Bits Bucket For May 23, 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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such great news:
http://gawker.com/5265546/times-scribe-omits-vital-details-from-bookarticle
http://gawker.com/5266329/will-annie-leibovitz-be-forced-into-bankruptcy
Hey Ben, I don’t speak German, but if you are in communication with the folks from Schwarzfilm, let them know you have a blogger who would be willing to do a few tracks for the glory.
May the Schwarz be with us!
Ralph speaks perfect english. I am waiting on them to let me know when they will be in Florida, and I am headed that way.
Gonna teach them how to trade?
Ich bein ein day traders??
Ich bin Börseentageshändler.
“Gonna teach them how to trade?”
Uh, no. I’ll stick with what I’m actually good at. For the record, I did finish ahead, but I know I got stupid lucky.
“… but I know I got stupid lucky.”
Ah, congratulations Muggy in that the Market paid your tuition for you. For so many other wannabes the Market charges some very high prices for its trading lessons.
SKF & SRS giveth, FAZ/FAS taketh.
Combo, I will be getting both books you recommended.
“I don’t speak German”
Das ist aber schade.
Dunkel ist das Leben: ist der Tod!
Kaufen Sie sich kein Haus.
Have you guys seen the new Re/Max ad!! ROFL!
http://www.youtube.com/watch?v=aSTdelX3_gU
Everytime I start to think the “Suzanne researched this” commercial was unfair to realtors.. Re/Max comes out with an ad like that.
I didn’t quite catch it all - Did they say people would be kicking themselves a year from now “for” buying in this market?? If so, I have new respect for ReMax. (sarcasm off)
comments have been disabled….You can’t handle the truth Remax!
They found a new way to play the same song.
“Buy now or be priced out forever.”
…same thing as…
“Buy now or be kicking yourself forever.”
Ad fails to address the issue of buyers who bought two years ago are now the sellers (at a tremendous loss) and how those FBs are the ones really kicking themselves. The losses are real, the promise of appreciation is a far-fetched dream. Makes you want to go out and kick a realtor in the nuts.
REMAXiScum has been airing that gross lie in the northeast for about 2 months now.
Enjoy Memorial Day Weekend everyone. I have to say that DC is a great place for it. Among the choices for this weekend are:
Rockville, MD’s Hometown Holidays - hey, I get stuck paying for it, I might as well go see the music and such.
Maritime exhibition at Smithsonian Museum of American History is having special events all weekend. New exhibit at the Sackler of gifts that Turkey and Iran gave to the Tsars of Russia to try to keep them from invading. And the museum stuff goes on and on…
National Memorial Day Choral Festival at Kennedy Center - tickets are $10.
National Memorial Day concert on the lawn of the Capital building - those in the know go to the rehersal the night before for smaller crowds.
The Marine Corps band is doing a program at Wolf Trap followed by fireworks.
Ceremonies, memorials and parades of various levels of meaning and piety.
Rolling Thunder Motorcycle Rally is in town this weekend too. Demonstrations for vets rights and POW/MIA issues. And they make their point. You can hear them all over town…
Just to say, Memorial Day around here is more than a cookout and opening the community pool.
http://dc.about.com/od/hoildaysseasonalevents/a/MemorialDay.htm
Oh, and if you listen really really carefully, you can hear the realtors biting their fingernails to the quick. After all, schools starts right at the start of September. Count back a month for moving and settling in and two months to get to closing, and they have a week left to get the sales done before the peak of the spring selling season is over.
Thanks polly- you made my day with the realtor comment- and thanks to all our vets- here and abroad!!! This day should be about alot more than the sales at the mall!!!
Must be nice when all the rats (politicos and lobbyists) leave town and return to their constituencies.
Well, the politicians are in their districts pressing hands, laying wreaths and walking in parades, but I don’t know about the lobbyists. They live here. I don’t think they ever leave except to for the normal vacations and travelling that the wealthy do.
I’d really like to visit DC again. I was just 12 years old, and on a school trip, the last time I was there. Maybe I’ll try to get there next year.
I’ve seen the Lincoln Memorial, so there’s only one place in DC that I would visit–the VietNam Vet Memorial.
It is an extraordinary experience, but be ready to be wiped out emotionally. I cried, and I did not expect that.
I like the FDR, at night.
To me, fireworks seems out of place on Memorial Day. The intent was to honor those who have given their lives while wearing their country’s uniform. Flags at half staff, memorial services, the playing of Taps, maybe a flyover of military aircraft in the “missing man” formation seem more appropriate to me.
It would also be a good day for HBO to re-air their movie, “Taking Chance.”
Aaaaaaaaah……that first cup of a new brew! That
subtle aroma whiffing by my nose, that first sip, a
long contented sigh…all is good and the day is just
beginning… Morning all, especially Oly girl!
Rancher, did you brew up a cup of Arbuckles? Good to the last drop.
And if you’ve never heard of Arbuckles Coffee, it was the coffee that won the West, here’s a video I made with a song about it, put dots in the spaces:
www youtube com/watch?v=Ht-vD7a_7To
Just dropped in some egg shells to settle the grounds. Have a ‘REAL’ cup before I crawl in at 5000′. Hope the stoneflys and Tellecos work in the morning.
“Desert Dogs” is a crack up. The canine with the HUGE stick kills.
Don’t you realize that by brewing your own java, you are helping to precipitate the shutdown of Starmucks stores? (P.S. — I brew my own, too — at an estimated cost at less than 1/10 per cup of Starmucks price per cup).
