Bits Bucket For July 16, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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1.5 million homes in foreclosure
“NEW YORK (CNNMoney.com) — The foreclosure plague is not going away — it’s only getting worse.
A record 1.53 million properties were in the foreclosure process — default notices, auction sale notices and bank repossessions — during the first six months of 2009. That was 9% more than the previous six months and 15% more than the same period of 2008, according to a report released Thursday by RealtyTrac.
.
.
It’s the economy
The biggest problem affecting foreclosure figures is the recession….”
Er…what do they think caused the recession?
sleepless_near_seattle,
How refreshing. You’ll get no argument from me, but good luck and fair winds in sharing that w/ others. To date it’s either Sir Alan, The Evil Fed, Bretton-Woods II, Credit Expansion, Wall Street and Chuck Farris.
Well, DinOR, are you saying these are all phony villains? I think pinning the blame on Credit Expansion is pretty accurate.
az_lender,
Not implying that at all. No one endeavors to get to the bottom of things more than me and there’s no doubt ALL played a part.
However.., just like anyone that’s had a night they really, really -regret-, you go back and play it over and over again trying to figure out where “things went so awfully wrong”?
Was it the people I left from work with? Was it the ‘bar’ we were at? Was it the tequila? What if I’d taken a ride or even the bus, would I BE in the trouble I am ‘now’?
Yes to all of the above and at the same time, NO to all but one! Sure, your “friends” from work are ‘loosers’ w/ no real future so ‘trouble’ is a way of life for them. Generally you were trying to ‘impress’ them w/ how ‘crazy’ you are! You could have called a cab or walked but the REAL source of your problem young man is the TEQUILA! ( 21 shots to be exact? )
So just b/c int. rates were low and the credit spigot was open full bore -still- doesn’t excuse our behavior!!! No one held a gun to these buyer’s heads.
So, what I hear you saying is, if I stick to Patron Anejo margaritas, then we’ll get out of this recession faster?
There’s nothing wrong with credit expansion.
The problem was credit OVER-expansion (aka lax underwriting–no underwriting).
Forget the recession. We have bigger problems.
‘Gay’ Penguin Goes Straight. Pro-homosexual activist cries foul.
“The San Francisco Zoo’s popular same-sex penguin couple has broken up.”
“Male Magellan penguins Harry and Pepper have been together since 2003. The pair nested together and even incubated an egg laid by another penguin in 2008, but their relationship hit the rocks earlier this year when a female penguin, Linda, befriended Harry after her long-time companion died. Zookeepers say Harry and Linda are happy and were able to successfully nest this year,” reported KTUV.
But not everyone is celebrating Harry and Linda’s newfound love. Some believe there can be no such a thing as an “ex-gay” penguin. Upon news of Harry’s decision to fly the same-sex-coop, outspoken pro-homosexual activist and anti-ex-gay crusader Wayne Besen cried fowl:
“Attempts to change sexual orientation are patently offensive, discriminatory by definition, theologically shaky, uniformly unsuccessful and medically unsound!” exclaimed a visibly angry Besen. “There is no ‘ex-gay’ sexual orientation. Harry is simply in denial. He’s living what I call the ‘big lie.’”
When asked if heterosexual penguins can become gay, Besen replied, “Well, um, sure. It happens all the time. But in that case it’s just the penguin embracing who he really is. Penguin pride is quite a courageous thing to witness, what with all the mean-spiritedness and homophobia among Penguo-Americans and everything. Once gay, always gay! You know; birds of a feather and all that.”
Maybe the other penguins staged an intervention, and brought in that counselor in “Bruno”.
Absolutely! Who cares about silly financial Armageddony type stuff when we gots such serious matters to consider as gay Pinipedal-Americans?
Meanwhile, Pepper has also had difficulty accepting Harry’s decision to embrace natural sexuality. According to KTUV, Harry’s relationship with Linda “did not go over well with Pepper, who became violent.” Zookeeper Jennifer Katz lamented that “Pepper is by himself now.”
Still, it appears that Pepper has yet to hit rock bottom. In recent days he has reportedly been spotted waddling around the zoo’s public men’s room, skulking in stalls and inexplicably tapping his flipper. There’s even speculation that, as things continue to spiral, he may consider a run for political office.
Hahahaha! That’s funny.
Anyway, why aren’t ALL penguins gay? I mean, because they all look exactly the same anyway. Like cute lil’ chubby midgets in tuxedos. What’s the difference, really? I say, go, gay penguins, go!
Like cute lil’ chubby midgets in tuxedos.
And everybody adores those. Right? Right? Why, I wish I had a couple of ‘em handy right now…
*lapses into wistful reverie… *
HAhahaah! Jeeze, I’m just kidding, you guys!
Mostly.
Penguins have a sense of humor.
home.comcast.net/~r.massey/penguins.gif
All penguins look that same!? Speciesist.
You’re right.
I…I…I am shamed.
My take was….penguins will bang anyone handy. Hey, it gets cold there at night. And they are all dressed like men, so its probably hard to tell.
Whoops. Post above mine made same points better (and earlier)….Nevermind…
and look who it was….just who you’d expect at the front of the line on a gay-penguin pride story…hey OG
I love parades. I like to see parades, and I like to be in parades. Sometimes I’m a parade all by myself, depending on circumstances, which is why I always keep a bullhorn, candy, and sparklers in my briefcase, and my desk, and my car, for just in case.
Best of all is when the parade turns into a riot, or else a riot turns into a parade, or if there’s deft segueing back and forth. Good clean fun, man! Much better than knitting.
But, you know, I’ve never participated in a parade with cute lil’ gay penguins in it, and that’s a serious pity. I can see I’m going to have to mark that on my ‘To Do’ list right away.
Hmmm. I wonder which word the filter objected to in my last post? Was it g*ay pinn*iped? R*iot? Spa*rklers?
Sigh.
It’s a mys*tery.
Oh, no! Pinnipeds are SEALS! And walruses, and those other fat, tubby, water-dwelling guys, and not penguins. Gosh, I’m so embarrassed now. You cannot even imagine.
Next time I see a penguin I bet it waddles up and slaps me briskly and shouts: ‘Get it right, ya dumb pink primate!’
And I will deserve this.
Olygal keeps sparklers in her briefcase, just in case of a parade. I, sadly, keep a tracheotomy tool in my glove compartment, just in case of an airway emergency.
I need to have more fun . . . .
Bisexual?
Forget the penguin stories. I want to hear more wombat stories.
How about this? Did any of these penguins undergo an accent change? Cause that’s when it’s love, mate.
Did any of these penguins undergo an accent change? Cause that’s when it’s love, mate.
Agreed.
That’s happened to me, oh, I dunno, three or four times? And each time it was true love.
What were the accents?
I cannot remember. It is all lost in a whirlwind blur of ‘true-loveness’.
You know how it is, I imagine.
I hope one was one of those African dialects that involves making clicking noises.
The housing bubble is just one of the a symptoms, not the cause of the recession. It’s more complex than that.
“what do they think caused the recession?”
Comprehension of cause and effect is not the strongest characteristic of these clowns. I like this quote from Janet Yellen, President of the SF Fed:
“Typically, recessions occur when monetary policy is tightened to subdue the inflationary pressures that emerge during a boom. This time, the cause was the eruption of a severe financial crisis.”
Ok, so the recession was caused by the financial crisis. What caused the financial crisis? I really despise these people.
“Typically, recessions occur when monetary policy is tightened to subdue the inflationary pressures that emerge during a boom. This time, the cause was the eruption of a severe financial crisis.”
Wow - I can’t imagine a more clueless statement than that. Even the timeline is wrong, being that the supposed financial crisis happened about 10 months after the recession started!
(shakes head)
It’s like the “Why?” strategy. Keep asking “What caused the (recession, housing bust, financial crisis, etc)?” until you can’t ask anymore. There you’ll find the real crisis.
patient renter,
Point taken, but again, where would be had The Housing Boom never taken place? Taking a dump in tall cotten? I doubt ‘that’. But we wouldn’t be in nearly the fix we are now.
Besides, I’ve pulled my hair out ( what little is ‘left’ ) trying to get people to see the cause and effect between the Cap Gains Exemption for “primary residence” and the Boom for years.
Since we can’t seem to manage to connect the dots ‘there’ why bend over backwards to accomodate any other distant “theories”?
Yellen’s the president of the San Fran. Federal Reserve ? Is that all she’s got to say on the subject ? Could she have come up with something just a little bit more intelligent ? Disappointing.
Not in the Bay Area, according to today’s San Jose Mercury News:
“More signs of a real estate bottom as home sales, median price climb in Bay Area”
It really is special here……………LOL
They seem to ignore the fact that the reason median price is rising is because the high end is falling enough to draw in knife catchers.
Yes, its truly amazing what the Merc does ignore - most of their income is RE advertising I suspect. It does have a comment section though and I don’t hesitate to use it.
I’m not advocating buying the Bay Area. But I did find it peculiar that the Case Schiller SF Bay Area Tiered indices all showed some abrupt flattening with the last release of data. This would indicate to me that the median home price moving up could actually be indicative of home prices flattening somewhat AND the mix changing a bit.
I’m scratching my head. It can only be related to some people thinking that the bottom is here, and deciding that they should jump in.
Temporary phenomenon. Watch the slide downward to resume in the coming months in the Bay Area.
I’ve seen that too. It’s the first wave of knife catchers for the ‘good’ areas. We’ve watched the crappy areas of the East Bay, peninsula and south bay crater 50+% and yet people think 20% off is a deal in the nicer areas. The not so crappy but kinda suspect areas are down 30-35%. The buyers are seeing East Palo Alto bottom out (and it is) at prices where you can buy the place and rent it for cash flow positive at today’s interest rates (about 150 times monthly rent), so they assume that the good neighborhoods must be bottoming as well even though they are at 200-300 times monthly rent still.
Come on guys - it’s not that hard. All of the sudden the government is giving people $18,000* to buy a house. That’s a heck of a new incentive, and is sure to provide some kind of support. Temporary support, but support nonetheless.
*I believe - isn’t the CA stimulus $10k, on top of the existing $8k from the Fed?
isn’t the CA stimulus $10k, on top of the existing $8k from the Fed?
IIRC that was just for *new* homes, not used.
They pulled the 10K already, first thing to go in the budget mess.
Yes, the $10,000 is for new homes in CA, but still…
Add to that the super-low interest rates and 3.5% FHA loans and all the moratoriums, etc.
We’re dealing with the same stuff here in San Diego. Very little inventory, and prices are still way too high. Many reports (and true, from what I’m seeing) that there are multiple offers all over the place.
They are going to drag this thing out until there are NO winners in this economy. They will kill us all with the duration of the downturn.
It’s a good thing in New Future, we won’t need jobs, healthcare and energy will be bubbles of unaffordability… I’m sure that’ll also reduce the number of foreclosures!
Foreclosures rise 15 percent in first half of 2009
Foreclosures keep soaring as unemployment becomes main cause of housing woes. AP Real Estate July 16, 2009, 5:29 am EDT
WASHINGTON (AP) — The number of U.S. households on the verge of losing their homes soared by nearly 15 percent in the first half of the year as more people lost their jobs and were unable to pay their monthly mortgage bills.
The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released Thursday by foreclosure listing service RealtyTrac Inc.
The data show that, despite the Obama administration’s plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, the nation’s housing woes continue to spread. Experts don’t expect foreclosures to peak until the middle of next year.
Foreclosure filings rose more than 33 percent in June compared with the same month last year and were up nearly 5 percent from May, RealtyTrac said.
“Despite all the efforts to date, we clearly haven’t got a handle on how to address the situation,” said Rick Sharga, RealtyTrac’s senior vice president for marketing.
More than 336,000 households received at least one foreclosure-related notice in June, according to the foreclosure listing firm’s report. That works out to one in every 380 U.S. homes.
It was the fourth-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes. Banks repossessed more than 79,000 homes in June, up from about 65,000 a month earlier.
More than 8.3 million U.S. mortgage holders owed more than their homes were worth and an additional 2.2 million borrowers will be “underwater” on their loans if prices decline another 5 percent, First American said March 4.
Nevada, Arizona
Foreclosure filings in the second quarter totaled a record 889,829, up 11 percent from the first quarter and up 20 percent from a year earlier, RealtyTrac said. June filings were 336,173, the third highest monthly total in records going back to January 2005.
Nevada had the highest foreclosure rate in the first half, with one in every 16 households receiving a filing, RealtyTrac said. A total of 68,708 properties were affected, 61 percent more than in the first half of 2008.
Arizona had the second highest rate, one in 30 households; Florida was third at one in 33; and California ranked fourth at one in 34. Other states in the top 10 included Utah, Georgia, Michigan, Illinois, Idaho and Colorado.
Top 10 States
California led in total filings with 391,611, an increase of 15 percent from a year earlier; followed by Florida at 268,064 for a 42 percent increase, RealtyTrac said. Arizona was third with 89,799 filings, up 55 percent, and Illinois was fourth with 68,932, up 29 percent.
Other states in the top 10 for their sheer number of foreclosures and defaults were Nevada, Michigan, Ohio, Georgia, Texas and Virginia, said RealtyTrac, which collects data from more than 2,200 counties representing 90 percent of the U.S. population.
Nevada had the highest foreclosure rate in the first half
We’re still Number 1!!!
With a bullet!
So Virginia joins the Top 10, does it? Interesting. Norfolk/Virginia Beach and areas along I-81 must be getting clocked.
Bet suburban DC is just fine though.
AFAIK, our foreclosure rate here in the Norfolk/Virgina Beach area are still pretty low. From today’s Virginia Pilot: “The number of foreclosure-related notices filed in June in Hampton Roads was 988, up 4.6 percent from 944 in May, according to RealtyTrac.” Our area is ~1.7 million people. People still buying, prices still nuts. Makes me want to move to Raleigh.
I’m actually pretty amazed that FL foreclosures increased by 42% YOY. Some of us had thought maybe FL was “close to bottom” since it had headed into the bust earlier than some other places.
My Florida Flipper clients must’ve learned their lesson (by losing money on a “flip” 10/08-03/09); they asked me for an agreement to lend them some money for a further flip this spring, but the agreement expired June 30 without their taking “advantage” of it. Welcome to reality!
1926 all over again.
When all is said and done - there will be a lot of houses demolished in Florida, and a lots sold for prices that rival those seen in the 1950’s.
It’s that bad there.
FWIW - official FHFA stats showed houses in the Bradenton/Sarasota MSA actually *increasing* in Q1 of this year. Which is just stupid. Not so much that the stats are wrong (I’ve seen other anectdotal evidence/stats that back it up), but that there are enough people thinking that prices are reaching a bottom, and causing a bounce. It’ll be the mother of all dead-cat bounces.
P.S. speaking of southern Florida here - anything south of Tampa on the west, and south of Jupiter on the east coast. North of there was bubbly too, but not as much.
It was bubbly north of those places too. They just started from a lower place so they didn’t bubble quite so high.
The Florida economy is built on over-paid industrial workers from up North selling their over-priced homes and coming south with their fat pensions and buying cheap. Now their are no over-paid industrial workers, much less with fat pensions, much less having any equity in their over-priced homes.
Florida is a goner for a generation. We are actually losing population for the first time ever. The only jobs are government, defense, tourism & restaurants. And all of those are contracting here.
With cost of living so cheap, and houses so cheap, perhaps it would be a good place for an industry to setup shop. Why not take advantage of it?
Cause housing & labor are still a heck of a lot cheaper in China.
A 15% rise lately is actually pretty good - a leveling off.
For a perspective on foreclosure rates - here are some good charts.
Good charts. Check out North Dakota ! Foreclosures less than 100. Balanced budget to boot. No Dem mayors or Gov. Summer not there yet (attention algore), wheat crop endangered.
“more people lost their jobs and were unable to pay their monthly mortgage bills.”
Wrong Wrong Wrong. There were more new foreclosure filings than there were homeowners who lost their jobs. Blaming foreclosures solely on job loses is just a setup for more silly government intervention.
Confusion? That’s an understatement, the current administration, can’t even splain it’s “plan”.
Bank of America Says Obama Mortgage Rescues Create ‘Confusion’
July 16 (Bloomberg) — The Obama administration stokes “confusion and delay” among mortgage lenders when it announces anti-foreclosure plans before completing the program details, a Bank of America Corp. executive will tell Congress.
Announcing programs without providing the rules for how borrowers and lenders should proceed, “creates immediate demand with insufficient lead time for operational readiness,” Allen Jones, a default-management policy executive at Bank of America, said in prepared testimony to be delivered before the Senate Banking Committee in Washington today.
“This can lead to negative customer experience and, ultimately, public backlash against the programs,” Allen said.
Borrowers are still awaiting the final details of a plan announced in April that would let homeowners rework home-equity debt. Other elements of a broader plan announced in February have been slow to reach the public. The administration said last month that the program, intended to help as many as 4 million people, had only extended modification offers to about 150,000.
“The issuance by Treasury of its brief and limited guidelines for the second-lien and short-sale programs months before their comprehensive rules have been finalized or even drafted has led to a great deal of confusion and delay in the industry and with the public,” Allen said in his testimony.
Well, don’t all speak up at once to defend the banks! …but in this case, I am sure their “excuse” is quite true.
It’s almost poetic justice, ain’t it?
Last night, I was talking to a coworker about her crumbling real estate empire. During the bubble, she bought ten investment homes on the Florida’s Southwest coast (Lee and Collier counties). Since they’re now worth about 35% of what she paid for them, she’s allowing them to go into foreclosure.
Here’s the amazing part of the story….
She hasn’t paid a nickle on these homes in nearly 3 years. While the lender has filed Lis Pendens on them 18 months ago, they have not moved forward on the foreclosure process. Before she quit paying, she put tenants in the homes. As tenants have moved out, she has not re-rented them (fearing the lenders could foreclose any day). However, about half of her original tennants are still living in the homes and are still paying her rent.
Amazingly, none of the bad mortgages are showing up on her credit report. Since she continues to pay on her primary residence and her other debts, her FICOs are still in the 800s. She’s perplexed on why the lender hasn’t reported the bad debts to any of the three credit reporting agencies.
While this may lead you to believe that the lender has simply forgotten about the homes, they’re action tell otherwise; the lender recently paid off the tax deeds on the homes are now keeping current on the property taxes.
Yet, they still haven’t moved forward on the foreclosures.
Of course this is anecdotal story, but I keep hearing similar ones over and over here in South Florida — people are going years without paying a cent and are not being foreclosed on. How many other borrowers are out there not paying their mortgages for 3 years or more?
Clearly the foreclosure crisis is MUCH worse than portrayed by the data presented in the MSM.
I know people in FL with similar situation and also read somewhere that due to this there would be a wave of foreclosures coming up that may seem surprising. I thought banks were not foreclosing due to hopes for some kind of stimulus plan that would help homeowners to do right by their loans and pay up or maybe there is a bigger conspiracy to create an illusion of better economic situation (higher comps) with the hopes of “psychology” taking over and propelling more spending while there still is some cash.
Or.. maybe banks aren’t in as bad shape as many people think.. and they can well afford to hold the properties for years and years if they want to..
