Bits Bucket For July 20, 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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Bernanke May Hold Rates Down by Showing He Can Reverse Course.
July 20 (Bloomberg) — To keep interest rates at a record low, Ben S. Bernanke may have to show Congress and investors he can be as creative about soaking up cash from the financial system as he was when pouring it in.
The Federal Reserve chairman will probably outline his strategy for exiting the biggest monetary expansion in history when he delivers his semiannual economic report to Congress tomorrow. Among the options: establishing term deposits at the Fed designed to induce banks to keep money there rather than lending it out, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.
Laying out a plan now may give Bernanke leeway to hold down borrowing costs for as long as it takes to reduce unemployment from a quarter-century high. To do that, he first has to convince lawmakers and investors he’s ready and able to contain inflation as the economy recovers.
“Bernanke needs to explain that the Fed has the tools to do the job and that it intends to use them forcefully when it has to,” said Lyle Gramley, senior economic adviser with New York-based Soleil Securities Corp. and a former central bank governor. “That would help hold down inflation expectations and give the Fed the opportunity to stay easier for longer.”
House Financial Services Committee Chairman Barney Frank said he expects Bernanke to spell out how the Fed will end its unprecedented expansion of credit when he testifies before the Massachusetts Democrat’s panel tomorrow.
‘Prepared to Unwind’
“I’ve urged him to be ready to tell people how he’s prepared to unwind some of those facilities when it’s prudent to do so,” Frank said.
Bernanke is “very conscious” of worries that the Fed may end up rekindling inflation, the lawmaker said.
Already, some investors are betting such concerns will force Bernanke’s hand. Trading in federal-funds futures suggests a better-than-even chance the central bank will raise its short- term interest-rate target by January from the current range of zero to 0.25 percent.
Among the options: establishing term deposits at the Fed designed to induce banks to keep money there rather than lending it out, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.
I thought banks were already keeping money and not lending it out.
Well maybe not lending it out, but still using some of it on bloated bonuses.
Super-low interest rates tend to create the incentive for not lending money. Given the Fed’s largely successful interest rate suppression efforts, why wouldn’t a bank rather to just keep its money under a mattress and wait for fire sales on some future rainy day, than lend it out for near zero return?
Some banks are using the money to buy competitors which leads to more unemployment.
i’d love to hear the reasoning behind that one…
I think the theory is that by combining operations you can gain efficiencies by reducing redundant employees. For example, you may only need 1 human resources department.
Reality is often quite different.
Bank as corporate raider just doesn’t seem likely to me. Nor does a bank seem like a profitable target for raiding. But then, you never know..
PBS’s Nightly Business Report just reported this very evening that 15 banks receiving TARP money used it to buy competitors.
Also, that 24 TRILLION has been pledged to bail out the financial industry.
Bernanke better get some credibility about how he’s going to reign in this monetary expansion or the bond market will cease to cooperate.
Banks have been on a merger and buying spree for years.
I can testify to that one.
Raise your right hand.. etc.
OK.. lets hear it.
If core inflation comes back in ANY real way, then the mortgage resets will go up since interest rates will need to rise. Note that 1) core inflation is not real inflation and 2) interest rates may go up anyway due to the ocean of dollars running around.
If mortgage interest rates rise (or LIBOR rises) then the Alt-A and Prime resets will go to a much higher level. We are then at the abyss once more. BTW, there is no more help for this. We cannot repeat 2007-09 tricks. No more “liquidity injections”, no more “game changer” Treasury purchases, no more bailouts, etc. This is be “The Disorderly” like last fall except maybe worse.
The FED, WSC (Wall Street Criminals), and USG are counting on low interest resets to mute or even eliminate the 2nd wave of ARM resets: Alt-A and Prime.
(Note to Self: Fecklessness and shortsightedness do not equal stupidity. Laziness? Maybe. Ok,yeah, probably. Shouldn’t confuse laziness with stupidity.)
Roid
Well then, since we’re talking about how to pull the liquidity back out of the system, then obviously all our problems are over right? We should all start spending and living ‘normally’ again. Or maybe the Fed wants to make it look like rising interest rates are something they want and are making happen, as apposed to something Mr. Market is demanding to compensate for risk.
How about returning to traditional accounting methods (like marking to market) ? I bet that would pull some liquidity out of the system.
Because this is the only way we can win the War On Savers and defeat those annoying productive people who won’t willing put on the yoke of debt slavery.
From mere teardowns to deconstruction: recycling houses.
http://www.detnews.com/article/20090720/LIFESTYLE14/907200368/Wayne-County-deconstructs-decayed-homes-in-new-spin-on-recycling
There are a lot of beautiful, “you couldn’t build it today” houses in the Detroit area, and a lot of money and crap houses in Texas.
Looks like a lot of hardwood moldings, stone fireplaces, etc. will be moving south.
There are a lot of beautiful “you couldn’t build it today” houses in Dallas also. Some of which the city will give you for free.
I think we covered the difficulties with meth remediation last week and I would be very leery of using anything out those houses.
This was tried in Cleveland several years ago; craftsmen made stuff out of the salvaged material. Couldnt turn a profit.
In a couple of examples of tougher times:
http://www.nbcsandiego.com/news/local/MTS-Officer-Shot-Twice-Days-After-Similar-Incident–.html
“Trolley officials are calling it an unprecedented string of violence. Security was beefed up at trolley stops around San Diego county Sunday after a security guard was shot and then robbed of his gun. The shooting came days after another incident with similar circumstances. This is the first time in the history of MTS that an officer has ever been shot, according to the Director of Security for MTS.”
Around 3 AM this morning, I got to hear/see a vehicle being repo’d as a tow truck hauled away a vehicle with the security alarm blaring. I’m not in a low income area.
This doesn’t seem like “green shoots” to me.
The trick is to avoid getting shot by any of the green shoots.
Sign of the times. I witnessed my first repo a couple of months ago. Middle of the night and I woke up to the sound of the repo guys taking a late model GM SUV back from the lady across the street. Naturally she always parks her $30-40K SUV out on the street in order to leave room for the piles of worthless crap in her garage so it wasn’t difficult for the repo guys to accomplish their mission. She was out in the street wailing to no avail but the very next day she went out and came home with a new Land Rover. I wonder how long it will be before that one disappears in the dead of the night as well.
In New Future, jobs will be plentiful as security stooges to protect Dear Banker Masters since they’ll be the only ones with money.
Indeed, lead shoots everywhere!
WASHINGTON - Federal Deposit Insurance Corp. Chairman Sheila Bair believes up to 500 more banks could fail, a U.S. senator said Bair told him in a recent meeting.
“She told us that unless something dramatic happens, we could lose up to 500 more banks,” Sen. Jim Bunning, R-Ky. said Thursday at a hearing of the Senate Banking Committee on the foreclosure crisis.
Bunning said Bair made the remarks in a recent meeting.
Ms. Bair doesn’t have nearly enough money in the FDIC till to bail out 500 more banks, but she can get the money from the Treasury Department, which can lay hands on the additional funds by floating more bonds in the marketplace. (At least until such time as the world’s lenders decide it’s a bad deal.)
Sounds like we only need about 500 more sunday-night emergency deals like the CIT one to take place and we will be all set. Fighting debt with more debt as a plan has not failed us yet. Goldman-bless us all!
Speaking of CIT, they really highlighted how messed up things are right now. After getting into trouble they looked for financing from the government FIRST, and only after that did they try the market place (which I heard this morning worked.)
Apparently the government doesn’t ask hard questions like “How are you going to pay us back?” or even “Do you have any revenue?”
So why not try them first?
They also dont charge a 10% rate which in the corporate world is one step away from loan shark teritory. As the NY Times article put it. “This didnt solve the problem, it just kicked the can down the road”
With a 10% surcharge
Goldman, Citi, BoA, and the rest should be split up like AT&T and forced to merge with these “less healthy” banks, IMHO.
Goldman, Citi, BoA, and the rest should be split up like AT&T and forced to merge with these “less healthy” banks, IMHO.
Wouldn’t it be better to split up the megabanks and have them merge into the healthier banks? Is there a reason we’d want pairs of poorly run banks merging with each other?
Megabank, Inc should be split up and sold off to smaller, healthier banks at prices that reflect the (undisclosed) weight of toxic assets on their balance sheet. This would greatly reduce the risk that we will soon face another “systemic” crisis requiring rescue of “too-big-to-fail” financial institutions.
Now, now PB - we wouldn’t want the Ken Lewis’, Jamie Dimon’s, and Lloyd Blankfein’s of the world to be standing on the corner with a tin cup in hand, would we?
Who was it?…David in the old testament?
“Too-Big-Has-Failed”
While institutions which became “too big to fail” were the problem, the politicians adopted a hair of the dog strategy to make them even bigger. JP Morgan gets WAMU, B of A gets Merrill, etc. Prior to the CIT bondholders stepping up to plate, there was chatter of JP Morgan becoming even more bloated by taking on their assets as well. These people are dangerous.
“…the politicians adopted a hair of the dog strategy to make them even bigger…”
The (proposed) icing on the cake: Let the Fed decide who is big enough to qualify for free too-big-to-fail bailout insurance.
Wouldn’t it be better to split up the megabanks and have them merge into the healthier banks? Is there a reason we’d want pairs of poorly run banks merging with each other?
Of course, that would be the ideal aside from letting them fail altogether. I’m just trying to work within the silly “government must save us” mindset that seems to pervade now. If we’re going to be sending huge sums of money to the banks anyways, let’s save the small ones too by including them in a breakup scheme.
“…should be split up like AT&T”
Hey bink…here in CA… AT&T will be bigger than ever, that nickle & dime stuff can really add up!
In the twenty five years since the AT&T breakup - how much money was artificially “created” from the numerous mergers and spin offs leading up to the re-emergence of the new mega AT&T?
The country would have been better off leaving the old school AT&T alone. With the old Ma Bell at least we never heard mention of the insidious term: “Local Long Distance”
FWIW - from someone who worked in that industry for 15 years, until last year - my view is that things are vastly improved since the breakup, and probably somewhat due to the breakup itself (it’s incredibly complex of course). Long distance rates are way down, and technology way advanced. This would have happened somewhat anyhow, but I think was encouraged a lot by the various marketplace competition; in particular now between the Bells and the cable companies. There are some places that are dominated by a single provided but they are few and far between - in most cases you can get phone service (and internet and TV) from more than one provider, and we are better for it.
Where I live I can get TV and internet service from at least three providers (not including over-the-air), and phone service from at least two. I’m talking tier 1 providers (Verizon, Comcast, DirecTV, etc) not niche.
“Local Long Distance”
Man that pricing scheme killed me back in the BBS days. I was in high school and would have to pay for the incredible phone bills I’d run up. I wasn’t aware that even though it was a local number, I’d be charged some crazy per-minute fee. Yikes!
AT&T has a new residential Cable/Internet/Phone service called U-Verse. We use Brighthouse where I live. I guess nobody was signing up for it after they laid fiber in my ‘hood, so they had a door to door salesguy knocking on doors. I invited him in as I’m always looking to cut costs.