Wall Street Journal
* PAGE ONE
* MAY 23, 2009
A Fan Hits a Roadblock on Drive to See Every Starbucks
After Coffees in 9,000 Stores, Winter Gets Jittery as Outlets Start Closing
By JULIE JARGON
A man on a mission to visit every Starbucks in the world has a problem: Starbucks Corp. is closing scores of stores he has yet to visit.
The freelance software programmer, 37 years old, calls himself Winter. He was on a job in Wisconsin last month when he learned that a Starbucks in Prince George, British Columbia, would close the next day. He spent $1,400 to jet there for a cup of coffee — sugar, no cream — and a photograph.
“If the store closed before I visited, I would lose another piece of my soul,” Winter says.
He needs to find a new hobby, obviously. How about visiting every McDonalds on the planet ? They never seem to close their doors.
I don’t really even like Starbucks beans. Somehow they impart a “burnt” taste to all their dark-roasted beans.
A Costco deal - San Francisco Bay Coffee Roasting Co. french roast beans 3 lb. bag for about $12.
But I stopped my Costco membership last year for various reasons….
Today’s shopping finds:
Cash & Carry (Idaho version of Smart & Final) - Ambiance french roast beans 2 lb. $10.78.
Grocery Outlet - Pear’s Gourmet french roast beans 1.5 lb. $5.99.
Is it just me, or has the price of coffee gone up a lot in the last year?
Crotch Full O’ Nuts is my longtime favorite.
It’s the heavenly coffee……. that I couldn’t find on the west coast!!!
Oh its out here- especially popular in West Hollywood.
You can also get Chock Full o’ Nuts coffee if you prefer that….
The July Coffee C price in NY is down a few cents from last year but the corresponding price is up 25 cents per pound from 2007.
Check the CBOT; the wholesale price of coffee has gone up because of a drought,freeze,too much rain you name it.The manipulators know!!!
Hi, Rancher.
I hope you had a super day.
It’s no longer morning and if I drink coffee at this point I’ll be skipping and prancing around the dark woods at midnight even more than normal.
BUT, and this is so very exciting, did you know you can eat Moon snails?! People can eat Moon snails! I learned this right today, at a shellfish workshop down at the Grange. I learned this from a bunch of sunburned booted guys in overalls. Then we went on a field trip to see oysters and I gathered some big fat leaky Moon snails up incidentally along the way, before and after I tried to leap a guy-line in my boots and fell right in the mud.
Man…the wasted years…
I have them in the fridge now all squirming around each other. Gonna eat them later.
(The Moon snails, not the guys in overalls, hahahah.
)
Olygal,
Now get some more of that great mud and wrap Moon snails, a large frog and one plump mouse into center creating a thick mudball(onions, herbs and gutting are optional) Build a small woodfire and place mudball with contents into the fire and cover with hot ashes and embers and bake until done. Turn if needed, 35-40 min should be adequete depending on mud and fire heat.
Crack open and enjoy with salt, pepper and a beer. It helps to be a little desperate and hungry but eat that and you’ll NEVER have to prove yourself on the HBB again.
Many people on this board said: Start a garden.
I did and here is my report.
I have beautiful plants and it was soooooooooo easy!!! Anybody can have a garden anywhere.
I am harvesting lettuce, tomatoes, eggplant, peppers, basil etc. I planted on April 7th.
agardenpatch.com (This is what I have)
and
earthbox.com
I purchased 10 boxes ($300) and have a 300 square foot organic garden that is portable. Still renting, so I will move the garden boxes with me. It is truly UNBELIEVABLE how fast and healthy plants are growing. I have never results like this before. Just wanted to share what I could.
Can you send fresh produce to Utah? To my PO box? Really cheap?
Congrats on the new sprouts, to you and Muggy both.
What’s neat if you live in the South is that you can plant broccoli and cauliflower in October/November and harvest it in January/February. I did that in Charlotte and had about 15 heads of both for 5 years running. Brief chills and snow do not phase either.
Better pick and eat that lettuce, radishes, peas, carrots quickly - they’ll be worthless to you in Texas in 2-3 weeks.
Thats funny- we planted a garden this year here in our rental house- probably did the whole thing for less than $200.00. Got started by the “tomato tree” thingie that hangs the plants upside down- impulse buy at the outlet mall “as seen on TV” store. The thing is going gangbusters- we’ll have fresh tomatos soon (can’t wait-honest to god vine ripened tomatos!!!). Anyway- we fenced off a section of the yard and dug up the ugly grass (backbreaking work with a shovel- but the idea was to do it cheap). We’ve got beans, lettuce, potatoes, squash, corn (don’t know how that will do but it’s fun to try) and some other stuff I forgot. Found out we have wild rabbits and racoons here in the LB when we put out a strawberry pot on the front porch. They in turn found out there is a hawk in the neighborhood (soooo cool). He buzzed us one evening trying to get the finches from the feeder sock we had hung in the front yard. Who knew all this wildlife existed in the big city? We wouldn’t if we hadn’t planted a garden!!
Bugs or spiders have put a major hurt on my earthbox plantings.
My tomatoes are doing well, but the cukes, bell peppers of orange/red/yellow are puny. They however are not in the earthboxes.
Got home today to try homemade remedy. Warm soapy water and spray 2 x daily to all leaves, under/over.
Any other ideas?
Carrots seem puny now that I have transplanted them, and so to parsnips. Darn. But the meyer lemon tree is going to have a margarita bounty this year.
Somehow the earthbox in the desert doesn’t need the plastic cover. I think it cooks the plants.
More Ponzi artists falling out of the wood work:
California AG arrests three for $200 million Ponzi scheme
California Attorney General Jerry Brown/ AP
Attorney General Jerry.Brown Jr. last night filed 79 criminal charges against three men who allegedly conned thousands of people for more than a decade in a $200 million Ponzi scheme.
http://www.examiner.com/x-4106-California-Statehouse-Examiner~y2009m5d22-California-AG-arrests-three-for-200-million-Ponzi-scheme
Unbelievable, how many of these Ponzi schemes are surfacing. This country is quite ill at the moment.
