Bits Bucket For August 10, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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http://tinyurl.com/n3jxsk
MW’s headline “How to expose unscrupulous realtors”
Wait, the headline implies there is any other kind of realtor?
exeter,
Some of the comments posted below were predictably laughable. What ‘else’ have we come to expect from this crowd?
In their on-going effort to plumb for new lows on a daily basis, I e-mailed our property manager last week explaining there had been a death in the family and I had reserve weekend, but I would be down on Friday to drop off the check.
Since it’s actually on the way to the Post Office, it just makes more sense to drop it off in person. When I did, the young gal at the front desk bellows out “You’re LATE!”. This as the owner bolts out of his seat, so I said.., “Had you r-e-a-d my email..?”
Sorry guys, it was just a new low for me. And all of it on a Friday. I just can’t deal w/ REIC’stas any more. I’m currently deciding whether or not I’m even going to stay until the end of my lease. I just love walking down the street carrying my gabage, recycling and shredded doc’s. ( We have no garbage service, cuzz’ ya’ times are tight and all..? ) Pretty impressive seeing your financial guy walking down the street like a freaking JANITOR don’t you think?
“Pretty impressive seeing your financial guy walking down the street like a freaking JANITOR don’t you think?”
I have A LOT more respect for a janitor doing an honest day’s work than I would for a landlord who cut out garbage service, that’s for sure.
Kim,
I can respect that. It’s just that it ‘may’ just look like “I” was too cheap to pay for garbage service? And how is using the dumpster at my condo complex ‘fair’ to the other people that use it? It’s a multitude of things.
We have a street address ( but no mailbox )?
Last holiday season when the whole town was lit up and decorated ( our… building remained bare )
Our wrought iron door at the street has a lock that can easily be used simply by reaching through it! We’ve never had a Grand Opening or event ONE here. The response is that we are free to do as we wish ( as long as it doesn’t permanently damage the bldg. ) Gee, thanks guys!
Never worry about what the neighbours think, until you see some evidence that they actually can.
– w
0 lates ever. I called from the hospital bed asking if I could wait till I got home to pay, which would be a day or two. They said, sure, but I’d have to pay the late fee of $100 or $200 (forget what it’s up to now).
VaBeyatch,
Yeah, I sent an email explaining there’d been a death in the family and that I had “reserve weekend” but that I would be down shortly to drop off the check. I think our grace period runs until the 10th anyway?
No sooner did I get thru the door and the gal say “You’re LATE!” It was just too depressing. I said you ‘did’ read my email, correct?” She seemed genuinely embarrassed and I know the owner put her up to it, so add HIM to the list of people I am no longer speaking to?
I’m trying to figure out who *isn’t on it? Surrounded by REIC’sters I tell ya’!
I predict that, after their little REIC property management venture crashes, and after you’ve moved your business to a much better place, you’ll be hit up for business in whatever new venture they’ll be involved in. Even if it’s Amway.
Slim makes a good prediction
LA Times today front page Business. Porn business down 50%. What will those out of work realtwhores do? Pole dancing out of reason. Oh, they can go to work for the SEIU and Obama.
You should start with the assumption that ALL realtors are unscrupulous. Then do some deep digging to find the rare good ones.
Sammy,
In truth, I’m… ‘thinking’ about moving altogether! Obviously we want to be close to our kids but even a few miles down the road might be beneficial.
Everyone here was so… confident The Boom would last forever, they’re beside themselves w/ grief. They just can’t move on. They’re depressing to look at and deal with every-damn-day!
There’s a small town ( home of the largest Octoberfest west of MS! ) where they really didn’t get on the bandwagon. In fact, before we got railroaded into buying our current condo, it was the market we were actually tracking. I just can’t look at these people and their broken dreams of easy money any more.
Dinor, I don’t know how you contained yourself with that ‘young girl behind the desk’. My response here at home would have been to point out that SHe is in the service business, and She needs to be more professional in her actions. And tell the ‘jumping out of his seat boss’ that he/she needs to train his employees better.
But then that is my response from a distance. Obviously coolers heads-yours- prevailed.
desertdweller,
Well thanks but I don’t know how ‘cool’ I was exactly? I just grabbed the damned recpt. and walked out the door shaking my head. ( Visibly )
Again, I doubt I’ll renew. The whole i-d-e-a was to be able to interface w/ the local biz community and get out of the house! You know, mingle a little? Sheesh, I was better off at home. And that’s the whole point, this isn’t a fruit stand here!? I can’t be seen out front pushing a damn broom? What would you think if you saw your CPA taking out the trash or whatever?
“And that’s the whole point, this isn’t a fruit stand here!? I can’t be seen out front pushing a damn broom? What would you think if you saw your CPA taking out the trash or whatever?”
DinOR, they’ll think you’re human, that’s all. Seriously, especially in a small town, a small businessman doing those chores is part of the charm; people don’t overthink that kind of stuff. But I understand that you are fed up with not getting all you pay for from your landlord/management company. How much longer to go on the lease?
Just think: when you move to shinier digs (probably for the same rent or less), folks will think your business is doing great. Since they’ll want to be associated with a “winner”, you might see an increase in business.
Kim,
Good take on things. Anything at this point helps.
My problem w/ “pitching in” is that once you set the precedent, you can’t get out of it. I made that mistake in front of our HOA. The re-litter that lives below me loves to say things like “We should put in an herb garden” but then can’t be bothered when we’re weeding etc.
After I moved into the office I swept the hall ( for what little ‘mess’ we made ) and the following Monday the mgr. came by and made the decision to just have the contract janitor come by once a month! The more you do, the more they excuse themselves for -having- to do! They let go of the regular janitorial svc. and now just have some laid off construction dude stop by and do a “quick and dirty”.
Can someone explain what this advocacy group is saying? It almost seems to imply that falling prices are bad for affordability, and rising prices are good.
http://www.globest.com/news/1470_1470/washington/180323-1.html
“The report, “Hitting Bottom? An Updated Analysis of Rents and the Price of Housing in 100 Metropolitan Areas,” suggests policy makers implement the following: ”
“Fund the National Housing Trust Fund to capitalize on current low prices, ensure long-term affordability in a recovery, absorb excess housing, and stimulate employment;”
“Stimulate demand for housing by lowering unemployment and raising wages;”
“If the economy doesn’t recover in the next four years the ability of folks to gain equity will be severely curtailed.”
Perhaps the issue is if housing become generally affordable, there is less need for government sponsored “affordable housing.”
“…falling prices are bad for affordability, and rising prices are good.”
Fair is foul and foul is fair
Hover through the fog and filthy air.
Those quotes make my head hurt.
The key point made in that article is that “rents have remained stable.” Even after 20 months of recession and job losses. This housing bubble popped almost 4 years ago, the funny lending stopped 2 years ago. Everyone’s screaming about future inflation. I think we’ve already seen it - we never saw any deflation.
My personal impression is that what we are witnessing is nominally successful stabilization of consumer prices. The problem is that many consumers have no money compared to the housing market ATM cash withdrawal days…
+1
The problem is that now “lack of rising housing prices” = “lack of income”.
Nice.
We need a nice political cartoon with a great big mother banker holding the “consumer” on her tit. The consumer is full though and wants off, and is about to suffocate in fact, but the banker keeps pushing and saying “KEEP DRINKING, DAMMIT!!”.
‘The problem is that now “lack of rising housing prices” = “lack of income”.’
Hence the oft-repeated conferred wisdom from politicians that the housing market (read: reflation of housing prices) will lead economic recovery.
Didn’t work out too well for Japan from 1990-2009, but not to worry — it’s different here in America.
Hence the oft-repeated conferred wisdom from politicians that the housing market (read: reflation of housing prices) will lead economic recovery.
I would actually ascribe this to typical rear-view-mirror driving. Residential construction usually IS one of the first things to recover after a recession. Possibly because mortgages have heretofore been considered the safest form of lending to consumers. Of course since the bursting of the RE bubble and massive defaults on mortgages was the trigger for this recession, the chances of housing leading us out are non-existant.
Jim A,
Thank you. And each moment, every dollar and ‘New Buyer’ program/incentive etc. has been a huge waste of effort and an enormous distraction.
I just ‘love’ the way it’s all about the REIC, don’t you?
“Hence the oft-repeated conferred wisdom from politicians that the housing market (read: reflation of housing prices) will lead economic recovery.”
The politicians today are like a hundred-foot-long line of ants that came in through the backyard, between cracks in the foundation and walls, behind the countertop, and found the sugar jar in the pantry. Now read “taxes, bribes, corruption and power from the housing bubble” for “sugar”.
It doesn’t matter that the jar is now empty, and won’t be refilled. It doesn’t matter that the most forward ants have been killed and swept away. Being the crawling insects that they are, politicians cannot stop themselves from marching brainlessly towards the old
jar of goodies. It’s all they know how to do.
Wow.
Oh so that is what was in my kitchen early summer, I thought they were ants, but they were politicians and realtors.
OMG. I would have smacked them harder.
I would have brought out the ‘nucular’ bug spray.
Next summer I will be prepared.Damn pols/RE’s.
smack SMACK, KAPOW, WHAM, BOFF, KaBlam.
No deflation? Excluding Washington DC, were are rents stable? We’ve read about crashing rents in NYC, greater LA has seen a 10% drop and ‘high end’ rentals sit empty. Las Vegas is getting ready to pull a Detroit. Phoenix is scary too. Florida won’t need another home built for 20 years! When in history have we ever had this large of a rental vacancy rate?
Deflation is a national event. Its here. Deflation is obvious in cars, computers, TV’s and a few other goods. Its obvious when we go to a restaurant. Wait times are done. The staff doesn’t even try to upsell with much effort.
The SWHTF at back to school. No more MEW for tuition. This will hit every level. Not to mention most school districts are skipping a year buying textbooks. (Which isn’t too bad of a deal… How much has history, language, math or science changed in the last three years? Not enough for new books…)
Heck, this Fall and Winter will be bleak. Hence why I’m declining my resistance and going to go house shopping with the MRS starting in October. By then the general mood won’t be something I have to fight anymore.
Future inflation? Sure! Its called Import inflation. But we have some serious domestic deflation to get through first. U6 is far too high for inflation on a broad scale. Some imported goods will not inflate due to the desperation to sell consumer goods.
Tax receipts are down too far for the DC bubble to continue much longer. There is a growing hatred over highly compensated government employees. Oh… I do mean hatred; I’ve never heard what I’m hearing now by a frustrated population. Recall, I travel a lot, so I’m not just talking about local attitudes. I do not abide by these conversations, but the benefits must be cut drastically to come in line with the taxpaying workforce. Recall the two government 10% across the board pay cuts during the Depression.
Got Popcorn?
Neil
I agree Neil….The private sector is Pi$$ed about all levels of Fed, State & muni compensation and over staffing…IMO, it has finally hit the tipping point…Now its Implosion time…California will lead the way…
Cash for clunkers is a great way to hide deflation.
Each car sale is registered at full value, people didn’t get a discount they just got free cash from Uncle Sam.
That free cash from Uncle Sam is inflation. $3 billion worth now, to be exact. It’s newly-created money that simply didn’t exist before.
Ummm that free cash came out of our pockets. Taxpayers anyone?
Neil - here’s a very good example of how the stimulus is directly causing inflation - Stimulus helps Virginia hold tuition rise to 5%. If you google “tuition increase” you’ll see that tuition is very much still rising most places.
Yes, inflation is “coming”, but in some cases it’s already here.
Home prices are bottoming right now, including on a seasonally-adjusted basis. Yes they will probably start back down again soon, but they are bottoming nonetheless - again driven mostly the dang stimulus. And they’re bottoming at prices that are way, way above 2000 prices - and even slightly above 1997 prices in CPI-adjusted terms!
Gas prices are up a fair amount as well, despite their being a glut.
I don’t doubt that rent is down in a lot of places - I think that’s the main exception right now. Indeed it is driven by record-high vacancy rate. It’ll probably continue that way for some time.
I’d like to reiterate the point I make a lot - we can’t view “inflation” vs. “deflation” in general terms; it’s very possible - and happens all the time - that we get inflation in some assets/expenditures and deflation in others - even for extended periods. We’ve had *massive* home price deflation for about 3 years now for instance, even while prices in other areas inflate or are level; just the same as we had *massive* home price inflation from 1997-2006.
Neil,
I hear you. And I think this Fall will mark the end of ’smugness’ from the younger crowd too? Acting/dressing ‘hip’ isn’t cheap you know? All those tatoo’s and piercings cost money.
Also having a junker car ( when you could have easily afforded better w/ the slightest of efforts ) will fall out of vogue too. Won’t be able to swing the 11 MPG and have the muffler fall off every other week. It’ll be a time for a LOT of people to grow up.
Great post Neil.
Don’t laugh.
I KNOW this is a RE blog but, Dont Laugh.
Serious question…
with deflation, inflation, would now be a good time to finish architect program I was doing? DONT” LAUGH, I was good at it and want to finish. Yeah, we all know this might not be a good industry, haha, to get into, but my family tends to live into the 100s. So have 45++ yrs to go. YIKES>
gosh, I am thinking about not posting this..but the Send button is beckoning.
Please be clear and concise, no nasty lobs, just thinking out loud with Neil’s post.
I think you should do it. And not just because you come from a long-lived family. (I’m from one of those too.)
Every field needs good, conscientious people. Reason: They’re in such short supply these days.
Desert,
Absolutely. Is this what you always wanted to do? If you don’t do it now, when will you do it? Is this a four year program? What school are you attending?
My brother will be starting next year for his architecture degree. It’s a dream of his and he is finally able to do it. He helped my sister-in-law get her masters in special ed. She now wants him to get his degree in architecture.
Education is one investment that cannot be depreciated by manipulators.
I am a 60 yr old civil engr, and have worked with many an arch. Arch is a fantastic education, however do not expect to get a paying arch job out of it. There are related careers though. One of our daughters’ arch friends does museum exhibit designs, another is a town planner.
Desert,
By all means, follow your heart. What you gain from the experience will far surpass anything the mere degree itself might bring you. Architecture is the gateway to history, to art, to philosophy, and design. My brother even parlayed his education and training into a career designing rockets and re-entry vehicles. (Go figure.) The fact that you are even considering this tells me that you are not motivated by the money so much as the knowledge and perspective it will bring to your later years.
Some of the most polished and fascinating people I know are architects. Do it!
San Diego traffic has never been better in the 15 years I’ve lived here. I haven’t sat in true gridlock in over a year.
Not in the Bay Area. Rental prices are dropping.
It looks like this “advocacy group” is a front for the REIC. Yeah, let’s pour more tax dollars into people’s bad housing bets and keep propping up irresponsible lenders. Of course these clowns will have the Chris Dodd and Barney Franks and their ilk eating out of their hand, in exchange for generous donations.
Whatever. Maybe deflation is just around the corner. It ain’t here today, 48 months after Katrina and the inventory blow-up in Arizona. That was the peak. Rents in my part of Pasadena, CA are the same as last year, same as the year before last. Gasoline isn’t any less. Beef, chicken, eggs, milk, bread, bananas, cereal, etc. the same. I don’t spend a lot of money. I buy discounted gift cards for movie theaters and itunes on Ebay. Same prices, maybe higher. At the crappy chain restaurants that my friends drag me to, the prices are the same. Service and food still suck. Many of them have closed. I guess that’s deflationary on some level. Not in my book, the same dollars are coming out my pocket for the same POS meal. Oh, I know you can get unheard of deals on travel and vacation packages. Maybe if I were in the market for a ‘71 ‘Cuda or some other such nonsense. Like someone predicted here a long time ago, deflation for the things you want, inflation for the things you need.
Morning!
And a good Monday to you all! Second cup of the good stuff and a busy day to look forward to, lots
of things to do. A no stress day. Ciao.
4100 yards of lap swimming over with and I’m also into my second cup.
Speaking of coffee and exercise, I thought both were supposed to elevate your blood pressure. So I was a bit surprised Saturday morning, after drinking a pot of Starmucks and playing 1 1/2 hours of racquetball, that my blood pressure had calmed down to 116/70 by the time I donated blood later in the morning. I was expecting to be sent home without making a donation. Perhaps the nurse messed up the reading?
Pre-surgical baselines were taken a few weeks back. The med tech said mine were 1/3 lower than most others my age. He knew I was a gym rat simply by the readings. The circulation is way more efficient when you’re in shape and the heart doesn’t have to work as hard.
Of course if you took my readings while I was reading all the housing info, they would probably be a lot more elevated.
Raquetball…I bow to your abilities…
Bill…Did you add one to many zero’s there ??
