Bits Bucket For July 13, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Meridith Whitney had some sobering comments this morning regarding unemployment…She said the “teen” word lasting through 2012…When asked about New York real estate she said that she rents in New York…
Don’t most wealthy people rent or lease?
And she is married to investment guru John Bradshaw. I guess Lenny Dykstra was already spoken for.
Bradshaw the wrestler ??
No. He is Bradshaw the “investment guru”. He used to wrassle but now he is a Wall Street god.
Well, in the past I use to ignore the blow hard Texan but now that I know he is bedding down with Meridith I may listen a little closer to what he has to say…Thanks..
Fair enough, scdave, but I think not ignoring a blow hard Texan is heading down a slippery slope…
Here’s another thing that The American Dream sheep don’t think about. Owning comes at a huge opportunity cost, especially in difficult times. I found out last night that the wife of one of my closest friends is losing her job in August. This is a friend that I begged not to buy in August 2007. He is really a good, decent guy so I hate to see him get hurt.
His wife will begin looking for a job soon. Her job search could be frustrating. They bought where they did to be close to her work. Oops. As she is seeking a new job, most likely at a highly reduced pay rate, she will have her options limited by that stupid house. Oh, wait, is it a “home”? I think when you “own” they call it a “home”. That’s pretty catchy. My buddy already said they wouldn’t be moving for her next job. If she is offered a job that is not close to their “home” she will have 2 choices. She can do the nasty commute or she can turn the job down.
It was another sad conversation. The price of owning just keeps getting higher. The other day somebody came on here and said they had just bought for about $300,000. Some posters took issue with the fact that some of us were not going to cheer this decision. In times of uncertain economic times the price of ownership goes through the roof. For all of you that are dying to own, be careful.
On another note I checked the Craigslist rental options in my hometown yesterday. They are 10 times better than they were 2 or 3 years ago. I was surprised how low the rental prices were. There were nice condos and single family homes listed. Perhaps you have to beware of landlord foreclosure but owning is looking dumber every day.
I feel bad for anyone who bought a place they could afford that they were legitimately living in and expecting to stay indefinately, with no HELOCs or other gimicks.
For such people, owning has historically been a good deal, although that may change. About the only piece of my savings that I am certain of at this point is that I will be able to live in my paid off house. Ownership makes it more difficult to flee, but at this point there aren’t many places to flee to.
The ability to be a migrant worker will pay off well in the next few years, methinks. Low cost mobility is a great asset that will perform well the next few years.
Didn’t our ancestors give up chasing elk herds across the plains to live on farms and in towns? Everything old is new again.
We never should have come down out of the trees. These knees weren’t made for walkin’.
Don’t get uppity peasant! Or I shall have you flogged!
If you don’t like the way I run this fiefdom, you’re welcome to leave… after I flog you!
The ability to be a migrant worker will pay off well in the next few years
I’ve ranted against this before, but I’ll take this opportunity to say it again… a migrant workforce is detrimental to families, especially with children. Seperating husbands from wives, moving children from school to school at the whim of the job market and rental market is not conducive to a stable childhood. Ask military brats how much they enjoyed being moved around… and what the impact of all that moving did to their ability to form lasting relationships.
As evidence, I can tell you that friendships I formed my freshman year in high school last to this day, over twenty years later. Our children now play together, just as we once played together. When my friends and their young families visit at my parent’s home, the same house I lived in twenty years ago, it brings back memories of their teenage years there and all the fun we had back then. Had my parents not sacrificed to own and eventually pay off that house, to put down roots, then these relationships would not have been formed, nor the memories. Our children wouldn’t be playing together today and we all would be emptier for it. This is what community is about, IMHO.
Our corporate masters may love the idea of a migrant workforce, and as a personal survival strategy it may work for single individuals, but as a society this should be actively fought against, as it disrupts families and destroys community.
+1
I agree with the theory, that it’s better to stay put to raise a family and be near family and long term friends. But as you mention, it’s often about survival. Moving does give a strategic advantage to those who are willing to do so, and in hard times it’s all about competitive advantages. For the kids, It’s easier for them to make new friends than it is to live on the streets.
How would you recommend fighting this trend?
How would you recommend fighting this trend?
This really needs its own platform, as the problem needs to be addressed at different levels, from individual actions/behaviors to mass political pressure at the State and Federal level.
As an individual, the typical advice on this blog in regards to living below your means and having savings to absorb life’s challenges still applies… if you have little debt, a savings cushion, and live in an area that is still economically viable, then you don’t need to look for work in another state or across the country. Buying locally produced goods over chain-store/mass market products, keeping as much money as possible within the local community. Basically a focus on the community-minded small business over larger corporate conglomerates and multinationals. Also, get involved in local politics, especially zoning and permitting. The problem begins and ends with jobs and employment. If it is feasable, start your own business. Better to place your fate in your hands then some corporate manager, and if you are successful, you have something to pass down to your children.
At the state level, legislators need to be shown that high taxes are a detriment to business development and high-employment, with few exceptions. Lobbying efforts need to be focused on lowering taxes, including tax incentives for businesses locating in your state or for starting businesses. There is a reason why so many corporations headquarter in TX… low taxes, limited regulation and a favorable legal/tort system. A real emphasis on education: employers want educated workers and will often locate in areas where they have an ample supply: Boston for all it’s high costs is a good example of this. Also, an educated workforce will be a creative workforce… Entrepreneurship is a powerful wealth creator. Clawback provisions for favorable corporate tax benefits. States/communities that extend tax benefits for corporations locating in a state/community should be protected contractually from those same corporations exiting. If I pull my money out of a 401K before I am of retirement age, I lose the benefits of tax deferral and pay a penalty… why should corporate america not play by the same rules? Protectionism in State government contracts… you have to be located in this state to provide the state services. Lastly, support for Unions. They are our last and only defence against capital run amok. It may be distastful at times due to corruption/inequality, etc., but it is necessary. All this requires lobbying and money to fund it, but if the public, the voters, are behind this platform, legislators will not be able to ignore them.
I’m not sure what to say at the Federal level, but that protectionism needs come back into favor. Labor (again Union support) needs to gain more support at the national level to counter corporate interests and Wall Street’s influence on legislators and government policy. Free Trade isn’t free and Globalism only benefits the capital side of the equation. We’ve tried it “their way” and have seen a declining standard-of-living for decades. This isn’t a Democrat or Republican debate, but a Labor vs. Capital debate. As a national platform, we can impact Washington and Wall St. with enough support from the public… every purchase made is a “vote”. There is our power to enact change. Sorry for the long post, but I guess I had a bit to say.
I disagree……
My marriage was fine, as long as I worked on second shift, and she worked on first. The problems started when I changed jobs, and we were in the same house all the time
As far as “detrimental to families”……..yeah, it would be better if everyone worked 8-5, Saturdays until noon, and the town rolls up the sidewalks on Sundays. If you can get a deal like that, more power to ya.
The government and business haven’t spent ten nanoseconds worrying about their decisions that were “detrimental to families”
Northeasterner,
welcome to the new reality. You may not like it. But the purpose in life is not to raise/produce children. The purpose is to make your world a better world. That is how it’s always been meant, however large families were once very important to have when most people were farmers and you needed more farmhands…
It’s nice to have close friends, but you can have friends all over the U.S. and still be close.
Al asked “how would you recommend fighting this trend?”
Would you use government to fight it - for the purpose of keeping families together? Is that going to make a society more competitive and productive than other societies?
In my hometown of Fresno, if you got a techinical degree, you most likely had to leave to Silicon Valley or Southern Cal. You could not get a reasonable salary if you stayed home. Same with health care. So three siblings left Fresno many years ago and are in other states.
The Waltons fantasy worked in the past because life was largely agrarian back then. Only legislative fiat could force such a thing on us for the sake of “togetherness.”
The fundamental unit of society is the family. We ignore that (or actively discourage it) at our peril.
“But the purpose in life is not to raise/produce children. The purpose is to make your world a better world.”
Huh?!
If everyone decided to forgo having children in order to make a better world, they would achieve their goal in about 80 years!
Okay, make that the main purpose in life, to make the world a better place. Less important is to reproduce.
Ah, the life theories of the terminally depressed. It is strange how bad personal experience leads people to want to extrapolate their bleak world view into a social movement.
Mentally depressing and bleak only to those who did not prepare for an economic depression. My father and mother lived during the great depression. My views are realistsic, not depressing.
I’m old enough to have been from a one-income household. But that was common back in the 60s and even early 70s. I simply would not want my spouse to work if we have kids. I cannot afford to live in the places I lived the last eight years on one income if I was married with children. My taste is only in California in that case.
I want all that my father and mother had back in the 60s and 70s. My dad’s daily commute was into the attached office to the house. Our family was close-knit and the strong father figure was there to raise us to be good citizens. It’s not affordable now. I have to become rich first. That is the reality you do not want to recognize.
Bill, at your “older” age, you’re reduced to going down to the pier and looking at 21 year-olds in bikinis, per your own post a couple of days ago. I thought it was funny, to be honest. You’ve also made reference to ” I’ll be the one sleeping with your 18-year old “, or something along those lines, recently. Someone posted “ewwwww” after your post on that subject. I don’t think you’ve got any expertise in what makes or breaks families. You’ll have to be careful or you’ll wind up as one of those 60-year old dudes just lookin’ at the girls 40 years younger and being laughed at by them. Geeze.
Too true, Silverback!
Bill,
With all due respect, raising children and having a close-knit family might not be **your** priority — and nobody else has the right to tell you how to prioritize your life.
Please realize that many people do not necessarily share your perspective. Many would argue that the #1 “social safety net” is the family. It’s a well established fact that married people tend to be happier, wealthier, and live longer than their single counterparts.
It’s a well established fact that married people tend to be happier, wealthier, and live longer than their single counterparts.
Until one spouse betrays the other and divorce.
Best advice for a happy marriage? Choose wisely.
During the largest debt bubble in human history a lot of things were not what they appeared to be.
“In times of uncertain economic times the price of ownership goes through the roof.”
Well put, you’re on a roll this morning.
1997-2007 bubble looks to be a once in a lifetime event.
2000-2050 will not repeat the “stability” of 1950-2000 for homeownazz.
2000-2050 will not repeat the “stability” of 1950-2000 for homeownazz.
Or probably for much of anything else, at least in this country. Even the last 20 years of that stability was maintained at an increasing cost through ballooning debt.
We are in the house where we intend to die. We do have a mortgage but we also have more than enough money on hand to pay for it if we want to. It’s a nice feeling to be settled after a lifetime of moves in a place we love.
It’s a different time now, where people don’t expect to stay with the same company for a long time. So if everyone needs to move all the time, then the frequency of home resales should increase across the board as people trade their homes with each other? If you rent, someone has to own the place your renting.
If you rent, someone has to own the place your renting.
Yes. They’re called speculators.
Or someday soon - the federal government.
Considering that the feds have no idea what anything is worth anymore either, isn’t it fair to say the Federal Government is speculating on housing just as much as yor average joe six-pack flipper?
Our friend still buys houses, and with 20% or so, it works out as a better investment than anything else. But he has a bunch of places, and owns a stake in a property management company. They are lower end properties, but not slums.
“Our friend still buys houses, and with 20% or so, it works out as a better investment than anything else.”
Yep. Lots and LOTS of speculative demand still out there. Lots of cash with nowhere to go. There’s a big flock to be sheared before the next leg down. We’ll see how long this bounce lasts.
Actually they are call INVESTORS who buy at the right price so they can make a profit…..UGH nasty word profit…
Chile:
Negative cash flow is for speculators…..
—————————————————
If you rent, someone has to own the place your renting.
Correct. Someone owns the house you’re renting. We own the house that our renters are renting. We are not speculators. It’s our retirement house. It’ paid for. It’s working for us. They’re literally working for us as well, by paying for our taxes on the place, and improvements that we want to make on it. This set is even painting a good deal of the interior for free, because she doesn’t like white walls. Cool.
“Ownership makes it more difficult to flee,…”
I see the issue as more about constraints on future employment options when the economy is very weak. If you own a home which has declined in value, you are faced with the unattractive choice between trying to secure employment within commuting range, or selling at a loss to pursue employment options farther away. If the housing market where your new employment opportunity is located has also declined in value, this may not be that big of a problem, *provided* that you can pay off your current mortgage out of the proceeds of selling your current abode.
“Ownership makes it more difficult to flee,…”
Or you can afford you house payment, have a job, don’t want to move but you bought at the wrong time and now you are $150-$200K underwater; do you send in the keys now and take the credit hit with the masses or do you keep paying, and paying and paying and when you sell years from now take the credit hit?
“The other day somebody came on here and said they had just bought for about $300,000. Some posters took issue with the fact that some of us were not going to cheer this decision.”
Damn straight. Don’t tell me how great of a deal you got when you’re talking about sums of $$$ like that. I still assert that there isn’t a shack on the planet worth $300k.
If you paid $300k for a house, you got ripped a new one.
Yes, but too many people got comfortable with the higher bubble numbers over the years. I never really did. 160K is considered *affordable* around here but it’s really not, based on average incomes of 43K for all families, owning or renting. And the people making more money have come to expect more house or at least more lot.
We do have some affordable homes. The low end of the market is affordable for well-above-median earning families. Some folks just don’t seem to realize the fundamental problem with this model.
Perusing ebay yesterday, RE section had homes for 70k,60k, and 35k listed. Auctions end today. But then again, some were in that area some of you say is horrible, Lehigh, not near anything, IIRC.
“We do have some affordable homes. The low end of the market is affordable for well-above-median earning families. Some folks just don’t seem to realize the fundamental problem with this model.”
Ah, the Maryland housing model. If you and your spouse BOTH make the median HOUSEHOLD income, you can afford a lower-end place that might be worth buying. Or, maybe you + a room-mate (even when you’re in your 30’s) who each make the median HOUSEHOLD income can afford a lower-end place. Yeah, this is going to end well!
“If you paid $300k for a house, you got ripped a new one.”
I’m with you on this one. I could put down $200K and take out a $300K mortgage but I like having that $200K even at %3 interest as a cushion.
BTW: didn’t he not only agree to $298K with a $150 down. It has 2 acres and a well. Not something easy to unload in the future.
“Live life and enjoy it” = Rent
Zorba the Greek..and mikey
Prices in my old neighborhood outside of Portland, OR (actually across the river in vancouver) are really starting to collapse. The very same model in my neighborhood which peaked at $320K have suddenly begun selling in the $240’s (3 in the last couple of months). That said, the inventory is still relatively low and about half of those listed still think it’s 2005. I think the herd mentality to hunker down and wait it out is still strong even though most people bought in long ago in the $100’s and could still make a decent profit.
“On another note I checked the Craigslist rental options in my hometown yesterday. They are 10 times better than they were 2 or 3 years ago.”
