Bits Bucket For June 2, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Good morning, Ben!
Good morning Lavi. I’m curious; have you had as much rain in Vegas recently as we have in N AZ?
BTW, I’m moving in town this week, so I’ll be a little blog challenged. But I’m getting a much bigger place in a better location and saving 25% a month on rent, while staying with the same property manager.
I really like our landlady, or I’d be trying the same thing. Our lease renewed at 0% increase, plus month to month. It was ‘cheap’ when we started renting the place, so it’s only a little expensive now. If things continue to go down, I’ll pull a starbucks on her, or actually move out because we can afford a nicer house. But I’d rather stay and get cheaper rent.
We’ve had a couple of storms, but none that I’ve actually been in.
The most I’ve seen is dried drops on my windshield.
…much bigger place in a better location and saving 25% a month on rent, while staying with the same property manager.
Congrats! Wish I had the ambition to move - I just re-upped for another six months.
BTW, I’m moving in town this week
PS, I don’t own a pickup truck.
You are giving me encouragement to check out how much we could save on rent by moving to a bigger, vacant place.
It’s doable even in ‘fortress’ areas of the Bay Area. We got a deal on rent when we moved in, and now with no increases we’re at fair to a little high.
BTW, I’m moving in town this week, so I’ll be a little blog challenged. But I’m getting a much bigger place in a better location and saving 25% a month on rent, while staying with the same property manager.
———————–
Congratulations, Ben! Every renter’s dream.
We just renewed for the next six months, no increase. Unfortunately, I offered to increase our rent when we pay next December (we pay every six months) because our rent is now very much below market. Feeling a bit stupid about it, but our LLs have been so good to us, that I was feeling guilty.
June 2, 2009
Credit-report provider TransUnion.com said the number of borrowers at least two months behind on their mortgage rose for the ninth quarter in a row, hitting 5.22%.
The first-quarter national average is 14% higher than the fourth-quarter average and is up 62% from a year earlier, when the average was 3.23%.
I’m really starting to feel like a sucker for paying my rent (no mortage) on time. At least I can sleep at night, but I’d be so much better off financially if I had a mortgage and hadn’t paid for the past 8-12 months….
except you wouldn’t be “better off”, because your equity would be going up in smoke.
Good point…assuming I had equity from downpayment or paying down the mtg (which is a good assumption).
But why not daydream about a 120% LTV interest only teaser rate mortgage where you dropped the 20% into TIPS and stopped paying when the banks got overwhelmed 8 months ago?
I’d probably buy bullion with the cash out rather than TIPS so they can’t trace it, but yeah….sounds nice
I haven’t made a mortgage payment since I moved into my house here.
Of course, I put 100% down.
DennisN,
This is something that nearly always gets swept under the carpet but if we were in a ’somewhat’ normal environment, mmkt’s would be paying 3-5%, muni’s 6-8% and HY 10-12% ?
In today’s “everything’s a lay up!” world, paying off your home def. looks like one of them. Going forward though there’s every possibility “normal” returns and no one is willing to lend out against your home?
In a “normal market” I’d be living quite comfortably living off the returns on my savings. At 1% savings returns I’m hurting.
Of course my situtation is different than most: I sold a house for $X in bubbly 2006 San Jose and bought a $X/3 house in not so bubbly Boise. That ($2X/3 + other savings) is still a big pile of cash to be sitting upon.
Besides, I’m one of those “debt free” retirees pundits laud.
DennisN,
Right… and all I was doing was pointing out the contra. I myself have been quite vocal about “debtoretirees” ( hey I kinda’ like that )
Had I my druthers I’d be sitting in bonds ( yeah I know, are you crazy!? ) and have the modest mortgage I can pay off w/ the stroke of a pen, but we’re not exactly ‘there’ are we?
There has been more downside here than I predicted, but it’s certainly less than I would have experienced sitting tight in SJ. One way of looking at things is that I paid less for my house here than people I knew in SJ paid for CARS.
Funny story - when I was an associate at a law firm I was visiting one of our startup client’s facilities. I noticed a shiny new Ferarri Maranello parked out front. In house counsel proceeded to rag on me about our firm’s billing and told me our partners were living too high on the hog. I said none of our partners had a Maranello. Without breaking stride he said “that’s the CFO’s car.”
“debtoretirees”
Nice
May I suggest “debtorees”? Rolls off the tongue easier.
DennisN,
Oh that ‘is’ rich! LOL. If I sound tentative, it’s only b/c I’ll be crossing that landmark myself ( hopefully ) very soon?
We realize it was the right decision for you but again my point was that it was a very isolated application that is by no means a “model” for the rest of us? So you were fortunate in that regard. While prices have utterly collapsed in LV ( my target market ) unfortunately I’m still a bit young to take full advantage of it.
I’ll need prices to continue to slide there ( which I’ve no doubt they will ) and for equity markets to recover substantially. Also having 2 daughters just grad. has made for challenging conditions to say the least.
So Dennisn, you are one of those CA relocaters that other states hate. Us horrible CA transplants!
“So Dennisn, you are one of those CA relocaters that other states hate. Us horrible CA transplants!”
In my experience, there are three things people dislike most about CA transplants, and not necessarily in this order:
1. Equity locusts- like DennisN, they made a boatload on the sale of their overpriced sh!tbox in CA, and effortlessly bought a house for cash in a community where people struggle, or are even unable, to purchase a home.
2. Whiners- These people constantly remind the people around them how things are done “in CA”, almost as if they expect their new communities to conform to their expectations of how everything should be.
3. Ubersnobs- These people show up and display a holier than thou attitude which borderlines contempt for the mere commoners they are surrounded by. They believe the universe revolves around them, and are rude as hell to anyone who doesn’t fit into their upper crust world.
Having grown up in Montana and lived in California, I can tell you what Montanans hate and call ‘D&mn Californians’ are just a-holes that happen to have come from California. Montanans will only put up with home-grown jerkwads.
People who are born and raised in CA are alright. I grew up in a small fishing and logging town in Northern CA and worked my tail feathers off as a kid which taught me good values.
I’ve always argued that the worst of CA are those that come from other states and around the world to make their fortune or get something for nothing.
The other thing that troubles me is the attitude of many that it’s their god given right to come live or vacation in CA, but if a Californian moves to their home state they’re incensed.
BB,
People in Idaho treat me fine as soon as they discover I moved to Idaho to ESCAPE all the liberal nonsense that’s now par for the course in California. My family settled in California circa 1860 and helped build up the state from scratch. I like Idaho precisely because it’s like what Californa was like in my grandparent’s time and sadly is no more.
Comment by robiscrazy
2009-06-02 13:50:45
People who are born and raised in CA are alright. I grew up in a small fishing and logging town in Northern CA and worked my tail feathers off as a kid which taught me good values.
I’ve always argued that the worst of CA are those that come from other states and around the world to make their fortune or get something for nothing.
The other thing that troubles me is the attitude of many that it’s their god given right to come live or vacation in CA, but if a Californian moves to their home state they’re incensed.
AMEN!!!!!!! (from a fellow native Californian)
We’ve suffered far more from everyone else moving here than they do from us moving there. Also agree that “real” Californians (those born here) are NOT the arrogant types that many picture with the fake body parts,fancy cars, and designer coffees. Those are the newbies who try to fit into the stereotype they get from TV shows.
Lots of non-California natives don’t realize there are a lot of down to earth people in the farm belt of California. My college education was in the farm belt. And I came from a hard working family (one family car, one TV, no vacations except occasional day trips).
The hardest working people are from the flyover parts of California.
I love my native California. I can easily ignore the clown politicians or laugh at them. It is not difficult to find ways so that they cannot harm me.
“ESCAPE all the liberal nonsense “dennisn
okeydokey, then lets take back all the things you have enjoyed from progressives doing the hard work for you since the late 1800s and then you can tell us how you like your life then.
Things such as 40hr work weeks, health ins, vacations, no child labor, your wife having an education/credit/ownership/driving.
The list is enormous, farmers excluded from hrs worked.
Unless you were born to uber wealthy in the 1800s, you too are reaping the massive benefits of people fighting on your behalf: ie progressives or as you guys nastily call em, “liberals”.
Yeah, it’s kinda ticking me off, too. I sure could’ve set aside a good chunk of money by now if I wasn’t paying rent.
I think the house across the street might be delinquent. Many roommates moving in and out, haven’t seen the owner in months.
He bought it for 620K in 2005. Did some renovations. Put it on the market in 2007 for 950K. Not a single bite.
Now all the roommates and his new 4Runner and jetski sitting in front of the house, never moving. Wonder if he skipped town, but still collecting rent by renting out rooms?
Any way for an inquiring mind to find out?
sfrenter,
Sounds like ya’ missed some steps thar’ pardner! ( Don’t forget the “Bilked Equity Out to the tune of what I’m now asking phase”! )
PropertyShark should have the skinny on that so ‘do’ keep us posted. Roommates, 4Runners, jetski’s, let me guess, the former owner was a kindly, elderly gentlemen that put half down, right?
“98% of all people are paying their mortgages.”
- Ben Stein 2007
“Ben Stein is an idiotic shill.”
- NYCityBoy 2009
Uh, are you the original NYCityBoy or a new NYCityBoy?
There’s only one.
The other day I had mentioned that I was being more honest at work with people. Somebody wanted samples. Yesterday was a good example. A co-worker and his fiancee are looking to buy in Long Island. Yes, you read that right. “The prices are way down.”
I replied, “something goes up in price by 200 - 300 percent and then drops 20 - 30 percent and it’s a deal?”.
He said, “you’re just Doctor Doom”.
Actually I have never been to med school. I responded, “don’t mistake reality for negativity. I said if I’m Dr. Doom then I’m surrounded by a bunch of Doctor Head Up Their A$$e$”. I added, “and that idiot out there (pointed to a desk about 40 feet away) that was still stating how stupid we were for not buying, as recently as May 2008, must be Doctor I Don’t Know What the F–k I’m Talking About”. Everybody is a doctor, in my book. Most should have their license stripped for malpractice.
I told him to be careful. He chuckled. If he gets his arms cut off by a falling knife then too blanking bad. It won’t be my fault. I will be there to pack his arms in ice and laugh in his face.
I will be there to pack his arms in ice and laugh in his face.
Make sure you pick up an arm and give him a good backhanded slap across the face with it before putting it on ice.
I will be there to pack his arms in ice and laugh in his face.
Paging Dr. Doom. Report to the severed limb unit, stat!
Today you guys are Doctor Made Me LMAO.
That’s NYCB all right!
“Uh, are you the original NYCityBoy or a new NYCityBoy?”
Who else quotes himself?
But he didn’t curse or threaten anyone in that post, so I was taken a bit back so I thought he could be a fake.
My bad.
simple test…
NYCBoy, What is you favorite beverage?
It is oh, so patriotic. It is an American classic. The new south meets the old south. Atlanta, GA meets Lynchburg, TN to make a marvelous concoction, elixir of the gods, better known as Jack and Coke.
hah, I’m convinced.
Where you been boy? And when you gonna start drinking a proper kentucky bourbon?
NYCityboy, did your liver have to register separately, or is Ben allowing you both to use the same account?
Welcome back !!
“My Cup Runneth Over” the return of NYCityboy has made my day. Sad life I know
“…up 62% from a year earlier, when the average was 3.23%.”
Green shoots are bustin’ out all over in June 2009!
Three fun charts I hadn’t run into before — plus (the fourth is) an updated alt-A reset chart.
http://ftalphaville.ft.com/blog/2009/05/29/56408
Three fun charts I hadn’t run into before
I am definitely retarded when it comes to financial stuff, but that first chart, is that right?
Only 8/10ths of one percent of loans originated in 2007 are delinquent after two years? I thought it was higher than that.
And speaking of charts, look at this.
(via techdirt.com)
No posts yet this morning? Oh the humanity!
Came across an article on MarketWatch last night that proposes a novel idea: Not having any debt when you retire. This is news?
www dot marketwatch dot com/story/retiring-debt-free-should-be-your-goal
Must be comsideringhow many retirees we read about whocan’tpaytheir mortage.
Drinking already? This early in the morning?
This is news?
Seriously, though, my in-laws violated this basic premise. Put their almost paid house on the market after buying a house 3 times as expensive back in 2006, and then had the bottom fall out of their furniture business when the bottom fell out of the housing market. Talk about a 1-2 punch.
The closer you get to retirement, the smaller your debt ratio should be. I couldn’t believe they were ‘upsizing’ their house before retirement.
Did they actually go for a bigger house, or just a nicer one?
I can see wanting to retire in luxury (though of course it’s a bad idea to take on more debt), but I really don’t understand wanting a large house as you get older. More to clean, presumably flights of stairs, etc etc.
I can’t even see retiring in luxury. If I haven’t been living “luxoriously” by then, who cares at that point? My retirement goal will just be comfortable. That’s lofty enough for me.
+1
My goal for retirement is ’stress free’. If livin’ high on the hog is going to put a strain on the retirement funds, well then I’ll happily live lower down on said hog. Hopefully not in the knuckle or sackular regions, but I won’t demand a ride up top and the expense of peace of mind.
My goal for life is “stress free”. Why wait till retirement?
A little stress in the present in exchange for less stress in the future is a fair trade-off. I don’t think you can live totally ’stress-free’, but you can definitely plan to minimize your stresses.
That post seems kind of spaced in, doesn’t it?
Can’t pay their mortgage ?
Heck…1/2 these people can’t LOCATE their freakin’ Mortgages !
I recently had to register my son for Kindergarten. Needed proof of residency. Had my lease that I signed in June 2007. Is a 12 month lease that states (in writing right on the first page) it will continue month to month indefinitely after the first year. I also brought my current electric bill and my license also has my current address on it. Wasn’t good enough for the school district. They stated it wasn’t a “current” lease. I said, “What about the electric bill?” They retorted, “Anyone can have an electric bill sent anywhere!” Huh? Why would I do that?
Anyway, they required a letter from my landlord stating I still lived there. I did them one better - I tracked my landlord down that evening (well, his wife at least) and brought her in person. Guarantee I’m the only one who ever did that! She’s a ball-buster, too, so it was pretty funny.
Anyway, I feel like I was targeted as a low-life renter because someone behind me who was a homeowner (so they say) coudln’t find the deed so they brought settlement papers. Now how’s that proof? They could have moved since and just pulled out old settlement papers, right?
