board President Todd Stroger (a.k.a. Urkel), who earlier this week vetoed a one cent repeal of our sales tax (highest in the nation), owes almost $12,000 in back taxes to the Feds. They’ve put a lein on his house.
Now that’s comedy gold!
BWAHAHAHAHAHA !
Dang, that felt good.
Wow…
“Shaw replied, “I really wouldn’t mind going through a a winter in the Northeast before I have to upgrade to captain. … I’ve never seen icing conditions. I’ve never deiced. I’ve never seen any. I’ve never experienced any of that. I don’t want to have to experience that and make those kinds of calls. You know I’d’ve freaked out. I’d’ve have like seen this much ice and thought, ’Oh my gosh, we were going to crash.’”
Yeah muggy, I read that too and thought about my hairy snowy winter take offs and approaches from Lake Michigan and Superior airports.
Winter flights with 24 yr old co-pilots and in-experienced pilots make me think of one thing…SNOWCHAINS
I can’t believe of all the things many professionals have to go through to become certified… You’d think a co-pilot flying into Buffalo in late winter would have ice/deice experience.
The captain was experienced in total hours, just not hours “in type”—e.g. in the particular type of aircraft, a Dash 8.
But it blows my mind that they didn’t handle a garden-variety stall-warning properly. That’s one of the first lessons a student pilot gets, and a large fraction of training is devoted to detecting and handling stalls in every configuration properly.
Wow. It is so hard to comprehend…
There are no calls to make, everything is written down and there is a checklist for everything(even the USAir that landed in the Hudson pulled out their checklist and followed it).
The days of Pan Am sky gods deciding to fly through thunder caps for the hell of it are long over.
I think the fact that the co-pilot skied all day in Seattle and then flew through the night to make it to Newark and the Captain flew in from Florida and slept in the crew lounge the night before contributed more.
48 hours without sleep would interfere with my decision making ability too.
Oh I am sure they had sleep, just not the kind our bodies need ie: in a quiet dark room -uninterrupted, not sitting in a psgr seat,
from around 11pm-7am or so, thereabouts.
Not restful at all, just enough to keep your feet moving in a forward direction.
As many here on hbb can attest to, caffeine is needed, and for those men/women in the tiny planes, much more.
It always amazes me that people are in awe of pilots of big planes which are primarily computer operated save but 60 seconds on takeoff and landing, and they have fewer landings etc, whereas, the pilots that fly commuter planes have 3-9 takeoffs/landings per day.
I always say a prayer for them. It is like Muggy buying lots and lots of stock while he is getting nearer to the Hot plate. Odds are…
No panel scan, which would have caught the declining airspeed. I guess their attitude was, “the autopilot’s got it.”
Did they really not know the purpose of the stick-shaker?
The final nail in their coffins was when the co-pilot retracted the flaps. WTF?!!
What’s really sad is that this incident had a direct precedent. The ATR that went down near Lowell, IN in 1995. Same deal, heavy icing on a turboprop. Shortly after that crash the commuters stated pulling turboprops out of the big markets and replaced them with regional jets.
One would think turboprop crews would be especially cautious of icing after that.
Actually it was Oct. 31, 1994. I went to high school with one of the passengers on that flight.
The turboprops in that accident (ATR something) are still in service, but they’re all based out of Miami for flights to/from the Caribbean. No ice problems at those latitudes, I hope.
Hey California taxpayers yep, … both democrapts & GOP young repubicans…
lets take a peek behind… “The O.C.” curtain:
Now remember kids…”The O.C.” it’s GOP country and it’s “Bren developed” as a template for America…they call it a “Planned Community” where the weak are allowed to be worker/slaves in their “apartment homes”
Few have profited from California’s government retirement system as former Anaheim city manager Jim Ruth — who is one of the highest-paid retirees at $219,045 a year.
Ruth, 73, continues working, earning another $225,000 annually from another local agency.
Even he says government retirements need to be reformed.
“They’ve got to look at some way to restructure the system,” said Ruth. “When you look at the cost of that system, I don’t think we can any longer afford that.”
Not that he’s willing to cut his pension.
“I got up everyday, went out and earned my money.
Count Dracula: “but vait there’s more:”
Just ahead of Ruth on the CalPERS list — and the highest-paid in Orange County — is former Newport Beach Police Chief Robert McDonell, who pulls down $221,554 a year since his retirement in 2007.
The state’s top retiree, of course, is the Huntington Beach man/retired Vernon official who collects a $500,000 pension - while under indictment.
Former Anaheim city manager hits jackpot with pension:
May 12th, 2009, OC Register by Tony Saavedra,
‘Few have profited from California’s government retirement system as former Anaheim city manager Jim Ruth — who is one of the highest-paid retirees at $219,045 a year.
Ruth, 73, continues working, earning another $225,000 annually from another local agency.
…
“When you look at the cost of that system, I don’t think we can any longer afford that.”’
More like Ruthless…’I got mine, so screw the rest of ya…’
“Bob” Citron (the longtime Treasurer-Tax Collector of Orange County) also was from Anaheim…Maybe Disney was on to something with that slogan:
“The Happiest Place On Earth!”
Florida’s House/Senate & governor are all overwhelmingly Republican. Well maybe not the governor, he’s whatever he needs to be to win. All love to talk about how red-tape bureaucrats are sponging off the hard-work of the cherished private sector citizens with the much hated state retirement plan. Florida’s been all Republican since 2000.
There hasn’t been a single bill introduced to change the system. Anybody guess why?
Dumb question of the day:
Why don’t people who are mortgaged to the hilt in non-recourse states where home prices have dropped by over 50 percent just walk away from their homes and start renting? It is not like there is a shortage of affordable rentals these days. For example, the SD Union-Tribune ran an article last Sunday about a woman renting a $1.2m ocean view home for $800 a month. Isn’t a little ding to the credit rating worth less than a lifetime of debt slavery to Megabank, Inc?
“…just walk away from their homes and start renting?”
Silly Mr. Bear, what? you forget what some have “buried” into their “Life’s biggest investment”…and I’m not talking what’s beneath the swimming pool either.
‘…what some have “buried” into their “Life’s biggest investment”…’
Economists are fond of pointing out that it is irrational to worry about sunk costs, but I realize lots of people struggle with irrationality when it comes to personal finances.
Renting is a sign of failure to many people. This group includes my own sister, who is deep underwater on a mortgage and HELOC in FL. She lost her job, and her husband sells real estate. When I suggested they walk away from the house and rent, she flatly refused. I can’t make her see that she doesn’t really own that house. Of course, it probably wouldn’t be good for her husband’s RE sales if word got out that he was renting. She has mentioned buying a cheaper house, so all is not yet lost.
“Renting is a sign of failure to many people.”
Being hundreds of thousands of dollars in debt is a sign of failure to me. I guess I am just different than many other people.
It’s simple Professor! People haven’t dumped the house to start renting because they haven’t made a payment in 6+ months and nobody’s bothered to file a forclosure yet.
Free House > paying rent.
Sooner or later the Mortgage companies will actually start removing people from their submarines for lack of payment, and they will flood into the rental markets.
I wonder how many folks are living rent/mortgage free? I’ve heard annecdotal stories of the banks having trouble reaching their debt-slaves, but no stats. No surprise the banks aren’t rushing to publish numbers.
I don’t know about the wider world out there, but I know a handful of people right here in my office 6-11 months past due with no forclosure notice…
And it’s not a big office, we’re talking half the people in the building.