I don’t t think it is really the case yet in Silicon Valley. I still see high rental rates for crappy homes. If you are looking for a decent looking home with 3 BR/2B with a clean yard, they are asking around $2500+. Goes higher when you are farther away from the barrio. Me thinks that don’t even cover mortgage.
BUT Apts are much lower.
Many of us here were ahead of the curve on the bubble. I think that we now may be ahead of the curve on owning. I beginning to think I don’t want to own again. Maybe 5 years from now saying you own will make people shake their heads in disbelief. To say I am particular and fussy about spending a few hundred thou is an understandment. There are so few places I would do that. Unfortunately not Calif. where I would like to return. As far as job mobility depending on the work, telecommuting is an option for many.
My wife and I are just starting this transition: “From what year will it be safe to buy again?” to “Maybe we don’t need to buy, period?”
I’m finding that this is turning out to be a great time to be a freelancer. The last couple of years have been quite an opportune time for my little studio.
Yes, there is this issue called health insurance. If you’re a self-employed American, your health insurance options are limited. The good ones cost an arm and a leg, and even then, you may be covered for a lot less than you think.
And that is reason #1 why Yours Truly was at a healthcare reform rally in Downtown Tucson this past Saturday. The status quo has gotta go.
+1000
The problem is everyone (including the insurance business, big pharma, and the hospitals and doctors) want to keep the current benefits, but offload the costs onto the government, J6P, and business…..but nobody can afford the system.
There are too many economic displacements that are caused by the current system (no/bad/expensive insurance available to the self-employed, dis-incentives to hiring older people due to exposure to claims, people locked into jobs because they or someone in their family has a pre-existing condition).
As much as some are pushing the “free market” programs, if what I’ve seen from my mom’s drug plans is typical, you will see the same thing you see with cell-phone contracts…..All kinds of promises in big print, and about 50 pages of disclaimers/weasel words designed to make it easier to for the insurer to deny payment/service. In other words, the perfect place for the Wall Street and Real Estate criminals to migrate.
Whats going to have to happen is that the adults are going to have to lock themselves in a room, and make some big- boy decisions on what is going to be covered, limits on doctors doing “lawsuit preventative medicince”, modifications to give the doctors, hospitals, etc, some lawsuit protection (while at the same time, giving the state medical boards some more teeth to review doctor performance), and some tough decisions on what a public plan will pay for in end of life care, AND pre-mie infants.
Nobody is currently in the mood to compromise, because too many people are getting a free/subsidized lunch with the system as-is. Everyone cries about “rationing health care”, but the fact is, the system is “rationing health care” right now.
Yeah we’re not down to those kind of numbers here yet. The local REIC is pitching the 160K condo or townhouse as “affordable” yes, we need to pay more taxes to help all the freelancers. Works for me!
an email from a friend of mine. I agree because of the times I have had to avail myself of treatment in foreign countries and it not costing an ‘arm/leg’.
On National Health Insurance
Sun Jul 12, 2009 12:09 pm (PDT)
As the debate about a national health insurance system gets underway,
I though I might express my opinions about the two national systems I
have lived under. Of the 27 years that have passed since I left my
parent’s home, I have spent 17 of them living outside of the US.
Nearly nine years in Japan and eight in Canada. Both Japan and Canada
have national health insurance programs. And both systems share many
common values. For example, you can go to any doctor you like and the
cost you pay at the time of treatment is either nothing or very low.
Of the two plans, I prefer the Japanese one because the coverage was
better. Eyes and teeth were covered in Japan, while they are not in
Canada, with some exceptions, for example. With respect to
convenience, both plans are far better than anything in the US. I’ve
lost count of the number of hours I have wasted on the phone with
UnitedHealthcare or Aetna trying to straighten out their mistakes.
I’ll take a national plan any day! Oh, and no need to ask permission
from some insurance company clerk for a surgery. Surgery is something
your doctor decides if it is necessary.
Do the Japanese and the Canadians have some problems with their health
care systems? Sure. They are human creations and thus suffer from
imperfection. For example at the time I was in Japan, much was made
about how some doctors tended to over prescribe as they also dispensed
your medication and had a financial interest in how much medication
you received. And they would have you come back frequently. (Hmm, I
wonder why?) In Canada today, there can be some long waits for some
elective surgeries. This became an issue because in the 1990’s the
national budget was seriously out of balance and funding for some
areas of health care were reduced along with other spending to bring
the budget into balance. The number of doctors to be trained and
hospital construction and so forth were cut. But once the budget was
balanced through cuts in spending and increased taxes, funding of
health care has increased. There is also a major effort being made to
increase the efficiency of hospitals and coordinate procedures better
to lower cost, and also move more people through the system safely and
efficiently. The goal is to protect the system so that it can serve
all Canadians better.
Having lived under these plans, I really can not understand the
rhetoric that I hear against a national health care plan in the US.
For example one group is currently running a TV ad that wants you to
believe that a government official will be overseeing what care you
receive under a national health insurance system. Ah, how is that
different from an insurance company clerk not giving you “pre-
authorization? ” As it is, the US government does decide a lot about
the care you currently receive as so much is controlled by the DEA and
the FDA. In Canada what is and is not covered is set by an
independent board that follows “best practice,” and “evidence based
medicine.” In other words good care that is peer reviewed and
established to work is available to all.
The US currently spends more per person on health care than any other
country in the world. And yet, our life spans are shorter than those
in Japan and Canada and we still can’t cover everyone in the US.
There is something seriously wrong here. Besides getting coverage to
everyone, we also need to reduce the extensive waste caused by “lawyer
driven care.” It is well known that doctors in the US often order
unnecessary tests and procedures simply to cover themselves in the
event of a law suit, not because they benefit the patient. That needs
to stop.
With a little give and take, and a desire to treat all of our people
equally, (what a novel concept!) the US can have top notch care for
everyone. If only we sit down and work this out rationally and not
rely on name calling, 30 second sound bites and all the rest that
passes for political discussion in the US which delays anything
worthwhile being accomplished.
and a desire to treat all of our people
equally, (what a novel concept!)
I don’t have time to respond to the whole letter. I think it’s good that it tries to have a rational discussion on the subject. However, this line really stuck out at me as being very misleading.
By this statement, as far as I can tell what is meant is “regardless of what one contributes to the system, everyone gets the same out”. I think it’s disingenuous ot try to frame it in the same way as “equal treatment under the law”, ie civil rights, etc.
Access to health care at someone else’s cost is not a fundamental right. In fact, in infringes on the life, liberty, and pursuit of property of the person footing the bill.
The root of any of these discussions is whether it’s moral to take from one person at gunpoint in order to give to another. I’d argue that it’s not.
My sister is renting a very nice loft in Baltimore on the waterfront. Some lofts are owned in the same building. She has all her stuff to make it a “home.”
For now, jobs are great in her field in the Washington/Baltimore area. But why buy when you can rent cheaper and save money to follow the wave of jobs back to the west coast in 2012 or so when the job market recovers?
i been thinking I don’t really want to own either.. at least, not a house in some crowded neighborhood in a smelly city.
While any sort of property management is not especially appealing, i might go for a small.. maybe 8 or 10 room Motel with decent living quarters.. somewhere warm, outside of town.. with a pool.. cactus garden.. nothing fancy.. pulling in just enough income to pay the bills.
And seeing how things are going, I might find one for the same price one would normally pay for a 3-2 house in the city.
“i might go for a small.. maybe 8 or 10 room Motel with decent living quarters.. somewhere warm, outside of town.. with a pool.. cactus garden.. nothing fancy.. pulling in just enough income to pay the bills.”
Shangri-La right there. Write a check for a joint like that and then collect rent, pay a part-time chambermaid, paint a room or two, fix some trim, mow some lawn, sweep the sidewalk. No hurry, just slow and steady.
In the high price areas of California exist the opportunities to make more money, to afford the higher priced places. The prices are high for a reason in Silicon Valley.
Where I live, the prices are high I assume because of the Navy. Constant turn over of people who think that buying (then renting when they get orders to relocate) is the way to go.
There is money to be made in housing, I’m sure.
No, asking prices on craigslist are skewed upward because the FB who are holding out for unrealistic rents keep reposting their ads day after day, as the place never gets taken. Rents are most definitely decreasing in Silly Valley.
“I beginning to think I don’t want to own again.”
That’s exactly where my wife is at. I’m half way to that point too.
We’ve been saying the same thing.
Funny thing is that years ago, I was saying this would mark the bottom of the cycle. Don’t think we’re there yet, but who knows how close we are?
In New Future (coming soon!), jobs will be hard to find and short-lived, and that won’t change. In that glorious new, high-tax, government and bankers own everything future, it will be very hard to buy a place with the expectation of having a decent job for 30-years to pay it off… 10-years will be considered a long time to be employed. Once one factors in the ever-spreading ghettos that will plague the nation thanks to permanently high unemployment, rampant poverty, and abandoned homes (which will keep their 2005 book value forever), finding a neighborhood worth living in for 30 years will be tough.
It sucks since it would be nice to have a place of one’s own, but The Powers That Be are doing everything possible to prevent ownership.
Ohio home prices shooting straight UP !!!
Ohio home prices increases leading the nation…
Cleveland up 19.6%
Columbus up 15.6%
Cincinnati up 12.9%
per Forbes Magazine…
While most homeowners cringe at the still crumbling Case Shiller Home Price Index, the firm that Wall Street trusts to gauge home prices has launched its own metric. And it’s mostly going up.
After three years sliding across the board, home prices gained on a quarter-over-quarter basis in three out of four regions during the three months ended June, according to Clear Capital, a real estate valuation firm out of Truckee, Calif., that caters to institutional clients like banks and the government. “This month’s market report was both surprising and encouraging,” said Kevin Marshall, the firm’s president. “There are still a lot of negative economic indicators out there, and housing market is not out of the woods yet, but it is a very healthy thing to see home prices stabilize for a bit.”
July index, the firm’s first monthly reading, showed that home prices in the Midwest and the South rose 5.3% and 2%, respectively, from the quarter before. Ohio’s three largest cities lead in quarterly gains with Cleveland rising 19.6%, Columbus, 15.6%, and Cincinnati, 12.9%. The Northeast, which is just beginning to get hit with foreclosures, saw very little price appreciation, just 0.1%.
A seasonal uptick, spring is a popular time for home purchases, generous first-time homebuyer tax incentives, as well as ongoing foreclosure moratoriums were all credited with bolstering home prices. Subprime-scourged Las Vegas saw the steepest decline with a 12.4% slide. However, the West showed signs of stabilizing, falling only 0.7%, after losing as much as 10.5% in a single quarter last year.
Clear Capital’s numbers suggest more of an improvement than the June Case-Shiller index, released last week, which showed a slowing in price declines and not an uptick (See “Prices Stabilize, But Housing Trouble Still Looms”). This is because the indicator cooked up by economists Robert K. Shiller and Karl Case in the ’80s and later purchased by ratings agency Standard & Poor’s, has a three-month lag and is based on data furnished by county tax offices.
“If we tried to speed things up significantly, the data is not going to be as complete, and then we are going to be facing big revisions,” said David Blitzer, chairman of the S&P index committee. “I’d like to have to have faster reporting, but it’s a tradeoff.”
Clear Capital.. nice home page.. well written.. but it’s hard to tell if they actually know what they’re talking about, or are just another little RE services company selling “proprietary” appraisal services to brokers..
(Their complete report in PDF from is on this page:
.. clearcapital.com/company/market.cfm
Google — Maps
Clear Capital
12116 Chandelle Way, Truckee, CA
Select Street View
.. gave me a nice chuckle..
From the report, “The Miami MSA found itself in the middle of the lowest performing major markets this month, slightly better than Florida companion, Orlando. Its 36.8 percent decline for the year positions the Miami MSA among the poorest performing markets with both REO condominium and
REO single family sales accounting for more than 40 percent of total sales in their respective classes. On a more positive note, the Miami MSA showed a decrease in the rate of decline
from last quarter—similar to many of the declining markets this month.
While the counties of Miami, Broward and Palm Beach have performed reasonably similar as a whole, Palm Beach has shown the most resistance to the Miami MSA’s declines with a 29.1 percent decline for the year. Despite Palm Beach County outperforming Broward County, the latter claimed the top performing sub-market with Pembroke Pines (ZIP 33028) declining only 10.8 percent for the year—with a modest 1.9 percent gain for the quarter. In contrast to the 43 percent REO saturation rate for the Miami MSA, REO sales only accounted for 22.2 percent of all Pembroke Pines sales over the last 90 days.
The relatively mild price decline for Pembroke Pines represented the strong performance of high-priced, single-family homes as compared to Broward County and the Miami MSA. The median sale price of Pembroke’s predominantly single family homes was nearly $100,000 higher than both the county and MSA’s median sale price.”
Now that’s freakin’ funny. I work on the edge of 33028 and follow housing in the area closely. This area is a mess, that is going to get clobbered.
I keep a database of homes in the area that have fallen off the MLS since January 2009. I only monitor 4-bedroom SFHs priced less than $350,000. Out of the 145 homes that have fallen off the MLS, only 23 have been actual sales. Nearly all the others (85%) have Lis Pendens filed again them. In other words, they’re foreclosures in the making. Eventually, these foreclosures will flood the market. Unfortunately, lenders in South Florida continue to drag their feet on the foreclosures. So, we haven’t seen the flood yet, but it’s coming.
In the mean time, joker firms like this will continue to weed out irrelevant statistical anomalies out of the huge pile of excrement that is South Florida housing data so they can prematurely proclaim the bottom. I wonder if Sean Snaith, David Lereah, and Lawrence Yun are the primary analysts for the firm.
Years ago sat in Joe Robbie Stadium and watched Dan Marino flick TD passes to his wide-outs, but ever since the bubble busts in tech and housing I’ve seen him in his post football life on radio and TV schilling for a bunch of stupid consumer goods companies. Kinda reminds me of the coliseum bands of our younger years now playing a gig at the local county fair. Hey daddy, look - the lead singer has a turkey neck!
Ten years from now for many of us, worrying about rent vs own will be a moot concern, we’ll be more focused on the visiting home health aid trying to help us off the crapper.
lol - sometimes i need a laugh on this blog. few tourists in hawaii, residential construction continues, mostly retirees wanting to build their dream house…
“While most homeowners cringe at the still crumbling Case Shiller Home Price Index, the firm that Wall Street trusts to gauge home prices has launched its own metric. And it’s mostly going up.”
Wall Street makes more money when prices are rising. Hence there is a big moral hazard for them to embrace a methodology which produces an upwardly-biased measure of home price appreciation. I will keep paying attention to the Case-Shiller/S&P index, as their methodology is transparent and designed to eliminate bias.
FWIW - you were slamming on the academic types the other day, but IMO that’s the best source of information we have for things like this. I’d much rather get data from Yale professors than from entities that are paid by either Wall Street or the REIC.
Just be careful of academics who are funded by the REIC (e.g. university real estate research centers).