I had the same issue when trying to get my driver’s license in WA. For “proof of residency”, a homeowners policy counts, but a renter’s policy doesn’t. WTF? And my utilities are billed through the management office (shared water, etc)..so I didn’t have any bills directly from a utility (I don’t have cable or anything, and use my cell phone for internet).
Why would I get a renter’s policy on a location I’m not living in? Stupid stupid.
eastcoaster,
Unbelievable. I’m sorry it went down that way. You’re right, FB’s can produce something from when they actually ‘were’ making the payments back in ‘07?
Who knows where they’re living now?
eastcoaster,
That’s just wrong on so many levels!
We rent in a good school district and only had to present two items to prove residency. A driver’s license and a bill worked just fine.
I hope your LL really gave them hell!
Making renters feel like scum is part of the plan. Gotta get you to buy a house you can’t afford! Gotta make you part of the consumer culture so it can grind you down. The same treatment is applied to single people, people without kids, independent thinkers, etc.
Awhile back, i posted a rant about always thinking 1967 prices when purcasing a car or, just about any itm. Over the years, i have recieved cooments, like do you own a tv or refridg? How can you drive such a rusty car. Obviously, I represented myself well as being cheap. Now, remember, I was vice president of a major company, driving a 1972 chev caprice in 1984.
So at this point in time, my thinking paid off. I have everything paid for and my total living expenses per year are less than 12k.
As far as I’m concerned, there isnn’t anything out there i would purchase new, except matresses. Let someone else take the depreciation hit.
Also, a comment was made about my computer. I own a refurbished emachine $ 265.00 and my monitor is a 2001 model, i got for free…a friend upgraded. I have vista and do everything everyone else does, except it didn’t cost me an arm and a leg….1967 thinking!
ps. I got the HP printer, scanner, copier out of a dumpster.
As far as I’m concerned, there isnn’t anything out there i would purchase new, except matresses.
Great! finally a buyer for my used underwear and socks.
and my used tissues!
Jonathan Pond had nice saying: Retire rich and die destitute.
(Jonathan Pond is another on of those common sense financial guys who get on PBS occasionally. Not a shill, nothing fancy.)
He also said a house is not an investment. Do not count on it as part of your retirement portfolio.
My favorite comment from him is “Every time I top off my car with gas ( I just DOUBLED it’s value! )”
Pond is a big fan of that mortgage trick where you pay this month’s mortgage + next month’s principal. Saves gobs on interest.
He is also a big fan of downsizing to a smaller home, and the heck with keeping a huge house for the grandkids. “With the money you save, you could put them up at the Ritz!”
I really like him.
oxide,
Like you, I’ve been a fan for years. Usually does their fund raisers too. What people ’should’ be taking away from his approach is that for all the frugal rec’s he shares, he really IS a fun guy! ( I mean for a CPA )
You guys inspired me to look him up, I managed to find “Safe Money in Tough Times: Everything You Need to Know to Survive the Financial Crisis” on Amazon. Anybody read it - is it any good? Not even a single review on Amazon…
Former finance pros become waiters and go to food pantries for help:
June 2, 2009, WSJ
From Ordering Steak and Lobster, to Serving It
Carlos Araya used to order lobster, filet mignon and $200 bottles of red wine at the Palm Restaurant in midtown Manhattan. Now, he seats customers at its Tribeca branch.
Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange. After visiting dozens of headhunters with no luck, he applied in August 2008 to be a host at the Palm to support his wife, two young daughters and mortgage payments. His salary has plunged from $200,000 to $25,000.
If the financial crisis was the flood, then the Arayas are one of the families standing in the stagnant waters left behind. Some former Wall Street employees, highly trained and accustomed to comfortable salaries, are having trouble translating their specialized skills to other fields that pay well, and instead find themselves forced to accept low-wage work. Now, Mr. Araya is on the brink of losing it all and is doubtful that he will ever return to Wall Street.
………………….
John Carbonaro was let go as a floor clerk by Bank of America in January 2009, and despite his job-hunting efforts, remains a “Mr. Mom.” Joe Morrone, a laid-off trading clerk from Prudential, has been unemployed for two years and struggles to support his daughters and grandson. He has had stints as a deli worker, a doorman and a bouncer. “I used to have three cars,” Mr. Morrone says. “Now I share one.”
The result is an unlikely stream of erstwhile Wall Street pros need help.
“I’ve got ‘em all — Lehman, AIG, Citi,” says Bob Townley, head of Manhattan Youth in Tribeca, an organization that gave the Arayas financial assistance to pay for childcare while they are working. “I can hear it in a parent’s voice when there’s trouble. Others are too proud to ask for help.”
Many of these parents once made donations to Mr. Townley’s program. Now they are asking for aid to pay for their kids. Mr. Araya’s daughters, ages 6 and 7, are in an after-school program at Mr. Townley’s center.
This is par for the course in EVERY bubble.
+1.
Bubbles always seem to pull in marginally-qualified people towards the end, and spit them out when it busts. None of these guys were probably the best at what they did.
Precisely.
I know many people who would never get a job if they were to be laid off. They are completely marginal but they soldier on as corporate droids. As a general rule, they are not self-aware about themselves to realize that this is the case.
The smartest people always ask themselves - what is my USP (=unique selling proposition) to the world?
Obviously, you still have a job, and haven’t been out in this job market. This one is a lot worse than the 1981-82 recession, at least in my business. Everybody’s business is down 40%, so employment is taking a 40% hit.
In my experience, the biggest brown-nosers manage to stay on the payroll, whether they are idiots or not.
The layoffs usually hit
-the kids with low seniority, and
-anyone associated with anything deemd as an “expense”; R & D, Product Support, Equipment upkeep, etc….cutting those make to books look better for about 24 months.
Firstly, you know nothing about me. Not to be totally smarmily “know-it-all” but your business WAS providing a luxury service. Nobody “needs” a private jet.
Unsurprisingly, it’s the first to go. The game of “taking a cut” from productive people is over. Either you are genuinely productive in providing a service, or you get hammered by the “invisible hand”.
Once again - USP.
You know fixing airplanes is a pretty good skill set vs say rambling on about gold and the dollar.
I guess BS salesman still pays pretty well though.
“Unique selling proposition” sounds like classic brown nosing to me.
One could say that R&D is a luxury. And on the balance sheet, Equipment Upkeep is also a luxury…until a bridge falls into a river.
Nope, R&D is not a luxury. The trick is to convert current research into a product that generates cash flow to fund (probabalistically) the next project. (And yes, I know that’s not how corporations work but that’s how anyone who wants to do research for a living should work.)
That would be the researcher’s USP.
Same works for upkeep. Do the contract - better than some for cheaper - demonstrate your skill. That would be an USP.
You keep missing the point - yep, brown nosing works but it’s not sustainable. You need - you guessed it - an USP.
My father is an engineer, and, like many engineers, he has a very low tolerance for BS. Which meant that workplace brown-nosing didn’t go far with him. Good engineering did. Still does, in fact.
Primey, I have a question. Are we long-lost siblings separated at birth?
You and I seem to +1 on virtually everything.
Coincidence? I think not!
FPSS, it could well be so! I too have noticed the remarkable congruence of our opinions on many subjects…
Or maybe we are both just extremely-analytical mofos who see the world through a particular (I like to believe accurate) lens.
Whatever the case, it’s fun to find long-lost twins…
+1.
Bubbles always seem to pull in marginally-qualified people towards the end, and spit them out first when it busts. None of these guys were probably the best at what they did.
It happened in the dot com bust. I remember people being hired to fill seats because we needed a ‘burn rate’ to be taken seriously, and they couldn’t find people even remotely qualified.
This isn’t ALWAYS a bad thing. I got my buddy who was a car mechanic got a job at our company as a QA Software tester intern. 2 months after he was hired he was promoted out of the intern position to regular QA. He now runs an IT group in Seattle.
But there were a hundred burger flippers for every guy of his quality.
Boo hoo hoo. A KnowNothing/WantSomethingForNothing who ripped off people $500k per year has to wait tables? These grossly overpaid non-producing white collar criminals ought to be in jail.
exeter,
We must be long-lost siblings, too…
:handshake:
They made that kind of money and they’re already on the skids? Yeah, yeah they live in NYC - but still - this just shows how fake all that “prosperity” really was. That’s the past that the politicians, and many others, think is desirable and sustainable?
They spend it as fast as they get it.
Remember Reagan’s trickle down — if the rich get more, they’ll save and invest it leading to growth for all? He was at the moment of a massive top to bottom cultural shift. No one saved for 25 years.
Well arguably the problem wasn’t whether they would invest or not, it is WHAT they invested in. Bonds carved out from pools of subprime mortgages DIDN’T improve productivity, or create durable wealth.
THIS is why i think we owe an apology to Michael Milken….he sold and diced up junk bonds but they were used to create companies and jobs….
—————————-
Well arguably the problem wasn’t whether they would invest or not, it is WHAT they invested in. Bonds carved out from pools of subprime mortgages DIDN’T improve productivity, or create durable wealth.
Our savings rate trickled down our leg.
edgewaterjohn,
And it never ceases to amaze me? If you go on Ebay, Lindsay Lohan is auctioning off her Maserati. Particularly in H’wood. Anyone remember Dan Haggerty? Guy had the most popular TV show for like 6 years running ( Grizzley Adams ) and six months after the show is cancelled he’s selling t-shirts out of the back of his van on H’wood Blvd.
I’m just not sure how anyone working crude on the NYMEX got laid off in ‘07.
That $200K probably didn’t go all that far in New York, by the time you figure in the two kids in school.
All you New Yorkers, really, what does it cost to live in New York? I can tell you that in DC, a single person needs at least a $35-40K salary to live paycheck to paycheck. That means rent in a decent neighborhood near public transport, no car (or car insurance), putting maybe 5% away in a 401K just to get the match, generally frugal. What about New York? Say, in Manhattan? In Queens or Brooklyn?
My starting salary was $620.00 gross, and was transferred to live in NYC. It was ‘77 but still, finding a free happy hour With food was prime occupation for survival.
NYC is tuff for living cheaply.
All depends on your assumptions. Kids or no kids, where would you live, etc.
I’ll give the baseline for a single person - $40-60K to live in a further out nabe near the subway and commute. $80K to live in the city proper in a “nice” 1-bedroom.
For NYC it varies, a lot partly because of (stabilized) rents.
If you’ve been here a while and were smart enough to get a rent stabilized place you can live pretty cheaply. I pay half the rent the “youngsters” in my office pay… newcomers are at a disadvantage.
And it depends on how you like to entertain yourself and eat. Lots of cheap or free things to do and eating can be reasonable if you’re a bit adventurous, willing to cook sometimes and place a higher value on your personal relationships than on stuff.
As to schools, a first rate education CAN be had in the NYC public schools but ONLY for parents educated and motivated enough to find their way through the process of “gifted and talented” testing, magnet schools, etc.
But yes, it would be VERY easy for someone to spend every penny of @$200,000 a year and feel barely middle class.
On $80,000 a year you’d be paying half or more of your take home pay on a free market STUDIO apartment in Manhattan.
But those tend to be the kind who believe the party will go on forever and believe that they’re special, whether as artists or financial masters of the universe.
There’s a fiction book called Morningside Heights by Cheryl Mendelson that captures the subculture pretty well
But those tend to be the kind who believe the party will go on forever and believe that they’re special
Mostly but not necessarily.
Those can also be the ones who realize that it’s a party, and you sock it away while the going is good.
Sorry, not everyone is a complete m*ron.
Thank you guys, I was so curious, and this is valuable information.
“Carlos Araya used to order lobster, filet mignon and $200 bottles of red wine at the Palm Restaurant in midtown Manhattan. Now, he seats customers at its Tribeca branch.”
What a fool. He was making all that money, and blowing it on nonsense. Serves him right. Couldn’t happen to a better person, really. Oil trader…
Recently WinCo stores has been having a special on filet mignon - $4 a pound. Of course you have to buy an entire tenderloin and cut them off yourself, but the tenderloins are about 3 to 4 lbs. each so you are out $12-$16.
Has the bottom dropped out of the filet mignon market?
“…Has the bottom dropped out of the filet mignon market? …”
Nope. Just slaughtering dairy herds in Central CA due to drought. LOTSA cheap beef right now.
No drought here in Id. and lots of diary herds. I’m guessing that’s going to help the local economy for the next few years. It’s odd but Id. is the #3 dairy state behind CA and WI. Sorrento Lactalis is starting a major expansion of their already-huge Nampa cheese plant. I would guess the local ag. industry around here will benefit from California’s drought.
I was in New York city this past weekend and went out to eat a lot. Nobody was in the nicer restaurants. Where are these green shoots I keep hearing about?
The “green shoots” are poison ivy.
LOL
That reminds me of a time back in the Boy Scouts when we were canoeing and had to pull over so a buddy of mine could drop a load. He asked me to find some “green shoots” since we didn’t have any TP… I guess you could say I wasn’t ever very good at plant identification. Let’s just say he was sleeping on his stomach for a while.
I think there is an analogy for the economy in there somewhere…
Restaurants in San Francisco are still buzzing. Tourists? Or does no one here know how to cook?
I read somewhere that SF has more restaurants per person than any other city.
Hey, weren’t the Obamas in NYC for a date? Or did they somehow deter everyone else from going out for a night on the town?
Hmmmmm. Try as I might I just can’t seem to muster any sympathy for these guys. I waited tables and did line cook work for five years while getting my masters degree in architecture (and a 19 to 21 credit load typically).
Managed to graduate Cum Laude from Catholic University (not an easy architecture program) and my skills are a bit more practical and “translatable” so cry me an F-in river.
And I learned to cook in the process
I learned to wash dishes and split firewood.
I will be walking by the Midtown Palm restaurant in a few minutes, on my way to lunch. This story will make it all the more joyful when I walk past this little landmark. Something tells me that a sinister little smile will cross my face and I will be thinking, “up yours, Carlos”.
Oh ok I guess this answers the question whether you are the original NYCityBoy.
Where the hell have you been?
And actually in your honer I will rephrase my question:
Where the $#!%^&* have you been?
I mean “in your honor”. Grrr.
NYC’s back!