We start off by adding up how much my current Cable/Internet/Phone costs me per month. Runs out to about $143. He says he can do U-verse for about $155. I say sorry, I’m looking to cut, not increase. He throws the hard sell on my (throws in $100, 6 mo free yada yada) and gets the cost down to less than what I am now paying (for 6 months only). I figure I’ll try it for 6 mos and then go back when the price goes up or give them an opportunity to continue the price discounts.
A few days later I run across a neighbor who has it. He says to watch out for the taxes which run about $10/mo. Hmmm… did they include taxes in my offer. I call, answer is no. So now my price is over my start point again. Next day I get a flyer which mentions that for an extra $10/mo, I can get HD channels. Wha? I already have HD channels with Brighthouse. I call U-verse again. Is this true? Yes.
I dropped U-verse before they installed it.
Dang - sounds pricey. I get Verizon FiOS for $127 a month total (including taxes etc), and that includes a ton of HD channels and HD DVR, and 15Mbps internet, and a full phone package.
Yea U-verse sucks. I recently tried it and the “HD” quality was worse than the SD on my old cable, and I say that with great pain since I’m not particularly fond of cable either. I dropped U-verse immediately, but god save anyone else who has to go through that process.
Blame the AT&T CEO - who was convinced for some god-forsaken reason that HD content could be carried over DSL; for multiple TV’s even. Thus AT&T chose to use DSL for their video service instead of fiber, to save on installation costs. So Verizon’s mopping the floor of the cable companies in the east while AT&T is struggling. The power of long-term thinking.
Odd. It must be a regional thing. We have it here in Houston and the price and quality are far superior to anything else.
It sounds to me like the CEO of AT&T has great Ignorance. Maybe he is qualified to run a bank?
Remember all the mini AT&T Bells? Pac-Bell, etc.. No longer around. AT&T has gotten bigger and it’s back to being a near monoply.
“but she can get the money from the Treasury Department, which can lay hands on the additional funds by floating more bonds in the marketplace. (At least until such time as the world’s lenders decide it’s a bad deal.)”
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.
It’s called counterparty risk. Where did people get the idea that it doesn’t exist?
Well I DO sympathize with their outrage about being discouraged from buying actual productive assests with their dollars. It’s as if people don’t realize that we’ve ALREADY sold our economy off to the chicoms. Really our only recourse is to make those dollars worthless faster than they can buy stuff with ‘em. But we really have no justification to complain when THEY want to buy mines and wells and factories with the money we gave them for clothes and cheap plastic gegaws. Yes, it’s a bad trade, but WE’RE the ones at fault.
I don’t think we’re complaining that they want to buy the stuff, I think they’re complaining that we won’t let them. Of course they’re always welcome to purchase manufactured goods from us.
The smart thing for China to do would be to spend some of their $800 billion stash on US manufactured products.
Instead, they are grabbing all the raw materials and intellectual property that isn’t nailed down.
But why would buying us manufactured goods be smart for THEM? Yes, it’s what WE want them to do, but THEY’RE the ones with the money and they have an OK manufacturing base and a workforce which has yet to demand first world wages. We want to sell them cheese, and they want to buy alfalfa for their cow.
At some level, because THEY think that continuity and stability are very important, they give more defference to our government then we ourselves do. Not in foreign affairs, or with respect to Taiwan or their territorial claims to the South China Sea, but with respec to what THEY consider our internal policies. They have yet to internalize the extant to which money IS power in the US, and they have the money. We should be fearful of the day when they realize that they have considerable (though not infinite) ability to boss us around
Sen. Bunning is currently getting his legs kicked out from under him in his re-election primary by our state republican overlord Sen Mitch McConnell, who refuses to endorse him or give him any assistance with fundraising. The rest of the repub power structure fell in line behind Mitch and Bunning is flailing in the wind. And, boy, is he pissed.
The unofficial line on this is that the repubs fear Bunning will be a loser in the real election. I think this is possible, but Bunning is a popular figure with many, with great local name recognition and all the advantages of incumbency. To throw him overboard seems strange to me.
I personally loathe 90% of his positions. But he has been great fun to watch in his seat on the Senate Banking Committee as he asks a lot of the questions that many of us here want asked. (mostly along the lines of ‘if you guys are such brainiacs, how did you lose all this money and why are you still rich and employed?’) I’ve often pondered whether his harsh treatment of the financial elite hasn’t played a large role in his (potential) downfall.
I think his fury over his in-party screwing, coupled with his natural cantankerousness and the fact that he’s got nothing to lose should produce some good fireworks in the coming months. Sit back and enjoy.
Bunning is 77, I can see the Repubs wanting to go with someone that might live out the term.
They kept going with Strom Thurmond until he was more than 100 years old. I’m not sure your logic holds water here…
if you guys are such brainiacs . . . why are you still rich and employed?
I think that question answered itself.
Heh! Good catch.
Skroodle- He’s seems very healthy, but you may have a point. Conversely, at this point I’d think the repubs would take any incumbent they’ve got over a shot in the dark. (It’s not like they’re overwhelmed with excess Senate seats.)
“whether his harsh treatment of the financial elite hasn’t played a large role in his (potential) downfall.”
Ya think?
Hope this one got through:
If core inflation comes back in ANY real way, then the mortgage resets will go up since interest rates will need to rise. Note that 1) core inflation is not real inflation and 2) interest rates may go up anyway due to the ocean of dollars running around.
If mortgage interest rates rise (or LIBOR rises) then the Alt-A and Prime resets will go to a much higher level. We are then at the abyss once more. BTW, there is no more help for this. We cannot repeat 2007-09 tricks. No more “liquidity injections”, no more “game changer” Treasury purchases, no more bailouts, etc. This is be “The Disorderly” like last fall except maybe worse.
The FED, WSC (Wall Street Criminals), and USG are counting on low interest resets to mute or even eliminate the 2nd wave of ARM resets: Alt-A and Prime.
(Note to Self: Fecklessness and shortsightedness do not equal stupidity. Laziness? Maybe. Ok,yeah, probably. Shouldn’t confuse laziness with stupidity.)
Roid
“The FED, WSC (Wall Street Criminals), and USG are counting on low interest resets to mute or even eliminate the 2nd wave of ARM resets: Alt-A and Prime.”
I don’t think ‘counting on low interest rate resets’ quite captures the situation, as it appears the Fed plans to sit on rates if necessary to keep them low for an indefinite period of time.
PB,
This is more of a question than a statement below.
I don’t understand this one. We are expecting rates to rise but I’m not really sure what will happen. If we have increasing defaults and slowing velocity of money then availability of credit might go down and rates might go down at the same time.
Thinking banks will have much higher requirements collateral and capacity. Basiclly in a depression, called that or not, rule is money is cheap but you can no longer get any. Banks will have to sit on capital or face runs. Larger and larger reserve loss requirements reduce velocity.
The most credit worthy borrowers are not going to borrow much and then only at low rates.
Not sure if this balances out the Fed policies and or creation of new money.
Not sure if we are going to see inflation for a while yet.
Also remembering that private sector debt outweighs government debt and private sector activity outmasses government activity.
Thoughts?
I’m not real certain as government spending has gone through the roof and money creation is going fast. Also think the data on M0-M2-M3 are poluted by the change in mark to market rules.
No place safe these days. Somewhat concerned that the US will do something like sell off its massive gold reserves to China.
Thoughts?
I don’t think thats going to help everyone - sooner or later those people with interest only loans are going to have to start paying down principle…
Agreed. The low rates are a bandage on a gunshot wound.
I doubt it at this point.
Why bother? The banks are getting money from us via the FED, and the houses will be “marked to fantasy” at 2005 prices forever.
The banks would only start caring about payment if they can foreclose on people who don’t pay and sell the house for some fantasy value, such as to government-backed speculators. That way, the bank never has to realize the loss on their balance sheet and they can pretend to still be solvent.
With appraisals now in lenders’ hands, Realtors worry that lower valuations will stifle any recovery
By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Sunday, July 19, 2009
Realtor Robert Garrison thought he had put together solid deals for two homes in Palm Beach County. Then the appraisals arrived.
One property, west of Lake Worth, had a contract for $257,000. The appraisal came in at $180,000. The other home, in Loxahatchee, found a buyer willing to pay $250,000. The appraiser’s estimate: $215,000.
Clark blames the lenders, not the appraisers, for low values. One house boasted new windows, a new roof, a new air conditioner and a renovated kitchen, yet the lender allowed the appraiser to raise the home’s value by only $5,000.
‘The underwriters, who never see the property, are giving guidelines to the appraisers,’ Clark said. ‘The appraisers can’t really give their honest opinion.’
Real estate in South Florida
Read the latest news on the housing market in South Florida.
The buyer of the Loxahatchee home decided to pay cash, but the other deal is languishing, Garrison said.
“To be selling at $257,000 and get a $180,000 appraisal is insanity,” said Garrison, an agent at Keller Williams Realty. “It’s killing the market.”
Garrison’s gripe isn’t just sour grapes from a Realtor who lost a commission in a difficult economy. Realtors, mortgage brokers and home builders across the country say lowball appraisals threaten to stall the housing recovery before it starts.
In separate surveys this month by the National Association of Realtors, the National Association of Home Builders and John Burns Real Estate Consulting, real estate professionals cited appraisals as a major obstacle. In the NAR survey, 37 percent of Realtors said they had lost deals because of appraisals.
Because mortgage amounts are based on appraisers’ estimates, appraisals are a crucial cog in the machinery of the housing market, but the cog seems to have ground to a halt in recent months.
After suffering huge losses from plummeting property values, lenders are leaning on appraisers to be more cautious. And appraisers’ jobs have grown more difficult amid wild swings in prices and sales volumes.
To some extent, deal-killing appraisals are the natural fallout of a wrenching real estate bust. Prices plunged, and appraised values followed.
Adding to the pain, “distressed” deals — foreclosures and short sales — make up a huge chunk of transactions, and those bargain-basement prices create a point of comparison for appraisers valuing houses whose sellers are not underwater.
“The inappropriate use of foreclosed and distressed sales as comparables is driving down the values of everything,” said Jay Carlson, a home builder in Punta Gorda and president of the Florida Home Builders Association.
Appraisers took a heaping helping of blame for the housing bubble. Some say they’ve responded by becoming too careful.
“All this pressure is being put on the appraisers,” Garrison said. “They’re so scared, they’re so gun-shy, that they’re finding the lowest comps they can.”
New rules stoke outrage
It seems every Realtor has a horror story.
Dave Petruzzelli of Petruzzelli Real Estate in Boca Raton recently helped a friend dispute a lowball appraisal on a 3,000-square-foot house in Boca Raton. The homeowner needed the appraisal to refinance his mortgage.
The first estimate came in at $230,000. After Petruzzelli wrote a five-page letter, the appraiser tried again and came up with a much higher figure: $650,000.
“It was absolutely ridiculous,” he said of the huge swing in value.
It’s not just low appraisals frustrating Realtors, mortgage brokers and builders. They’re also outraged by new rules that have upended the way appraisals were conducted for years.