Yes. UF is a great example - there’s been a lot of crap “research” coming out of the real estate center there.
Let me go a step further than this. There is a tremendous amount of money to be made by deceiving people about asset prices. I take the news that Wall Street “trusts” a firm as a very strong signal that the numbers they produce are highly suspect, and designed to lure sheeple into making poor investment decisions which enable Wall Street firms to profit.
Exactly.
Anything and everything that comes out of Wall St. is a big fat lie.
Never forget it. Our grandparents knew it. The hard way.
Yeah from 50K to 59K who hoo
Cleveland rising 19.6%,
So what does this mean? The median house went from $50 to $100?
here’s the link…
http://www.forbes.com/2009/07/10/clear-capital-housing-index-business-wall-street-home-prices.html
Don’t buy into this bullcrap.
The fact is, most banks are insolvent if their REO is valued at market. So they now let people stay put in the houses as squatters rather than foreclose. Why? Because if they foreclose they have to write the property value down to actual value received, to take the hit, and report the loss. If banks recognized all their actual losses now they would all be bankrupt.
What you may see at this point are speculators jumping in to properties thinking the supply at current “bargain” prices is limited. That they need to “snap them up” before the supply is gone. The supply won’t be gone five months or five years from now. It will be bigger. The phantom “increases” in value being reported are like those winter ice-fishing shacks on the lakes in Minnesota. Anybody foolish enough to pretend it is a sustainable housing trend will soon wind up “underwater”.
“The fact is, most banks are insolvent if their REO is valued at market.”
+1 I’m amazed how few adults realize this fact.
If you’re going to look at things that way, you’d have to say that every business which, if totally liquidated, resulted in a net deficit was “insolvent”.
Such a method would determine that just about every business ever in existence was or is insolvent, and is most likely to pass through periods of insolvency in the normal course of events..
But solvency doesn’t matter much when a business is operating. Such “insolvent” businesses still generate income. Customers buy their products. They still profit the community by generating jobs and tax revenues. Banks lend them money based on future income, and they still attract investors because of that potential income.
As long as daily/monthly/yearly income exceeds out-go, an “insolvent” business can generate profit for everyone involved.. forever.
The difference though is that the true debt levels of most businesses is a known entity - such that when presented, the loaners to that business (bondholders etc) would still be willing to hold the loans and/or equity stake. In this case - if the true value were known, they would freak out and try to sell everything at whatever price they can get.
agreed.. an unknown debt level is very disturbing. But why?
It’s disturbing because investors can’t know for sure if (or for how long) the business can continue to beg, borrow or steal enough to pay it’s bills and thus avoid going bankrupt.
But as long as it looks like they can continue to make timely payments on existing debt, everything is pretty much OK.
Investors, lenders, suppliers, subcontractors etc. are far less concerned about a business’s ultimate, bottom line after liquidation.
But as long as it looks like they can continue to make timely payments on existing debt, everything is pretty much OK.
Say what? You just summed up the problem IMO.
Here is an example of what happens when otherwise sane people agree that asset values don’t matter to banks whose business it is to properly value assets:
Financials Pull Stocks Higher Ahead of Earnings- AP
Investors are hoping that improving profits at banks will signal the economy is beginning to recover. Stocks mostly rose Monday, led by financials, after zigzagging in the early going. The Dow Jones industrials gained about 50 points at midmorning. Banks got a boost after analyst Meredith Whitney said on CNBC that she was upgrading her view on Goldman Sachs Group Inc., which has long been considered the strongest bank amid the economic downturn. She also noted Bank of America Corp., one of the hardest hit by mounting loan losses, could provide value for investors.
Again, this bullcrap being promoted can be summed up this way:
The current administration believes it can repeal the laws of mathematics in order to convince you things are really getting better in the economy.
The fact is, you can deceive a lot of people by painting the tape and having Goldman Sachs buy and sell to itself at sucessively higher prices, creating the illusion of a climbing market.
You can sucker people in to throwing good money after bad. But you can’t do it forever.
Some view risk as a problem.. some see it as an opportunity to make money.
If you can borrow apparently unlimited money for free, who cares how your assets look?
Well banks are supposed to be held to a higher standard than other corporations because we, through the FDIC, are on the hook should they be unable to repay their depositors*.
* and depositors constitute the largest share of creditors to a bank.
* and depositors constitute the largest share of creditors to a bank.
…this actually helps make my point.
Suppose all the depositors of any bank decide to simply take their money? That bank would immediately fail. It can’t cover all deposits. Does anything of substance prevent the run on the bank? Nothing I know of..
Therefore, can banks always be considered “insolvent”? By the above logic regarding REOs and net worth, i think they can..
Insolvency is NOT generally considerd the same as being llliquid. Just like George Bailey said: “The money’s in Bills house, and John’s house” Depositing money in a bank is like the “Soldier’s dilemma”: The best chance to survive a battle is if your side wins. But if your side loses, the best chance is to be the first one to run away. It is best to have your money in a bank earning interest. But if there is a run on the bank, the first people in line have a chance to get their money out. No bank can survive a run on the bank, because of the duration mismatch between its liabilities (deposits) and its assets (loans). But it IS usually the case that a bank does have total assets worth more than its total liabilities.
This is the reason for the Bagehot principle of central banking: “Lend money freely at high rate on good collateral” The central bank must be willing to lend money freely so that there is no NEED for depositors to be first in line to get their money out. It must charge high interest to prevent banks from borrowing EXCEPT in an emergency. And it must insist on good collateral to limit losses to the central bank(and therefore taxpayers).
But of course at present, we’re lending out money freely, at LOW interest, on CRAP collateral. Witness the TALF and the rest of the alphabet soup that the Federal Reserve and the Treasury Department are engaged in.
This is sorta interesting..
Wikipedia.. “insolvency”
There are two types..
Cash flow insolvency — Unable to pay debts as they fall due.
Balance sheet insolvency — Having negative net assets – in other words, liabilities exceed assets.
A business may be ‘cash flow insolvent’ but ‘balance sheet solvent’ if it holds illiquid assets, particularly against short term debt that it cannot immediately realise if called upon to do so. Conversely, a business can have negative net assets showing on its balance sheet but still be cash flow solvent if ongoing revenue is able to meet debt obligations, and thus avoid default – for instance, if it holds long term debt. Many large companies operate permanently in this state.
You expect most adults to understand not just accounting, but bank accounting?
You have a much higher estimation of the education level of “most adults” than I do.
lol Like the ones who can’t understand how their account’s out of money when there’s still checks in their checkbook.
are still checks…..Never make a grammatical error in a sentence mocking the stupidity of others.
Never make a grammatical error in a sentence mocking the stupidity of others.
And likewise - don’t point it out either because most of us are reading this blog waaaaay to fast to notice!
Or at least I am!
Never make a grammatical error in a sentence mocking the stupidity of others
I agree you open yourself up to attack, but sloppiness is different from stupidity
You can fix sloppiness…
dogone rite drumming..i kan fix dee earorz
So, alpha, you are suggesting I have money left in my checking acct? goodygoodygoody,( rubbing hands together in glee)
I will wait for your answer. tic toc tic toc…
What? You’re timing me? I don’t perform well under pressure! But, the quick answer to your question is, if I understand contract law at all, yes, if you still have checks, you obviously still have money. Like attracts like.
While we’re on the subject, I have this friend, a wealthy African prince, and all his money’s tied up in…….
The phantom “increases” in value being reported are like those winter ice-fishing shacks on the lakes in Minnesota. Anybody foolish enough to pretend it is a sustainable housing trend will soon wind up “underwater”.
LOL at this image.
I could see a bunch of sign-twirlers “HURRY BEFORE SPRING THAW!!!!”.
I agree with cobalt. You always see upticks/blips in downturns. Those buyers have bloody hands but don’t know it yet.
The only people who should buy houses now are those who have the cash.
I’m enjoying my second job as a buyers’ agent, but I only have two clients now: both cash buyers and we’re lowballing everything.
What state? Are you meeting REO bank employees?
Arn’t you in Sac ??
Yes. I wish I could tell you about some of my adventures, but it would be as inappropriate as telling you about my patients.
Thank you for respecting doctor-patient confidentiality, REhobbyist. Wish more doctors were like you.
“I’m enjoying my second job as a buyers’ agent, but I only have two clients now: both cash buyers and we’re lowballing everything.”
I’ve said it before on these boards: the #1 quality I am looking for in an agent is the willingness to lowball with enthusiasm and conviction.
Last time I made an offer, our agent didn’t want to spend the time writing it up because she deemed it too low. Because it wasn’t written up, I doubt the seller’s agent felt bound by NAR ethical guidelines to actually present the offer to his client. One of these days I might make the same offer directly to the seller and leave the agents out of it.
If you’re sure of what you’re doing, use the seller’s agent as a duel agent. Best way ever to get a low ball offer through. And get the sellers to accept it.
If the house has been sitting for a while, the agent’s looking for the commission. The agent doesn’t care how much the sellers are making, she/he just wants to get the deal done at any price.
The agent who the sellers trusted to do their bidding is now working for you.
Hi Kim, in three cases I researched public records and wrote letters to directly to the owners.
2 of the 3 sold for way more than I thought they’re worth, the third is in foreclosure… Can’t seem to find a middle ground. This was back when we were still considering Florida, now that we’re eyeballing my hometown, I’m sure I’ll be blackballed quick.
I really don’t care.
Let ‘em blackball you, redball you, whatever kind of ball they want - who cares. You’re the only one bringing something to the ball game. You have the money!
“If you’re sure of what you’re doing, use the seller’s agent as a duel agent. Best way ever to get a low ball offer through. And get the sellers to accept it.”
Good idea, RE Refugee. Maybe I’ll find out when their listing contract expires and resubmit my offer one week prior.
Better yet, take three months to get your real estate license and represent yourself. I’m finding that listing agents in nice neighborhoods can’t yet see that prices are inevitably falling. Makes it hard.
use the seller’s agent as a duel agent.
Dueling agents.
That I want to see.
Dueling agents, sounds like a win win to me!
Here’s how to get more clients. Instead of 3% of the selling price, offer to take 5% of the difference between the 2005 selling price and however low you can get it!
I’m surprised some idiot Minnesotan hasn’t proposed an ice fishing development yet, right on the frozen water. They’re running out of land, doncha know.
ISTR that several years ago in the UK there was a problem that people were were comming to the end of their 99 year leaseholds on their apartments. Something like the thaw coming to those icefishing huts. Now leaseholds were bought and sold like condos. So they changed the law such that the leasee didn’t have the automatic right to take posession at the end of the lease, and instead legally HAD to extend the lease at the request of the leaseholder.
U.S. Commercial Construction to Drop 16% This Year, Report Says.
July 13 (Bloomberg) — Construction spending on offices, retail centers and hotels is likely to fall 16 percent this year and 12 percent in 2010, more than previously forecast, the American Institute of Architects said.
Rising unemployment and reductions in business spending prompted the Washington-based institute to cut its outlook from January, when it predicted non-residential construction spending would drop 11 percent this year and 5 percent in 2010.
“We’ve had a really rocky six months in the economy and in the construction sector,” Kermit Baker, the institute’s chief economist, said in a telephone interview. “People are seeing a real tough environment out there and not a lot of incentive to invest in projects.”
Sentiment among U.S. consumers dropped this month as the country’s unemployment rate approached 10 percent, according to a Reuters/University of Michigan preliminary index. The economy probably shrank at a 1.8 percent rate from April to June, according to a Bloomberg News survey. Nonresidential construction tends to lag behind the economy, Baker said.
Spending on office buildings is forecast to sag 22 percent this year and 17 percent in 2010, while retail construction probably will sink 28 percent this year and 13 percent in 2010, the architects group said.
Looking for Signs
“Why do you build new office buildings? You need to see job numbers pick up,” Baker said. “Why do you build new retail centers? You need to see consumer spending pick up.”
Hotel construction is likely to decline 26 percent this year and 17 percent in 2010, the institute said. Industrial spending is forecast to dip 0.8 percent this year and 28 percent in 2010, according to the report.
Commercial Real Estate will finally tumble as the Alt-A and Option-ARM defaults get underway; glad I chose a Term Life policy.
Commercial Real Estate will finally tumble as the Alt-A and Option-ARM defaults ??
It has already tumbled and unlike the residential SFR’s which are commonly purchased with a fair degree of emotion commercial buyers (unless its owner occupied) are pure objective buyers and in this type of market they are predatory buyers…The combination of high leverage, softening retail sales and loans rolling over are a body blow to commercial real estate…
Agree completely, scdave. I really meant the REO values to tumble. At some point the inevitable markdowns will have to happen causing great pain for bankers, insurance investors and tax collectors. It’ll be breathtaking.
Does anyone know if there exists a general commercial RE price index - e.g. similar to Case/Shiller except for commercial?
exists a general commercial RE price index ??
Don’t think so but the “Urban Land Institute” and “Marcus & Millichap” both do very good research…
Hey Losty…
Sorry I missed you in Moab, but I left some recycled memories in the bin for the wandering river rats to cash in…
Journal entry July 10th 2009:
“Thus it was my great misfortune to go with that scrabble faced “Squatter Captain Bastard” to “Bitch Creek” over in “Dead Horse”, he just sitting there on the banks of the Colorado watching the morning sun illuminate & transform the dark brown cliffs into a blazing orange-red wall of light, his mocking laughter echoing off the towering canyons to the unsuspected campers at Goose Island…then the shasta really hit the fan…”
Thanks for the relay telegram Ben…
Hwy50
What are you seeing on the rails, Hwy?
Word is traffic is down ~19% YOY. Seeing any dead lines?
Over the Fourth we saw that BNSF parked a looooong string of fairly new bulkhead flats (cars for carrying lumber) to the northwest of Madison, WI. For all intents and purposes, that’s in the middle of railroad nowhere nowadays.
Hey EdgeyH20,
Well as you know, Mr. Cole & I are train wacko’s…
saw lots of UP & BSNF …especially, in our leaders main street of Flagstaff, AZ (Mr. Ben it’s been confirmed by Mr. Cole, that there’s a train apprx. every 17 & 1/2 minutes going thisaway or thataway) Not a lot of 110 car links much throughout the trip, a lot of UP engines parked in south Denver, (Mr. Cole counted 63) not sure of that is the norm…
PS, you would all be proud of the financial “work” $$$$ that the train wacko elderly folks are doing to get America’s economy back on “track”
The “G” scale convention was great! Geez, Mr. Cole & I are new to this scale modeling, but I gotta tell ya, the folks are very very kindly like, Mr. Cole got to run his Amtrak engine on several peoples backyard layouts…I will soon be making withdraws to his “inheritance” to keep up with this activity… 
(Hwy thinks he is has somehow got himself & Mr. Cole involved in a “cult”) Well, it can’t be all that bad…it does require a lot of gardening! 