I’m not positive about the numbers, but there are about 8,500 FDIC insured commercial banks. Some additional number are not FDIC.
How many banks got bailout money? All i’ve seen was a list of about 50… and some of those didn’t even need it.
Don’t forget that the banks don’t hold the mortgages, so they really don’t care. It’s the holders of the crappiest tranches of the MBS’s that care and I don’t know that they have a direct mechanism for recourse.
What has the banks screwed up is that they can’t create and sell any MBS’s anymore (except to Freddie and Fannie), so their profitability is way down. And developers, builders, realtors, mortgage brokers, & manufacturers that live off HELOC money are toast. And that is pretty much the American economy.
true.. the question of who owns the mortgage is a big part of it, and we know this is a complication with some large number of underwater loans.
I don’t know much about it but it seems to me that:
If the bank only services the loan, they have no dog in the fight. The loan defaults and whatever recourse specifically spelled out in the service agreement is exercised. Chances are the bank would receive instructions on what to do.
Now, if some group of investors own it and the loan goes into default, why on earth would they decide to foreclose and sell the property? Taking ownership is the last thing MBS investors want to do. Avoiding an owner’s headaches is one big reason why they bought RE paper in the first place..
What are the holding costs involved if a property is taken back? Substantial.. but whatever they are, most costs are avoided if the property is continuously occupied and somewhat maintained, even if there’s no income to investors or to a bank. Income is nice, but just avoiding a payout can be equally nice.
As a lender, I’d rather get 30-50% of my initial investment back NOW, rather than wait indefinitely for ???something??? (maybe much less).
Various systems have broken down, except people don’t really realize it yet. Just like a fish stinks from the head, so goes many of the systems and institutions we take “for granite” in the US. Yes, people are still carrying on, trying to work within the “system”, except there really isn’t one. Fraud, criminality, rigging things, etc., all this sh*t flows downhill, from Washiton and Wall.
I’m not going to kid myself, I don’t expect a thing from Washiton except to make things worse, and reward the likes of AIG, JP Morgan and Goldman Sachs. Next up, CIT (not to be confused with CITI). The more criminality is rewarded, the more you get. And the more it is mimicked at lower levels, so expect more fraud, home invasions, etc.
palmetto
Good analogy as always, but depressing. My other half was saying just this week, this so called *Democratic-Republic was probably an illusion from the start. The elite has always run this country. I, on the other hand, think our Founding Fathers set up a great road map, but the off ramps came along.
*A Constitutionally Federated Democratic Republic
The elite has always run this country. I don’t know if I agree with that, but I must say that in past decades the elite were far more willing to contribute to the entire nation. Think of Teddy Roosevelt Jr., who was the only general to land with the first wave on Utah Beach on D-Day. He was the first off his landing craft. When he recognized that the boats were well off their assigned positions, he re-arranged his unit’s activities to meet the situation. Later General Omar Bradley was asked to name the single most heroic action he had ever seen in combat, and he replied, “Ted Roosevelt on Utah Beach.” Roosevelt was awarded the Congressional Medal of Honor for his acts that day. Eisenhower had him set for promotion to Major General, but Ted died of a heart attack in France a month after D-day. He is buried next to his brother Quentin, who was KIA in WWI. I forgot to mention their father Teddy Sr. was also awarded the CMOH, posthumously in 2001, for his actions on San Juan Hill in 1898.
Teddy Sr. also tried to re-join the service during WWI. He was turned down.
They don’t make ‘elites’ like those guys any more.
I have come to learn about Teddy Roosevelt rather late in life and in the process, have developed something of a reverence for the man. He truly loved the American people, it would seem. So much so, that he set aside much land in the form of national parks for them, protecting the lands from future development and dedicated for the enjoyment of the citizens. I get a sense that he wanted the best for his people. I find it interesting that he was succeeded by one of the vilest presidents ever, Woodrow Wilson.
say what,
I agree their is a conspiracy to create an illusion of stability in the housing market, and I believe its major goal is not so much to propel consumer spending, as to KEEP FB’s PAYING MORTGAGE money.
Just learned of a “new to rental market” house in Morro Bay CA where the rent being asked for furnished house w/ utilities is less than 1/3 of 1% of the sale price being asked. When will these jerks learn that 300x monthly rent is not an attractive price.
And what if the FBs decide that they no longer want to keep paying mortgage money?
“I believe its major goal is not so much to propel consumer spending, as to KEEP FB’s PAYING MORTGAGE money.”
You nailed it. Think about it….. you lend a dollar and get back $2.40.
Of course we keep hearing………
THE POOR BANKS and THOSE CRIMINAL BORROWERS!!!
When they can give up the idea that doing that is somehow adding value to their existence “I am a homeowner”.
If you’re upside down on your property 30,40, or even 50%, why would you continue to pay the bank ? Someone help me out on this.
In the last few months I have had several reasonable offers turned down (reasonable 1999 prices) on houses that are bank owned and still sitting empty today. Yesterday my LL who hasn`t seen the house I rent from them in four years and I am 99.9% sure have not paid their neg-am mortgage in four months told me they had a realtor who said I could buy this (POS) house on a short sale with no money out of pocket using the first time tax credit and own it for less than what the rent is, and they are not making a dime on the deal (I guess the $40,000 HELOC they took out before they left doesn`t count) I have not missed a rent payment in four years but get collection letters from WAMU, HOA lawyers and the pool service company in their name. They are also trying to get a cram down on the house they bought when they moved back to Long Island in 05.
jeff saturday,
I’m sorry to hear that Jeff. And again I don’t know if “owning” is even really your design or intent? I’ve recently blown a gasket over one of our HOA members wanting to rent out their unit after the most recent one moved out. ( Knifecatcher )
You’ll find yourself caught up time and again in some specuvestor’s scheme. But bubble-sitting is a piece of cake, right?
What a Moron I am your friend is the genius…..stashing all that free rent money away.
tell her to get month to month tenants..probably be at least another year before she gets foreclosed on then she will be debt free,l ots of cash in da bank……with 10 foreclosures on her report.
It is getting harder to tell who the “fools” were in this whole fiasco- those who abstained from the mania or those who took part in the “looting” and are still enjoying their goods while the gov devises ways to help them keep it.
There was an episode of the Twilight Zone the other day.. the theme was “Futures Trading”. It wasn’t financial futures.. it was people’s futures… their future lives.
If a person felt their life sucked, they could pay a fee to this Futures Trading company and trade their life in for some other client’s life.. perhaps one where you’re powerful, famous and wealthy..
My guess is that while quite a few FBs would be most anxious to sign up, few people, if any, would trade places with them.
Sounds a lot like what the FB’s already signed up for when they got a $500,000 mortgage on a strawberry pickers income.
Excellent point alpha!
..$500,000 mortgage on a strawberry pickers income..
alpha, if you really envy the FB’s, I am sure there are plenty of other cons and scams you could run for a year or more, live the high life, and bail out when the time is right.. and then run another one.. A person might live his whole life that way.
there are plenty of other cons and scams you could run for a year or more, live the high life, and bail out when the time is right.. and then run another one..
Ooh ooh! I know! Call on me Call on me!
CEO of major corporation with signing bonus and golden parachute?
..CEO of major corporation with signing bonus and golden parachute..
There ya go!!
Just walk into the nearest skyscraper and tell them you wanna be one of them high fallutin’ CEO types. The jobs are a dime a dozen and require almost no skills or prior experience.. Expressing your strong desire to steal corporate income is a big plus…
I suck at golf.
Your friends homes are now part of the “shadow inventory”.
Lots of theories about why banks don’t move on foreclosures,
but the best one I’ve heard that makes the most sense is that
banks *don’t* want to foreclose because the properites would
be marked to market. In other words, foreclosing would
force the banks to take real loss and would have to be
accounted for as such. Such a loss would materially
affect quarterly earnings, affect bank stock price
and probably bonus earnings for the execs.
So obviously the banks’ “great” profit reports have been skewed a bit…
I’m just a simple caveman,but you would think that somewhere along the line, the fact that people aren’t making mortgage payments would show up on somebody’s quarterly earnings.
All this financial stuff makes my head hurt. I guess I’m not sophisticated enough to appreciate the fine nuances.
LOL. That was my thought too. That you’re a caveman. (kidding)
I’m also wondering how in the heck the banks can get away with this. Then I remember the recent FASB changes foregoing market-to-market, and it makes sense again.
Easy, they don’t really know who holds the liens these days.
Remember, the mortgages were sold and repackaged and securitized.
There have already been successful refutations by home owners of who actually holds the lien and it turns out… nobody could prove they actually had the home owner’s mortgage.
They could not find it. So the judge said the home owner could keep the house and the bank/mortgage company could go pound sand.
This is the current situation. And they know it and many home owners are wising up as well.
Thousands of trading programs somewhere are the actual owners of all those mortgages. And they don’t know where it is.
Get it now? Yeah… “Oh sh!t” is right.
I hate when my really good explanation don’t show up. Maybe later.
Oops
Easy, they don’t really know who holds the liens these days.
Remember, the mortgages were sold and repackaged and securitized.
There have already been successful refutations by home owners of who actually holds the lien and it turns out… nobody could prove they actually had the home owner’s mortgage.
They could not find it. So the judge said the home owner could keep the house and the bank/mortgage company could go pound sand.
Yeah - that too.
Easy XGS-Fixer- Get the money from the Fed (Rothchilds) at 1% and loan it out at 5-6-7-8-9-10%, whatever, makes making a profit a slam dunk.
It did. We’re soaking in it.
A few things I forgot to add to the above post:
1) If the bank marks to market (sells) a foreclosed property,
then, of course, the comps decline. This could be a bigger
problem for larger banks who hold the bag for like properties
in the same area. So, with one stroke of the pen a bank
will take an actual loss (which must be accounted for
on the books) AND effectively devalues the other like
properties they hold.
2) Since booking losses affects the banks liquidity, such
losses could raise a red flag to those fun loving auditors
over at the FDIC.
In any event, it’s a big no win for the bank.
Kinda like one of those 4th July hotdog eating contests:
If you “win” your the one who will explode first.
I have neighbors in north Florida that are doing the same thing. They have several oceanfront condos in 2 counties that are in lis pendens. They rent them out to vacationers by the week. Two of the units have been in preforeclosure for 24 months.
My first thought when I read your post was that your friend is rent skimming, which could land her in prison, but it appears after some further research that she may not be, so long as she does not rent the properties again while in the foreclosure process. The law is kind of murky. Either way, continuing to collect rent without making payments to the lien holder is slimy.
Funny, she’s confessed that she feels really guilty about continuing to collect the rent (not guilty enough to stop though). She just never imagined that this was going to continue on for 3 years. She thought it might go six months or so.
I agree that the collecting rent without paying is slimy.
Still, she’s a pretty likeable person. So, I’ll just turn a blind eye to her slimy real estate transactions. I’m sure half the likeable folks at work have equally slimy financial transactions that I just haven’t heard about yet (it is South Florida after all).
Why doesn’t she just send in the keys?
Um… free $$$ ?
Is there any way to report rent skimming schemes to the IRS?
Does rent skimming violate tax laws if they report the income? I mean if you are willing to rent out a house when you aren’t paying the mortgage you might be willing to cheat on your taxes, but one doesn’t automatically mean the other.
But you could start here:
http://www.irs.gov/individuals/article/0,,id=106778,00.html
Found by typing “report tax cheats” into the search box of irs.gov and looked through the links on the first page of results. Found this pretty quickly.
Yes. There is a toll free number you can call to report suspected tax violators to the IRS (my brother in law is an attorney with the treasury department). If the gubment investigates and collects from your tip, you get a pretty hefty commission (I think it’s 25%?). Could become a part time job. Especially b/c my B.I.L. tells us that the IRS is ramping up like nothing he’s ever seen in his 15 years there - new hires, expansion. Should get innnnnneresting.
I asked her about taxes. She happens to be a CPA (so am I). She is declaring her rental income and paying taxes on it — quite a bit too since she doesn’t have the mortgage interest expense to offset her rental income.
“So, I’ll just turn a blind eye to her slimy real estate transactions.”
Unbelievable.
I hope I you never complain about crooked businesses and government entities.
Part of you must admire your thieving/unethical co-worker.
Uhhhhh…
Get over yourself.
I work with someone who does some slimy business transactions. What the heck do you want me to do about it? Refuse to work with her? Declare shenanigans on her in the next company-wide meeting? De-friend on linked.com (I don’t use Facebook)?
Or maybe I could file a complaint against her with the mythical business ethics authorities (since there are no legal authorities I can complain since she hasn’t done anything even remotely illegal).
Please give me exact details of what you would do in a similar situation other than what I did (complain about the slimy transactions on a relatively anonymous message board).
Tell her she sucks? Just a thought.
Call her out on it. Tell her if she continues to accept the money that you’ll report her.
Tell her you don’t appreciate it. Tell her that’s she’s unethical and that you no longer trust her.
Some of us have the gonads to say just that kind of thing -and have done so numerous times.
In fact, some of us - such as myself - have called out senior executives on it, quit on the spot, walked out from a corporate job - and did so without having anything else lined up.
That’s what I expect from Americans in general. I fully realize that 80% will never live up to that expectation.
That’s what’s wrong with this country -
Sh*ts from all walks of life will continue to screw others at will unless the good people decide to do something about it.
Sadly, most will complain - whine without end - and do nothing but let the unethical continue to fleece others.
Thanks a lot.
Incidentally, perhaps YOU are the one who should get over himself/herself. Your JOB is more important than principles?!
Those in the military put their lives on the line for you so that you can what - let the unethical and immoral run roughshod?
Collectively, we on this board bitch regularly about the unethical and immoral in business and in government. As long as we’re willing to put up with it, the scenario will continue to get worse. If you look the other way, they’ll continue to screw you and yours. Got it?
Eudemon, my deepest thanks for that. I thought I was alone in this sort of thing.
It takes balls to call people out like that. Most people avoid confrontation and don’t have the constitution for it. I can’t say that I do, most of the time…
But good points/rant, Eudemon
Couple of observations. For reference I am in South Florida.
I have a few friends and neighbors that have been in ‘foreclosure’ going on two years. They stopped paying the mortgage,yet the banks have not auctioned the houses. They have been living there for FREE, banking over $50,000.
Your friend is receiveing rent money on properties she is not paying on. Sorry to sound mean, but that is rewarding her for bad behavior.
The banks are scared to death and do not want the houses back. There are stories down here about people begging the banks to take back the houses, and the bank flat out refusing.
There are another two foreclosures in my development and in my zip code there are at last count over 150. The “shadow” inventory is massive and the banks and lenders are still playing the same games. This is going to get much worse.
I canot imagine why a potential buyer (if you are really set on buying) would pay retail when there is such a huge inventory of short sales and foreclosures. You can buy for about 50% off current retail prices.That being said, with such a disparity between wholesale and retail prices, there HAS to be some sort of further adjustment. You cannot have one house for sale in the neighborhood at $425k and a foreclosure in the same neighborhood at $225k.
BTW, did I mention that I just negotiated a renewal of my lease at a 25 % DISCOUNT to last year? So tell me how it’s a great time to buy.
There is a very good discussion (with charts) over on
piggington.com “Another Chapter in the Increasingly
Boring Tale of the Shadow Inventory” (July 10.)
It’s San Diego centric, but I believe the basic premise
would apply to any specific market.
One of the local radio shows here in LA/OC
(House Calls KFWB-AM 10-12am Sat) has recently been
playing up the perceived “shortage” of properties in the MLS.
Of couse, if it was possible to add in all the shadow
inventory to the MLS, it would paint quite a different picture.
you better get prepared to move out one of this day when the house is foreclosed.
Dude, can you let us know who the lender is? Talk about a sweet shorting opportunity!!!!
Pick a bank, any bank. I don’t think this is limited to any one.
And yet I continue to lose my butt in SKF….
You expect the markets to reflect reality? What a quaint concept. I’m gonna write that down.
She hasn’t paid a nickle on these homes in nearly 3 years.
Wow! My best is 20 months here in California…
This isn’t over by a long shot.
Got Popcorn?
Neil
Think a bunch of things about this…. our time lines were way to optomistic.
1) The banks in no way want price discovery
2) TARP money is being funneled to bond holders
3) TARP money is being used to sit on property to help prevent price discovery
4) Many of the banks are bankrupt and no longer able to service the MBS or pay to forclose
5) A lot of the MBS have been sold to garbage investors who are just sorting things out and seeing how to take advantge of this
This has market long term decay written all over it.
I am out exercising every morning. I’m going past five or six empty houses every day. They have signs on them but don’t show up in the MLS. Will contact lenders and offer cash flow positive price numbers for the houses and try to turn them to rentals.
+1
People are amazed that the banks aren’t foreclosing, but it makes perfect sense. They don’t want to drive prices down any more than they already are by trying to sell them. There’s no way they can sell the majority of these houses now, so if they foreclose they kick out someone who would otherwise be performing maintenance on the property, including just keeping the AC on - don’t underestimate the value of that!. Especially since the AC is paid for by the tenant and not the bank.
And as you say - they don’t want price discovery. If I were a bank - I certainly wouldn’t be foreclosing either in this market, if I had even an inkling that the market will have any kind of reasonable turnaround in the next say 3-5 years.
And:
This has market long term decay written all over it.
Yep
Many banks can’t foreclose. They no longer know who actually holds the mortgage.
MBS anyone?
…The banks in no way want price discovery..
No doubt about it.
Much like the highroller who doesn’t want his trophy
girlfriend to discover that her “diamond ring” is really
made from cubic Zirconia.
If there was ever a giant game of chicken being played
out this is it. I fully agree that the TARP money is
backstopping many banks.
However, it is going to get really interesting when one
rogue bank (perhaps a smaller one) who doesn’t take
TARP funds decide to wash all the toxic waste from
it’s books. Talk about price discovery! From that
point on its the race to the bottom. (Unless the
government contrives some other market distorting scheme)
Bingo.
I’m starting to find this all rather amusing. The PTB may very well have been too smart for their own good. They thought they were fleecing sheep, but the sheep turned out to be rats.
The banks are now damned it they and damned if they don’t and while J6P ain’t very bright, he’s learned a lot about cheating and stealing from the best.
It appears the tables have turned.
blasted typos.
I can take you to a house that’s within easy walking distance of mine. It was owned by an elderly lady who took out a reverse mortgage a few years back. I’ve told the story here before, so I’ll spare you yet another re-telling.
But, long story short, the house ended up in foreclosure. However, the Pima County Assessor records still list the house as being in the elderly lady’s name.
Check out Milwaukee and their abandoned houses in an earlier HBB.
Gatorfan,
Beware.
I would be very caring in any dealings with said co-worker. She’s immoral and unethical, that much you know. To scam the system that way (taking tenant money whilst not abiding her own responsibility) is inexcusable.
She’s also a thief. She’s taking your tax money.
I checked the recorder info for a vacant Phoenix house next door to my Aunt. It was set for an August Trustee Sale. I then ran the debtor’s name through the recorded docs database for Maricopa County, and she had nine Trustee Sale notices in May/June 2009. So nine more Trustee Deeds will likely be issued in August/September 2009. They were all from the same servicer, which must have given up on any hope of any payment.