I have read for the second time this week about Paycuts in India. If it is a trend then wages will have to continue to go lower and then maybe even lower again over here to try and compete.
TPTB keep trying to talk up inflation but deflation is the name of the game right now.
With the paycuts that are happening here…I don’t believe any company trying to push prices higher will have much luck for too long. Food may be the exception.
Stay safe…..prepare for lower wages even if you have and keep a job.
‘Stay safe…..prepare for lower wages even if you have and keep a job.’
Benefits get whittled away. Work hours get more demanding of your schedule. Companies go belly-up. Are we having fun yet? New economy, schmew economy. This is a generational storm. The eye is passing over us right now.
I personally feel the real eye of the storm will be passing over in about two years. We’re taking more financial precautions. If we’re wrong, well, then, we’re just in better financial shape. It’s horrible, either way.
Know the feeling Rancher.
I’m also enjoying my first cup of nectar. Looking out the window, watching a humming bird going from flower to flower on the humming bird feeder sipping its first cup nectar, a great start.
Ahhh typical summer pattern here. Fog and wind. All is good here.
Good morning to all.
We have its cousins right outside our kitchen window, three feeders filled at least once a week.
Territorial little buggers.
Have a nice weekend, Gal.
Mike Morgan article now online:
http://online.barrons.com/article_print/SB124303112018248371.html
Oops,
Should be:
http://online.barrons.com/article/SB124303112018248371.html
Pretty horrific scenario, but then it is the view from Florida.
Actually, I think he is talking about the country as a whole, though many references are particularly about Florida.
Thanks for linking Mike’s article, Dave. Good stuff!
More punishing the saver ideas! Oh yes, I really want to help out those debt slaves who bet the farm!
U.S. Needs More Inflation to Speed Recovery, Say Mankiw, Rogoff
May 19 (Bloomberg) — What the U.S. economy may need is a dose of good old-fashioned inflation.
So say economists including Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the International Monetary Fund. They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up.
“I’m advocating 6 percent inflation for at least a couple of years,” says Rogoff, 56, who’s now a professor at Harvard University. “It would ameliorate the debt bomb and help us work through the deleveraging process.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=auyuQlA1lRV8&refer=home
So when businesses have to pay 12 to 15% to borrow money that is going to be so great for the economy? They are going to buy up new equipment and hire new workers? Yup. Brilliant completly. I heart him. Lets put him in charge.
“So when businesses have to pay 12 to 15% to borrow money that is going to be so great for the economy?”
How could this happen so long as the Fed is using quantitative easing to keep a lid on l-t Treasury yields? It seems like the adjustment would have to flow into dollar exchange rates.
Am I correct in my assumption that the Fed can come in at any time it pleases to hammer the 10-yr yield back down? If your answer is no, please explain why not.
LA Times
Why Wall Street is deserting Treasuries and the dollar
1:56 PM, May 22, 2009
This week couldn’t end fast enough for the Treasury bond market or the dollar, both of which were hammered again today as investors bailed out in thin pre-holiday trading.
The yield on the 10-year T-note jumped to 3.45%, up from 3.35% on Thursday and 3.14% a week ago. The yield now is the highest since mid-November.
So much for the idea of Treasuries being a haven: The iShares Barclays 20+Year Treasury exchange-traded fund, which owns long-term government bonds, has lost 22% of its value since the start of the year as rising market yields have depressed older bonds’ prices.
In the currency market the euro shot up to a five-month high of $1.40 from $1.39 on Thursday and $1.35 a week ago. The dollar also slumped further against most other major currencies and a lot of minor ones.
As for the stock market, it performed a modest levitation act for much of today’s session, only to surrender to gravity in the last hour.
Global investors and traders suddenly seem to have every reason in the book to sell Treasuries and the greenback, and no reason to buy.
If Mankiw and Rogoff are openly advocating a policy of inflating away the debt, is it a safe bet that the Fed will execute a stealth attempt to do so?
Stealth? They are quite open about trying to inflate our way out of this… and in fact they have to be if that is the strategy as expectations are central to generating inflation.
The $64 million question: can they do it? So far, the answer is no. The Fed can’t actually for companies to hire, unemployment continues to rise, wages are falling, consumption is decreasing… the great deleveraging is underway.
The other possibility is that they will try to actually maintain stable prices during the financial crisis and afterwards. There is evidence in the MSM that at least some FOMC members favor price stability over currency devaluation.
“They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up.”
“If Americans were convinced of the Fed’s commitment, they’d buy and borrow more now, he says.”
How does borrowing more now help one pay down debt?! The only type of inflation that would help workers pay down debt would be wage inflation without inflation of costs for essential items. But how is wage inflation possible with wages falling and unemployment at the highest levels since the Great Depression.
Wouldn’t greater inflation actually reduce the possibility of workers reducing debt, either through reduced purchasing power or much high interest rates on revolving credit?
It is really a scam, IMO, as currency dilution is a taking from those owed fixed dollar obligations (e.g., retirees on fixed pensions) to reduce the debt burden of profligates who borrowed more than they could hope to ever repay. So far as I am aware, the Fed never issued any apology for leaving many pensioners destitute after the Great Inflation of the 1970s, so I don’t see why they would not repeat the performance as they see fit.
I still vividly recall the experience of grocery shopping with my mother in the 1970s and hearing hapless grandmothers muttering under their breath about how unaffordable the price of bread was getting.