Uh-uh. Train wackos. Got that in my DNA too. Mother’s father was a railroad detective. Father’s father was a serious railfan.
Sort of me too, slim, g-ma was a wanderlust and went to the end of the ATSF in Albuquerque as a Harvey House girl, just like the film with Judy Garland…
Anyway, then she pursued her medical career and then more wanderlust on the rails.
As a first-time traveller to flagstaff 15 years ago (stopover before the grand canyon), I was shocked to see how cheap some of the motels were on old 66 on the east side of town. I plunked down my 29 bucks for a room at the best western after dinner and was giddy as heck.
Then I heard the train go by. And another. And another.
No sleep that night. I was no longer giddy as heck.
Next time I came to Flag I made sure to get a hotel as far away as possible from that line.
LOL @ Steve W - we do exactly the same thing when we go through Flagstaff. Sadly, we don’t seem to be doing nearly as much Southwest travel as I’d like, but there you go.
Personally, the trains themselves, rumbling in and out of Flag don’t bother me - its the d@nm road crossings chiming away and the triple shot of the engine whistle that keep me up.
I can hear the Amway commuter train from where I am in Van Nuys, and they always do the ‘triple blast’ thing too - any of you train geeks out there know why?
From your description you’re probably hearing the standard warning for approaching a grade crossing, which is two long, one short, one long blast.
If done with finesse, it might sound like three instead of four blasts.
Hardcore nuts can even tell you who makes the airhorn.
Thanks for the info ewjohn - as I’m typing I’m hearing exactly what you describe.
I wonder if there’s any time of day when they wouldn’t do it….
For those not in the know, a railfan/model railroader will eat dog food and walk to work before they cut their budget for train stuff.
Golfers might stop golfing, and boaters might stop boating, but it doesn’t surprise me in the least that train buffs keep on spending.
63 units in storage in Denver? Saw a similar number in Forth Worth on the BNSF last Christmas. Enough to suggest business is slow, but with today’s high HP units, the railroads need fewer units to begin with.
UP? New fangled whippersnappers. The rail line I live next to dates to ‘35.
80 to 120 trains/day. 60-80 cars typical. Flagstaff is top of the line. I also live in Flagstaff, not far from fearless leader’s secret headquarters
What? You were here and I didn’t know it? I knew you were gonna be in the area, but not when…
Dang, now what am I gonna do with this case of Squatter’s Beer?
And I had reservations at Ray’s and had made arrangements with my train buddy for you guys to ride the tailings train from Moab to Crescent.
Sounds like you had fun anyways.
“…Dang, now what am I gonna do with this case of Squatter’s Beer?”
Hey Losty, get that Squatter’s nice & cold…then drink it all gone…but get some more…’cause Mr. Cole wants to go floating down the Colorado from Dewey’s bridge to Goose Island…so looks like we’ll be back in October!
OK, may be in Montana freezing by then, but let me know when you’re around. If I’m here, hows about let’s hop a freight in Green River and ride over Soldiers Summit?
On that note, did you see my train vid posted elsewhere - king of the road?
A glimpse into our future?
Seems to me we’re heading down that path.
However is it really feasible - on a world-wide-scale, for this to happen to the two largest economies in the world, without some other world-changing event(s) happening?
A football analogy - it’s generally no issue for the team as a whole if the second-string QB goes down with an injury, and usually it’s not a huge problem even if the first string QB goes down, since the second-string can step in. What happens though if *both* are out? Not so good.
I am working a foreclosure tour along the Mogollon Rim today headed back home. But I’ll be in internet no-mans land for most of the day. I’ve got some help moderating, but please be patient.
Yesterday I had a bit of a revelation. I was at a house in Navajo county, up here in the NE part of the state. To make a long story short, the housing bubble is very evident. Driving back to Show Low, I was sort of in awe at the reach this mania had, if it could creep into back county roads in places where almost no one will ever go or know exists.
Anyhoo, Ms Penelope sent this to me and I thought it was fun to reflect on a bit in light of what I’ve seen this weekend:
By Annette Haddad, Times Staff Writer
July 16, 2005
When Ben Jones daydream, he has visions of Alan Greenspan
He fantasizes that on nights the Federal Reserve chairman gets restless, he wanders into his den to boot up his computer. But instead of monitoring overnight currency trading, Greenspan links to Jones’ interactive Web log, or “blog,” to check the pulse of the nation’s real estate naysayers — those who see the housing market enveloped in a persistent bubble. “Maybe he secretly logs on to see what people are thinking,” said Jones.
Rich Toscano is among the bubble bloggers. A computer programmer by training, he says he is obsessed with financial markets. He’s also a renter in San Diego, which had been one of the nation’s hottest housing markets until its home-price growth started easing this spring.
So it seemed natural for him to put his personal zeal to work on trying to figure out what is going on in his hometown, which he considers to be in a bubble.
“When I started, the idea that there was a housing bubble in San Diego was considered to be quite radical and was roundly mocked in the mainstream media,” said Toscano. “At this point, the idea of a bubble is accepted quite widely, and lately it’s reached a fever pitch.”
A self-described “economic activist,” Jones, sees his mission as chronicling a seminal financial event, something future scholars can turn to just as historians today would read an anthology of letters written by Dutch tulip traders in the 1630s.
“In 100 years, economists may be studying the comments of this blog because this was a real-time skeptics’ log in the middle of a financial mania,” said Jones.
Jones’ fervor stems largely from his status as a casualty of the dot-com meltdown, when he was the controller at an Austin, Texas, Internet firm. He resigned in 1999 before the company went bankrupt, after he spent a stressful final year trying to convince his entrepreneur bosses that “companies really do need to make money.”
The housing market today “is just like the tech bubble,” said Jones, who holds economics and business degrees. “That’s why it’s a mania — because people have forgotten the fundamentals.”
“This is my premise: Prices are out of whack and probably will fall. How big the correction will be is the question,” said Jones, who rents “because it’s cheaper than buying now.”
His blogging has struck a chord with many like-minded housing bears.
A recent posting by Jones questioning whether there were fewer buyers these days for Countrywide Financial Corp.’s mortgage-backed securities drew 40 comments in seven hours. Another, posing the question, “What will be the big housing story in 2008?,” attracted 125 responses, including one from a Philadelphia commentator using the online moniker “Dreaming of a home in ‘07.”
Jones spends about 25 hours a week reviewing hundreds of articles, news releases, analysts’ reports and industry publications before deciding which to link to. Usually his selections are cited without commentary.
Sometimes he will offer sharp remarks, such as: “There is a lot of baloney being thrown around concerning condo conversions. Proponents would have you believe this is a benefit to aspiring homeowners.” He then excerpted a news report about the trend to turn apartments into for-sale condominiums.
Indeed, housing bulls rarely join in on the blog’s bubble discussion. But a recent post questioning whether the premise of Jones’ blog was misleading prompted a polite debate, with references to Fed interest rate policy, hyperinflation, Mexico’s peso crisis and the Austrian School of economic theory.
Jacqueline Doyle of El Segundo doesn’t mind discerning the sense from the drivel when she clicks on to Jones’ blog several times a week. For the most part, she finds the commentary and other postings great sources for educating herself about the housing market at a time she and her husband are looking to buy.
“It’s crucial to read the logic behind each side’s interpretation,” she said. “Bottom line, there are no unbiased comments with respect to the housing market.”
That’s the point of his website, says Jones. “There’s a place for all in the discussion,” Jones said. “People feel they can discuss things on the blog in a rational manner. That’s what the topic deserves.”
Whether the housing bears like Jones will be proved right is open for debate. Until then, he will be waiting it out online — and waiting for Greenspan to tune in.
“I’m looking forward to the day when this bubble isn’t an issue anymore,” Jones said. “Hopefully, not too many people will get hurt in the process.”
Sir Greenissspent’s “Box Index”… is replaced by… The “Jones HBB Illuminati”
…Whether the housing bears like Jones will be proved right is open for debate…
proved right? Proved right about what? If housing ‘bears’ haven’t already been proved right, pray tell what more needs to happen?
Note that article was written in 2005.
In 2009 yes - there’s no question who was proven right.
doh!
my bad.. got caught skimming..
As Ben has said for a long time, it’s also about DECENT JOBS and WAGES.
Meanwhile, here in Wisconsin, the job losses just keep coming and at this rate, even the cows will be ready to march down into town and file for umemployment by Fall pumpkin season.
Sheboygan’s J.L. French files for bankruptcy protection
By Rick Barrett of the Journal Sentinel
Posted: July 13, 2009 9:32 a.m.
J.L. French Automotive Castings, a Sheboygan company that makes transmission casings for Ford Motor Co. and General Motors, filed for Chapter 11 bankruptcy protection Monday, listing debt of as much as $500 million.
The largest creditor without collateral backing its claims is Morgan Stanley Capital Services Inc., with a $15 million claim, according to court papers.
This is the second time in three years that J.L. French has sought bankruptcy protection. The company, founded in 1968, filed for protection in February 2006 after defaulting on about $30 million in bonds.
In a news release, J.L. French said it plans reduce its secured debt, from approximately $280 million to $65 million, through a debt-for-equity swap with lenders.
http://tinyurl.com/mn6k55
Not looking good here in fly-over country. Don’t come home from LA or NYC as your brother and his family just commadeered Mom’s basement !!
One of the things I really like about the HBB is that all the threads are archived. I save a bunch of the info, and go back occasionally to find reference information - e.g. important discussions, links to articles, and just discussions on the occurrences of the time. It’s great since many blogs and discussion boards don’t archive their threads.
Thanks Ben! (FWIW - if you ever plan to remove and/or move any threads - please let us know!)
Are all threads archived, or only those with story links in them?
I thought the term “bits bucket” implied that these were flushed every so often.
I think they’re all still there - try changiong the “p=nnnn” number in the link, and going back as far as you wish. The “bits bucket” concept wasn’t started right off the bat, so early ones don’t include those. They are in order by date though, which is really nice.
Whether the housing bears like Jones will be proved right is open for debate. Until then, he will be waiting it out online — and waiting for Greenspan to tune in.
I guess we know who’s been proven right!
Sheesh…I hope that nobody important in the RE MSM ever notices my dumb posts.
They might try to take away my free “Ben’s Jones Buy at the Bloody Bottom Discount Coupon” and make me rent Forever!!
40 comments in 7 hours? What, was everybody on vacation that day? IIRC generally the traffic was a lot higher than that back then.
I looked up the article — the title was omitted.
Bloggers Talk About the ‘Bubble’
Recall that the article was in 2005. And note that the quotation marks around “bubble” are original.
So B.Dogg….. Is the fallout as bad as you envisioned so far?
Be honest.
For me, I’d say that housing itself* hasn’t fallen as fast as I would have anticipated, but I’m surprised at how quickly it’s taken out the rest of the economy nontheless.
*at least middle and upper end stuff around DC.
No Kidding, even for a P/T DJ, i had 2 HS reunions cancel already and maybe 2 more, plus all the older peoples stuff i do from swing to disco, is down 50% from last year…this was the stuff i count on every year. I already know 2 of my last year holiday parties are not going to happen One has 50% less employees and the other is closing down next month…..
————————————————————-
but I’m surprised at how quickly it’s taken out the rest of the economy nontheless.
Traveling notes:
They should rename Mesquite, NV…Desolation City, NV
Free golf if it’s over 100…yesterday was 104…lots of elderly housing, condohotels with outdoor patio’s, golfing…but no one to be found outside at 8am & 100 degrees, except maintenance workers in john deere golf carts.
Beautiful new road to the Mesquite regional park…however just short of a half mile from it… they have the road closed…the new road continues…to an uncompleted grading on the bluff
Hey Hwy, got my fav part of the desert all to myself, now that it’s over 90 (supposed to be 100 today). And it rained a bit this morn and cooled everything down long enough for a hike, all to myself.
Signs along the way:
1. Available
2. For rent
3. For Lease
4. Reduced
And as we left Mesquite via Pioneer Blvd…Mr. Cole was prescient to note: “Hey Dad, there ’s a sign missing lately…”Coming Soon!”
Sing it as you travel Hyw
McMansions for sale or rent
Condo to let…fifty cents.
No phone, no pool, no pets
I ain’t got no cigarettes
Ah, but..two hours of pushin’ broom
Buys an eight by twelve four-bit room
I’m a man of means by no means
King of the road
Can’t resist:
http://www.youtube.com/watch?v=yVoxjyBD3JI
I’ve recently seen a “Coming Soon” sign and it made me do a double take. I was surprised they had enough lawn signs lying around to spare one before it was actually on the market.
What should the Swiss do?
Last year, Washington tried to impose a $780 million fine on the Swiss for their refusal to enforce U.S. tax laws within their own country.
Next week, the Regime intends to press its claims in court – that is, in its own courts – in the hope of forcing the Swiss to turn over confidential information on some 52,000 Americans who have private accounts protected by Swiss law.
< How would YOU handle this question? The USA is demanding that Swiss bankers break the laws of their own nation and divulge private information on accounts held in Switzerland by U.S. citizens. Should those banks violate their own laws in deference to the demands of the United States?
My question would be… Why should they? What would compell the swiss to break their own laws to satisfy a foreign country?
The swiss have made a reputation for themselves by never getting directly involved in conflicts, and lending money to both sides of the conflict. Why should that change now?
I would tell the US to go pound sand….
Then we should tell UBS to get out of the US. I read that they’ve already admitted to helping their clients hide US taxes, now they should be punished. It’s not fair to those of us that pay taxes to let them profit from this.
Just think how many evils emanate from that “neutral” nation.
I know. I wanted Roddick to win.
Unless UBS has the tax returns of all it clients, its pretty difficult to determine whether or not they claimed the income.
Please note, there are two laws being broken. Not reporting the income and not reporting the fact you have an off shore account(its legal to have one, but illegal not to notify the IRS of this fact).
UBS out of US! Now, there’s a good slogan for a bumper sticker. Or a protest sign.
Didn’t we filter $5 bn in US taxpayer dollars to UBS thru AIG?
Of course, UBS paid a $700+ mil fine to the United States Government for committing fraud. But, looks like that was more than covered by the $5 bn handout.
This is according to William K. Black, the regulator, in his interview with Bill Moyers.
Black is really hammering on the current administration, the Treasury, and the Fed for all the lies and cover ups.
He thinks we should have just let the failed financial institutions go into receivership similar to the handling of the S&L debacle. In fact, according to him, Paulson and Geithner were required by law to opt for receivership.
Trying to stop foreign tax evasion is like trying to compress the air in one of those long clown balloons use for making doggies and such. You can squeeze in one area but it’ll just move the air somewhere else.
Plus tax evasion in Switzerland these days pales in comparison to the Bahamas and Caymans already.
“They’re digging in the wrong place!”
- Sallah (from Raiders of the Lost Ark)
Agreed, I’d be much more for this new coercive policy was being applied to ALL offshore havens.
Also, why aren’t the names published? I’ll bet my bottom dollar that congresscritters and their spouses/relatives litter those lists.