I might have mentioned to the renters who were moving out that they could have stayed in the house for free for at least a couple of more months, plus get some cash from the bank. But my Aunt was comfortable with the couple’s motorcycle enthusiast friends having to find a new hangout.
So a REALTOR is a person of interest in the murders of the husband and wife with 16 kids in Florida.
http://news.yahoo.com/s/ap/20090715/ap_on_re_us/us_florida_couple_slain
Last night it was reported on ABC News that there was a gang connection, possibly MS13. Wow, I guess the gangs are “going global” and are all affirmative action in their recruiting now, since the home invaders were Anglo and Afro American.
Agents do gain access to a lot of homes through their rounds. And sadly, many people are also inclined to trust them with personal and financial information.
Why do I get a “there’s got to be more” vibe from this story.
What’s even more disturbing is that such a large group of loosely connected individuals with day jobs could conspire to commit murder.
It must have been a pretty big payoff to make it worth shooting two people to death. Sounds like killing was part of the plan also and not just a byproduct of the robbery.
So, the couple had a sophisticated surveillance system? Why?
“So, the couple had a sophisticated surveillance system? Why?”
On account of they had 12 children with developmental problems and disabilities. They wanted to be able to monitor their children to make sure they were OK.
But I do agree, there’s more to this story. The parents owned pawshops, a finance company and a used car business. Also, the realtor has just been named an accessory after the fact, for providing the van and a place to hide the goods.
Ahhh….makes sense now. The one pawn shop guy I’m acquainted with is very paranoid. Could easily picture him storing valuables and cash at his house and needing a surveillance system.
Sweet! Just a few hours after slobbering Barney Fwank announced that ‘”we” are not going to let CIT fail. Wonder what old the banking queen will have to say this morning.
CIT talks fall apart, bankruptcy looms…
WASHINGTON/NEW YORK (Reuters) - CIT Group Inc, a lender to hundreds of thousands of small and mid-sized U.S. businesses, said bailout talks with the government had ended, a development that could ultimately drive the company into bankruptcy.
Wednesday’s announcement followed last-ditch talks in which Treasury officials had expressed concern about a worsening liquidity crunch at the 101-year old lender and indications that government aid would not put it on a path to recovery.
It also showed the possible limits of Washington’s ability and willingness to rescue companies, after multiple bailouts engineered by Treasury, the Federal Reserve and the Federal Deposit Insurance Corp for larger companies such as American International Group Inc and Citigroup Inc.
“At least in the eyes of the Fed and the eyes of the Treasury, we’ve turned the corner, such that the systemic kinds of risks facing the economy may be well past,” said Mike Knebel, a portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon, which recently sold CIT bonds.
“It also showed the possible limits of Washington’s ability and willingness to rescue companies, after multiple bailouts engineered by Treasury, the Federal Reserve and the Federal Deposit Insurance Corp for larger companies such as American International Group Inc and Citigroup Inc.”
It also showed the possible limits of Washington’s ‘INABILITY’ and willingness to rescue companies, after multiple bailouts engineered by Treasury, the Federal Reserve and the Federal Deposit Insurance Corp for larger companies such as American International Group Inc and Citigroup Inc.
wmbz,
And when you think about it, this is one instance where a bailout ‘may’ have made sense? Since employment growth won’t be coming from the bigs any time soon, wouldn’t it have made more sense to work with a lender that actually does something besides pass out checks for hyper-inflated home values?
Nope, not IMO, big, medium or small, you fail, you fail, no “bailout” by the gubermint. Private sector buy outs, fine, leave big nanny out of it.
I agree w/ wmbz. Nevertheless I am not too uncomfortable holding bonds issued by corporations whom the govt has apparently deemed TBTF. Merrill, Prudential, Hartford. If you can’t beat em join em.
+1
Absolutley not. This place lends to commercial developers, yes? If they fail, and the developments go bankrupt, then they will be purchased by others for less money (and therefore less debt burden) and will be able to lease out retail/commerical space at lower rates which will allow businesses to operate successfully with lower incomes. Deflation in business costs is sorely needed to adjust to the new economy.
Interesting point. I know of at least two solid, long term businesses that were forced to move or close due to skyrocketing rents.
I wonder if the debt bubble masked that kind of effect.
Unfortunately, one intended or (unintended?) consequence of bailing out the biggest banks is that they have had safe harbor, while all their competition is wiped out in the storm. We will be left with fewer banks, less competition and IMO more bad banking behavior in the future.
What? The feds are finally going to let a zombie bank die? Yipes!
Well to be truthful, CIT had been acquired by… Tyco, back in ‘01? IIRC for $9 bil. they were spun off not long after at a huge loss to TYC. Anyone remember that? It’s hazy.
Still, I think GH made my point. Besides, they were more than just a lender, they were more like a partner. I guess I’m sensitive about it b/c my daughter and SIL are thinking about starting a sporting goods store and I asked me how they find ’some’ financing?
Uh… now that MEW-funded “groovy retail” is all but dead, where can they go? ( I mean ‘other’ than me? ) Like it or not, there won’t be any Green Job Messiah to save us. It’s all boot strap from here on in. Anyone rent “There Will Be Blood” like I TOLD ya’ll over the weekend? Hmm..?
And, as I ranted about the other day, Green Jobs are hard, hard work. As in, hot, sweaty, and dusty work.
Not only that, you do need to have some brain cells functioning. Installing solar systems isn’t a job for dummies.
“solar systems”
…and God said, let there be light.
I’m getting the vibe that he next three month’s will be interesting. I think the full scope of the financial/housing black hole will come into focus.
I think we’re about to enter the “nobody can control it” phase.
US foreclosures up 33% from same time last year.
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/16/AR2009071600699.html
I’d be glad to enter the “nobody control it” phase. It’s Washington and Wall Street’s feeble and misguided efforts to control it that are making things worse, IMO.
Washington to CA: Drop Dead!
Nobody can control it, but they’re sure going to try. And you don’t have to be a stockpiling ammuntion, MREs and gold nut to think that the attempts to do so are going to have as many negative consequences as simply letting RE prices adjust would.
I represent that remark (stockpiling guns, ammo, food, precious metals).
Robiscrazy,
How about a little info on that stone totem pole in the water thingy when I click your link.
Heck, I can answer that one. Rob is crazy.
Morning all
In the continuing saga of Wisconsin of Job Losses in the big boy TOY department….
As profit plummets, Harley to cut 1,000 more jobs
By Rick Barrett of the Journal Sentinel
Updated: July 16, 2009 7:20 a.m.
Harley-Davidson Inc. says it is cutting 1,000 more employees as its second-quarter profit sank 91% on falling motorcycle sales.
Harley said Thursday its earnings for the quarter ended June 28 fell to $19.8 million, or 8 cents per share, from $222.8 million, or 95 cents per share, in the same quarter in 2008.
Revenue declined 27% to $1.15 billion.
http://tinyurl.com/lkpbsx
Mercury Marine warns Fond du Lac jobs might move to Oklahoma
By Rick Barrett of the Journal Sentinel
Posted: July 15, 2009
Outboard engine maker Mercury Marine Inc., one of the Fox Valley’s largest employers, said Wednesday that it soon will decide whether to move its Fond du Lac operations to Oklahoma.
The move could result in the loss of about 2,000 jobs in Fond du Lac, where Mercury has its headquarters and a large manufacturing plant. The move would send a shock wave through a region already hurt by the loss of manufacturing jobs.
Nothing has been decided yet, and other options also are being considered. But with the boating industry in a steep recession, Mercury says it must make additional cost-cutting decisions soon
http://tinyurl.com/ltsbfy
I hope Brunswick goes tits up! Mercury engines suck big time and Brunswick ruined Boston Whaler and a bunch of other boat lines. The boat engine business is just a micro version of the auto industry. Mercury and Evinrude/Johnson dominated salt and freshwater till Yamaha came along (Honda and Suzuki too). I don’t know much about motorcycles but I do know a lot about boats and it’s been my wish for over a decade to see Brunswick aka” The Dark Side” crash and burn.
muddyfoot,
What was surprising was that in the wake ( no pun intended ) of the dot.com crash, yacht sales continued… to boom! In fact, I think ‘01 was one of their best years ever. And sales did nothing but ramp up until recently.
Didn’t Genmar go under recently as well? I’ll never understand why they didn’t farm out warranty work to small independents but they were so commited to the marina model I guess they couldn’t see past that?
Me again. I should have noted this in my earlier comment about the vacant Harley Davidson of Tucson location.
Although the store building is empty, the back of the property is being used for boat storage. And, boy, are there some big boats back there. I can’t help thinking that those boats were foreclosed upon.
Didn’t GM farm out the engine for the ZR-1 Corvette to Mercury 20 odd years ago? Back then GM considered Mercury’s engine technology superior.
Yeah…….didn’t work out so well.
John Lingenfelter was one of the guys that modified the engine for more power. I remember an interview 10-15 years ago that he did……..said they typically put incoming engines on an engine dyno, for baseline and problem detection reasons.
He said that the ZR-1 engines horsepower ratings varied as much as 40-50 horsepower…….which doesn’t say much about Mercury Marine’s Quality Control, especially considering how high-profile this project was at the time.
Brunswick closed the Bayliner manufacturing facility here in southern OR; there is still a bunch of shrink-wrapped cruisers sitting on the lot of the empty plant. You can also see what looks like forms for fiberglass i guess. You can see it from I-5.
The North River boat operation is also shut down. The FBI raided their property for evidence, due to false booking of revenue iirc.
The competition amongst the states for jobs will be an immensely interesting side bar to this high drama. For many people the foresight and adroitness (or lack there of) of their state and local pols will be what makes or breaks them.
Here in IL, we just got a budget that kicks the can down the road a year. Seriously, what state and local pol would think that revenues will rebound that quickly?
Oh yeah, and they’re saying MI just lept past 15% unemployment!
competition amongst the states for jobs ??
Excellent point edgewaterjohn….Maybe worth further discussion…Around here the rumblings are strong about modifying Prop#13 into a split roll to allow the raising of property taxes on commercial..I don’t think there is much chance of it but if it happened you would not be able to find a uhaul trailer anywhere in this state…
Here in Ohio, companies don’t pay much property tax. Technically they are supposed to, but all the small local cities like to give 100% property tax abatements to lure companies from neighboring cities/suburbs. What is important to cities is not the property tax paid by companies, but the income tax paid to the cities by the employees.
As a result, Ohio companies are nomadic. They move every 10-20 years to gain property tax breaks and stiff their employees with city income taxes.
That’s one reason things are a bit different here than on the coasts. Cities pop up here and there, lure companies to them for 15 years, then start a steady decline as other new cities steal the companies. So in effect, “cities” are constantly moving.
Makes it very hard to pick a place to live when your employer may move 30 miles away next year.
Interesting perspective Cincy…
Tried posting a link here earlier from a local rag about the official rate now at 15.2 percent.
But if you also count those who haven’t even looked for work in the last month or part timers who want but can’t find a full time job, it’s 22.5 percent.
I’m sure glad now that my chronically underemployed brother blew $20K+ on a new fatboy two years ago. He told me it was an “investment” since Harley’s “keep their value or appreciate” and hence it made no sense to purchase one used. Gotta belly up to the dealer and pay full list price. Just like buying gold ingots.
A acquaintance just offered me his Harley for $15,000….He has roughly $40,000. in it…I will pass…Not into riding motorcycles on the street particularly around here…
He has roughly $40,000 in it
Great googly moogly. And I thought boats were bad! That’s just… insane.
The “Harleys keep their value” dogma is more widespread than the “housing never goes down” groupthink.
I don’t think it was a Harley, but I saw an episode of a “clean out all the crud that you bought” reality show and an older “classic” motorcycle sold for $200. Yes, those are hundreds, two of them.
Keeps its value. Right.
Used Harley prices have cratered. There is an oversupply akin to housing. Too many bikes, not enough buyers. As if that weren’t enough, a lot of the owners are aging and unable to ride anymore, and their passion for the overpriced, underperforming behemoths isn’t shared by the younger generations. 50 cents on the dollar is what you can expect if you need to sell.
I live near where Harley Davidson of Tucson used to be. (They weren’t the best of neighbors, BTW. We really didn’t care for their loud store parties and the crowds they attracted. But, with some help from the city, those got shut down.)
Any-hoo, the Harley place is now empty, the “for rent” sign has been there for almost a year, and who knows when it will be occupied again.
As for Harleys on the roads of Tucson, I’m seeing fewer of them, than, say, a couple of years ago. I guess coolness comes with a price.
And there’s also the safety factor. I know a lot of cops, and to a man and woman, they do not enjoy responding to motorcycle accident calls.
I have friends in a motor cycle club. 4 deaths over the past 5 weeks. Would not like to see young families buying motorcycles.
Motorcycles would be much safer if there weren’t such things as cars and trucks. When a motorcycle collides with one of them, it’s curtains. I grew up riding dirt bikes, but ride street bikes very infrequently, mainly because I am very uncomfortable in heavy traffic.
I mentioned before I raced Prof. Moto for Team Honda. I could wheeling a 900 Kawasaki at 140 miles per hour (yes it was blue-printed) and think about lunch.
Haven’t been on a motorcycle for 20 years, and never intend to again.
wheeling =wheelie
I never learned to ride a bike in San Jose - the traffic is just too crazy there. Now that I’m 56 and living in Boise, I consider my window to be a novice biker to have passed.
I was shocked moving here to a “no helmet law” state. The libertarian in me approves, but I still shake my head as yet another dude goes by on a highway in a T shirt and no helmet.
Yeah, but could you ride that 140 mph wheelie in peak commuter traffic(not a track free of cars)?
My impression….most motorcyclists die from impacts with cars.
Oh, and of all the v-twin cycles you could buy, why would you purchase a Harley Davidson? With all the nifty options out there, people choose the oldest technology. What’s wrong with an inline 4 cyl that doesn’t vibrate near as much, weighs less, is quick, and quiet?
There must have been a load of accountants out there wishing they would have joined the Hells Angels or Mongols when they were kids. Trying to relive or recreate the past.
Google Ghost Rider video - that maniac is doing wheelies in traffic at 290KPH
Yes. I’ve seen some of the Ghost Rider stuff. Did that guy ever get caught? He also did some stunts in a Subaru STI.
Yeah, I had a Suzuki two stoke road bike as my only transportation in college (many years ago). I got on it one day and before I started it, thought of all the close calls I had had from old ladies pulling out in front of me. I got off the bike and never rode again. Since then I have taken up serious SCCA road racing in Formula Cars, including Formula Atlantic. I felt safer in the race cars than on a bike on the street. Bike are REALLY fun to ride, but….
And why would anyone want a Harley? They are heavy and slow and seem sort of …..old.
“The rate of decent is slowing”.
When people stop seeing that as good news, I’m bunker bound.
Even as the derivative gets smaller than it was before, the integral still gets larger….
“The rate of decent is slowing”.
The velocity of good.
“Bad Moon Rising”
I see foreclosures are arising.
I see trouble on the way.
I see earthquakes and lightnin.
I see bad times today.
Chorus:
Dont buy a house tonight,
Well, its bound to take your life,
unemployments on the rise.
I hear hurricanes ablowing.
I know the end is coming soon.
I fear food stamps flowing.
I hear the voice of rage and ruin.
Chorus:
Dont buy a house tonight,
Well, its bound to take your life,
Theres foreclosures on the rise.
Excellent. As always!
“I think we’re about to enter the “nobody can control it” phase.”
Prepare for a soft landing
1. Prepare an Emergency Plan in your head!
If you know the housing market is going to crash, you have a few minutes to prepare before the actual situation.
2. Take on an Emergency Position!
lean forward and put your chest on your thighs and place your head between your knees, take hold of your ankles with your hands. These positions prevent damage to your spine at the crash.
3. Keep calm!
It is very hard to keep calm and not panic right before and after such a crash. Let’s think about which direction is the safest to go, and try to give maximum chance for your survival by thinking calmly about how to do it!
4. Take on the Oxygen Mask!
You should always take on your own mask, before helping others. In case of loss of home values these masks are only required for a few minutes, while the pilot navigates the housing market to a lower value, where the outside pressure is high enough so that you can breath normally. Don’t be afraid to take it off and leave it behind after this has happened.
5. Protect yourself from the smoke! The best you can do is to put a cloth in front of your mouth and nose. If you have a chance, make the piece of cloth wet, even with your own urine if there is no other way, it also reduces the risk of internal injuries if your bladder is empty. It may sound disgusting but it works and may save your life!
6. Leave your rental propery immediately!
The most important after a housing crash has happened is to leave the rental immediately! Don’t sit around stunned and waiting for instructions, GET MOVING as soon as possible.
7. Quickly move away from the wreckage!
I’m fairly certain that I will have an empty bladder in the event of the plane crash.
5. Protect yourself from the smoke! The best you can do is to put a cloth in front of your mouth and nose. If you have a chance, make the piece of cloth wet, even with your own urine if there is no other way, it also reduces the risk of internal injuries if your bladder is empty. It may sound disgusting but it works and may save your life!
but it works and may save your life
Have you tried this method before? With the urine?
“Have you tried this method before? With the urine?”
No I have not, but urine can win you the medal of honor.
Maynard Harrison Smith
From Wikipedia
Staff Sergeant Maynard Harrison Smith
United States Army Air Corps
Sec.of War Henry L. Stimson awards MOH to S/Sgt. Smith
Nickname Snuffy Smith
Place of birth Caro, Michigan
Allegiance United States of America
Service/branch United States Army Air Corps
Years of service 1942–1945
Rank Staff Sergeant
Unit 423d Bombardment Squadron
Battles/wars World War II
Awards Medal of Honor
Air Medal
Maynard Harrison Smith a.k.a. “Snuffy Smith” (May 19, 1911 - May 11, 1984), US Army Air Forces Staff Sergeant and gunner aboard a B-17 Flying Fortress bomber in World War II, was awarded the Medal of Honor for his conduct during a bombing mission over Germany on May 1, 1943.
After completing the aerial gunnery school, he was shipped overseas to Thurleigh, Bedfordshire, in south-central England, where he joined the 423rd Bombardment Squadron, 306th Bomb Group. Staff Sergeant Smith quickly gained a reputation as a stubborn and obnoxious airman who did not get along well with the other airmen stationed there, hence his nickname “Snuffy Smith”. Consequently it was six weeks before he was assigned his first combat mission.
Medal of Honor action
It was during his first mission, on May 1, 1943 that Staff Sergeant Smith, who was assigned to the ball gun turret, helped save the lives of six of his wounded comrades, put out a blazing fire (with his own urine stored in his catheter bag as was worn by all such airmen), and drove off wave after wave of German fighters.
Probably empty bowels too.
Why, I got an empty bladder right now just thinking about a plane crash!
So I thought, ‘Heck, why not practice just what to do, right here in my twirly office chair?’
(No, not really. I just said that for fun.)
…Truly, though, what sort of person wastes time in an emergency earnestly pe*eing on a spare han*ky? In that sort of situation I’m going to hold my breath and claw my way to fresh air out over the tops of people who are bending over and looking for their spare pe*e-soaked hanky.
Jeeze! Who writes these things?! I bet they never EVER been in that particular situation!