Beginning May 1, all home loans bought by Fannie Mae and Freddie Mac, the mortgage giants that account for more than half of all loans, must follow the Home Valuation Code of Conduct. The new rules forbid mortgage brokers from ordering appraisals.
Instead, lenders must order appraisals. The appraiser can be an employee of the lender, but more commonly the appraiser is hired by a third party known as an appraisal management company.
The rules discourage appraisers from talking to Realtors and mortgage brokers about their price estimates. The new guidelines, negotiated last year by New York Attorney General Andrew Cuomo, aim to end the cozy relationships among appraisers, Realtors and mortgage brokers that encouraged inflated values.
‘Doing a haphazard job’
The new rules have created a litany of side effects, Realtors and mortgage brokers say. For starters, appraisal management companies sometimes take hefty fees that discourage experienced appraisers from working for them.
“I don’t think the appraiser is intentionally trying to kill the deal,” said Alan Sperling of Mortgage & Investment Consultants in Boca Raton. “But the appraisers are going out and doing a haphazard job because they’re not getting paid very much.”
Wellington appraiser Gina Rascati said she does not work with appraisal management companies because they take as much as half of the appraisal fee. On a typical appraisal that costs the borrower $350 to $400, the appraiser might keep only $175 to $200.
“I don’t know how appraisers are able to do appraisals at that price,” Rascati said. “The only way they can is to do it so fast and cut so many corners. The appraisal management companies want the cheapest appraisal they can get.”
What’s more, appraisal management companies often assign properties to appraisers who don’t know the local market.
Vince Laviano, owner of Better Homes and Gardens Real Estate in Palm City, said the new rules mean appraisers from Broward and Indian River counties come to Martin County to appraise homes.
“It’s pretty bad when you’ve got an appraiser calling a listing broker and saying, ‘Where is that property? How do I get there?’ ” Laviano said. “Anybody can do an appraisal, but you’ve got to know the market to really understand the trends.”
With the Home Valuation Code of Conduct sparking so much discontent, NAR, NAHB and the Appraisal Institute have put a full-court press on Congress, aiming to change or delay the rules.
Cuomo argues that the rules are necessary and that critics are looking for someone to blame for a cratering housing market.
“With home prices falling and foreclosures rising, this complaint is simply wrong and risks returning us to a corrupt system filled with conflicts of interest that promoted artificially inflated values,” Cuomo spokeswoman Emily Browne told The Associated
“One property, west of Lake Worth, had a contract for $257,000. The appraisal came in at $180,000. The other home, in Loxahatchee, found a buyer willing to pay $250,000. The appraiser’s estimate: $215,000.”
Quit bellyaching and tell the buyer to bring cash to the table.
“Realtors, mortgage brokers and home builders across the country say lowball appraisals threaten to stall the housing recovery before it starts.”
I don’t understand, help me out here. Didn’t the RE association and MSM tell us that the housing recovery is well underway. Which is it? I’m sure that the MSM will tell us in a year or two!
“Adding to the pain, “distressed” deals — foreclosures and short sales — make up a huge chunk of transactions, and those bargain-basement prices create a point of comparison for appraisers valuing houses whose sellers are not underwater.”
I didn’t hear any complaining on the way up. Everything was only based on price per sq.ft. the same as it is on the way down baby. Get a grip.
““Anybody can do an appraisal, but you’ve got to know the market to really understand the trends.”
Gotta love that phrase ‘understand the trends’, yep tell us just what those trends other than down,down,down.
“The inappropriate use of foreclosed and distressed sales as comparables is driving down the values of everything,” said Jay Carlson, a home builder in Punta Gorda and president of the Florida Home Builders Association”
b..b..but the same “inappropriate” use of fantasy prices, frauds, and investment flips drove UP the values of everything, now didn’t it?
…and you guys thought you’d get away with it forever, didn’t ya, didn’t ya ?
Har Har!!
The RE industry has no room to complain about appraisals at this time.
However, the appraisal industry does seem to be having some problems. I refinanced back in February (was a 30yr fixed: shortened my term, lowered the interest rate) on a bank-owned mortgage.
The ‘kid’ the bank sent out to do the appraisal looked at our house and then turned to my wife and said “I have no idea how to comp this”. Sure enough, his comps were all screwed up. For instance - 2 of the 3 houses he used were in a school district that is ranked 5th worse in the state. My school district is ranked in the top 5%.
CincyDad
Walnut Hills High School grad here.
And you are right. School district makes all the diference in the world.
Thge “kid” they sent out to do the appraisal said he did about 8 appraisals a day - all 1950/60s 3 bedroom 1600 sq ft ranches, owned by old people who were pulling equity out.
Then he came to my house (1873 farmhouse in Lebanon school district, 4 acres land) and had absolutely no idea what to do with it. So he picked some older houses in the Middletown school district to use as comps.
Keep in mind that Warren county has not really experienced much drop in pricing, and the place is still growing steadily.
The number he came up with was considerably below what he should have come up, and I noted other errors in his evaluation noted on his printed report (like incorrect # of rooms).
I wrote a 5-page appeal to the bank, but they refused to reconsider. The numbers worked out OK for me, so I went ahead and refinanced, but the appraisal was definetly botched.
If the numbers worked out OK for you to complete the refi, why did you invest the time and energy to write such a long appeal to a bank??? I don’t get it; emotionally clinging to presumed equity, maybe?
I’m not CincyDad, but I’d appeal the appraisal too if it didn’t even have the number of rooms right. There’s something about accuracy I like.
” emotionally clinging to presumed equity, maybe?”
In Cincinnati? you’ve got to be kidding.
The house is older and I need to redo the roof and kitchen in the not-too-distant future. I was trying to put in place up a HELOC big enough to allow me to tap it IF NECESSARY to complete the renovations. (I wanted to borrow as much as possible at fixed rates I don’t ever expect to see again in my lifetime.) I had to settle for a smaller HELOC than I wanted. Keep in mind, the heloc is not tapped and will only be used to renovate on an as-needed basis.
The house still appraised hire than I paid for it 3 years ago, without any capital improvements.
The overall point is that the appraisal industry still has some problems with it, just maybe not the same ones it had 3 years ago.
Yeah, I couldn’t see there being any kind of real estate bust that would effect Lebanon Twnship.
I mean its not like some super massive real estate bubble popped just about three years ago.
Its only effecting those bad places like California, Michigan, Florida, Nevada, Chicago and Virginia.
Cinci is special.
Comps always get noisy in busts and places are hard to value. But if you think values are up from 2006 you need to get your head examined.
Fair points. Getting as large a fixed rate first-mortgage makes sense if you want to invest in the house; it’s a better deal than doing renovations on a 2nd.
Note that you better not make plans based on HELOC, since anecdotally banks are chopping unused lines to reduce future exposure to RE losses. Don’t start on a project until you take the FULL amount out of the HELOC in cash and park it somewhere; I’ve heard tales of people being in a bind mid-project due to the bank freezing a line that they were counting on for completion of the project.
Yes, appraisals will always have a margin of error. The appraiser was probably just using the # of rooms that the county has listed on the tax roles; if you want to avoid such errors in the future, it might be a good idea to double-check that they have the right data there.
One thing that people forget is that when things were booming, it was “safe” for appraisers to go on the high side, because even if they were wrong, the market would soon erase the error. Now appraisers have the same incentive to err on the low side; low-side errors will self-correct, but high-side errors will not.
My favorite part of the bellyaching is that appraisals are now doing what they are supposed to do, determine the value the 2nd greatest fool would pay for the house… in two to five years time! An appraisal should be the lowest of today’s value or the foreclosed upon value; its purpose is to ensure the lender and mortgage insurer come out whole.
“To be selling at $257,000 and get a $180,000 appraisal is insanity,”
I do not think that word means what the Realtor ™ thinks it means. In other words, its not the $180k of the lender covering their butt that is the insane part.
“With home prices falling and foreclosures rising, this complaint is simply wrong and risks returning us to a corrupt system filled with conflicts of interest that promoted artificially inflated values,” Cuomo spokeswoman Emily Browne told The Associated
Kudos for doing your job Cuomo! (It seems like no one else will call out the REIC.)
Warms my heart. Or is it because I have a WORKING coffee maker this morning?
I want to emphasize, the appraisal is for the mortgage insurer (lets face it, only a fraction of home sales are cash or even 20%+ down, exhibit A: “FHA”). Ahhh… this reminds me of the traunches threads of years ago.
Got Popcorn?
Neil
Bingo Neil.
“To be selling at $257,000 and get a $180,000 appraisal is insanity,”
It ain’t the seller who’s the insane one here, Bob. And it ain’t the appraiser. That leaves two other possible people… (well, three if you include the bank; if this is a financed house).
I don’t want banks (or the government ) to make high risk loans
(3% down FHA loans ),in a declining high supply foreclosure
market . In light of the fact that still so many of the purchases are investor based loans that are planning to “flip that house “,who cares if these buyers have to but more money up ,(as investors should ).
Who is to say that those purchases aren’t your same shill buyers that were operative in the peak of the fraud of the housing
boom . it’s not natural for a buyer to pay top dollar when foreclosure comps are coming in much lower ,unless they have been denied information ,in which they are than not a true market competitor ,but a ignorant buyer or a fraudulent buyer ,or maybe even a cash back paid buyer .
Lets face it ,in every tract you have a wide range of prices listed for the same darn house .I have seen tracts where the same darn house is listed for a 200k difference . Also ,some tracts have great potential for a higher foreclosure rate in the near future ,to the point where the lenders have the zip codes .
This no doubt influencing the underwriting decisions .
Why not have the homeowner pay the amc for an appraisal prior to listing? That way, s/he knows how much to list the house for to start with. The other upside is that you already have an appraisal done. You don’t have every person who tries for the house and doesn’t qualify have to pay for a different one.
Bammy wants to tax “the rich” to fund health care reform. I’ve got a better idea. Cut the fat in the heads of Congress and administration officials.
That health care reform bill is a Frankestein monster. As to taxing “the rich”, he’s referring to upper middle class and professionals who are already overburdened.
My marginal tax rate (federal, state, local), including the employer’s share of FICA (passed on to me in lower wage increases), is 55%. Spend any additional money and I pay a sales tax now approaching 10%.
I wonder if the rich will ever face a tax bill that high.
There are already leaks that the $200k* floor will not hold.
The taxation “sweet spot” is $35k-$125k* - and you’d better believe that’s who will be paying - sooner than later.
* HH Income
No doubt this thing is going to end up making things worse off than if “reform” never happened. The industry lobbyists are dominating this legislation.
I read this blog a lot but seldom comment. I would like to hear some thoughts from you wise folks on how and where to invest some cash. I paid off my mortgage just because I didn’t feel comfortable with any of the usual investments. I figure not paying 6% interest was as good as I was going to do this year.
Now I have saved about another $30k that I need to keep safe for a while. I’ve got a fair amount in my IRA and some mutual funds but it seems like I’m just rewarding bad behavior by adding anything to these right now.