We’re one of the few countries that tax our own citizens on income earned in other countries. I wish we’d keep our hands out of other countries bizness w/r/t banking and taxes.
For the past two years I paid taxes in both the US and Australia for income earned while living in Australia. I paid the US at a full rate and the Aussies at the full rate.
If it weren’t for my employer paying the Australian taxes for me (and giving me a bump to account for the increased American taxes due to that “income”) it would have been finacially disasterous for me to work overseas.
And I would have been out of work, populating the welfare rolls.
Not entirely true. You can claim credit for whatever tax you paid in Australia, against your US taxes. So the net loss to you is only from the difference in tax rates.
The first $86,700 of money earned outside the US is tax free, so Bad Chile must have been making bank over there in Australia.
“The first $86,700 of money earned outside the US is tax free”
Earned income, not investment income. Interest earned in foreign countries (or earned in foreign mutual funds) is taxed, but offset by the foreign tax credit as yensoy states.
Tax Evasion ?? Look no further than right here at home…Thats why I believe we will end up with a VAT model of taxing…Much more difficult to evade that tax…
VAT is just as easy to evade, just differently.
Bring on the VAT!
Sadly, a VAT cannot be reconciled with the debt pushing, hyper-consuming economy that our pols think is the ultimate state of human existence.
If i were King, i might tell them that that if they didn’t stop using Swiss accounts as a weapon in their childish political battles, I’d freeze all funds and then close all accounts owned by Americans. Take your check and find somewhere else to hide your stash..
What would you choose at age 55? Government pension of $50K per year with 80% of health insurance premium paid or a lump sum of $650K without health insurance (both spouses have employer-paid health insurance and both are healthy)? I’m leaning toward the latter.
Cue combotechie…….cash is king???
Is the annual pension indexed to inflation? Is the lump sum taxable?
55 is young… I lean towards the annual pension, but I don’t know all the facts.
I agree. If they’re healthy 55 year-olds they could collect that pension for a long time, coupled with the health care it would provide peace-of-mind that is hard to quantify.
It would be hard to invest the lump sum, particularly if its taxed, and get anywhere near the same return in today’s 2% CD world.
Employer-provided health coverage is only as secure as the job, and few jobs are secure anymore.
Inflation of course is the risk ( if its not indexed). This can be hedged by investing in assets etc that do well in inflationary environments. The coming deflationary decade should be a good time to start such investing.
This country needs to get away from the “get your health insurance through your employer” thing. Obama keeps talking about it like it’s some sort of fine American tradition.
Sheesh. It’s a fluke of history. Started during WW2 when wages and prices were frozen.
Sheesh. It’s a fluke of history. Started during WW2 when wages and prices were frozen.
Isn’t it also encouraged by tax law? ISTR reading somewhere that employers can deduct this “expense”? So it’s a cheaper form of compensation that employers can offer because they can deduct the cost?
Yeah. It’s a trap. If you develop a chronic(expensive) disease you better hope you never get canned and you’re unlikely to ever leave voluntarily to start your own biz or try a new trade. Kind of like a thirty-year mortgage.
If you develop a chronic(expensive) disease you better hope you never get canned
It’s my understanding that you don’t have to worry about ‘prexisting conditions’ if you’ve not had a lapse in coverage over 63 days. Is that not the case?
I honestly don’t know the specifics ( are you allowed to say that ?) but what if you were laid off/fired and couldn’t find a job for a year or two? I think you can keep your prior coverage for a while but I don’t think after that while is up you are guaranteed comparable coverage with comparable rates.
I don’t think after that while is up you are guaranteed comparable coverage with comparable rates
I suppose that’s the differentiator. I suppose it could be that preexisting conditions will be covered, but perhaps there’s no limit on what your premiums may be as a result?
I suppose I’m lucky I’m at an age where this isn’t a factor yet, but it’d be useful to know how it really works. I have some “preexisting conditions” I still need to get resolved, namely some foot and thumb surgery. Wheee!
COBRA can be used for most people for the first 18 months after termination. After that, HIPAA takes over . Everyone should take the time to learn all about HIPAA. Someday it may be worth your life.
http://www.dol.gov/dol/topic/health-plans/portability.htm
Thanks. A lot of info to digest. One thing jumped out at me- if you your company goes BK or quits having a health plan, that’s the end of your cobra. Also, they’re very vague on the voluntary termination qualifications. I just skimmed it though.
if you your company goes BK or quits having a health plan, that’s the end of your cobra.
My previous company closed its doors, but I’m still eligable for COBRA. ADP Totalsource is now the point of contact. I’m not sure how it happens if a company is not using them to manage benefits, though.
Q24 in the FAQs says if there is no longer a health plan there’s no more cobra. Elsewhere they talk about differences b/w chapter 7 and 11 BKs. Sounds like some corps keep the plans going and some don’t or can’t. That makes all the diff. Like I said, a quick skim. I’m too tired to read it closely. (govermentese)
Federal government, or state and local? Because getting “warrants” for future payment would get tiresome after awhile. Unlike states, the federal government has to pass a law to change entitlement* payments, even if they ARE broke.
*That’s what make them entitlements: the funds don’t require an appropriation bill.
Since you’re still working take the 50K/year and invest it conservatively. At 65, you’ll still be getting the 50K & health insurance + you’ll have at least $500K extra.
I see no way to hide the $650K from lots of risk nowadays. Stick it in the bank and watch the FDIC take over and give you $100K back…
Outrage at public employee pensions at young ages is growing. As public services collapse, younger generations will no longer be willing to pay taxes for benefits they will never see.
“Screw the newbie” contracts, with lower wages and benefits for future public employees to fund the sweet deal of those who came before, will just add another group of outraged losers.
Did your union ever convince your state legislature to sweeten the pension retroactively after you were hired, based on a set of assumptions that there would be no cost? If so, I recommend taking the cash, and preparing to flee the country if things get nasty enough.
The younger generations who have been brainwashed into believing that unions are bad and who don’t have the guts to join/form them, are not going to win against the generations that had the intelligence and guts to join/form them. Sorry, but the strong prevail over the weak.
I think the reality is us ‘younger’ folk see how corrupt union leadership is. Sure, in the past they’ve done good things, and even know they provide some use. But they also are very corrupt, union leadership acts to enrich itself, and oftentimes would rather kill the company than yield on its demands.
Also, being *forced* to join a union must sour many people against them. If you’re a good performer, chances are a union won’t provide too much benefit. Sure, collective bargaining can be an important tool, but if you really provide value to the company, you can do most of the bargaining on your own.
Unions also help keep “dead wood” around. Someone who strives to be a good performer isn’t likely to be too happy about that function of a union (see teachers unions, etc).
…and even
know*now* they provide some use…Strong performers have never needed unions. But strong performers are maybe the top 15% - 20%. It’s that bottom 80% that unions are meant for. And sure unions are corrupt. But far less so than corporate management. They skim a little off the top but make up a lot for membership.
So what’s the younger guys gonna do? They’re going to accept their 2-tier lower positions on the pay scale. They’re going to work at Mickie D’s and WalMart. They’re going to complain while the decent jobs are getting shipped out to China. But what are they going to do about it? Picket? Form a political party that cares & actually vote? March on Washington? Ain’t never gonna happen.
I have never been in a union in my life. I’ve been in management since I was 25. There is no way I would put up with what kids put up with today. I have had to deal with unions and for the most part the guys get a decent living for a decent days work.
I work for local government in Florida. Our union guys (police, fire, heavy construction) will be getting small pay raises and will be keeping most of their jobs. Everyone else will be getting pay cuts, furloughs, or laid off.
And let me take one thing back. On any given day, the fire guys do not do a decent days work.
I work for local government in Florida. Our union guys (police, fire, heavy construction) will be getting small pay raises and will be keeping most of their jobs.
The only reason that works is because they’re working for government. If they worked for a private employer that was actually constrained by a budget/income, the company would be bankrupt and the contract will be renegotiated, or the company will close its doors.
Yes, as I said, collective bargaining can bring some benefit. But as you say, it brings benefit to the lower 80% (or whatever % you want to throw out there). Generally speaking, the higher performers are held back by a union, as the “Standard compensation” structure they have set up stops them from getting paid commensurately based on performance. And takes away the ability to negotiate on an individual level.
I do think it’d be nice to see some collective bargaining from IT folks and what not. But I think a “union” as they exist today at the autoworkers, airlines, and public sector, is not the way to go. Instead, they should simply be there to protect against egregious violations (such as not getting paid OT), but should not be about defining every aspect of how a company can operate with respect to its treatment of employees.
And sure unions are corrupt. But far less so than corporate management.
I’ll certainly concede that management can be “corrupt”, but I disagree they’re corrupt in the same ways (unless you’re simply talking executives), nor are worse than union leadership.
Corruption can be defined legally or ethically. Certainly you will find more union corruption from a legal standpoint. From and ethical stand point, corporate leaders are far more corrupt, simply because they have access to far more wealth.
“Corrupt” may not be the word to use.
“Pri#ks” and “A$$holes” is more accurate.
You don’t want to work for a “Little Hitler” in a non-union shop. Even if you are part of the “best 20%”
A union contract tends to restrict the behavior of these guys, and, if enough grievances are filed, he may even be shown the door, or transferred somewhere where he can’t hurt himself or others.
In public service, they are forced to join the very unions that were ripping them off.
Younger people shouldn’t join the existing unions, they need their own. And at some point we’ll need a six month general strike by everyone under age 50.
“The strong prevail over the weak.”
In my view the de facto union of coroporate executives and directors have won out overall.
In my view the de facto union of coroporate executives and directors have won out overall.
It’s that victim mentality that will ensure unions have a target audience…
Um, Jon, sorry, but the younger generation is certainly not weaker than the older one. Unionization only worked before globalization took over. Trust me, the younguns are more productive than you are.
2004
1. “The ability of lending institutions to manage the risks associated with mortgages that have high loan-to-value ratios seems to have improved markedly over the past decade.”
-Alan Greenspan [February 2004]
-2005
2. “Home sales are coming down from the mountain peak, but they will level out at a high plateau, a plateau that is higher than previous peaks in the housing cycle.”
-David Lereah, Chief Economist, National Association of Realtors [December 2005]
-2006
3. “I don’t know, but I think the worst of this may well be over.”
-Alan Greenspan, [October 2006]
-2007
4. “We have a very strong global economy… and I feel very comfortable with the global economy.
-Treasury Secretary Henry Paulson [March, 2007]
5. “The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”
-Ben Bernanke [March 28, 2007]
6. “In today’s environment, it is virtually impossible to violate rules.”
-Bernie Madoff [November 2007]
-2008
7. “Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009.”
-National Association of Realtors [January 2008]
8. “Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession.”
-US Congressional Budget Office [January 2008]
9. “I don’t think we’re headed to a recession.”
-President George W. Bush [February 2008]
10. “I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”
-Ben Bernanke [February 28, 2008]
11. “No! No! No! Bear Stearns is not in trouble.”
-Jim Cramer, CNBC commentator [March 2008]
12. “Later this year, I expect growth will pick up.”
-Henry Paulson, just after Treasury had mailed out 130 million economic stimulus cheques [May 2008]
13. “Fannie Mae and Freddie Mac are fundamentally sound. They’re not in danger of going under…. I think they are in good shape going forward.”
-Barney Frank, chairman of the House Financial Services Committee [July 2008]
14. “My own belief is if we were going to have some sort of big crash or recession, we probably would have had it by now.”
-Canadian Prime Minister Stephen Harper [September 2008]
15. “We’re probably somewhere pretty close to a bottom.”
-Fund manager Barton Biggs [September 2008]
16. “The fundamentals of our economy are strong.”
-US Senator John McCain [Sept 15, 2008]
17. “We remain committed to examining all strategic alternatives to maximize shareholder value.”
-Lehman Bros. CEO Dick Fuld, shortly before Lehman went bankrupt [Sept 2008]
Nice post wmbz….
“Can somebody get the lights on the way out?”
- Last Wall Street trader [sometime in 2015]
Fantastic! I just e-mailed this list to a bunch of people.
Ditto. Great stuff. I find it most important to remember how clueless and worthless the Fed chairmen were.
Now we need to place those statements on a Case-Shiller home price chart.
I know somewhere in the great Interwebz there is a compilation of the NAR quotes on the Case-Shiller chart…
“Nobody could have seem this coming”
-Everyone already quoted above + 100000000 more ‘experts’
This weekend, while leaving a restaurant in Manhattan, I got hit up by a bum (not sure if he was homeless or not) for $20.
Seriously?!???
I’m glad I don’t live there. The beggars in DC rarely ask for more than change or some food.
Was it a super high-end restaurant? Bums do market analysis too.
Maybe it’s a response to people always replying, “Sorry, all I have is a $20.”
Sounds like that bum knows what the REAL cost of living is.
Say you are sorry, then spray him with pepper spray. See if he ever asks you again.
Out where I live, the bums just want tree-fitty.
Worst yet to come: White House economic advisor
“When it comes to the economic crisis, the worst is yet to come, top White House economic advisor Lawrence Summers said Saturday. “I don’t think the worst is over,” Summers told the Financial Times. “It’s very likely that more jobs will be lost. It would not be surprising if GDP has not yet reached its low.”
news.yahoo.com/s/afp/20090711/ts_alt_afp/financeeconomyus;_ylt=AkAKEJ0YyVMOxBKYJnUVHuQDW7oF
“…the worst is yet to come…”
Gloomster.
“GDP?? We don’t need no stinking GDP!!!!”
- Wall Street
truthslayer to gloomster:
Cheney-Shrub Legacy Effect # 86 : “It’s contained”
I thought you guys would get a kick out of this! Enjoy!!!
Housing Happiness
http://www.youtube.com/watch?v=nSH9KEF8Rso&eurl=http%3A%2F%2Fzerohedge%2Eblogspot%2Ecom%2F&feature=player_embedded
That was really cool…Thanks…
Highly recommend.
Watching the tail end it appears Washington DC and New York are very much still in denial. The price drops in CA and FL are breathtaking. Clevland and Detroit appeared to have avoided the bubble, however, as we all know Detroit is DOA due to job losses. Hence why OH was recently showcased as one of the top gainers in RE prices for 2009?
“Clevland and Detroit appeared to have avoided the bubble”
You’re joking, right? Even an $800 house is bubbly if it’s previous price was $5k… that is happening in Detroit.
Yes. Detroit especially had no up - but are definitely having a down. Thus their bubble was simply lack of earlier depreciation when prices should have been dropping already.
Trudat Packman, HBB hos gone around this before, too: rust belt cities’ bubbles weren’t realized in price gains, they were experienced as temporary reprieves from price declines.
Rochester, here I come!
Ummm, Detroit had an up ( Detroit and the suburbs both), as evidenced by the declining value of our house…..
“Hell appears to have avoided the worst of the wildfires.”