Slowly the contagion is spreading as well. Several others are painfully aware of their massive negative equity (although they are current at-the-moment) and they have been looking long and hard at the “other half”.
Who knows how big the number is.
None directly in the office that I know of have done this(good employment that pulls credit reports), but tons of siblings of office coworkers have stopped paying. The record holder, without a NOD, is 20 months of living mortgage and tax free in their Inland Empire CA home (My boss’ sister). Of course they kept paying the DirectTV bill…
A few are wondering if they can walk away from speculative home purchases (2nd homes).
Oh, about half the office now has an unemployed spouse or soon to be unemployed spouse. (Including myself). In order their spouse’s previous employment was:
1. ex-Realtor ™ or other home sales support (One unemployed ex-house salesperson spouse for every 5 coworkers.)
2. ex-Teachers
3. Mix of ex-blue collar: Technician, express delivery drivers (for a firm that catered to the IE and OC mortgage brokers), contractors, and a few other blue collar jobs. (Note: The sum is less than the number of ex-Teachers!)
4. Other white collar (including my wife)
The contageon is spreading for a reason. Lack of funds! Besides, those who bought 2005-2008 were paying > 50% DTI!!! There is zero cusion at those debt levels.
Some of my coworkers still rant that its unfair that they cannot borrow against their underwater home. Many rant its “unfair” of the banks to expect them to pay their full mortgage when the house is worth far less than what they bought it at. This is So-Cal. Being underwater $250k is the new black.
Got Popcorn?
Neil
Some people cling to credit ratings, and perhaps they don’t have much money saved. I assume there will be costs associated with walking away, if you don’t want to go through a full bankruptcy?
Former official slams Fed for inflation risk…
By Mark Felsenthal and Alister Bull
JEKYLL ISLAND, Georgia (Reuters) - A sharp critic of the Federal Reserve and prominent authority on monetary policy on Tuesday slammed the U.S. central bank for risking inflation and warned that government action had “caused, prolonged and worsened” the country’s financial crisis.
John Taylor, a former undersecretary of the Treasury for international affairs and author of the widely cited Taylor Rule of central banking, ran his own numbers for the U.S. economy and said the Fed’s monetary stance was way too loose.
“My calculation implies that we may not have as much time before the Fed has to remove excess reserves and raise the rate,” he said in remarks prepared for a financial markets conference hosted by the Federal Reserve Bank of Atlanta.
“We don’t know what will happen in the future, but there is a risk here and it is a systemic risk,” he said.
He noted a recent Financial Times report of internal Fed estimates using the Taylor Rule. This found interest rates should be minus 5 percent at the moment to compensate for the headwinds on the U.S. economy.
But Taylor said that his own analysis suggested a rate of 0.5 percent, indicating that the Fed could have a lot less time to raise interest rates than it may currently think.
In addition, the Fed has pumped hundreds of billions of dollars into the economy to support credit markets in the face of a severe U.S. recession, and may find it very hard to remove this expansion by shrinking its balance sheet in the future.
“While Federal Reserve officials say that they will be able to sell newly acquired assets at a sufficient rate to prevent these reserves from igniting inflation, they or their successors may face political difficulties in doing so.
“That raises doubts and therefore risks. The risk is systemic because of the economy-wide harm such an outcome would cause,” Taylor said.
Taylor used these cases to illustrate examples of where government intervention had magnified market failures and turned them into system-wide problems.
Taylor’s been saying this for a while now.
You know it’s bad when even the Keynesians are slamming the Fed for its loose-lending inflationary policies.
BTW:
“‘My calculation implies that we may not have as much time before the Fed has to remove excess reserves and raise the rate,’ he said in remarks prepared for a financial markets conference hosted by the Federal Reserve Bank of Atlanta.”
BWAHAHAHAHAH!!!
Rock, meet hard place.
Let’s see:
A. Keep rates low and continue QE = cause hyperinflation, or
B. Raise rates and stop QE = put the final nail in the housing coffin, crashing the markets in the process
Which to choose? Which to choose?
C. Raise rates and tens of millions of adjustable rate credit cards cause people to say: skrew it i’m not paying ever again!
Let’s see:
A. Keep rates low and continue QE = cause hyperinflation, or
B. Raise rates and stop QE = put the final nail in the housing coffin, crashing the markets in the process
Which to choose? Which to choose?
I don’t get these rate manipulating clowns. Free markets are supposedly superioror with all things, except short term interest. Is it just a coincidence that banks make a living by pocketing interest on money that they create out of thin air?
Hey, anyone think this quote can be modified to work in Ben’s HBB collection of quips?
“It was a struggle to find buyers,” said Perry Rubenstein, a dealer based in Chelsea, New York. “People are still in observational mode.”
Sotheby’s Contemporary Art Sale Slumps 87% From Year-Ago Record :
By Lindsay Pollock and Philip Boroff Bloomberg news
Mr Bear can this qualify in the catergory of “Bottom Callers” ?
Bottom Out:
“Robert Gober, who crafts handmade objects from beeswax and human hair, was among the sale’s top offerings and outright flops. His 1990 “Untitled,” depicting a naked male’s buttocks covered in real human hair and hand-painted musical notes, failed to elicit a single bid. The presale estimate was $2.5 million to $3.5 million. The same work sold for $189,125 at Christie’s in London in 1993.”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!
I haven’t done that in a while…feels good!
From the Whashington Fake Press:
“While sales of most consumer goods have been seeing improvement, a clear sign of a recovering economy, sales of tacky foo foo art crap have been slumping, hurting overall sales numbers. When ‘foo foo’ is factored out, we see some strong indications of improving consumer confidence. Mr. Bling, the senior economist for The Eclectic Emporium, noted that sales in the last quarter were slightly better than their abysmal expectations, a sure sign of recovery. “We expect people to resume buying this useless stuff to fill their oversized McMansions any day now.” Mr Bling further suggested that people make their purchases now while things are slow and before inventory begins to decline. “It’s not like Robert Gober can just whip these things up over a weekend.”
“His 1990 “Untitled,” depicting a naked male’s buttocks covered in real human hair and hand-painted musical notes, failed to elicit a single bid. The presale estimate was $2.5 million to $3.5 million”.
Damn, what is the world coming to, when a talented “artist” can’t sell a hair covered wax ass for 2.5 mil?
Why do I have this feeling that the artist “model” was Dutch and grew tulips?
I’m kicking myself in the hairy bees wax for not thinking of it first.
The hard part is not thinking of the hairy butt piece, but marketing it.
Would it be correct to refer to the live auctioneer trying to sell that piece as a “bottom caller”?
California…bunch of environmental whacko’s:
In late January, the California Public Utilities Commission (CPUC) said that Californians — who account for nearly 70% of the U.S. solar market — installed twice as many megawatts of solar power than the year before. A Staff Progress Report on the California Solar Initiative, the ratepayer-funded program that provides incentives for solar system installations, shows that homeowners, businesses, and local governments in California’s investor-owned utility (IOU) territories installed 158 MW of distributed solar photovoltaics (PV) in 2008. That figure is double the 78 MW installed in IOU territories in 2007. The state now boasts a cumulative total of 441 MW of distributed solar PV systems. And the trend is expected to strengthen in 2009: The CPUC reports that the program has received applications for roughly 322 MW of grid-tied, distributed solar PV projects…”
PV Sales in the U.S. Soar as Solar Panel Prices Plummet:
http://www.powermag.com/issues/departments/global_monitor/PV-Sales-in-the-U-S-Soar-as-Solar-Panel-Prices-Plummet_1758.html
Just think how happy these people will be if we end up with hyperinflation. Electric bills for non forward thinking slobs will skyrocket.