I missed your anger! Rage on.
Olygal is gonna be one happy gal today. She really missed that anger too.
Does everyone that works for a financial institution have terrible money management skills?
It is telling that the one fella couldn’t even find work that paid anything even remotely close to his old salary.
Salaries too high? Skills not so valuable after all?
Right and we should all remember this clown’s salary when we’re at the pump? It has to come from ’somewhere’? Besides I guess I just assumed a lot of that fluff went away w/ decimalization etc.
I think the vast drop is because there is much much less current demand for his skills. Arguably he could trade other commodities with a little study time, but global trade is so much lower, why would anyone hire a person who wasn’t up to speed from day one.
At $25K a year, he is competing with out of work actors for that job. He should stay home with the kids and let his wife go to work. I bet she could make a lot more as a nanny than he is as a “host.”
“Does everyone that works for a financial institution have terrible money management skills?”
Is this a trick question?
“Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader… ”
Umm, I may be a little naive here, but doesn’t it just take an internet connection and a brokerage account to be a crude oil trader?
What I’m saying is, with the insight and knowledge of the inner workings of the oil futures market he must have gained from his employment, couldn’t he be making a nice living out on his own? It seems to me that there has been a wee bit of money to be made trading oil over the past two years, for those with the expertise and network of contacts…
My guess is that he was just a floor broker not a crude oil prop trader (=proprietary trader). He has no particular skills except to answer the phone and enter the order, something that is easily automated and has been.
RE: From Ordering Steak and Lobster, to Serving It
You left out the good stuff, C91…
like the guy’s purchase of a $960,000.00 2 bedroom/2B condo 4 years ago, with it’s $6200.00 per month carrying costs.
Husband and wife’s total monthly income-$4000k.
Savings depleted, they are now in a month in arrears on their mortgage note.
Dude’s definitely on the crap end of the stick in his hostess job, relative to the saying, you only feel rich or poor via comparison of how those around you live.
But zippo empathy for those falling off the urban, high roller, “let them eat cake” pedestal.
They are toasted. $960K for a two-bedroom is insanity. And it’s in Battery Park - the place where you can’t even get a pizza delivered at night!
Who, in their right mind, would live there, let alone, pay that price to live there?
short commute to his previous job?
It’s a 25 minute commute from most express stops. He’d spend about that time walking there.
So no groceries, and not much of a win on the commute either.
They were speculating - plain and simple, and their ass got nailed.
As promised forever, I will now proceed to giggle and growl with great glee and gusto!
I might even drop in to that restaurant, order a lobster, eat half of it, and hand the man the doggy bag. It’s “for the children”.
Schadenfreude is one of the great glories of life, and I will not waste this opportunity promising glorious gawdy goodness.
“From Ordering Steak and Lobster, to Serving It.”
No Job Bank for You. NEXT!
It was way easier to watch it all go on and not ride the upswing. I suspect it’s much harder to cascade down the food chain once you’ve thought you were at the top. Going to be a lot of bitter, angry people. I wonder what it will do to the next generation raised by a bunch of victims whining about what “the economy” did to them.
There are definitely going to be a lot of bitter, angry people but for most, it is a transient emotion. Of course, there will be a handful who will never recover.
And I think it might have the opposite effect than what you are thinking. The children are much more likely to be fiscally conservative and sane.
Probably right there Faster.
DEFINITELY right. This is the lesson from the depression-era generation.
If the Palm Restaruant in NY is the same as DC the $25K must be a base then tips are added ? Good servers and upscale places can earn in the six figures.
These clowns helped destroy our economy, and now they want us to feel sorry for them!?
Hand them over to a mob full of: the people they scammed, the people laid off when they “right-sized” their company, and the people who have been priced out of the housing market for years while watching criminal behavior go unpunished.
“WASHINGTON – The number of U.S. homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in nearly eight years, a sign that sales are finally coming to life after a long and painful slump.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts’ forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
Economists were encouraged by the report, and stock indexes advanced modestly.
“This is yet another positive indication that the bottoming process is forming,” Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. “Now if only prices would stabilize.”
Economists surveyed by Thomson Reuters expected the index would edge up to 85 from a reading of 84.6 in March. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.
In early trading, the Dow Jones industrial average added about 20 points to 8,741, and at times traded above 8,776.39, its finish for 2008.
Still, some economists wonder whether rising mortgage rates will dampen home sales. Nationwide average rates for 30-year-fixed rate mortgages are around 5.3 percent this week.”
“Don’t believe anything you hear, and only half of what you see” - Grampa Cobalt, circa 1950
My biggest question about this, is why on earth are the contracts going up, while the real sales keep on going down?
MANY pendings are not closing. Short sales (not approved), financing not approved, contingent upon sale of an existing home (does happen), etc… These pending numbers are a big head fake.
It’s called “falling out of escrow”, or “not even making it there”. BWAHAHAHAHAHAHAHAHAHAHAHAAA!!!
Wouldn’t surprise me if there are contracts being written between Realtors that were never intended to go through, just to pad the numbers.
Interesting take on the numbers.
I was looking at houses over the holiday. Lots of nice places where I wouldn’t mind living. But the prices were still quite high. I was considering making a string of lowball offers, say 50% of asking. There is very little traffic, and a lot of these houses have been on the market a long time.
My thought here is to make offers on houses I liked, knowing the offers would be rejected, to soften them up for when I might come back again to buy in January, maybe after the house has fallen out of escrow a couple times.
A long time friend, now gone, taught me
years ago to never, ever offer what they’re
asking. He was a multi-millionaire with
SFH all over the SF bay area. He’d take the
broker the offer and the broker would be
all huffy and puffy and tell him that he was
not going to offend the seller….
My friend would tell him, “You have
to, it’s the law” and low and behold, many
times the offer would get accepted.
Whenever we go into an establishment,
wither eatery, hardware, lodging, I always
ask for my discount and after som dodgeing
and weaving, almost get one…If you don’t
ask, you’ll never get one.
almost ALWAYS get one…..signs of a
aging mind…
And those that do go through are sometimes taking longer to close.
Here in Tucson, I’ve seen more than a few “For Sale” signs sporting “Sale Pending” riders. And, for some reason, those riders stay put for many weeks. Which tells me that a lot of those pending sales really aren’t.
You can count my bro as one of these. He just signed a contract to purchase a second home as an investment in Raleigh, NC. His points was:
1) Interest rate is very low
2) Banks aren’t paying squat for his deposits
3) House prices have come down
My counter points:
1) Second wave of foreclosure coming, which will be bigger than the first.
2) Shadow housing inventory + overbuilt during bubble periods means it will be L shaped housing market, not V so what’s the hurry.
3) Economy may double dip next year.
But he still did it. Guess quite a few folks are doing the same using probably the same arguments.
Well it’s possible that the combination of lower (but hardly lowest) prices, low interest rates and a future of high inflation will mean that today turns out to be an optimum time to buy. I wouldn’t bet on it, because that’s only true all three factors are near optimum now.
It is hard to make the case for higher real estate prices if interest rates continue to climb…IMO, at best it would flat line for a fairly long time…Think..1980-85 1990-96
I certainly think that’s likely. But if inflation REALLY kicks off, even though house prices would fall in REAL terms, they might stay close to flat in NOMINAL terms. But again, things have to align JUST RIGHT for now to be a better time to buy than in a year or two. It could happen, but I wouldn’t place a big bet on it.
But there will be no income growth, so inflation will just price everyone out of the market… which may be the goal, of course.
Timmy- When you double dip it`s like you put your mouth right in the dip, just take one dip and end it!
George- Well Timmy, you dip your way and I`ll dip mine.
Sienfeld.
I wish the AP would learn to write headlines.
Ok…nevermind. They fixed it while I was reading the blog in the past 15 minutes.
Original headline for the article mentioned above was “Existing home sales highest in eight years”.
Of course that is wrong, and it now reads, “Existing home sales rise largest amount in eight years.”
Well, duh. It is a month to month number. Existing home sales year over year are up only 3.2%. Well La-Ti-Da.
of course if you go from selling one house per month to selling two houses per month, that is indeed a 100% increase in sales.
This morning in Bloomberg, it said that GM was filing for Ch11 due to a massive debt load, and the inability to produce small cars.
I would have to call BS on this one, as GM produces the Aveo, and the cobalt, both small cars that IMHO are not very appealing.
I would like to ask, if there was ever a time that GM or Chrysler ever produced a reliable, decent small car that was fuel efficient, and easy to maintain?
I have heard the jokes about Vega’s and Pintos, but the cavalier was a long running model, that was slow, heavy, not very pretty or sporty or fast or confortable, yet it was sort of cheap to buy.
The escort seemed to be decent, and now with the ford focus, ford has had a decent run with it.
If you look at the sales numbers, plain vanilla medium sized sedans in the Impala, and the Camry style are by far the largest segment. These sedans would be full size anywhere else in the world, but if the market buys 5 to 10 times the amount of medium sized sedans, vs the amount of small cars, why would you force a company into producing small cars?
BTW, I hate small cars, as my 6′7 frame hits the roof in most of them!
GM’s (Opel & Vauxhall) Astra is a popular model in Europe. Saturn did a very poor job of marketing it in the US. Most Americans have never heard of the Saturn Astra.
With all the nonsense that GM and our wonderful government have pulled, they can kiss my Astra.
+1 for the boy
Last year I wandered in a Saturn showroom. “Kiss my Astra” was the sales slogan for the Astra!
BTW, I hate small cars, as my 6′7 frame hits the roof in most of them!
That’s what you get for being taller than most (99% ?) of the general population.
Don’t blame us, blame our folks.
The Aveo is made and designed by GM Daewoo in Korea (and lately built Mexico also).
RE: would like to ask, if there was ever a time that GM or Chrysler ever produced a reliable, decent small car that was fuel efficient, and easy to maintain?
Half the problem with the Big 3’s small car fleet, was the mating of 4 cylinder engines to auto transmissions, resulting in a bunch of performance dogs and mechanical problems.
Any decent small displacement European car runs a standard transmission with attendant appropriate acceleration numbers and power train longevity.
Not so for the imbicile dullard consumers in the country.
Movin’ that clutch leg is requires far too much physical exertion, never mind the concentration and skill involved in finding the friction pressure point, so you don’t roll back on a hill into the idiot stopped on your bumper.
Nope, for Wal-Mart Nation, it’s just jam that stick in Drive and grab for the Biggie Fries and cellphone.
skill involved in finding the friction pressure point, so you don’t roll back on a hill into the idiot stopped on your bumper.
It was a fabulous day for me when I learned the trick of using the parking brake to hold you in place while letting off the clutch to stop you from rolling backwards on a hill. Of course, I didn’t learn that until after having a car w/ manual transmission for a year or so.
RE: It was a fabulous day for me when I learned the trick of using the parking brake to hold you in place while letting off the clutch to stop you from rolling backwards on a hill.
The idea of exercise in this country is pushing the channel buttons on their TV remote.
Heaven forbid any US citizen should be subject to the acute physical exertion and mental strain involved in pulling on a handbrake while simultaneously engaging a foot clutch peddle.
…I’m so tired!
I always have driven standard. Which makes it really easy when visiting or living overseas, because most cars everywhere else are standard.
I think every American should have the experience of driving a standard transmission, right hand drive auto once in life. Only through that do you realize the difficulty in driving a right hand drive standard transmission car is not in shifting with your left hand, but drinking coffee with your left hand.
RE: I think every American should have the experience of driving a standard transmission, right hand drive auto once in life
LMAO, Bad Chile! You are exactly correct.
I had sweat pouring down my back when I shoved off from Heathrow a few years back. Grand Cayman was one thing-the M25 in London another.
But an American driver hasn’t really lived until he’s entered an A-rated motorway UK roundabout in a right side drive, left shifting car, with a big mo’fo lorry badge and belching exhaust stacks in the rear view mirror with the owner of those items running right his rear bumper.
Ya know how to spot a tourist driver in England?
The windshield wipers are running while the sun is shining, since the directionals and wiper stalks are also reversed. are the right siders. Left turn-wipers on!
Never could quite get used to that idiosyncracy.
Or, you can do like a past gf of mine and ever so slightly engage the clutch while revving the motor- holding you in place. I think she went through 4 clutches in that RX-7 before she wrapped it around a tree. She was a handful, that crazy gal.
Actually you probably shouldn’t use the clutch to hold yourself on a hill - it wears out the clutch faster. SF Bay Aryans know enough to “pass” on a used car coming out of SF due to (1) increased corrosion from the salt fog and (2) worn out clutches.
Yeah…I really wish I had learned the handbrake trick before a trip to SF. Took me a while to get going again after the stop sign on the back side of Lombard St (I believe). Nothing like the smell of a burning clutch
Geo Prizm (Chevy) was the exact same car as the Toyota Corolla. Made in the same factory with the same parts by the same people. They just put a different id tag on it at the end, but because it was a Chevrolet it had a much lower resale value. I was looking for a good used one when I discovered that I could buy a fleet car from my previous employer for the estimated wholesale value. So, I got a 4 year old Taurus instead (for less than $5K) and it has served me well for nearly 8 years.
Paahlease…driving a car with a standard transmission does not make you any more macho than driving a car without power steering and power breaks does.
Even Porsche has given up and gone automatic.
Its a lot more fun than a slushbox. Also, have you ever gone into a curve while accelerating and then mid curve the slushbox shifts on you? Not fun.
Another advantage of a manual gearbox is that it greatly reduces the number of requests from “friends” to borrow your vehicle, especially if its a truck.
But I will agree that for day to day driving a slushbox is best.
I drove standard my entire driving life, wouldn’t think of purchasing automatic. Then after a stop-and-go commute at a job that lasted a few years, me joints started to hurt.
(right shoulder and elbow, left knee.)
So I switched. But I do feel like I’m more in control of the vehicle when driving a stick.
RE: Then after a stop-and-go commute at a job that lasted a few years, me joints started to hurt.
Foot clutch pressures in domestically produced motor vehciles have always left something to be desired.
I didn’t realize how bad this was until I rented a Spanish Altea in England.
Man, the clutch throw in that car was like cutting butter.
You didn’t even know you were shifting. Just a slight leg stroke to pedal and voila!
So, what’s the US producer’s solution?