Inflation is everywhere and always a monetary phenomenon.
–Milton Friedman–
So does that suggest deflation is everywhere and always a monetary phenomenon?
There was a time when I would joke about a loaf of bread costing $10. Little by little, give it time.
That is the problem. And it was the problem during the last bout of intended inflation. After the dotcom crash loose money flowed entirely into assets while wages were flat at best.
Hope everyone has a wonderful Memorial weekend…Smile and say hello to someone you don’t know…
hello.
Do I know you?
I don’t know you but I know Bink…
Two more recession related stories from Milwaukee Journal Headlines today.
“Bustle is notably absent from Port of Milwaukee
At the Port of Milwaukee, everything is supersized - cranes and forklifts, containers and ships. So are the numbers. The port handled 2.8 million metric tons of cargo in 2008, down 12% from 2007. This year could be tougher. When the economy slumps, shippers on the Great Lakes feel the recession’s weight”
“Dropped dealerships find themselves in a bind
Car dealerships losing their Chrysler and General Motors franchises could be stuck with millions of dollars’ worth of vehicles that, under Wisconsin law, they can’t sell after their franchise agreements end.”
http://www.jsonline.com/
Peace baby
Maybe that lady who said hello to me on the golf course an hour ago read your post before I did.
Wasup
yo dude.
When taking some of the appliances isn’t enough, I now give you the ultimate revenge (see BBQ remarks):
http://www.redfin.com/CA/Temecula/45695-Hawk-Ct-92592/home/6645264
I love ‘ceramic flooding on the first floor.’ HEHEHEHEHEHE
Okay, I give up. What exactly is ” ceramic flooding ” on the first floor ? It doesn’t sound too good.
If any of you are bored and want to read about life in Utah, click on my handle here. I’m getting lonely out here in the Big Empty…
Love your site, Lost!
Are you still in the “nice” rental you found, or did you move again since you went to Montana (?) for school, IIRC.
Are you going to stay in Utah for a while, or just temporarily hanging out?
Hope you have a great weekend!
NY Times article today about financial advice from a new financial planning grad. (Yeah, kinda silly since she’s 22 and the advice is probably parroted from her parents views, but whatever.) Get this: She says, “Don’t buy a home.”
http://www.nytimes.com/2009/05/23/your-money/financial-planners/23money.html?em
“A lot of people don’t realize the expenses that come with a house… There is upkeep. Taxes. Insurance. It’s a lot more than just a mortgage payment, and just because your mortgage payment doesn’t go up doesn’t mean taxes and insurance won’t.”
I think this is a sign that the tide of public opinion is finally starting to change. It took a lot of pain to get here, and it will take a lot more before the get-rich-quick-on-real-estate mindset is fully a thing of the past (at least for this cycle).
I don’t normally take financial advice from people named after the cities in which they were conceived, but she seems to have her head on relatively straight.
She is probably unique amongst her friends in Texas. I’m glad to hear she works for USAA. I’ve been tossing around the idea of opening an investment account with them. They’ve been nothing but fair to me in all other respects.
When we were thinking of names for baby girls, we both decided we hated Madison. It struck us as one of those names that seems to be everywhere now. We’re old fashioned at heart I guess.
Anyhoo, we looked online at one of those baby name sites and it turns out that hardly anyone was named Madison until…that stupid Splash movie with Darryl Hannah came out. Then, boom.
But, not her fault she’s named that way, and yes, she’s pretty much right on in the article.
Come on, DC, can’t you recognize a too-big-to-fail financial entity when you see one (in this case, the once-great state of California)? Please open the bailout floodgates as soon as possible, before the left coast recession kills all the green shoots you all have been reporting.
California could run out of cash come July
Fiscal chief warns legislators to work out budget – or else
By Judy Lin
2:00 a.m. May 23, 2009
SACRAMENTO – California will run out of cash in two months unless lawmakers act swiftly to close a widening deficit and pass a budget, state finance officials warned yesterday.
Failure to reach an accord will trigger a financial storm much greater than the one the state endured this winter when it stopped infrastructure projects and delayed payments to vendors and refunds for taxpayers, state Controller John Chiang told lawmakers at a budget hearing yesterday.
“No matter how bad you thought February was, without immediate and real fixes to the state’s finances, sometime next (fiscal) year we will have a cash crisis that is four times as broad as what it would have been this fiscal year,” he said.
The budget agreement in February sought to close a $42 billion deficit.
Based on April 15 tax collections, Chiang said the state’s treasury will be $2.1 billion in the red in July. The projection does not include the rejection of five budget-related measures in Tuesday’s special election, which increased the deficit in the coming year by $6 billion. It also does not include billions that the state has borrowed from internal funds and must repay.
Chiang urged lawmakers to meet the constitutional requirement to pass a budget by June 15 – a deadline they rarely meet.
The shortfall is projected to be about $24 billion for the coming fiscal year, which ends June 30, 2010. That deficit amounts to about 25 percent of the state’s general fund.
Illustrating how quickly revenue has dropped, the state Board of Equalization yesterday cut quarterly sales tax payments to local governments by $122.8 million. The total is nearly 20 percent less than what it had anticipated to hand out.
Gov. Arnold Schwarzenegger’s Finance Department had estimated that sales tax collection would drop 7.4 percent, but receipts for the first quarter were down more than 18 percent.
I have a horrible feeling that the repaid TARP money will be funneled to California.
I hope not….I want it to go completely broke…We need a start over…There is serious discussion going on about a constitutional convention next year…Will see…
and all this time, Dave, i’d been misreading you as a South Carolina guy. I apologize for the inattention.
scdave,
I agree. I don’t want the federal government to intervene. California needs to restructure the way it operates and spends money. I don’t want the feds delaying that necessary process.