I’m used to yardage. Was a masters swimmer in the 1990s and competed in meets in southern California and AZ. Trained at 3,000 yards in the mornings at University of Arizona. Elite collegiate swimmers typically swim 10,000 yards a day. That’s a few king sized snickers bars worth of calories.
Up to three months ago I had a good routine of interval training and used my timex triathon watch for time intervals. I’m just doing long distances for now. I know I have to get back to the interval sets, as my 900 yard times have been suffering lately.
Yikes. 10,000 yards is approximately 5.68 miles. I guess it helps that elite college swimmers are mostly 18-22 year olds without an ounce of fat on them.
Show me a picture of studly swimmers ..yowsa. ;>
Good for you Rancher! Have a great day. Sounds like you’re gonna be busy!
Who’s feeding the Alligator?:
“Honey, we got a NOD in the mail today, so we’re not going to pay - make sure you buy everything on our credit card, ok?”
That’s America.
Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.
Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes. A third of the decline is due to tax breaks in the stimulus, including the middle-class tax cut that President Obama campaigned on during last year’s election.
Got that?
The Stock Market has been on a tear, powered by printed money. Bernanke and his clowns have been monetizing debt - only $400 billion of the more than $2 trillion in market increase came out of money markets - the rest of the “firepower” - more than $1.5 trillion - came from “new bank reserves” used to buy mortgage-backed securities (Fannie and Freddie) and Treasuries - a figure that incidentally is close to the market’s rise in terms of capitalization.
Annualized, the $181 billion deficit increase in July alone is approaching one half of the full year 2008 deficit - in one month - and Treasury has announced it is going to sell almost half that much again this week in new Treasury issuance - that is, yet more deficit (or addition to debt.)
Think about a personal example. You get a NOD in the mail and realize there is no chance you can pay the mortgage in full going forward. Therefore, you don’t - on purpose.
Instead, you spend the mortgage money on consumption. You go out to eat every night, you take a cruise, you live the high life. Why not? You’ve got an extra $3,000 a month now, and by God you’re going to spend it. Even better, since you know full well that eventually your credit card companies will discover you’re not paying the mortgage, you go out and immediately run those up to the rafters, booking that exotic dream vacation you’ve always wanted but could never afford.
Your lifestyle goes from being cash-strapped and eating Mac-N-Cheese trying to pay your mortgage to that of a King! Why this is great - what could possibly go wrong?
This is what America’s government has chosen to do under Barack Obama, Tim Geithner, Ben Bernanke and our Congress.
Let me ask: How does this end for you when you do it?
What makes you think it will be different for our nation?
(From K. Denninger)
‘…more than $1.5 trillion - came from “new bank reserves” used to buy mortgage-backed securities (Fannie and Freddie) and Treasuries - a figure that incidentally is close to the market’s rise in terms of capitalization.’
Evidence of the Terry Schiavo economy…
Terry is getting rather obese with the increased flow in her feeding-tube. Will she eventually ‘blow’?
I recently mentioned the cartoon depicting Dr Bernanke’s experiment:
“If we stick in enough money at this end of the piggy bank, something good is bound to eventually come out the other end…”
“What makes you think it will be different for our nation?”
Economic bailout / stimulus / rescue measures will result in cargo drops of cash dropped onto all Americans’ front porch steps (especially American bankers).
“will result in cargo drops of cash dropped onto all Americans’ front porch steps ”
Not until the elites get there’s first in spades.
Someone needs to clue Main Street in that there’s not enough to go around.
“Remember - what’s good for the financial industry not only good for the rest of us, without it, we would all fall into ruin.”
Wow. If that is true, all I can say is that if a company (or group of companies) metastasizes into something that can hold the country hostage, that entity should no more be allowed to exist than a drug cartel.
I guess the Feds can always follow California’s example and issue IOUs when the bills come due.
You mean little slips of paper with words saying that the paper is backed by the full faith and trust of the government?
Looks like the payment-makers are going on strike. Instead of paying the FIRE sector of the economy, they’re paying themselves.
Let me ask you, how do we get some of that money? We can’t stop the fact they are printing it, but it’d be nice to have some of it.
Get a loan (little dogie)
10 pricey cities that pay off:
http://tinyurl.com/ns3yu8
(note: California has all but 3 of the ten pricey list…but Salinas included?)
“10 pricey cities that pay off:
economists look at every asset as having an “amenity value,” which measures the amount of satisfaction the asset brings to its owner. How nice is the weather where you live? How close are you to the coast? How many cultural and recreational opportunities are nearby?
Another big component of a city’s amenity value — trade productivity — essentially measures how many goods a city produces that other people value. The San Francisco area has Silicon Valley. New York has Wall Street. But productivity boosters can come in other forms, such as universities that produce an educated work force, easy access to water or other transportation, or proximity to natural resources.”
I find this interesting. ‘Amenity value’ is what people are paying more for, just like having a view. By the lot for the view and after a week it’s nothing, just put a cover over the window for privacy or to block out the sun; when company comes,hype the view. I live in Salinas and go to the coast all the time as I am an outdoor person and like to exercise. People in this area spend most of their time indoors and stay close to home but like to brag about where they live. I think it should be called ‘label identification’ like buying a gucci purse, BMW, Rolex, etc. I thought that I would like to buy in Carmel, PG or Monterey but the houses are old, not up to standard, the town can be filled with tourists, etc. I rent in Salinas, get great veggies and fruit, can buy a month bus pass for $75 dollars and spend all day at the coast without paying for the taxes, parking, etc.
“10 pricey cities that pay off:”
That line suggests that you will some how make money over the long haul by purchasing a home in that city. But this entire article ignores the time-tested principle of ‘buy low / sell high’: Just because California cities offer lots of nice amenities doesn’t mean you won’t lose your shirt by overpaying for real estate in a desirable area. I can’t speak to all the areas on the list, but in America’s Finest City, many neighborhoods (including ours) are priced at levels at very high (unaffordable) multiples of end-user incomes in the area. Further, rents are remain lower (on comparable housing) than monthly payments on purchase loans.
Try not to catch yourself a falling knife!
I spent 15 months living in a “low country” town in the middle of nothing in South Carolina. It was nice if you were in your late-30s, educated, married, had a couple kids. And it helped if you liked golf.
Thing was - I was late 20s, educated, and unmarried. I don’t golf. It was boring as all get out. Nothing to do, nowhere to go.
Locals would tell me all the time: “This is paradise! We’re two hours from the mountains, two hours from the ocean, two hours from Atlanta - this is great! We have everything!!!!”
To which I’d always reply, “Triangulate those three locations and you’re in the middle of nowhere!”
Bad:
at least i lived in Charleston and Columbia working working the TV stations there, so it wasn’t all bad. but if you lived in Orangeburg or some other no name town well it is nowhere.
But its just like New york city you would be amazed how many people I’ve met have never been farther west then New Jersey!
aNYVdj: Same thing here in the Boston metro area. People that have never been further than 10 miles outside of the city. Most hold the conflicting belief that (a) there is no place better on earth; and that (b) everyplace is just like Bahston with its four Dunkin-Donuts on every corner, bad drivers, roads made of potholes, no open spaces, and terrible weather. The town we live in - which is one town outside of Boston (about a 10 minute drive until you’re technically in Boston) even sells t-shirts that say “Townie” on them. Someone needs to explain to the city fathers the meaning of that word.
As for my stint in SC, I was near the Savannah River Site. Ain’t much in that area, espically during the first years after the end of the cold war. Looking back now, it would be perfect with me, the wife, and mini-chile…
The most provincial people I’ve ever met were born in NYC.
My take is SC is a good place to retire, have money and everything you own is paid for. But a horrible place if you are poor.
For example If i wanted to start a dj business, everything you buy in SC cost the same as in NYC…but if you are making 1/2 the money per gig, its mighty had to build up any capital and pay for things like rent and car insurance.
Didn’t they once make a film called “The Amenityville Horror”?
This whole article reeks of the REIT trying to explain the overpriced COL in some of those places. Similar articles from Forbes and Money came to the exact opposite conclusion about cities in the US.
“Albouy says that his study does not take into account building regulations that might make it difficult for the supply of housing to increase, and thus keep housing prices up. “California would have a lot more people if you can build more houses there. And that would probably be good for the country,” he says, because more people could benefit from its high quality of life.”
That myth is being dispelled daily. There’re plenty of empty houses, but no one’s rushing in to buy them. What, the fabulous quality of life in the Inland Empire isn’t enough?
Can we once and for all dispense with this myth that unbridled growth doesn’t impact quality of life? In too many instances, especially in California, that growth has destroyed the very quality of life that was at one time an attraction.
Wow, back from the gym and only 2 messages posted so far. I guess I’ll have to pull up the on line newspaper crossword puzzle while I drink my coffee. Anything to improve or keep them brain cells firing!
Ron, look at the link above. Salinas is in the top ten priciest cities in the U.S and said to be worth it.
There is a premium to pay on access to the highest paying jobs, educational institutions, best climate in the U.S. (Honolulu is also on the list), and transportation.
If SHTF, I prefer to be in a place where the best medical care can be found - large cities.
but Salinas included ?
Big Artichokes ??
“Ron, look at the link above. Salinas is in the top ten priciest cities in the U.S and said to be worth it.”
No problemo here! Just a police heli in the air with spot light on, 7 cop cars with candles lit, one fire engine and one ambulance all a one address on the good side of town chasing down a gang member. All going on for over an hour but what the hell, you’re paying high housing premiums for these reality shows. Highest number of gang killings for any town this year.
GOsh, ron, we have to have something to watch on tv…don’t we?
;>
Nice post cobalt. Really scary.
(From yesterday’s Bits Bucket, in a thread about banks’ rapacious overdraft fees):
Comment by alpha-sloth
2009-08-09 20:24:35
was you ever stung by a dead bee?
Yes. Their autonomic nervous systems are wired so their stingers can still operate after they are dead.
I am quite certain many former Countrywide customers can attest to this fact.
Tee Hee! Bad Bees!!
Jellyfish too.
To Have and Have Not.
To own and own not.
To Bee or not to Bee.
Excellent!
True story: About a year ago, I went to the ATM at my credit union. My intent was to withdraw $20.00.
Well, oopsie-daisy, I fumbled fingered the keyboard and entered $200.00. I tried to void the transaction, but couldn’t do it. Ten $20 bills were spit out of the machine.
Uh-oh. My checking account was overdrawn. I quick-like-a-bunny ran inside and attempted to put $180 back into it.
And the credit union attempted to charge me $5.00 to put the money back in the account. Oh, yes, they were more than happy to put the excess cash back into checking, but there was that $5.00 that I would have to pay.
I stood there and raised the roof until they waived the fee. Which they did.
OK wow - I’m amazed that the ATM would allow you to withdraw that. It’s been a while since I’ve had that low of an account balance (college), but I’m pretty sure that the ATM wouldn’t let me withdraw more than I had in the account.
Well, the Vantage West Federal Credit Union ATM had no qualms about letting me overdraw the account. After all, charging those overdraft fees is quite the profit center!
Isn’t that going to be Illegal when the OHbaaaaama CC plan takes effect sometime next year?
They are supposed to decline a CC purchase or ATM that goes over your limit…
If, “if”, you’re a good customer, you can have
a higher limit. Mine is a grand and they don’t worry about an overdraft because monies are
automatically transferred from a savings account.
Karl Denninger had a comment today on your ATM rip-off:
“IF we had honest regulators it would be strictly unlawful for a bank to intentionally approve a debit transaction which it knew you did not have the funds to settle unless you had an established overdraft line of credit (at a reasonable APR.)
In fact, it was not all that long ago, in the 1980s and early 1990s, when this was the case: If you went to the ATM and tried to withdraw $100, but didn’t HAVE $100, the transaction would be declined.
Every time.
But then the banks came to realize that if they let the transaction go through they could make an unregulated loan for that $100 to you, charging you $30 or more for the privilege - an annualized interest rate of thousands of percent!”
Bingo.
Remember, since the 90s, almost 50% of banks revenue has been from FEES.
> IF we had honest regulators it would be strictly unlawful for a bank to intentionally approve a debit transaction which it knew you did not have the funds to settle unless you had an established overdraft line of credit (at a reasonable APR.)
The government finance paradigm!
Rent to own…or own to lease…
to the marrow of bone thus goeth the fleece.
Thanks PB, now I am Sure I will get dead bees out of pool. Had a hunch.
“To be is to do” - Socrates
“To do is to be” - Sartre
“Do Be Do Be Do” - Sinatra
“Scooby Dooby Do” - Scooby Do
“Yaba Daba Doo!” - Fred Flintstone
Fannie and Freddie are like giant tumors growing on the face of America. America the beautiful has become the Elephant man.
I would love to see a shard of evidence that useful lessons were learned from last year’s near-collapse of the financial system, but all I see is an effort to use hair-of-the-dog measures to restore boom conditions.
Won’t work…
“Fannie and Freddie are like giant tumors growing on the face of America. America the beautiful has become the Elephant man.”
If Fannir and Freedie are like giant tumors, then that begs the question what is AIG?
AIG = tobacco?
AIG is one of those flesh-eating maggots that grow under the skin and fester.
http://www.youtube.com/watch?v=A18zTHSxGHY
If Fannie and Freddie are the giant tumors on the face of America, Chris Dodd is the giant anal polyp who took their money and touted an “all is well, have no fear” line on Fannie and the housing bubble.
LOL Sammy! That would make Barney Fwank one of the undigested corn-kernels embedded in the monster steaming turd still hanging like a giant dingleberry from America’s stretched anus.
And that was our seed corn!
LOL! You guys kill me…
LOL. I can always count on my fellow HBB posters to take disgusting visuals and make them even more so, albeit to make a point.
Sammy, if you can’t say something nice.. I bet you mean that in the nicest way of course. snicker.
Paying people to break windows.
Steve Saville
Aug 10, 2009
The “Broken Window Fallacy” originally described by Bastiat in 1850 is well known in economics, thanks in large part to Henry Hazlitt’s excellent book “Economics In One Lesson”. Wikipedia provides the following explanation:
“The parable [of the broken window] describes a shopkeeper whose window is broken by a little boy. Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefiting the baker, who will then buy shoes, benefiting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.”
“…The fallacy of the onlookers’ argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he could not spend it on something else. For example, the shopkeeper might have preferred to spend the money on bread and shoes for himself (thus enriching the baker and cobbler), but now cannot because he must fix his window.
“Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more. His actions benefited the glazier, but at the expense not only of the shopkeeper, but the baker and cobbler as well.”
The popular “Cash For Clunkers” program implemented by the US government is a great example of the “broken window fallacy” in action. Under this program the government pays people to destroy their old cars on the proviso that the money they receive is put towards a new car. The idea is that the additional spending on new cars will help support the auto industry and give the overall economy a boost.
“Cash For Clunkers” is akin to paying people to break windows. It gives a temporary boost to the makers of new cars in the same way that the breaking of a window gives the glazier in Bastiat’s parable an immediate benefit, but it makes the overall economy poorer.
But let’s put aside logic for a moment and assume, for the sake of argument, that “Cash For Clunkers” and programs like it actually offer a net benefit to the economy. The question then becomes: why stop at old cars? Few industries are in worse shape than the construction industry, so why not start giving people cash to have their old homes demolished on the condition that they use the cash for a down-payment on a new home? And for that matter, why stop at homes? Just imagine, for instance, how much new work could be generated for the construction industry by destroying an entire city or two.
Programs such as “Cash For Clunkers” make no economic sense, but it is not difficult to understand why they appeal to politicians. They are politically appealing because the economic positives (more jobs in a particular industry) can be seen and therefore pointed to when on the campaign trail, whereas the negatives will be unseen (the overall economy will be weaker, but it will be impossible to show that the weakness is partly attributable to the policy). In the specific case of “Cash For Clunkers”, politicians can also claim that they are helping to save the planet by encouraging the replacement of old ‘gas guzzlers’ with the new fuel-efficient machines.
As an example of the broken window fallacy, “cash for clunkers” is truly pocket change by comparison with subsidies for “green energy”.
You can add a whole long list of things to that.
Agriculture subsidies
Energy subsidies (including non-green)
Health care subsidies
Rural utilities
etc. etc.
I agree though “green energy” is definitely the poster child, and fastest-growing.
Tell me about it. I’ve been thinking of replacing my old gas-fired water heater with a solar heater. Cost of solar? About $5,000.
That’s 5,000 smackeroos and you’re not even boiling the damn water.
Oh, yes, you get all sorts of tax credits to go solar, but you still have to front the money.
By contrast, a new gas-fired heater would be about $500.
Well I don’t particularly WANT boiling water coming out of the shower head. A friend once told me “There’s a REASON they have bars on the windows in the burn ICU.”