Dump the standard transmission which btw, gives better MPG (which is why the Europeans still stick with program); performance; and is less prone to premature. failure. The 2 200k VW GTI’s I ran never had their clutches replaced or suffered from any trans problems.
But, who cares-there’s still a front seat double cup holder for the masses!
The Spanish car was also probably 75-90hp… even base model small cars here are 130-140hp.
My F-150 has a very light clutch for what it is, although the hydraulics have little feedback and the engagingly point changes a lot from day to day.
My LS1 Camaro has a man’s clutch, like doing one-leg squats. Just have to remember to compensate when walking and always aim left of where you want to end up.
“Half the problem with the Big 3’s small car fleet, was the mating of 4 cylinder engines to auto transmissions, resulting in a bunch of performance dogs and mechanical problems.”
Exactly!
There is nothing inherently deficient with a 4 cylinder engine. Well,…OK, torque can be a bit of an issue, but Honda has proven (over and over again) that you can make 4 cylinder engines that will make 200+ reliable horsepower all day long and right out of the dealer lot. With modest tweaking these engines can easily and reliably make up to 300hp and when you put that into a small chassis with a close ratio six speed transmission you can run rings around almost anything.
I know this because I have built several such beasts and they are adicting.
Yeah, but you gotta admit that turbo kits for previously NA cars are not something the average person really wants to mess with. And 300hp all motor Hondas aren’t exactly practical either. Way easier to just start with a Mitsu or Suby and add more turbo as desired. In all those cases automatic trannys still kind of ruin the car due to lack of low end.
Speaking of Wal Mart nation went to DMV today to fight a parking ticket. THis was in Wash, DC. Anytime I go to the DMV here in DC or in the Virginia suburbs it amazes me how so few people maybe only 3% bring anthing to read or work on. DMVs have gotten more efficient and sometimes the wait is very quick but many times an hour or a bit more. Just sit there and waste an hour ????
So, anyone who doesn’t want to add the “thrill” of screwing around with a manual transmission while driving is now some sort of dullard. Because we really do need more distractions while driving… right…
My 6′8″ cousin drove a Ford Focus for years and had no problems whatsoever.
I have serious issues with people that slam Vega’s. Throw a small block in them, add low gears and slicks, and you have a serious race car. Same thing with Pinto’s.
But that is not exactly how the car came out, did it?
It came out with such a bad construction that in quiet nights you could hear it rust in the driveway, and the suspension fell out. Also wasn’t that the car that fell apart during testing?
You can obviously take a bad product, and improve it to a tolerable margin if you spend enough money in it. I had a friend with several chevy vegas, liked them because they looked like small camaros, and had rear wheel drive, but he would chuck out every single moving part, put in a new drive line, suspension and brakes, dipped it in an anticorrosive bath, painted the whole thing put a new interior and then he had fairly decent car, but it was far from the car that was envisioned and produced.
There are cars that have their downsides, and are worth keeping, or modifying because they appeal to either a sense of aesthetics, or just because the person likes the car.
I agree there were POS from the factory. You just needed some imagination!
LOL. Vegas were great cars, except for the engine block, the suspension, the drive train, and the body!
Both my wife’s family and mine were die-hard Chevy families. It took almost 10 years of unmitigated GM junk (from 1972-1982) before we all finally threw in the towel and went started buying those strange foreign brands.
Needless to say, none of us ever went back to GM.
My dad was a die-hard GM fan. Every few years he would buy yet another GM monstrosity. He would constantly bitch and moan about what a crappy car it was. After spending huge sums keeping it running (he refused to learn how to work on cars himself), he would finally give up and trade it in on . . a new GM car.
I loved my Vega. It had character.
RE: have serious issues with people that slam Vega’s.
The wife of a friend of mine ran a small block V8 late 60’s Nova coupe.
The freakin’ thing had like 309k on the odometer. And this was a Maine car.
When I asked her how often she’d change her oil, she looked at me quizzically?
Change the oil, what do you mean? she says. “All I’ve ever done is just put a quart in the hole whenever the level got down to that little marker on that long thingy you pull out of the engine area”.
Uhmmm…like did you ever take it to a mechanic to dump the entire sump? And put in like all new oil in? Like 6 quarts instead of one?
“You’re suppose to do that”??????????????
Moral of the story-Small block American V8’s-you just can’t kill’em.
Been the Big 3’s bread and butter motor design for decades.
Strayed too far from the path and now 2 are toast.
Fiat Motors…oh ‘tay Spanky!
I agree with you completely that the small block V8’s are pretty much bulletproof and I learned which end of a wrench to hold working on them as a kid but I fell in love with japaneese twin cam four bangers in the 80’s and never looked back.
On a horsepower per displacement basis Honda and BMW make the best engines on the planet. The domestic manufacturers were VERY late to the party and never really mastered the technology on a mass production basis. Yes, they CAN make some amazing engines (the Corvette ZR1 comes to mind) but could never get their heads around applying that to their entire production line.
I come from a muscle car family, and GM, Chrysler and Ford made some great ones. My dad owned a 1967 Camaro with a solid lifter 396. That thing was fast but it was hard to get it to hook up. My brother owned 12 GTO’s (including a couple amazing Judge’s), and a crazy fast 1969 Mustang 428 CJ. He’d floor it and the windows would come off the tracks. But probably the car that scared me the most was a Chevy Vega running 700 HP small block. I drove in it ONCE! My first car at 16 was a 1970 440 Magnum Road Runner. Hey I was young! My brother’s first car (at 15 1/2) was a dual quad 1965 GTO. The thing pulled the wheels off the ground in 3rd gear. He was dropping tranny’s at 16. A buddy of mine had a 440 six pack 1970 Challenger. One night 6 of us get into the thing. It has slicks on it so I’m thinking it will hook up good. He does 3 or 4 massive burnouts. Then he jumps on it. The front wheels were so far off the ground he was spinning the steering wheel all the way to each side while the car barely lurched left and right. Damn thing did that until we hit 100.
These were special cars, from special companies. And then the Wall Street crowd and greed destroyed them.
This is really going to age me, but did anyone
every tweek one of those 4 - cylinder Crosley
over head cam engines with the vertical
shaft driving it through beveled gears?
Anyone ever worked on a MG-TC with the
pre-selector gearbox?
RE: These were special cars, from special companies. And then the Wall Street crowd and greed destroyed them.
Hey BananaP-
If you can, check out P.J. O’ Rourke’s article in the Sat-Sunday May 30th/31st Weekend section in the WSJ entitled, “The End of the Affair”.
You’ll like it.
Power per unit displacement is a pointless measure of performance. What matters is power per mass of engine weight, and the modern LS series small block V8 is very very hard to beat (LS7 is better than any exotic or Honda in this category - 505hp stock with a dry engine weight of 430 pounds per GM performance parts catalog).
The only reason people even talk about power per unit displacement is because displacement is regulated in many countries. So the S2000 makes 120 hp/Liter. It also weighs about 2800 pounds and has a 240 hp engine with about 180 torque. The base vette weighs about 3200 pounds and has a 430 hp engine with around 400 torque, while returning almost identical fuel mileage. I know which one I’d rather have…
Vegas were junk. Loud, noisy, underpowered, poor shifting, crap handling, junk. Period.
So was the Pinto. And the Maverick.
Detroit, then and now, knows nothing about building quality small cars.
I’m that size. Those new style VW beetles have tons of head-room.
I have found that most VW’s due to their german origin are rather well suited for tall people. I have fit into a Mini (barely) and into the Focus with no problem. Forget most Fiats, or other european brands, as their target population is much shorter.
It is fun though to go to a stealership and ask for a car that I can fit in… I generally get steered to full size pickups or SUV’s…
I like my Pontiac Vibe. Of course it is GM’s version of the Toyota Matrix so that probably makes the difference.
The Neon despite its flaws was very popular / successful for a few years.
Dodge/Plymouth Neons are pretty decent little cars. Have had five of them around the house at various times.
Biggest thing I had to do to any of them was replace a connecting rod on my kid’s 99 DOHC Sport (she had it lowered with an aftermarket “cold air kit, that picked up the air below the bumper. Worked great until her B/F drove thru 3 feet of water, submerged the intake, and hydraulic-locked one cylinder.
Car was exceptionally easy to work on, was able to change the rod without pulling the engine……took about 11 hours total.
Same problem, same size, which is why I drive a
truck.
Testify!!
Need a laugh?
http://www.newsday.com/media/flash/2009-04/46217527.swf
That’s funny. Very creative.
Outstanding! Laugh of the day for me.
Comment by jeff saturday
2009-06-02 07:34:43
Palm Beach County foreclosure filing fees shoot from $301 to as much as $1,906
June 1st, 2009 by Jeff Ostrowski
Filing foreclosure in Palm Beach County just got a lot more expensive.
On Friday, filing a foreclosure in Palm Beach County Circuit Court cost $301. Today, the prices are way up:
A foreclosure filing for a loan of $50,000 or less now costs $401.
For loans of $50,000 to $250,000, the fee is $906.
And for claims of more than $250,000, the fee is $1,906.
“The increases are part of legislation initiated by Florida judges and sponsored by Rep. Ellyn Bogdanoff and Sen. Ken Pruitt,” the Palm Beach County Clerk’s office said in a statement. “The state, not the Clerk & Comptroller’s office, will receive the additional revenue the fee increases are expected to generate.”
UPDATE: Lenders pay the higher fees, but RealtyTrac’s Rick Sharga says lenders likely will pass the fees on to borrowers (if the foreclosure doesn’t go through) or investors (if the bank takes back the property
Ultimately, the borrowers will pay unless they file bankruptcy.
Florida is a recourse state and nearly all the mortgages written in Florida were recourse mortgages. So, when the lenders start filing deficiency claims, the new foreclosure filing fees will be included in those claims.
You really think deficiency claims will ever get paid. Have you ever gotten blood from a stone?
Decoupling revisited:
I know you’re all tired of my cousin Nancy in Wyoming, but humor me by guessing how long this particular decoupling will last:
Population (2000 census) divided by present (5/31/09) number of distressed properties listed on foreclosure.com :
Pinal County AZ (my lending venue): 24
San Luis Obispo County CA (my winter res): 82
Fremont County WY (Nancy’s place): 2700
Will the sand or the waves reach the mountaintop? When? My personal guess is, they will NOT…but I’m one of those who wrongly thought NYC would be spared.
Isn’t half of Fremont county the Wind River Indian reservation? IIUC the county seat Riverton was carved out of the reservation in order to have a place where normal US law prevailed - not Indian law. Doesn’t that affect the statistics?
A caution about on-line RE statistics in WY. My brother’s house in Riverton simply does NOT show up on places like Zillow. It’s probably the least “automated” of any place when it comes to being trackable on-line. I would guess this would lead to there being a great underreporting of distressed properties in the area.
Different areas peaked at different times, and will bottom at different times. WY was one of the last to experience high prices, but will correct nonetheless. To figure out how much an area will fall, one only needs to figure out how much house prices inflated. It’s all relatively simple. Some corrections will be massive. Others will be more mild, as the prices didn’t reach such lofty heights.
Wouldn’t it make sense to look at the amount of new housing stock added and entertain the fact that prices would have fallen had there not been a bubble?
In a place like Texas, for example, prices didn’t go up a ton (they did go up!), but the amount of building is crazy. I can’t help but think that the supply/demand curve simply will shift as demand dies out due to lack of funny money loans.
Absolutely. Large inventories in certain markets will force prices even lower.
And they are still building!
Check out Le Bijou in downtown Fort Worth.
Luxury townhomes starting at $699k up to 1+ million - http://lebijoufw.com/
Not anywhere near close to worth what they’re asking.
BTW, I HATE, that faux 19th century old euro look.
GAG!
BanteringBear,
And while we’re on the topic..? I think there’s strong correlations w/ savings & investments too. Every 401k participant is whinning the blues over their woe is me account balance but relative to their “retirement home” how is it necessarily all bad?
Your acct. was cut by 50% but your target ret. market has been cut by 75%? ( Or -will- be before it’s all said and done? ) So your ret. acct. takes a month of Sunday’s to recover..? Besides, most didn’t really have anywhere’s near the savings needed to fully retire anyway.
NY Times: We have to stop foreclosures or home prices will continue to fall. God forbid homes actually become affordable!
http://www.nytimes.com/2009/06/02/opinion/02tue1.html
Check out the comments… 20 to 1 against the editorial board and in favor of letter the housing market correct.
Too many comments about the “looters” being the banks and the borrowers think they are all victims.
These idiots want the govt to maintain housing prices “where they belong” at 2005-2006 levels.
They honestly don’t seem to get it. (????) The problem isn’t falling prices. The problem was RISING prices. It was the high prices — that nobody could afford — that have caused all these foreclosures, not the falling prices.
OK…let’s try this again..
Need a laugh…
http://www.newsday.com/media/flash/2009-04/46217527.swf
Geithner sells a devalued dollar
(China Daily)
Updated: 2009-06-02 15:01
Comments(0) PrintMail
It is not surprising that Timothy Geithner, the US Secretary of the Treasury, asked China to buy more US treasury bills during his visit to Beijing, which began on Sunday. However, the US dollar’s weakness in the foreign exchange market as well as the gloomy forecast on the outlook for the greenback makes Geithner’s sales pitch look feeble, says an article in China Business News.
And the Chinese students laughed at him when he said the US dollar was safe.
What I want to know is, how did this guy ever even get a gig in the first place? Did he sleep with Henry Kissinger or something?
That would certainly explain a lot things.
Evidence persists in Radar Logic data that San Diego home prices are plunge protected at $200/sq ft. Since dropping below $200/sq ft for the first time during the bust on October 1, 2008, the daily index has bounced back above $200/sq ft 21 times. The average increase for such moves was $16.94 to the upside, versus a mean absolute deviation in all the daily moves during this period of $10.10. The significantly larger movement on days when the index crosses back above $200 is suggestive of market manipulation by a player with massive financial fire power.
Perhaps this is an attempt to save banks from mass walkaways by FBs who would rather not hold on to falling knives? I don’t see how it will work, as inventory will continue to grow if prices are artificially propped up above the market equilibrium level.