Let me know what you think.
Same deal. Paid off a 7% mortgage. Most excess savings is in Treasury Direct rolling 3 month T-bills at 0%, as a placeholder.
We’re waiting for asset prices to fall/interest rates to rise to levels that allow a reasonable rate of return going forward, and all the bubble losses to be admitted to so we don’t end up with them.
What we are doing is the opposite of what we usually do — spend money. Generally on consumer durables that will save money in the long run. As an inflation hedge.
We finally bought digital TVs, after the industry finally met our price. Got a new computer, replacing one eight years old. Redid the roof, which had leaked. Solar panels started cranking out juice yesterday, massively subsidized at the federal, state and local level.
I’m getting a free home energy audit next week. The hot water heater is 18 years old, the clothes dryer perhaps as old. The steam boiler is 30+ years old and is fine, but we’re having it evaluated for an energy efficiency payoff. Same with the frig, and the clothes washer. We’ll get the windows checked, and evaluate the price, savings and disruption of new insulation.
To me this is the only way out collectively too. Due to the “paradox of thrift” we can’t all start saving at once if no one will invest, but in the long run we are broke. So we need to invest in things that save money later, unlike paper assets that could be worthless or consumer durables (SUVs, McMansions) that force you to spend more (particularly on energy) in perpetuity.
“What we are doing is the opposite of what we usually do — spend money. Generally on consumer durables that will save money in the long run. As an inflation hedge.”
Sounds like you got with BB’s program…
The non-conventional view in the 0% interest regime is to literally keep money under your mattress in crisp dollar bills. That way you pull the cash out of circulation and fractional reserve banking, which as we can agree, is a pretty big cause of the financial soup we are in.
Of course, invest in a safe, keep dogs and don’t brag about this.
safe, check
keep dogs, check
don’t brag, oh crap.
WT Economist,
That “energy audit” is worth it’s weight in gold. I complained loudly and longly enough to finally get one. Because we were already doing things about as efficiently as can be reasonably expected, there wasn’t a lot of room for improvement.
But the auditor had some surprising suggestions. We have 2 cordless phones and those chargers are sucking juice 24/7. Not a lot, but he suggested there is nothing wrong with the older corded phones. We also have about 4 times as many clocks than anyone could really ever use. Why have an answering machine when you have a cell phone? Just little things that add up.
Uhhh. Maybe 10 watts an hour? So if your power is 7 cents per kilowatt hour, that’d be around 50 cents a month total for using the cordless phone?
Little leaks sink big ships.
I’ve decided to spend some money on health care while I am still employed and have insurance and while my son is still in college and I can cover him.
Shows how much faith I have in Congress to come up with a reasonable health care reform bill.
Of course if they do come up with something good, I can postpone some less urgent matters.
Saving up cash in very low yielding T-bills is what you should do. Avoid bubbles and greed. Look how greedy people got caught in the 1990s with internet stocks and this decade with real estate. Being humble and diversifying your investments is the best approach to prevent you from being caught.
I’m 50% in stocks and the other 50% in precious metals and government securities. While only 2% of my assets oar in T-bills, I’m proudest of them.
Interest rate hikes are going to happen sooner or later. You want to avoid notes and bonds until their yields are double digit percentages. They’ll get there.
Money markets are my personal choice right now. I’d have to buy a 6 - 30 month CD (depending on the bank) to earn the same rate as the MM. Be mindful of FDIC limits (roughly $100K per bank, per person in a non IRA), and research the bank’s ratings before opening an account.
Kim,
The limit’s higher right now.
From the FDIC website: The standard insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor
Oops, my bad. You’re right.
And your apology is also accepted for the heart attack you just gave ME re my $180K account!
You got $30K to gamble with? Two words: Las Vegas!
but seriously, I’d just park it in a savings account. Gains on $30K won’t change your life.. might get you a half tank of gas of something.
The time is coming when markets will offer lots of fine opportunities. Few people will have the spare cash to take advantage of it. Be one of them.
Some banks pay more. My Zion’s Bank MM is paying 1.85% right now. Plus I can tease Olygal about backing by the saints.
I have $100K in a WAMU (Chase) CD paying 5%. I opened it the day after Chase took them over.
So far the FDIC has made good on depositors. Right now the risk of Zion’s crumbling is more of theoretical interest to me. If the FDIC stops making depositors whole the entire system may melt down.
I’m reading up on bond investing for future reference. All the old rules appear to be suspect these days.
i remember towards the end WAMu was offering those CDs .. they needed cash in a really bad way. 5% was way higher than what more stable banks were offering. Meanwhile me and my brother are debating whether WaMu could possibly go under..
I was afraid to get one of the CDs… actually pulled some dough out of WaMu to diversify my risk a bit. Then they went bust but things turned out ok anyway.
Gold (actual not a piece of paper implying heavily that someone somewhere may have seen some bright objects in the back of a warehouse …), Silver, and the most previous metal of them all …
Lead!
you ain’t far wrong.. it’s been branded “evil. Mercury is another one.
About a year ago i noticed 60/40 lead-tin flux core solder was disappearing from the shelves. I tried the new stuff but it’s melt temp was a lot higher. Since i do some electronic tinkering on delicate circuit boards this disturbed me.. and alarmed me a little.
So i went out and searched and found enough 60/40 to probably last me a lifetime considering the small amount i need. I dunno if there’s still any available but i wouldn’t be surprised if there isn’t..
It’s not exactly a good morning yet, the coffee machine is on the blitz………………….
Beer is an acceptable replacement.
Sorry, pal. My coffee is ready for the drinkin’.
Cowboy joe says:
1.Boil the water, then…
“then…”
2. Dump in coffee grounds.
3. Drink coffee (grounds included).
When I was in a treatment center for crack cocaine addiction, they wouldn’t let us have regular coffee. The staff could have it though. Found staff’s stash, and ate the grounds with my chocolate milk. It wasn’t bad at all!!
ATE….maybe i got lucky and never had any drinking or drug problems even though i hung around bar owners dj’s musicians even radio and tv execs who did.
I do remember the 80’s and 90’s where lots of parties they were well…. very open about it…and that is in the Very Rich areas Greenwich New Canaan Westport CT…
I guess you functioned ok until you didn’t.
“Found staff’s stash, and ate the grounds with my chocolate milk. It wasn’t bad at all!!”
Indeed! Why do you think chocolate-covered espresso beans sell so well (aside from the intense buzz they generate)?
I’ve Gotta try those choc-covered expresso beans Prof.!!
Isn’t that the recipe for Turkish Coffee?
Best coffee: I was 16 at summer camp in Vinton County.
Heat water in coffee pot over fire and grate.
Throw in ground coffee from the can, generic.
Boil and boil and boil.
Remove coffee pot from fire, holding pot by wire handle. Use hot mitt.
Swing pot in 360-degree motion in quick circles like a windmill to force the grounds down. Make sure no campers are nearby. Ten swings maybe.
Dark and thick brew.
Oh, I like the twirling around the head part. I’ve never made it like that, and I can see it’s something I need to try.
*makes note to self to attempt this right away *
When I’m camping I use an old aluminum kettle that has been with me for years and is all bashed up from being thrown at sunning rattlesnakes or thrown at Murphy (aka Portly McFatty) the dog to keep him from snitching a tin-foil dinner or from falling into and becoming mangled a bit in the jeep engine and stuff like that. It’s my trusty pal.
But TODAY I am daintily sipping a pleasant blend from Trader Joes, ‘Bolivian something or other, with notes of caramel and smugness’.
I found something that makes great coffee no matter where you are.. it’s a HandPresso. Check it out at Amazon. Not cheap (near $100).
It’s an hand-held espresso machine. Uses industry standard ESE pods (Easy Serving Espresso)
A solid quality “machine”.. actually a little bicycle pump type thing with chamber at the end.
Pump it up. Insert pod. Boil 2 oz water and pour it in the chamber. Release the pressure and you get an espresso.. then do whatever you like… maybe add more hot water for an Americano, which is just your regular cup of coffee…
Since i found this, the rest of my collection of small traveling coffee makers stays home.
Bear,
Camp coffee is boiled with egg shells to
settle the grounds…works, I just didn’t want
to waste an egg.
Extra7/20/2009 12:01 AM ET
9 reasons the economy won’t recover soon
Job losses over the past 6 months have exceeded anything we’ve experienced since World War II, and the number of long-term unemployed is at an all-time high.
By Mortimer Zuckerman, U.S. News & World Report
Recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. The appropriate metaphor is not the green shoots of new growth. It’s better to view the total of jobless people as a prudent navigator perceives an iceberg.
What we see on the surface is disconcerting enough. The Bureau of Labor Statistics estimate of 467,000 jobs lost in June increases to 7.2 million the number of unemployed since the start of the recession.
The cumulative job losses over the past six months have been greater than for any other half-year period since World War II, including demobilization. What’s more, the job losses are now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all employment growth from the previous business cycle.
That’s bad enough. But here are nine reasons we are in even more trouble than the 9.5% unemployment rate indicates:
1. June’s total included 185,000 people assumed to be at work but many of whom probably were not. The government could not identify them; it made an assumption about trends.
But many of these mythical jobs are in industries such as finance that have absolutely no job creation. As official numbers are adjusted over the next several months, some of the 185,000 will likely be added to the unemployment totals.
2. More companies are asking employees to take unpaid leave. These people don’t count on the unemployment rolls.
3. At least 1.4 million people weren’t counted among the unemployed, even though they wanted work or were available in the past 12 months. Why? Because they hadn’t searched for work in the four weeks preceding the survey. The assumption is that they had found work or don’t want it, but there are other explanations: school attendance, family responsibilities, sheer exhaustion.
4. The number of workers taking part-time jobs because of the slack economy, a kind of stealth underemployment, has doubled in this recession to about 9 million, or 5.8% of the work force. Add those whose hours have been cut and the total of unemployed and underemployed rises to 16.5%, putting the number of involuntarily idle workers in the range of an overwhelming 25 million.
5. The inside numbers are just as bad. The average workweek for production and nonsupervisory private-sector employees, around 80% of the work force, dropped to 33 hours. That’s 48 minutes a week less than before the recession began, the lowest level of activity since the government began tracking such data 45 years ago.
A recovery slow and painful
There are signs the recession may end in coming months, but recovery is likely to be so listless that many won’t feel the difference, says The Wall Street Journal’s David Wessel.Full-time workers are being downgraded to part-time as businesses slash labor costs to remain above water. Factories operate at only 65% of capacity. If American workers were still putting in those extra 48 minutes a week, 3.3 million fewer employees could perform the same aggregate amount of work. With a longer workweek, the unemployment rate would reach 11.7%, not the official 9.5% (which in turn dramatically exceeds the 8% rate projected by the Obama administration).
6. The average length of official unemployment increased to 24.5 weeks. This is the longest term since the government started to track these data in 1948. The number of long-term unemployed (those out of a job for 27 weeks or more) has now jumped to 4.4 million, an all-time high.