Hey, I don’t want boiling water in my shower either. It’s just that $5k is a bit steep for a solar hot water system. Even with all the tax credits, rebates, and other gimmicks, you still have to front the money.
Well of course you also have to figure out the cost of the oil/gas/electricity/propane that you’re saving. But also keep in mind that you still use SOME of the above when you run into a cloudy day.
$5K? They saw you coming.
The differences is that when you spend money on green energy you have something of value. You’ve traded soon to be worthless pieces of paper for reduced future energy needs. Since it is quite likely that gas will be much much more expensive in 10 years it is a great investment. If we use less then energy prices will rise less in the future, and thus everyone including the baker and the cobler benefit.
The differences is that when you spend money on green energy you have something of value.
Not necessarily. Many large solar and wind facilities for instance have been torn down because they don’t even generate enough electricity to pay for their maintenance costs.
Granted, these are generally older-generation facilities, but nevertheless - the principle is there - anything that requires government subsidy for its existence by definition consumes more resources than it provides, and thus is subject to the broken window fallacy.
IMHO, the solar energy thing is quite feasible on the device level. Case in point: I just took my front porch light off the grid.
Replaced it with a solar-powered LED array, and, man, is that thing bright. Better yet, I don’t have to remember to turn it on. Once the sun goes down, it powers up.
Cost was around $250.
Cost was around $250
OK wow - when’s the payback crossover on that? Did you have a movie-theater spotlight or something for a front porch light?
. Many
Are you sure about that? Many?
Heck, I exaggerate once in awhile (cough/ahem) too.
You betcha
I don’t know what the payback crossover is, but I do know that I have the LED equivalent of a 75-watt light over my driveway. And that it’s not giving Tucson Electric Power, or the City of Tucson via taxes on my electric bill, any money.
Burning a 60 Watt incandescent bulb 11 hours a night and paying 8 cents per kWH for electricity, the payback is about 14 years.
If solar (and a lot of other things) were cost efficient, they wouldn’t need subsidies to sell them.
You might have replaced a 60W bulb but that thing can’t put out more than a watt or two. Even then the LEDs are being over driven and they do get dull if it’s continued for a long time.
But the problem with such devices isn’t the LEDs or the solar energy part.. it’s the lifespan of the energy storage part.. aka the battery.
14 years..
365 x 14years = 5,110 battery charge /discharge cycles.
That’s a lot. NiCads are supposedly capable of 100’s to 1,000’s of times depending… Lithium, hundreds of times.
But as long as you’re willing to take it apart and stick some sort of battery in there if the original dies or can’t keep the lamps lit all night, it might last forever..
This is not a criticism of your installation. i’m big on solar.. alternate energy’s been a hobby since i was a kid.. but i’ve learned to be practical about it. Energy storage is the weak link in the chain.
how long will the battery last and how much will replacements cost?
Keep in mind that you can get a screw in LED cluster WITHOUT going solar photoelectric. Might be more cost effective. Certainly I have very few incandescent light left in my house: Small halogen reading light, decorative bathroom lights, and closet lighting that probably gets less than 50 hours per year. Most of my lighting if fluorescent, compact or otherwise.
Burning a 60 Watt incandescent bulb 11 hours a night and paying 8 cents per kWH for electricity, the payback is about 14 years.
Yeah but you can get a motion detector for $20 (or use a switch) and only use it for 5 minutes a night. So payback then is about 1000 years.
This is not a criticism of your installation. i’m big on solar.. alternate energy’s been a hobby since i was a kid.. but i’ve learned to be practical about it. Energy storage is the weak link in the chain.
+1
I’m amazed that in the age of cordless phones etc, where we now each have a dozen or so devices that use rechargeable batteries - that always go bad after a couple of years - that lots of people haven’t caught onto this yet.
(no offense meant Slim)
P.S. this is especially true for electric and hybrid cars.
Don’t get me wrong - I love battery devices (and have a hybrid car myself), but I hardly ever hear the battery part of the equation come into alternative-energy discussions.
LEDs can be useful for certain tasks. I have blue LED night lights all over the house so I don’t trip over the cats. I also have a white LED rope light for the stairs.
wmbz: Outstanding post, and for me, since I don’t know anything about economics like you guys, really helpful to see the crazy poop going on. Thank you for the post!
Well. Since they are replacing the vehicles with higher fuel efficiency vehicles it effects oil consumption. That helps lower the cash flow out of the country.
Also since prices are set in the margin, lowering gas consumption should lower prices for everyone.
Well - except for one thing - estimates of the amount of gas savings due to this program is 75 million bbl per year. That sounds like a lot - until you learn that we currently use 384 million bbl per day.
I don’t think that’s going to affect prices much at all.
Especially when you take into account the offset of additional energy usage to now produce these extra cars that wouldn’t have otherwise been produced.
It may not, probably not, affect prices, but it will slower usage.
But we need to hurry up and use up all the oil so we can move on to better technologies!
384 million bbl/day…. whoa dude, I think you’re off by a factor of about 18. US consumes about 21 million bbl/day according to the CIA world fact book. I’d link but it’d get swallowed.
Yes - actually I remembered wrong - it’s 384 million gallons a day, not bbl. However the ratio is the same - the estimate for cash-for-clunkers was that it would save 75 million gallons per year. However that may have been before the problem was extended last week. Nevertheless - the gas savings is quite small in the scheme of things.
James…not really
what you have is people with PAID OFF cars buying cars with a monthly tab plus higher insurance rates being its newer and more expensive.
A Seriously dumb idea
So that begs the question, over the life of the new car what exactly is the savings for the consumer?
Having to carry full coverage for 72 mos. (the term of many new car loans) will wipe out the $4,500 for a lot of people.
HAHAHAHAHA
OHBAAAAHMA’s revenge!!!!!
I’m sure that the energy required to make the new cars, transport and crush the turned-in cars more than outweighs the supposed savings in gas.
I’m sure that the energy required to make the new cars, transport and crush the turned-in cars more than outweighs the supposed savings in gas.
YEP no savings in energy here. Just waste.
Not to mention it ensures that there is little or no salvage value. Lots of good parts in a clunker with which to fix other clunkers.
“Not to mention it ensures that there is little or no salvage value.”
Not only that, but some of these “clunkers” happen to be very nice perfectly fine vehicles that are simply worth than the government is willing to pay for them. Thus they’re destroyed. Completely backwards.
Thanks to entropy, EVERYTHING takes more energy than you get back.
Which is why one way to save energy is to have less things… like cars… like new cars created for this wasteful program.
welcome to the house of sloth
The biggest user of fuel by far in the USA is the military…The powers at the Pentagon along with their friends are determined to stay in a World War II mentality…Amour and boots on the ground…
The military does what its civilian masters tell it to do. Point the finger where it belongs. How many no-win conflicts have we found ourselves embroiled in since the end of WW II?
“…How many no-win conflicts have we found ourselves embroiled in since…”
What Sammy, you think Cheney left his paddle in D.C.? Run, Sammy…RUN!
Civilian? Hows about politicians, and the lobbyists for the military industrial complex.
I didn’t hear any of my neighbors all these years say, oh yea lets spend more so the ‘army’ can drive more cars, use more fuel. I didn’t hear that in the neighborhoods of ‘civilians’ in the past.
The military does what its civilian masters tell it to do ??
You really don’t think the pentagon wants to shrink do you Sammy ?? Start the intervention war, build it, blow it up, rinse, wash & repeat…
rinse, wash & repeat…
Gee’s..That was brutal…You can tell I don’t do the laundry but I think you get my point…
Oh, I don’t think so, I think the biggest user of fuel is the airlines, which flies a hell of a lot more of planes than the armed forces.
there is no way to conserve anything unless you stop using it!
You can lower the consumption, which extends the life, but it is never conserved.
Kind of like renewable energy! No way to renew energy in normal methods. Once used it is lowered in state.
JackO
There are many people living on the edge driving $500 wrecks, which individually produce more pollution than a hundred regular cars on the roads. The turned in cars (if in decent condition) could have been given to these people who really need then and the real gross polluters taken off the road… Many folks in need could benefit from this. Besides, at $4500 this will not even cover the added cost of insurance, road tax, interest and sales tax for the first year for most folks.
That said, right now ANY program which bypasses the banks to get money directly to people to help them replace the money they have already lost to off-shoring will help.
Sorry, but helping poor people is just damned socialeest/commie thinking and we can’t have none of that around here!
I didn’t realize that cash for clunkers was a program to help poor people. Someone should alert Congress.
I was making lite of this comment:
“There are many people living on the edge driving $500 wrecks, which individually produce more pollution than a hundred regular cars on the roads. The turned in cars (if in decent condition) could have been given to these people who really need then and the real gross polluters taken off the road… Many folks in need could benefit from this.”
…which I happen to think is a damn good idea. Makes a lot more economic sense all the way around.
Instead, the poor (and now newly poor) are excluded from something they could benefit from while the dealerships find every possible way to defraud the system.
Actually it probably more hurts the poor, by (once again) encouraging them to go into more debt. Which IMO is what’s really under the hood of this program.
Same as the $8k housing credit.
And NOT A DIME to build the second ave subway herein the Beeg apple so instead of it being operational in 2010 its now at least 2015 and probably 2017.
Amazing waste of resources…has anyone in OHbaahman’s clan heard of recycling? DUH.
————————————————————–
Cash For Clunkers
I see it simply. Anytime you take a running engine and blow it up on purpose, you are either DingBat, (A Guy I raced bikes with) or totally crazy.
P.S. DingBat was crazy, pluse he couldn’t ride to good, either.
I too appreciate your post. Cash4stripmalls is going to be an amazing program. The main reason I heard cited for congress to extend Cash4clunkerz was due to its “popularity”. When has free money ever been unpopular? Bigger idiots could not be found to lead our country than the ones we now have.
“…but, its got electrolytes!”
Very nice Idiotacracy reference. Now I have to see if that is out on Blu-ray.
It’s what plants crave…
Blu-ray for “2001″ - sure
Blu-ray for “Idiocracy” - why?
(I did like the movie, but why spend the extra scratch vs a regular dvd?)
Gatorade had a commercial last year that showed a bottle floating through space and had the “more electrolytes” comment in there–cracked me up. (and no, I don’t think they were doing it to be tongue in cheek)
Blew ray is just more money wasted. Just get a decent upscaling dvd player. It does the same job on your hdtv and will be just as good a picture as the blew ray but will be a fraction of the cost and use cheaper regular dvds. Nothing like Sony throwing billions into a soon to be dead technology. Now that I think about it, blew ray is just another example of the MEW mentality. Sorry if I offended anyone, I know some folks are really are into their A/V stuff.
Our 12-year-old DVD player just went out, and FWIW we bought a pretty nice $39 sony replacement. The picture quality delta between a $39 standard DVD and a $250 blu-ray just isn’t worth it to me, especially since I know I’ll be able to get blu-ray a lot cheaper in just 1-2 years.
I just got a nice little $29 dvd player off amazon that can be unlocked to play other region dvd’s… great as you can get dvd’s of great UK shows from Amazon UK at reasonable prices and before they are released here .
Heck I just bought a blu-ray player at Wallyworld for $99.
Hopefully some of that Cash4stripmalls can go into this struggling retail sector.
“…The fallacy of the onlookers’ argument is that they…”
“…Missed the true target of such destruction”
All would have ended well for ALMOST everyone…IF only the little boy had simply gone to the local bankers mansion and broken ALL of his windows instead.
Yeah, just imagine that a group of mad scientists created viruses to spread around the world just so their pharmaceutical employers could sell the vaccines they already had on the shelf.
Hmmm…swine flu…Novartis…Baxter…mandatory vaccinations due to the “pandemic”…hmmm…nah, nobody could be that evil in this enlightened age.
For a minute I though you were talking about computers.
wmbz,
The broken window fallacy is simplistic. It leaves out the possibility that the shopkeeper would just save the money & give it to his kids whenever he dies. In that situation, the rock throwing kid is actually doing a good thing for the current economy, at the expense of the shopkeeper’s kids future purchasing power.
We tend to think of economies in terms of money. We should think about it in terms of useful work(producing things others want). A good economy should maximize people’s ability to do useful work. Unfortunately, when money stops moving through excessive savings and financial speculation, useful work doesn’t happen and the economy becomes more poor.
And for that matter, why stop at homes? Just imagine, for instance, how much new work could be generated for the construction industry by destroying an entire city or two.
How about if we move everyone out of a moderately-sized city, and then nuke it to dust?
That would scare the crap out of everyone in the world! North Korea and Iran would abandon their nuclear ambitions immediately.
It reminds me of an Eddie Murphy (?) routine in which he was joking about Mike Tyson.
“Mike Tyson’s so mean, he’s beating his own self up!”
So funny lavi!!!!
Hmmm, I would have thought TARP was the ultimate “broken window fallacy.”
Cash for clunkers is chump change in comparison.
For those of you who are not aware, most of our economy has been government subsidized since before you were born. Whether through tax breaks, favorable legislation or direct government financing, almost no industry is untouched by the feds helping hand.
Did you know that one of the main accelerants in sending jobs offshore was the government giving large corporation tax breaks for doing so?
Did you know that one of the main accelerants in sending jobs offshore was the government giving large corporation tax breaks for doing so?
I know that is an incentive, and it’s a shame. Not sure I’d say it’s one of the main accelerants though. I worked for a company that sent its jobs to China - in fact I flew to Shanghai last year to train some of my replacements before I got laid off. The main benefit was simply way, way lower wages - like a ratio of about 1:5.
Additionally of course is the benefit of offshore manufacturing not being subject to our environmental, workplace safety, or minimum wage laws. We can change tax laws all we want but the offshoring trend won’t stop until we fix those things.
Post lost in space test
The Cash for Clunkers program if continued for an extended period might have the same effect that the condo conversion craze had on wiping out affordable rental housing, in that in a few years you won’t be able to find an affordable car. Kids who saved $5000 for their first car will be out luck, and the banks won’t be financing cars the way they are now. We all may want those clunkers back in 5 years! Better to be able to buy a car that runs than no car at all.
Wonderful post, wmbz
The “Cash for Foreclosures” program is working well, according to an NAR spokesperson. I wonder what these people will say when they realize the program has eaten the seed corn for a substantial portion of next year’s crop of prospective first-time American home buyers? Perhaps flippers trying to capture the subsidy bump in prices will make up for a dearth of end users.
NPR
Homebuyer Credit Makes August Hot For Home Sales
by Marilyn Geewax
August 9, 2009
Spring is usually the peak season for home buying. But this year is different.
Real estate agents say that when Congress decided in February to create an $8,000 tax credit for first-time homebuyers — and set a Nov. 30 deadline — it turned August into the new real-estate rush hour. Because a sales contract can take months to complete, buyers are turning out in droves this month to ensure they make the deadline.
“It’s having a big impact,” said Iverson Moore, a spokesman for the National Association of Realtors.
The trade group is collecting data to measure just how big the impact is.
“We are hearing … that a large share of first-time buyers are being motivated by the tax credit,” Moore said.
To qualify, buyers must be purchasing a principle residence for the first time or at least for the first time after at least three years of renting. To keep the focus on first-time buyers, Congress set an income limit for the full credit. For a single person, it’s $75,000 and for married couples, it’s double that.
Just like the “Cash for Clunkers” program that helped the auto industry, the homebuyer tax credit is helping turn around the housing market. Moore’s group said this past week that the number of contracts to buy previously owned homes rose in June for a fifth straight month.
…
“Cash for Foreclosures”
Can anyone think of a better marketing slogan? ‘for Foreclosures’ doesn’t have a very good ring to it.
a better marketing slogan?
Cash for Crapshacks?
How ’bout Heli-Ben’s-cash4eternity ?
Dumps4Chumps ?
Not bad. But it is missing the reference to free money.
How about Dough4Dumps?
Cash for Caddyshacks..
Cash for flunkers.
Right, and wasn’t it the realtwhores “pulling their book forward…” that created most of this mess to begin with!?
When you put 20-somethings into dream homes as their -first- purchase, it never occured to you that might create a log jam in demand down the road? I mean, scuh-rew that starter home BS, right?
Real estate agents say that when Congress decided in February to create an $8,000 tax credit for first-time homebuyers — and set a Nov. 30 deadline — it turned August into the new real-estate rush hour. Because a sales contract can take months to complete, buyers are turning out in droves this month to ensure they make the deadline.
Even if that’s true, NAR’ll have to explain away the precipitous late-fall drop in home sales, no? Winter coupled with the expiration of the Magick Bullet sounds like it may have some serious downside for our friends in realty. I hope they buy their ramen in bulk before that Weimar II scenario kicks in …
“…expiration of the Magick Bullet…”
Some folks contend that ‘temporary government program’ is an oxymoron.
it may have some serious downside for our friends in realty.