PB, I don’t buy the manipulation theory for several reasons:
- First of all, it’s not the simplest explanation—e.g. it does not satisfy Occam’s Razor. The simplest explanation for me is that distressed sales are moving into nicer areas. As FBs buy more up-scale properties that have come down in price, I could see that coming through in the PPSF data as an up-tick, because those properties likely had higher PPSF valuations at all stages of the bubble. I would argue that an up-tick is predictable, and the oscillation is likely due to the competing upward and downward pressures.
- Secondly, RE is a hard market to manipulate covertly. The issue is the sheer amount of data that is public record: all the title recordings, liens, etc. While futures markets might be easy to manipulate with little-to-no records accessible to the public, a public market strikes me as one in which it would be hard to hide the manipulation. Anyone with sufficient motivation and an internet-connection could figure out who is buying the properties and look for patterns.
I had a third point when I tried to post this late last week, but it never came through and now I don’t recall it. :-)a
I only threw out a hypothesis which might explain stickiness at $200/sq ft. Though I agree with your point that substitution into higher quality housing may partially explain this, I see no go reason for prices to bottom out at such a high level compared to San Diego incomes while unemployment is still rising, and I also see plenty of motive for banks and their government lackeys to do what they can to prop up prices. Given that your explanation does not address the motives of policy makers, I believe it fails to satisfy Occam’s Razor.
Could it not just be all the realtors are in collusion and have talked amongst themselves and all said it should not go under $200?
UHS can talk till they are blue in the face about what prices should be, but to get average prices at $200/psf, you need lots of buyers with lots of bank. I guess I just don’t understand how so many of these could spontaneously start coming out of the woodwork given the state of San Diego’s and California’s and the US’s and the world’s economy, but perhaps I am just underestimating how many really rich people there are out and about…
It’s knife catchers thinking they’re getting a job at the ‘nicer’ neighborhoods that have now started coming down. Sales are up because the truly collapsed neighborhoods are hitting cashflow positive levels, so REInfestors are out buying them to rent out, which makes sheeple think the bottom is in, so they run out and do their best to buy into the fair to decent neighborhoods that have dropped 20%. The infestor neighborhoods all dropped 50%+ and they think 20% is all that the good places will drop given that ‘the bottom is in.’
We saw it when the bad neighborhoods dropped 20%. People jumped in thinking they were getting a deal and wound up walking a year later.
I guess I just don’t understand how so many of these could spontaneously start coming out of the woodwork given the state of San Diego’s and California’s and the US’s and the world’s economy, but perhaps I am just underestimating how many really rich people there are out and about…
——————-
PB,
I think there is a lot of investor activity out there right now (what we’re seeing on the street and talking to people). Been hearing about more hard-money lending, in addition to the investor pools. This is where all the cash is coming from, IMHO.
While there are first-time buyers coming into the market, I’m guessing at least 40% is speculative activity; and we all know what happened the last time we saw this activity…
Hey, I woke up and turned on CBS This Morning and they said the recession is over.
The recession is obviously over. Now that Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, Indymac, Washington Mutual, Countrywide, Chrysler, and (yesterday) General Motors, among others, have gone belly up, what else could possibly go wrong?
what else could possibly go wrong?
The Mother Of All Financial Entities - the one with a $3.5 Trillion annual budget - could go belly up.
LMFAO!
Florida: Gov. Crist Signs Growth Bill:
The bill rewrites Florida’s 25-year-old growth management law, principally by allowing developers in the most urban counties to add more housing developments without expanding roads and by allowing counties and cities to designate new urban areas that also would be exempt from certain road-building requirements.
http://www.tampabay.com/news/politics/gubernatorial/article1006378.ece
Yup, that’s next. And so we repeat the mistakes of the last big housing recession. We’ve got horrible roads here that were pieced together in the 1980s, and of course the locals don’t want to pay to fix them and the rest of the city says to hell with you, we never go there so why should WE pay for it…LOL.
Crist is an absolute moron and FL never ceases to amaze me. Builders, developers and uber-wealthy retirees make all the rules in FL, the rest of the sheeple are being taken for a ride.The most politically corrupt state in the country, worse than Louisiana.
Small wonder that Disney was able to create a local gov’t for Disney World.
So I am ensnared in a ridiculous situation: a doctor sent my wife’s account to collections after they 1. submitted the claim incorrectly 2. sent the bill to the wrong address 3. said they called 3x but didn’t
Wish me luck. I’ve got a Tampa collection agency to deal with.
G’luck, Muggy. I hate dealing with administrative f-ups like that.
Call the doctor in question today. If he/she is a decent person he/she should be able to get that fixed and figured out.
And if he/she is business savvy, he/she (boy that’s getting annoying) will realize that he’ll make more money if you just send in whatever you owe rather than get a percent back from the collections agency.
I always wondered about this - can a creditor “take it back” from collections? Do they hire a collections agency to work on their behalf, or if the agency is involved has the debt been sold off already?
“can a creditor “take it back” from collections”
Nobody at either office has been able to answer this for me.
Tell the collection agency to send you proof of the debt including proof that the claim was submitted *properly* to the insurance company and was rejected. Demand that they include a complete explanation of all the medical coding that was used on the forms submitted to the insurance company. Also demand that they include all the identifying information so you can confirm that it is actually your wife’s claim that was attributed to you. Make sure it isn’t someone else’s social security numboer on the thing.
Then start the process of contacting your insurance company. If you spend enough time, you may be able to figure out exactly what was done wrong and be able to get that corrected. In the best of all possible worlds, you can resubmit the claim yourself (properly) get the reimbursement from the insurance sent to you, and negotiate the collection agency down so they will take less than 100% in total satisfaction of the claim. You could make money on this or at least reduce your co-pay.
Whether the claim can go back to the originator after the collection agency has purchased it depends entirely on the contract between the doctors office and the collection agency, though I suppose some states might have rules about that.
Then get a new doctor and report this one to the better business bureau or something. You deserve better than this.
Yes.
“And if he/she is business savvy”
Bwahahahaha. Oh, that’s funny. A business savvy doctor? Oh, stop it. You’re killing me. When you have good material you have to use it.
As long as you’re looking for a business savvy doctor you may as well start looking for Amelia Earhart and Jim Morrison.
How many thousands and thousands of stupid real estate stories can we come up with if the subject is doctors getting fleeced? Why do you think they have to charge so much? They are every con man’s favorite pigeon.
“whatever you owe”
We don’t owe anything. The office received a bulk payment. Who knows what they applied it to.
Seriously, then, call the doctor. Not all of us are morons when it comes to business and customer service.
Sorry if this posts twice, but seriously, call the doc. Not all of us are morons when it comes to business or customer service.
They do. They have their records and the insurer tells them what claims are paid and which ones are rejected. And your insurer should have sent you that information as well. If they didn’t, get it from them.
Muggy,
I’ve been through this countless times. Thank goodness we’re fairly healthy. What’s been even more defeating is that I always discuss any procedure and billing/insured expenses before actually doing it!
Oh they’ll agree to anything ( cause we’re all just J.O’s to them anyway ) and then go-right-ahead w/ biz as usual. Best of luck.
What’s been even more defeating is that I always discuss any procedure and billing/insured expenses before actually doing it!
On any substantial issue with doctors or hospitals, always, always, always, put it in writing & mail it to them. Ditto for phone conversations, write down what transpired & mail it to them. For some reasons, written material gets attention that spoken material does not.
He said, she said.
Firm written copies of everything!
Still working on bills that were rejected by bcbs and AT appt, I discussed with MD to make sure to code procedures correctly in order for the MD to get paid. Even if the MD had to code it as saying they had to pull my head from my arse, it was medically necessary. Even though it was just an eye exam. Just kidding on the eye exam part!
And the exams were in Feb. Still getting billed. Just spoke with MD’s office to say ’send letter to YOUR pathology dept’.
Why this stuff isn’t done correctly is beyond me.
Good luck Muggy.
Muggy, whatever you do, don’t talk to the collection agency on the phone!
Ask for written validation that the debt is real and proof that they have the right to collect it. Create a paper trail.
I agree trying to deal with the OC is the best approach.
Thanks MCAT, I think I got this under control. We’ll see what happens.
Wow, thanks everyone for all of the advice. I’ve done most everything that has been suggested here. Way too many details to go over. I just have to wait to hear from the Dr’s office and my insurance co.
Polly etc. thank you! I may need more advice as the issue narrows.
You are most welcome, Muggy. To add to MCAT’s advice about not talking to the collection agency on the phone, I agree if you possibly can, but sometimes you have to. They record the calls. Always keep that in mind.
My situation was physical therapy for a neck injury from a car accident so the total price was limited by NJ law and the company collected everything they were allowed to have by law from the car insurance, then illegally got more from my health insurance and then illegally sent the rest to a collection agency. Whenever the kid on the end of the phone said “Are you refusing to pay this debt?” I always replied, “No, I am not refusing to pay the debt. There is no debt to be paid.” I got to a supervisor much more quickly that way. Still had to say it about 5 times. If they keep repeating themselves, you repeat yourself.
They want to have a recording of you saying you refuse to pay the debt. Don’t give it to them. Either ignore the question or come up with some variation of “I can’t refuse to pay something that doesn’t exist.” It is a little different in your situation, but you can modify it to fit your exact facts.
I think you really have to get on the phone with the insurance company. If the doctor’s office is refusing to deal, they are the next line of attack. If you have a friend who is a medical coder, that would be a great resource.
Well, last minute phone call from the ofc. manager. She has a copy of the “collections stand down” fax for me to pick up. I’ll be there first thing in the a.m.
Man, that was very stressful.
Wish me luck. I’ve got a Tampa collection agency to deal with.
Read this PDF!
You have 30 days to dispute a debt in writing from the first contact with a debt collector.
Debt collection is 90% psychological.
Good luck!
Ha! I had the same problem when my daughter broke her arm.
The hospital sent the bill to the wrong insurance company, then sent the letter to me to the wrong address, and then collections. (What did we fill out all those forms for)?
The X-ray guy tried to bill us for something the insurance company had already paid, and sent that to collections.
The doctor never billed us at all, but the insurance company sent us checks to offset what he told them he would bill us, and we practically had to force the money on the guy, whose records were so messed up he was going broke.
Yep. Medical billing is a nightmare.
About two months ago I got billed for a $35 flu shot that I had two years ago in another state. Two letters and three phone calls later, the insurance company (luckily I am still with the same one) paid the $35.
I’ve found that it doesn’t hurt to provide feedback to your employer’s benefits department (if your insurance is through your job). That sounds pollyannaish in this economy, I know, but about 10 years ago I got an insurance company to pay up an out-of-state ER visit (that they initially refused) in part because I made it clear I planned to be a squeaky wheel.
My corps Emp benefit dept has been diced up
and OFFshored.
Nice huh?
In fact the HR dept has been offshored
and they SAID they have No ability to look
into our corps Benefit pages on the website.
WTF?
Their answer to us, call our supervisors.
Oh brother.
I have been there. Do you, perhaps, have CIGNA? I left them over their mishandeling of my claim and threats to send me to collections over a $475 bill for a regular yearly check up that the doctors office had coded incorrectly. I spent months getting it dealt with. Calls weren’t made, faxes were lost,… GRRR. Hate health insurance companies!!
Back to lurking…
Stars End
When a former employer started using CIGNA as a the health insurer, I knew that trouble would follow. I continued to see my “out of network physician,” and even though that guy wasn’t perfect, well, he musta been doing something right. I’m still here, after all.
Any-hoo, CIGNA assigned me to a Primary Care Physician, but I never went to see him.
Before I left this outfit’s employ, I got a letter from CIGNA saying that this PCP had died. (He’d had cancer, and I also got a letter informing me of that news. It was sent when the doctor had to take a leave of absence from his practice.)
Well, that wasn’t all. In my final weeks of employment, I got a survey from CIGNA. They were asking me to evaluate the quality of care that this doctor had provided me. Mind you, I had never visited his office. And by the time this survey was sent, the doctor was deceased.
Ich bin Bernanke! White Dove of Peace!
Bruno/Eminem meets HBB? Nobody?!
Is the HBB Meet up in SD happening? June3?
where, when, details?
Was it postponed?
And what about the meetup in Florida?
Yeah…Whats up with Florida ??
where when who?
Wow, a pile on!
I thought there was going to be a minor meet and greet for some of the San Diego crowd, but maybe that isn’t happenin.
I just got into “The O.C.” this evening…I’m up for a train ride to San Diego tomorrow…I’ll post in the morning!
Geithner just lied through his teeth in an interview with Steve Liesman of CNBC. I’ll try to find the exact quote through a transcript. Said U.S. was “not monetizing” debt. Hmmm.
Said U.S. was “not monetizing” debt
Isn’t this technically true? The Fed Gov’t isn’t…the Federal Reserve *is*, however?
They are totally monetizing. What do you think QE is?
What do you think all the various programs are? They are paying full price for things which are worth much less. The difference is the extent of monetization.
Thank you.
“They are paying full price for things which are worth much less.”
Would they possibly do this for individual (high-end) housing, either directly or through some kind of laundering operation? How could one tell? I personally cannot understand what is buoying San Diego home prices at this point…
PB, you need to really trade the markets daily for a year or seven!
What happens in minutes there takes months for housing. Modulo that, they are isomorphic.
This is the phase where you have a huge gap between the nearest bid and ask. When that happens, as any good futures trader will tell you, the bottom is gonna fall out of the market.
“PB, you need to really trade the markets daily for a year or seven!”
In my next life, I plan to do that.
“What happens in minutes there takes months for housing. Modulo that, they are isomorphic.”
My thought experiments have already taught me this.
“This is the phase where you have a huge gap between the nearest bid and ask. When that happens, as any good futures trader will tell you, the bottom is gonna fall out of the market.”
I get this, but if the bid-ask gap’s so big, then why does the daily average price keep repeatedly bouncing back over $200? I suppose thin volume might help explain the bouncing around, but I am still mystified that so many San Diegans feel rich, confident and qualified to buy in that price range…
Perhaps I misunderstand, FPSS. Is the QE not the Fed Reserve printing dollars and buying gov’t debt on the open market?
And what has the US gov’t bought at full price that is worth much less? I know that the fed has taken MBS as collateral at par (or some non-realistic discount to par)…
I’m not saying you (or BB) are wrong…I’m likely misunderstanding. What am I missing?
I know that the fed has taken MBS as collateral at par
If you’re going to ask your own question, and answer it too, what more can we add?