Hwy’s “Marginally Attached” theory of income categorization:
Past / Present / Future:
I haven’t had an income…I don’t have an income… …I’d don’t think I will be able to get an income soon…
Are the Green Shoots Really Dandelion Weeds? By John Mauldin
“…In addition, there are 2.1 million who are “marginally attached” to the workforce”.
“These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”
Nope, no “fudging” here.
From Agora 5min…
A study out today shows that minorities are suffering the worst of the housing crisis. The homeownership rate among all Americans has fallen 1.7% from its 2004 peak. But for black households, the rate of ownership has plunged 3.8%, more than double the national average. Native-born Latinos have it even worse — down 4.6% from their high.
According to Pew Research, this rise and fall among minority homeowners was directly correlated with the popularization of subprime lending. “Blacks and Hispanics were more than twice as likely to have subprime mortgages as white homeowners, even among borrowers with comparable incomes,” reports The New York Times. (Queue the predatory lending lawsuits.)
And the only ethnicity to not see homeownership rates decline? Latino immigrants, with the lowest rate of all groups studied, have managed to maintain a homeownership rate of 44.7% since peaking in 2007.
“…And the only ethnicity to not see homeownership rates decline? Latino immigrants, with the lowest rate of all groups studied, have managed to maintain a homeownership rate of 44.7% since peaking in 2007.”
I wonder if that statistic holds for those living near Tombstone AZ?
Simcox takes on McCain for Senate:
“…Simcox had previously relocated to Arizona from southern California. In Tombstone, he published a newspaper, the Tumbleweed. The paper’s tone turned policy issues into talk about bravado, gumption and guns. The organization he co-founded increasingly adopted elements of a nativist movement. There were charges about “sell-out officials” and “national sovereignty violations.” Valid patriotism came only in the Minuteman vintage.”
“Perhaps it was appropriate that this culture would take root in Tombstone, near Boot Hill, and that the newspaper offices were on Toughnut Street. On the other hand, many local merchants laughed it off and referred to the handful of Simcox’s followers as “The gang that couldn’t shoot straight.”
“Here lies Lester Moore, Four slugs from a .44, No Les, no more”
That’s always been a favorite epitaph of mine after:
“Here lies one whose name was writ in water”
and
“Here lies David St. Hubbins — and why not?”
Fasty, where are you?!
I get my feet wet, and you’re gone! No!
Perhaps I can help you? My dartboard works and I have a copy of the Journal.
Do you have a pet monkey?
If only. I heart me some squirrel monkeys.
Or you can try the Noel Constant method (from Vonnegut’s Sirens of Titan).
get your Gideon Bible ready
I miss Vonnegut.
What? everybody that was helping Made-Off have disappeared?
Mistake!…meant to post under Bink’s comment…sorry ;-(
Maybe he’s e-mailing muggy from his laptop.
“I don’t make jokes. I just watch the government and report the facts.”
~Will Rogers
Sounds like Will was the precursor to Jon Stewart and Stephen Colbert…
If you are not familiar with Will Rogers, you are in for a treat… and one jaw dropping realization of the parallels of then and today and how after almost a century of progress we’ve lost it all.
Start with Wikipedia.
I like: “The sex like of a mosquito”
Hey, Hwy has an idea! GM/China ought to partner with Wal-Fart/China (Which Mr. Cole now refers to as: “The death factory”) and use those huge parking lots as regional dealerships!
O.K., you #2 pencil, overpaid marketing folks can have that one for free! 
GM Plans to Import Chinese-Built Vehicles Into US in 2011:
“…shows that GM plans to import 17,335 Chinese-built vehicles into the U.S. in 2011. The imports from China would jump to more than 38,000 in 2012 and more than 53,000 in 2013″
By WSJ Staff …Auto Industry Tracker
Well that’s optimistic. I wouldn’t expect GM to sell that many cars.
Sorry, it says import not sell.
Well, they wouldn’t have to sell them right away…@ 53,000 units, that’s like what x1 per store?
O.K., long overdue…This is how you can “modify” what’s on the Gov’t menu!
Bon Appétit:
I like Jack’s response when she tells them all that:
“Alright, I not taking anymore of your smartness & sarcasm!”
http://www.youtube.com/watch?v=6wtfNE4z6a8
hwy, great scene.
“I woulda just punched her out”.
+1
Today’s edition of San Diego’s KPBS public radio ‘These Days’ show explores the origins of the Ownership Society concept, which date back all the way to the aftermath of the Great Depression and WWII.
Current Economic Downturn is Redefining the “American Dream”
By Maureen Cavanaugh, Hank Crook
These Days | Wednesday, May 13, 2009
Maureen Cavanaugh: From the time of the first settlers to the immigrants of today, America has offered the world a dream of a better life. But what that dream has come to represent in recent years, may have less to do with freedom and opportunity and more to do with McMansions and six-figure incomes. As the American dream became glossier and more unattainable, many Americans have resorted to credit and creative financing to make their dreams come true.
So as we persevere through the worst economic collapse since the Great Depression, it may be time to re-evaluate the values and assumptions that got us into this mess, and invent “the next American dream.”
Guests
Stephen Smith, executive editor of American RadioWorks on Minnesota Public Radio.
Sam Eaton, sustainability reporter for Marketplace in Los Angeles.
Doesn’t a rise in bank repossessions portend an acceleration in the rate of future home price decline, as banks dump REO inventory on the battered market, rather than riding falling knives all the way down to the bottom of the sea?
May 13, 2009, 3:59 a.m. EST
U.S. foreclosures at record rate in April
RealtyTrac sees bank repossessions spiking in coming months
By Robert Daniel, MarketWatch
TEL AVIV (MarketWatch) — U.S. foreclosure filings in April rose to a record, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months, RealtyTrac reported.
Foreclosure filings — defined as default notices, auction-sale notices, and bank repossessions — were reported on 342,038 U.S. properties in April, up less than 1% from March and up 32% from April 2008, the Irvine, Calif., real-state consulting firm reported.
RealtyTrac began issuing its report on foreclosures in January 2005.
“Much of this activity is at the initial stages of foreclosure — the default and auction stages — while bank repossessions … were down on a monthly and annual basis to their lowest level since March 2008,” Chief Executive James J. Saccacio said in a statement.
“This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria.”
Bank repossessions are likely to spike in coming months as these loans move through the foreclosure process, he said.
Major Kong has left the plane
Wheeeeeeeeeeeeeeeeeeeee!!!! Yahoooooooooooooooooo!!!
Can Major Kong see the bottom yet?
Nope just an extremely bright light.
For some reason Space Oddity popped into my head:
Ground control to major tom
Ground control to major tom
Take your protein pills and put your helmet on
Ground control to major tom
Commencing countdown, engines on
Check ignition and may gods love be with you
Ten, nine, eight, seven, six, five,
Four, three, two, one, liftoff
This is ground control to major tom
Youve really made the grade
And the papers want to know whose shirts you wear
Now its time to leave the capsule if you dare
This is major tom to ground control
Im stepping through the door
And Im floating in a most peculiar way
And the stars look very different today
For here
Am I sitting in a tin can
Far above the world
Planet earth is blue
And theres nothing I can do
Though Im past one hundred thousand miles
Im feeling very still
And I think my spaceship knows which way to go
Tell me wife I love her very much she knows
Ground control to major tom
Your circuits dead, theres something wrong
Can you hear me, major tom?