What happens when you remove yourself from reality?
Well, you take the “i” out of reality and what do you get..?
The government is relentlessly trying to funnel consumption into housing and construction. Is that the best way to recover the economy? By encouraging more debt? It might enrich the FIRE industries, but what about the rest of the economy?
“…the program has eaten the seed corn for a substantial portion of next year’s crop of prospective first-time American home buyers?”
The “future” harvest may be “stunted”… but the mortgage interest rates won’t be.
You sure do have faith in high future mortgage rates. It seems like we are currently in a T-bond yield regime akin to the early 1960s. How long after that did interest rates spike? (Answer: 20 years)
By the time two decades have elapsed, many posters here will be permanently out of the housing market. Of course, just because the time lag between rock bottom rates and super-high rates was two decades last time doesn’t necessarily mean it will turn out that way this time…
The national debt may have a thing or two to say about that.
“…Of course, just because the time lag between rock bottom rates and super-high rates was two decades last time doesn’t necessarily mean it will turn out that way this time…”
Old Taoist saying: “…Shasta happens!”
How long did it take 1 gallon to reach $4.60 per gallon…without a China/Nigeria oil embargo?
(Hwy sometimes marvels at how x1 small “event” can lead to something…much, much larger…but with the MOTU & super computer modeling…there’s practically nothing “they” can’t solve or control…)
but with the MOTU & super computer modeling…there’s practically nothing “they” can’t solve or control…)
Yar, that’s what those fancy-pants computer modelers want us to think, but they go and do silly things like assume that the consumer is rational or that governments will act in the citizenry’s best interest or that credit default swaps are perfectly safe, and all those fancy processors end up churning out bunk data anyway. Surprise!
Saw a chart recently:
Darly 1980s “Cray XMP” supercomputer: 500 mflops.
(and cost $8M or something)
c.2002 desktop PC: 500 mflops.
“…You sure do have faith in high future mortgage rates.”
Fed seen ending in September key support of mortgage rates:
August 10th, 2009, 12:23 pm by Mathew Padilla OC Register
http://mortgage.freedomblogging.com/
Administration Wants To Raise $12.1 Trillion National Debt Ceiling
Posted: August 8, 2009 at 7:21 am
The Administration has a bit of a problem. The cap on the national debt, which must be approved by Congress, is $12.1 trillion. The Treasury is borrowing money so fast to fund the stimulus and budget deficits, that it will push up against the level in about two months.
With many members of Congress against the rising federal red ink, the battle lines are likely to be drawn with the stakes being how much higher the limits on federal borrowing will be allowed to go.
According to Reuters, Treasury chief Timothy Geithner sent Senate Majority Leader Harry Reid a letter saying, “It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.”
…
So raising the debt limit increases an entity’s ability to repay that debt?
The contract only specifies how many dollars need to be paid, nothing about the value of said dollars.
I should add that we have a strong dollar policy in place.
Oh, that makes me feel so much better.
Cheney-Shrub “Shadow” Legacy Effect #127:
http://blogs.wsj.com/washwire/2008/06/09/bush-repeats-commitment-to-strong-dollar-policy/
Don’t forget the Rumsfeld legacy:
Sen. Graham Says More Troops Needed in Afghanistan, Urges U.S. Not to ‘Rumsfeld’ War
Sen. Lindsey Graham, R-S.C., says NATO should commit more troops to the theater and more funding to increase the size of the Afghan army, but that the United State should be prepared to send in more troops regardless of the actions of its allies.
The United States must not “Rumsfeld” the war in Afghanistan, a prominent Republican said Sunday as he called for more troops and resources to be sent to the war-torn country.
Sen. Lindsey Graham, R-S.C., said NATO should commit more troops to the theater and more funding to increase the size of the Afghan army, but that the United States should be prepared to send in more troops regardless of the actions of its allies.
June 8, 2008
President Bush Monday reiterated his commitment to a strong dollar policy, and in a nod to record-high oil prices, called on Congress to relax restrictions on domestic oil exploration.
“A strong dollar is in our nation’s interests. It is in the interests of the global economy,” Bush said in remarks to reporters before departing for Europe. “The long-term health and strong foundation of our economy will shine through and be reflected in currency values.”
[Bush]
Reuters
President Bush walks toward Marine One after speaking to reporters upon his departure for Europe Monday.
The comments, a reiteration of the administration’s mantra on the greenback, were interesting for their context rather than their content. Bush typically only discusses currencies when prompted by the media. He wasn’t prompted Monday. The remarks also come just ahead of Bush’s meetings with European leaders, many of whom have voiced concern about the weak dollar.
Bush said the topic will come up this week in Europe, where he is participating in the U.S.-European Union summit in Slovenia, before visiting Germany, Italy, the Vatican, France, the U.K., and Northern Ireland.
Bush’s comments, intended to let markets know the dollar is on his mind, follow similar recent rhetoric from Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, who helped trigger a boost in the greenback last week. But that rally fizzled after European Central Bank President Jean-Claude Trichet on Thursday indicated that interest rates are on the rise in the euro zone
“Urges US not to ‘Rumsfeld’ war.”
And don’t ‘Greenspan’ the economy, either.
Don’t Barack that J, either.
Reagan proved deficits don’t matter.
It’s Mourning in America
by Jim Panyard
Jim Panyard is the retired president and CEO of the Pennsylvania Manufacturers’ Association
Playing off the sloganeers of Ronald Reagan’s 1984 Presidential re-election campaign, it’s safe to say, “It’s Mourning in America.”
Even The Gipper would admit it.
As of June 2009, 155 million people were laboring in the shrinking private sector of the American Empire with a per capita income of $39,751 and a per household income of $50,740.
In addition to supporting themselves and their dependents on those earnings, they were also supporting:
22.5 million government employees at the federal, state and local levels. The average pay of those on the federal government payroll is $75,419 this year, according to Econwatch. The story is much the same at the state and local levels. In Pennsylvania, for example, the average state employee has a pay package of about $68,000 per year, while the state’s household income is $48,576. (As an aside, there are only about 20 million jobs in the nation’s manufacturing and construction sectors, combined.)
3.9 million welfare recipients
46.5 million Social Security recipients, a number projected to rise to about 72 million in the next 20 years.
14.7 million Americans drawing unemployment benefits, with that number expected to rise consistently in the foreseeable future.
The productive sector workers are also paying for everything the Leviathan State does, such as wars, roads,Imperial adventures, private stadiums, bailouts, counterfeiting, ad infinitum. They also pick up the soaring tabs for 47 million Medicaid and 42 million Medicare recipients.
If this isn’t rampant socialism, it will do until the real thing arrives.
How can 155 million productive workers support themselves, nearly 100 million nonproductive others and a seemingly endless list of government endeavors (most of which could be done more economically and more effectively by the private sector)?
Answer: They can’t. Or, as they say in the computer business, “Game Over.”
Ah, it’s nothing a little more household debt can’t cure.
Who says “game over” in the computer business?
wmbz…Post of the month so far !!…Thanks..I am going to cut and paste to some friends…
Yeah, I’m a little aghast at those paychecks too. The common refrain you’ll get from the over-employed at the state is: “Would you rather we became the example of the low road for pay and benefits!?”
So the ‘logic’ works for them? But clearly this is unsustainable. I recall the Air Force Reserve tech’s making like… maybe, $15 bucks an hour back in the late 80’s, early 90’s. Not bad but certainly no one was getting “rich”. Well NOW they make upwards of $30 an hour and I just don’t see any commensurate pay for those fields -anywhere-?
I’ve heard a few (contradicting) refrains from local State workers here in CA.
We accept pay below that of the private sector (the facts contradict this)
You are just jealous because you could never get a job with the State (yes, this is seriously a common refrain in the SacBee comments)
“…The average pay of those on the federal government payroll is $75,419 this year.”
It’s a good thing they don’t have “benefits” :-/
When I lived in Pittsburgh during the 1980s, we referred to Reagan’s 1984 re-election as Mourning in America.
Nail, hit on the head.
Good post and well said.
We do indeed have socialism already in this country. But what we have is all the responsibilities (paying for it) but none of the benefits for J6P.
In other words, Corporate Communist Capitalism©®™. Socialism for the corporations, of which government is just an extension.
Corporate Cronyism.
Exactly.
With Mensa candidate Jim Panyard running our manufacturing base it’s no wonder China is making everything today. I don’t think the men and women of our armed forces would appreciate being called “nonproductive.” Especially all those making over $75,000 (is he counting Blackwater?) Better double up on those flag lapel pins, Jim. Ditto for police, firefighters, district attorneys, border patrol, FBI… oh why waste my time
I am quite skeptical that hair-of-the-dog hangover cures work for alcoholics who just finished nearly drinking themselves to death, but I will reserve judgment until this episode is a topic in economic history.
The Fed
Aug 10, 2009, 8:00 a.m. EST
Punch bowl to stay on table after Fed meeting
Central bank to maintain easy policy despite improved outlook
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — Even though some Federal Reserve officials and market participants want the party to end, the central bank is going to keep the punch bowl full after its two-day meeting this week, analysts said.
Former Fed Chairman William McChesney Martin once famously quipped that the Fed’s primary role was to take the punch bowl away before a party really starts cooking.
But it’s important not to take away the spirits too soon.
“Although some hawks want to take the punch bowl off the table, I don’t think they will convince [Fed chief Ben] Bernanke,” said David Jones, a veteran Fed watcher.
Bernanke, a student of the Great Depression, knows that the Fed made a mistake of tightening too soon during the late 1930s, thereby prolonging the downturn, Jones said.
“That is something Bernanke is going to avoid,” Jones said.
…
Mr. Bear… rock climbing and bungee jumping have many similarities …both require height & ropes…but, it’s best not to mix up the respective equipment & falling positions…this is especially true …IF….the “economy” is…falling off a cliff!
So far, it has cost at least thirty times more to cleanup the economic fallout related to failed debts than simply paying off the debts.
We have not even began to scratch the surface on defaults yet. I cannot see this ending well.
“So far, it has cost at least thirty times more to cleanup the economic fallout related to failed debts than simply paying off the debts.”
Thirty times the cost = thirty times the stimulus, right?
No, as onerous as it would be to pay off deadbeats debts (albeit with a big red mark on their credit reports, it has proven to be some 1.2x the total held mortgage and private debt so far (some 12 Trillion dollars in guarantees and real cash by some estimates) just to handle the 10% of so of debts which have gone bad so far. Keeping the minimum payments met on these obligations would not have cost more so far than a billion or two … But Billion, Trillion, 10 Trillion who’s counting right?
The current problem arises from the complex tangle of derivatives and credit default swaps, insurance etc. It appears a single failure sets off a domino effect. Thousands of failures at once, a tsunami of dominoes which inundate the system.
If current policy was applied to air safety, we would pay to cleanup air crashes instead of maintaining our aircraft. We would make passengers pay for the wreckage and give airline companies senior execs huge bonuses for the money they saved not maintaining their planes.
Remember the horses left the barn in 2002 - 2006. That is the time frame the money was actually spent. All we can do now is to minimize the damages, which so far have meant only taking action in response to cataclysmic events at a cost many times greater than managing the wreckage before it occurred.
Next up - a triple feature commercial real estate paper, ALT-A’s and Credit Cards. Hold on tight!
Once again, and (Hey! It’s a Monday), an outstanding post here, and thanks GH!!
“If current policy was applied to air safety, we would pay to cleanup air crashes instead of maintaining our aircraft. We would make passengers pay for the wreckage and give airline companies senior execs huge bonuses for the money they saved not maintaining their planes.”
Apparently it is different when people actually die due to executive malfeasance, rather than just losing their jobs or their homes. Besides, the banking meltdown was nobody’s fault because nobody could possibly have seen it coming and those who did see it would have risked their firms’ profit opportunities by taking action.
If you go back through the archives a few years you will find plenty of folks on this blog who saw right through the bubble.
Prof. B., you can Muddy the Waters, can’t ya?
My wife had dinner with a lady friend who had purchased her house in Salinas in 1965 for $24K. The house next door, built in 1965, is for sale for $625K. Over 1/2 million dollars. I keep saying that in terms of a million $ because I think that puts things in perspective. Thousands of $ just jades us into thinking it’s just a mere trifle. The house is worth $200K for ‘amenity value’ and nothing more.
“…I keep saying that in terms of a million $ because I think that puts things in perspective.”
I like keeping things in perspective too…like…. how many house in America would have been sold @ 14+% mortgage rates and at what prices?
Salinas must have gone through some major changes since last I visited. Isn’t it full of gang bangers? Salinas and Watsonville would never have been my first choice. But it has been 20 years since I was last there so who knows?
Who killed Wall Street? Blodget and Spitzer- together again! Great Interview. No hard feelings.
http://finance.yahoo.com/tech-ticker/article/298209/The-Blodget—Spitzer-Interview-Who-Killed-Wall-Street?tickers=%5Edji,%5Egspc,xlf,,
Many great interviews with Spilzer on this post …..Outstanding .
“Spilzer’s Wise Investment Advice. You Cant Win So Don’t Play.”
Spilzer’s take on AIG is dead on IMHO .
Man…You guys can sure provide some great stuff…I don’t have enough time for god sakes…I spend my day learning instead or earning…I do enjoy it though…Thanks to all of you who provide the blog with all this great information…
or = of
They sure do, don’t they? I love this blog.
Any votes for Grand Canyon shaped recovery? (I can’t think of an appropriate letter, though…)
Economic Report
Aug 10, 2009, 9:44 a.m. EST
Economists see U-shaped recovery on tap: Blue Chip survey
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) — Most economic forecasters say the recession will end this quarter, but most also believe a U.S. recovery will be subdued, according to the monthly survey of economists published Monday by Blue Chip Economic Indicators.
The panel of 51 economists predicts that the economy will contract 2.6% in 2009 and that gross domestic product will grow 2.3% in 2010, according to the median forecast.
About one-sixth of the group believes the recovery will be robust, resembling a V-shape on chart, as it typically does after a deep recession. Another one-sixth believes the recovery will look like a W, with a further period of weakness next year after a period of strength over the final six months of 2009.
The others — about two-thirds of the group — expect a U-shaped recovery, with below-trend growth until late next year.
…
“Economists see U-shaped recovery on tap: Blue Chip survey”
I wish that every news outlet and everybody would keep asking themselves one question: If these same economists couldn’t seen the housing bubble, the wall street bubble, the financial bubble then how can they see a recovery with high and higher unemployment, loss of jobs, houses, etc. Just put a sign over the TV that says ‘LIARS’ to keep things in perspective.
“…how can they see a recovery with high and higher unemployment, loss of jobs, houses, etc.”
There is good money in pretending to know stuff you don’t know.
One guy said it will be a square root recovery.
It’ll be a recoveryless recovery.
Or put in keyboard terms - a \ shaped recovery.
There is good money in pretending to know stuff you don’t know.
That can’t be true, or I’d be frickin’ rich.
Lavi d…LOL
How do you know?
Stock market investors apparently see a vetically-asymptotal-shaped recovery.
I say a L….No recovery in real numbers particularly after the juice is withdrawn…IMO, Consumption is going to continue to contract…Particularly with the 50 and over crowd even though many have the ability to do so…
BTW…Just back from “Hot August Nights” in Reno…The Peppermil, which is arguably the best venue in Reno now was off (at least in my eyes) by 50%…All the cabbies said business was very slow..
I can’t pretend to speak for all 50-plus folks, but I’m noticing a certain sense of contentment with what I have.
Which is translating in a very low desire to acquire more stuff. If anything, I’m paring down my stuff inventory. I’ve had numerous conversations with other 50-plus types, and I hear similar things.
I’m paring down my stuff inventory. I
I’m in my 50’s and I need to pare down my “stuff” inventory. Man, do I have a pile of ridiculous crap.
I want to get rid of it to lessen the pain of my next move.
Right now, if I was to contemplate a move to some place more fun, less expensive or for a better job, I have to factor in the pain associated with moving all that crap.
I would like to cut back. But the wife bought two patio furniture umbrella covers. Then we bought the umbrella. Then we bought the Patio Table and chairs, and most recently the stand so we can use the umbrella.
We can’t find the two patio umbrella covers.
This is what happens when frugal people spend money. I don’t think we know how to do it properly anymore. No, wait, we put it on the 0% for 1 year credit card: We’re On The Road To Hell!
Ditto here Slim…
When I was younger, I wanted a lot of “toys” I couldn’t afford. Now that I’m older, while I can’t still can’t afford them, I don’t want them either because I now see them as just that, toys.