Now you’ve confused me, then. We’re back to what I said initially..
The *FED Reserve* is monetizing, not the federal government/treasury
what more can we add?
Some applause would be nice
And a foot rub.
Done.
Hop on the PATH + subway.
I’ll throw in a fine meal as well (and as many here know, I write a food blog.)
Oh, and BTW, you have to “put out”. This isn’t “rocket surgery”.
LOL
send link for the food blog.
Grin and tummy growl.
Food blog? address please, we love to cook…
For how long can this check kiting operation suffice to keep l-t rates low without seriously calling into question the strong dollar policy?
Jun 1, 2009, 11:53 a.m. EST
Low Mortgage Rates Are Going, Going…
By Brett Arends , The Wall Street Journal
If you’re looking for a new 30-year mortgage, last week’s events from the financial markets carry a very simple message: Get ‘em cheap while you still can.
…
It is two months since Federal Reserve chairman Ben Bernanke unveiled plans to print money to buy up Treasury bonds. The aim was to keep long-term rates down. He will have to step up the process. The federal government may also wade back into the market for mortgage backed securities with a similar strategy. The U.S. Mint will have to move to a triple shift to print all the money.
Alas, there is only so far this can succeed. Treasury bonds are IOUs of the federal government. But so are dollar bills. Ultimately the bond market may notice that Uncle Sam is only paying off his IOUs with more IOUs. Gamblers who do this tend to find their markers start trading at a discount. When it does, neither is likely to command a premium.
Write to Brett Arends at brett.arends@wsj.com
Alas, there is only so far this can succeed. Treasury bonds are IOUs of the federal government. But so are dollar bills. Ultimately the bond market may notice that Uncle Sam is only paying off his IOUs with more IOUs. Gamblers who do this tend to find their markers start trading at a discount. When it does, neither is likely to command a premium.
This cannot be emphasized enough. And the administration is only making things worse by killing corporate America via things like the GM bond fiasco. Don’t underestimate the drag that will have on the general economy going forward - companies - especially union houses - will have a much harder time obtaining financing for expansion. Long-term this will kill* the stock markets - and guess what then? Government tax revenue gets hammered even more. The $10 Trillion new debt projected over the next 10 years will turn out to be pie-in-the-sky wishful thinking.
*The one possible saving grace to the revenue problem is hyperinflation. This will actually help the government’s cause by increasing the tax revenue significantly, since equities, and therefore capital gains taxes, would do well in a hyperinflationary environment. Of course then even if the treasury is able to start paying off the debt - it’ll be in worthless dollars.
“*The one possible saving grace to the revenue problem is hyperinflation.”
Do you suspect, as I do, that the Chinese are on to this newfangled Fed conundrum?
Absolutely. The Japanese and even the Russians too, I heard today.
Well the board of governers is a govt agency, and they run the fed. so there!
“govt agency”
Really? Which branch? The choices are executive, legislative or judicial.
Aren’t they appointed by the exec? Or is that just Bernanke (and not the whole board?)?
Yes, only the chair is appointed by the pres. The rest are appointed by the member institutions.
For all you boaters out there, Genmar declared bankruptcy today. I think they’re the 2nd largest boat builder behind Brunswick. Time to shake your booty down by the docks!
Well, color us surprised. Who didn’t see that one coming?
For fun, I peruse the craigslist boat section and sort by typing in “must sell.” The number of hits is epic. Lots and lots of people desperate to unload their toys. Also, I’ve been doing this for used trucks, motorcycles, and RV’s. The inventories are astounding.
Surprisingly MarineMax did -extremely- well in the post tech wreck/9/11 world. One of the top performers I recall?
I have joked all along that I would like to pick up a small Skiff or Whaler for me and my son for my bubble efforts. I still don’t think we’re there yet. It’s obvious to me that I bought my 2nd car a year or so too early.
Anyway, no more joking: I want a boat at the end of all of this.
I’d like to pick up a 60′ blue water catamaran under 50K. My chances?
ahansen:
I read your link late last night regarding the woman on welfare, which was in response to my post. The satire was humorous, but I think you missed my point. Because I am against the use of illegal labor, and am underwhelmed by the efforts on the part of illegals to assimilate and abide by our laws, does not mean that I am pro welfare for legal citizens, or in favor of government programs and policies enabling these leeches. The point of my post regarding the illegal immigrants, and the problems they bring, was that the people who are hiring them are the ones who are ultimately responsible for the burdens placed on our country. No need to build a wall, just take away the jobs and the illegal immigrants, for the most part, go back home. Many, if not most, would prefer to be near their family anyway.
Don’t forget harsh penalties for whoever hires them too.
I will point out that illegal labor is an oxymoron as all individuals have a right to freely trade their services with one another.
Unfortunately, there are about 100,000 laws preventing the trade of services. The oldest profession of course, has been banned in 49 states for many years.
And yet, unsurprisingly, it thrives in myriad forms!
Did you know that Ms. MJ makes more money than the top 4 cash crops of the US combined? And that you can get home delivery in Manhattan at all hours of the day or night for that particular “raw material” but you couldn’t get, let’s say, carrots or tomatoes or milk?
“home delivery in Manhattan”
Ah yes, my buddy orders “tickets” all of the time. I take it “front row seats” are better.
Pardon my cultural illiteracy, but MJ = ?
ooh ooh i know the answer mary ja whanna…..
but MJ = ?
Mary Jane, I assume. aka marijuana.
Wow PB, I thought I was the sheltered one.
I keep reading how Chrysler and GM went bust because they stopped building cars people wanted, but I think this is a very superficial analysis of the situation (like most of what we get from our worthless news media).
Here’s why our auto industry went bust…
1. GM, Chrysler (and much of Corporate America) are slaves to Wall Street. They cannot possibly look past the next quarter, so any decisions they make must pay off almost immediately. Otherwise the assholes that run these companies (into the ground) won’t be able to cash in on those awesome stock options. So great ideas like the EV1 get killed just before they could pay off. Short term thinking killed these companies.
2. Foreign competitors are just smarter. Our embarrassingly managed companies could actually get away with this crap until they are exposed to real competition from overseas. Just about every company we have that faces real competition from abroad eventually bites the dust. And the heads of these foreign companies actually make A LOT LESS than our guys do. Still, they clean our clocks.
3. Greed. The people that run these companies are only looking for a payday. Who cares about the workers, or the company? Not these guys. It starts with everything you see on TV. The media shoves greed in our faces every second of every day. That’s why we get degrees. To make more money. Greed is also why half the country spends every waking hour trying to figure out how to screw the other half.
But there are some companies that actually get it. I can guarantee you that if the people that run Southwest Airlines were running GM, they wouldn’t have gone bust. Ford didn’t go bust. But the Obama Admin has got to stop bailing out these lousy companies. Honestly, Ford ran their company a lot better than either GM or Chrysler. Now they are actually handicapped by the bailouts GM and Chrysler are getting. That is complete BS. If you want to support the American auto industry, buy a Ford.
So GM, Chrysler and a long list of other US companies have failed, and it won’t stop anytime soon. Sure, making products people want would help, but you can only do that if you have long-term vision, and an ounce of respect for the very company you are working for. I doubt that changes anytime soon in the US.
4. GM and Chrysler thought they were too-big-to-fail, but apparently they were not.
GM and Chrysler thought they were too-big-to-fail, but apparently they were not. They haven’t really failed until they are out of business, a la Studebaker.
It’s hard to disagree with everything you outlined above. It points to some real defects in not just our business, but our culture. Just my opinion, for what it’s worth, but the financial & economic crisis is really a symptom of our cultural and social (or anti-social) problems.
What do you any anyone else on this blog think would turn things around? Produce more and consume less (that’s unAmerican!). Cooperate with each other (socialism!)? Stop squeezing wealth upward (more socialism!)? Manufacture our own products (god no, to expensive and besides we’ll all be brand managers)? Any other ideas?
What do you
anyandgod no,
totoo expensiveshesh….proofread for goodness sakes.
Have to point out the obvious that Southwest Airlines is not profitable either.
Profitable or not, I doubt that SW salaries and bennies can hold a candle to those of the UAW.
Have airlines, as a whole, ever been profitable?
SW Airlines is profitable. Only the percentage has declined.
Google it.
Also has by far, the best safety record.
RE: If you want to support the American auto industry, buy a Ford.
One jet black 2010 Mustang GT for me please!
I’ve bought 6 Ford or Ford-controlled vehicles in my time.
1985 V6 Ranger
1992 Miata
1993 Escort LX-E (1800 DOHC)
1998 Contour SVT
2001 F-150 4.6l V8
2004 Miata
All were at least competent and only the Ranger had some overall quality issues. And that was 25 years ago. The last two are what I drive now.
BP, you need to kill yourself! Otherwise, they will come after you.
The truth is always suspect.
“Well,” said Conan O’Brien, the fifth host of ” The Tonight Show,” “I’ve timed this moment perfectly. I’m on a last place network, I moved to a state that’s bankrupt, and tonight’s show is sponsored by General Motors.”
Crude just turned positive for the day, poised to make a bit of a run towards the end of trading. Gasoline, in a few places, is up more than $1 per gallon in just a few months time. This is NOT good news for the economic “recovery”. It will drive a stake through it’s heart. Of course, I never bought into the “green shoots” in the first place.
High gas prices present the biggest burden to those very people the politicians are always rallying behind…”working Americans”, “families”, etc.
How’s all that central planning working out? Who is the villian this summer?
Who is the villian this summer? Silly rabbit, anywhere and always, the villian is “W”.
Add to that
Higher mortgage rates
and highway department about to collapse due to decreased gas tax dollars due to decreased driving. Many are recommending a higher gas tax, which I support strongly. Not good for the economy though unless they return the dollars in the form of income/payroll tax cuts.
But if we’re driving less we shouldn’t need the highway department as much, right?
Agree with the revenue neutral gas tax idea. Sadly, it will never fly because it would be severely regressive. First, energy costs (and costs of all other basic staples whose prices are affected by energy prices) are a much larger portion of the budget of lower income people. Add to that the fact that income tax cuts will provide more benefit to those paying more taxes.
The frogs have started turning on us. This would make a good M. Night Shyamalan movie.
Garden frog blamed for man’s death in Sydney
Norfolk Va / Virginia Beach / Hampton Roads / Southeastern Virginia:
http://hamptonroads.com/2009/06/hampton-roads-apartment-rents-fall-vacancies-rise
“Hampton Roads’ apartment rents fall, vacancies rise”
Also someone mentioned Michael Moore yesterday. Check out the documentary, ” Michael Moore Hates America.” I didn’t have high expectations but was pleasantly surprised.
Some “expert” on CNBC just referred to current market situation as the “green shoots rally”. I don’t know why, but I laughed hysterically. This whole situation is so incredibly absurd that it’s hard to believe. Can you imagine betting a bunch of money based on “green shoots”?
BB, what kind of work do you do? Or are you retired?
(if you don’t mind me asking, of course!)
‘Can you imagine betting a bunch of money based on “green shoots”?’
Don’t fight the Fed! Buy stocks now or get priced out forever…
Thrift losses narrow in 1Q; more on ‘problem’ list
Thrifts narrow losses considerably in first quarter, but more placed on feds’ ‘problem’ list
Daniel Wagner, AP Business Writer
On Tuesday June 2, 2009, 3:23 pm EDT
WASHINGTON (AP) — Losses at U.S. thrifts narrowed considerably in the first quarter, but the number of institutions in trouble increased, the Office of Thrift Supervision said Tuesday.
Thrifts lost $47 million in the quarter ending March 31, their best performance since September 2007. That compared with losses of $5.4 billion in the fourth quarter and $617 million in the year-earlier period.
But the number of “problem thrifts” increased to 31 from 26 in the previous quarter and troubled assets made up more of their portfolios.
“The numbers are decidedly mixed,” said OTS acting director John Bowman. “It’s too early to say we’ve hit bottom.”
The agency said thrifts reported a smaller loss because they set less money aside for losses on bad mortgages and other loans. Thrifts set aside $5.8 billion for the quarter, down from $9.3 billion in the final quarter of last year.
The number was still large enough to make the first quarter’s loan-loss provisions the highest in history except for the four quarters of 2008.
Loan-loss provisions likely will remain at “elevated levels,” dragging down industry profits, until the housing and job markets recover, said James Caton, OTS director of financial monitoring and analysis.
Thrifts are crucial to consumer credit because they must have at least 65 percent of their lending in consumer mortgages and other loans.
Mortgage originations by thrifts totaled $95.9 billion in the first quarter, down from $133.8 billion a year ago but higher than the $63.2 billion in the previous quarter.
Troubled assets — repossessed property and delinquent loans — made up 3.35 percent of thrifts’ assets, up from 2.54 percent in the previous quarter and 2.06 percent a year ago.
The total value of the troubled assets was a record $41 billion. The previous record of $40.5 billion was set in the second quarter of 2008.
Compared with the early 1990s, the troubled assets were more concentrated in single-family and small multiunit housing. Eighty-one percent of the assets were in that category, with 13 percent in commercial real estate loans. At the end of 1990, 68 percent of troubled assets were in commercial real estate and 23 percent were in buildings with up to four units.
“We have a sense we are being taken care of”
Riiiight, we’re being taken ‘care’ of alright!
Shiller Says Rise in U.S. Confidence a ‘Puzzle,’ Credits Obama
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By Erik Holm
June 2 (Bloomberg) — Robert Shiller, the Yale University professor who predicted the collapse of the housing market, said President Barack Obama may deserve credit for boosting consumer confidence with swift action to help ailing banks.
Confidence among U.S. consumers rose in May to its highest level since before the collapse of credit markets last year, and never fell as low as it did in earlier periods in the 1970s and 1980s, a development that Shiller said was “a puzzle to me.”
“Why aren’t people scared now,” asked Shiller at an Oppenheimer & Co. conference in New York today. “I think it’s because at this point in time, we have this sense that we are being taken care of, we have this aggressive stimulus policy.”
Financial institutions have received more than $370 billion from the U.S. as part of the government’s rescue effort, according to Bloomberg data. The bailout was prompted by the credit crunch that cut borrowers off from their usual sources of capital in 2008, and a decline in U.S. housing prices that is now in its third year.