Can you hear me, major tom?
Can you hear me, major tom?
Can you….
Here am I floating round my tin can
Far above the moon
Planet earth is blue
And there’s nothing I can do.
-David Bowie
“Damn! A boy could have good time in Vegas with all this stuff.”
Are you talking about real estate or nylons,lipstick and vodka?
As I hear it HBB’ers had a good time with both.
“…nylons,lipstick and vodka?”
In what order?
Everything’s O.K., … in “The O.C.”
“…Ok and the others targeted homeowners facing foreclosure, convincing them that they could help them keep their homes.
Mortgage scamster is stuck with plea: ‘Guilty’:
May 13th, 2009, OC Register by Marilyn Kalfus, real estate reporter
If regional/small banks have any sense they’ll tell Turbo Tax Timmy to f-off. Bite into the cheese that little dingle berry is offering and instant acid-reflux.
US official: Bailout funds to go to small banks
US Treasury Secretary Geithner: Bailout repayments from big banks will go to smaller banks…
Christopher S. Rugaber, AP Economics Writer
On Wednesday May 13, 2009, 12:35 pm EDT
WASHINGTON (AP) — The Obama administration will use bailout money repaid by large U.S. banks to provide additional capital infusions to community banks, Treasury Secretary Timothy Geithner said Wednesday.
In remarks to an association of community bankers, Geithner also said the administration is moving forward with plans to streamline financial rules as part of a broader overhaul to be unveiled in the next several weeks.
Banks with less than $500 million in assets will have six months to apply for the funds, Geithner said. They also will be able to apply for larger amounts than banks were allowed to request during the current round of investments.
The Treasury Department has said it expects banks to repay $25 billion in government funds over the next year. Banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. have said they want to pay back the money they’ve received from $700 billion Troubled Asset Relief Program, or TARP, as soon as possible.
While Geithner’s remarks to the Independent Community Bankers of America drew applause, it is not clear how many small banks want more government aid. Many say they are healthy, do not need the money and are wary of the limits on executive compensation and other restrictions Congress has imposed on bailout recipients.
Twelve smaller banks have returned almost $1.2 billion in government funds so far. More than 570 banks have received about $198 billion in TARP funds.
The administration first indicated that the repaid funds would be used for further injections earlier this month when regulators announced the results of the “stress tests” conducted on the nation’s 19 largest banks. Those tests found that 10 of the banks, including Bank of America Corp. and Citigroup Inc., needed to raise additional capital to survive a worsening recession.
Several members of Congress, including Rep. Brad Sherman, a Democrat, contend that the law creating the TARP does not allow the money to be invested a second time. Instead, repayments should be used to reduce the national debt, they say.
17.5% This is funny, really.
O.k., so how do I double down? I get, “buy low, sell high,” but options/puts are beyond me.
I might touch the plate twice, just one more time.
I really want a FL/Jesus vanity plate: HBB SKF
“I really want a FL/Jesus vanity plate: HBB SKF”
!
Muggy, when the power company shuts off your lights, contact us from your local Starbucks about how your trades are going…
Well, fire up a red or blue signal flare
So I should get the “Golf Capital of the World!” with NAR CFC on it?
My bad, y’all — I know better than to joke about religion.
The only way I’ve ever really made money with options is to sell call options.
You hold the stock in a long position and sell calls at a higher price.
Works well with stocks that trade fairly consistantly in a set range. The only downside is if the stock sells for more than the strike price, they take your stock. But, you get to keep the money from selling the stock at the strike price and what the buyer paid for the call.
For Example:
I’m holding 100 shares of Apple. It’s currently selling at 120. I sell a call option for 125 in July for $250. In July the stock is selling for 122. The call isn’t exercised. I keep the stock plus the $250.
Repeat August Repeat September…
Got it… I think I am going to set a trailing stop on SKF. The stop param is expressed as a %… so, if I choose 5 that means my order becomes market if the price falls 5%, yes?
AIG
What is the plan to repay the American people and does it have a realistic chance of working?” asked committee chairman Rep. Edolphus Towns, D-N.Y. The excesses continue with AIG paying public relations executives up to $600 an hour in taxpayer money, he said.
“We think that the American taxpayer will be fully repaid” in three to five years under the company’s plan, Liddy said.
Liddy agreed to provide portions of AIG’s “Project Destiny” restructuring plan to the committee, but said details are sensitive and could hurt the company’s ability to sell assets while unfairly helping its international competitors: ACE Ltd., Zurich Financial Services Group and Axa SA.
Jill Considine, one of three trustees charged with overseeing the government’s interest in AIG, called the company plan “workable.”
The trustees have asked Liddy to make a thorough review of AIG’s compensation programs and to develop a new one. They also are seeking new board members for the company, who could be elected at a shareholders’ meeting next month.
Here is my plan, every bonus offer to employees should be based on and pay out when AIG pays back uncle sam. It should all be paid out in the form of AIG stock that must be held for 5 years.
“The check is in the mail.”
Uh huh…
did I see it right at end of day, AIG was $1.+/-??? per share?
Ok, why I need to keep repeating this I’m not sure. We, taxpayers, will pay $460 billion for a company that was worth maybe $200 billion on a good day.
$200 billion = 2.6 billion shares X $80/ share in 2004.
$300 billion = 2.7 trillion total AIG unwind money X 180 billion bailout so far / 1.6 trillion unwound so far.
We will not get our money back. They will owe more than they were ever worth.
Roidy
DETROIT (Reuters) – General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.
GM, facing a U.S. government-imposed deadline of June 1 to restructure or file for bankruptcy, is expected to send termination notices to up to 2,000 dealers — a third of its roughly 6,000 U.S. dealers, the sources told Reuters.
Chrysler, which filed for bankruptcy on April 30, will also tell up to 1,000 of its 3,189 U.S. dealers that it is terminating their franchise agreements, according to the sources who asked not to be identified because the controversial closure plans have not been yet announced
Another what 40-50,000 jobs go poof. My guess is most in small towns.
Does anyone understand how this will save Chrysler money?? I didn’t think they owned the dealers.
Mfgs. and dealerships have very complicated money games they play with each other.
You think your car deal was convoluted? The dealerships and the mfgs. are constantly trying to screw each other. Another part of their downfall.
It seems to me a lot of dealers mean dealers fight to sell cars, ie they add less to the price of a car vs a dealership that has no competition??? I just don’t like the idea of further business consolidation and decreased competition.
They have accepted that the sales volume will never get back to where it used to be. I agree with what others have posted here: that we will be seeing corporate owned dealerships, where only one price will be offered. Instead of having huge inventories that depend on impulse purchasing and incentives, these dealerships will be tiny, have only a handfull of test drive models and you will order your car to your specs and wait a few weeks for delivery. This is how it is done in most countries.
All kidding and schadenfreude aside, this truly is the end of a way of life for hundreds of thousands of people.
Then again, after having met many drones from the automotive corporations, buying a new car is going to involve new levels of pain, never before imagined.
Like waterboarding, but not as much fun.