LOL!
My kind of thinking there, Oly!
I prefer to err on the side of safety. Next time I experience turbulence, I’m going to immediately give myself and my seatmates a golden shower. No need to thank me.
hehehe…..I’ll take death, thank you very much.
Yeah, yesterday the MSM was in a tizzy cuz house prices went up! At dinner my sister and BIL were crowing about this news and I just clammed up. Why be the perpetual Debbie Downer by pointing up that this was likely due to high end properties now being sold at 50% from peak. A couple McEstates sold at $10 mil instead of $20 mil will certainly skew the numbers… I just smile and agree…
Aw, come on. Be a Debbie Downer. We are
I’ve been on the same wavelength. Why quailify the eternal optimists on (real & true) current events when there is such a ploy to keep the focus on the rebound and skewed stats? I’ve found myself just nodding and saying “hope” a lot, it sure has worked well for Obama land thus far.
Seems to be working for me, too. No one wants to be viewed as the eternal dark cloud. I could care less what they think of me personally but I have to get along on a professional level- so my professional relationships seem to function better/easier when: “…I just smile and agree…”
I’ve also been playing the “question” card more often. Knowing full well what the answer is. Getting someone to actually think requires that they respond to a real (set-up) question. Wait for an opportunity… they come often. Like, “The market is coming up/back, home sales are on the rise!” I ask if the #’s are month to month,YoY, or from peak; they almost always don’t know, let alone understand the difference. Use a question to get your point across in a less drab way. It is great to see them squirm trying to come up with a plausable answer… or, a straight up lie. Then you can tell the difference between someone that just swallows what is put in front of them vs. the scammer looking to enrich only his/her self.
It is my stoopid vs. conniving test…
I just spent several days with my sister’s family. The foreclosure next door to them (which needed work) finally sold for more than $500k in their gated golf course community outside Phoenix. She was talking about what a ‘deal’ it was. I said they grossly overpaid, and it would be evident in a few years time as prices are still falling. She said that only the bad neighborhoods are, and that house prices in her neighborhood are rising. I felt my blood starting to boil so I just laughed and changed the subject. She’s clueless, as are many people who have unlimited supplies of cash and feel no economic pain whatsoever.
It’s like they live in Whoville!
Geithner Says U.S. Can’t Afford to Apply Growth Brake Too Soon
July 16 (Bloomberg) — U.S. Treasury Secretary Timothy Geithner said that authorities will be careful not to blunt measures aimed at pulled the economy out of recession.
Withdrawing stimulus too soon “would weaken our long-term fiscal process and weaken the basic fabric of the economy,” Geithner said in an interview with Bloomberg Television in Paris today. “That’s not something we can afford to do.”
The U.S. unemployment rate rose in June to the highest in almost 26 years as officials battle the deepest recession in half a century. Geithner said July 11 it’s too soon to determine whether a second stimulus package is needed, saying that the $787 billion measure that President Barack Obama signed into law in February may not take full effect until the second half.
“We’re not going to repeat the classic mistake that the U.S. made in the 1930s and that governments around the world have made in financial crises, by at the first sign of hope putting the brakes on prematurely,” he said.
China became the first major economy to rebound from global recession after today reporting 7.9 percent growth in the second quarter. Geithner said that emerging Asian economies are providing ground for “cautious optimism” about the prospects for global growth.
“We’re seeing durable signs of greater confidence” in markets, Geithner said. He earlier called for “comprehensive” reform of compensation practices as part of the U.S.’s shakeup of how financial markets are regulated.
May I suggest something Mr Geithner? Please don’t consider applying any growth brake till YOU SEE SOME GROWTH.
And I don’t mean growth in the number of unemployed.
(although to be honest, some good old growth brake in the form of higher interest rates would be a welcome thing for me)
Withdrawing stimulus too soon? Aw, come on, Tim, don’t get too personal now.
“stimulus interruptus” We swear we’ll pull it out in time.
Tee Hee!!!!
before the “money-shot”
“growth” brake? What growth?
“China became the first major economy to rebound from global recession after today reporting 7.9 percent growth in the second quarter.”
Ok, get a clue. This is not growth for these people. This is “preventing the masses from cutting our heads off and putting them on a stick.” 8% is what they need.
Will China be able to keep this up? Without the US population with VISA card at the ready? Really?
Hmmm.
Roidy
yes, and those FBs NEED to get 650 k for their houses. I don’t think either one is going to happen.
French workers threaten to blow up site
By Peggy Hollinger in Paris
Published: July 14 2009 03:00 | Last updated: July 14 2009 03:00
“Workers at a failed French car parts supplier are threatening to blow up their factory unless the company’s two biggest clients - Renault and PSA Peugeot Citroën - stump up extra compensation.
Employees of the engine parts maker New Fabris have rigged up gas canisters inside a factory workshop, which they say will be detonated on July 31 if the two carmakers fail to pay €30,000 ($42,000, £25,850) to each of the 366 workers facing unemployment”.
I think these workers have an axle to grind…
Too bad they didn’t fight the Germans with such tenacity.
“Run away! Run away!”
(Battle cry of the French Republic)
((Just kidding. I’m French. Or was, until my ancestors ran away.))
Only the French would name a car company “Lemon” (Citroen).
Well the Americans did attempt to market their Chevy Nova in South America sans a name change.
No va = No go.
Urban legend. Check out snopes.
Only the French would name a car company “Lemon” (Citroen).
You mean citron, non?
I’m sorry to hear of their woes - The Citroen Safaris were awesome cars. The hydraulic systems made them superb long distance tourers, on dodgy roads. Plus, very very cool looking…
We had neighbours who would drive to and from London and southern Greece every summer in one of those tanks, back in the day when Greece was a 3rd World country (ditto Yugoslavia) and had roads that would swallow up lesser cars to the wheel arch.
Having the hydraulics up to Warp 7 took a but of getting used to, and you’d need to get your “land legs” back after a few hours driving, but they’ve always been on my list of ‘totally impractical cars I fell in love with in childhood”
(See also the Jaguar E-Type…)
Re: Nova
I call BS on Snopes. I distinctly remember native Mexicans in Mexico making fun of that name when I was there in the late 80s.
FWIW - I think the French are tenacious - they just are *really* bad engineers compared to the Germans.
(generalizing of course)
The Eiffel tower is still standing you know…
As an engineer - I can say the Eiffel tower is one of the easiest things ever to build, and nearly impossible to take down unless doing it piece-by-piece. All it is is one big triangular-shaped support structure. No worries about wind effect on walls, concrete wear, weight distribution, HVAC, plumbing, wiring, etc. It actually was built to be temporary for the 1889 world’s fair, but they decided to just leave it up.
There are French engineering achievements to be sure - e.g. the statue of liberty is one, and the Millau Viaduct is another; though even for that they had to partner with a British architect.
Peugeot beat Audi at LeMans this year.
At least current French prez presses full frontal attack on restrictive female garb:
http://www.timesonline.co.uk/tol/news/world/europe/article6557252.ece
http://www.breitbart.tv/sarkozy-looks-to-ban-burqa/
Sarkozy to burqa:
Interdit chez moi!
I admire how the French workers are so ready to “take it to the streets”. You don’t get those great benefits unless you demand them. If the rest of the world’s workers were so motivated, we might be on to something.
alpha-sloth,
Well… there’s a difference between ‘that’ and threatening to blow UP the plant ( but I get your meaning ) and I totally agree. The avg. American worker has gotten so used to eroding benefits and pay, they just go along more or less willingly now?
Besides, when your house Zillow’s for $10k more than it did ‘last’ week, who needs a raise?
Hey, they get points for creativity! Anyone can hold a “sit-in”. Plus, it’s all very French. No one really thinks they’ll blow it up.( at least not with anyone in it )
It’s like when they “kidnap” the company pres or manager. You can just picture the “victim” and his captors all sitting around a desk, smoking cigs, drinking brandy-laced coffee, talking about the World Cup match, and yukking it up.
Nobody will take them seriously until they start putting up “Al Queda in Iraq”-type videos……too bad Al Queda didn’t have some of their money with Madoff. (or the Russians).
A graph I created showing a lag between the home price bubble bursting and mortgage debt level falling. Mortgage debt hasn’t even yet begun to fall significantly, whereas home prices have already given up about 2/3 of the frontside gains.
This is why we have a long ways to go yet, and why home prices will vastly overshoot on the downside - at least in inflation-adjusted terms.
It’s likely of course that the actual debt level won’t get back down to where it was pre-bubble - as it didn’t in the last two smaller bubbles. But given the size of the bubble - I seriously doubt it can avoid falling at least some, in inflation-adjusted terms.
According to the chart, mortgage debt only goes up in the long run. Unless a century long trend has just reached its limit.
Intersting that there was a little jump in the 1980s housing bubble, and a big one in the recent bubble. IMHO housing prices were even more out of whack in NY and New England in 1987 than in 2005. So the recent bubble wasn’t deeper, it was broader, affecting more places.
IMHO housing prices were even more out of whack in NY and New England in 1987 than in 2005
Nah. Various HPI data does show NYC and Boston for instance still having much bigger bubbles this past time.
P.S. One thing I haven’t figured out how to do (or if it’s possible) in MS Excel is to have two different scales in the same chart. I see this a lot in newspapers etc., but not sure how to do it, except possibly just manually. If anyone knows how please let me know.
E.g. for this graph the Y axis values are for Case/Shiller HPI. However the debt values don’t match that scale - I had to manually adjust to show the relationship. The actual mortgage debt peak is about $11T.
Yes, you can have two scales. Highlight the data series you want on another axis and right click, going into “Format Data Series.” Then tell it to plot vs. another axis.
See http://www.mrexcel.com/archive/Chart/30391.html
Gist is, click on plot and choose the option saying “plot on secondary axis”. Of course you will need to set your secondary axis appropriately.
In the excel help files it is called “Adding a secondary axis”.
When the values in a 2-D chart vary widely from data series (data series: Related data points that are plotted in a chart. Each data series in a chart has a unique color or pattern and is represented in the chart legend. You can plot one or more data series in a chart. Pie charts have only one data series.) to data series in a 2-D chart, or when you have mixed types of data (such as price and volume), you can plot one or more data series on a secondary value (y) axis. The scale of the secondary axis reflects the values for the associated data series.
On a chart sheet (chart sheet: A sheet in a workbook that contains only a chart. A chart sheet is beneficial when you want to view a chart or a PivotChart report separately from worksheet data or a PivotTable report.) or in an embedded chart (embedded chart: A chart that is placed on a worksheet rather than on a separate chart sheet. Embedded charts are beneficial when you want to view or print a chart or a PivotChart report with its source data or other information in a worksheet.), click the data series that you want to plot along a secondary value axis.
On the Format menu, click Selected Data Series.
On the Axis tab, click Secondary axis.
Tip After you add a secondary value axis to a chart, you can also add a secondary category (x) axis, which may be useful in an xy (scatter) chart. Select a chart that displays the secondary value axis, and then click Chart Options on the Chart menu. On the Axes tab, select the Category (X) axis check box.
Thanks all you guys!
Here’s an updated graph
There’s a mean-looking gap opening up on the right.
It would be really cool if we could get this same chart separated out for the various metros.
Not sure if you’ll read this or not but - sorry can’t be done. C/S does per-metro stuff but the debt data is just national. The C/S per-metro also isn’t inflation-adjusted since inflation stats aren’t put out per metro.
I don’t understand the graph. Is it missing another y-axis for outstanding mortgage debt? It looks as if it says that for most of the first half of the century the average mortgage was only 15% of the average home value.
For all intents and purposes - yes that is correct. I’ve updated the graph to show a new secondary axis (thanks for the help - update should show up in a few minutes). Nonetheless the scales are still absolute, and indicate exactly what you say - that the *average* mortgage in the first half of the century was indeed that low.
Keep in mind that many houses are paid off - I think on the order of about 40% (?) these days even. Back then a much higher percentage was paid off.
So hypothetically if half the homes were paid off, and the other half had say 80% LTV, then the average mortgage is 40% LTV.
P.S. as a couple of points of reference - from Federal Reserve z1 data:
Home equity as a percentage of real estate value:
1945: 84.0%
2005: 58.5%
2009: 41.4%
BTW, packman, I thought the graph you posted a couple of days back (mortgage debt-to-GDP) was really interesting.
Even a couple of years into this bust, there was no visible decline yet. Was that because GDP is declining faster than debt? Or is the debt really not declining in nominal terms yet?
Thanks for sharing!
Debt is declining somewhat in nominal terms. As you say the key thing is that GDP has been declining just as fast.
This happened during the GD as well. Mortgage debt in nominal terms went down somewhat from 1929-1933, but since GDP went through the floor, debt as a percentage of GDP went way up. Eventually they flipped - GDP started going back up while mortgage debt continued down, so the slope reversed.
Thanks for the charts, packman.
CIT said late Wednesday that negotiations with regulators about a possible rescue had broken off after days of round-the-clock talks, raising expectations that the New York-based company will file for bankruptcy. The move marked a defining moment for the Obama administration and showed it’s drawing a line in the sand on federal rescues for troubled financial firms.
http://finance.yahoo.com/news/Denial-of-CIT-bailout-apf-1527320040.html?x=0&sec=topStories&pos=main&asset=&ccode=
The all knowing Filter is constipated.
Yep. Mornin’ ATE!
Are you getting enough fiber?
Who Bub? Me or Mr. Filter? I’m cornfused!!
Confused? That’s okay, as long as your not constipated.
The freakin’ filter had me remove my shoes, belt and all sharp point objects and I still can’t get my posts flying on Ben’s AZ Purple Haze Blog. It’s worse than the TSA soup nazis.
I’ll try charging the gate in my undies…
Bang..Bang..
Ooops !!
I feel your pain Mikey - all of my posts yesterday were written around 10.30 am and got dumped wholesale into the thread at about 3pm - long long after they were relevant, appopriate or interesting.
Or maybe they never were, ymmv…;-)
Mornin’ Palmy! Tell me the local weather, (like I don’t know, huh?)!!
Hot. Hot. Hot. Did my jury pool day yesterday. Didn’t get picked, most of the cases plead out. Only two juries needed. They let the rest of us go a little early. Now I’ll see if I get my $15.00 check from the govmint.
Why is it that govmint centers seem to attract som real nutters, hanging around the periphery, talking to themselves, panhandling, preaching or whatever?
Gov’t buildings are sick places. Next time pay special attention to the people working there. I’ll bet you a case of brew you won’t another work environment with more limping, coughing, and slouching going on.
To stay healthy avoid hospitals, doctor’s offices, and gov’t offices of all kinds.
“Gov’t buildings are sick places.”
Amen, brothah! Although I have to say, Tampa/Hillsborough’s govmint center isn’t as bad as some I’ve seen elsewhere. Pat Frank, the Clerk of the County Court, is awesome and most of her workers are reflective of her character and the department is generally well run. When Pam Iorio, now Tampa’s Mayor, used to be Supervisor of Elections, that department was also well run, until Buddy Johnson took over. We had some hope when Phyllis Busanski got voted in, but she bit the biscuit not long ago and Crist had to appoint someone else. One thing I can say for Phyllis, she died with her boots on.
Why is it that govmint centers seem to attract som real nutters, hanging around the periphery, talking to themselves, panhandling, preaching or whatever?
So its kinda like a real life blog?
Glad you got out of it Palmy! To answer your question, it is simply people emulating the behavior of the gubmint staff, IMHO. Wanna Bees, all of em…
Speaking of 15 percent……..
http://www.freep.com/article/20090716/BUSINESS06/907160410/State-jobless-rate-hits-15.2–in-June
Anyone watch Squidbillies?
The saying on Early’s latest cap?
“Cash is King”
Cash is mostly blips on computer screens now.
Blips is king!
Q2 shr $0.08 vs $0.95
* Q2 net revenue $1.15 bln vs $1.57 bln
* Lowering shipments, cutting workforce
NEW YORK, July 16 (Reuters) - U.S. motorcycle maker Harley-Davidson Inc’s (HOG.N) quarterly profit fell sharply, as bikers put off new purchases. It also slashed its 2009 shipment forecast and said it would cut another 1,000 jobs.
The company reported a second-quarter profit of $19.8 million, or 8 cents a share, compared with $222.8 million, or 95 cents a share, last year, as it cut motorcycle shipments by 27.6 percent from year-ago levels.
Retail unit sales of new Harleys skidded 30.1 percent from the same period, and revenue fell to $1.15 billion from $1.57 billion.
Harley slashed its 2009 shipment expectations to between 212,000 and 228,000 new motorcycles, or 25 percent to 30 percent fewer than the 303,479 shipped in 2008. It had previously expected to ship 264,000 to 273,000 motorcycles.
As a result of the lowered shipment volume, the company said it would cut 700 more positions in its hourly workforce and slash the salaried workforce by about 300 positions.
It had already announced cuts of 1,400 to 1,500 hourly production positions in 2009 and 2010 and about 300 salaried positions. (Reporting by Christopher Kaufman; Editing by Derek Caney)
What, no more CPA’s riding commando?
Foreclosures at record high in first half 2009 despite aid July 16, 2009 1:22 AM ET
NEW YORK (Reuters) - U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated.
Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.
The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year.
Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months.
One in every 84 households with loans got at least one foreclosure filing in the first half of this year.
Single-family construction in Florida to drop to 14 percent of 2005 levels
Palm Beach Post Staff
Wednesday, July 15, 2009
Florida construction activity has plunged to less than half its 2005 levels.
Single-family construction is projected to fall in 2009 to 14 percent of 2005 levels, McGraw-Hill said Tuesday, while commercial construction is expected to plunge 38 percent from 2008 to 2009.
Institutional construction, such as hospitals and public buildings, will rise 4 percent in 2009, while “nonbuilding” construction of roads and bridges is expected to soar 50 percent in 2009. The largest stimulus project in Florida is the proposed $128 million Indian Street Bridge over the St. Lucie River in Martin County.
Under Operation Loan Lies, 189 lawsuits, cease-and-desist orders and other legal actions have been filed in 20 states. In Southern California, prosecutors have moved against 14 firms and 21 people.
“At the moment, there are more scammers than there are government officials going after them,” California Atty. Gen. Jerry Brown said at a news conference in downtown Los Angeles. “There are more of these rats coming out of these holes than we can stomp on, but we’ll keep doing the best we can.”
Although the announcement was made Wednesday, the operation has been underway for weeks, FTC Chairman Jon Leibowitz said.
So far, 189 lawsuits, cease-and-desist orders and other legal actions have been filed in 20 states as a result of Operation Loan Lies, officials said.
In Southern California, prosecutors have taken legal action against 14 companies and 21 people accused of running loan-modification scams that ripped off thousands of struggling homeowners looking to avoid foreclosure.
In documents filed in U.S. District Court in Los Angeles and Orange counties, Brown and the FTC alleged that the California firms charged $500 to $5,500 in upfront fees, often promising to get lenders to modify mortgages to make payments more affordable — and never delivered.
For a upfront fee of $3,500, one alleged victim was promised a 40% reduction in her mortgage principal and a $2,000 reduction in her monthly payment by U.S. Homeowners Assistance, one of the lawsuits said. After learning in April 2008 that her loan modification request had been denied, the woman discovered that the Irvine company had forged her signature and falsified her financial information, the suit said.