The Reuters/University of Michigan preliminary index of consumer sentiment rose to 67.9 in May from 65.1 in April. The index reached a low of 55.3 in November.
“I think there is a risk of it reverting back down,” said Shiller, who is also chief economist at MacroMarkets LLC. Stories about past recessions can take hold on consumer psychology and create a self-fulfilling prophesy, he said. “There is a potential here for really resurrecting the story of the Great Depression, and falling into one again.”
Shiller, along with economist Karl Case, created home price indexes in the 1980s now used by Standard & Poor’s. The index last week showed home prices in 20 U.S. metropolitan areas fell a more-than-forecast 18.7 percent in March from the same month last year.
“The question is whether the newfound confidence would be reason” to think the U.S. housing market will turn around, Shiller said. “I honestly don’t know the answer, but I don’t think we turn on a dime in this market.”
Maybe the rise in consumer confidence is simply a function of consumers’ short attention spans?
I think there are a lot of people living rent free in un-foreclosed houses.
That leads to money in their pockets, but not really long term confidence, I would think. You’d have to see the exact phrasing of the question to understand the change.
It’s due to
Gov printing press
Gov/Wall Street PR campaign to drive up prices so the banks can have secondary offerings to new suckers.
Lets see how it stands up to rising gas prices, and more difficult expensive refinancing, and job losses.
On another Note
Vanguard has closed treasury money market fund and now the federal money market fund to new investors. It’s also restricted how much you can put in for old investors. They want that cash in their regular prime money market account.
I believe Fidelity closed its Treasury-only fund some time ago.
Just checked…yes, it’s closed to new investors.
http://content.members.fidelity.com/mfl/summary/0,,233809300,00.html
Absolutely no doubt about it in my mind, they are trying to force everyone into riskier assets/investments. They’ve learned nothing from this debacle.
Pyschobabble economics gets tiresome in a hurry. More and more I think it is just a smoke screen to legitimize whatever interventions the Fed sees fit to execute. Is Shiller contemplating a position with the FRB?
Hi, folks! Here’s Slim with the water line update…
‘Member a month ago when my neighbors were getting all huffy about my water line replacement cutting off their power. Well, the thlot pickens. Now they’re reporting my contractor to the Arizona Registrar of Contractors.
I spent about a half hour to 45 minutes of today listening to their electrician (yes, they finally hired one) insist that the problem was caused my my project. An inspector from the Registrar of Contractors was there too.
Well, I kept The Troublemaker (my mouth) shut and observed.
And it was interesting, to say the least. The neighbors are tapping into another neighbor’s line to get power. (With permission of that neighbor, of course, and yes, it appears to be legal to do such a thing.)
And they’re also getting new electrical service installed at their house. Seems to me that they’d like to get Al Coronado Plumbing to pay for it. Hence, the complaint to the AZROC. I suspect that if the AZROC rules against them, they’ll try to sue Al.
Well, they may find that more difficult than they expect. After the AZROC inspection party broke up, I went back to my notes and found three interesting tidbits that I’ll share with y’all:
1. A few hours before the neighbors got all up in the face of my contractors, the guy next door came over to inform me that his house had no power. So I called Tucson Electric Power to report an outage. TEP told me that they were aware of the problem, and that the cause was a blown fuse at the house. This phone call took place on the morning of Monday, May 11.
2. On the evening of Tuesday, May 12, I saw a Tucson Electric Power bucket truck next door. It was there for at least a half an hour. Don’t know what the nature of the call was, but May 12 was also when I heard the guy next door was whining to the neighbor across the street about his house’s lack of power.
2. During the afternoon of Wednesday, May 13, a Tucson Electric Power pickup truck was parked so that the city recycling truck couldn’t get at my bin. Quite a chorus of horn-honking ensued. The TEP-er, who was paying another call to my next door neighbors, moved the truck and I had a successful recycling pickup.
I called Al Coronado and shared the above info with him. He found it fascinating. I’ll lay ya dollars to donuts that the AZROC inspector will soon be clued in on it as well.
I can’t help thinking that if TEP is telling me that the outage was caused by a blown fuse at the neighbor’s house, which would be consistent with the loud popping sound I heard on the afternoon of Saturday, May 9, then the “water line replacement cut off our power” argument falls apart.
Will keep you posted!
Wow, Slim, what a good story. I think there is a really good book in here somewhere, and someone else who posts has a well tuned gift of story telling, a certain lilt!
Third time trying to post this..hope it works.. pretty funny..
http://www.newsday.com/media/flash/2009-04/46217527.swf
The US CIC may never comment on monetary policy, but they do have secret meetings with the Fed Chairman and the Treasury Secretary which certainly does raise questions about central bank independence.
Financial Times
Merkel mauls central banks
By Bertrand Benoit in Berlin and Ralph Atkins in Frankfurt
Published: June 2 2009 17:25 | Last updated: June 2 2009 23:19
Unconventional monetary policies being pursued by the world’s main central banks could aggravate rather than ease the economic crisis, Angela Merkel, Germany’s chancellor, suggested on Tuesday.
Her surprisingly strong attack on the US Federal Reserve, the Bank of England and the European Central Bank was remarkable coming from a leader who had so far scrupulously adhered to her country’s tradition of never commenting on monetary policy.
“What other central banks have been doing must be reversed. I am very sceptical about the extent of the Fed’s actions and the way the Bank of England has carved its own little line in Europe,” she told a conference in Berlin.
“Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds.”
She added: “We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years’ time.”
Ms Merkel’s decision to ignore one of the cardinal rules of German politics – an unwritten ban on commenting on monetary policy out of respect for central bank independence – suggested Berlin is far more concerned about the ECB’s approach than has so far been apparent.
There goes the European Union…
AWESOME! This made my day, and NO, this is not an Onion article.
By JENNIFER PELTZ
NEW YORK (AP) - The real estate market’s troubles are hitting close to home for Treasury Secretary Timothy Geithner.
After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn’t sell and recently rented it out instead… Although $7,500 might seem like a lot of rent, it probably falls a bit short of the monthly mortgage payments on the Geithners’ two loans totaling $1.25 million, plus $27,000 a year in property taxes.
http://apnews.myway.com/article/20090602/D98IQVGO0.html
Small wonder these guys are so interested in propping up housing prices, as it affects their own household financial positions.
$1,250,000.00
$250,000.00 down
30 yr. at 5.32%
$5,655.00 p/i no tax no insurance
Tim has a gator there, unless he doesn`t pay the taxes.
Surprise surprise.
“There are people who just cannot come down off their asking price because they just cannot afford to lose $200,000 or $300,000, so they’re saying, ‘Let me just put a Band-Aid on it temporarily,’” Stiefvater said. “Losing a couple of thousand versus $5,000 or $6,000 a month, that’s a lot better.”
Snicker. Yeh, just lose a couple thousand a month, and then you are down $300-$400k next year instead of just $200-$300k this year. Good strategy.
Looks like the HBB has found the smoking gun…
Here’s poetic justice.
A couple of guys who were stealing copper wire got themselves fried.
http://www.latimes.com/news/local/la-me-bandits-killed3-2009jun03,0,7082631.story
The bodies of two men believed to have been electrocuted while stealing copper wiring were found early Tuesday on an abandoned driving range in Riverside County, authorities said….
After extinguishing the fire, which took place at what used to be San Jacinto Golf Center, officials discovered the bodies. A spokeswoman with the coroner’s office said the bodies were burned beyond recognition and would possibly be identified today.
So, I was talking to a good friend the other day and he says, “The Miata is a chick car.” I had to agree.
This Graham Ratio graph (linked from Brad Delong’s web site) is ominous; it suggests the stock market has perhaps another 50 percent drop ahead before we are out of the woods, unless it is different this time.
“… another 50 percent drop ahead …”
Sounds about right.
Are you referring to the invisible graph, or the invisible link to the graph?
Link didn’t go through — sorry. Try this:
http colon doubleslash img dot skitch dot com slash 20090418 dash e6yfdj2iq4d3g191sng42dasxm dot render dot png
I think you can get away with simply omitting (or obfuscating) the http colon slash slash www
http://delong.typepad.com/sdj/2009/03/delong-lessons-from-the-new-deal-for-today.html
This chart says yeah, it can easily happen.
OK, FPSS, whatcha think of this saltwater economist’s attack on freshwater economics?
My personal thought: No account of why rational expectations appears such an utter failure as am empirical theory is complete without considering the enormous behind-the-scene efforts of the Fed to override fundamental market forces.
The Chicago School is eclipsed
Friday, May 29, 2009
Brad DeLong
Richard Posner, leader of the Chicago School of Economics and Fourth Circuit Court of Appeals judge, uses his new book, “A Failure of Capitalism,” to try to rescue the Chicago School’s foundational assumption that the economy behaves as if all economic agents and actors are rational, far-sighted calculators. In some sense, Posner must try. For without this underlying assumption, the clock strikes midnight, the stately brougham of Chicago economic theory turns into a pumpkin, and the analytical horses that have pulled it so far over the past half- century turn back into little white mice.
Thus he writes: “At no stage need irrationality” on the part of markets or their participants “be posited to explain” the collapse of financial markets last year and the current deep recession.
Posner’s effort looks to me like an earlier effort to “save the appearances” in the face of discomfiting contradiction. The Jesuit astronomers of 17th-century Rome wanted above all to maintain the assumption that the sun revolved around the earth—for if it did not then the Bible’s declaration that Joshua called on God to make the sun stand still in the sky was a lie, and a Bible that lies even once cannot be the inerrant foundation of faith.
Thus the Jesuits created much more complicated models than the elegant heresy of Copernicus, in which the earth revolved around the sun. They succeeded in their attempt to save the appearances. Posner’s attempt does not: It is definitely a retrograde motion, for we see many things in the financial crisis and the recession that are not what we would see in an economy populated by smoothly rational utilitarian calculators.
What you don’t know about TALF can hurt you. But don’t worry — no tax dollars are involved, as it is funded through currency dilution. Apparently it involves making loans to big investors at below-market interest rates so they can loan it to you at higher rates and pocket the spread.
Tuesday, June 2, 2009
What you don’t know about TALF
The Federal Reserve Building in Washington, D.C.
TALF is a program aimed at getting credit flowing to consumers. But it might be the biggest government program you’ve never heard of, even though it provides financing for a lot of the things you buy. Jeremy Hobson reports.
The Federal Reserve Building in Washington, D.C. (Mark Wilson/Getty Images)
Kai Ryssdal: Ever since the financial crisis got really hairy, the Federal Reserve’s been running a hodge-podge of programs that are designed to get credit flowing back through the economy as quickly as possible. It’s not overstating the case to say Ben Bernanke and his colleagues have been throwing money at the problem.
One of those programs, the TALF, or Term Asset-Backed Securities Loan Facility, is quite possibly the biggest government program you’ve never heard of. Even though it’s providing the financing for a lot of the things you’re buying. From New York, Marketplace’s Jeremy Hobson reports.
JEREMY HOBSON: The money comes from the Federal Reserve, not the U.S. Treasury, so the program didn’t require Congressional approval. Nevertheless, up to a trillion dollars will be lent to big investors to buy pools of debt. Asset-backed securities they’re called, in which the assets are my debt, your debt, the neighbor’s debt. Here’s UCLA Forecast Economist David Shulman.
DAVID SHULMAN: Student loans are in this package, small business loans are qualified collateral, and they’ve also opened it up to commercial real-estate loans, so it covers quite a bit of lending that goes on in the economy.
Shulman says when the financial crisis started last fall…
SHULMAN: The market for asset-backed securities stopped. So as a result, auto credit began drying up, credit-card credit began drying up, student-loan credit began drying up because the originating financial institution had no ability to take the loan and sell that loan into the marketplace.
In other words, when your bank or your car dealership makes a loan to you, they’ll take your IOU. Add it to hundreds of others. And sell that pool of IOUs to investors who make money on the interest you pay. That way, the IOU is at least partly off the bank or dealership’s balance sheet, and they can make new loans to new people.
If investors are willing to buy this debt, then lenders are able to extend more credit to you and me at a low interest rate. This way of doing business may seem roundabout, but Shulman says it’s the world we live in.
Company Focus6/3/2009 12:01 AM ET
Coming: A 3rd wave of foreclosures
The next group of Americans to lose their homes seemed to have good credit and affordable loans. But those families have been walloped by the recession.
By Michael Brush
MSN Money
There’s a simple reason you shouldn’t get too excited about the “green shoots” of an economic turnaround.
In the housing market, a lot of prime mortgages are becoming subprime as a new wave of foreclosures begins to hit. Mainstream homeowners — those previously “safe” borrowers with sound credit who have conservative, fixed-rate mortgages — are getting into trouble at an alarming rate.
In the first quarter, the percentage of these borrowers who were behind on their mortgages or in foreclosure had doubled from a year earlier, to nearly 6%. For the first time in the housing crisis, these homeowners accounted for the largest share of new foreclosures.
Job losses are a major reason once-safe borrowers are falling into trouble. With unemployment likely to rise, the problem will only get worse. So the core challenge at the heart of our economic crunch — a poor housing market that infects banks and the whole credit system — is not going away soon. That’s bad news for the stock market and the economy in general.
“A couple of months ago, a lot of people had hoped that the housing collapse was about over,” says money manager and forecaster Gary Shilling, a well-known bear who called the housing problems early in the cycle. “But it was more hope than reality.”
The 3rd wave of woe
Economists call rising delinquencies and foreclosures among prime borrowers the third wave of trouble. The first two waves were housing speculators going bust and subprime borrowers — those with poor credit histories and some version of no-down or low-down adjustable-rate mortgages — getting into trouble.
Mark Zandi, the chief economist for Moody’s Economy.com, calls the third wave a “significant threat” to the economy. “It is gathering momentum,” he says. “The problem is now well beyond subprime and deep into prime.”
It will cause at least three problems that could shrivel the “green shoots”:
Mounting foreclosures among prime borrowers will destroy their credit ratings, making it tough for them to contribute to growth by spending on credit.
Rising foreclosures will add to an already high level of housing inventory on the market, pushing down home prices even more. That will make people feel poorer, so they’ll spend less. It also will tempt more people to walk away from mortgages, adding to the problem.
Foreclosures will mean more loan losses at banks, deepening the problems in the financial system.
Sounds like good news to me!