Way fun.
Thanks.
What was the deal with Dallas?
Ben could verify this for us, but I think it had to do with the 80’s bubble they experienced.
Nah - it’s just that Case/Shiller didn’t publish data for certain markets back years ago - like Atlanta, Dallas, etc. Dallas for whatever reason didn’t come until the latest.
Call me dumb if you must. Is the X axis representing incomes ? Is there any real estate data on the graph? Does green = national hh income? Orange income for specific markets?
Sweet!
Suggestion would be to not put ‘$’ in the Y axis - that implies for instance that all markets had a median home price of $100k in 2000, which of course they didn’t. Also maybe mention at the beginning exactly what’s being graphed - the progression of the indices over time (the “Annual median…” slide at the end)
whino
That was awesome, It looked like the prices came out of a cold pool at the end because there seemed to be significant shrinkage.
LOL!! Thats the part I enjoyed the most!
“Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller
Jul 13, 2009 08:30am EDT by Aaron Task
The slowing rate of decline in home prices is likely to continue but the housing market is “still in an abysmal situation,” says Robert Shiller, a professor of economics at Yale. The co-creator of the S&P Case-Shiller Index, which tracks national housing prices, says the housing market could “languish for many years,” due to the “huge inventory” of unsold holds, “shadow inventory” of homes kept off the market by banks and other potential sellers, and “a lot of financial problems.”
But incredibly, the author of Animal Spirits (with George Akerlof), The Subprime Solution and Irrational Exuberance believes “there could be another bubble” in housing, once the excess inventory is worked off. “This is not my more probable scenario [but] people have gotten very speculative in their attitudes toward housing,” he says.
Shiller cites Boston as one area for a potential echo-bubble in housing, noting its typically volatile market did not fall in the past two years as dramatically as “more bubbly” cities like Phoenix. The professor and bubble expert isn’t predicting it, but the fact he’s even mulling the possibility is eye-opening, to say the least.
Whether you think the housing bubble is going to collapse further or reinflate, Shiller’s firm MacroMarkets recently listed two indexes on the NYSE Arca that allow investors to place their bets (or hedge their own housing exposure): The bullish Major Metro Up (NYSE: UMM) and the bearish Major Metro Down (NYSE: DMM).
I think the average, young American Joe has no hope of ever having a decent paying job where he actually gets to create something of value. His only hope is going to be to get lucky in some speculative venture. I’m betting that millions can’t wait for the next bubble. Cause right now they are out of work, out of cash & out of hope.
Wow. You’ve nailed it, Jon.
+1
Jon, this has been happening since the 80s. So it’s not just the “…average, young American Joe.”
It was his older siblings and his parents as well.
It was only a mater of time before the rising cost of living intersected with the downward vector of real wages. Which is bad news for a consumer economy.
What makes you think there will be a next bubble, Jon?
IMHO, there can be no end-user driven “echo bubble” without a reversion to the debaucherous lending standards circa 1998-2005. If such a reversion takes place, all bets are off. Animal spirits are not enough to overcome household budget limits without renewed decoupling of incomes from loan amounts.
There is one other “echo bubble” scenario that comes to my mind, which is for some kind of Wall Street-Washington coalition to artificially reflate the value of housing through financial means, independent of end-user housing demand. This would require the Fed to either directly intervene or hand newly-printed dollars to proxies who could carry out intervention to artificially prop up housing prices. Under this scenario, the extant problems with a record level of overbuilding of unwanted, unneeded, unaffordably-high-end homes is exacerbated by renewed incentives for overbuilding. Given the history of destructive government distortion of the US housing market since the 1930s, I don’t believe this scenario is out of the question.
If house prices in any given area don’t fall below their historical avgs , that in itself would constitute an “echo-bubble”.
Maybe, but the problem is - not only do there need to be “willing” participants to a bubble, but there need to be “able” participants.
The “able” is what’s going away fast. Too many banks got burned on this go-around to open up the spigots so hard again anytime in our lifetime. And there’s a *lot* less actual non-debt money “on the sidelines” in 2009 than there was in 2000.
That being said - I wouldn’t necessarily discount the possibility of some significant bounce due to the whip-saw effect of government debt, e.g. like what we’re seeing now in the U.S., CA, etc. tax credits. What’ll happen though - as Shiller observes - is that these effects will be localized to certain areas that didn’t have quite as much bubble, and thus aren’t falling (or didn’t fall) as much, but are however reaping the benefits of the non-localized universal benefits of the credits. This is I think is already starting in some areas - e.g. around me in the DC suburbs.
In the end though - unless/until we start to into high inflation, these will be dead-cat bounces. The only question is how high will be the bounce.
…but no jobs.
Game over.
The name of the game in 2016 might be “Go get a job with the Government”.
Don’t think there will much of a game left in anything else.
The gain in house falls mainly to the spouse.
The rain is Laos falls mainly on the house.
The rain in Spain falls mainly on the plain.
The pain in games falls mainly on the lame.
White House: Health, green jobs growing quickly
White House: Jobs in health care, environment growing more quickly than rest of economy…
Monday July 13, 2009, 12:58 pm EDT
WASHINGTON (AP) — The economy in 2016 will look like the one from 2008, according to a report the White House’s economic team released Monday.
The Council of Economic Advisers predicted jobs providing health care and helping the environment were likely to grow more quickly than the rest of the struggling economy. The president’s in-house economic brain trust also predicts the construction sector would eventually recover and add a demand for skilled electricians and plumbers.
The upbeat economic report served as a supporter for President Barack Obama’s $787 billion economic stimulus plan. Critics have said it has failed to provide the results promised; its supporters, including the president, urged patience.
The White House, seeking to calm domestic frustration, has insisted its plan would eventually boost millions of jobs. The CEA report stood by a prediction that the stimulus spending would save or create 3.5 million jobs by the end of 2010.
However, the job market continues to contract and more Americans are filing for unemployment. The economic recession has cost the United States 6.5 million jobs since December 2007 and has left states and cities in financial freefall.
The report also offered some evidence of optimism. White House economists predicted a 48 percent growth between 2000 and 2016 in health care support jobs. The officials also predicted a 52 percent growth during the same period for environment-based jobs.
Even so, the White House acknowledged its predictions were based on a Labor Department report from 2007, before the economic troubles became a crisis and well before Obama’s spending plan took effect.
White House economic adviser Christina Romer planned to talk about the report online at 2:30 p.m. on the White House’s Web site, whitehouse.gov, and on Facebook.
The president’s in-house “economic brain trust” also predicts the construction sector would eventually recover…
“Economic brain trust” Now that’s funny!
WASHINGTON (AP) — The economy in 2016 will look like the one from 2008, according to a report the White House’s economic team released Monday.
That’s pretty gloomy, I have to say. I guess Barack is coming around.
Did you see his latest Weekly Address video? The guy is going gray in one heckuva hurry. I predict that he’ll look like Nelson Mandela in a couple of years.
Time to color that hair like Billy Mays did.
And it’s a splotchy graying. Does that suggest a nastier form of stress than uniform graying?
I predicted he’d be full gray by Dec. 2009.
Yep, that office ages them in a hurry, and Barry is a smoker. He’ll probably be up to 3 packs a day before the end of his term. Leave office, gray or bald coughing up lung chunks.
I wonder if we pay for his smokes? Does that mean *every* taxpayer is being affected by the increase in the sin tax(es)?
LBJ was also a heavy smoker. Recall that he died almost four years to the day after he left office.
Going further back in history, I don’t think FDR’s smoking habit helped him. He had extremely high blood pressure, which, IIRC, set him up for the stroke that killed him.
Stupid Question: Can you still smoke in the White House? Are they somehow above the ban on smoking in federal bldgs? How about the Capitol? I’m sure tourists can’t smoke, but can congressmen in a “smoking room” somewhere?
Hard to imagine telling a visiting foreign dignitary , “Sorry, Sheik. You’re gonna have to take that cig outside to the parking lot”.
Answer to above question: No, you can’t smoke inside the White House. It went smoke-free during the Clinton years. AFAIK, you can still light up in designated smoking areas outside the building.
It went smoke-free during the Clinton years.
Is that why Clinton had to find another use for his cigars??
!Zing!
“I didn’t have sexual relations with that woman. Close, but no cigar.”
Seriously, in the winter, they send foreign dignitaries etc outside to smoke? I bet there’s some flaunting of the rules. “For the sake of National Security”.
I think Willie Nelson claims he “burned one” on the roof of the White House during some sort a party back in the Carter years. Different times….
“economy in 2016 will look like the one from 2008″
Sounds a little overly optimistic to me.
Slim here. Lemme tell you something about green jobs. They’re (excuse my language) a lot of damn hard work.
Ever built a xeriscape with water harvesting? It’s a lot of digging, folks. And, sorry to say, one of the best times to do this sort of thing in Arizona is in May or June. Digging holes at that time of year ain’t fun, people. I’ve done it.
The reason for the May or June timeframe is that it’s before the monsoon season arrives, which generally happens in July. Monsoons provide a good, quick test of how well built your xeriscape — with its water harvesting berms, basins, and swales — is.
Oh, did you want to plant something in that xeriscape? Well, you’d best wait to do that until August. Which means that you not only have heat to deal with, you also have humidity.
Okay, that’s one green job.
Now let’s move on to getting an old house so that it doesn’t leak so much energy. Here, we’re talking about blowing insulation into attics. Get ready to heave bales of cellulose into a blower that needs to be fed on a continuous basis. If you slack off, the spraying crew in the attic (where it’s 120 degrees) is gonna be awfully mad at you.
Oh, and if you’d like something that doesn’t involve attics, how about some window replacement? You haven’t lived until you’ve taken the old windows out first. Those old Arizona rattlers (metal framed casement windows) will not give up without a fight.
And that’s another green job.
Any takers?
120 grees in the attic…
Hey Slim , THAT isn’t in my Union Contract !?!
*only* 120 degrees? I’d imagine it’d be much warmer, if it’s ~100 outside. Then again, I never took a thermometer up into my attic when I lived in Texas.
“If you slack off, the spraying crew in the attic (where it’s 120 degrees) is gonna be awfully mad at you.”
OMG, you hit this one on the head Slim! I did that _once_ in my own attic (back when I was a homemoaner).
It was the dirtiest, nastiest, hottest, sweatiest day of my life. You can’t see, you can barely breathe (even with a mask), sweat running down you everywhere which makes the celulose and dirt stick to you everywhere. Freaking _miserable_! And when the blower stopped blowing, you just knew that person on the other end of the hose was eff’ing up and extending your stay in the attic!
After that, I decided that any price was worth paying someone else to do that job, if I ever had to do it again.
Thanks for reminding me of that vow!
Hey Slim,
Re: “in the attic (where it’s 120 degrees)”
It’s been 115-116 in the afternoon in the SHADE on the back porch here in Mesa last few afternoons.
Would have to be 140-150 in my attic space. I wouldn’t know for sure. I only go up there in December to check on the gas heater and in March to check the A/C condensation line.
No place for the thermally challenged.
Bunch of wussies…….
Try an airplane tailcone. Outside. On hot asphalt. OAT 100 degrees plus. No clouds, sun beating down on the airplane, tailcone is heat soaked.
Then start the APU, and crawl around in there, looking for bleed air leaks, (or whatever). Try not to lay your hands on any of the hot bleed air lines……Or the steel tubing pressurized to 3000 psi. It gets hot too. If you are lucky, none of the hydraulic plumbing is leaking…….especially if it is Skydrol.
It get 120-125 back there with a OAT around 70F. (measured with certified digital thermometer). I’ve been afraid to measure it during the summer.
We A&Ps take our breaks in your 140 degree attics……
How about standing in a real desert in the middle east with a 130lb ruck on your back, 50lbs of body armour, a kevlar helment and an M4. Add to that the actual temp is 125. The temp coming of the rocks and cement is 146. Now, imagine you get to work in that from May through October. 100 degrees is the average.
Oh yea, throw in a rocket attack and a couple of ambushes almost every day, four hours to drive 5 miles because you are scared of every rock that looks undisturbed, in a country that has nothing but rocks.
Now, tell me, who are the wussies again?
Man, how do you fight with all that gear on?
Isn’t it better to be quick?
Maybe you’re strong beyond belief and can dart behind buildings and boulders with that amount of weight?
ok,
The armour is only about 20lbs with the new set up…:)
Just try it in my attic. It’s 120 minimum in Florida with 100% humidity in a vaulted ceiling where the attic is about 4 ft high max. You’ll be hunched over, sweating like a dog, trying to balance on a couple of 2 x 4’s with zero visibility from the fog of blown in insulation. Dead man walking.
“You’ll be hunched over, sweating like a dog, trying to balance on a couple of 2 x 4’s with zero visibility from the fog of blown in insulation.”
Wow, I had blocked out that part of the joyous experience, Jon. Yes, being hunched over while balancing on studs (which are almost impossible to see between the piles of insulation and all the stuff in the air) certainly added to the whole experience. Phew!
And blowing in insulation is the easier way to do it. ( I didn’t say easy.) Try crawling on the joists of a multi-gabled attic cutting and installing insulation in rolls.
Taking out old windows is not that hard at all.
Yep. Just grab a chain, a 4WD truck, and throw ‘er in gear and gun it!
Does anyone else find the predicted jump in health services jobs disconcerting?
That’s not a knock on doctors, nurses, etc. by the way. It’s just that that’s an industry where bigger is scarier.
Here’s slender Slim with a prediction: There’s going to come a time when a lot of those jobs won’t be needed. Reason: There will be less paper to push in medical offices.
And, as has already happened with things like home pregnancy tests and glucose monitoring for diabetics, a lot of things we now go to the doctor for will be done by us.
Oh, one more thing: Don’t hold your breath waiting for an upsurge in primary care doctors. Ain’t gonna happen.
Expect to see more of the intake done by nurse practitioners and physician assistants, who, BTW, are pretty sharp and observant. (My primary care person is a physician assistant, and she’s a lot more attentive than most doctors I’ve seen.)
Expect to see more of the intake done by nurse practitioners and physician assistants, who, BTW, are pretty sharp and observant
I go see an ARNP as my ‘primary care doc’. I find her much more personable, and can handle all the everyday stuff. If it’s something beyond the scope of her competency, she’ll pass me on to one of the docs in the office.
(of course it doesn’t hurt that she’s cute, but that makes it really awkward when it comes time for the yearly physical)
(of course it doesn’t hurt that she’s cute, but that makes it really awkward when it comes time for the yearly physical) Well, then, ask for an uglier one.
Call me old-fashioned, but if someone’s going to prod and probe my naked body, I prefer she be a cute female. Makes an unpleasant task much more tolerable.
Makes an unpleasant task much more tolerable.
Maybe for you, but what about her.
Just teasing…
Hey, at least she is well compensated for the unpleasant task!
I think the big increase will be in nursing home aids making minimum wage, not in doctors and nurses.