Leibowitz said that homeowners should be wary of loan consultants requiring payment before services are performed. Federal and California lawmakers are working on rules to block loan modification services from demanding upfront payments.
Hundreds of thousands of homeowners have been victimized by loan modification scams, Leibowitz said, estimating monetary losses in the hundreds of millions of dollars. And the fraudulent schemes are more rampant in Southern California than in any other part of the U.S., he said.
“Part of the reason why we’re out here today is because California consumers have been among the most hard hit and also because a lot of these malefactors are based in Orange County,” Leibowitz said. “It’s one of the hotbeds of mortgage scam activity.”
Brown and the FTC are demanding millions in civil penalties and restitution for homeowners as well as permanent injunctions to prevent the defendants and companies from offering mortgage-relief programs.
Firms named in the California suits included U.S. Homeowners Assistance (also known as Statewide Financial Group Inc.); We Beat All Rates; U.S. Homeowners Preservation Center; U.S. Foreclosure Relief Corp. (also known as Lighthouse Services and California Foreclosure Specialists), based in Orange; Home Relief Services, with offices in Irvine, Newport Beach and Anaheim; RMR Group Loss Mitigation, with offices in Newport Beach, Orange, Huntington Beach, Corona and Fresno, and its lawyers at Shippey & Associates and Arthur Aldridge; United First Inc., based in Los Angeles; Payment Relief Services Inc. of Costa Mesa (also known as Mercury Financial Services Corp.); and Living Water Lending of Newport Beach.
Man, FAZ dropped 5 bucks since I wanted to short it. I wish I had the coin to open a margin account.
Lots of folks bought CIT thinking it was TBTF - down 74% this morning.
Lots of folks bought CIT thinking the government had no choice but to bail them out. CIT down 75% this morning. That’s gotta hurt.
Sry for double post.
That CIT was one of the BEST media enabled head-fakes I’ve ever seen. Truly a sucker bet.
Stay away from margin.
ESPECIALLY on triple leveraged ETFs!
Don’t worry, I wouldn’t do any of that unless I had a few other things in order first. That’s why I said *wish*
Hamptons Home Inventory Increases 12%, Prices Fall
By Kathleen M. Howley
July 15 (Bloomberg) — The number of homes for sale in the Hamptons, the towns on the east-end of New York’s Long Island, rose 12 percent in the second quarter from a year earlier as the deepest recession in 50 years cut demand for vacation homes.
There were 7,288 homes for sale in the oceanside summer retreat for Wall Street financiers and celebrities, up from 6,490 a year earlier, New York-based property broker the Corcoran Group said. The median price for all the east end towns during the first six months of the year was $605,000, down 22 percent from 2008, the report said.
“People who work in the financial markets have had job insecurity and bonus insecurity,” said Rick Hoffman, Corcoran’s regional vice president. “There were more homes competing with each other and we see that in the drop in prices.”
New York City unemployment climbed to 8.7 percent in May as Wall Street losses and asset writedowns topped $1.47 trillion worldwide. City Comptroller William Thompson is projecting the number of unemployed New Yorkers will hit a 15-year high in 2010.
Amagansett was the most-expensive area of the Hamptons in the first half of 2009, with a median price of $2.73 million, according to the report. That was up 39 percent from $1.96 million a year earlier.
East Hampton Falls
The village of East Hampton was No. 2, with a median price of $2.4 million, down 22 percent from a year earlier. The median in Bridgehampton and Sagaponack was $2.2 million, a drop of 17 percent, the report said.
The number of sales in the Hamptons plunged 58 percent in the second quarter to 175, the second biggest decline in records dating to 1982, broker Town & Country Real Estate said in a report yesterday.
More than half the Hamptons homes that traded in the second quarter cost less than $1 million and 35 properties went for less than $500,000. Just 12 properties worth $5 million or more sold, a 61 percent drop, according to yesterday’s report.
To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.
http://www.bloomberg.com/apps/news?pid=20601213&sid=aihm9mXz4b.A#
The bigger they are, the harder they fall.
“Thousands of low-income Coloradans reliant on public assistance could get a free cellphone under a plan before the state Public Utilities Commission.”
http://www.denverpost.com/ci_12838433
Just yesterday my wife commented that the kids in her special education county program here in LA were badgering her for her cell phone number, noting that other teachers/counselors gave theirs out. She explained that she didn’t have but 1000 monthly minutes and had to share them with me. These poor kids probably have unlimited calling plans courtesy of our government =/.
A friend who is a teacher in a low income area of CA often goes on visits to the homes of her students to do parent-teacher conferences. She often finds a giant flat screen on the wall amidst what is otherwise general squalor - and of course the family always has one or more cell phones.
If that’s your only source of entertainment, no movies, nothing else, I don’t see where it’s that big of a deal. The poor people will probably pay $5000 to a rent-a-center before getting it repo’ed of course, where it’s resold over 6 times.
Don’t forget cigarettes!
The cellco’s already prey on the poor, now they’re getting the gov’t involved. Grrr.
That’s what I was thinking too. Here’s a free cell phone & 80 free minutes! Ooh look, you used 400 minutes! I’ll need $50 from you. No money? Hmmm… how much is that car you got there worth?
The 80 free minutes will be gone 80 minutes after they get their free phones. However, they’ll still be able to call 911.
Forbes: America’s Most Troubled Luxury Neighborhoods
Stephane Fitch and Matthew Woolsey 07.13.09, 12:00 AM ET
The collapse in prices has finally come to your neighborhood, too, Mr. Comfortable.
Has the housing market scraped bottom? Not in some of the wealthier neighborhoods–places like New York City’s Greenwich Village, Santa Monica, Calif. and Chicago’s Lincoln Park. They held up nicely while the rest of the country slumped last year. This year such Tiffany zip codes are on track to fall 15% to 25%.
Why haven’t you heard about this? Statistics lag. With relatively low unemployment, high-end addresses don’t have foreclosures to hasten capitulation. If they’ve attracted luxury high-rise developers, these markets may be propped up by recent condo closings at foolish prices agreed to two years ago. But talk to experts who know the regions block by block–or to people who’ve sold (or tried to sell) a home or co-op. There is a still-growing supply of wildly overpriced, unsold homes–60,000 U.S. properties priced above $2 million listed on Realtor.com. Experts get these gloomy vibes by dividing inventory by the current monthly rate of purchases. “Any result over seven months generally means falling prices,” says David Stiff, chief economist at Fiserv in Brookfield, Wis. In some tony neighborhoods the level of glut is higher than the national average of ten months.
In Pictures: America’s Most Troubled Luxury Neighborhoods
Unsold inventories in Manhattan are at their highest levels in a decade. You can’t tell by looking at data about its condo market. According to Radar Logic, which generates national realty info from its New York City office, condo values fell only 4% last year–far less than the 12% drop for the city as a whole. It’s been held aloft by new-construction condo sales above the $1,200-per-square-foot level, says Radar Logic founder Michael Feder, reflecting deals struck a year or two ago. Once they pass through the system, the average price of a condo will plummet to $900 a square foot, reckons Feder.
In addition to the 10,500 properties already listed, there are another 9,500 in the wings, estimates Manhattan appraiser Jonathan Miller. Some 2,500 of these shadow listings belong to sellers who have some flexibility to keep their listings off the market in hopes of better pricing. Developers hold the rest. Both groups are likely to rush their listings onto the market once it’s clear prices are falling. Some folks can’t wait. Françoise Pourcel, 62, listed her 2,100-square-foot Tribeca loft last August at $3.5 million, in line with the sale price of a similar unit on a lower floor of her building. In June she accepted a bid for $2.5 million.
Condo prices in Manhattan would have to fall 50% to return to values relative to rents they had in 1999, a relatively sane year in real estate. A condo owner could then lease his home and garner net rental income (rent minus property taxes, insurance and fix-up costs) equal to about 7% of the property’s fair market value. The current yield is around 3.3%. Far too low.
It’s a similar story in Lincoln Park, where single-family home prices slipped only 2.2% last year, far less than in the rest of Chicago. But inventory has since tripled. Wagner Appraisal Group figures there’s a 16-month supply. A year ago “I was almost cocky about our position compared to the rest of the market,” says Jennifer Ames. No longer. After 11 months of lowering the $2.1 million asking price on her 3,400-square-foot house, Ames sold it in June for $1.6 million.
Given the glut of unsold homes, Lincoln Park’s prices may well slide at least 15% this year–as Chicago’s did in 2008. If you look at Fiserv data going back many years, you find values in Lincoln Park track the rest of Chicago pretty closely with a one-year lag.
In Santa Monica’s coveted “north of Montana” area overlooking the Pacific, listings are up 60% since last year and the number of days on the market for those listings has doubled to 140. Homes once sold in as little as a week here. Closer to Main Street, Bill H. Meyers has struggled for more than a year to sell his condo. In April 2008 L.A. was hurting, but Santa Monica values hovered around their peaks. So Meyers tried to unload his property for $850,000, roughly in line with what another unit in his building sold for. He turned down bids near $800,000 after he found a renter at $3,500 a month.
Now that his tenant is gone, Meyers hasn’t found a replacement at that price, and getting another $800,000 bid is impossible. The data still say Santa Monica is stronger than other nearby markets. It’s just 14% off peak prices, versus Los Angeles, down 38%. But the beach city’s inventory of unsold homes has just crossed the 15-month level, as high as Los Angeles’ were last year. By that grim logic, Santa Monica’s values are likely to tumble as far as those in Los Angeles did last year, 27%.
Like Meyers, anyone who can afford to will hang on as long as possible, banking on the faith, he says, that “the market is going to come back.” Meantime, excess supply is piling up.
States of Collapse?
Last year the housing crash spared some of the nation’s fanciest enclaves. But mounting inventories suggest they may drop as much this year as their metros did in 2008.
http://www.forbes.com/forbes/2009/0713/opinions-housing-market-values-heads-up_print.html
Hamptons has ‘America’s Most Troubled Luxe Nabes’?
Forbes magazine just released its compilation of “America’s Most Troubled Luxury Neighborhoods” measured in home sales, and there are four celebrity studded Hamptons communities on the list.
Billy Joel’s Sagaponack earned No. 4, and Alec Baldwin’s neighborhood of Amagansett is No. 5.
Bridgehampton, where Countess LuAnn de Lesseps of Bravo’s “The Real Housewives of New York City” has a home, followed at No. 6.
Southampton, where Howard Stern built a home with his new wife, Beth, followed Old Westbury (up Island) at No. 10.
According to Forbes there have been 1,725 listings in these five Long Island communities over the past three months.
In this time, there have been only 39 sales. The list features 12 communities that saw their number of listings and number of sales at 30-1 or greater in the last 90 days.
— DANIELLE DEBOUVER
Posted by Valerie Kellogg on July 15, 2009 2:59 PM |
http://weblogs.newsday.com/entertainment/localguide/outeast/blog/2009/07/hamptons_has_americas_most_tro.html
“Condo prices in Manhattan would have to fall 50% to return to values relative to rents they had in 1999, a relatively sane year in real estate. A condo owner could then lease his home and garner net rental income (rent minus property taxes, insurance and fix-up costs) equal to about 7% of the property’s fair market value. The current yield is around 3.3%. Far too low.”
Ah, but rents are going to go down, too. How about a 60% decline in real dollars? It’s happened before.
WT
Toll bros:
http://www.5sl.com/
And these lux crapolaboxes
http://www.lhauslic.com/residences.php
http://www.hunterspointcondos.com/home
Will they all be BK by years end?
With regards to Chicago:
It’s being reported that the high end areas of the Gold Coast and Lincoln Park are leading the city in the percentage of listings with price reductions. So some thaw is underway.
Man there are a buttload of condos laying around though and to date the deadlock seems to be holding the panic at bay. The deadlock is almost like a security blanket at this point.
Agreed, although deadlock may not be the right word, maybe the market is just dead. I know in my zip 60626 we have years of inventory, and very few sales. Wierdly the lakefront condos here in rogers park are listing for more than the lakefront condos in upscale willmette.
Most sellers are lising at thier prior sale or as a short sale and still not selling. This often means units that are identical are listed for as much as 100k more or less than each other.
Also, after months of reporting hundreds of foreclosures on realty trac there are only 20 reos for sale in my zip. I assume this means things will get much worse before they get better.
Rogers is a mess. There are so many conversions up there it ain’t even funny. With areas to the south starting to cave, I can’t imagine who would pay those prices up there.
It’s being reported that the high end areas of the Gold Coast and Lincoln Park are leading the city in the percentage of listings with price reductions. So some thaw is underway.
Prices in Greek Town / West Loop are reportedly down quite a bit as well. As you both note, there are very few sales, so it’s hard to gauge the relevance of the price data. The condo glut continues unabated, though I have seen more projects being re-billed as “luxury rentals.”
We’re rapidly approaching Labor Day, which must be making the legions of would-be sellers nervous. There’s not much of an open window left!
Many owners are renting and waiting for better days and it is driving down rents. Some may soon not even be able to find renters, for thier price. This may go on for years though.
I think back to the climb up of the bubble, it took years to get going full force to the upside and went way higher than anyone expected. I think the collapse will be the same.
I think you’re right.
+1
That’s the most astute observation about the collapse that I’ve read.
“tried to unload his property for $850,000…..turned down bids near $800,000…”—-MORON—-
hogs get slaughtered
YEP So many in the US thought they were the elite now they find that it was all a mirage. They will be treated like the rest of the cattle. Tax incomes and keep tax on top 0.1% to a minimum, then let loopholes that allow hedge fund managers to pay <20% effective tax rates stand.
The ‘People’s Republic’ of Santa Monica has rent control and restrictive building and other socialist ordinances. Tends to prop up property values.Few sales make sense. You have to pay to stay.
Anybody want a laugh?
Check out these BIG whiners!!!
Why are they angry now? NO one cared when I was priced out of the market…pisses me off now!!
http://blogs.wsj.com/developments/2009/07/13/study-one-in-four-mortgage-defaults-may-be-strategic/tab/comments/#comment-56456
Very interesting (and entertaining) reading! Thanks for sharing the link.
Reading those kinds of comments, it seems more people threaten to walk away than who actually do (at least so far). I was suprised at the number of people who are over $100K underwater who are still hanging on. Hope springs eternal.
From the comments:
“Ben There wrote: Back in 1986, I witnessed new grads coming out of college and getting their first jobs. They were PANICKED by the rate of home and condo price increases. They were saying out loud “If I cannot get a house, I have GOT to get a condo. If I cannot get a condo, I am going to miss out since in a year or two, I will not be able to afford either”.
We got married in 1986, and everyone was telling us we had to buy while we could. Fortunately, I had just had a housing markets class in graduate school.
“Needless to say, they were too young to know of the boom and bust in the economic cycles. Sure enough, October 1987 hit with a vengeance. People who had bought houses were OK but people who bought condos saw their equity PLUNGE off of a cliff.”
In NY those were co-ops back then, but otherwise correct. Back then the demographics favored houses — the whole baby boom was moving from the singles and couples phase into parenting — so the relative losses could be different this time. But the falling off a cliff part isn’t.
JFKFC
+1
“Last year the housing crash spared some of the nation’s fanciest enclaves. But mounting inventories suggest they may drop as much this year as their metros did in 2008″.
The metros themselves, in places like NY, have only begun their price declines. The second home markets are going to be fried. Time to move some of the welfare cases in the Shinnecock Indian reservation ghetto in Southampton to empty McMansions that may get converted to multi-family housing.
SAN FRANCISCO – A bill to tax and regulate marijuana in California like alcohol would generate nearly $1.4 billion in revenue for the cash-strapped state, according to an official analysis released Wednesday by tax officials.
The State Board of Equalization report estimates marijuana retail sales would bring $990 million from a $50-per-ounce fee and $392 million in sales taxes.
The bill introduced by San Francisco Democratic Assemblyman Tom Ammiano in February would allow adults 21 and older to legally possess, grow and sell marijuana.
Ammiano has promoted the bill as a way to help bridge the state’s $26.3 billion budget shortfall.
“It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available,” Ammiano said in a statement.
Now apply this nationwide and factor in the savings in terms of court costs and prison. Huge windfall. No more dangerous than tobacco and alcohol. Certainly safer than sniffing glue or paint which are legal to purchase. When will America wake up stop funding Drug lords that destroy governments like say our neighbor Mexico.
I wonder, if MJ is legalized then will airline pilots, train engineers, airplane mechanics, etc. still need to be drug tested for it?
When a mechanic I was enraged to learn the bag handlers and many others working around aircraft were not drug tested, although we were. That’s discrimination! If it’s legalized then it should be legal for everyone - any preconditions automatically imply discrimation.
Pilots would of course be subject to the same rules that they are now. They aren’t even allowed sleeping pills for 48 hours before they fly.
If there is any incident on a flight, the pilots are drug tested when they land, and if they had any positive results, are fired.
Probably they still should be, since it can impair your work. Maybe the difference would be the existence of a legal limit, such as the DUI 0.08 blood alcohol content.
legalize it…ALCU would not let it happen but if we could make mandatory drug testing for all 6-12 grade children….
I had to read the first line in the second paragraph twice! I agree with your post though.
When a bag handler drops a bag, no one is hurt.
There are many companies that drug test now. Where were you 20 years ago? Think of the children.
“When a bag handler drops a bag, no one is hurt.”
This musician disagrees.
A drunk/high bag handler could:
1. Load someone’s puppy in a bin with a shipment of dry ice - suffocating said puppy
2. Fail to properly secure a door
3. Drive into a very expensive plane - or run over a very expensive-to-train pilot doing his walkaround
Need more examples?
Elitism should not prevent highly trained specialists from taking the same tokes that the knuckle draggers enjoy.
And to fix an airplane you need to have an A/P certificate. Thats discrimination. Whaaaaa…
Shush you, I’m trying to bring down western civilization here!
Are the executives of companies that test low-level employees for drug use ever tested?
Are congressman, judges, and members of the executive ever tested?
I don’t know about that, but a friend of mine was running for county attorney in S. Texas and she passed on a friend’s 60th birthday “magic brownies” because she considered it a possibility to be tested if she won. That was well before the election, so I guess she was concerned about a test with a longer time line than a urine test.
She certainly wasn’t under any kind of peer pressure in that “mature” crowd
There were others present who didn’t partake.
Ted Kennedy once evaded a test for 24 hours.
Remember an executive can steal 100-1000 times more then the guy on the loading dock.
I wonder, if MJ is legalized then will airline pilots, train engineers, airplane mechanics, etc. still need to be drug tested for it?
Were you aware that you can have marijuana residue in your system from smoking a joint three weeks ago is not the same as being high?
It’s like having trace amounts of alcohol in your system and not being drunk.
…to legally possess, grow and sell marijuana…
“Damn i hate tax season… [puff] Lets see… Line 12 a)… hmmm.. Hey honey, do you remember how many pounds of weed we grew last year? It says here we owe $50 per ounce for the tax.. [puff]”
yeah… raise existing or create new taxes.. the #1 cure for all our troubles. How can it fail?