7. The average worker saw no wage gains in June, with average compensation running flat at an average of $18.53 an hour.
8. The jobs report is even uglier when you consider that the sector producing goods is losing the most jobs — 223,000 in the last report alone.
9. The prospects for job creation are equally distressing. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers to full-time status.
So the gov’t is out making “assumptions” about employment levels?
Yeah, good luck with that.
Dice.com guy interviewed on Fox says about the same thing. He says he took a poll and 43% (maybe it was 47%, I forget) of employers reply that they are either cutting jobs or not hiring.
Cut debt and build up cash. It’s going to be a long cold winter.
Final details left for discussion in Calif. budget
By DON THOMPSON (AP) – 5 hours ago
SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger and California’s top lawmakers are set to resume talks Monday with the hope of hammering out the final details on a deal to close the state’s $26.3 billion budget deficit.
The negotiations come as the state pays its bills with IOUs for the first time in nearly 20 years and as major credit agencies threaten the state’s already basement-level bond rating. The dismal economy has forced a new round of cuts just 4 1/2 months after California closed a previous $42 billion deficit.
…
Long ago, in a land far away…
Reasonable state income taxes, and or sales taxes, property taxes, licensing and regulation fees and associated taxing revenues USED to be profitable enterprise and supported a State and all it’s basic NEEDS.
What happened !?!
The states WANTED MORE and SPENT it ALL…every single DIME !!
Ooops!!
Say “Goodnight” kiddies
No, what happened was “smaller government through outsourcing” or “streamlining” and the best euphemism ever invented, “privatizing.”
What we the sheeple didn’t realize was that government contractors are just that, contractors. In other words, a business. A business now with a captured market. A business run by some politician’s brother-in-law/buddy/frat brother who could now raise prices at will.
And they answered to no one.
I think its cute that the other states do not realize how much this is going to whack them.
No more California jaunts (hits the airlines, hotels).
Fewer building supplies (we couldn’t have the pollution from making them here in California, now could we?).
Since California cannot borrow, that’s less commision for Wal Street…
Slower turn over in California car/truck pools
Got Popcorn?
Neil
Add to that:
FAR fewer Californians selling their overpriced shacks and coming to WA so they can pay cash for a new home and settle back to a nice, relaxed, easy retirement of incessantly complaining about the rain and about how things are better in California…
HooraaAAYYYYYYYYY!
I’m sure glad I took the money and ran when I did. Selling in San Jose in May 2006 made up for a lot of other financial stupid moves. Almost moved to WA instead of ID - would I have incurred the wrath of our blondie Pallas Athena?
Almost moved to WA instead of ID - would I have incurred the wrath of our blondie Pallas Athena?
No, ’cause you don’t appear to be a w*eenie. I only get mad at roving w*eenies.
Hey not all Californians would complain about the rain. Love the rain. Was in Canmore Canada the past week. Two days of rain. Loved every minute of it. Wish we would get rain here during our summer.
Same here. Never rains or snows enough for me. When I think of the constant rain I experienced in Sacramento and Eugene, I just shake my head in disbelief.
Morning (notice the missing word).
For all you Massachusetts residents, I just learned something about the 25% increase in sales taxes due to go into effect August 1: alcohol package sales are no longer exempt.
Eg, not only do you get the ’stealth’ $0.05 tax per bottle; but now you get to pay 6.25% sales tax as well on top of all the alcohol taxes. Overnight, the price of beer, wine, and hard liquor will increase 6.25% in MA.
Ouch.
Regressive as all heck. If the states keep this up we may actually see some tangible grumblings/unrest.
The people in the commonwealth are Idiots. They had a chance last year to repeal the income tax. 54% voted against it, at the behest of the state unions that are the first at the trough. Now that they voted that down, they will have more taxes crammed down their liberal throats to pay for everything from Mass transit (one of the loss leaders, but hey it is “green”), to pensions for flaggers that make $35 per hour, and is their god given right to make that much, because hey they are police officers, and they had budgeted for it.
What a nice state….
2 cartons of smokes and 2 bottles of booze the welfare check will be gone and they will be down to food stamps. Thank god for Govt. subsidized housing.
To the poster above looking for investments, go long on NH convenience stores near the MA border.
Case of Harpoon IPA (locally brewed IPA):
Massachusetts: $21.99 on the shelf, + $1.37 in sales taxes on Aug 1 + $1.20 bottle depoist = $24.56. Get $1.20 back if you return the bottles before a homeless guy steals them off your porch.
New Hampshire: $18.99 out the door. Give the bottles to the homeless guy as a nice gesture.
I once did business in NH right on the MA border. There are lots of “state line” liquor stores there. MA cops in unmarked cars would follow large purchasers with MA plates back into MA and bust them. Careful MA purchasers would detour north a few miles into NH to shake them.
Same sort of thing happened just over the Delaware line. Pennsylvanians (including the Slim family) went to DE to avoid paying the exorbitant liquor prices in the PA State Store system.
Well, PA and DE made a deal, and DE started sending officers into the parking lots around DE liquor stores. They’d note the numbers on the PA license plates and report them to the PA authorities.
Oh, well. It was fun while it lasted.
Isn’t this illegal for the cops to enforce this? Your allowed to purchase things from across state lines and …
Oh what the hell. The constitution has been run over so many times it hardly matters any more.
They’d note the numbers on the PA license plates and report them to the PA authorities
I’m not sure how that proves anything, unless the PA officers would pull you over on the way home? Just because you were in the parking lot doesn’t mean you broke a law. 1st amendment, freedom of association and all that? Seems sketchy
James,
The XXI amendment repealing prohibition includes section 2, which permits the states to PROHIBIT interstate transfers of alcohol should they so desire it.
I’m with James, trying to figure out exactly why it is wrong or illegal for you to excersize free choice and go buy where it is cheaper?
Preventing freedom of choice is what this is all about.
Now, back to work - bankers need your money today!
$0.05 per bottle? Oh, the humanity!
Solution - switch to 40s.
“There is no revolution without empty Stomachs” Lenin
Quite a few fill their gut with Beer. This is going to put hate into J6P’s belly. They could have taxed wine and hard liquor and all they would have heard was grumbling. But to hit them *and* Beer was a political mistake.
Hmmm… I know a half dozen home brewers in Connecticut and one more in Rhode Island. Me thinks there are just as many around Boston and that its suddenly going to become a more popular hobby in Mass. The ‘paradox of thift’ is about to claim another.
Got Popcorn?
Neil
Oregon wanted to raise the beer tax something stupid like 1,900%.
I can see all of their “craft breweries” relocating just over the state line in Idaho. Hey, that’s where they get their hops from anyway.
Wall Street Journal
* FOREIGN EXCHANGE
* JULY 20, 2009, 9:27 A.M. ET
Dollar Sags to Multiweek Lows
By PAUL EVANS
TORONTO — A further improvement in global risk sentiment is keeping the dollar on the defensive and at multiweek lows against the euro and other currencies save for the yen so far Monday.
The latest positive mood swing has been fed by news that U.S. commercial lender CIT Group Inc. has reached an agreement with its creditors and for now looks to avoid collapse.
“Markets are clearly relieved to avoid yet another big-name bankruptcy, and just about everything risky is rallying this morning,” said currency strategists at TD Securities, pointing to rallies for most overseas stock exchanges and an extension of recent gains for risk-sensitive currencies.
…
Why is the CIT rescue hammering bonds and the dollar?
Wall Street Journal
* JULY 20, 2009, 9:27 A.M. ET
Treasurys Prices Fall, As CIT Group Skirts Bankruptcy
By Emily Barrett
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Treasurys prices sank early Monday on news of a deal with bondholders to help keep CIT Group (CIT) out of bankruptcy court.
Investors lack any other substantial distraction in a light data session. Stocks were stable to stronger in major markets overnight, and in the U.S., CIT’s reprieve sent its shares up a stunning 84% ahead of the open.
Expectations of a healthy performance for U.S. equities Monday also drained bids from the government bond market. In the early hours of U.S. trade, the two-year note was down 1/32 in price at 100 7/32, and the yield had crossed back above the 1% threshold, hovering at 1.02%. The benchmark 10-year note was 6/32 lower at 95 17/32, yielding 3.68%. Yields move inversely to prices.
…
Didn’t these problems develop on Lawrence Summer’s watch as Harvard’s president? I have to wonder if that has any implications for his prospects to assume the Fed chairman position at some future point. Probably not, as nobody could have seen the financial crisis coming.
Economy
Harvard University Staggers As Endowment Shrinks
Morning Edition, July 20, 2009 · Harvard University is facing what some say is the worst financial crisis of its 373-year history. What got Harvard into so much trouble? Nina Munk, a contributing editor at Vanity Fair, talks with Linda Wertheimer.
“…Harvard University is facing what some say is the worst financial crisis of its 373-year history.”
They should have done like Guinness…and signed a 900 year lease!
Actually Guinness has a 9,000 year lease!
Feel no sympathy for Harvard.
They are a non-profit organization that pays no taxes but yet at one point amassed more than $37 billion dollars and yet still charges more than $37k per year in tuition.
According to the Vanity Fair article, page 145, “Officially, the university charges $48,868 for undergrad tutition, room and board….but only a small number of students actually pay that much. ..students whose parents earned $60,000 or less would be able to attend Harvard gratis.” This was in response from growing pressure from Washington and outsiders who accused the school of (a) elitism and (b) hoarding its immense wealth.
Do you think half the students come from $60K households? 1/4th? Perhaps 10 token students?
Prediction: While some politicians may eventually buckle under the pressure to make a few disparaging remarks about Goldman’s blowout TARP-fueled profits, they won’t feel sufficient pressure to warrant action.
Jul 20, 2009, 3:31 a.m. EST
Is grousing about Goldman reaching critical mass?
Commentary: Questions are reaching the point where something might happen
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) — I’m amazed: Grousing about Goldman Sachs, and fury at the financial sector, is actually reaching the point where something might happen — maybe even answers to questions we’ve been asking for a while.
As Jim Bianco of Bianco Research just noted in his News Clips/Daily Commentary service: “The amount of bad news that (GS 159.07, +2.23, +1.42%) is generating with its record earnings is incredible. We cannot remember a company that has received so much scorn for making money.”
…
This is a follow-up to Taibbi’s earlier attack on the bailout, which he portrayed all too convincingly as a sort of Wall Street coup d’état. ( See March 30 column.)
Taibbi describes the extraordinary personnel interlock between Goldman Sachs and Washington, apparently regardless of the party in power. He thinks that a key development was the emergence of Robert Rubin, who became Goldman’s co-chairman and then Bill Clinton’s Treasury secretary.
Taibbi writes: “If America is circling the drain, Goldman Sachs has found a way to be that drain. … The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere.”
…
“Taibbi describes the extraordinary personnel interlock between Goldman Sachs and Washington, apparently regardless of the party in power.”
Uh oh, he said what? “…regardless of the party in power…”
That’s gonna rock some people’s (two party, black/white, good/evil) worlds.
Owning the US government turned out to be a good business plan for GS. Now let’s share the loot! Bonus time!