The state first needs to restructure how it spends money, then on how it raises revenue (what’s taxed, how much, etc.). Those pushing for a constitutional convention, unfortunately, mostly seem to be interested in making it easier to raise taxes without addressing any of the spending issues. Spending is the main issue. The tax structure is secondary.
I think the state will be wracked by riots by summers end. The gravy train is derailed, but the passengers have not yet found out.
Joe- this is something I’m afraid will happen too- the racial tensions are unbeliveable right now- take their free money away and the powderkeg is gonna blow!! BTW SDGreg- as a Cali resident too say let it fail!!
“I think the state will be wracked by riots by summers end. The gravy train is derailed, but the passengers have not yet found out.”
I am thinking Cali is due for riots and a good magnitude 7.0+ earthquake to boot before home prices bottom out and the bubble is a fading memory.
An earthquake - by breaking down storefronts and disrupting emergency services - could certainly form the trigger to a riot. If the store window is already broken, it’s not too tough to start looting.
This guy Chiang is a tool. He was the one who did not support Arnold’s furloughs for the state employees. How can any controller be so dumb? Balancing the budget is very critical -not the feel good stuff, especially when furloughs were better than layoffs.
CA cannot avoid the massive layoffs - no way! Along with the layoffs I think there should be some accountability that needs to come from holding an elected or appointed position. For example why do chancellors of UC system need to earn $400k? And why does the Port of LA manager (mayoral appointee) earn $250k?
Defaults down locally
Foreclosures up; trends ‘erratic’
By Emmet Pierce
San Diego Union-Tribune Staff Writer
2:00 a.m. May 23, 2009
Armondo Campos (right) helped Agustin and Felicisima Garcia as they signed documents modifying their home loan at Community HousingWorks’ City Heights office. - John R. McCutchen / U-T
Notices of home mortgage default in San Diego County dropped unexpectedly last month from March’s all-time high, while foreclosures rose by 23 percent, MDA DataQuick reported yesterday.
Default notices, which declined by 12 percent from March, had been expected to rise along with foreclosures, now that many loan servicers have stepped up foreclosure activity, said Alan Gin, an economist with the Burnham-Moores Real Estate Institute at the University of San Diego.
But experts said it was hard to discern any clear trends from the report.
DataQuick analyst Andrew LePage said the economic problems that have led many observers to predict hard times ahead remain in place, with unemployment expected to remain high.
“I don’t think we are dealing with smooth trend lines anymore,” LePage said. “It’s pretty erratic. There is so much in flux.
“Who knows how committed the major lenders are to loan modifications, and how many homeowners will fight to stay with their house rather than just throw in the towel?”
The discrepancy between the CA unemployment rate and the payroll data suggests the drop in unemployment could be due to sampling error, rather than an actual drop in the actual CA population unemployment rate.
State jobless rate fell 0.2% in April
But other data point to long road to recovery
By Dean Calbreath Union-Tribune Staff Writer
2:00 a.m. May 23, 2009
For the first time in nearly three years, the jobless rate in California decreased slightly last month, according to data released yesterday by the state Employment Development Department.
But the unemployment rate, which slipped from 11.2 percent in March to 11.0 percent in April, is still at its highest levels since the Great Depression. And economists say that other data in yesterday’s report – including a loss of 63,700 payroll jobs – show little sign that the outlook is improving.
“While it is encouraging to see California’s unemployment rate level off this month, we’re still experiencing job loss and have a long way to go on the road to economic recovery,” said Gov. Arnold Schwarzenegger.
Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto, said that while there are “glimmers of hope” for an economic recovery later this year, the drop in April’s unemployment rate is a “false signal” that the recovery is already under way.
On the other hand, Christopher Thornberg of Beacon Economics in Los Angeles said the downward “blip” in unemployment could suggest that the job market is “moving into the realm of stabilization,” since the rate is no longer galloping upward.
Only four other states have higher unemployment rates: Michigan, suffering from the collapse of the auto industry, at 12.9 percent; Oregon, 12 percent; South Carolina, 11.5 percent; and Rhode Island, 11.1 percent. Three other states – Nevada, North Carolina and Ohio – are above 10 percent.
Nationally, the jobless rate rose from 8.5 percent in March to 8.9 percent in April. Many analysts forecast it will hit 10 percent by summer.
The California jobless rate, which is based on a telephone survey of 5,500 households throughout the state, contrasts with the larger and more reliable monthly survey of 42,000 California businesses, which the Employment Development Department uses to calculate employment growth.
The business survey showed that California payrolls shed 63,700 jobs between March and April and 706,700 jobs between April 2008 and April 2009. The April job loss compares with a revised loss of 61,700 jobs in March, meaning that the job market is still weakening.
If the unemployed leave a state, what does that do to the unemployment rate for that state?
PB does it even need to be “sampling” error? If you ask 5500 people a yes-or-no question, isn’t the standard error something like 22 people (sqrt(Npq)) ? Which in this case would be 0.4% ?
I’ve forgotten some of that stuff but you must know it.
The idea of sampling error is that the 5500 people you ask might have a much different unemployment rate than the rate for the entire California labor force.
For a yes-no question with a percentage of yes’s (”Yes I am out of work”) equal to 11 percent, the standard error (standard deviation of the estimator) is given by
sqrt(Variance/n).
For the case at hand, the variance is about 0.11*0.89/5500 so the standard error (in percentage points) is
100*sqrt(0.11*0.89/5500) = 0.42.
Based on the normal approximation, a 95 percent confidence interval for the current unemployment rate is
11.0 +/- 1.96*0.42 = (10.2,11.8).