They’d probably sell coupons allowing the holder to grow x amount of plants. Random enforcement. Kind of like fishing licenses.
You pay ahead of time to grow a crop? I dunno if that’s ever been tried with any type of agriculture. It’s kinda hard to predict how much a plant will produce.. and then you’ve gotta deal with crop failures, harvest quality and such.
Random enforcement .. Right now it’s an all out war and the govt can’t make a dent in the supply… can’t even estimate how many growers exist or how much is being grown. Are we gonna rely on dopers being honest, or fearful of being fined?
Scaling back on enforcement will put a few drug enforcement people out of jobs and save a few bucks. My guess is the State will “make” more money there than with anything to do with added tax revenues.
Tobacco used to be sort of like that. A farmer owned “rights” to grow x amount of tobacco. These rights could be sold to another farmer. Not identical but a similar up-front and regulated allowance of how much you could grow.
A now deceased friend grew his supply on the back patio. He had terminal cancer, and he said that MJ was the best thing going for chemo-induced nausea. Worked much better than the prescription drugs.
RJ Reynolds will be able to make joints so cheap and with so much profit, they won’t mind collecting the taxes for the gov. Nobody’s going to buy from some kid in the hood anymore.
Random enforcement would be spotty certainly. The key would be a relatively cheap license or coupon versus a very severe fine if you’re caught without.
I suspect many people would grow outside, just as few grow say tomatoes in a closet when it’s so much cheaper and easier outside. Makes enforcement a little easier. Again, it’s like a fishing license. You’re rarely checked, but they’re so cheap and the fine so high that many (most?) go ahead and buy one.
Policing hundreds of tobacco growers is probably several orders of magnitude easier than would be millions of home pot growers..
I’m sorry but this is not a new idea. If the State thought it would work, pot would already be legal and taxed..
..RJ Reynolds will be able to make joints so cheap..
heh.. did you miss what just happened to tobacco taxes a couple months ago?
Wanna take a guess how many people would grow and roll their own cigarettes if only they could?
Unfortunately, it takes years to just prepare a field for a tobacco crop and it requires pretty rare environmental conditions. In contrast, top quality weed will grow wild just about anywhere, as long as it gets water.
And current tobacco tax is around $25 per Pound in bulk. This proposal suggests a weed tax of $50 per OUNCE will fly…
Bubble Bubble Bubble…like what Dude, did you…Oh..cool man!!
Sounds like ATE-UP is in favor! Tax him!
Yeah Alpha I used it twice, didn’t I?, hit Oly with it too. I mean, you wrote this write? What…
one toke over the line….
“yeah… raise existing or create new taxes.. the #1 cure for all our troubles. How can it fail?”
What people don’t realize is that there is a game going on out there and has been for years. Certain illegal activities are never going to be totally shut down. Why, because they support a large segment of the economy. The underground economy supports an awful lot of the inner city poor that the cities don’t want to deal with, ergo they monitor the activities and only shut down those that get too big for their own good. The government gets involved when people are spending more on untaxed illegal activities then on taxed items and the cities need revenue. Yep, taxing the MJ will effectively tax the inner city poor then if will the middle and upper class. The poor will now be subsidizing their own new medical premiums but be none the wiser for it.
Plus, if city government don’t totally shut down illegal activities they can grow there law enforcement departments through propaganda and fear.
Gee Whiz, with all my typo’s in that post it’s time for a stiff drink. if=it there=their don’t=doesn’t
Or, considering subject matter, a stiff joint! (That’s what she said).
i can hardly imagine the political repercussions of legal pot..
“It’s a direct assault on the poor and especially minorities, far worse than now, where the Man’s boot on our necks is a liquor store on every corner in our neighborhood!!”
and the anti-smoking lobby.. lets just ignore the threat of lung cancer..
This is just stupid. Federal law will simply override any state law legalizing MJ.
Federal law will simply override any state law legalizing MJ.
Federal law must be enforced, however.
The question of which laws to enforce, when to enforce them, and how many finite resources to devote to that enforcement could become quite problematic, both logistically and politically — especially if more than one state passes legalization or significant decriminalization measures.
It may come to pass the decision will need to be made: protect the nation from terrorist or move those resources to regulate marijuana.
Exactly.
Should it choose to enforce, the federal government could quickly find itself trying to prosecute or imprison myriads of otherwise law-abiding citizens. That presents headaches on many levels, some of them purely practical … such as how to house all these newly minted criminals.
The decision to enforce federal over state law could also align many political factions that don’t always see eye to eye — pro-legalization types, state’s righters, fiscal conservatives, and privacy advocates (to name a few interested factions) could all conceivably be allied against federal enforcement for vastly different reasons.
Federal law will simply override any state law ??
And therein the #1 problem…I don’t need some legislators in the higher than thow southern states (throw Utah in there also) legislating the way I live…Leave the states alone to govern themselves…You don’t like what is going on in your state ?? Leave…
Sadly the Commerce Clause has been expanded beyond all recognition since FDR’s time. Only a few cases in recent years have trimmed its reach.
However in marijuana’s case there is a separate Constitutional attack possible on Federal anti-marijuana statues. In order to buy states’ votes for the repeal of prohibition, the XXI Amendment includes a section 2 which expressly exempts “intoxicating liquors” from subject matter under the Commerce Clause.
The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
Note the word “intoxicating liquors” is used rather than alcohol. The question to be raised on appeal would be “is marijuana an intoxicating liquor for the purpose of the XXI Amendment?” In which case federal drug laws fail as unconstitutional acts of Congress.
“There are reasons it’s called dope.” — Anonymous
What are they?
“If you have to ask the question, you wouldn’t understand the answer.” — Anonymous
Only a dope would say they were anonymous.
Seriously, whenever I see the words ‘quoted by “anonymous” I know I’m going to hear either something really stupid, or a rhyming poem about kitties with big eyes who can see angels, or else something the author’s grandma made up and he or she put it in there so he or she wouldn’t hurt gran’s feelings. Or else all of those at once.
I thought the US drug czar said that the Federallies would no longer intervene with states’ decision on MJ…?
Then we’ll get a case, go the supreme court, and stuff will get fun.
If everyone is growing it home, how does this generate income to the state?
I am guessing the same way tobacco taxes work.
I hazarded a guess above. Coupons that entitle holder to grow x amount.
They’ll probaby levy taxes on the myriad Medical Marijuana clinics that are all over the place here in CA - its a lot easier to tax the product going through legal channels than fining small homegrowers.
At least, that was my reading of the article…
Coupons are used as a way to limit the supply and keep tobacco prices high.
Missouri spends millions of dollars every year trying to eradicate the stuff that grows on the sides of the highways there (they call it ditchweed).
Its a much different crop than tobacco.
But I think ease of buying will trump all.
Yeah, coupons did limit supply and kept prices high-and kept a lot of family farms profitable. Used to be a big deal around here (Lexington KY) when all the small farmers would bring in their tobacco crops (smells great before you burn it) , sell it at auction at the downtown tobacco warehouses (now mostly gone-Condos!), and then spend their money here in town at the local stores and restaurants.
The fact that “weed” is easier to grow than tobacco shouldn’t be a problem. Why would it be?
Coupons that entitle holder to grow x amount.
Don’t you currently have to pay taxes after you brew a certain amount of beer?
Well you wont have to worry about drug cartels bringing ship loads in
so that will save millions tens of millions maybe billions, in law enforcement expenses
Best policy:
Grow your own but still make it Illegal to sell
Yep, let’s get’er done! Next step, trial lawyers. Driving under the influence of THC, traffic accidents and death. Plus any long term medical problems that we can go back and sue for. Smoking cig’s cause lung cancer but I’m sure breathing in smoke from MJ won’t cause any health effects, right?
Gotta lov them legislators!!
Chronic smoking of MJ causes more mouth and throat cancers than tobacco (think of Bob Marley) and less lung cancers - not to say it doesn’t produce carcinogens in the smoke (all smoke does, no matter what its from), but its less frequent in long term MJ smokers.
Anyway, I don’t think keeping it illegal does anyone any good, people are going to smoke it/eat it whether or not its allowed. Just like they killed themselves with Bathtub Gin during the Prohibition - keeping it undeground just makes it more hazardous to the end user…plus its is a tax revenue.
Personally, I’m a lot more scared by the cr@p Big Pharma pimps on the TV every 6 minutes during the commercial breaks - that stuff’ll kill ya, like as not.
I’ve heard prosecutors says that its very rare they have prosecuted anyone for driving under the influence of MJ, unlike alcohol…………….
That’s ’cause when you’re enjoying mj you don’t feel like driving around all busily. Right where you are seems good enough, which is one of the benefits of mj. (Well, that’s what I hear.
)
Anyway, one fun thing to do when enjoying mj is to watch ‘Reefer Madness’. Check it out on Netflix!
)
Then you will laugh and laugh until you inhale all your potato chips and tropical-flavored Skittles into your head and fall right off the couch. (Well, that’s what I hear.
Truly, though, why does ANY governmental entity waste time on maryjooana rules? Don’t we have any rapists or armed robbers or deceitful mortgage brokers to incarcerate? What, did we run out of those when I wasn’t looking?
Bubble Bubble Bubble…like what Dude, did you…Oh..cool man!!
deceitful mortgage brokers to
incarcerateincinerate?Fixed that for ya.
In my old home county of Mendocino, CA the DA just announced they would not file on cases involving 200 plants or less due to budget problems and staff cutbacks. You can already grow a couple of plants for personal use with a script. Feds are hands off up there. What more could a grower want? Just make sure your fields are <200 plants. Of course, the sheriff still busts up the grow operations, but according to this, no charges are ever filed.
ukiahdailyjournal.com/ci_12834455?source=most_viewed
““It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available,” Ammiano said in a statement.”
It’s more like the poor will be the major buyers and we’ll use them like the British did the Chinese with opium, control the masses. Shoot, since they’ll always be stoned they won’t remember wether they got medical care or not.
I’m loving the smell of fear in the air. Just got through looking on Redfin and Trulia for new listings for Salinas, Monterey, Pacific Grove and Carmel-by-the-sea. What an explosion! All of those pseudo millionaires soon to be reduced or re-introduced to reality. Example: Oliver Rd, Carmel sold in 2003 for $465K asking $1.35M. I’m gonna enjoy the show in the coming 9 months.
Hey, salinasron - It seems to me that Pacific Grove is tanking fastest of the west of hwy 1 towns.
What’s your take on Pebble Beach? I don’t pay much attention to the high end stuff, but the no. of listings under a mil are edging up, oh and one is set to be auctioned.
Did you catch the RE ad in the Herald claiming prices where rising?
Pebble Beach has some high hidden fees and has a lot of old housing that should be tear downs at wishing prices. Saw a condo with very high HOA’s at a $750K+ selling price that had been on the market for over a year.
Sorry didn’t see the Herald, but I bet that they made the claim. Look up Seaside, I think it’s called the Highlands and see the number of foreclosures. Yeah baby!!!!
Peter Schiff might be running for US senate against Chris Dodd! That would be awesome if he won. Schiff has a good understanding of the US economy and warned of this economic collapse years ago.
http://www.schiffforsenate.com/
There’s already a primary challenger Merrick Alpert. merrickforachange.com/
We’re number 1!
Thursday, July 16, 2009, 12:01am EDT |
Modified: Thursday, July 16, 2009, 12:02am
Florida in top 3 for foreclosure activity
Orlando Business Journal - by Anjali Fluker Staff Writer
The Sunshine State still has not seen much relief in foreclosures in the first half of the year, according to the latest RealtyTrac U.S. Foreclosure Market Report.
Florida posted the second highest number of fillings and the third highest rate of foreclosures nationwide between January and June, the report said.
The state reported 268,064 properties received a foreclosure filing in the first half of this year, a 7 percent jump from the previous six months and a nearly 42 percent hike from the first half of 2008. Only California posted a higher number for the first half of the year, with 391,611 foreclosure filings.
…
Social Security spends $700,000 on Phoenix conference.
ABC News
PHOENIX — A Social Security Administration motivational management conference held at a high-end Valley resort last week cost $700,000, the SSA told the ABC15 Investigators.
Costs for the conference at the Arizona Biltmore Resort & Spa included airfare, hotel entertainment, dancers, motivational speakers, and food, an administration official said.
A spokesperson outside the SSA’s Phoenix office declined to comment.
Video Click here to watch an interview with a Social Security representative
A spokesperson from the SSA’s regional office said the conference was essential, that teleconferencing was not an option, and that all 675 managers needed to meet in person.
Uh-oh. Just watch what happens when the Tucson PTB finds out about this. They get pretty riled up about things going to Phoenix instead of here.
They get pretty riled up about things going to Phoenix instead of here.
What do they do when they get riled up? Hop up and down and scream? Fling poo-poo?
Me, too.
They do all of those things. And they blog about it.
Wombat or Homosexual Penguin poo poo?
Why not fling both? I’ve stored up a bunch of either in convenient Ziploc baggies*.
*No, not really! Jeeze, man! As if!
I thought everyone agreed that the government had to spend money to prop up the economy. That $700,000 goes directly into the economy of Phoenix. Its better than if they bailed out 1 homeowner with $700,000.
So what was spent during these years? 2000-2008
Cheney-Shrub Legacy Effect # 441: “No-Bid contracts”
2nd UPDATE: US Lawmakers Spread Blame On BOfA/Merrill Deal
Dow Jones
July 16, 2009: 01:14 PM ET
(Updates with additional comments from lawmakers and Paulson)
By Michael R. Crittenden
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Former Treasury Secretary Henry Paulson misled Congress and along with Federal Reserve Chairman Ben Bernanke looked the other way as major mistakes were made at Bank of America (BAC) even as the government was preparing a $20 billion aid package for the firm, U.S. lawmakers charged Thursday.
Paulson, making his first appearance on Capitol Hill since leaving office in January at a hearing before House Committee on Oversight and Government Reform, defended the government’s response to the financial crisis and his role in ensuring Bank of America closed its transaction for Merrill Lynch & Co. But lawmakers, who repeatedly interrupted Paulson to ask him to move closer to his microphone, showed little faith in his answers.
“I don’t think anyone’s buying what you’re saying,” Rep. Dan Burton, R-Ind., said.
Rep. Edolphus Towns, D-N.Y., who chairs the panel, described the negotiations with Bank of America as a “good old-fashioned Brooklyn shakedown” at the expense of taxpayers. Rep. Jim Jordan, R-Ohio, accused Paulson and Bernanke of a “clear pattern of deception and intimidation.”
“The biggest, most powerful bankers have essentially received a free ride at taxpayers’ expense,” Rep. Dennis Kucinich, D-Ohio added.
…
Imagine that. Burton and Kucinich on the same side of an issue.
I thought that Paulson and Bernanke shook down BOA on behalf of taxpayers by refusing to let BOA back out of the Merrill Lynch deal, and refusing to provide more subsidies.
The aftermath certainly doesn’t look like BOA got the best of the deal, although it was a deal they chose.
Bottom line is, they had a deal, if they didn’t go ahead with the deal it would have caused systemic risk, and the feds said make good or else.
There is something un-American about jack booted government thugs strong-arming a private corporation into a shotgun marriage.
You all sound like “They” knew what ‘They” were doing…
Bugs: “eh, I don’t think so Doc…”
Regarding the Paulson” Blank Check “request ,with immunity (better known as TARP ), this must be some kind of a joke that now the Politicians are screaming foul .
What do you think of Politicians that hand over 800 billion to a dude like Hank Paulson ,while he offered no proof of what the melt down would be, while he never explained why loans couldn’t be made while the matter was being investigated .Paulson has never explained why the unregulated banks needed to be part of the bail out either . Who cares if AIG couldn’t pay off on the credit default swaps they owed
GS. My personal belief is that Paulson had a personal stake in GS being paid what it was owed . Paulsons conflict of interest was pointed out during the Tarp hearings ,yet the House and Senate proceeded anyway to give that thug 800 billion ,and now they are crying foul .
This is what the game is . Do what the thieves want and than scream foul after the fact when the real game comes to the surface . What about the responsibility of our members of the Senate and Congress to read bills as well as have enough evidence of need ,or figure the cheapest way to bail out something ,instead of responding to some thug conflict of interest party like Paulson screaming FIRE in the movie house .
“Who cares if AIG couldn’t pay off on the credit default swaps they owed GS. My personal belief is that Paulson had a personal stake in GS being paid what it was owed . Paulsons conflict of interest was pointed out during the Tarp hearings ,yet the House and Senate proceeded anyway to give that thug 800 billion ,and now they are crying foul.”
He did such a great job scaring Congress and everyone else with the end-of-the-world financial scenario he claimed would occur if TARP were not passed that everyone forgot to check out what kind of conflict of interest might be entailed by the former CEO of Goldman Sachs handing over a record lump-sum tax payment to the industry he served before moving to Washington. Is it any wonder that Goldman is now reaping in billions when the rest of the country is suffering?
It is quite amazing to me that San Diego’s MSM-cited experts remain permanently frozen in the denial phase of the housing bubble stages of grief!
Median home price up in June
Hopes raised for comeback in S.D. housing market
By Emmet Pierce
Union-Tribune Staff Writer
2:00 a.m. July 16, 2009
…
The share of purchase loans above $417,000 rose to 14.8 percent in June, the highest since it was 15.6 percent last August. The median price for new and resale houses and condos in Southern California last month was $265,000, up 6.4 percent from $249,000 in May but down 26.4 percent from $360,000 in June 2008.
Even though the San Diego County market’s future remains uncertain, the rise in the median price for June is a good sign, said Kelly Cunningham, an economist for the National University System Institute for Policy Research.
“More homes are selling, and not just foreclosed homes,” he said. “Activity in the housing market is a fairly strong indicator of better health in the economy. Housing is what led us into the downturn. We are looking for it to lead us out of the recession.”
What is so hard for these guys to grasp about the fact that we are witnessing the deflation of the largest real estate bubble in U.S. history? This is not a reversible process, and we are not going to see a quick and easy rebound in the aftermath.
Exhibit A: Japanese real estate market over the post-bubble-collapse period from 1989-2009
I dunno. A median of $265K isn’t bad for San Diego. At some point prices have gone down enough.
That doesn’t mean housing is going to lead anyplace out of the recession, however.
“A median of $265K isn’t bad for San Diego.”
You have to know where and what kind of homes are selling and where and what kind are not to reach any conclusions. So far as I can tell, the market has recently been skewed to reflect the tsunami wave of subprime foreclosures, which represents the low end of the market. The next three years will prove interesting, as (presumably) Alt-A and prime resets will result in an ongoing flood of high-end homes on to the market. I believe this is what is reflected in the uptick in the median, more than an increase in the market value of same-quality housing. The next Case-Shiller/S&P Index release may shed light on this conjecture.
Old Laoist saying: “The high rests upon the low”
WT, do you live in San Diego? If you’re just looking at the numbers, then like PB says, it doesn’t tell the whole story. Sure, you can buy a crapshack in Escondido now for $275-$300K, but average tract housing in 92127-92128 is still going for $600K+, and that’s for very average homes. I’m no economist, but just because the median may not go much lower, that doesn’t mean that higher priced houses don’t have a long way to fall.