“…to turn all of America into a giant pump-and-dump scam”
QUOTE OF THE CENTURY.
This might come in handy in Kallyfornia:
http://www.thesun.co.uk/sol/homepage/news/2544992/iPhone-application-lets-you-find-nearest-cannabis-dealer.html
Puff, puff, whoops, who needs this application?
I went to a couple open houses this weekend for the heck of it. One required a photo ID to view the place. I didn’t go in because it sounded weird. Anybody heard of this before?
You weren’t wearing one of Ben’s HBB t-shirts were you?
Theft. They probably decided that it was better for sales than following you around. Also, an open house isn’t to sell that home, but to gather a potential client list. I did residential on the weekends, but my meat and potatoes was in commercial (salaried).
Maybe they’ve had a problem with theft? I’ve been to open houses with people openly looking for prescription meds and jewelry. Usually I just tell the agent to keep an eye on them.
Nope. Never heard of that. I’m usually asked to sign in, though.
Was it an expensive place?
No, not expensive. Rinky-dink little condo.
I googled –open house theft photo id– it pulled up a bunch of stuff. Apparently, it’s quite common for thefts to occur. Perhap’s it was more up and up than I thought. It just seemed scammy.
Sounds like a good reason to have a fake ID.
One of my programmer friends had custom license plates that read FAKEID.
Well, um, Hobo, could it have been a personal appearance issue?
Subprime Brokers Resurface as Dubious Loan Fixers
Published: July 19, 2009
LOS ANGELES — From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.
By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.
Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.
“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”
Mr. Soussana’s partners at FedMod, as the company is known, were also products of the formerly lucrative world of high-risk lending. The managing partner, Nabile Anz, known as Bill, previously co-owned Mortgage Link, a California subprime lender, now defunct, that once sold $30 million worth of loans a month.
Jeffrey Broughton, one of FedMod’s initial partners, served as director of business development at Pacific First Mortgage, a lender that extended so-called Alt-A mortgages for borrowers with tarnished credit for Countrywide Financial, which lost billions of dollars on bad mortgages before being rescued in an acquisition.
I smell rats…
More than likely these low-lifes have been unable to land another job that paid 10% of what they formerly made, and they just made the lateral move into “helping” people… Of course their only interest in “helping” people is to help relieve them of their money.
I doubt ANYTHING that these clowns could do, could not be done by the end user with a bit of patience, and some basic letter writing, and math skills.
From what I have heard, most loan modification outfits are nothing less than scams, and not even banks are willing to work with them, so why even pay 4K for their services… Upfront?
Pinch-a-penny,
There may have been a time when Loss Mitigation Specialist meant something, but that day has come and gone. Again I see major supply chain issues here.
It reminds me of “Mr. Haney” on Green Acres fer’ chrissakes. No matter what your “problem” was, he had yet another ‘hat’ to put on that would cure it. Slightly humorous in re-run syndication ( not so much in real life )
Part of the problem is that MB’s weren’t really providing any kind of meaningful service in aligning people w/ loans to begin with, so they’ve no qualms about shaking people down a second… and a third… time. This is just plain wrong.
“Part of the problem is that MB’s weren’t really providing any kind of meaningful service in aligning people w/ loans to begin with…”
I dare say this is true for a majority of the front-line FIRE types. Making the sale, preferably for a high comission product, was commonly the only goal.
Arghh! Why aren’t these guys in jail? Let alone “fixing” the very problems they created. At $30 mil. a month, yes, they were major contributors to the problem.
But the REIC won’t do jack. They’ll make a ton off the downside too. You guys are paying for it so I hope you like it?
This is has always been American business at it’s finest.
Create the problem then sell the solution.
Was planning on making an offer on a house I saw Saturday, but by the time my realtor went to check past sale history, it was listed as sold. My timing stinks! He pulled the listing for me just a few days prior and the house had been on the market for quite a while.
Oh well. Dodged another bullet, perhaps. Wasn’t planning on offering full asking anyway. However, it was kind of an ideal situation…original owner (who probably paid $6000 for it 50 some years ago) and they wanted to settle immediately (which I can do).
Inventory around here is pretty sparse, though. Not sure what’s going on. People holding back? Or it’s “different” here
With PA being in the news for budget troubles, I’m hoping perhaps the ripple effect is finally coming upon us (I believe this area always lags in trends and, so far, I haven’t seen a huge change in real estate since the supposed bust).
Interesting EC. I know how long you’ve been looking.
I see a decent amount of REO inventory disappearing off the rosters. I also see alot of sign churn with non-REO houses. This evening we’re going to look at a couple shacks in CT. I have no intentions of buying but I may offer a low-risk price if I’m interested. Both are REO’s. Last week the wifey and I looked at an REO in CT. It turned out to be a heavily deteriorated modular but *it looked good in the photo*. I wouldn’t have bought the place at any price as I have enough duties, tasks and pastimes. The level of effort to get it the way I wanted it was out of the question.
I should explain why we’re looking at all given the fact that my wife has zero interest in owning and I’m so cheap. On occasion we’re observing REO coming on line in more desirable areas. Not alot and very random but we’re seeing it. I should clarify and say we’re sometimes seeing realistic prices in desirable areas. Desirable areas is defined by exeter as those areas that have lower risk of filming episodes of Cops in the next 10 years.
Things aren’t yet bad enough to force very many people who want-to-sell into the need-to-sell category.
I thought that oil was like gold…it only always goes up?
“…Refiners from Germany to Hawaii are weighing plans to shut or sell plants amid the biggest drop in oil demand in almost three decades.”
Oil Refiner Margins Poised to Rise as Shuttered Plants Increase:
By Aaron Clark and Barbara Powell July 20 (Bloomberg)
“It won’t be well advertised, you will have very quiet shutdowns, some will say for ‘maintenance,’ which nobody in the industry will believe,” said James Cordier, the founder of OptionSellers.com, part of Liberty Trading Group in Tampa, Florida.
“Other” excuses:
1. weather related
2. pirates with rpg’s & rubberboats
3. rebels with valves & siphons
4. Goldman Sachs runs out of storage capicity
Does “Supply & Demand” always precedes “Drill Here!…Drill Now!?
I blame the environmentalists. God, how I hate them!
But gas is still over $2 a gal.
So my wife’s pay is going down because, of all things, the voter-referendum which gives teachers more pay is partially based on real estate values.
Whooda thunk!?
Better than it going down because they cut teaching jobs and hers was one of them.
I keep waiting for the actual California Budget Implosion, but they seem to keep kicking the can down the road.
Methinks the other states in trouble are wanting CA to be the one to test the bailout waters.
I’m hoping Cali gets a big “up your nose with a rubber hose” from the Feds. MAYBE then there will be a big enough shakeup to get actual tax/spending reform going on. What we really need is a constitutional convention.
Well, first you assume “Real Estate Only Goes Up”. From there…..
D’oh.
I’ll guess her pay went up a bit during the bubble’s expansion..
No actually, it basically stayed the same. That’s why the referendum was introduced because housing outpaced salaries. Funny, huh?
Just shows that one should use a basket of goods to measure inflation, rather that one good/asset class.
Detroit area home sales up, foreclosure sales double, median price declines 45% yoy to 56K.
http://www.freep.com/article/20090720/BUSINESS04/90720028/Report–Metro-Detroit-home-sales-up–median-price-down-in-June
When they’re snapping up all those deals in Motown, do the buyers signal any intentions of bringing some jobs to the area to support their purchase?
Or are they just going to let the gov’t figure out that little detail?
I think a lot of those infestors are relying on Section 8. So the job they’re actually relying on to provide that money is YOURS AND MINE.
Then they are in for a dissappointment.
+1 CNNMoney had a video aboot some CA infestor buying 200 or so properties and trying to resell or rent. I don’t fault the guy, necessarily, but I have a feeling the $10-20k he puts into the houses is more likely to become an ongoing expense rather than a one-time rehab.
“Detroit area home sales up,…”
Sounds like the Section 8 slumlords are descending on Motor City. I am embarrassed to admit, but the thought even crossed my own mind that now might not be a bad time to invest in Detroit real estate.
I’ve had a nerve wracking weekend. Put in a lowball offer. Thank god the seller was ‘insulted’. Wife is happy because we ‘took a swing at’ getting a house, so she feels progress is being made, and she is again annoyed at unrealistic sellers, so this should put off the nesting instinct for another few months. I expect a major uptick in nesting instincts when our baby turns one, however.
So it all ended well, then. Goody.
…Why would nesting instincts kick in at precisely one year of baby owning? What, is there an inset timer, or something?
We’re planning on two sprogs, and after the one year mark it’s time to start thinking about when to get to work on the next one, at which point I’m sure the tiny 3 bed rented house we’re in will seem not nestlike enough. I try dragging straw and twigs into the place, but it doesn’t seem to help. And if I try and stick things together with my spit, watch out!
Don’t have 2 in diapers at once. That’s my only advice.
You mean they don’t learn to change each other? DANG!
If we wait too much longer, I’LL be in diapers!
I try dragging straw and twigs into the place, but it doesn’t seem to help. And if I try and stick things together with my spit, watch out!
Hahahahaahaha! Funniness!
3 bedrooms not big enough? Nonsense.
I made a harmless funny and it didn’t come through?? Darn.
Good for you SFBB! Stay on’em. I’m always pleased to hear about a HBB’er throwing low balls.
I felt sick because I was worried it wasn’t low ENOUGH. I was afraid it would close and I would be banished from HBB. NOOOO!
Next time take the estimated “HBB banishment number” and subtract 25% and you should be ok.
“I expect a major uptick in nesting instincts when our baby turns one, however.”
For me, the strongest nesting instinct came BEFORE our baby was born. We’re struggling with it again now because our DD is starting Kindergarten and our rental is assigned to one of the three worst schools in the district.
As long as you have easy access to a public playground, you may find yourself happily “home free” beyond Junior’s first birthday.
We’re struggling with it again now because our DD is starting Kindergarten and our rental is assigned to one of the three worst schools in the district
Do what we did… private school. At this point, our children may remain in private school even if we buy an SFH in a desirable town with good schools, we’ll see. Bottom line, with kids in private school, we’re in no rush to buy based on the children’s schooling needs, but can focus on price.
I’ve made this argument with my wife. She went through a private high school and is at least open to the idea. Our main focus right now is to get out of our neighborhood. It’s slid downhill FAST. (Thank goodness we didn’t buy, right?)
“Do what we did… private school.”
That is exactly what we are doing. We’re having a difficult time squaring our decision with our frugal sides, though. Our area is lucky to encapsulate a number of good public schools - we’re just not in one of them.
Kim,
As the father of 3 kids, all of whom have done private & public school, I can tell you that the performance of the kid is far more about the kid than it is about the school.
All 3 children were raised identically. The first is marginally successful, bright, intensely lazy & self-centered. Did well in school. The second is a total screw-up, great guy (give anyone the shirt off his back), did lousy in school and at 22 is finally deciding its time to think about the future (as in next weekend). The 3rd is a freak. 12 year old, great athlete, All A’s (never had a B), master piano player and is smarter than me & his mum put together.