As an example, where I live, the pickup truck is king. I drive a very nice, but small, Japanese PU that gets great gas mileage and hauls everything I need it too.
Then I see guys who have to have the largest behemoth they can find with the most “bling” and wonder how their gas mileage is, because I already know how damn hard it is to park those suckers and what their payments are.
Didn’t they close down the casino in Sparks — Silver Nugget or Silver Legacy or Silver something?
Well they could call it a “Hell’s Canyon” recovery. Not only does it sound right, but it’s half again as deep as the Grand Canyon of the Colorado and the sides aren’t as steep.
Beautiful part of Idaho.
Double-wide recovery?
L__________________________________________________________I
LOL - yeah. Except for the part at the end.
It’ll be a backslash-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-underscore-forwardslash-shaped recovery.
\_______________________________________/
Gettin’ closer; not sure either of us drew it wide enough, though…
Pbear….Was that a brick wall or are we going vertical ?
I’m calling for a staircase shaped recovery. Downstairs is the direction.
L
L
L
L
L
“Economists see U-shaped recovery on tap”
Let me guess: These are the same “economists” who held a consensus view that there would be no recession?
What happens if the Chinese / Hong Kong stock market bubble blows up? (Not trying to predict that it will, or anything…)
Never mind — don’t worry, the Fed has noted repeatedly that bubbles can only be identified through the lens of the rear view mirror. Hence these reports must be off base.
This Week in China
Aug 9, 2009, 7:25 p.m. EST
Joseph Yam’s latest warning
Commentary: Another bubble could be the endgame for the dollar peg
By Craig Stephen
HONG KONG (MarketWatch) — This year we have witnessed a succession of warnings from industry leaders and regulators about the risks of a financial bubble in Hong Kong. But as the market climbs ever higher, these warnings fade to background noise.
Last week, Joseph Yam, the head of the Hong Kong Monetary Authority, said there were risks of an asset bubble from surging money flow. In a city-state that lives by the pulse of the stock market, the surprise was that Yam’s comment was relegated to the inside business pages of the leading English daily — the South China Morning Post. Forget bear-market rallies, the hot story now is the new issues bonanza. But should these warnings get more attention?
…
——————————————————————————
Asia Markets
Aug 10, 2009, 3:11 a.m. EST
Shanghai acting like it’s 2007 again, analysts say
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — Early warning signs suggest a bubble could be building in China’s stock market, although it’s too early to know whether this warrants an immediate exit from Chinese equities, analysts said in a recent research report.
Credit Suisse analysts cited similarities between the Chinese share picture today and that prior to the Shanghai Composite’s topping out above the 6,000-point level 22 months ago. That top marked the start of a steady drop to below 1,750 by late last year.
Specifically the broker pointed to an economy glutted with excess liquidity, a surge in openings in stock-trading accounts, and a turnover-to-market-cap ratio that was nearing 2007’s level.
The Chinese stock market “is clearly expensive now, but has not yet reached a full-blown bubble as in 2007. If a healthy market correction does not happen in the next few months, and the market continues to surge ahead, fundamental investors should start to worry,” analysts headed by Vincent Chan said in the note, released Friday.
…
Are there shoeshine boys in Hong Kong too?
I don’t shine other people’s shoes, but I aspire to fill a similar purpose by writing on this blog.
That’s axiomatic, isn’t it?..Prof. B.?
Looking on the bright side, it is probably better for the global economy to boil atop a sea of frenzied froth than for all the myriad bubblets to pop, leaving behind a lead weight economy and six thousand fathoms of dead water between the surface and Davy Jones’ locker.
Or Micky Dolenz’s…
Pet store shut over sales-tax nonpayment.
PROVIDENCE — At the entrance to Dr. Doolittle’s Pets & More, near the advertisements for “Baby parakeets. All colors. Lowest prices.” and “Free hamster with any cage over $30.00,” owner Don Russell has put up a new sign.
It is written by hand in black marker on a poster-size sheet of yellow paper taped to the front window.
“At this time we have no money and we are not allowed to open to raise the money. STUPID, STUPID, STUPID.”
Dr. Doolittle’s is one of the 1,092 businesses the state recently ordered to close on the spot for falling behind in their sales-tax payments. About half the businesses who got the cease-and-desist notices in late July paid off their debt to the state and are open. The other 500 are in various stages of resolving their problems, according to figures the state released Friday.
The state does not know how many of these 500 businesses, such as Dr. Doolittle’s, remain closed, said Amy Kempe, spokeswoman for Governor Carcieri.
Russell stopped paying sales taxes he collected on behalf of the state six months ago.
“I used that money to stay in business,” he said.
Now, he owes $23,000 in back taxes and $6,000 in penalties. On July 29, an East Providence police officer delivered a letter to the shop from the Rhode Island Division of Taxation. “You are conducting business without a permit and must cease immediately,” it told him.
So Russell locked the shop entrance and spends his days on the phone, calling East Providence City Hall, state politicians, bureaucrats, anyone who will listen. He hears the same answer again and again — “We’ll get back to you.”
He still goes to the store every day. So do some of his two full-time and five part-time employees. The 13 puppies — Shih Tzus, cockapoos and other small breeds — need to be fed and given water. The ferret needs to get out of its cage. The birds crave attention.
Russell faces a dilemma. He wants to pay his taxes, but the only way he can do that — reopening the shop — is forbidden, unless he pays the taxes.
In all, the state went after 1,200 businesses who owed money to the state. Of those, 1,092 involved sales-tax issues.
Pet shops are in trouble. I feel for the guy.
But the bigger picture is that in their zest to aquire revenue, the states are killing the golden goose (small business). Without small business growth, there is no pulling out of this recesssion. Everything I’m seeing points to a real economic decline for at least another 18 months.
Got Popcorn?
Neil
their zest to aquire revenue ??
Yep….I will say it again, this is why I am firmly in the camp of a coming VAT…
I concur VAT is on the way.
You guys realize that VAT is nearly 20% in Europe right?
Throw on state sales tax of 5-10% and your grocery bill will go up 25%? It would complete destroy our consumer based economy. No way anyone in Congress is going to support that.
VAT was 17% when I lived in the UK (I think it still is). Thing is — its built into the price, so you actually don’t notice it. If the goods say 16 pounds, then you pay 16 pounds.
There is no VAT on food.
Amen, Neil. Small business owners are going to be an extinct class when the tax bill comes due for Obama’s utopia for the unproductive and parasitical masses who now form a majority voting bloc. You think they’re not going to continue voting themselves more benefits that some else will have to pay for?
Pet shops are going to be hard-hit. I volunteer at the local Humane Society, and you wouldn’t believe the number of pets being dumped off. Or the lame excuses of most of the people doing the dumping. “I’m moving and I can’t take him with me.” A$$holes.
If I were a Billionaire, I swear, I would attempt to put a “end” to the implied “right” to own a pet or at the least “mandatory” spaying of all pets other than federally licensed breeders…I would put a end of the disgusting abuse of dogs & cats or go broke trying…
I’m with you, scdave. Although I am not a pet owner at present, I grew up in a household with them.
My parents still have a dog, and she’s been good for them, and vice versa. I think that without the dog, my mother would have lapsed into severe depression and ultimately died from it.
now we want federal regulation of pets…jeesh.
now we want federal regulation of pets…
jeesh ??
What I want is the indiscriminate breeding and abuse of dogs and cats…If that takes a friggen federal regulation then so be it…
This dude stopped laying golden eggs 6 months ago. Now it’s time for the pot so they can let a younger goose in to lay a few eggs.
Let’s be clear about this. Sales taxes aren’t revenue. He collected EXTRA MONEY above and beyond the price of the items that was supposed to be given to the government. He decided to keep the money instead.
Get this thief out of business and let somebody else run a business in his location.
Exactly. His customers paid that money and he just kept it.
Screw him.
“I used that money to stay in business,” he said
No…no…you STOLE the money to stay in business.
Yup. It was a choice, his choice. He didn’t “want” to pay anything until he got busted.
He “misappropriated” the money for a “malinvestment” (say, an English Bulldog $2,000 - $5,000)…something Merrill or Lehman or several other “unnamed” “corporations” in America have done recently…however, just because he’s a little guy…doesn’t mean I should not focus any anger elsewhere… ;-/
Again, big boyos getting away with everything and being lauded for it.
Hey, it’s a nice competitive move when the other pet shop owners in the area are paying their taxes and your not. Gives you some pricing advantages.
This guy was probably wasn’t paying his payroll taxes either. In both cases it is theft. This wasn’t extra revenue for him, it was money he collected for the state on behalf of the consumer.
I sent a little suggestion letter to my former employer that I hadn’t received my tax info so far yet on February 16th. (IIRC, This is the date that you should wait to before informing the IRS that they forgot to pay their payroll taxes.) I don’t think he understood the felony implications. “Didn’t we do a 1099 on that last year?” (Sorry, you sent out actual pay stubs for January: Here’s your sign.)
The next step is supposed to be to personally inform the IRS of the malfeasance. I’ll get to that “eventually.” If he gets tossed in jail or thrown into bankruptcy, it really doesn’t help my pocketbook any.
Just like his neighbors sicking the city on him for 2 employee cars parked at his house. Would his neighbors really prefer him to be foreclosed to having two more cars in his driveway? I think they were mostly upset that they weren’t Standard Issue Suburbanite SUVs. (One was a $50k sports car, but the other was a Camry: oops.)
Ah…HA!!!
This cuts to the chase of what I’ve been noticing quite a bit of lately? It’s called “I tightened my belt before YOU!”
Even THE most oblivious bubble-denier can play! Simply say times are tough, cut your services and plain old participation to the bone, if people don’t like it..? F ‘em.
Guys, I’m seriously thinking about walking away from my lease. It’s not just that the service sucks and it’s clear the property mgr. has NO designs to spend a DIME cleaning ( let alone promoting ) the building? I did a little experiment, after paying rent on time for over a year ( not looking for a pat on the back here? ) I have had precisely ZERO referrals from my mgr. Not ONE.
Whatever happened to doing businesss with the people that do business with YOU? Evidently w/ REIC’ster/bubble-deniers that all gets shoved under the bus the -minute- they feel the slightest bit of discomfort. I have to go to a FOUR month school for the Air Guard and fully intended to just continue to pay rent on an empty office. But at the rate things are going, why bother. They never sweep the front of the building and the same trash/cig. butts have been exactly where they were thrown six MONTHS ago! ( Very… impressive! ) REIC’sters suck, across the board.
Oh, btw, a “Management Company” ( who’s -primary- source of revenue is selling used houses ) is NOT a ‘management company’! They’re just UHS ‘pretending’ to be a mgmt. co.
Steer clear of ‘em.
Send notices of your complaints by certified mail, give it some time for them to respond before you walk….
Don’t get me started on referrals, D.
I can’t tell you the number of businesses I’ve done business with, naively thinking that somehow, some way that they’ll splash some business my way.
Doesn’t happen.
Ditto for those networking groups. Until I woke up and realized which way the money was going (one way, away from me), I spent all sorts of time and dollars on those things. All in the hope of getting referrals.
I’m especially with you on this part:
Whatever happened to doing business with the people that do business with YOU?
Arizona Slim,
And that’s a large part of the reason I ( for the most part ) steer clear of Portlanders. They have the art of skimming your client book down to a fine science! In fact, you could say that IS their “business”.
It’s a lot of what defines the pecking order there. I was sad to see it seep over into more rural areas. I don’t think it’s possible to get away from it now?
Same way in the 80s kids. Mom had a travel biz that gave portlanders a really cheap way to go to vegas/reno and other places with hotel, food, and freebies.. she went under because those numnuts would rather pay more, drive, and never refer her. Portlanders/oregonians are not an easy way to do biz.
I love your site, Slim, and have it bookmarked to refer you when the moment arises.
Dumb Q here– what type of referrals/promotion do you normally expect from an office landlord? Are they supposed to take out ads encouraging people to come patronize your business or to lease neighboring units or what?
LehighValleyGuy,
Oh, again, it was just an ‘experiment’ ( but they’ve found many ‘other’ ways to disappoint! )
No truthfully, wouldn’t you think over the course of an entire YEAR and all the people they come in contact with over the course of it.., there’d be at leat (1) person that needed an accountant, notary, dog groomer?
They’re so blatantly self-serving and they don’t care. I have a group of clients I work with that ARE an actual mgmt. co. They work closely with their dry cleaners etc. and make constant suggestions for improving their tenants revenue! “Hey, we have another cleaner in a location that’s almost identical and he’s had great success running and ad that say..!”
They really “partner” with their tenants. They WANT them to be successful! ( All mine does is collect rent and send an illegal over once a month to sweep fine oak floors with a construction broom )
OK, I see what you mean. Your mgmt co is of a piece with inner-city LLs who do little to improve or maintain their properties, but simply wait and hope for some speculative windfall.
Well, I just don’t think they’re in this league. In the past they managed numerous SFH rentals for farmers etc. They don’t know the first thing about managing a property of this scale.
Actually, the new anchor tenant downstairs ( manage multi, multi-family properties ) has infinitely more experience. I’m kind of hoping they’ll take up the fight? The mgrs. -know- most of us don’t have thge resources to stage these kinds of events so it’s kind of a don’t ask don’t tell policy.
But since there were only 5 ( FIVE! ) RE transactions all of last month ( and about 10 realty firms to split it up ) we ARE the best thing they have going right now! I just think it’s high time to start acting like it!
DinOR, cut your losses now. Get out.
One firm rule I have in life is that if you make an honest mistake, I’ll understand, but if you treat me like crap, I will never do business again with you and I’ll bad mouth you every chance I get.
It’s saved me a lot money in the long run. (it’s really cut down on places to spend my money :lol:)
One firm rule I have in life is that if you make an honest mistake, I’ll understand, but if you treat me like crap, I will never do business again with you and I’ll bad mouth you every chance I get.
Oh, brother. I’m one of those “bad mouth early, bad mouth often” types too. Especially when it comes to businesses and individuals who’ve treated me like…
…carp.
OTOH, if you do a good job, or if you screw up, admit it, and proceed to make things right, you’ll have no bigger fan than Slim.
I’m with eco. It would be an uphill battle to get your mgmt company to change and to get what you want from them. Save the energy, maybe even save some money, and go elsewhere. And be happy
“Whatever happened to doing businesss with the people that do business with YOU?”
Very few businesses or people “give back” these days. That’s one reason I find chambers to be favor suckers. The independent toy store in one of my former centers (Mgr/Mrtking) gave the chamber $500 (cost) worth of toys (holiday charity), and when they had to add to the pile (paid for), they decided to go to Toys R Us. I mean, nice slap in the face for a good deed.
As Bill Withers said “You just keep on using me, until you use me up.” I know the feeling, DinOR.
awaiting wipeout,
Seriously? Truly classless pigs. I knew there was a reason I wasn’t a member! And it’s across the board. It’s the name of the game. Work over ‘other’ business people for “endless referrals” and do JACK in return. It’s all part of the Donald Trump School Of F’ing People Over.
And they don’t see why it’s a larger part of the reason we were so easy to conquer.
Right on, wipeout!
I can’t tell you how many networking/other groups I’ve been involved with where I’ve experienced the same thing. And believe me, when I’m in a group, I make my presence known.
So, these days, when a networking group is looking for my membership dollars, I ask ‘em what’s in it for me. Not the most altruistic approach, I’ll admit, but it shows the “use me until you use me up” crowd that I’m on to them.
DinOR- Yes, that really happened, and they had the nerve to come back to solicit other tenants. I had the toy store write a piece in my monthly newsletter, telling the tale of the “knife”, so the chamber could not find anymore suckers.
Arizona Slim-
Isn’t it funny how the users, don’t handle the same treatment well. I hear you on networking groups! I’m with you.
I don’t know if my heart grew smaller, or I’ve seen too many a-holes use to many of us decent people. My other half has taught me not to jump in as the girl scout, until I see and watch all the players. That’s why first impressions, are just that.
Arizona Slim,
That’s why I finally got my MB license. I haven’t done a single one but at least when starving MB’s try to hit me up for ref’s I can honestly tell them “Oh, I do all ‘that’ stuff myself!”
And of course you promptly never hear from them again! So I guess it worked. Unfortunately this reaction is big part of the reason our small biz. “community” is falling apart.
They are landlords, they are scum. Homeowners don’t have these issues.
The irony is, Russell no doubt voted for the Republicrats whose insatiable appetite for ever-more unlimited power and tax dollars is screwing over small business owners like him. Learn something, Russell.
When I worked in a Tucson bicycle shop, we were down the street from one of those oh-so-cool high end shops. You know the type. Better have your bike racing resume up to date before you walk in the door.
They looked down their noses at us, and we returned the favor by hating their guts. (Nothing like business rivalries in the bike business. They get very personal.)