Guess we know who is buying those bank secondary offerings. My guess is that this mutual fund is held by a large number of retirees. With a name like Value Trust why wouldn’t they own it, no one would name a mutual fund that gambles recklessly Value Trust would they??
May 13 (Bloomberg) — The returns on Legg Mason’s Value Trust mutual fund depend on Bill Miller being right about bank stocks and Meredith Whitney being wrong.
Miller, who beat the Standard & Poor’s 500 Index for a record 15 straight years before stumbling in 2006, says financial companies are his favorite investment for the rest of the decade. Whitney, the former Oppenheimer & Co. stock analyst who became one of Wall Street’s first bears when credit markets started to freeze in 2007, said banks are “grossly overvalued” after government evaluations of their financial health.
The stakes are greater for Miller, 59, who lost more money in the past three years than 99 percent of rival managers by owning Bear Stearns Cos., Freddie Mac and American International Group Inc., according to data compiled by Bloomberg and Morningstar Inc. Whitney, 39, proved prescient by telling her clients to avoid Citigroup Inc., Wachovia Corp. and UBS AG, which lost at least two-thirds of their value last year.
Bad Bets
Miller, a so-called value investor who seeks the cheapest companies relative to earnings or assets, posted the worst returns within his fund’s category in the past three years, data compiled by Chicago-based research firm Morningstar show.
The fund lost 55.1 percent in 2008 after Miller underestimated the magnitude of the worst financial crisis since the Great Depression. In April last year, a month after Bear Stearns collapsed and was taken over by JPMorgan Chase & Co., he wrote in a letter to fund shareholders that “we have seen the bottom in financials.”
The S&P 500 has tumbled 34 percent since then, with a measure of banks plummeting 53 percent. Today, the S&P 500 fell 2.5 percent to 885.32 as of 1:06 p.m. in New York. Financial stocks dropped 4.2 percent.
Miller boosted his stake in McLean, Virginia-based Freddie Mac, once the second-largest U.S. mortgage-finance company, to 17.7 million shares from 5.9 million shares in the first half of 2008, Securities and Exchange Commission filings show.
Most Upside
Miller’s holdings in New York-based AIG, once the world’s biggest insurer, also increased to 9.68 million shares from 8.45 million shares at the end of 2007. Both companies were taken over by the government in September.
“He’s made massive bets in institutions that were wiped off the face of the exchange,” said Frederic Dickson, who helps oversee $20 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
I actually had shares in Miller’s Value Trust and Opportunity Trust funds.
Did really well.
Until Citibank bought Legg Mason. Then he just seemed to go off the reservation buying up builders in 2006/2007. Now banks. Sad. Always liked his commentaries with the baseball analogies.
Sold all of it by 2007. Awareness gained here helped quite a bit.
Bill Miller is a bull-market genius.
Ride a bubble, ride it hard.
And it may not be obvious to you but managing $1-10 million is a lot easier than managing $1-10 billion. You run into diminishing returns very quickly. So the early results don’t count unless you were one of the early investors.
Chrissakes, he should have been reading this blog. Some of our more astute money-minded folk were raising red flags about Bear, Freddie (&Fannie), and AIG way back in ‘06!!!
SEC to file charges against Mozillo….
Just a blip on FBN….
news at 11
Halalooya
Now let’s see if the SEC can find any of his money, and go after a few of his political puppets.
SEC to File Civil Fraud Charges Against Angelo Mozilo Co-founder of Countrywide
By editor|May 13, 2009|4:52 PM
The WSJ is reporting that the Securities and Exchange Commission has decided to recommend filing civil fraud charges against Angelo Mozilo, the co-founder of Countrywide Financial Corp.
From WSJ: The SEC sent a so-called Wells notice to Mr. Mozilo several weeks ago alerting him of the planned charges, the people said. The potential charges include alleged violations of insider-trading laws as well as failing to disclose material information to shareholders, according to one person familiar with the matter.
…
Mr. Mozilo has previously maintained that he hasn’t done anything wrong. If the SEC’s commissioners approve the filing of a civil suit against Mr. Mozilo, it could be announced within the next few weeks…
Countrywide was acquired last year by Bank of America Corp
“Tan Man May Get Burned!”
LOL
Stick a fork in him !
We’ll spar over the crispy skin.
Not gonna eat it though - too carcinogenic. I need a new pair of shoes.
Naaawww, I’m a Southerner. I love fried pork skins with hot sauce. Bring it on!
Roidy
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) - BankUnited Financial shares slumped 31% Wednesday after the Florida bank warned that it could be forced into receivership by the Federal Deposit Insurance Corporation because it missed a regulatory deadline to raise as much as $1 billion in new capital.
BankUnited /quotes/comstock/15*!bkuna/quotes/nls/bkuna (BKUNA 0.79, +0.03, +3.95%) entered into an agreement with the Office of Thrift Supervision on April 14 that required the lender to meet certain minimum capital levels. At the end of March, the bank needed between $706 million and roughly $1 billion to meet those targets, according to a regulatory filing late Tuesday.
The deadline to raise that capital expired May 4. That leaves the bank “subject to regulatory enforcement actions, including the Federal Deposit Insurance Corporation receivership,” BankUnited added in the filing.
BankUnited shares slumped 31% to $1.11 during afternoon trading Wednesday.
The stock has rallied in recent weeks on hopes that the bank may be acquired. In February, the Financial Times reported that distressed debt investor Wilbur Ross and private-equity firm the Carlyle Group were considering a joint bid for BankUnited.
In its late Tuesday filing, BankUnited said it’s been trying to raise capital at the holding company level for more than a year. The company has since switched to focus on getting capital to support its main bank subsidiary.
“No assurance can be given that we will be able to raise capital at either the Bank or the holding company level,” the company warned. “In addition, a recapitalization of the Bank without a simultaneous recapitalization of the holding company would reduce or eliminate the Company’s ownership in the Bank, thus raising substantial doubt about the Company’s ability to continue as a going concern.”
BankUnited, based in Coral Gables, just south of Miami, Florida, has been hit hard by the real estate slump in the state.
Technically speaking, wasn’t it the leadership at the Fed and Treasury who had gotten ahead of itself in thinking we were coming out of this recession aggressively, rather than “the market”? I can’t recall Mr Market spreading around all sorts of rumors about “green shoots” and “housing bottoms.”
U.S., Europe Stocks Drop on Retail Sales Decrease; Bonds Gain
By Lynn Thomasson
May 13 (Bloomberg) — U.S. and European stocks fell as American retail sales unexpectedly decreased in April, the Bank of England said the U.K. economy faces a slow recovery and companies from ING Groep NV to Applied Materials Inc. posted losses. Treasuries rose, while copper tumbled for a fifth day.
…
“The market had gotten ahead of itself in thinking we were coming out of this recession aggressively,” said Peter Jankovskis, who helps manage $1.2 billion at OakBrook Investments in Lisle, Illinois. “We’re not going to be retesting the low of March 9 by any stretch of the imagination, but some retracement of the gains since that time is certainly in order.”
“We’re not going to be retesting the low of March 9 by any stretch of the imagination,”
I can Imagine it
I can imagine it so vividly, I can almost taste it. And I’m not even stretched!
Betcha there are some even more vivid imaginers who can not only almost taste it, but have actually bet a lot of money on it.
They might be stretched, but I don’t think they mind very much.
Not to diferent from Madoff, Ken Lay, Adelphia, Tyco….
Hope this isn’t to long to publish, Ben.