All 3 kids went (and the youngest is still going) to the best private school in my town. It’s ok, but they still have quite a few bad teachers & head case kids. Whatever they don’t pick up at school, be prepared to teach them at home.
I agree, Kim. My son starts Kindergarten in September and my desire to buy has increased ten-fold. Though I plan to stay in the school district that I rent in.
I’m glad we’re not at that stage yet. I’m hoping the bottom will at least be within spitting distance by the time our little girl is ready for kindergarten. We’ve looked into private schools, and they are painfully expensive, but it may be the way to go as the house prices are even more painful.
We have a 17 month old and another on the way and my wife used to sound like yours. Over the last 6 months we’ve seen a lot of our friends ‘get a great deal’ on houses and subsequently stop doing anything else on weekends except fix up their houses and worry about money. Meanwhile our rent keeps getting cheaper and we’re free to do whatever we want on weekends. Now my wife is losing interest in owning anything until the kids are older so things can change - you just need some good negative examples!
Steve
This is something to ponder. There is a very good chance that the first houses available at reasonable prices in the good areas will be total fixer uppers (or substandard flips) that will need lots of work. Wait a few years more and even the nicely maintained stuff will be affordable and you can move in with only responsibility for regular chores, not all that wall paper stripping and other time consuming stuff.
The place we lowballed was like this. Well maintained unupdated home that wouldn’t really “need” anything, but in a very good neighborhood. It had been sitting for six months, and I suspect it will sit for another six based on the sellers.
We have some good negative examples. Her family. Her parents AND her sister bought places between 2004-2006.
Ouch.
We felt poor when we moved back in 2007, but now we feel rich.
I’m going to have to do the same thing in about 5-8months, then hopefully renew the lease. Brilliantly played
Good luck, Measton!
(Every time I see you post, my brain translates you to MeatSon)
That is so weird! Me too!
Wonder how many people it takes to install a half million dollar traffic signal.
http://www.recovery.gov/?q=content/contracts-recipient-summary&id=57-FA521509C0011&primeid=1041
Maybe it’s at the edge of a volcano…
Traffic signals are really expensive. IIUC just a regular one is around $300K.
From AZ DOT:
Traffic signals are much more costly than is commonly realized, even though they represent a sound public investment when justified. A modern signal can cost taxpayers between $80,000 and $100,000 to install - depending on the complexity of the intersection and the characteristics of the traffic using it. On top of this, there is a perpetual cost which is almost never considered - the cost of the electrical power consumed in operating a signalized intersection 24 hours a day. This now averages about $1,400 per year.
From city of Palmdale CA:
When properly applied, traffic signals represent a sound public investment in the transportation system. A new traffic signal installation may cost $150,000 to $200,000.
Also a nice markup for whoever sold ham to the guvmint….
http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2009/07/0322.xml
Guvmint doing something good for once……..
http://www.freep.com/article/20090720/NEWS07/90720021/More-states-may-put-beer-samples-on-tap
“Rep. Thom Tillis, a Charlotte Republican, assured lawmakers that tastings wouldn’t attract minors used to cheap beer. Milwaukee’s Best, he says, is unlikely to be on the menu.”
See, there IS a God.
Sorry if this has been posted.
The cat is out of the bag. Banks mis-using TARP funds per inspector.
http://seattletimes.nwsource.com/html/businesstechnology/2009501172_tarp20.html
I’m shocked I tell! Just shocked!
BTW, good find.
Time to “green shoots” the person who figured this out. Can’t have people questioning the Bankers!
Finally some MSM coverage of the “doubling-up” demand-destruction trend that we’ve talked about here for some time…
After the Foreclosure: Downsizing and Doubling Up
By Greg T. Spielberg Greg T. Spielberg – Mon Jul 20, 8:08 am ET
Downsizing their living spaces and doubling up with roommates and relatives: The housing collapse has left many victims of foreclosure looking for a place to call home. For many investors, the once-solid decision to invest in real estate has turned into a financial blunder, leaving the market awash with extra inventory and further depressing prices.
In 2006, 4 out of every 10 homes sold were investments or second homes, according to Alex Charfen, CEO of the Distressed Property Institute, an Austin (Tex.) company that teaches real estate agents how to deal with foreclosed properties. In the ensuing crash, that 40% now represents a wave of foreclosures by lenders.
Chris Henning, 66, actually lived in her investment property, a $150,000 South Palm Beach (Fla.) condo overlooking the Atlantic. Despite a solid job and good pay in the 1990s, Henning has refinanced her condo three times since 2002. During the boom, Henning subscribed to the conventional wisdom that housing prices couldn’t slide. “Looking back, I thought, ‘How naive could I have been?’ ” she says. Now, after her boyfriend’s death and a lack of revenue from a cookbook she co-authored, Henning is unemployed and her condo is on the short-sale block. In the case of short sales, lenders shave money off the loan balance in order to more quickly sell the house and recoup debt money.
Sliding Down the Ladder
“So, here I am, after having a successful career making a six-figure income,” Henning says on the telephone from her smaller, cheaper condo in Cocoa Beach. To cover costs, Henning is renting out the Palm Beach property until a buyer materializes. Still, she hasn’t found a job — and if she can’t secure one soon, she plans to move in with her son and his family to cut costs. “I would much rather help people, vs. them helping me!” she says.
Henning is part of a larger trend of moving in with others that has softened the rental market, which was once expected to strengthen during the wave of foreclosures. According to a survey by Rent.com, an eBay (NasdaqGS:EBAY - News) unit that lists apartment rentals, at 40 large property owners representing more than 850,000 units across the country, almost half the vacancies are the result of people doubling up to save money. Bridge Property & Asset Management, a division of Salt Lake City-based Bridge Investment Group, manages more than 9,000 units across nine states and has seen one-bedroom vacancies skyrocket as more renters seek two- and three-bedroom apartments. “I certainly believe that many people are now moving in with someone else, whether a family member or not, and that this is having a significant effect on the demand for apartment residences,” Mark Obrinsky, chief economist and vice-president of research at the National Multi Housing Council, said in a news release. The NMHC is a Washington-based rental advocacy group.
Rents are going down. Things are looking up.
+1!
Yup
And you BLEW it on real estate..instead of saving it…..
———————————————————-
So, here I am, after having a successful career making a six-figure income,
“Still, she hasn’t found a job — and if she can’t secure one soon, she plans to move in with her son and his family to cut costs. ”
Let me get this straight. Mom had a live in boyfriend and a six figure income. Boyfriend didn’t leave mom anything and mom can’t afford the condo that her name is on the mortgage. Mom is 66 yrs old and very, very stupid and functions under the delusion that she is going to move in with me. I don’t think so, it ain’t gonna happen. Mom needs to see what the county has to offer. If she can’t find anything let her rob a bank or throw a rock through the sheriff’s substation window and she’ll get free medical care, plus three squares a day.
I wonder what percentage of homes sold today are primary residence versus vacation versus to be rented?
Now, after her boyfriend’s death and a lack of revenue from a cookbook she co-authored, Henning is unemployed and her condo is on the short-sale block.
So what was her job exactly? Girlfriend or cookbook co-author?
At 66 yo, I doubt she was a professional girlfriend earning six figures without including the .00 at the end.
Getting paid 2 bucks six times is not a six figure salary?
You learn all sorts of interesting things on this blog!
Housing complex owners vote to ban smoking, indoors.
By Julian Emerson
Leader-Telegram staff
It’s not just indoor public places in Eau Claire where lighting up is prohibited. Now residents of a south side, owner-occupied housing complex will have to snuff out smoking in their homes, the most recent sign of public anti-smoking sentiment.
Members of the Fairfax Parkside Homeowners Association on Wednesday voted to outlaw smoking inside residences that are part of the 34-unit development. The ban also prohibits smoking in shared spaces, such as porches and garages, but does allow it in yards and on patios.
Of the 19 association members who voted on the issue, 15 favored the anti-smoking regulation proposed by association President Dave Hanvelt, while four argued that residents should be allowed to smoke in their homes.
“This doesn’t restrict a smoker from living here,” Hanvelt said of the smoking prohibition. “It just means that there are restrictions on where they can smoke.”
Fairfax Parkside is believed to be the first Eau Claire development in which homeowners aren’t allowed to light up indoors.
“I’m not aware of any other instances where that is the case,” said Julie Marlette, coordinator of the Tobacco Free Partnership of Eau Claire County.
The adoption of the indoor anti-smoking rule likely won’t impact many Fairfax Parkside homeowners, as Hanvelt said he doesn’t know of any smokers in the development. But it does restrict future homeowners there from smoking, and visitors also won’t be allowed to smoke inside.
“You don’t want to have to worry about your non-smoking neighbor moving out and a smoker moving in,” he said.
Hanvelt proposed the regulation earlier this year because homeowners in the development own twin homes, or each side of a duplex-style home. Because of their close proximity, smoke from one unit could flow into the one next door.
I like it. In fact I’d propose to expand the ban to cooking broccoli. I hate that smell.
And… the beat goes on. I saw Tiburon is installing new cameras to take pictures of every car that comes and goes - not just traffic violators but all cars.
Big Brother grows stronger by the day.
Big Brother grows stronger by the day.
Good thing I’m not doing anything wrong. Otherwise I’d be concerned….
Wait, forgot to close my tag: </sarcasm>
yup.. i read that story. Burglars will need to park before the cameras and ride bicycles the rest of the way.
According to the authorities a resident’s license plate would never be run, setting off alarms in some remote govt data base due to a past, but unsatisfied, infraction of some sort. We shall see.
We discussed “moral hazard” vs. “moral wrong” last week.
This is moral hazard.
Yeah it may not be an invasion of privacy now - but it certainly enables invasion of privacy later.
Neither a moral hazard nor invasion of privacy. If you are driving on a public street you fair game for the big brother’s camera or anyone else’s
However Anon,
A public street is paid by you and me the taxpayer. So no we are not fair game.
Nice to know that all the members of the American National Socialists Party ended up as presidents of home owner’s associations.
Was unaware that all people who do not like smelling cigarette smoke are Socialists.
I guess since Obama smokes, it is proof that he must not be a Socialist.
Authoritarians come in all flavors. Socialists, Fascists, Marxists, Communists (left or right wing). So Jon had it partly right.
You have to have some kind of inadequate life to want to ban other people’s behavior, especially if that behavior is behind closed doors.
I don’t want to smell the flatulence from fat people, the liquor breath from alcoholics, the perfume of the smelly, the diesel exhaust from busses and trucks, or listen to mutterings of intellectuals.
I put up with it because we live (or used to live) in a free society. A society where tolerance meant more than supporting gay rights, illegal immigrants and the non white male.
In Belmont CA, it is now illegal to smoke inside any multistory, multiunit dwelling.
U.S. Rescue May Reach $23.7 Trillion, Barofsky Says (Update3)
By Dawn Kopecki and Catherine Dodge
July 20 (Bloomberg) — U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.
“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.
Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.
“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”
Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs.