Hopefully I am not missing something here (I have been drinking a little fruita da vin while calculating…).
Meant to say the variance of the sampling distribution is
0.11*0.89/5500, and the standard error is the square root thereof.
(so we both got the same answer for the standard error, actually)
And if you call the all the right area codes you can get whatever result you want- I can’t believe they even report garbage like this. Only 5500 people? I’d love to see what areas the calls were concentrated in!
Did the operator say,’Push 1 for English?’.
“The California jobless rate, which is based on a telephone survey of 5,500 households throughout the state, contrasts with the larger and more reliable monthly survey of 42,000 California businesses, which the Employment Development Department uses to calculate employment growth.
The business survey showed that California payrolls shed 63,700 jobs between March and April and 706,700 jobs between April 2008 and April 2009. The April job loss compares with a revised loss of 61,700 jobs in March, meaning that the job market is still weakening.”
Suppose that 70 percent of the lost jobs represented income used to pay home mortgages (not sure if this is in the right neighborhood; just using it to get a rough estimate). That would imply the number of California mortgages at risk of default due to job loss from last April would be
.70 * 706,700 = 500,000 or so.
Don’t worry — this is just a made up number; I am sure the actual number of California mortgages at risk of default due to job loss, not to mention Option ARM recasts/resets, is far lower than 500,000. I also am not taking into consideration that some of the job losses may represent multiple jobs in the same household…
The survey of households also includes the self employed. It soared much more than the establishment survey in the boom, and had been falling much faster in the bust.
As self employment continues to rise as a share of total employment, it becomes the more reliable indicator.
One, Two, Three, Four, Five, Six, Seven, all good children go to Heaven.
Here’s the first part. Come to think of it kind of appropriate
You never give me your money
You only give me your funny paper
And in the middle of negotiations
You break down
I never give you my number
I only give you my situation
And in the middle of investigation
I break down
Out of college, money spent
See no future, pay no rent
All the money’s gone, nowhere to go
Any jobber got the sack
Monday morning, turning back
Yellow lorry slow, nowhere to go
But oh, that magic feeling, nowhere to go
Oh, that magic feeling, nowhere to go
Nowhere to go
Aaaaahhhhhhhhhh…
Aaaaahhhhhhhhhh…
Aaaaahhhhhhhhhh…
One sweet dream
Pick up the bags and get in the limousine
Soon we’ll be away from here
Step on the gas and wipe that tear away
One sweet dream came true today
Came true today
Came true today (Yes it did)
One two three four five six seven All good children go to Heaven
DearSanFranciscoBayAreaGal:
You made me smile!!
Ben,
Hope you don’t mind my re-posting what you wrote yesterday in the forum:
Some of you may recall that I am working in the foreclosure industry. I’ve discovered something that I think is significant, and not widely reported.
About a month ago, contacts I have in the business started seing a sudden drop off in what are called initial secures. This is where the lender puts a new lock on a house that is either in foreclosure, but more often it is pre-foreclosure. They do this on a secondary door if possible, so they aren’t trying to lock anyone out, but rather provide access for their contractors and inspectors, etc.
Now, we have seen this happen on a company-by-company basis. For instance, Bank of America had a moratorium as did the GSEs. But I reported here that even as those moratoriums were in place, the same organizations were still taking back houses on older defaults. It was meaningless, IMO. But what’s different right now is it isn’t one group or a handful; it’s everybody, small firms, large ones and loan servicers. And it is across the spectrum of loan types. FHA/HUD loans are in a different universe from conventional loan foreclosure markets, yet this sudden change in initial secures happened at the same time in both.
What can this mean? Is it possible that all these organizations simultaneously made these decisions? IMO, that isn’t remotely possilbe. Then what can we suppose has happened? That at some level, joint inaction was agreed upon? And who or what organizations could have facilitated such agreements?
What are the implications? Even though we are seeing near record notices of default, how can it be in the best interest of the mortgage holders for these companies to arbitrarily put off what is considered the best course of action? I can tell you from experience, these houses are almost always vacant. And vacant means not being maintained. That’s why the lenders act; to preserve the value and minimize their liability. Simply avoiding taking the prudent action doesn’t stop ongoing vandalism, water damege or neighborhood blight, for instance, from occurring.
And this isn’t taking into account that the interested parties are likely to recieve even less for the properties the longer they wait.
So, who is pulling the strings on this? Who is beneifiting and what are their motivations? How is this legal? Why isn’t it public? And isn’t it bound to fail to stop foreclosures from piling up and prices falling even further? And most important for the HBBers, what does this imply for near term and long term prices?
Add to this, how come REO is not getting marketed by local RealTards yet I refer to the bank REO lists, the realtards contact info is right there. One REO in Rehoboth Beach, DE I visited yesterday had 3 surrounding houses with multiple signs on them yet the REO had nothing.
There’s a good article on something similar to this in Bubble Meter -http://bubblemeter dot blogspot dot com/2009/05/realtytrac-500000-reos-being-held-off dot html
Hopefully my last post (quoting Ben’s post) will clear soon. This is a reply to that post (I posted yesterday, but was late, as usual).
I think this is important. IMHO, they are trying to refi as many private mortgages into GSE/FHA/HUD mortgages, then they will let the PPIP buy up what remains, to the best of their ability. It looks to me like they are trying to foist as much of the losses onto the taxpayers’ balance sheet as possible. If this is the case, then we can certainly assume that massive inflation/currency devaluation is in store — I’m thinking much more than most people expect, but those are the musings of a devout member of the tin-foil hat club.