Well, in January 2000, I reported to work, and Mike, my fellow mechanic and coworker had a gleam in his eye. It was kind of sadistic, in fact.
The news was that our oh-so-cool high end competitor had gone under. We later found out that the reason was state sales tax evasion.
Pay your sales tax you collect.
It’s really that simple.
exeter,
I agree, but again, this is the name of the game right now. A lot of REIT’s are sitting on their cash and not paying out their dividends. Then we set off this chain reaction of “cross defaults” and everyone figures “better you than me”?!
I’d really have to know more about the guy’s history? Did he have a tendency to shaft employees, customers etc? I can tell you if he *hadn’t collected the sales tax, he’d be in a HEAP of trouble! Cash Preservation Mode everyone!
Obviously, with the downturn this business was not functional anyway and even it it had closed when it should no tax would have been generated anyway.
The good news - we have some 2 GM size bankruptcies a week going right now in the Good Ole US of A when you aggregate all the failed small businesses into one. Each time one closes it’s doors, Credit Card Companies and banks who loaned to these companies and their employees (who will default not long after being layed off on their debts) are left in the cold, the noose tightens on the commercial real estate sector - which I understand we will be called on soon to bail out :-), the noose tightens on tax losses, which will eventually lead to hundreds of thousands of layoffs in State and Local Government, which will lead to. Oh forgot, don’t forget the 79 Months of unemployment which must be paid to the layed off employees now and funded by the remaining businesses. Factor in Obaaamaas health reforms which will place considerable additional burden on those small businesses which remain and we will have all the more failures and layoffs. Wrong medicine and the wrong time!
I know this is America - No Mercy - Survival of the fittest etc, but that is an awfully expensive alternative to just giving small businesses their own bailout and allowing them to weather the storm eh?
GH: Your writing and posts are of very high quality.
“Each time one closes it’s doors, Credit Card Companies and banks who loaned to these companies and their employees (who will default not long after being layed off on their debts) are left in the cold, the noose tightens on the commercial real estate sector - which I understand we will be called on soon to bail out…”
Bullsh!t. There will be no more bank bailouts after these recent insane profits and bonuses. No way in hell.
Sorry for double post if that’s what happened just now - but if he wanted to pay, then why didn’t he?
Would he make more money this month than last?
Question: When most of your paycheck is taken up servicing housing debt in high cost of living areas, how can that be called ‘quality living’? Why is it that all the people in the ‘quality living’ areas sell and move out quickly upon retirement (shouldn’t their houses be paid for)? What is quality living for you: small or large community, top quality medical, small lot or large lot on which to grow your own fruits and veggies, good transportation system available or who cares, low crime or as long as I’m or the other side of town ‘who cares”, etc?
good point. In the article I posted earlier, most of those people who have mortgages or lucky enough to have paid off their homes have miniscule savings compared to what they have in their own house. That is a disaster waiting to happen, particularly in earthquake zones.
The rule used to be that your rent or mortgage should equal one week of your income. Hell, you couldn’t even rent a rattrap apt if you couldn’t meet this criteria.
This is where we went wrong.
http://www.schifftruth.com/
Peter Schiff vs. Chris Dodd - no contest. Now Schiff is out to take Dodd’s Senate seat.
I would love to see that repugnant,lying sack’o'crap get his butt stomped, and jailed. Along with damn near the whole D.C. cesspool, but beating an incumbent ain’t easy. I am sure Dodd is spreading the graft around plenty, to insure he’s buying as many votes as possible.
My fellow South Carolinian’s kept putting Strom Thrumond back in the Senate until he was dead at 100. The old orange haired fellow didn’t know who he was,he sat in a wheelchair and drooled. Hell we would have voted Strom back in after he was dead, if he could have been put on the ballot.
I do wish Peter Schiff the best of luck!
Slim’s on a roll, baby!
Early this Sunday morning, I was rousted out of a sound sleep by a party emanating from the house across the street. This was the house that was purchased by a guy for his daughter to live in while she went to the University of Arizona.
Well, after Princess graduated in December ‘09, she stayed around for a few months, then she left at the end of May. I guess she found a job.
Since she left, I’ve noticed some effort to fix the place up, but it’s moving at a snail’s pace. I suspect that Daddy doesn’t have the money to repair the damage that Princess and her tenant/friends did to the place since the summer of ‘04.
Well, this past Saturday and Sunday, Princess’ brother and the lone remaining tenant had a bash, and there were cars parked all up and down this street. If the fire department had to get through to deal with something in this area, it would have been a challenge.
So, I called 911.
Two squad cars responded, and they posted an unruly gathering tag on the front window of the house. This means that the people over there have to behave for six months, or else they’ll get fined from here to Timbuktu. And there is a fine for the first offense as well.
Slim,
Again, whether it’s pilfering tax revenue or getting in one last good bash, it ALL comes from the same place!
I thought I was rich, turns out I’m ‘not’ so now I’m unhappy about my station in life and I don’t care ‘who’ else has to pay? Besides, I’ve suffered enough.
( Is that close enough? )
I think you have things pretty well summed up, D.
The purchaser of Princess’ college casa was her father. Who’s a big muckety-muck with Pima County. He bought houses for two of his college aged kids as in-VEST-ments.
And, as we can see, it hasn’t worked out according to plan. I surmise that the sale proceeds from the house were going to pay off Princess’ student loans, and give her a nice pile of cash to Start Out In Life. Or something like that.
But, darn it, she had to go out and get a job in another city. Boo-hoo. She’ll have to work like the rest of his.
Meanwhile, the college casa is in much worse condition than five years ago, and Dad doesn’t appear to have the funds to fix it up.
Arizona Slim,
That was such a common “model” here in Portland as well. Buy a loft in Downtown and when it quadruples in value after 4 years, sell and pay off student loans, go to Ibiza w/ balance.
In the end, they’ve actually managed to put themselves in a -less- secure position to be of ‘any’ help to their children. I imagine there were rare instances where the parents could just say “Oh well…” but rare indeed.
Again, no one minded taking risk that involved ALL of us if it meant a free ride for Chad/Brianna. And what with the impact crater they’ve left behind, it ‘would’ have been cheaper to foot the bill for your neighbor’s kid’s college!
“…Two squad cars responded, and they posted an unruly gathering tag on the front window of the house.”
(Hwy hopes the next posting is : NOD)
You may be on to something, Highway.
It’s obvious, given the amount of work that the place needs, that this in-VEST-or family is in over its head. Oh, hey, did I mention that the mother, who’s divorced from Dad, is in the mortgage business?
And, that, amazingly enough, Dad was able to put 20% down on the property? I think that’s because — I think — Dad did an MEW on his primary residence.
It was probably a First Magnus loan, because that’s where Mom worked. Until FM imploded in 2007. (They’re #123 on the Mortgage Lender Implode-o-Meter.)
Oh dear. A regular Peyton Place.
So, I called 911.
Well thanks a lot. We were just starting to have fun, too.
Hey, if you’re a college-aged girl, you certainly were having a lot of fun. I heard your group’s screeching all the way over here.
Hey! Ya heard the good news?
There’s Good Rockin’ at the Arizona Slim Ranch!!!
If there’s Good Rockin’ here, I guarantee that you won’t be able to hear it beyond my property line. Heck, you won’t even be able to hear it outside my house. Why? Because if I have the music turned up, my doors and windows are closed.
Likewise, if people are outside the house, say, doing work on the place, I have a strict “no radios” and “use your indoor voice even when you’re outside” rule. That’s because this house is very close to several others, and, if I’m going to be such a stickler for peace and quiet, I need to behave as if my neighbors are that way too.
Whew! What a relief: Paul Krugman says we avoided a great depression!
http://tinyurl.com/nmcmgu
now I can relax
Uh oh. We’re in big trouble…
I lost respect for the guy after his article which argued that oil was not in a bubble. This is when it was near it’s all time high. It subsequently burst in one of the most magnificent crashes of all time.
O Death, where is thy stinger?
Oops- this was supposed to post under ATE’s ‘To Bee or not to Bee’…but I got one for here too-
“We avoided a great depression!”
We’re gonna have a mediocre one.
.
This truely will turn out to be Obama’s “MISSION ACCOMPLISHED” moment !!
There’s that word again: Irvine!
From behind “The O.C.” orange curtain:
“…The company, under founder and former CEO Robert Maguire, paid top-dollar for some of Orange County’s most visible office buildings. He justified the purchases during real estate’s heady days by saying rents would keep rising. Instead, the recession hit, rents tanked, and the county has a vacancy rate approaching 20 percent.”
The company said it will stop paying “the cash shortfall” on the following properties:
* Park Place I in Irvine
* Park Place II in Irvine
* Stadium Towers in Anaheim
* 2600 Michelson in Irvine
* Pacific Arts Plaza in Costa Mesa
* 500 Orange Tower in Orange
* 550 South Hope in Downtown Los Angeles
Maguire to turn over 6 O.C. properties to banks:
August 10th, 2009, Mathew Padilla OC Register
Heard from anyone from CNY today Muggy? We had an amazing show last night w/about 4-5 hours of crazy storms. Skaneateles had some flooding problems.
The storms trekked south just before us and we mostly only got grazed. So we went out on the porch and watched ball lightening, cloud to cloud, strobes. There was one green and one purple cloud to ground that we caught. It was amazing. And we weren’t even in the thick of it. I imagined some of your friends to the west had some real good stories this morning.
Yes, my sister said the weather was crazy. Coincidentally, one of the few tornado deaths in WNY killed my football coach’s brother when I was in HS.
I think people everywhere joke about their weather being crazy, but I can say C/WNY has the most extreme shifts I have ever experienced of all the places I’ve lived. Sure, the weather in Florida can be nuts, but you have a 90 degree day, followed by a 40 degree night, with hail the next day, then snow the day after.
BTW, my wife has crossed Skan off the list. Most of her friends and family have left, and she never liked the too-smalltown vibe. I would still love to live there, but it will be enough to visit in the summer and fall.
We’re looking in the donut around Rochester to the south/southeast. I would like to get 2-3 acres to let my littleman (and future littlegal) run wild. Which reminds me, today at my local playground a lady let her son run around nude. Is that normal? I mean, I understand your backyard being o.k. for that, and I know it’s August in Florida… still… a public playground?
Another BTW, the inventory in Skan below $200k is swelling, AND, this is huge, I saw an add for an auction on a Village of Pittsford home. Nice.
Consumer, Celebrity Bankruptcies May Hit 1.4 Million.
Aug. 10 (Bloomberg) — Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the trade group American Bankruptcy Institute.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-exiting debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
Debt problems don’t stop with sub-prime borrowers. Celebrities who filed for bankruptcy in July included movie actor Stephen Baldwin, who sought protection from creditors after lenders began foreclosure procedures against his home. Lenny Dykstra filed for Chapter 11 bankruptcy in a petition that says the former Major League Baseball All-Star owes between $10 million and $50 million dollars.
Banks Hurt
Also last month, con man lawyer Marc Dreier’s luxury Manhattan condominium sold for $8.2 million, 21 percent less than what he paid two years ago, in an auction at U.S. Bankruptcy Court in Manhattan. Proceeds will be used to pay creditors in Dreier’s bankruptcy case and victims of Dreier’s fraud, said Salvatore LaMonica, trustee in the Chapter 7 bankruptcy case.
Steeply rising filings by consumers are hurting commercial banks. JPMorgan Chase & Co., the second-largest U.S. bank, predicted more losses on consumer loans last month even as it announced a rise in second-quarter profit on record investment banking fees. Chief Executive Officer Jamie Dimon said he doesn’t expect the credit card business to make a profit this year or in 2010, and the company increased its loss projections for prime and subprime mortgages.
What’s even more amazing and scary is that the bankruptcy reform laws made it very hard to file for bankruptcy and yet the numbers are still reaching record amounts.
“JPMorgan Chase & Co….predicted more losses on consumer loans last month even as it announced a rise in second-quarter profit on record investment banking fees.”
According to the story I linked further down the bucket - B of A lost $255 M in the US in the 2Q on bad loans. Now that the details of those profits are coming out it ain’t looking too pretty.
Crushed by the arm of Lenin…
Lenin statue collapses, kills man in Belarus
AP
MINSK, Belarus – Belarusian officials says that a massive statue of Soviet founder Vladimir Lenin collapsed on a man who was hanging from it, killing him on the spot.
The Emergency Situations ministry said Monday that the 21-year-old man was drunk when he climbed onto the five-meter (16-feet)-high plaster monument early Monday and hung from its arm. It then broke into pieces and he was crushed.
The statue in the southeastern Belarus town of Uvarovichi was built in 1939.
Belarusian President Alexander Lukashenko is a staunch admirer of the Soviet Union, and the nation still has numerous Soviet-era monuments to the revolutionary leader.
As noted above, dead bees can deliver powerful stings.
was you ever crushed by a dead commie?
Not yet — so far, so good…
Do they have a drinking problem?
Dead bees can’t take things off the shelf. So, no.
A strong contender for this year’s Darwin Award.
Agreed.
Deficit grew by $181 billion in July
FT
Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).
Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July.
Falling tax receipts and increased spending on bailouts for auto companies and the financial sector and for the economic stimulus package added to the deficit, according to CBO.
Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.
Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes. A third of the decline is due to tax breaks in the stimulus, including the middle-class tax cut that President Obama campaigned on during last year’s election.
The independent budget scorekeeper has projected the deficit to reach $1.8 trillion by the end of the fiscal year, Sept. 30. The deficit in 2008 reached $455 billion, which was a record at the time.
Pay no attention to those numbers. We gotta get this health bill passed.
Right!
What’s good for the healthcare industrial complex is good for America!!!!!
Or so Billy Tauzin told me — and, heck, a lobbyist has never lied to me before.
State government hired 3,600 in past year
As private industry lays off workers, California keeps hiring
As California businesses and local governments shed droves of jobs this past year, the state of California’s payroll ballooned by thousands of new hires.
In the 12 months that ended in June, the state enlisted 3,600 additional workers — a 0.7 percent gain, according to the state Employment Development Department.
California’s private industry slashed about 760,000 jobs — a 6-percent loss — during the same period. Local governments shrunk by 1.5 percent.
“Obviously not every hire that the state makes is unreasonable, but as a trend it’s a total indication of the problem that we have that the state doesn’t live within its means,” said Scott Macdonald, spokesman for Californians Against Higher Taxes.
As San Bernardino County’s unemployment rate soars to 13.6 percent — with more than 17,000 searching for work in the High Desert — critics are deploring state growth that seems to defy a state cash-flow crisis amid a brutal recession.
After hiring 17,791 more state workers in 2006-07, the state added 27,659 more by the middle of 2009, according to the state legislative analyst.
To help close a swelling budget deficit, the Legislature raised $12.5 billion in taxes in February and more recently agreed on seizing and borrowing nearly $4 billion from local governments.
“We can’t continue to overspend, and then turn around and look at taxpayers and businesses and say, ‘Now you have to pony up,’” Macdonald said.
Quite the set of budget cuts they’ve been making apparently.
We’re slowly (more rapidly the past year or two) working towards a system where everyone works for the government.
“We’re slowly (more rapidly the past year or two) working towards a system where everyone works for the government.”
DING DING DING!!!
We have another winner!!!
And just before we get to that place, we find that everyone who HAS a job, works for the government.
There are some places where that’s already the case, or close enough to it…for government work. he he
For 3 months of every year, you already do.
California should institute a state worker tax only for state workers in order to help pay for all of the state workers.
Maybe something like for every new net worker added, all state workers lose $100.
skroodle,
Hey, wait a minute, I think you’re ON to something! LOL!
Yeah, maybe it IS time to concede that this IS ( after all ) a “private club”.
SFGate: “It’s time California got over itself”
Great article tresh. Nice post. Actually, true. Too late though, I think.
“Like - Oh My God!”
“Fer sure!”
“Dude! Chill!”
Excuse me eco, but are you talking to me? Seriously, I just wondered. Thanks.
Naw, just makin’ fun of CA.
gag me with a silver spoon
gag me with a platinum racconn.
Oly? How do you spell raccoonn??
Also, the ugliest hit in that article came from St. Louis, where I think, Prof B. is and I am until moving again. Makes you wonder about midwestern values. They are really better I think. I was raised here, and also lived elsewhere…
Government will continue to spend until economic fundamentals prevent it from doing so. And inflation is the only economic force which can do this. That I’m aware of at least.
My simple mind says that is pretty profound.