Ivar Kreuger, the match king
A likeable rogue
Apr 23rd 2009
From The Economist print edition
ONLY occasionally does literature throw up great swindlers, like Anthony Trollope’s Augustus Melmotte. Real rogues are far more common. A new biography of Ivar Kreuger, who perpetrated perhaps the biggest financial scandal of the 20th century, provides a fascinating insight into how high society falls prey to such colourful characters.
Kreuger’s story is uncannily relevant today. When the dapper, 42-year-old Swede sailed aboard a luxury liner into New York in 1922, he could sense the mood of euphoria beginning to grip Wall Street. But he didn’t just take advantage of it like a fly-by-night Charles Ponzi. He helped define his era, accompanied by friends such as Greta Garbo and Herbert Hoover.
The product on which he built his fortune, the Swedish safety match, kept cigarettes smouldering through the jazz age. Hence his sobriquet, the Match King. But that was just for starters. Frank Partnoy, a well-regarded academic and writer on contemporary white-collar crime, explains in detail how Kreuger used the laissez-faire spirit of the time to persuade cash-strapped European governments to grant him match monopolies, offering them loans financed by American investors in return. He had a genius for financial innovation and an utter disregard for accounting niceties, making him a forefather of some of the financial scandals of the 21st century. Investors didn’t care much about the lack of transparency. He raised $154m from them in America, enabling him to replace banks such as the House of Morgan as a source of global finance. That caused bitter consternation. When he made a $70m loan to the French government and wiped Jack Morgan’s eye, the international media “compared him to the Medicis and Fuggers, history’s other great private funders of governments,” Mr Partnoy writes.
The author can at times appear gushingly over-impressed by his subject. But in some ways he is setting the record straight. When Kreuger’s suicide was reported in 1932, and he was discovered to have forged holdings of Italian treasury bills, his empire collapsed and he was vilified around the world. It knocked the last shred of confidence out of the Depression era. Yet some of the businesses he founded or invested in, such as Swedish Match and Ericsson, are still standing, and his American investors could have recouped some of their losses if they had held out long enough.
Mr Partnoy is less convinced by the claims of Kreuger’s long-standing champions in Sweden that he did not take his own life but was murdered. In defence of Kreuger, though, he makes a point worth remembering as people seek villains to blame for today’s financial mayhem. There is always a fine line between sharp business practices and being ethical. In his “alegal” pursuit of profit, Kreuger was egged on by his directors, his investment bankers, his auditors and, of course, his investors. When times were good, they turned a blind eye to his foibles. When they wanted someone to blame, they turned on him. But there was (and there usually is) plenty of blame to go round.
his American investors could have recouped some of their losses if they had held out long enough
Wrong because it ignores “opportunity cost of capital”!
St00pid, st00pid, st00pid people. They will never understand Bastiat’s elegant argument.
This from the Atlanta Journal Constitution:
Deeply discounted distress sales — including foreclosures and last-ditch sales by people forced to take lowball offers — accounted for nearly half of transactions in the first quarter, the association reported.
This is promising. The appearance that Megabank, Inc gets special treatment due to special connections is beginning to fade.
Wednesday, May 13, 2009
Geithner Says Bailout Money to Be Used for Small Banks
Kathryn Elizabeth Tuggle
FOXBusiness
At a summit before the Independent Community Bankers of America on Wednesday, U.S. Treasury Secretary Timothy Geithner announced that bailout money will be used to support small community banks that hold under $500 million in assets.
The Obama administration has said the money will come from the $700 billion bailout fund once larger banks repay the money they borrowed. Small banks have up to six months to form a holding company that would allow them to participate in the program.
Out of nearly 8,400 banks in the U.S., 92% are considered in the “small” to “mid-sized” category and have less than $1 billion in assets. Meanwhile Geithner pointed out that out of 9,800 banking offices found in communities with less than 10,000 residents, 2/3 of them are community banks.
Geithner acknowledged the fact that these smaller hometown banks offer a more personal service than their larger counterparts.
“In a time when financial innovation has put more and more distance between borrower and ultimate lender or investor, yours are the banks where staff and customers greet each other by first name, and where relationships still define the business of banking,” said Geithner.
He acknowledged that smaller banks held their own through the economic downturn, “Lending by small banks held up better last year than lending did overall, or by large institutions,” he said.
The problem with the Megabank, Inc business model is that they are much more efficient at lobbying Uncle Sam for bailouts than they are at banking. By contrast, small banks who are forced by competitive pressure to develop client relationships and properly underwrite loans may actually have a comparative advantage in sound business practice.
Brain-eating parasite creates zombies.
O.k., since all of my picks are up at least 15%, I put t-stops on them @10%
I’m just experimenting, so I’m going to let them run wild, but since they’re up, this gives them a little room to wiggle, but protects my initial investment.
Am I missing something?
I’ll repost tomorrow, but why couldn’t you just place buy/sell t-stops on one sector, and just go with the flow?
And you’re right, combo. Here I am tweaking way past my bedtime. I’m going to play in the trade sandbox a little longer, then close shop.
WASHINGTON — Reps. Bob Inglis of South Carolina and Jeff Flake of Arizona on Wednesday became the first Republican lawmakers to introduce legislation imposing a carbon tax on producers and distributors of fossil fuels.
The bill, co-sponsored by Democratic Rep. Dan Lipinski of Illinois , would set a tax of $15 a ton of carbon dioxide produced in its first year in effect, with the tax rising to $100 a ton over three decades.
“The first axiom of economics is if you want less of something, you tax it,” said Flake, a leading fiscal conservative, in an interview. “Obviously, we want less carbon, so we tax it.”
Inglis noted that several prominent conservatives support a direct carbon tax: Arthur Laffer , a former economic adviser to President Ronald Reagan , and Gregory Mankiw , who advised President George W. Bush and is now a Harvard University economics professor.
The three lawmakers offer their measure as an alternative to a massive climate change bill backed by President Barack Obama and now before the House Energy and Commerce Committee .
That cap-and-trade legislation would set a national limit on total carbon dioxide emissions and attempt to lower them over time through the sale and trading of carbon “allowances,” or credits, among the government, factories, utilities, automakers and other sources of pollution.
Inglis and Flake call their measure “tax neutral” because it would reduce payroll taxes by however much revenue the carbon tax raises, with employers and employees splitting the payroll tax cut equally
BINGO - TAX CARBON
It will reduce the amount of money we send to Iran Saudi Arabia Russia ect. My guess is it will create jobs via increased spending on insulation , lighting, distributive electricity generation, solar, wind, building of more efficient appliances ect. So little manufacturing is done in the US anymore that I doubt it will have much impact on that. If so they could just apply a carbon tax to all imports for the amount of CO2 we estimate was used in their creation.
America’s triple A rating is at risk
By David Walker
Published: May 12 2009 20:06 | Last updated: May 12 2009 20:06
Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.
…
The US government has had a triple A credit rating since 1917, but it is unclear how long this will continue to be the case. In my view, either one of two developments could be enough to cause us to lose our top rating.
First, while comprehensive healthcare reform is needed, it must not further harm our nation’s financial condition. Doing so would send a signal that fiscal prudence is being ignored in the drive to meet societal wants, further mortgaging the country’s future.
Second, failure by the federal government to create a process that would enable tough spending, tax and budget control choices to be made after we turn the corner on the economy would send a signal that our political system is not up to the task of addressing the large, known and growing structural imbalances confronting us.