Bring it on, already!
Company Focus6/3/2009 12:01 AM ET
Coming: A 3rd wave of foreclosures
Continued from page 1
The ’subprime society’
Shilling suspects many so-called prime borrowers are now going bust because, well, they really weren’t so prime to begin with. The same lax standards that created a zoolike atmosphere in subprime lending infected prime mortgage lending to some degree. Many prime borrowers still stretched to qualify, and they lack the financial reserves to sustain any personal setbacks, Shilling says.
A few months of unemployment will throw them into default. The official unemployment rate stood at 8.6% in April, and many economists believe it will top 10% as the recession drags on.
How much worse will the foreclosure crunch get? Credit Suisse (CS, news, msgs) analyst Rod Dubitsky predicted last week that 8.1 million mortgages, or 16% of all mortgages, will go into foreclosure over the next four years. A weak economy, continued declines in home prices and rising delinquencies among prime borrowers all but ensure that foreclosures “will march steadily higher,” he says.
Dubitsky thinks such a high level of foreclosures could transform the U.S. into a “subprime society.” The large number of people unable to borrow because of impaired credit will keep the consumer-spending engine on low idle.
Zandi predicts that a rising number of troubled prime borrowers will keep the number of distressed mortgages aloft for at least 18 more months. He thinks the number of mortgages in default or behind by more than 30 days (the definition of distressed) will rise to 9.2% in the current quarter from 9.1% in the first quarter, then stay above 7% through most of next year.
To put that into context, from 2000 through the end of 2006, 2.7% of mortgages were distressed, on average, at any one time.
Inventory overhang
A big problem stemming from all those foreclosures will be that huge excess inventories of homes for sale will continue to push down prices, Shilling says. “As long as you have those excess inventories, you have downward pressure on prices. It is no more complicated than that,” he says.
The combined inventory of new and older homes on the market remained relatively constant at about 2.5 million for many years. Now, it’s officially around 4 million, but Shilling thinks it could be higher because of miscounting.
In his bearish scenario, the inventory overhang will push down home prices so much that up to 25 million homeowners will be “underwater,” meaning they will owe more than their homes are worth. That would be a huge increase over recent levels of 13.5 million homeowners and bad news for the economy.
Homeowners who are underwater can’t borrow against their homes to fuel a rebound. They’re reluctant to spend. And they are more tempted to simply walk away from what looks like a losing prospect.
2 more waves
Bad enough? Well, this third wave of prime borrowers going bust will be followed by two more waves of credit-related problems, Tilson says:
In a fourth wave, more homeowners with “jumbo prime” loans will go into default. These are loans to buy high-end homes that once boasted price tags upward of $1 million. “All over the country, the high end is starting to tip over,” says Tilson. This wave will also bring more problems with home equity loans and second mortgages on homes.
A fifth wave will carry rising defaults on commercial-real-estate and business loans.
Like Shilling, Tilson believes all of these waves of credit-related problems spell the most trouble for homebuilders and regional banks. “Homebuilders are going to face severe headwinds trying to sell homes at least for a couple of years,” he says.
Regional banks will have problems because they got heavily involved in commercial-real-estate loans when they lost so much of their home-mortgage business to upstarts vying for a piece of the subprime action during the boom. Regional banks also lack the income from wealth management and trading that’s helping big banks such as JPMorgan Chase (JPM, news, msgs) earn their way out of trouble.
Company Focus6/3/2009 12:01 AM ET
Coming: A 3rd wave of foreclosures
Continued from page 2
There are ‘green shoots’
There are some glimmers of hope in all this. For one thing, homes are more affordable than ever. Mortgage rates are still extremely low by historical standards despite a recent increase. So the cost of buying a home compared with average income levels is as low as it has been in nearly three decades.
And intriguingly, a housing sector analyst who first started warning of trouble back in 2003, way ahead of most people, now predicts a reversal is at hand. Stuart Feldstein, the president of SMR Research in Hackettstown, N.J., thinks home sales and prices are turning and will be in an uptrend soon.
One problem here is that Feldstein was early — even if impressively prescient — the last time around.
And of course, housing affordability doesn’t mean much if so many people continue to lose their jobs. Goldman Sachs Group (GS, news, msgs) economist Ed McKelvey doesn’t expect the jobless rate to peak until after 2010 — in a sluggish economy that he expects will grow at a paltry 2% in the second half of next year.
With economic conditions like that, no matter how cheap houses get, it’ll be tough for anyone to buy them.
ROFLMFAO!!!
Newsweek
Daniel Gross
There’s No Place Like Home
Good riddance to the vacation house.
Published May 30, 2009
From the magazine issue dated Jun 8, 2009
…
In the late boom, conceding the lack of a second home, and a lack of interest therein, marked you as a downscale outlier. Historically, only the rich had second homes. But as easy credit flowed like a mighty stream, second-home ownership trickled down. In 2005, the combined sales of vacation and second homes (many of which are either bought as vacation homes or to rent as vacation homes) accounted for 39 percent of total home purchases. In 2006, a record 1.07 million vacation homes were sold, according to the National Association of Realtors. The typical vacation-home buyer that year had a household income of $102,200—well-off, but hardly rich.
And so it became déclassé to stick around, especially when there were so many exciting places to go to. Each Friday, the New York Times Escapes section presented a new place where readers should think about setting up a homestead, each more implausible and inconvenient for New Yorkers than the next: A-frame houses near Lake of the Woods in Minnesota, lakeside developments in Kansas, mountaintop retreats in North Carolina.
But with people underwater on their primary homes, unemployment rising and lenders melting down, the air has come out of the second-home bubble. Some of the hardest-hit areas—Florida, Phoenix, Las Vegas—are second-home havens. The real-estate market in the Hamptons is as still as the Sargasso Sea. In 2008, sales of vacation homes and investment properties nosedived 50 percent from their -bubble-era peaks. This spring the Times folded its Escapes section.
Hallelujah! For the virtues of second-home ownership were not something I ever grasped. I grew up in Michigan, where many of our neighbors had a cottage or cabin “up north”—the vast stretch of the state where it was even colder than it was in our neck of the woods. These primitive structures could be used for summer pleasures like swimming in freezing lakes and swatting away flies the size of hummingbirds, and for utterly mystifying winter pursuits like ice fishing and cross-country skiing. My parents were displaced New Yorkers. Our primary winter sports were reading and brooding.
Do you ever feel like returning to MI, at least for the cheap housing?
I’ve noticed that the buy price is still a good bit above spot for the PMs. That doesn’t indicate we’ve topped out yet, but when it turns it might indicate a good time to exit the precious.
Full Post
Posted Tuesday, June 02, 2009 5:07 PM
Are Governments Running A Ponzi Scheme?
Rana Foroohar
There are now lots of folks predicting that economic recovery may come in the shape of a W – that is, a rebound out of recession (soon) followed by another dip at some point in the next couple of years, before things finally stabilize. But the hows and whys of the W recovery are up for grabs—economists say it could be the result of inflation, or a commodities spike, or any number of other reasons. Today, I saw an interesting theory put forward by Eric Chaney, the chief economist of the AXA Group, one of the world’s largest insurers. Chaney used to write opinion columns for me when he was chief European economist for Morgan Stanley, and he’s a pretty smart guy. His take is that the second dip of the W may come from a bond market crisis, touched off by the huge amounts of debt that will be issued by governments all over the world in the coming months and years.
The numbers are truly astounding – the increase in net borrowing by rich countries between 2008 and 2010 will be around $2.5 trillion, or 4 percent of the world’s GDP. Emerging economies will need to borrow hundreds of billions more, of course. In his report Chaney asks, “Will lenders be ready to absorb all this paper at reasonable (for borrowers) prices? To put it bluntly, aren’t governments initializing a generalized Ponzi scheme a la Madoff? If not, how do we get out of the debt spiral?”
I ascribe to the stairstep theory.
Newsweek
Wealth of Nations
Full Post
Posted Tuesday, June 02, 2009 5:07 PM
Are Governments Running A Ponzi Scheme?
Rana Foroohar
There are now lots of folks predicting that economic recovery may come in the shape of a W – that is, a rebound out of recession (soon) followed by another dip at some point in the next couple of years, before things finally stabilize. But the hows and whys of the W recovery are up for grabs—economists say it could be the result of inflation, or a commodities spike, or any number of other reasons. Today, I saw an interesting theory put forward by Eric Chaney, the chief economist of the AXA Group, one of the world’s largest insurers. Chaney used to write opinion columns for me when he was chief European economist for Morgan Stanley, and he’s a pretty smart guy. His take is that the second dip of the W may come from a bond market crisis, touched off by the huge amounts of debt that will be issued by governments all over the world in the coming months and years.
The numbers are truly astounding – the increase in net borrowing by rich countries between 2008 and 2010 will be around $2.5 trillion, or 4 percent of the world’s GDP. Emerging economies will need to borrow hundreds of billions more, of course. In his report Chaney asks, “Will lenders be ready to absorb all this paper at reasonable (for borrowers) prices? To put it bluntly, aren’t governments initializing a generalized Ponzi scheme a la Madoff? If not, how do we get out of the debt spiral?”
How to screw over your investors without really trying:
Investing June 2, 2009, 11:35PM EST
Corporate Bankruptcy: What Investors Need to Know
When debts outweigh assets, as with GM and Chrysler, protection can help businesses reorganize or liquidate. A guide to bankruptcy’s risks and rewards
By Rachel Beck, The Associated Press
General Motors Corp.’s filing for bankruptcy protection bankruptcy protection on June 1 highlights what many companies today face: the ugly scenario of having debts that far outweigh their assets.
That means they can’t pay their bills or creditors in a timely fashion. In many cases, they turn to the bankruptcy court for cover—either to liquidate or reorganize their businesses.
The plethora of corporate bankruptcies lately could put this year in the record books. There have been 100 public company bankruptcy filings during the first five months of this year, just shy of the 2002 high for the same January-through-May period, according to BankruptcyData dot com.
So it’s probably a good time to understand what a corporate bankruptcy is and how the process works. Here are some questions and answers.
What is bankruptcy?
Bankruptcy is a legal procedure set forth by the U.S. Bankruptcy Code for use when a debtor isn’t able to make payments. That could happen when a company (or individual) can’t pay debts as they come due, or has overwhelming debt obligations.
In the case of GM, the nation’s largest automaker had $172.81 billion in debt and $82.29 billion in assets, according to its bankruptcy filing on Monday.
Bankruptcy is a safe haven because it gives companies protection from their creditors, which can no longer demand to be paid once bankruptcy is declared.
Bailout mail: Send California rescue funds now, or watch the green shoots go up in smoke in a Santa Ana driven firestorm.
Wall Street Journal
* JUNE 2, 2009, 7:43 P.M. ET
Schwarzenegger Warns of Deadline to Plug California Budget Hole
By STU WOO
SACRAMENTO, Calif.—California Gov. Arnold Schwarzenegger and the state’s chief accountant Tuesday warned lawmakers that they have until June 15 to close the state’s crippling budget deficit.
If they miss the deadline, the state will run out of cash by the end of July, said state Controller John Chiang. That means Californians could see a repeat of this past winter, when officials delayed payments to welfare recipients, private contractors and local governments to keep the state solvent amid a budget impasse.
“California’s day of reckoning is here,” Mr. Schwarzenegger said in an unusual address before a joint legislative session. “We have no time to waste.”
Wall Street Journal
* JUNE 3, 2009
USA Inc.
Congress Helped Banks Defang Key Rule
By SUSAN PULLIAM and TOM MCGINTY
Not long after the bottom fell out of the market for mortgage securities last fall, a group of financial firms took aim at an accounting rule that forced them to report billions of dollars of losses on those assets.
Marshalling a multimillion-dollar lobbying campaign, these firms persuaded key members of Congress to pressure the accounting industry to change the rule in April. The payoff is likely to be fatter bottom lines in the second quarter.
The accounting issue lies at the heart of the financial crisis: Are the hardest-to-value securities worth no more than what the market is willing to pay, or did the market grow too dysfunctional to properly set values?
(See which PACs contributed to which representatives on the Financial Services Committee during the first quarter of 2009.)
The rule change angered some investor advocates. “This is political interference on a major issue, and it raises questions about whether accounting standards going forward will have the quality and integrity that the market needs,” says Patrick Finnegan, director of financial-reporting policy for CFA Institute Centre for Financial Market Integrity, an investor trade group.
Backers of the change say it was necessary because existing accounting rules never contemplated the kind of market turmoil that unfolded last year.
It is necessary for Congress to help banks scam the public? Ahem…
Wall Street Journal
* JUNE 2, 2009, 4:15 P.M. ET
UPDATE: Long-Dated Treasurys Up On Bargain Hunting Before Fed
By Min Zeng
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Long-dated Treasurys were up modestly Tuesday afternoon as bargain hunting overshadowed an upbeat U.S. home sales report.
The 10-year and 30-year maturities, which bore the brunt of the selling Monday, were the biggest winners Tuesday afternoon ahead of a bout of bond purchases Wednesday from the Federal Reserve. The buying will target maturities between May 2016 and May 2019, followed by another round of purchases Thursday with maturities between May 2011 and April 2012.
The recent back-up in Treasury yields has lifted mortgage rates, increasing speculation the Fed may boost its bond buying as rising rates may hinder the tentative improvement in the economy. But policymakers haven’t signaled any concern lately on the rise in yields, with some arguing the increases are more reflective of unwinding safe-haven flows as the economic outlook brightened and stress in credit markets thawed.
Also lifting prices for long-dated Treasurys Tuesday was some profit-taking in the steepening yield curve trade. The trade has been one of the most profitable in the Treasury market lately as investors sold long-dated maturities and bought short-dated notes, which widened the yield spreads to historic widths last week.
Tuesday, investors flipped some of their steepening positions by buying back the 10-year note, narrowing the yield spread. The benchmark yield curve, the yield gap between the two-year note and 10-year note, flattened back to 267 basis points from 274 basis points Monday. The curve hit a historic wide of 275.1 bps May 27.
Noting that several flattening trades were put on, Kevin Giddis, head of fixed income sales, trading and research in Memphis, Tenn., at Morgan Keegan Inc, said: “We are currently caught somewhere between the ‘range’ trade and a technical support band, which is keeping the sellers from gaining control.”