Don’t you know it’s MAGIC? (MGIC)
NEW YORK, July 16 (Reuters) - Mortgage insurer MGIC Investment Corp reported a wider quarterly loss and said it will stop writing new business as losses mount in the battered housing sector, sending its shares down 14 percent in premarket trade.
You basically cannot finance a home purchase with more than 80% LTV (loan to value) without private mortgage insurance - that is, insurance that covers the lender if you default and they take a loss.
MGIC (NYSE: MTG) is the largest issuer in this area. They said they will be “trying” to capitalize a new company to write this business, but their continuing losses - which, by the way, they said they thought they had under control last year after repeated flirtations with going under outright - has apparently forced this decision.
There is absolutely no way to read this as anything but an outright disaster for the housing industry.
We need to force lending back to 80% maximum LTV (20% down payments in CASH) and 36% DTI (debt-to-income) ratios maximum, but the housing industry has continued to rely on and demand access to money on looser (that is, more leveraged) terms.
The problem is that there’s no way to do that and turn a profit, as MGIC continues to show. Between them and PMI, the other “big” player in this space (due to report in August) they provide the backing for these high-LTV loans - backing that is now disappearing.
Let me be clear: this sort of lending needs to go away, but essentially the entire thesis behind those who claim that we’re “bottoming” in the recession and the housing market depends on the availability of private mortgage insurance so these loans can be funded, securitized and financed, including but not limited to funding by Fannie and Freddie.
Put a fork in the calls for a bottom to housing folks - we’re going back to sustainable lending whether the Realtors Guild and Housing Crooners like it or not.
With the death of the “housing has bottomed” call will come an end to those who claim that the economy has turned. It may take an hour, a day, a week or a few months before these folks realize they were wrong, but there’s no way around the conclusion given this set of facts.
(From K. Denninger))
The 20% down figure (and 36% DTI to a lesser extent) has always resonated with me. I usually find myself starting from that point, saying, OK, how much can the average young couple afford to put down on a house. Fine. That is 20% of the price. The figure I come up with, is usually about $10,000-$20,000, assuming there is another $10,000 available for a rainy day fund. The political problem is that the average house would be a hundred grand or so.
Now that would be nice - easily a cash purchase range even if it needed substantial updating.
Like a wooden stake through the heart of the Vampire of “Housing Prices Must Not Fall”
This whole notion that Megabank, Inc and other members of the too-big-to-fail club should get free risk insurance while banks “not quite big enough” to qualify should get thrown under the bus is bogus. This is apparently the basis of the proposal to make the Bernanke Fed the too-big-to-fail judgment God. It is time for this muddled thinking to give way to common recognition that “too big has failed” (to quote the words of the KC regional Fed bank president), and to change the system so that Megabank, Inc cannot profit through wealth destruction.
Jul 16, 2009, 11:41 a.m. EST
CIT shares slump as investors gird for bankruptcy
Troubled lender reportedly in last-ditch scramble for $2 billion
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) - CIT Group Inc. shares slumped more than 75% Thursday as investors girded for what may be the fourth-largest bankruptcy in U.S. history after the troubled lender failed to get a government bailout.
Fitch Ratings downgraded CIT (CIT 0.45, -1.19, -72.83%) to C and said the company is highly likely to file for bankruptcy protection “in the very near term.”
…
So far, I see some similarities between this and the GM bailout scenario.
GM fell to $2 a share on the suspicion that there would be no govt help.. Then the stock went up over 400% in the course of a week when it was approved.
Around one million small and mid-size businesses at risk here.. if CIT is allowed to fail, I expect a huge market surge upwards. Why?
Because if CIT is allowed to fail it means the govt truly believes it’s not a threat to the economy.. that we’re healthy enough to overcome the job losses, etc.. and that systemic risk is virtually nil.
Yeah, well screw the little guy and the middle guy! This gov’t is all about corporate America!
um… yeah.. i won’t argue about that. In fact there’s probably an evil CEO hiding under your bed right now.. over there, near where they attach your leg restraints.
I didn’t go to evil medical school for 6 years to be called Mr. Evil, thank you very much.
Where is Teddy Roosevelt when you need him?
MarketWatch First Take
Jul 13, 2009, 12:11 p.m. EST
CIT Group’s bankruptcy would fuel doubts
Commentary: Big banks would gain with small lender’s exit from marketplace
By MarketWatch
NEW YORK (MarketWatch) — CIT Group Inc. isn’t a part of the Wall Street power circle, and that’s made it susceptible to trouble as it faces mounting loan losses.
CIT (CIT 0.41, -1.23, -75.00%) has hired a bankruptcy attorney and continues to negotiate with its creditors and the government in a bid to refinance its debt and continue doing business without going to bankruptcy. See full story.
CIT does its business by making loans to business owners who don’t always fit the profile of the traditional bank borrower: franchisees, startups, spinoffs — all on a smaller scale than the big corporate customers preferred by banks such as Bank of America Corp. (BAC 13.42, -0.01, -0.08%) and Citigroup Inc. (C 3.09, -0.08, -2.52%) .
But because CIT did not engage in the sophisticated lending business that Wall Street engaged in, its problems are more like those of any bank — the firm’s loans are souring along with the economy, and it can’t pay back its own creditors.
Had CIT run into trouble last September, it might have been lucky enough to survive on the raft of government support in the market at the time. It could have benefited from the kind of government orchestrated merger or bailout given to American International Group Inc. (AIG 12.85, -1.37, -9.64%) , Washington Mutual or Fannie Mae (FNM 0.56, -0.05, -7.92%) and Freddie Mac. (FRE 0.61, -0.04, -6.68%)
Now, a government that was so free with aid is suddenly cutting off the tap, claiming CIT does not represent a “systemic” risk.
…
“…and to change the system so that Megabank, Inc cannot profit through wealth destruction.”
Mr. Bear, are you tenured?
(Hwy, thinks we’ve come a long ways from Joe McCarthy…maybe, maybe not?) 
July 16, 2009
A letter to UC community from President Yudof
From the President
Dear Colleagues:
I write to update you on The Regents’ actions this week concerning the university’s fiscal situation and the proposed furloughs/salary reductions. At their meeting today, The Regents declared an extreme financial emergency for UC and approved the proposal I shared with you last week for a one-year systemwide furlough plan, effective Sept. 1, 2009.
If you had the opportunity to listen to the meeting, you heard all ten chancellors talk with The Regents about the extraordinarily negative impacts these budget reductions are having on the campuses.
The furlough plan is a necessary, albeit painful, part of closing the significant budget deficit confronting us. As you know, the furlough plan is part of an overall strategy, built on a central principle of shared sacrifice, to address our fiscal challenges. The furlough plan is expected to solve roughly 25 percent of our budget problem.
The unprecedented $813 million funding shortfall we face is in addition to the state’s continuing failure to honor its previous obligation to fund other costs, estimated at more than $330 million, such as utility cost increases, employee and retiree health benefits, and student over-enrollment. This means that the State is short-changing UC by more than $1 billion during 2009-2010 alone.
(Blah, blah, blah…)
I want to thank you again for your understanding and partnership in this process.
I deeply appreciate your continuing commitment to UC, and for the sacrifices we are all making for this great institution.
With best wishes, I am,
Sincerely yours,
Mark G. Yudof
President
P.S. If everyone behaves as though we live under censorship with no constitutional right to freedom of speech, pretty soon there will effectively be no constitutional right to free speech.
Didn’t the GOP fence off about 1 square mile of downtown San Diego when they had their convention…and something about not letting people in with slogan’s on their t-shirts…and were those gov’t paid employee’s carrying the black screens in front of the US soldiers American flag draped caskets as they arrived back here on US soil…wait Cheney would like to make a statement…
US hopebuilder confidence is a long way down from the “peak of hopefulness.”
US homebuilder confidence hits 10-month high
By Alan Rappeport in New York
Published: July 16 2009 18:09 | Last updated: July 16 2009 18:09
US homebuilder confidence rose to its highest level since last September this month and has doubled since falling to a record low at the beginning of the year in spite of foreclosure rates reaching new highs.
The National Association of Home Builders’ index of homebuilder sentiment rose from 15 to 17 in July, beating economists’ expectations. The figure remains 76.4 per cent below the peak of hopefulness reached in June 2005 when the index rose to 72. A reading of more than 50 indicates “good” conditions.
“Builders are seeing slightly better sales conditions this month as consumers take advantage of the first-time buyer tax credit, low interest rates and attractive home prices, but many remain quite concerned about the road that lies ahead,” said Joe Robson, NAHB chairman.
Sentiment improved in the south, slipped in the northeast and was flat in the west and midwest.
Much of the increase in sentiment was focused on current conditions, due to attractive government incentives luring people to the market. However, homebuilders remained wary of the outlook for the housing market and David Crowe, NAHB chief economist, warned that record rates of foreclosure and joblessness could stymie a recovery.
“Builders recognise the recovery is going to be a slow one and that we are facing a number of substantial negative forces,” Mr Crowe said.
…
Aflac, Genworth Among Insurers Exposed To CIT
35 minutes ago - Dow Jones News
Aflac Inc. and Genworth Financial are among life insurers with exposure to troubled lender CIT Group Inc. (CIT), analysts at Credit Suisse said Thursday.
Late Wednesday, CIT said that it probably won’t get a government bailout anytime soon, increasing the likelihood that the lender may collapse in what could be the fourth-largest bankruptcy in U.S. history.
“We are highlighting life insurance exposures to CIT pending a likely debt restructuring or other action that could trigger impairments for life insurance companies,” Thomas Gallagher and his analyst colleagues at Credit Suisse wrote in a note to investors. “There are expectations of about a 50- or 60-cent recovery rate on the securities.”
Aflac (AFL) has CIT securities with a conditional fair value of more than $218 million, according to the Credit Suisse analysts. That’s 3.3% of the insurer’s equity, excluding accumulated other comprehensive income, or AOCI, they noted.
Genworth (GNW) has CIT securities with a conditional fair value of nearly $140 million, according to the analysts. That’s 1.5% of the insurer’s equity, excluding AOCI.
In addition, Lincoln Financial Corp. (LNC) has CIT securities with a conditional fair value of $76 million, according to Credit Suisse. That’s 1% of the insurer’s equity, excluding AOCI, the analysts said.
Protective Life Corp. (PL) has CIT securities with a conditional fair value of $32 million, according to the Credit Suisse analysts. That’s 1.7% of the insurer’s equity, excluding AOCI, they noted.
Conseco Inc. (CNO) has CIT securities with a conditional fair value of more than $20 million, which is 0.9% of the insurer’s equity, excluding AOCI, the analysts said.
24/7 Wall Street
Foreclosures Take The Economy By Storm, Again
Posted: July 16, 2009 at 4:49 am
The government might have expected that it could have some effect on foreclosure rates by working with banks to make money available to homeowners and by setting up programs for modifying existing mortgages to reduce monthly payments. Foreclosure numbers from the first half show that none of that has worked very well.
Foreclosure filings went up to 1.9 million in the first half, according to RealtyTrac. The figure is up 15% from the first half of 2008, so the rate of acceleration is depressingly impressive.
It will not surprise anyone that unemployment is a primary cause of the foreclosures, which means that the figures are likely to be worse in the second half of this year. It also raises the issue of whether the government really wants to be in the business of saving homeowners who want to stay in their houses and of helping banks provide more credit to people who want to buy a home, especially for the first time.
Government intervention may slow the rate at which real estate prices fall and the rate at which people loss their homes, but 1.9 million foreclosures is an overwhelming number. Recent surveys show potential home buyers are still staying out of the market, based to some extent on their expectations that prices have much further to fall.
The government could withdraw from any meaningful effort to salvage home prices. There would be a certain cruelty to allowing people to be pushed out of their houses, but it is the only way for prices to quickly and brutally find a bottom. Once home prices have adjusted down another 15% or 20% on a national basis, the concerns about buying a home may whither. The value of houses will have dropped back to where they were fifteen or twenty years ago in some markets and the bargain hunters will come out in force. Then, prices will slowly start to rise.
Douglas A. McIntyre
“…but it is the only way for prices to quickly and brutally find a…”
Geez Mr. Bear, what?… you want someone in Gov’t to be responsible for the “grizzly” details of the only possible solution to the housing debacle?
Well, like I’ve said…14+% …Kill the beast!
When “reality” happens:
A MAN partially sawed off his own leg with a pocket knife after he was pinned under a tree in California.
Al Hill, 66, was clearing trees in rural California when a large tree fell on him, the Associated Press quoted the local Auburn Journal newspaper as saying.
Mr Hill spent up to 10 hours trapped in the remote area before trying to saw off his left leg to escape.
“He partially amputated his own leg just below the knee with a pocket knife,” Iowa Hill fire chief Luana Dowling told the Journal.
Mr Hill was eventually found by another local, Eric Bookey, who heard his cries for help.
Mr Bookey and another man freed Mr Hill and drove him to Iowa Hill, from where he was flown to hospital and had his leg amputated, the paper said.
“Only me, Al and God were there that day,” Mr Bookey said.
Mr Hill was in a serious condition shortly after his ordeal, but visitors said he was in good spirits.
“He’s a pretty remarkable person,” Ms Dowling told the Associated Press.
The town of Iowa Hill, population 200, is in the gold mining district of California.
In May 2003, a 27-year-old Colorado man used a pocket knife to amputate his own arm below the elbow to free himself after being trapped for five days under an 363kg boulder in a national park in Utah.
“Only me, Al and God were there that day,” Mr Bookey said.
Plus the pis*sed off tree that fell on him.
-1
Oly, -1 only because I feel sorry for that semi-elderly man. That is just me. I’m sure you do too. Even if I am a Freshman here, still have my opinion…
Bubble Bubble Bubble…like what Dude, did you…Oh..cool man!!
Kinda screwy to give god credit for saving the guys life but not give him credit for throwing the tree on the guy in the first place.
Bush League, Oly! Bush League!
(and I don’t mean the former President)
Hey sleepless, I think Oly Gal’s mad at you an’ me…:(
Moi? C’est impossible!
damn.. partially amputate your leg and THEN help arrives.. somedays it just don’t pay to get out of bed..
LOS ANGELES (AP) — The National Association of Home Builders says its housing market index climbed in July to the highest level in nearly a year, as low interest rates and other incentives helped builders woo homebuyers.
The Washington-based trade association said Thursday the index rose two points to 17, its highest reading since it was 17 in September.
Index readings lower than 50 indicate negative sentiment about the market. The last time it was above 50 was in April 2006.
The report reflects a survey of 484 residential developers nationwide, tracking builders’ perceptions of market conditions.
The reading for current sales conditions rose three points to 17, while traffic by prospective buyers rose one point to 14. The sales expectations index over the next six months was unchanged at 26.
The law of unintended consequences is playing out horribly on vacant Phoenix foreclosure homes.
Kidnappings and Foreclosures Collide in Phoenix “Drop Houses”
Listen
There were nearly 370 kidnappings in 2008 in Phoenix, Arizona — almost all connected to the state’s Mexican immigrant population. Phoenix Police Sgt. Tommy Thompson tell us about so-called “drop houses,” homes in areas with high foreclosure rates that are used to hold the people who have been kidnapped.
Holy miniature cow!
Kidnappings imply 3rd world conditions. Isn’t Mexico City kidnapper central?
Gotta love the title on the radio track:
NOW PLAYING:
Kidnappings and Foreclosures Collide in Phoenix “Drop Houses”
Homebuilder sentiment index rises in July
US homebuilder sentiment index jumps 2 points in July as builders benefit from low rates
July 16, 2009, 2:41 pm EDT
LOS ANGELES (AP) — The National Association of Home Builders says its housing market index climbed in July to the highest level in nearly a year, as low interest rates and other incentives helped builders woo homebuyers.
The Washington-based trade association said Thursday the index rose two points to 17, its highest reading since it was 17 in September.
Index readings lower than 50 indicate negative sentiment about the market. The last time it was above 50 was in April 2006.
The report reflects a survey of 484 residential developers nationwide, tracking builders’ perceptions of market conditions.
The reading for current sales conditions rose three points to 17, while traffic by prospective buyers rose one point to 14. The sales expectations index over the next six months was unchanged at 26.
U.S. may need another fiscal stimulus: Roubini
Thu Jul 16, 2009 2:47pm EDT
NEW YORK (Reuters) - The United States may need a second fiscal stimulus worth $200-250 billion around the end of the year, but the worst of the economic and the financial crisis is already behind us, leading economist Nouriel Roubini of RGE Global Monitor said on Thursday.
Roubini, one of the few economists who foretold much of the current financial turmoil, said a second stimulus would be necessary to boost a deteriorating labor market.
The stimulus “can not be too small, but it can not be too large,” Roubini said, or financial markets will become too worried about the sustainability of the U.S. debt.
Then what? I’m not happy about unemployment or the perceived credit squeeze but the reality is that people are still working and those with cash and good credit scores have access to credit.
Why can’t they let things settle out in the steady state that those, uh, “things” want to settle to and build the economy from there?
The Catapillar to Alice “By the way, I have a few more hints. One side will make you grow taller…”
Alice “One side of what?”
Catapillar “…and the other side will make you grow shorter.”
Alice “The other side of what?
Catapillar “The mushroom of course.”
Yep, we’re in wonderland now.
Go ask Alice, when she’s five feet tall.
Please try to avoid doctor/lawyers, bathtubs, toasters, Grace Slick and drug-raddled weekends in Vegas for a while, ate-up
“The stimulus “can not be too small, but it can not be too large,” Roubini said, or financial markets will become too worried about the sustainability of the U.S. debt.”
And we all wonder what the next asset bubble would be !!
Now we have if defined via Roubini!!!!!
Goldilocks Roubini. I don’t know anything, but I followed him, and, thought he was right, but again what do I know? Now I think he is crazy. But again, Bubble Bubble Bubble…like what Dude, did you…Oh..cool man!!
New driver causes multi-millions damages to Detroit highway infrastructure.
Souns like the kid was alright and just made a mistake.
I remember that style of bridge from when I lived/went to school in MI during the 1970s and early 1980s. When I first saw one, I admired MI’s ability to build a sturdy, somewhat stylish looking bridge. But I guess that such a bridge is no match for an exploding tanker truck.
Kid. 27 years old is adult last I checked.
Oh, and if they determine he was at fault due to traveling at 20 mph above the speed limit.
At least yank his license for goodness sake!
Yanking licenses are no big deal……its when we have the guts as Americans to impound the car for 6 months or a year and he still has to pay the payments on it.
That is what will hurt.
Can’t wait to see how this works out.
Massachusetts in Suit Over Cost of Universal Care
Published: July 15, 2009
BOSTON — A hospital that serves thousands of indigent Massachusetts residents sued the state on Wednesday, charging that its costly universal health care law is forcing the hospital to cover too much of the expense of caring for the poor.
The hospital, Boston Medical Center, faces a $38 million deficit for the fiscal year ending in September, its first loss in five years. The suit says the hospital will lose more than $100 million next year because the state has lowered Medicaid reimbursement rates and stopped paying Boston Medical “reasonable costs” for treating other poor patients.