How to get even with banksters:
1) Pay off your charge cards every month without interest.
2) Save up and buy your next car with cash.
3) Rent and save until you can afford to buy a home with cash at fire-sale prices.
4) Keep your money under a mattress; banks are paying next-to-nothing on savings, anyway.
Wall Street Journal
* MAY 14, 2009
Worries About Economy Weigh on Loan Demand
By KELLY EVANS
Maria O’Brien, a 27-year-old free-lance writer, and her husband are planning to do something later this year that they would have thought crazy in the past: buy a minivan — with cash.
“It’s worth the sacrifice right now to get out of debt,” Mrs. O’Brien said. “It means living more frugally, but also more freely.”
Banks are under fire for not lending enough and for tightening terms of credit, contributing to a drop in U.S. economic activity. But as the O’Brien family illustrates, the loan market’s shrinkage isn’t just about the supply of credit. It is also about weak demand for credit, a byproduct of households and businesses wary about the economy.
[less interest]
“Lending money is the bread and butter of banking,” said James Chessen, chief economist for the American Bankers Association. “The money is there, but banks are running smack into a wall of poor loan demand.”
The O’Briens, who live in Front Royal, Va., with their three children, are putting aside at least $500 a month toward the purchase of a used minivan in the $6,000-$8,000 range. They are also imagining a debt-free future.
“Once we get rid of it, we’re never going back,” Mrs. O’Brien said.
P.S. We bought our 2008 Toyota Sienna with cash last year. We got a really sweet deal, thanks to avoiding the car loan scam.
Does owning a car debt free qualify us for membership in the Ownership Society? Or does it have to be a GM car?
Or does it have to be a GM car? You (and I) already own GM. Who needs their cars?
This is a scam. Why should those who are willing and able to pay with cash have to subsidize the credit card industry?
Wall Street Journal
* MAY 14, 2009
Paying With Cash Could Soon Pay Off
By SUDEEP REDDY
Retailers could get more aggressive about levying higher prices on customers using credit cards under a measure being considered in the U.S. Senate.
As part of a sweeping bill to change the rules for credit cards, a pair of senators are pushing to lift constraints that Visa, MasterCard and other credit card networks impose on merchants’ ability to offer discounts for paying by cash or check.
Retailers have long chafed under the restrictions, which make it burdensome for them to make transparent to consumers the fees they pay to credit card companies. Those fees amount to tens of billions of dollars a year. The result, they complain, is that cash-paying customers unfairly end up sharing the cost of letting other customers buy on credit.
“Cash customers pay a penalty because we take credit cards,” said Jeff Miller, president of Miller Oil Co.
I”m torn on this issue. I try to pay cash because I realize that merchants raise prices due to the skim that the CC makers take. When possible, I negotiate a discount for paying cash - at the least I let them know *why* I’m paying cash.
But the merchant makes the agreement with the CC companies. They could simply not accept visa and mastercard and conduct their business with cash. I don’t see why congress needs to get involved?
But the merchant makes the agreement with the CC companies. They could simply not accept visa and mastercard and conduct their business with cash. I don’t see why congress needs to get involved?
Prohibiting that type of agreement seems a good idea to me.
To it more plainly, if my local merchants would give me a 3% discount for cash, I would switch to all-cash transactions for them, and reserve my CC’s for trips. My CC’s are paid off every month anyway.
But you’re interfering with freedom of contract here. One needs an awfully good reason to legislate against it, IMO. The merchant freely enters the contract. You freely do business with the merchant. Ask them for a 3% discount. If they won’t offer it, go elsewhere.
Perhaps there’s a point where legislation is needed, but I hate people jumping to get government involved when there are much better solutions that don’t infringe on individual’s rights.
I find it interesting that some here believe gov’t shouldn’t be involved in mortgages, banking, interest rates, etc, etc, but at the same point in time want it involved in all these other aspects of business (not saying this is you, thresho…I don’t keep close enough track of everyone’’s stance on gov’t intervention). There’s no monopoly at play. Take your business elsewhere. Convince others to pay cash - make them see that using CCs causes a rises in price greater than the cash back they get or any benefit they get from CCs.
/rant
Look at it this way…we all (I think) hate the bailouts the banks are getting. We think the system’s corrupt.
Why feed the beast by letting them have the skim on all of your transactions? You’re directly giving money to the people who caused all this. Banks don’t need to be involved in every bit of commerce. Cut them out, even if you’re not getting a discount. Do you really want every financial transaction cleared through a 3rd party?
“One needs an awfully good reason to legislate against it, IMO.”
Would a membership card for the D-rat party be considered an awfully good reason?
A “conspiracy to restrain trade” seems like a good reason to me.
On second reading, I agree with you. I am happy merchants do this, as I like paying now with a credit card and enjoying the float until we pay off the charge the next month.
But is that worth 3-4% of the purchase price of the good? (presumably the amount the price is marked up to cover the charge from the bank).
Muggy, look what you’ve done!
Wall Street Journal
* Thursday, May 14, 2009
* TODAY’S MARKETS
Signs of Consumer Strain Hit Stocks
By PETER A. MCKAY
Fresh signs of strain among U.S. consumers revived doubts about the broader economy’s health and sent stocks sharply lower on Wednesday.
The Dow Jones Industrial Average fell 184.22 points, or 2.2%, to 8284.89. The Nasdaq Composite Index sank 51.73 points, or 3%, to 1664.19, while the S&P 500 declined 24.43 points, or 2.7%, to 883.92.
…
Wednesday’s data struck at a time when many market veterans believe stocks are vulnerable to a correction following a bustling springtime rally.
“I’ve heard even some of the technicians say that the market is due to get more discerning here,” with investors carefully sorting through individual names looking for those best positioned to weather the remainder of the recession, said portfolio manager Linda Duessel, of Federated Securities in Pittsburgh. “That’s a pretty unusual thing for statisticians to say,” since such traders tend to look for broad market swings based on chart patterns.
Strategist Scott Marcouiller, of brokerage Wells Fargo Advisors, said that he was less concerned about the retail data than he was about the market’s need for a more sustained correction following its hefty gains from early-March lows.
“This is a market that’s tired, using the retail news as an excuse to head lower,” said Mr. Marcouiller. “But we’re going to need more than a day or two of correction to really shake out the excesses.”
The Commerce Department’s April consumer spending data showed a drop in activity, which belied Wall Street’s expectations of a slight rise. The report undermined nascent hopes that the recession was in its last stages, Peter McKay reports.
May 13, 2009
THE BEAR’S LAIR
Which green shoots will wilt first?
By Martin Hutchinson
Stock markets have shown clear signs of irrational exuberance in recent weeks, on evidence that the US and global economy is exhibiting “green shoots” of impending recovery. While I have said several times that the US economy appears to be approaching a near-term bottom, I don’t expect recovery to impend any time soon, so I thought it worth examining these green shoots to determine which were most likely to wilt first.
…
The principal cold gale causing green shoots to wither will probably be the inexorable rise in long-term interest rates. This has already begun; the 10-year Treasury yield is up from its low of 2.07% in December to around 3.3%. However, the enormous Treasury financing requirement and the increasing visibility of inflationary signals will cause yields to go much higher.