SF observation on retail housing:
Biked to Stern Grove via Great Hwy (closed to cars b/c of Sunday Streets — woo hoo!). Sloat is a bit sketchy for bikes, so the SO and I biked a bit on the sidewalk. Right around Sloat and 19th Ave., we had to get back on the road due to the veritable thicket of For Sale signs on ugly used houses. Haven’t been seeing as much of this lately and neighborhoods like Noe seem to be keeping their value. Notes from a bike…
MrBubble
The Financial Times editors have joined in the campaign to reappoint Ben Bernanke.
US must reappoint chairman Ben
Published: August 9 2009 22:15 | Last updated: August 9 2009 22:15
A central banker must combine the technocrat’s virtues with those of the politician. Ben Bernanke, chairman of the US Federal Reserve board, possesses both. He should be reappointed when his current term expires in January.
…
As Dubai’s Glitter Fades, Foreigners See Dark Side RTWT. It ends in a terrific adventure.
I especially like the part about the JPMorgan banker who resigned “while in prison”. Gee, is there anyone the bankers won’t throw under the bus?
At least they’re our allies!
Don’t worry, I’m sure Haliburton won’t let its world domination headquarters become seedy. Well, “too” seedy anyway.
Cheney? Yeah, I’m talking to you.
Dubai’s royal family, the Maktoums, own several very nice thoroughbred horse farms and breeding and sales operations around here (Lexington KY). They fly in during racing and sales season with a huge entourage in their private 747. They’re locally well-liked and known to be spectacular tippers. They once caused a minor ruckus when they left ~$100,000 cash with our airport manager as a tip for the airport personnel. It was returned. (I’m sure in the future they just handed it out to each person. These guys are no fools, they know this makes the people watching your plane have a vested interest in nothing happening to it or you.)
Just received in the mail a new listing of fees for American Express. I love it since I pay mine off each month but for those that tote a balance it will become their worst nightmare. I guess they want in all that windfall money being spent by those living in their houses and not paying the mortgage for months. APR will be prime plus 11.99% (15.24%) and prime plus 21.99% for cash advances (25.24%). Ah yes, so just what did Congress do to help the process for the poor!!!
I predict that having a credit card won’t be as common as it has been in recent years. In other words, we’ll be going back to the way things were back in the 1970s.
In my mail today also, in reference to a blue card that we have. It has not been used in over a year, has a zero balance. I do use my gold card, but it is paid each month.
So people are going to get hammered with these new percentages. I know several small business folks that carry balances on their plum and blue cards.
This may change the way they do business.
This may change the way they do business.
They may be conducting some of their business in Bankruptcy Court. It is one thing to cut off a credit line if you suspect it may go bad. In this economy that would be good business. It is entirely another to drive people and small companies into bankruptcy by jacking existing balances to very high rates.
I predict the strongest business will be those which shed their debt in court and then go forward on a cash basis. It is high time we realized just how evil debt really is!
I got the same letter.
Since I always pay off my balance by direct withdrawl from checking, I’m wondering how they are going to nail me. They’re making plenty of money off the retailer charge with no risk, but steady revenues at no risk are never enough.
I only got it because Costco doesn’t accept other credit cards. And I only have credit cards at all because I’m afraid that if I have a debit card, someone will steal the information off some computer and empty out my checking account. I had my Visa card changed out earlier this year because someone hacked a retailer.
Ben, do you know this dude? Sounds like you guys have something in common.
Go-to guy on foreclosure cleanouts sees it all
By TODD LEWAN (AP) – 2 days ago
GROVELAND, Fla. — 393 Ed Douglas Road was a hot potato now, not a home — just another ghost property in the resale pipeline with curtainless windows, a yard populated by fire ants and weeds, and the telltale flier taped to the front door: “U.S. Government Property.”
Nick Hazel shoved a key in the lock.
“Don’t look now, but we got company.” Above his head, and along the eaves, dangled nests in plump, grapelike clusters. “Hornets,” he muttered, then with a forced grin, “I looooove hornets.”
The door opened with a yawn. There was a bare foyer and beyond it a living room, cool and hollow, with the restful atmosphere of a funeral chapel and something of the same smell.
A queen yellow jacket floated in, nonchalantly, then drifted off into a bedroom.
Hazel leaned his mop against a wall, then walked the joint.
A broken dishwasher. Check. A countertop range stripped of its coils. Check. Fixtureless showers. Seatless toilets. Missing water heater. Check, check, check. Wires dangling from holes gouged in the ceilings — the work of whoever relieved the place of its fans.
“At least these guys left the wiring,” he said, with a shrug.
Hazel, 40, is a “property preservationist,” which these days makes him a very busy man. With thousands of people defaulting each week on mortgages across central Florida, he’s one of growing regiment of people the banks summon to “trash out” — sanitize and seal up — their foreclosure stockpile.
Among other labors, he mows waist-high lawns. He shoos away squatters. He duels wet rot. He boards up shattered windows. He replaces door locks. And, most often, he trucks away refuse so diverse, profuse and amorphous, that sometimes Hazel must squint to distinguish its components.
In short, it’s Hazel’s job to arrest the decay of a decaying housing market — a profession he likens to another the public views with angst. “It’s like I’m a dentist,” he says. “Nobody likes to see me. But when a house’s teeth go bad, who else is going to clean out the rot?”
His is also a profession with brilliant prospects — in the near future, particularly. In an average week, Hazel inspects roughly 90 structures, secures 20 others, and trashes out between 10 and 20 “REOs” (bank shorthand for “real estate owned”). That’s up twofold from a year ago, when he got his start. He’s had to employ his wife, son and five other men just to keep up.
“I don’t sleep much,” he says.
…
“…Hazel leaned his mop against a wall, then walked the joint.”
My eyes see the words…but my mind produced this:
“Hazel lit a match, then smoked the joint.”
He’s busy, but I wonder how profitable this is?
Ask Ben, he secures homes.
“…how profitable this is?”
As I mention below, this is clearly a growth industry. Current profitability may not be as important as the fact that opportunities (read demand, revenues, etc) are likely to expand considerably over the next decade, as mortgage time bombs start blowing up right and left.
It depends on your region. But it’s profitable enough for him to hire people. That should tell you something right there.
Growth industry noted:
Last updated August 10, 2009 12:00 a.m. PT
Business makes lemonade from foreclosure lemons
By ROLF BOONE
THE OLYMPIAN
OLYMPIA, Wash. — A higher rate of residential foreclosures throughout South Sound has become a growth industry for an Olympia business that cleans up and maintains such property.
The goal: Maintain the property to better improve its chances for a sale.
The business, BnE LLC, was launched by the husband-and-wife team of Matt and Jenifer Gault in 2007. Named for their two sons Brendan and Ethan, the business started slowly but has picked up steam as the residential real estate market has slowed. Today, they operate two trucks, three trailers and have three full-time employees. And when that’s not enough people, the business hires day laborers from staffing companies, Matt Gault, 33, said.
The Gaults and their business are riding a wave of new foreclosures in the South Sound. Although the region doesn’t have a serious foreclosure problem when compared with California and other parts of the country, the number of foreclosures are higher here than last year, according to regional data.
One measure of the foreclosure problem is through notice of trustee’s sales, a document issued when the homeowner has fallen behind on their mortgage payments and an auction has been scheduled. Through the first six months of 2009 in Thurston County, those notices rose nearly 80 percent to 826 from 467 in the same six-month period in 2008, Thurston County Auditor data show.
…
“…The business, BnE LLC,…”
Must be a typo…rewrite: “The business Ben LLC”
Is it too late to snatch up a $1m McMansion, in order to earn the “Right to Rent” it?
P.S. I note that Dean Baker recently bought a home, so I would expect him to start circulating proposals to prop up home values, as it is in his personal interest to do this.
Money’s Two Cents
Fixing foreclosures with a right to rent
Posted by Carla Fried
August 10, 2009 12:17 pm
…
One proposal making the rounds in D.C. is Right to Rent: a program, first floated two years ago by liberal think-tanker Dean Baker, that would allow folks who have lost their home to foreclosure to continue living in the home as a renter. As Baker sees it, giving the foreclosed the right to rent their home at a market rate for a long stretch (perhaps five to 10 years) is a win-win. The landlord (an investor or bank) gets market rental income, the homeowner isn’t uprooted, property values aren’t further depressed by foreclosure fire sales, and taxpayers aren’t asked to bail out lender or borrower. In mid-July a Treasury official confirmed the administration is mulling the idea. The House has supplied traction too, recently passing the Neighborhood Preservation Act, which would permit FDIC-insured banks to lease back homes to folks it has foreclosed on. Did you catch that artful spin? This isn’t solely about helping the foreclosed; it’s about protecting your neighboring home’s value.
…
I’ll ask again here: Why does it take a law to allow someone to pay market rent for a property?
It forces the bank to hold the property for 5 or so years and accept whatever is ruled as ‘market rate’ rent. It’s yet another law designed to keep the foreclosure clog in place.
The key for this to be good is for both parties to be willing participants, at whatever rate they choose. If that’s the case - then this is an excellent idea. However then that begs the question - why isn’t this happening now? Presumably there must be some law preventing banks from renting homes they own? Why?
“…why isn’t this happening now? Presumably there must be some law preventing banks from renting homes they own? Why?”
As I explained in another post, it gets down to the issue of option value. Banks currently have the option to either rent out REO homes or keep them vacant until they can find a suitable buyer. In other words, they enjoy the rights and privileges of ownership which are taken for granted by participants in America’s free enterprise system of economic governance.
Enter new age communist Dean Baker, who has seen the light in measures to coerce banks into protecting property values, especially now that he himself has purchased a home. I am reasonably sure many of our underwater leaders (including the Treasury Secretary) may clearly perceive the wisdom in this proposal.
This is a bad idea.
Yes, but it may still gain political backing from the Obamanites due to the pattern of winners and losers it would create:
- Current homeowners would win if the measure succeeded in preventing further price declines back towards affordable levels.
- The measure would be a mixed bag for lenders. While some of the incentives for walkaways would be eliminated if price declines were forestalled, banks forced to rent out homes to owners who would otherwise be foreclosed lose the option value of selling the home to a better qualified buyer at a future point in time when demand has rebounded from the crisis trough.
- Prospective homebuyers who did not drink the crazy lending koolaide would get screwed by what essentially amounts to price fixing from the top.
Why?
Hey, “Badminton” was on Yahoo’s top 10 search list today!
(Hwy, secretly believes that there is hope for the many people’s of the spinning planet yet…)
One way the poor get poorer and the rich get bailouts -
A nasty statistic:
Banks make $38 billion a year from overdraft fees.
Now let’s look at the internals on that statistic:
3/4 of all accounts have not had an overdraft in the last 12 months. This means that one quarter of all accounts are responsible for basically all of this.
Of the remaining quarter, half of those account for nearly all (90th percentile plus) of the overdrafts. This means that roughly 12.5% of consumers are bearing the entire brunt of these fees.
70% of the overdrafts happen at a POS terminal or ATM, not by writing a check.
The last statistic is the clear one: There is no reason whatsoever for anyone to take such a hit. The bank knows before they approve the transaction that the money isn’t there in the account.
This is not the same thing as a check, which the bank has no way to warn you about before you write it, as there is no “connection” between your checkbook and their computer.
IF we had honest regulators it would be strictly unlawful for a bank to intentionally approve a debit transaction which it knew you did not have the funds to settle unless you had an established overdraft line of credit (at a reasonable APR.)
In fact, it was not all that long ago, in the 1980s and early 1990s, when this was the case: If you went to the ATM and tried to withdraw $100, but didn’t HAVE $100, the transaction would be declined.
Every time.
But then the banks came to realize that if they let the transaction go through they could make an unregulated loan for that $100 to you, charging you $30 or more for the privilege - an annualized interest rate of thousands of percent!
This is clearly-predatory behavior. Nobody with half a brain would knowingly sign up for a “service” that would cover a POS or ATM withdrawal at 5,000% interest, yet that is exactly what nearly every bank in the land will currently do by default when you open a new account. They bury the “disclosure” in their terms and conditions, but nowhere do they state these “fees” in equivalent annual percentage rate terms.
It gets better: Banks will intentionally “sort” transactions from a given day to produce the maximum overdraft fee. They sort withdrawals to debit them largest-amount-first, because the fee is assessed per item. An example:
$1,000 in your account.
You write checks for $20, $50, $100, $1,000 and all are presented on the same business day.
How many checks will hit you with an overdraft fee?
THREE - every time. The bank will re-order the transactions so that the $1,000 check is processed first, guaranteeing that the $20, $50 and $100 checks overdraw, thereby generating three overdraft charges. If they processed the transactions “largest item LAST” you’d generate one overdraft fee - on the $1,000 check.
(From K. Denninger)
..There is no reason whatsoever for anyone to take such a hit. The bank knows before they approve the transaction that the money isn’t there in the account…
i agree.. There’s no reason whatsoever someone shouldn’t know how much money is in their own account. Can’t add and subtract? Then get some 12 yr old to help you.
The bank knows there’s no money in the account.. The customer also knows the acct will be overdrawn if they make their withdrawals… But they do it anyway because they want the money.
Their monthly statements probably tell them in big, bold type how much it’s gonna cost them to overdraw. But they think it’s worth the cost. Who’s to argue with them?
Hey Joey, you married?
heh… i searched for and read the whole article.. that guy Denninger is a piece of work..
//
market-ticker.org
After writing a check for $1,000 in an account that has only $1,000, you:
a) hope to hell it clears.
b) deposit a few extra bucks into it, just in case, or
c) “You go to the mall and use your debit card four times to buy a $5 Latte, $15 lunch, a $40 pair of pants and $25 for a couple of movie tickets….
I’m supposed to feel sorry for a someone that’s got $1,000 in an account and then does something like that.. i’m supposed to be mad at the bank for charging the fees? Well, if i were the bank i’d consider dumping this putz.. Let someone else deal with it.
—–
oh.. sorry.. married? hmmm… not married to someone who overdraws the bank accounts, if that’s where you’re heading.. I’m not available either, if that’s where your heading.
I know several people that no longer use ATM cards or checks because of this. They use only debit cards.
Don’t worry, the free market will fix this.
Fix what?
I don’t see a problem here.
It’s not the government’s job to be our babysitter.
If you’re not smart enough to either:
A) balance your checkbook, or
B) choose a bank that won’t do such things
then you deserve to be taken advantage of.
What’s next - we start cracking down on QVC for suckering people into buying crappy stuff? Cereal makers for putting crap toys in their cereal boxes?
At some point people have to look out for themselves.
‘Professional’ beggars earning up to £200 a night to supplement their day job. Daily Mail 10th August 2009
Gangs of organised beggars from Eastern Europe congregate outside Harrods department store
Begging is becoming a second income for some ‘professional’ beggars according to police
Street beggars are earning up to £200 a night - the equivalent of a £73,000-a-year salary tax free, according to police figures.
Officers have discovered a growing number of ‘professional’ beggars, some of whom even beg on the streets after finishing their office jobs.
They are using the extra cash to supplement their normal day jobs.
Leicestershire police arrested 20 beggars last month - none of whom were homeless.
One woman even admitted she begged at night after her day job so she could pay for a new kitchen in her flat.
Sergeant Adrian Underwood, of Leicestershire police, said: ‘On a good Friday or Saturday night, some can pick up to £200.
‘We have intelligence that there is a woman who is begging because she wants a new kitchen for her flat.
‘A lot of well-intentioned people see someone begging and think they are deserving causes.
‘Would they give them money if they knew that person had just come out of a flat, was receiving benefits and had food in the larder?’
Toni Soni, head of hostel services at Leicester City Council, said previous operations by the authority and police had found no beggars to be homeless.
He said: ‘There are people who are actually professional beggars who are doing it to make a living.’
There was a case in New York some years back where a professional beggar would get done for the day, walk around the corner with some $500 in cash, get into his Mercedes and drive home to his comfortable home and wife. That said, I doubt most beggars are doing it because it is a great way to make a living, and I doubt most make close to that much.
Gangs of organised beggars from Eastern Europe congregate outside Harrods department store.
What they don’t tell you, because they’re too politically correct, is that most of these are ‘organized bands’ are Gypsies. The UK takes in Gypsy asylum seekers with open arms from places like Romania and the Czech Republic, then finds out the hard way why they are so detested back home - they make their living by ripping people off.
One might argue that the guilt-ridden deserve to be ripped off. Heck, I’ll argue for it myself. Most Western cities have a large population of saps ripe for the taking.
Borrow from the Fed at zero, then charge the working poor 400%. Sounds like green shoots for somebody:
Big Banks Offering Payday Loans
Big banks are entering another controversial arena: payday loans, whose interest rates can run as high as 400%. Historically the market has been dominated by small nonbank lenders, which mainly operate in poor urban centers and offer customers an advance on their paychecks. But big lenders Fifth Third and U.S. Bancorp (USB) started offering the loans, while Wells Fargo continues to boost its payday-loan program, which it began in 1994.