“We filed this suit more in sorrow than in anger,” said Elaine Ullian, the hospital’s chief executive. “We believe in health care reform to the bottom of our toes, but it was never, ever supposed to be financed on the backs of the poor, and that’s what has happened in Massachusetts.”
The central charge in the suit is that the state has siphoned money away from Boston Medical to help pay the considerable cost of insuring all but a small percentage of residents. Three years after the law’s passage, Massachusetts has the country’s lowest percentage of uninsured residents: 2.6 percent, compared with a national average of 15 percent.
Low-income residents, who have benefited most from expanded access to health care, receive state-subsidized insurance, one of the most expensive aspects of the state plan. But rapidly rising costs and the battered economy have caused more problems than the state and supporters of the 2006 law — including Boston Medical — anticipated.
According to the suit, Massachusetts is now reimbursing Boston Medical only 64 cents for every dollar it spends treating the poor. About 10 percent of the hospital’s patients are uninsured — down from about 20 percent before the law’s passage in 2006. But many more are on Medicaid or Commonwealth Care, the state-subsidized insurance program for low-income residents.
One of the state’s reimbursement rates to Boston Medical, dropped from $12, 476 in 2008 to $9,323 by 2009, the suit says.
Say bye-bye to private: insurance, hospitals, practices. Say hello to long waits, or medical tourism for those who can afford it.
But why go to Thailand? I wouldn’t be surprised to see a cruise ship reconfigured to be a surgical ship. Come aboard and depart from the Port of Miami on Sunday, surgery outside of territorial waters on Monday through Wednesday, with the procedures requiring the longer recovery done on Monday. Then recover for the remainder of the week and disembark on Sunday. Different ships would be set up for different types of surgery, i.e., The M.V. Cardiovascular, The M.V. Orthopedic, etc.
Think how competitive they would be if every patient paid in advance.
Oh, and free burial at sea for those who don’t make it.
FNG @ HBB - That’s Me.
I’ve enjoyed from a far the parallel views of the near and more-distant future and thank each of you for your input/thoughts/beliefs.
I hail from the zipcodes I’d call “The Parakeet To California’s Lost Gold Mine” - SW Florida, another land of sunshine, beaches and fiscal misery for far too many.
I’ll attempt to stay quiet enough to learn the newest news, but was drawn from my cave by some posts claiming “nobody knew this was coming that early”.
Like the HBB’s Author’s rants of the early days of the breakdown, I was locally known as “insane” for my views of what “Unsustainable” would bring as a message to those “too busy getting rich to listen” at the time.
In this “cycle”, my warnings went to folks who are references yet today - the month was October, the year was 2004. Some few paid attention and have cleared the hurdles with some powder left to burn, others (the majority) knew better and have suffered the fate they couldn’t wait to achieve. The message was clear, the math presented as “proof” clearer yet:
“You have one year until this breaks - “IT” will bring a world you never thought could happen and “IT” will last a lot longer than you would ever dream possible.”
Yes, I’m a Realtor, but I’m one of those who has NO victims from the Boom and its follow-through Bust/Crash - I’m still sending folks away who want to play high-risk games with their eating money today.
To any who are seeking “expertise” of some sort, know that I am NOT an “expert”, just a scar-tissue reader with plenty of reading material on hand from some deep experience to draw on.
Again, thanks to the HBB’ers for providing at least ONE site I could point to where others could plainly see was un-avoidably the future only a few short years ago.
“ASIG” (And So It Goes)
(Just another amateur armed with a calculator and far too much time on his hands.)
interesting post asig
Well, That was easy, the all knowing Roubini says it’s safe to come out, problems over by years end. Me thinks he may have the big head, I’ll pass on that prediction.
U.S. Stocks Rise as Roubini Predicts Recession to End This Year
By Whitney Kisling
July 16 (Bloomberg) — U.S. stocks rose for a fourth day, the longest streak in six weeks, as economist Nouriel Roubini said the worst of the financial crisis is over and the recession will end this year, while takeover speculation lifted commodity shares.
Mosaic Co. rallied 12 percent, the most since December, on a report Vale SA may bid $25 billion for the fertilizer maker. United Parcel Service Inc. and General Electric Co. led industrial shares to the best gain among 10 groups as Roubini, the New York University professor who predicted the financial crisis, said a second government stimulus plan would help broaden the economic recovery.
The S&P 500 increased 0.9 percent to 940.74 at 4:05 p.m. in New York, capping its best four-day rally since March. The Dow Jones Industrial Average added 95.61 points, or 1.1 percent, to 8,711.82. European and Asian shares advanced.
“The optimism that people are starting to embrace is that the recession may be months away from ending,” said David Goerz, who oversees $17 billion as chief investment officer at Highmark Capital Management in San Francisco. “Even the most bearish forecasters are starting to capitulate.”
Financial shares led the market lower earlier on concern commercial lender CIT Group Inc. will have to file for bankruptcy protection and after JPMorgan Chase & Co. said its credit-card business probably won’t make money next year. The S&P 500 reversed its loss as Roubini said the world’s largest economy will recover from the recession by the end of 2009.
“The freefall of the economy has stopped,” Roubini said at a Chilean investors’ conference in New York. “There is light at the end of the tunnel. And the light at the end of the tunnel for once is not the one of an incoming train.”
Stock market is buoyed by bears coming out of hibernation. The suggestion is that bears’ comments carry lots more cred than bulls’ do these days (and small wonder, given that those who always say “the stock market always goes up” were pretty far off the mark over the recent period).
Given that the green shoots meme died only a week or so back, I believe Mr Market is getting out ahead of himself at the moment.
Wall Street Journal
* TODAY’S MARKETS
* JULY 16, 2009, 6:06 P.M. ET
Recovery Hopes Spark Late Rally
By PETER A. MCKAY and GEOFFREY ROGOW
Stocks started slow but gained steam Thursday to end with a fourth straight gain, aided by mounting investor hopes about earnings season and comments from a prominent bear about a possible end to the U.S. recession.
After a flat open, the Dow Jones Industrial Average ended 95.61 points higher, up 1.1%, at 8711.82, up 6.9% over its recent winning streak. Among its components, J.P. Morgan Chase slipped 0.4% despite reporting better than expected profits, but IBM jumped 3.2% as investors placed early bets ahead of its report after the closing bell.
The company announced a 12% rise in second-quarter profit and raised its full-year outlook, continuing a recent trend of upbeat corporate guidance.
The market gained momentum late in the session after New York University economics professor Nouriel Roubini said in remarks at an investors’ conference that the U.S. recession is in its late stages.
The remark was interpreted by many market participants as a surprisingly upbeat one from someone who had previously gained renown and the nickname “Dr. Doom” for predicting the global economic crisis. But Mr. Roubini said in a clarifying statement released after Friday’s close that his latest comments were consistent with his earlier forecast.
Mr. Roubini became the second high-profile bear this week whose remarks moved markets. Investors in recent days have also hailed bank analyst Meredith Whitney’s upgrade of Goldman Sachs to a “buy” rating.
“This are major symbolic events,” in the broader bear market that has stretched from October 2007, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “It’s not surprising when, say, someone who is running a bear fund says bearish things. But when we get a bear turning more bullish, I sit up and take notice.”
…
Looks like there’s some distress in the Phoenix apartment market:
http://www.azcentral.com/business/articles/2009/07/16/20090716biz-rents0716.html
I think all of those “investors” who, in recent months, have been buying foreclosed houses with plans to rent them out are in for a surprise.
We have more than a few of those “investor” homebuyers here in Tucson. And I think that reality’s gonna bite them in the (never mind!) before too long.
Derek Jeter building a 31,000 sq. ft. house in Tampa.
http://www.sunnewspapers.net/articles/fnnews.aspx?articleID=12186
Look at the photo! It looks like a hotel!
I’m stuck in the filter… just posting that Derek Jeter is building a 31,000 sq. ft. house in Tampa.
That is a big freaking house.
Yeah Muggy, and he is a big F…ing pretentious idiot. When narciscissm goes that far, I am not impressed anymore.
P.S. How do you spell narcisscissm and where is my mirror?
P.S. How do you spell narccissism and where is my mirror?
Oh, nice! Thanks.
…Say, how come you can’t spell ‘gauge’, but you can spell ‘narcissism’ right*?
*Well, more or less. What’s an extra ‘c’ among friends…?
Maybe he likes to entertain.
Entertain WHAT?? Rosie O’Donnell?
marching bands, small corporations, the usual
Feh. ‘Tis a mere shack compared to Lebron James monument to excess. HIS has a casino!
Can’t these guys just get their c@cks out, compare, and be done with it?
http://www.newsnet5.com/sports/11402547/detail.html
When are we going to stop worshiping these guys?
Shame on the media for even considering this the news.
The house literally got stuck in Mr. Filter? Tell Oly and Palmy!…
Depression: watching Dennis Kneale talk over John Mauldin when he’s trying to explain that today’s unemployment numbers were awful once you did the seasonal adjustments and other adjustments for oddities in the auto industry.
Dennis Kneale just reminds me of someone from the mind numbing game shows in the movie, “V” only he’s not secretly one of the good guys.
After having my face pealed back in surgery I’ve been thinking a lot about “V” as well. What a coincidence.
You know they’re remaking it for TV, right?
Is that the movie with Natalie Portman and the dude wearing a Guy Fox mask?
Dennis Kneale is the epitome of annoying. AND, when you put him and Larry Kudlow together, they’re intolerable!!
Just heard back about a Boze rental, they came down $200 and went from no pets to pets, I can have it early, too. And sign a lease at whatever length I want. Beautiful place, furnished. Interestingly, it’s in a new subdivision WAY out of town.
No wonder they can’t rent it, from what I know, Bozeman is half students.
Man, I hope none of these property managers read this blog and figure out what I’m up to…singlehandedly bringing down the Bozeman rental rates (I know, I’m delusional).
Good for you Losty!
Go Lost go….go Lost go….Sic ‘em. Then sic your pack of hounds on them. Teach your dogs to laugh like hyenas and roll around on the carpet when you are getting the keys, filling out the check-in sheet, and signing papers.
In today’s market, anybody who leases is catching a falling knife!
…just thought i’d throw that out there.. see what bites.
Detroit panhandler dresses for success, succeeds.
Green says he is not proud of himself.
“I’m a criminal,” he confides. “I’m a panhandler and I lie. I don’t need money for the bus and I think that God must be ashamed of me.”
But it is a small sin, a white lie considering the crimes committed by the rich and powerful who have walked past him in his 10 years working the City County Building.
tehehehehe…..
There is spokesman written all over this guy.
Hey, anyone feeling adventurous? Want to “beta-test” a feature for the JT-extension that allows you to preview your posts before submitting them to the server?
If so, install this.
I’d like to tweak the layout a bit, but it’d be good to have a few more monkeys pounding on the keyboard, so to speak.
Testing the Joshua Tree Extension preview functionality.
Thanks drumminj. Now take that job and make some money for efforts already! JK
for efforts = “for your efforts”
I was just testing you.
Wow, even with the preview function you messed up your post? hah!
Now take that job and make some money for efforts already
btw, i’ve been working this past month, and did end up accepting that offer. That’s why I’m trying to push this thing out there. Otherwise, I’d get too busy and it’d fall into the abyss.
From now on I’m going to blame all my typos on bugs in the JT EXT preview function. It’s some sort of deadly embrace that forces me to misspell over and over.
Good tool. Thanks heaps!
Part 1
The US-China Ponzi scheme
By unwittingly tying together their fortunes as they pursued their own interests, the 2 nations have put themselves on an economic path of mutually assured destruction.
By Jon Markman
MSN Money
Imagine becoming so successful at your job that you stack up $2 trillion in income, which you conservatively place in short-term U.S. Treasury bonds for safekeeping.
Now imagine that when you try to cash in those bonds to buy a few things for your kids, the clerk at the bank abruptly shuts her window and tells you to go away.
That is essentially the situation faced by China these days as it wonders whether its plan to manufacture goods for U.S. consumers over the past two decades in exchange for a pile of credit slips was really such a hot idea.
The answer is coming up as a big, fat “uh-oh” as the U.S. deficit and debt obligations balloon to levels never before contemplated, and Beijing is denied requests to buy U.S. and Australian mines and oil properties. And as Beijing leaders talk openly, if obliquely, about their angst, they are unsettling world credit, currency and stock markets, which don’t know what to make of the idea that the world’s largest Ponzi scheme might be coming to an abrupt end.
This is a good time to assess the chilling possibilities, as the resolution of this pending crisis will afflict investors, workers and business owners alike.
Dangerous symbiosis
What’s so Ponzi about the Chinese-U.S. relationship? Basically everything. Look at it this way:
After a currency debacle in 1998 left its economy in tatters, Beijing decided to radically restructure its financial relationship with the West. Policymakers pegged the value of China’s currency to the dollar, which had the effect of keeping it artificially low.
The cheap renminbi made it irresistibly inexpensive for U.S. companies to manufacture goods in China, even after shipping costs. As more companies shifted their operations to China, the U.S. manufacturing base was hollowed out in the name of globalization and profitability. Americans who once enjoyed high-paying factory jobs moved on to lower-paying service jobs.
China didn’t need much of anything made in America, so instead of buying cars from Detroit and furniture from North Carolina with its factory profits, it bought Treasury bills. The purchase of all those bills drove down U.S. interest rates. So as middle-class and blue-collar Americans saw their wages stagnate or decline, they discovered they could still keep their old lifestyles by borrowing.
Over the past decade, Americans were able to outspend their incomes by easily rolling their debts forward through serial home refinancing. The situation was never ideal, but it worked as long as the value of their collateral — their homes — kept rising.
As long as China kept buying Fannie Mae (FNM, news, msgs), Freddie Mac (FRE, news, msgs) and Treasury credits, the scheme worked in a strange and beautiful way: Our driveways filled up with cars and boats, shopping malls spread out across the suburban landscape, and the retailer with the closest ties to China, Wal-Mart (WMT, news, msgs), became the United States’ largest company.
Land-mine economics
Was that so bad? Well, now think about this in the context of a Ponzi scheme such as the one perpetrated by disgraced financier Bernie Madoff.
Madoff’s clients for years thought they were rich because he sent them brokerage statements that said so. But that scheme worked only as long as new money kept coming in. When international money flows seized up last year and too many people wanted to redeem their accounts at once, Madoff’s $50 billion game fell apart. Then his victims suddenly discovered that their brokerage statements were worthless pieces of paper. Madoff clients’ households crashed, and now one-time millionaires are broke. The reality is that they were always broke; they just didn’t know it yet.
Part 2
The US-China Ponzi scheme
Continued from page 1
The credit that has kept American families afloat for the past 10 years is similar to those Madoff-produced brokerage statements. The credit is good only so long as China keeps recycling funds through the Ponzi scheme. But if Beijing leaders ever decide that it’s just too risky to own U.S. dollars and debt, then the system is going to come crashing down.
Of course, it is not really in China’s interest to stop the scheme, even if it wanted to, because its own economy would likewise blow up. Satyajit Das, a credit derivatives expert in Australia, likens this to stepping on one of those land mines that are activated by the weight of a victim’s body. As soon as the weight is lifted, the mine explodes, and the person’s leg is blown off.
China is thus frozen in place, damned if it does and damned if it doesn’t. It’s a classic Catch-22. China’s cache of U.S. bonds isn’t worth anything unless the bonds are sold. But selling them on any kind of scale will gut their value.
But if they’re sold on any kind of scale, they won’t be worth much either.
“People need to realize that China doesn’t actually have any real U.S. money,” Das says. “Unless they can turn in their bonds and exchange them for something else, they’re only paper assets. Yet if they try to exit the position, they’ll destabilize the dollar, and the value of the rest of their assets will plunge. And that’s not even their biggest problem. It’s that they also need to keep buying Treasurys, or interest rates will go up and their capital losses will be terrible.”
In short, Das says, Beijing thought it had discovered the perfect scheme for establishing independence from the West, yet it has instead made its dependence worse than ever. And he observes that one unspoken reason that China has gone whole-hog on its massive, $650 billion fiscal stimulus program — creating more factory capacity in a country that is already reeling from overcapacity — is that the effort gives it cover to stockpile copper, oil, iron ore and other hard assets that it considers to be better stores of value than dollars.
The long, unwinding road
Now here’s why this affects all of us: China and the U.S. together built the most monstrous liquidity bubble in world history as each pursued what it believed to be logical self-interest without any regulator, such as a stern global central banker, telling them that they were on a path of mutually assured destruction.
Now it’s reached the point where global capital markets will impose their own discipline. Because most money generated over the past decade was spent on consumption rather than investment — it’s as if Madoff’s clients blew their fake money on chartering jets rather than buying real property as a store of wealth — there are few new buyers of goods. This has killed U.S. retail sales, crushed employment, lifted the foreclosure rate, stymied homebuilders and undercut loan demand.
There are no good solutions. The Chinese need to open their markets and let their currency float on the open market, but they won’t for political reasons. And the U.S. needs to either halt its runaway deficit spending so that the world is not even more flooded with our debt, or swallow its pride and issue Treasurys denominated in Chinese currency. That probably won’t happen either. Which means there is only one solution left: a long, slow, boring, lonely, soul-crushing process of digging out from under the piles of debt that got us into this mess.
You might even say that the bursting of the credit Ponzi scheme has left us all in jail now with Madoff. Let’s hope that our sentence is shorter than his.
House prices slump in the Hamptons as Wall Street’s wealthiest feel the pinch
Wall Street’s wealthiest are feeling the pinch as property sales in their summer beachside playground – the Hamptons – are more than 40pc below last year’s levels.
By James Quinn, Wall Street Correspondent
Published: 8:20PM BST 26 Jul 2009
What was once an area in which New York’s rich just had to have a home, the Hamptons is fast becoming a place where owning a home can be a poisoned chalice, given the collapse of the local property market.
According to new data from upmarket NY estate agent Prudential Douglas Elliman (PDE), second-quarter house sales in the Hamptons – which is made up of a series of small, affluent towns on the eastern end of Long Island – are 43.3pc below the same quarter last year. The raw data show that 307 homes were sold in the three months to June this year, compared to 541 in the same period last year.
Although the second-quarter figures are an improvement on the 201 homes sold in the first three months of this year, all the other leading indicators point to a worsening market in the area.
The number of properties up for sale continues to rise, up 23.6pc on the same period last year, while the so-called monthly absorption rate – the number of months it takes to sell all the current inventory based on the current pace of sales – has risen to 22.3 months from 10.3 months at the end of June 2008. In addition, prices are down on previous levels, with average sale prices down 11pc to $1.28m (£778,000) from $1.44m last year.
The statistics, compiled by PDE chief executive Dottie Herman, show that the area’s real estate market is at its lowest ebb in years, making it increasingly difficult for buyers who need to sell to do so quickly.
A wider survey, by the Long Island Real Estate report, showed recently that the number of weekly sales of private homes and condominium apartments on Long Island has fallen by 42.3pc during the 29 months starting January 2007. During that same period, the number of weekly foreclosure auction sales has risen by 133pc.
The two Hamptons homes of convicted New York lawyer Marc Dreier – who two months ago pleaded guilty to eight counts of fraud – fetched a combined $10.4m at a recent auction, some $2.1m below the expected price.
http://www.telegraph.co.uk/finance