Treasury’s Comment
Williams said the programs include escalating fee structures designed to make them “increasingly unattractive as financial markets normalize.” Dependence on these federal programs has begun to decline, as shown by $70 billion in TARP capital investments that has already been repaid, Williams said.
Barofsky offered criticism in a separate quarterly report of Treasury’s implementation of TARP, saying the department has “repeatedly failed to adopt recommendations” needed to provide transparency and fulfill the administration’s goal to implement TARP “with the highest degree of accountability.”
As a result, taxpayers don’t know how TARP recipients are using the money or the value of the investments, he said in the report.
And let us not forget a factoid that should focus the mind wunnnerful like:
The Bailout money to date could have (and lets go over this slowly) … PAID OFF EVERY MORTGAGE IN THE UNITED STATES OF AMERICA … (with change left over) …
But this wasn’t done …
What was done and why?
Where did the money go ,where did the money go ?
Fox just reported that Tarp ultimate cost may be $24 Trillion. The fat lady is gargling.
To clarify - it’s not the TARP that would be that high, but the sum total of all bailout and related programs. FWIW - that presumably extends into all kinds of gray areas, including the stimulus package, and by extension various long-term programs that are started now.
Given that the scale of the bubble was about $10 Trillion - $24 Trillion is quite a bit of waste.
Sounds about right for the government.
So this should come as no surprise…
GAO: FDA can’t estimate its own budget needs
Jul 20 12:32 PM US/Eastern
WASHINGTON (AP) - The Food and Drug Administration—which has struggled to fulfill its mission of regulating food, drugs and other consumer goods that make up nearly a quarter of the U.S. economy—does not have the expertise to forecast its own budget needs, according to congressional investigators.
While many lawmakers and consumer advocates have long complained that the agency lacks the staff and equipment to accomplish its mission, the Government Accountability Office says the agency doesn’t even have “the data to develop a complete and reliable estimate of the resources it needs.”
The GAO places some of the blame on the FDA’s lopsided budget—which dedicates significant resources to approving new products, but far less to tracking their safety once they’ve reached the market.
FDA officials acknowledged the problems uncovered by the GAO, saying they are working to get a better picture of the agency’s spending and how much additional funding it needs.
“We have to be able to talk about the funds we need, and how we’re using the money, with more detail than FDA has in the past,” said Dr. Joshua Sharfstein, the agency’s deputy commissioner.
The GAO report, due out Monday, is the latest in a series to document the problems facing the agency. The FDA has spent the last few years careening from one public health crisis to the next. They have included the recall of the painkiller Vioxx—which was linked to heart attacks, contaminated blood thinners imported from China, and an investigation into a salmonella outbreak that dragged on for weeks before peppers were identified as the culprit.
Interesting observation to share. While looking at houses this weekend (all empty), we came upon one that had a car in the driveway. Thought that was odd and knocked a few times before getting the key from the lockbox. As my realtor was opening the door, there was a guy quickly putting his boots on. He apologized and said he was told 11 am (it was 10:30 am - we said between 10 and 11).
Anyway, there was a blow up mattress and a t.v. in the living room - that was it. I think this person was staying there to make sure there were not break ins. (Actually, at first I thought “squatter!” but my realtor thought he was there legitimately.)
“Anyway, there was a blow up mattress and a t.v. in the living room - that was it.”
Better than a blow up doll, that’s for sure…
The stock market only goes up.
Yeah, but on what volume? The NYSE volume was down again today.
This idiot pays $1.50 a lb, and it costs around .79 cents at the grocery store down the street from me. Who cares it’s not their money they are pissing away.
Statement from Agriculture Secretary Tom Vilsack
“Through the Recovery Act, the U.S. Department of Agriculture has made $100 million available to the states for The Emergency Food Assistance Program (TEFAP), which acquires food that is distributed to local organizations that assist the needy – including food banks, food pantries, and soup kitchens.
The Recovery Act funds referenced in press reports allowed states to purchase ham, cheese and dairy products for these food banks, soup kitchens and food pantries that provide assistance to people who otherwise do not have access to food. This program will help reduce hunger of those hardest hit by the current economic recession.
The references to “2 pound frozen ham sliced” are to the sizes of the packaging. Press reports suggesting that the Recovery Act spent $1.191 million to buy “2 pounds of ham” are wrong. In fact, the contract in question purchased 760,000 pounds of ham for $1.191 million, at a cost of approximately $1.50 per pound. In terms of the dairy purchase referenced, USDA’s Farm Service Agency (FSA) purchased 837,936 pounds of mozzarella cheese and 4,039,200 pounds of processed cheese. The canned pork purchase was 8,424,000 pounds at a cost of $16,784,000, or approximately $1.99 per pound.
While the principal purpose of these expenditures is to provide food to those hardest hit by these tough times, the purchases also provide a modest economic benefit of benefiting Americans working at food retailers, manufacturers and transportation companies as well as the farmers and ranchers who produce our food supply.”
Statement from Agriculture Secretary Tom Vilsack
These programs are aimed at providing money to farmers and ranchers. That is why it (and food stamps) are handled by the Dept. of Agriculture.
The gurus at ASU’s biz school are busy bottom calling on Arizona house prices. BTW, whom do you have to anger to end up as a professor at Arizona State?
“The latest ASU-RSI, released this week, shows that prices for existing homes fell 35 percent in April compared to April 2008. That’s an improvement over February and March, when prices fell by 37 percent compared to last year. The two-month projections offer more encouragement, with May expected to log a 33 percent decline and June, 31 percent. This is “pretty good evidence that the worst of the price declines are in the past,” said Guntermann.
The median price metro-wide for a resale home is also showing improvement, though the news is tempered by the large number of foreclosures that have not yet washed through the market. The preliminary median price in June is $119,000 — up from $115,000 in May and $117,000 in April. “It may turn out that the lowest prices were in May,” Guntermann said, however the large number of foreclosed properties that have yet to sell will keep the median fluctuating around this price point for the near future.”
http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1796
“It may turn out that the lowest prices were in May,” Guntermann said, however the large number of foreclosed properties that have yet to sell will keep the median fluctuating around this price point for the near future.”
Or it could turn out that we are looking at a market-intervention-fueled debt cat bounce. Time will tell.
Good grief. The median is skewed here, a fact that any clown with half a brain should be able to see. The median can go up plenty more, that doesn’t mean prices aren’t still falling on what is selling.
The Spitzer face epidemic has spread all the way out to the West Coast.
California Budget Crisis Diaries: Day 19 of the budget impasse
By Hoa Quach, SDNN
Monday, July 20, 2009
Any minute now… :
Schwarzengger said that a dispute with Democrats over education funding would not hold up a deal to close California’s budget shortfall.(AP Photo/Rich Pedroncelli)
California lawmakers are expected to reach a budget deal any minute now. Gov. Arnold Schwarzenegger and party leaders, deemed the Big 5, have been meeting nearly every day of the 18 pass days of the budget impasse. Both parties have said that the budget talks are stalled over the education cuts.
Last Friday, California Controller John Chiang told San Diegans education was pretty much a sacred issue. And, he said, he believed the leaders are much further from reaching a deal compared to what they have said in the lime light.
“They are far from an agreement on that issue [education],” Chiang said. “I think they need a lot of work.”
But Assembly Speaker Karen Bass (D-Los Angeles) said, on Sunday night, a budget deal would be made soon.
Arnold has joined the ranks of a number of East Coast luminaries who have recently mugged this same vexatiously perplexed facial expression in front of a media camera:
- Elliot Spitzer
- Hank Paulson
- Ken Lewis
Financial Times
Fiscal problems of US states to continue
By Nicole Bullock in New York
Published: July 20 2009 22:13 | Last updated: July 20 2009 22:13
The fiscal problems of US states will continue even though lawmakers have received federal stimulus funds and made sweeping cuts to close shortfalls in their budgets for recent years, according to a report by a leading bipartisan research group.
States had to close a $142.6bn (€100.3bn, £86.2bn) gap as legislatures enacted their budgets for the latest fiscal year, which began on July 1 for 46 of 50 states, said a report from the National Conference of State Legislatures released on Monday.
That followed a cumulative shortfall of $113.2bn for the previous year.
“And the bleeding is far from over,” the NCSL said. The “staggering number” for 2010 did not include any gaps that may open after the start of the fiscal year. States including Maryland, Colorado and Virginia are independently warning that falling tax receipts are ripping new holes in their budgets.
As the downturn has worsened, many states have already made multiple rounds of cuts that have involved firing state workers, closing schools and even shuttering prisons.
“Lawmakers are alarmed by looming budget gaps, which just keep getting bigger,” said Corina Eckl, director of the fiscal programme at NCSL. “They have already taken far-reaching, difficult and often unpopular actions. At this stage of the problem, there aren’t many palatable solutions left on the table.”
…
…And the bleeding is far from over… falling tax receipts are ripping new holes in their budgets
wow.. bleeding and ripping…
I found an audio-book copy of “2001 - A Space Odyssey” the other day.. been hooked on audio-books lately.. figured what the hey.. it might be fun.
The first couple chapters talks of early humans. They picked berries or dug roots or whatever to survive. Some degree of gnawing hunger was their natural, normal state of existence.. from birth to death.
I got to thinking about that, and concluded that while it’s frightening to imagine ourselves having to cut corners and do without all the things we want for a while, it’s unlikely to kill us.
Well PB ,think there will be a emergency tax put on milk or beer or
maybe toilet paper ,or just a overall sales tax increase ,or is printing money going to come to the rescue .
Has anyone posted this?
Goldman code that sees trades before they’re executed… and that Russian guy.
http://market-ticker.org/archives/1192-FLASH-Goldman-Code-Theft-BOMBSHELL.html
I really need to catch up with my old bandmate. He’s a good guy, so I bet he left GS because he saw behind the curtains. I don’t wanna dig too deep. I like my life and don’t need to be suicided in some freaking Orange grove in Pasco.
Data Quick Socal numbers are out for June.
http://dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
* The Wall Street Journal
* JULY 21, 2009
Bernanke Heads to Congress Battling Calls to Tame the Fed
By JON HILSENRATH and SUDEEP REDDY
Federal Reserve Chairman Ben Bernanke helped steer the economy away from what he calls “Depression 2.0.” Now he’s trying to defend the Fed itself.
…
Many Fed critics blame it for the economic crisis. They say it failed as a bank regulator and also fueled a bubble by keeping interest rates too low for years. They also feel Mr. Bernanke, who became chairman in 2006, stretched the Fed’s powers too far by bailing out firms like AIG, pushing Bank of America to complete its Merrill Lynch takeover, and pumping hundreds of billions of dollars into the financial system.
Opinion
“My colleagues and I believe that accommodative policies will likely be warranted for an extended period. At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.” – Ben Bernanke
Mr. Bernanke defends his actions. “I don’t regret anything we’ve done,” he said in a recent interview. “If the Fed and the Treasury hadn’t acted” as they did, “then the global economic environment would have been much, much worse than it is today,” he said. “There would have been some risk of a 1930s-style Great Depression. We averted that.”
…