———————
From one of the posters on Piggington’s:
I went down to the courthouse today to check out the trustee sale. Wow a heck of alot different then when I was there a few months ago. There were about 40 people this time. The first HOUR minutes were filled with nothing but postponements due to br, bk, and even a few cancellations. Then they had bidding. I would say I was there for about 30-40 properties and 5 were sold to private parties and the rest went back to the bank. There were still properties to go when I left.
He continues…
I “think” they had a total of 280 properties to start with today. So the first hour or so he blew through them…Maybe it took 10-15 seconds per property. He would read the address, then the reason it was not going to sale today. Example
“1313 Mockingbird Way, San Diego (he would not even do the zip cod) postponed 6/22 BR. (beneficiary request)”
So he slammed them. I would say he got about 3-4 per minute and then he would take a break and chug some water after about 10 minutes. He knew most of the bidders there by name and visa verse.
http://piggington.com/visit_to_the_courthouse_steps
After reading this article in the NY Times:
http://www.nytimes.com/2009/05/24/business/24phoenix.html
about speculators “snapping up” foreclosures around Phoenix, I came to realize that the housing bubble is nowhere close to ending.
The stupid money never stopped chasing real estate. Where are the $400/sh on no earnings dot coms? Where is the $150/bbl oil?
What’s going on mimics the old saying about a street drug, “People will just keep shooting/smoking/snorting it until something better comes along.” Well, in the world of finance and investment, nothing better ever came along.
“People will just keep shooting/smoking/snorting it until something better comes along.”
Or until the money runs out.
These people are known as “cigar butt” investors. They grab a stock or house when it is completely beaten down and buy it. They then sell it for a small or even large profit. This article is an example. Anther good one is the Bear Sterns debacle. Gov;t wanted $2 / sh and finally sold for $10/sh.
In spite of what the article says, the bad old days are not coming back.
Roidy
Below is a repost from yesterday. We visited another shack today, realtard-less of course. Gained access through the back door with the help of a local friend. Anyways, this REO HAD NO SIGN EITHER. Can anyone confirm or deny REO without marketing in their area?
——————————————————————–
My anecdotal observations of Sussex County, DE, i.e. Rehoboth Beach and points north to Milford, DE
Many many for sale signs for land. Land land everywhere. Bulk acreage, lots you name it. Farming here has been quite profitable for decades according to natives but when the developers moved in during bubble years, land reached a whopping $50,000 an acre. Just to give you an idea of the level of madness here, I personally watched a 125 acre corner tract(tilled for generations) go for 9 million in June 2005. The seller (a farmer) demanded the developer pay all taxes associated with the transaction and the developer agreed. My superintendent at that time told me that the most a plot of that size would sell for pre-bubble was $3000/acre. My opinion is that farmers thought the prices were permanent but it seems they missed the boat and realized it all at once if the number of signs are any indication. Anyways, unless you’re farming, I’m not sure the massive inventory of land has much use and therefore not worth much.
Multitudes of signs on new and used SFH’s. More than I’ve observed in the past, used in particular. Of course we have the usual suspects here… Pulte, KB etc. Schell appears to be a large regional player with tons of “New Community” signs everywhere.
Commercial construction has not let up here. It’s all retail and it’s everywhere. I even noticed some stick framed housing going up and I didn’t even have to look that hard.
Wife and I looked at a couple of houses today without realturd of course and we noticed something very strange. NEITHER had a realturd sign on them yet both are listed with realturds through the REO dept of bank. One shack is owned my Wash. Mutual and the other I cannot determine what bank has a stake in the place. The Wamu shack appeared to be well kept and possibly someone living in it but I couldn’t confirm. The second shack is in a state of minor disrepair, generally speaking. Punch listing that place would be a delight in terms of leveraging the price downward with a realturd. Both are fantasy priced at 200 and 240k but they would have easily fetched the high 300’s at the peak. Possibly 400k.
Can anyone speak to the fact that these places don’t have RealTurd signs on them?
When the sign goes up out front there are some obligations on part of the listing agent( must have a sale price, prop must be listed in MLS within 3 days, etc).
What a JOKE
GM borrows $4 billion more, prepares for bankruptcy May 22, 2009 7:59 PM ET
All Thomson Reuters news DETROIT (Reuters) - General Motors Corp on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month.
The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion.
GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete.
Just a little something about the economy that affects travelers.
British Airways ditch first class in new planes as age of austerity bites
• Fears that some wealthy customers may not return
• Company posted worst loss ever of £401m
BA air stewardesses from 1977. Photograph: Dennis Stone/Rex Features
Business class passengers famously draw envious glances from the herd in economy by turning left when they enter a plane, but it is the first class ticket holders who are the most pampered. On British Airways’ 747s they ascend to their Kelly Hoppen-designed cabin and don their free pyjamas and slippers before supping on the likes of lobster thermidor, pan-seared wild Scottish salmon or roasted Cornish game hen, then slip between the sheets of their roomy – and extremely flat – bed.
Now, however, this most opulent form of travel is under threat.
The global downturn has devastated demand for expensive seats, and even Hollywood stars and bankers are shying away from BA’s extravagant first class prices. The airline, stung by a slump in premium bookings that helped push the company into its worst-ever loss of £401m, has removed first class accommodation from four of its new long-haul planes, and is to review seating plans for other new aircraft.
“The long-haul aircraft that we take delivery of this year will not have any first class cabins in them,” said Willie Walsh, BA’s chief executive. He insisted there was no direct link to the recession, but he added: “Longer term we will review the configuration of [all] new aircraft.” BA is also launching a service this year from Heathrow to Las Vegas, a prime destination for high-rollers, with no first class option.