In the 1990s, when average inflation was 2.9%, the same level as the recently announced first-quarter gross domestic product (GDP) deflator, and the federal budget deficit averaged a mere 2.3% of GDP, the 10-year Treasury yield averaged 6.67%. That level may seem very high at present, but it is likely to be passed fairly rapidly, on the way to Treasury bond yields of 10% or more as deficits and inflation provide a howling adverse gale for the T-bond market. The rise in interest rates will be prolonged and initially quite slow, but we can probably expect 10-year Treasuries to yield more than 6% a year from now.
If rising interest rates are the gale causing green shoots to wither, inflation will be the frost causing them to die. Federal Reserve chairman Ben Bernanke has enjoyed a period in the public eye, even before his January 2006 ascension as Fed chairman, largely punctuated by self-delusion on an extraordinary scale. It began with his discovery of a hitherto undetected dire deflationary threat in 2002, continued with his announcement of the “Great Moderation” in February 2004, just as his lax monetary policy was sending housing policies into orbit. It continued with his accusation that evil Asian savers had caused the 2007-08 explosion in commodity prices
, and it has now settled into an indelible conviction that, however “unorthodox” and Weimarite his monetary policies may be, inflation is far less of a danger than deflation.
It will be a race between soaring interest rates and grimly rising inflation to kill the green shoots of recovery and plunge the US economy into renewed downturn. Both factors will reinforce each other as buyers of Treasury bonds, appalled by the price declines in their holdings, will come to realize that inflation as well as soaring interest rates has made long-term Treasuries the ultimate sucker’s bet. Zhou Xiaochuan, governor of the People’s Bank of China, will no doubt be especially withering in his condemnation, discovering a hitherto little-known treatise on sound monetary policy in his copy of the Thoughts of Mao Zedong.
The housing market and its corollaries, the housing finance market and the construction market, will recover or wilt further, depending on which - interest rate rises and inflation - proves predominant. Here my crystal ball is a little cloudy. House prices are now around their long-term average in terms of median income, but on the other hand there is a huge overhang of unsold housing inventory and foreclosures or potential foreclosures, which would normally depress prices further.
Nevertheless, very rapid inflation without a concomitant rise in interest rates might cause the housing market to find its feet quickly. Had Bernanke been allowed to wreak his inflationary-producing magic unaccompanied by the deficit-producing efforts of his partner in congressional obfuscation, Geithner, that might have happened. However, in the short term, Geithner’s operations pushing up the federal deficit and interest rates should win out over Bernanke’s attempts to push up inflation by lowering interest rates. In that event, further green-shoot wilting and chaos in the housing market is likely, producing knock-on negative effects on construction, mortgage finance and the US banking system.
With higher interest rates, higher inflation, a wobbling housing market and a wobbling banking system, the stock market’s recent exuberance is most unlikely to continue for long. Currently, particularly in the financial sector, the riskiest and most damaged stocks are showing greatest strength, which is always a worrying sign. At some point, investors will note that the old problems haven’t fully gone away, while new problems have appeared. Then a rapid stock market decline below the March lows will probably occur, although there will be heavy buying at March’s levels by investors who have noticed that in March, stocks at those levels proved to be bargains. This time around, the bargains will be false ones, as further earnings damage is in store through the rising cost of debt in an overleveraged economy.
“However, in the short term, Geithner’s operations pushing up the federal deficit and interest rates should win out over Bernanke’s attempts to push up inflation by lowering interest rates. In that event, further green-shoot wilting and chaos in the housing market is likely, producing knock-on negative effects on construction, mortgage finance and the US banking system.”
I find the above the most intriguing and provocative passage in Hutchinson’s analysis. However, I note that he omits a number of important details that we often discuss here:
1) A rising unemployment rate does not portend well for housing demand.
2) There is not only a worsening foreclosure crisis, but also a record 19.1 vacant homes sitting in shadow inventory across the U.S. landscape.
3) Home prices are dropping at the fastest rate in U.S. history right now, despite ongoing but futile attempts by the PTB to stem price declines.
4) Peak Alt-A and prime ARM reset peaks are scheduled for the future, and are not expected to substantially taper off until 2011.
5) A reversion to traditional mortgage lending standards, including requirements for income verification and downpayments, means that home prices are still quite high relative to lending budget constraints, even after record drops.
6) Banks are reportedly holding lots of residential real estate inventory off the market, presumptively under the assumption that it will be more profitable for them to ride out the bust (or wait until they get bailed out) than to unload REO in a down market. But given the time span over which the elephant has remained hidden under the rug without any kind of government rescue, it seems highly unlikely that any kind of rescue of these private banks is forthcoming, as bailout fatigue is sinking the viability of the too-big-to-fail insurance policy they thought was in force. They would probably be better off unloading REO sooner than riding falling knives to the bottom of the sea.
In sum, I suspect the factors weighing in favor of further green-shoot wilting and chaos in the housing market are stronger than Martin’s analysis suggests.
Green shoots taste delicious when picked fresh and fried.
May 13, 2009, 11:07 p.m. EST
Asian Shares Drop; Stronger Yen Hits Japan Exporters
By MarketWatch
SINGAPORE (MarketWatch) — Asian shares stumbled Thursday after a downbeat session on Wall Street and amid concerns about the health of the U.S. consumer, with exporter shares dented in Tokyo by a rising yen and mining shares sold further in Sydney.
Japan’s Nikkei 225 was down 2.6% with Australia’s S&P/ASX 200 down 2.9% - touching a two-week low - and South Korea’s Kospi Composite off 1.7%. Hong Kong’s Hang Seng Index fell 3.1%, with Taiwan shares down 1.2%.
“Clearly we’re not out of the woods yet. With many unsure and asking if this is really the start of a bull market or just the sound of a bear
rallyinggrowling, we could see investors clicking the sell button and consolidating over the next few days,” said Philip Gillet, a sales trader at IG Index.The Japanese yen remained well-bid, a sign of the caution filtering through markets, with the euro briefly falling to its lowest level against the yen since April 30. U.S. stock futures were largely flat in screen trade.
Overnight, the major U.S. indexes had their biggest losses since April 20 as an unexpected drop in retail sales hurt sentiment. The Dow Jones Industrial Average fell 2.2%.
The Economist trains more witheringly hot sun rays on the wilting green shoots:
Finance and economics
Buttonwood
Happy days are here again
May 7th 2009
From The Economist print edition
Investors’ optimism has returned very quickly. Too quickly
…
The economic data may have improved, but only from some terrible lows. It would have been amazing, given the amount of stimulus thrown at the economy in the form of lower oil prices and interest rates, quantitative easing and fiscal deficits, if there had not been some kind of rebound.
Nevertheless, an observer who had woken after sleeping for the past two years, would be alarmed at the numbers. Nominal GDP in America has fallen for two consecutive quarters for the first time in more than half a century. Industrial production is still dropping at a double-digit annual rate in America, the euro zone and much of Latin America and South-East Asia.
Companies are still defaulting on their debts at a steady rate; 40 issuers did so in April and Moody’s expects the default rate to reach 14.3% by next March. Even the results season has been mixed. Andrew Lapthorne at Société Générale points out that 62% of American companies have missed expectations for sales. That implies the profit improvement is coming from higher margins, something that it is hard to believe can persist given the economic backdrop.
The danger is that sentiment has flickered higher rather as a dissected frog’s leg will twitch when an electric current is applied. The world is still drowning in debt, unemployment is still rising, wages are stagnant and the threat of higher taxes hangs over consumers. This was not a conventional downturn; it is unlikely to herald a conventional recovery.