All the talk of green jobs is great, but will they pay what these people previously made? It’s great to say they’re adding jobs but we’ll need 2x or 3x the jobs to make up for the lost earnings power.
“but we’ll need 2x or 3x the jobs to make up for the lost earnings power”
DING! DING! DING!
We have anotha winna, folks!
“All the talk of green jobs is great….It’s great to say they’re adding jobs…”
There’s a chap by the name of Bastiat at the door. He has a glazier he’d like you to meet.
examiner dot com
California State University system announces admissions freeze thanks to budget cuts
July 13, 4:08 AM
In California the “go-to” colleges, the ones students could depend on for a seat (at a discounted price) in a classroom of higher education, have locked their doors to new students.
The California State Universities were reliable stand-by colleges for Californians, especially given the competition in college admissions. The growing economic woes also made the Cal States attractive to many families with budget restraints. Even if a Cal State was not a student’s first choice, it was always comforting for them to know they could rely on a spot at one of the campuses.
It turns out that the Cal State System cannot be bothered by the economic situations of those who otherwise cannot afford college. It seems the misappropriation of state funds have rendered the system stagnant - actually altogether defunct in terms of admission.
The good news is that prospective students who submitted applications for the winter term before July 6 will be considered, but not necessarily offered admission. Some may find little solace in that glimmer of hope.
And the 35,000 students on average who historically enroll in the spring? The one thing we know for sure is that they are not welcome at CSU. Rising high school seniors should search for an alternative safety net because CSU seeks to decrease enrollment by 40,000 students for the 2010-2011 academic school year.
California State University system announces admissions freeze
This would imply that the “costs” of the education is higher than the tuition? I find that hard to believe, even for public universities…
Just read a book by Elizabeth Warren (of Congressional Oversight Panel fame). On colleges’ supposed need to increase tuition, she says they’re doing because they can, not because they must.
Sounds like another bubble…
That stands to reason, and to me anyhow it’s awesome. That means that about the time tuition will be at rock bottom - at the tail end of the depths of this depression in about 10-15 years - tuition will be dirt cheap when my kids go to to school.
Selfishly speaking, of course
I feel really sorry for those who have kids in school right now. Really, really sorry.
Exactly.
Dude, they only charge like $3k per semester these days. The state pays the rest.
And are you saying $3/semester/student isn’t enough to pay the staff and for upkeep of the buildings (not anything sports-related, and housing is a separate expense)? I’ve not done the math, but I really have a hard time believing the *costs* of running a university are that high (for what’s *required*)
The tuition doesn’t come close to covering the costs.
The tuition doesn’t come close to covering the costs.
Got a link to information? I’d be curious to see it. Certainly colleges spend a TON on unnecessary things (collegiate sports?!)
By comparison - most private elementary schools run about $8k per year, so yeah $3k per semester for college (with presumably teachers that are paid a fair amount more, plus more expensive facilities) sounds quite cheap.
Though when I went to public school in the late 80’s I remember being quite dismayed when tuition went up to something like $800 per semester.
most private elementary schools run about $8k per year
But those are also run for-profit, no? It’s a valuable data point, but in the end the university should be seeking to break even; the private school is looking to make money after paying out all costs?
Profit vs. non-profit is generally a very slim difference - like about 5% max.
Full time enrollment at CSU is about 350K so that’s about an 11% drop.
California State University
According to wikipedia CSU has over 417,112 students supported by 47,000 faculty members.
That is a 10 - 1 ratio of faculty to students.
If they cut 35,000, the ratio becomes 8 - 1.
Harvard is 7 - 1.
Why doesn’t CSU cut it’s sports programs? All money pits at every campus. No one goes to the games except friends and family of the players because there are no big name teams.
BTW….don’t the taxpayers of CA pay the majority of the operating budgets of CSU? California tuition is cheap compared to other states.
Huffington post
The CFTC has announced it was ready to place volume limits on energy futures by pure financial traders/investors, tougher information requirements to identify the role of hedge funds and traders who swap contracts on the barely regulated nor visible over the counter markets.
Immediately, the New York Times (”U.S. Weighs Curbs…” 07.08.09) cautioned “…proposals could encounter fierce opposition from big banks and Wall Street firms, which each are big traders in the commodity markets”
Who are these “big traders in the commodity markets”? They include Morgan Stanley and Goldman Sachs, both colossi in the field. And both, once “Investment Banks” are now “Bank Holding Companies” having turned themselves into Bank Holding Companies with the Fed’s blessing on September 22, 2008 in the wake of the chaos in the financial world following Lehman’s demise.
As Bank Holding Companies they became eligible for Tarp funds and other emergency loan programs set up by the Fed and Treasury, an array of new Fed lending facilities including access to the Fed’s discount window, as well as access to bank deposits that would be insured by the Federal Deposit Insurance Corporation (FDIC).
Both banks reported enormous gains from their trading activity over this second quarter, enough for Goldman, according to the WSJ (”Big Pay Packages Return to Wall Street” O7.02.09) to be on track to pay out $20 billion this year or $700,000 per employee nearly double the firm’s $363,000 average last year! All this after it was reported that Goldman had received billions in counter party funds from AIG that the Fed had made available to AIG permitting AIG to bail out Goldman’s speculative derivative positions of CDS’ and similar toxic paper worth probably less than 30 cents on the dollar at the time, for 100 cents on the dollar. Thereby covering what otherwise would have been billions upon billions of dollars in Goldman losses (Talk about a “good ole boys” network. How many homeowners were as fortunate and escaped foreclosure, how many small business’ could have made their payrolls had they had equally accommodative banking relationships?).
All this raises an even bigger question. What are these Bank Holding Companies doing using Fed monies and programs, with access to the Fed’s discount window, and FDIC insured deposits, speculating in the commodity futures markets? The irony is that Fed monies, instead of going to business lending and real estate mortgage financing which is what the economy desperately needs, goes to provide exceedingly cheap and voluminous funding to play the commodities casino. Thereby the American public is hit twice.
This is one of the main reasons I purchased an electric car.
I’m assuming that cap and trade will allow them to game the currently regulated electricity markets soon, thus solar panels are in my future.
Link to stats. http://www.calstate.edu/as/inbrief/inbrief08.shtml
MANATEE COUNTY (Bay News 9) — A text message offering free housing to those in need was just a hoax, housing officials say.
Monday morning, hundreds of people arrived at the Manatee County Convention and Civic Center expecting financial assistance for housing.
http://tinyurl.com/l8r3ou
So “accepting HUD applications” = free housing?
Guess I never really knew the details of HUD, but surely that’s not really true - right?
I would have loved to have seen the crew lining up to feed at the trough. Manatee County’s a worse mess than Hillsborough.
Monday morning, hundreds of people arrived at the Manatee County Convention and Civic Center expecting financial assistance for housing.
You know what it’s feeling like to me? Like everyone is WAITING for something. Waiting for the economy to get better, waiting for someone to save them. The country isnt making anything anymore…THAT’s why we suck…
Another Obamanomics First:
WASHINGTON – Nine months into the fiscal year, the federal deficit has topped $1 trillion for the first time.
The imbalance is intensifying fears about higher interest rates and inflation, and already pressuring the value of the dollar. There’s also concern about trying to reverse the deficit — by reducing government spending or raising taxes — in the midst of a harsh recession.
The Treasury Department said Monday that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to nearly $1.1 trillion.
The deficit has been propelled by the huge sum the government has spent to combat the recession and financial crisis, combined with a sharp decline in tax revenues. Paying for wars in Iraq and Afghanistan also is a major factor.
The country’s soaring deficits are making Chinese and other foreign buyers of U.S. debt nervous, which could make them reluctant lenders down the road. It could force the Treasury Department to pay higher interest rates to make U.S. debt attractive longer-term.
Forget the editorial about “combatting the financial crisis” and insert “creating a larger financial crisis under the banner of social engineering”, if you prefer. I do.
“Paying for wars in Iraq and Afghanistan also is a major factor.
I like Bill Bonner’s take on this in “Empire of Debt.” He states that historically nations go to war for the booty (why did the song “Rumpshaker” just come to mind?) they can take, which in turn pays for the effort.
Empires, on the other hand, get to a point where the overtaken becomes a gator that the conquering nation has to feed as opposed to being an annuity, thus bankrupting the empire.
Iraqistan: gator, or annuity?
Treasuries Record Demand Damps Concern Supply to Grow.
July 13 (Bloomberg) — Bond investors across the country are snapping up 10-year Treasury notes as expectations for a U.S. economic recovery this year disappear.
Firms from New York-based BlackRock Inc. to Franklin Templeton Investments in San Mateo, California, are turning more bullish a month after yields on Treasuries rose to the highest since October. Declining consumer confidence, falling stocks and unemployment climbing toward 10 percent has overcome concern that record auctions of government debt will overwhelm demand. Barclays Plc estimates $1.1 trillion more sales by the end of the year, on top of the first half’s $963 billion.
The gap between yields on 10-year Treasury notes and 2-year securities narrowed to 2.40 percentage points from a record 2.81 percentage points on June 5 as investors took advantage of relatively cheap longer-term debt. The so-called yield curve typically widens when investors anticipate a recovery because they demand more compensation for the risk that growth will spark inflation.
“You are starting to hear more concerns about how well the economy is doing,” said Michael Materasso, co-chairman of the fixed-income policy committee at Franklin Templeton, which oversees $128 billion in bonds.
Franklin reduced its holdings of corporate bonds that perform better than government debt in an expanding economy and added Treasuries due in about 10 years in the past two weeks, Materasso said.
This to me indicates that there really is a significant amount of money “on the sidelines” - kind of. The money for all these new treasuries isn’t coming out of equities - else the market would be crashing. They seem to be coming out of commodities, which have been down a lot the last few weeks. That to me indicates there was indeed a commodities bubble - i.e. too much money there.
The problem is this - is it feasible to take money back *out* of treasuries? Given that there’s no sign of government debt actually going down - seems like the answer is no.
Banks borrow printed money at 0% and invest in treasuries. Or Commodities as noted above.
Agora5. 7-13-09
“If you think Canada escaped the downward trend in U.S. banking, think again,” Dan Amoss begins. “While the country may not have plunged headfirst into subprime mortgages, it did dip heavily into risky derivatives. The leverage it took on generated impressive returns on equity in good times, but that same leverage is set to wipe out equity today.
“Canada has just entered what will ultimately be an enormous credit loss cycle, and by the time it’s over, the Canadian banks could easily lose their pristine reputations. Until the middle of 2008, Canada’s economy was booming. Its mining, energy and manufacturing sectors are world-class, and every other sector was pulled along for the ride.
“But the wheels fell off last fall. According to Statistics Canada, the unemployment rate rose to 8.4% in May — the highest in 11 years. Ontario, with its heavy manufacturing base and ties to the ‘Detroit Three’ auto companies, is especially hard hit; Ontario lost 234,000 jobs, or 14% of its entire manufacturing work force, since last October. Ontario will lose even more jobs this summer as GM and Chrysler dramatically cut auto production. Alberta has slowed dramatically too. Just a year ago in Alberta, every skilled construction worker was working overtime on oil sands projects. Now many projects are postponed and workers are getting laid off. The unemployment rate in Alberta nearly doubled from May 2008 to May 2009, to 6.6%, and is heading higher.
“For Canada, this credit cycle will probably be worse than the one in the late 1980s. According to RBC Capital Markets, annualized loan loss provisions for the entire Canadian banking system peaked at 2.88% of all loans in 1988. As of April 2009, this figure was just 0.77%. Over the next year or two, loan loss provisions should easily triple or quadruple, which would cut deeply into profits and capital.”
Hey, technical (IT/software) contracting folks (Bill in LA, and others I can’t remember right now). I need some help evaluating a job offer for contract work, and was wondering if any of y’all would be willing to provide opinions. Since I”m used to being salaried, I want to make sure I’m not overlooking something when trying to evaluate this offer. Anyone willing to lend a hand?
Drumminj, Congrats on getting your offer. Is it through a broker? W-2/1099/corp-to-corp? As I’ve said, IMO contract is much preferable to salaried. Do scrutinize the non-compete clause, and if possible check w/ a lawyer before signing. Try to negotiate it down, and have it say that it doesn’t apply if you’re terminated involuntarily. And don’t sign anything goofy re: trade secrets and patents. If you like, e-mail me the contract and I’ll be happy to look it over for you.
Thanks, LVG. I think the employer may be bypassing the broker (I had submitted resume directly a while back for a diff posting. I know I was submitted by a broker sometime after that, presumably for this role - I’ll leave it up to them to sort out - I never heard back from the broker after the initial call).
Looks like they want to do W-2 salaried, so basically a salaried employee with no benefits. Obviously I’m losing out on possible overtime, but the salary is reasonable for that kind of situation. Plus I don’t have to worry about self-employment tax.
All I have in hand is an offer letter which I don’t believe is a full employment contract? Regardless, good point on the non-compete. I’m pretty good about negotiating that kind of stuff (went round and round on my current contract gig. Finally got them to waive all non-compete and any terms unfriendly to me).
What’s your background, btw? (lawyer? contractor? etc)
drumminj, e-mail me at billtstrong@aol.com
I have a fairly extensive background in both law and software. Not sure what you mean by a “W-2 salaried” contractor. When you said contract I thought you meant hourly pay, so you should get extra for overtime. If not, that’s a red flag IMO. I’ll send you an e-mail offline.
When you said contract I thought you meant hourly pay, so you should get extra for overtime.
Yeah, initially that would be my thought. But I guess the way they have their other contractors working is under this agreement (a contract, salaried (weekly) employee). I imagine I could get them to go to straight-hourly if I really pushed, but based on the rate, I think it’s a reasonable offer even if I discount pay for vacation, sick, company holidays, and paying for my own benefits. It’s just a weird way to structure it.
They wouldn’t do it this way if they didn’t expect to come out “ahead” by people working OT without being compensated. Of course that’s what I’m used to, being a salaried software developer in the past.
I’ll look for the email - thanks.
If it’s a contract position on a W-2, I can’t scream per diem loud enough. DON’T DO IT without per diem.
The alternative?
If you can direct expense your costs, then it can be somewhat lucrative so long as the salary is high enough.
costs
I’ll be working on-site at their office on their hardware. So there shouldn’t be any costs above what a standard full-time employee has. Or am I missing something?
Drum…. is the proposed work location commutable from where you’re living now or do you have to find additional living arrangements for the duration of the contract period?
living arrangements
It’s commutable. 30 miles….30 minutes in light traffic..I shudder to think what it could be in heavy traffic…I just need to figure out the right time to commute.
Probably no one will notice this today, but I found it amusing.
http://www.foxbusiness.com/story/markets/al-lewis-wells-fargo-bank-sues/
Friday, July 10, 2009
Al Lewis: Wells Fargo Bank Sues Itself
You can’t expect a bank that is dumb enough to sue itself to know why it is suing itself.