First class is the last remnant of the more romantic days of air travel when BA’s predecessor, British Overseas Airways Corporation, offered first class tickets alongside the more down-at-heel tourist or economy cabins. Its upmarket reputation has become even more rarefied over the years following the introduction of slightly less luxurious business class seats in the late 1970s, and cut-throat competition on the transatlantic market.
Walsh admitted that the cost of ripping out seats in the existing fleet is too great to get rid of first class in existing planes, leading industry watchers to speculate that upgrades for economy class travellers might become a more common occurrence. “In the short term we would have to spend money to do it and that’s not necessary,” said Walsh.
The review of seating layouts is taking place against the backdrop of a decline in business travel that poses a serious threat to long-haul airlines. BA relies on premium passengers for more than 50% of its revenues, more than any other major European airline. In an indication of the current mood of austerity, Walsh announced yesterday that he will work for no pay in July, and urged BA’s 40,000 staff to take unpaid leave or work part-time. “This is no stunt. I do not easily give up anything I have earned,” he said.
BA has seen premium bookings decline by 13% over the past six months with its north Atlantic routes, BA’s main source of profits, badly hit by the crisis in the banking sector. Its rivals have fared just as badly, with premium travel since the start of the year slumping by nearly 20% across the industry. The International Air Transport Association expects business class bookings to recover once global trade picks up, but it is gloomier about the prospect of bankers flying again in the droves that have boosted BA’s profits in recent years.
The recession has also reduced demand for corporate jets, emblems of excess whose use has caused serious embarrassment to companies bailed out by national governments, including some of the major American car manufacturers and RBS.
Business jet travel in the UK has fallen by 20% over the past six months, ending a boom that saw flight numbers grow by about 14% annually to 150,000 trips per year.
The cost of refitting an aircraft, at millions of pounds per plane, means that airlines will have to turn to riskier strategies such as overbooking flights until their new aircraft orders arrive. Airlines can guarantee strong revenues from economy class passengers if they overbook the back of the plane. Under that scenario, any passenger who is the victim of an overbooking could be upgraded to one of the many empty seats in business class, or bumped to another flight.
© Guardian News and Media Limited 2009
I tried to post a link earlier this morning, but it didn’t go through. A furor is raging about the book Busted, written by a NYTimes business columnist. Apparently, in his attempt to relate to the common folk and appear a sympathetic victim of subprime home loans, he omitted some rather interesting facts. He was outed by a blogger on the Atlantic website, who discovered among other things that his 2nd wife had declared BK twice, not because of job loss or health misfortune, but because she’s obviously a spendthrift. More so, even with his 150K income there’s no way he could have ever afforded the house he bought to make her happy. Just Google “Busted author wife bankruptcy” and you’ll find tons of links.
We were in West Hollywood today and heard this average looking 40+ bleached blond say this on her cell phone:
“He gave me this $10,000 ring last night, and it wasn’t even the one I wanted, so I told him to f off. (used the word). It’s over.”
She did the guy a favor.
+1 Great catch! The comments at Salon are worthwhile too.
My sister married into a trust fund from a deceased famous musical fil, and they have a very unhappy marriage. She got a $10K rock too. bfd.
You can get an 8-10K rock from a nice dealer on ebay for 1/3 of that price. I know from personal experience - EGL and GIA reports and all. Don’t be a sucker and pay “jewelry store prices.” Like anything else in life, look around and you’ll probably get a better deal.
http://shop.ebay.com/merchant/diamond_dudes_W0QQ_nkwZQQ_armrsZ1QQ_fromZQQ_mdoZ
Nice guys, too.
“Apparently, in his attempt to relate to the common folk and appear a sympathetic victim of subprime home loans, he omitted some rather interesting facts.”
While it’s hard to be sympathetic about the book author, the book and the coverage surrounding it have made more widely know some common practices that weren’t seemingly widely known. The type of egregious practices common during that era are well-known by HBB readers, but much less so among decision makers.
The author of Busted covered business/economics for the NY Times and wrote at length about subprime loans. He of anyone should have known better.
Wifey is chaperoning a prom… just staring at an empty wine glass. Too bad the markets aren’t open. Lol…
OK, Inflation - Deflation…
In the current world of deflation, the final outcome would be the total freezing of the economy. In the short term, those with fixed incomes, retirees etc would see a major boost as wages and prices drop while their pay remains the same. Problem… All the wage cuts are causing folks to default on their ever more expensive debts. The more debts that default the more it costs to rent money and the higher unemployment goes. So deflation is to the economy as freezing to death is to us.
In the world of inflation, assuming something can be done to get wage inflation going in the short term those with entitlements will lose while everyone else sees temporary gains. The problem here is that everything is getting more expensive by the day and foreign investors will lose causing them to pull their devaluing money as fast as possible. In this world debt obligations will generally be made, but money will be expensive to borrow since it will be worth less next week etc. This let go wild would be the economic analogy of boiling to death…
My $0.02 conclusion. We need to accelerate out of this one, since there is very litte control on the deflation side and we have all seen the result of deflation over the past few months. I agree inflation could end badly, but if things are not turned around soon change we can believe in will be all that is left of our life savings as dead beat debtors default in ever growing numbers.
Remember this. Todays money spent is cleanup. The real money was spent three to five years ago when banks were loaning double the real value of a house and giving away $20K credit cards to anyone with OK credit. $800 / MO car payments were the norm. Not many were complaining back then. The Tarp money was spent years ago. Now we have to pay to clean up the mess and I am pretty confident had things continued the world economy would have unwound by now.
About California, my wife and I both voted no on all the measures designed to give the State more money. The State will have to go bankrupt to get rid of the excess fat, but I am sure will stick it to us in a big way first.
In summary; this hangover hurts, reality sucks, MORE TEQUILA!