Yet I could not resist asking Wells Fargo Bank NA why it filed a civil complaint against itself in a mortgage foreclosure case in Hillsborough County, Fla.
“Due to state foreclosure laws, lenders are obligated to name and notify subordinate lien holders,” said Wells Fargo spokesman Kevin Waetke.
I always find it interesting that we all complain about taxes, etc., but, can never offer solutions.
Make your self Arnold of California!
Now make your recommendations as to how you will cut $28,000,000,000 in spending!
Now, no new taxes, no new income, just cut $28 billion dollars!
Where do you start?
Hell, I live here and I can’t figure out how to do it, without removing people from the state, cutting welfare, cutting schools, cutting medical services, cutting help for the old or infirm, cutting veterans benefits, and I still can’t get to $28 Billion
Can you?
Jack
What do you mean? You just put out a list of things that can be cut. I’m not sure what the question is.
you think any politicans would recommend the cuttings that I would undertake?
Well, I guess we will find out!
Jack
“Dear Taxpayers,
We appreciate your kindness and generosity. Over these many decades you’ve clothed, fed and supported us, and we understand that the economy has crashed, and we’d like to help.
We do receive a bit more than we need. Please feel free to give us less without feeling guilty about it, at least until the economy improves a bit.
All our Love,
The poor and needy.
It the Illegals man, the Illegals….cut them off first and hope they go back home.
Americans FIRST……yeah its politically incorrect but who cares Phfft!
Dang, NYCdj, I knew there was a reason why I liked you. And it wasn’t just that zydeco music.
Now, no new taxes, no new income, just cut $28 billion dollars!
Everyone in government, from Arnold down to Mr. Potholer takes a 25% cut in pay. Not just employees, all politicians, city, county and state.
25% cut in vendor pricing. If you’re doing business with the state, prepare to take a cut.
Ignore all victimless crime. Fine anyone caught with illegal drugs the approx. street value of the drugs.
Kick everyone out of prison whose only crime is drug possession.
Where are we?
Where are we?
I think somewhere along the lines of $100billion in the black, at that point
Watched local news about neighbors upset over a home invaded by bees. They were mad that the city wasn’t taking care of this hazard, since the homeowner refused. The city’s position is that it’s private property, and therefore the homeowners responsibility, but of course, if someone gets stung they’ll sue the city. As long as people whine for these services and hold city/state’s liable for citizen stupidity and dumb luck its going to be hard to cut off the juice.
.
How to make $28 Billion in cuts?
Simple.
Across the board… cut all CA public employee salaries 10% (or whatever % necessary to make the needed savings).
This way… it is fair. No employee loses his/her job… but they ALL take a hit.
No favoritism. No complaining. Just across the board cuts. Everyone takes a hit. If you don’t like it, you can quit.
Also, cut back on any & all CA employee retirement plan contributions.
Union contracts??? Fukkem.
It’s so simple.
Another scheme due to fail:
The purpose of NSP2 is to provide states, local governments, and nonprofit organizations with funding to acquire abandoned and foreclosed residences and residential properties in order to stabilize neighborhoods. The minimum grant request is $5 million affecting a minimum of 100 units. Eligible properties must be foreclosed or abandoned. Staff is working with local banks, lenders, and real estate professionals to ascertain properties that meet HUD’s requirements. Three potential sites have been identified that meet the NSP2 program requirements and the City’s multifamily, affordable housing funding guidelines. Sites that are acquired and redeveloped would be subject to income and rent restrictions for households at 30, 50 and 60% of area median income for a 55-year term. The City application will be $80 million to address the above purpose.”
Seem to think that it is free money to buy sites for the homeless or low income!
But who is going to build, and pay for the work to be done?
Medial income here is about $60K, 30% of 60K is 18K,
Know many who can repair, or build homes , that can be rented to $1,5K permonth renters
Jack
But who is going to build, and pay for the work to be done?
well, HUD tells you “who”.
…NSP2, a term that references the NSP funds authorized under the American Recovery and Reinvestment Act (the Recovery Act) of 2009, provides grants to states, local governments, nonprofits and a consortium of nonprofit entities on a competitive basis. The Recovery Act also authorized HUD to establish NSP-TA, a $50 million allocation made available to national and local technical assistance providers to support NSP grantees
So, for instance, a city might apply for a grant and that city would then spend the money demolishing abandoned buildings, rehabbing buildings that the city thinks are worth saving, etc.
Then that city can (within the limits set in the grant) sell or rent the property to certain people (according to limitations in the grant).
NSP funds may be used for activities which include, but are not limited to:
* Establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties;
* Purchase and rehabilitate homes and residential properties abandoned or foreclosed;
* Establish land banks for foreclosed homes;
* Demolish blighted structures;
* Redevelop demolished or vacant properties
…hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/
Looking Out for Number One
by Bill Bonner
Waterford, Ireland
Ireland is nearly broke. Its debt was downgraded a couple weeks ago.
Unemployment is near 14%. Deflation is at 5.4% — the highest since the Great
Depression of the ’30s. And it’s not over. It’s “too early” to talk about recovery,
says Finance Minister Brian Lenihan.
It’s too early in England too. Financial Advisor Peter Hargreaves says that talk
of ‘green shoots’ gives rise to illusions. People think they see the light of dawn
when the sun is still going down. And forget about a V–shaped recovery.
There won’t be any simple bounce-back. Nor even a W-shaped double
decline. “There could be a quadruple dip in my opinion,” he said.
And what about California? This week’s Economist magazine gives us a new
measure for California’ budget deficit — $26 billion, up from the $24 billion
last reported in this space. A widely published photo shows Arnold
Schwarzenegger smoking a cigar…apparently confident that the state’s
problems will work themselves out somehow.
Of course they will. They always do. But not necessarily the way people hope.
California is the world’s 8th largest economy. It can print IOUs when it runs
out of money. But there’s no law that says banks have to take them. They
stopped taking them last week…which leaves the Golden State in a jam.
What is ailing California is ailing the entire United States of America –
and much of the rest of the world, especially that part of the world that
speaks English. Politicians have promised too much…without being willing to
raise the money to pay for it all. Solution: spend less. Or tax more. Or a little of
both.
Hey, Arnold should have asked us. It’s so simple.
But wait. California is a democracy. And the democracy is a flim-flam. As
we’ve explained in these reckonings: there are two parts to it. One part is like
professional wrestling – full of bullying, humbug and hollow gestures. One
group wants to stop its neighbors from smoking. Another wants a flag with
yellow trim. Still another wants revenge on a neighbor because it feels
disrespected. There is no accounting…or predicting…what direction the mob
will take.
The other part of democracy is more rational. The citizen wants to know not
what he can do for his government, but what he can get out of it.
This second part is a time bomb. Once citizens realize that they have the
power to vote themselves the contents of someone else’s pocket, the system
is doomed. They don’t let up until they’ve bankrupted it.
A man may vote for a candidate who promises a yellow flag. No harm done.
But when he votes for the candidate who promises more “benefits” at someone
else’s expense, he is on the road to Hell.
“Democrats in the House propose setting a 1% extra tax on couples earning
more than $350,000,” reports the Financial Times this morning. The money is
to be used to pay for other peoples’ health benefits.
If you earn less than $350,000, you feel that you are getting something for
nothing. But that money – had it not been confiscated – wouldn’t have
disappeared. It would have been put to work in one way or another – added to
the nation’s capital formation, lent to the government, used to buy a new car or
take a vacation. Instead, it is to be sucked out of the benefits of the willing
economy and used to give people something they couldn’t afford or didn’t
want to pay for themselves.
In order to get elected, politicians have to promise more and more of these
‘benefits.’ There is no backing up…no turning around. Even when the
government is clearly headed to bankruptcy. If a politician hesitates, some
other clown will just take his place. He may even be overcome – in a weak
moment – with a desire to level with the voters. He may imagine himself going
on TV and putting it to them straight:
“Look, we’d like to continue these programs; but we don’t have the money.”
Then, he comes to his senses: ‘I might as well say I’ve fallen in love with a
woman from Argentina…or a man in a public bathroom; either way, I’m dead,
politically.’
Now, Dear Reader, you may object. ‘The American political system draws
forth the best and the brightest from the entire nation of 300 million,” you may
say. “Surely these people are capable of doing the right thing for the good of
future generations.”
They are surely capable of making rational decisions. But what is rational for
them – ducking serious issues…nourishing the illusion that voters can get
something for nothing — is fatal to the republic.
Of course, the same thing could be said for a business…as well as a country.
Why did GM go broke? It was the largest company in the world. It could pick
and choose the very best managers …the smartest businessmen…the greatest
investors…the most far-sighted engineers… the most wonderful of the
wonderful. Surely, these fellows could add and subtract, right? Surely one of
them noticed:
“Hey…if we keep adding costs, we’re not going to be competitive any more.
And if we’re not competitive, we’re not going to be able to sell cars at a profit.
And then, we’re going to lose money and go broke.’
How come the best talent money could buy couldn’t change course at
GM? How come all those smart people in the California legislature can’t
balance the budget? Well, that’s just the way it is. An institution matures…and
the parasites take it over.
Retirees, executives with their golden parachutes, the halt, the lame,
employees, managers, hangers on, lawyers, accountants, businessmen…
everyone has an interest in keeping the hustle going. The executive wants his
bonus…the retiree wants his pension…the lawyer wants his retainer… All can
see that the old place ain’t what it used to be. They all know that the gravy
train won’t go on forever…but that just makes them more eager to get it while
the getting’s good. So they jiggle the numbers so each quarter doesn’t look so
bad…jive the news so it sounds almost as if the institution had a future…and
they juke up the whole system so that no one even mentions that they’re going
broke.
GM “sets out on a fresh start,” says the Financial Times. “From this point on,”
says its top man, “our efforts are dedicated to customers, cars…” and repaying
the feds.
What were they dedicated to before they had to turn to the feds for money?
And the exact happenings discussed in Plato’s “The Republic”, which we all must have read, but not accepted.
I tell everyone to read Plato to see what he says about a democratically elected government.
You may disagree, but it sure looks like it is happening
Jack
“The people have always some champion whom they set over them and nurse into greatness…This and no other is the root from which a tyrant springs; when he first appears he is a protector.” -Plato, The Republic
Now I’m wondering if I got admitted into film grad school because they’ll be getting my out of state tuition of 14k a year. Now that the schools are hurting so much…
Maybe I should just go get a job at the bowling alley.
Sorry, had to share that somewhat OT thought after reading about universities above…
Heck, if I’m gonna be OT, might as well do it right since Ben’s gone - here’s what I did yesterday, caution, tearjerker, I made it for my cat who recently died…
http://www.youtube.com/watch?v=d84o-C7wD3k
http://www.youtube.com/watch?v=d84o-C7wD3k
Hi Lost,
What a beautiful tribute.
I believe that there is an energy, or spirit, in living things that lasts beyond this world and realm.
Those that we haved loved, both people and pets, are really never that far from us. We just have to wait a while to see them again.
Awesome comment, thanks.
The exact moment the bubble burst.
And how is Exeter mentioned?
See below and be informed:
From The Telegraph (U.K.)
http://tinyurl.com/mvpuod
The photograph, taken by Richard Heeks, of Exeter, shows a soap bubble with one half still perfectly formed while the other shatters in a distinctive pattern of streaks.
“There’s something so satisfying about picturing something in your head and then finally seeing it on the camera,” he said.
“It would be great to record the sound of a bubble popping, slow it down and play it over slow-motion footage of a bubble bursting.
“The ripping action reminds me of a storm front passing across land. It must be like a wave.”
Sounds like a great HBB topic for tomorrow, or this weekend.
Washington DC IT sector continues to hire
Megabank, Inc to Arnold: We don’t want your stinkin’ i.o.u.s.
Options dwindle for cashing California IOUs
By DON THOMPSON – 1 hour ago
SACRAMENTO, Calif. (AP) — Thousands of California creditors were left Monday with fewer options for cashing IOUs issued by the state, as several major banks said they no longer will honor them.
U.S. Bancorp became the latest to reject the pay-you-later warrants, joining Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and other large institutions.
The state began issuing IOUs at the beginning of the month as a way to save cash amid a $26.3 billion deficit.
“The decision by most major banks to not accept IOUs makes them less liquid, makes it more difficult to turn them into cash,” said Tom Dresslar, spokesman for the state treasurer’s office. “It’s logical to conclude that the potential for hardship has increased.”
Officials said it was too early to tell if businesses that receive the IOUs were feeling a financial squeeze.
The state controller’s office issued nearly 130,000 IOUs — formally called registered warrants — for $436 million between July 2 and Friday. The state expects to issue $2.9 billion worth of IOUs through the end of July.
California Bankers Association spokeswoman Beth Mills said major banks had hoped their refusal to accept the notes would push legislators and Gov. Arnold Schwarzenegger to more quickly close the deficit.
“We’re still hopeful that something gets done here in the short-term,” she said. “Really, what needs to happen is there needs to be a (balanced) budget.”
…
How come Megabank, Inc got bailed out but not California? I am deeply disgruntled over bailouts for banks that destroyed massive wealth, and which are now enjoying huge windfalls while the rest of the country suffers. Where is my pitchfork?
Where is my pitchfork?
Well, I’ve got a spare I will willingly loan yer. I got it at an estate sale down in Delphi Valley for a buck or something, and it has nice sharp tines, well maintained by the elderly farmer who sold it to me.
I haven’t posted for a few days because I been playing with my mom and sister, who’s visitin’ from Utarr.
Also, my tummy hurts. I probably ate too much; the result of some cook-offs ‘twixt me and Sister Rachel.
NO ONE cooks better than me! I defy you! Bring it on!
“Well maintained”???
When the time comes for pitchforks, I’m grabbing the old, rusty, nasty one that came with my rental (it was leaned up in the corner of the dank, dark, dirt-floored garage).
Clean, well-maintained pitchforks don’t seem right for the dirty work to come.
p.s. I volunteer to be a celebrity taster at the next cook-off…
So uh, I always thought “pitchfork” was a metaphor. You’re suggesting we use real pitchforks?
Btw…there are a lot of military and x-military folks on here that work for the system we seem to object to. It would be fun to know what side everyone falls on? You know…..if the pitchforks come out is DinOR and Stpn2me going to be standing there ready to shoot Americans on behalf of the banks and corp. controlled US Government?
Do you really need an answer?
Here’s a hint - do you see “the state of California” anywhere on that list?
Yawn (literally - I’m off to bed - tired as all get-out)
The US can’t even manage a protest we are so far away from pitchforks.
By the time the average US citizen is ready to riot it will be too late, the money and economy will be gone.
Occurs to me how housing is so much like those internet stocks after their bubble burst. Most of them never came back. Hear lots of wild speculation about what a great time to buy. I bet it is years before we see prices seriously start to go positive. Probably as we expected, prices will return to 1999 and maybe lower.