More big banks are getting into the market just as a recent flurry of usury laws has crippled smaller players. In the past two years lawmakers in 15 states have capped interest rates on short-term loans or kicked out payday lenders altogether. The state of Ohio, for example, has imposed a 28% interest rate limit. But thanks to interstate commerce rules, nationally chartered banks don’t have to follow local rules. After Ohio limited rates, Cincinnati-based Fifth Third, which has 400 branches in the state but also operates in 11 others, introduced its Early Access Loan, with an annual interest rate of 120%. “These banks are skirting state laws,” says Kathleen Day of advocacy group Center for Responsible Lending. Says a spokeswoman for Fifth Third: “Our Early Access product fully complies with federal regulations and applicable state regulations.”
Lenders argue they offer a valuable service for those who need emergency cash. Wells Fargo says it warns customers using its Direct Deposit Advance that the loan is expensive and tries to offer alternatives. “We have policies in place to prevent long-term usage of the services,” says a spokeswoman. U.S. Bancorp didn’t return calls.
National regulators are taking notice, however. The Office of Thrift Supervision says it is “looking into” two institutions that are offering the high-interest loans. “We need to make sure there’s no predatory lending and also ensure that there are no risks to the institutions,” says an OTS spokesman.
Megabank, Inc smells blood, decides to try the loan shark business…
This file has become quite large: “Quick,…look over there!”
“….But thanks to interstate commerce rules, nationally chartered banks don’t have to follow local rules.”
Niiiice.
So to be an upstanding businessman like these bankers, the dope dealer down at playground needs only tell his clients to ‘take it easy’ and ‘practice moderation’ and he’ll be just as respectable.
National regulators are taking notice, however. The Office of Thrift Supervision says it is “looking into” two institutions that are offering the high-interest loans.
Oh yeah, the Office of Thrift Supervision — weren’t they the jokers who didn’t provide adequate oversight of Countrywide’s lending practices? (Yes, they were.)
OTS depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, which seems like a rather problematic approach to me.
“We need to make sure there’s no predatory lending and also ensure that there are no risks to the institutions,” says an OTS spokesman.
Ha,ha,ha,ha, that must be a stupid sick azz joke. The clown troupe keeps rolling along!
Sounds like a typical bank PR department announcement (PR = propaganda).
According to the book “Credit Card Nation,” the big banks have had their hands in the payday loan game for a while. It’s just not apparent.
Yes, they have. It’s just that the names of the businesses don’t announce that. Isn’t “Money Tree” owned by Wells Fargo or another big bank? These monster banks are the most disgusting, pathetic excuses for businesses ever imagined. They don’t serve their customers, they bleed them to death.
Good catch GrizzlyBear. This is a little known fact.
I don’t know what they’re thinking when our economy is 75% consumer driven and the consumer is broke. But I do what will happen and it won’t be pretty.
You ain’t seen nothin’ yet if this happens.
Like I said, “free market ” means free to f&*# you up the A.
We The People Stimulus Package.
http://www.youtube.com/watch?v=jeYscnFpEyA
Not “The O.C.” …son-of-gun gonna have some fun…me-o-my-o
Geez, come on Dr. Fill, you’re a good-o-boy from Tayhos, don’t ya think it would be much more “revealing” to follow the students from Kearney, NB over to get .35 cents draft beers @ the “Buffalo Chips Saloon?
“The idea popped up because the show’s producers were impressed by how thoughtful Chapman students were last year when they appeared on Dr. Phil to discuss the problem of binge drinking on American college campuses”
Dr. Phil Show to shadow Chapman freshmen this fall
August 10th, 2009, by Gary Robbins, science writer-editor
http://collegelife.freedomblogging.com/2009/08/10/dr-phil-show-to-shadow-chapman-students/6795/
“It is idle to talk about preventing the wreck of Western Civilization. It is already a wreck from within.” ~Jim Panyard
Wreck on the Highway. Springsteen/River
Well, well, well…looks like B of A’s 2Q profit wasn’t all that.
Their domestic operations lost money, the result of mounting bad loans. The “profit” came largely from one time deals in Asia.
Linky pooh:
http://finance.yahoo.com/news/BofA-lost-money-in-US-during-apf-1985765945.html?x=0&sec=topStories&pos=1&asset=&ccode=
That cannot be!
We all know banks thrive on bad loans because they make unseemly profits in “fees”! The housing bubble was a deliberate conspiracy by banks to make as many bad loans as possible! The bubble was designed and executed as such by the PTB.
sorry.. i refuse to believe B of A isn’t swimming in profits due to their crap-assed loan portfolio. Someone “at the top” is surely hiding the truth.
If the payment-makers start going on strike in a big way, or if people really start fighting back against fees, there goes their business model.
BofA is one of what.. 8,000 or so banking institutions if you restrict it just to FDIC insured banks?
I guess there’s another 10,000 spots to park an account if you include US credit unions insured by NCUA.
But people just gotta stay with BofA? If someone doesn’t like the penalties they can take their business elsewhere.
And who’s complaining? The few dimwits who overdraw their accounts to the point of pain (along with some loud anti-bank pundits) and blame it on the bank? Are these the leaders of the revolution? No. They are the sum total of people who give a rat’s ass..
I’d advise the mathematically challenged over-spenders to get the MSM involved.. then maybe you got a shot at it. They failed with the penny ante charges for using the wrong ATM machine but they might succeed here..
sorry about that previous answer…. i was on the wrong thread / topic.. This micro-uprising due to BofA overdraft fees annoys me.
I agree in the assessment that if people en mass don’t pay what they owe, that business / industry is doomed.. no matter what business we’re talking about.
Result is no business.. no services available.. no products to buy.. and for some, no jobs.
So seeing that attacking business is a double edged sword, i suspect people would come to their senses before they accidentally chop off their own heads. Like it or not, and regardless of government intervention or not, all sectors of society are interdependent. We sink or swim together.
Why does it even matter one iota whether they make a profit, so long as top management gets to wallow in the bonus trough no matter what the company does? This is the essence of too-big-to-fail status: bonuses and corporate survival are government-guaranteed.
bonuses.. meh.. While weak kneed politicians and the MSM are in a tizzy about it, people who let their money do the talking are unconcerned. BAC is up from $3 in Feb to over $16 today.
Are you suggesting that near-death experiences are good for the banking industry?
no.. i’m saying let the bankers bank.. let the teachers teach.. let the plumbers plumb. They, not politicians and not pundits, are the experts in their fields. Their industries expect certain results and set pay and bonus rates according to time tested methods.
Although some unusual situation may reveal weaknesses in those methods, the average layman doesn’t suddenly become an expert who knows the best remedy.
Are we justified in limiting or reducing teacher pay or benefits because of poor results? Hardly (although arguable).
If a teacher, bank executive or plumber price their services too high, competition in the market solves the problem automagically.. There’s no need to concern ourselves with it. There is need to concern ourselves with outsiders trying to manage businesses they know not.
Meanwhile, I look out for number one. I have an interest in keeping the economy rolling.. i like to eat. I like it when my favorite restaurant remains open for business. I appreciate it when some industry is “too big to fail” and backed by the govt because I feel safer investing in that industry.
As for changing things that I cannot change and don’t concern me anyway, my days of trying to save the world are long done and gone..
Judge Rakoff, defender of the American people against a rapacious, out-of-control banking industry:
Judge Won’t Approve Bank of America-SEC Settlement (Update2)
By Thom Weidlich
Aug. 10 (Bloomberg) — A federal judge refused to approve Bank of America Corp.’s $33 million settlement of a lawsuit over bonuses connected with its January acquisition of Merrill Lynch & Co., saying the amount isn’t appropriate if the bank lied about billions in payments.
…
Who Was Responsible
“Was it some sort of ghost?” Rakoff asked today. “Who were the people? Mr. Thain and Mr. Lewis would seem to be responsible, yes?” John Thain was the Merrill chief executive officer who negotiated the sale to Bank of America, and Kenneth Lewis is Bank of America’s CEO.
Rosenfeld said Thain and Lewis relied on their lawyers. He said the agency “can’t infer” misconduct from an accelerated bonus schedule.
Rakoff noted that Merrill’s losses would have been lower if it hadn’t paid the bonuses.
“If they would not have paid out $3.6 billion, they would have had a loss of $3.6 billion less, no?” the judge said, referring to Merrill.
…
Is this bonus mess a PR disaster for Megabank, Inc, or does it just look like a PR disaster from the outside?
No worries, the PTB will conjure up a distraction soon enough and the wayward (my word would be heroic) Judge Rakoff will get a phone call. (hopefully TTT won’t call at 2 a.m. cussing loudly)
Why I heard tonight that they won’t be releasing the details of Michael Jackson’s autopsy - now that’s news people can sink their teeth into!
Are the same folks who tune in with fascination as Megabank, Inc pays billions in bonuses to reward billions in losses readily distracted into reading about MJ’s autopsy report status?
Has anyone else who uses Firefox had to deal with incredibly slow page loads? In the last few weeks, my browser is acting like I’m using dial-up. It’s ridiculous.
try “Help”
“Check for updates”
let it d/load and install the latest version.
If that doesn’t fix it the problem is somewhere else.. might be some bad RAM.. (Hit the Windows key and pause/break simultaneously. “System Properties” appears, showing how much RAM is currently recognized.)
..or something like a anti-virus app is hogging too many resources.. or some other program is running and doing it..
I was using IE till 8 months ago. Among other things, pages loaded slowly or things just stalled completely. Firefox fixed all that.
Yes. Something weird is going on because it now seems to have fixed itself.
However, I did trim as much crap out of it as I could. Look in your Add-ons and extensions and disable or uninstall everything is not absolutely essential to you.
Also, they were doing some work in my area on the phone lines. That didn’t help either.
You have a virus then.
Here is a promising development. Perhaps the judicial branch of the US government will take it upon themselves to restore trust in the banking system, even as banking regulators meanwhile busy themselves with all manner of bailouts and hair-of-the-dog stimuli.
Judge Won’t Approve Bank of America-SEC Settlement (Update2)
By Thom Weidlich
Aug. 10 (Bloomberg) — A federal judge refused to approve Bank of America Corp.’s $33 million settlement of a lawsuit over bonuses connected with its January acquisition of Merrill Lynch & Co., saying the amount isn’t appropriate if the bank lied about billions in payments.
The hearing, held in New York before U.S. District Judge Jed Rakoff, ended with Rakoff’s saying he needs more information on the Aug. 3 accord between the bank and the U.S. Securities and Exchange Commission, which filed the suit. The settlement won’t be final unless Rakoff approves it.
Rakoff said that if the SEC is right that Bank of America lied about whether to pay the bonuses then the proposed settlement is not “remotely reasonable.”
…
hmmm.. we have a federal judge on one side and the SEC and Obama administration on the other.. where should i place my bet.. this is a tough one.
Shut up Rakoff! If you fine them too much the bank could fail. Do you really want to put systemic risk before justice??? Geeez.
Nobody in their right mind bank has trusted banks since 1929.
Judge Rakoff for Supreme Court!
Wall Street Journal
* AUGUST 11, 2009
BofA Judge Seeks More Data on SEC Bonus Deal
By CHAD BRAY
NEW YORK — A federal judge delayed a decision on whether to approve a $33 million settlement of allegations that Bank of America Corp. failed to disclose to investors that Merrill Lynch & Co. agreed to pay billions of dollars in bonuses on the eve of their merger.
At a hearing Monday, U.S. District Judge Jed S. Rakoff in New York questioned lawyers from the Securities and Exchange Commission and Bank of America for more than 90 minutes about the pact, in which the Charlotte, N.C., bank didn’t admit or deny wrongdoing.
The judge said he had “continued misgivings” about the settlement and wants more information about who was responsible for the alleged wrongdoing, the basis for the settlement itself and whether an evidentiary hearing should be held to weigh the facts of the case.
“I would be less than candid if I didn’t express my continued misgivings about this settlement at this stage,” the judge said. “When this settlement first came to me, it seemed to be lacking, for lack of a better word, transparency. I did not know much about the facts from the complaint, I did not know much, or really anything, about the basis of the settlement.”
Lawyers for the bank and the SEC will simultaneously file papers in response to the judge’s request by Aug. 24 and then have a chance to file response papers by Sept. 9.
…
How come the SEC’s fines are so minuscule compared to the size of the issue (e.g. fines in the millions to redress questionable bonuses by the billions)? Are they fully captured by Megabank, Inc?
Wall Street Journal
* AUGUST 11, 2009
‘Urgency’ Drives SEC Crackdown
New Leadership Accelerates Investigations and Levies Millions in Penalties
By KARA SCANNELL
The Securities and Exchange Commission is reeling off a string of enforcement moves against high-profile companies and individuals as it tries to establish what its new enforcement chief calls a “sense of urgency.”
In the past week, the SEC announced three settlements with Bank of America Corp., General Electric Co. and former American International Group chairman Maurice “Hank” Greenberg, with each agreeing to pay stiff penalties. Those coincided with the announcement of the most significant changes to the agency’s inner workings in decades, including the creation of at least seven specialized divisions and moves to speed up cases.
SEC Chairman Mary Schapiro and enforcement director Robert Khuzami are trying to repair the agency’s reputation, which has been battered in recent years. The agency was taking a longer time to bring cases and failed to stop the multibillion-dollar investment scheme pulled off by Bernard Madoff before he confessed in December.
“Many aspects of our initiatives are designed directly or indirectly to create efficiencies and a sense of urgency in our work,” Mr. Khuzami said in an interview.
…
PB…If Wall Street can get away with paying a fine ,(if they get caught )instead of being criminally nailed and paying major
punitive fines ,they will continue to take SEC violation risks . It almost like they set up the SEC. to avoid the regular criminal /civil Justice system .
I have always felt that the SEC fines were low compared to the
damage that these guys do .
Zillow used stats from 2007 for the zestimates for my former residence (it showed me last solds in 2007 only). In 3 months from my last inquiry, my former residence went up almost $50K to $854K, whereas the last home sold in the nighborhood sold in July 2009 for $670K per MLS (not recorder’s office). The average buyer out there doesn’t know how to data mine or even question a used home bs artist. I’m depressed.
Who is spending this kind of dough, even with a good job in So Ca? When our former home hit $1.3M at the peak, I was amazed. Nice view home, but not the Taj Mahal.
OK, we’re leaving So Ca, so I can find a better life. Any place I should check out? Small(ish) town feel with good rail system, good medical, educated populace with minimaal 3rd worlders. You know, a utopia. (A gal can dream, can’t she!)
Is there a small(ish) town in the US with a good rail system?
San Francisco used to be one.. had electric rail streetcars all across and up and down the city’s 49 square miles… but only a few lines exist now.
the story goes that someone with ties to either BF Goodrich, Goodyear or some other tire co. got elected to the Board of Supervisors in the early 20th century and was able to replace lots of street car lines with buses… might’a been a Mayor.
South Pasadena (think Rose Parade) here in So Ca is one. The Metro subway flows through Pasdena, and hooks you up to downtown L A, Long Beach and some burbs. Can’t afford the perfect home there for $1.6M .
I wonder if Spokane, Wa is another? Part of Cannon Hill is a historic residential area. I’m craving a Craftsman one-story, but want good rail to commute with.
Hmmm. To me, nothing feels ’small-towny’ between LA and San Diego, but I guess that’s a personal opinion. Spokane looks cool, never been, but I don’t think they have light rail.
Santa Fe, NM.
http://www.usdebtclock.org/
Welcome to the Motel California. we were checking out of our motel — a place we had chosen only because it was less than $70-a-night in an area where we hadn’t seen anything under $100 — when I casually asked the front desk manager, “Do people ever stay here for more than a few days?”
“No,” he said, scoffing at the question. “We are not an apartment building.”
That’s when Michael and I knew that if we looked hard enough, we’d probably find families living there. Turns out, we only had to walk as far as our car.
Any out-of-work bankers reading here who might be looking for a job?
Financial Times
New York Fed in hiring spree
By Aline van Duyn in New York
Published: August 10 2009 23:30 | Last updated: August 10 2009 23:30
The Federal Reserve Bank of New York is aggressively hiring traders as its seeks to manage its burgeoning securities holdings, making the central bank one of Wall Street’s most active recruiters of financial talent.
The New York Fed – the arm of the US central bank that implements its monetary policy – plans to increase the staff in its markets group to 400 by the end of the year – up from 240 at the end of 2007.
…
Posted here the other day I believe:
“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of this country … corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in ta few hands and the Republic is destroyed.”
– Abraham Lincoln, November 1864
(letter to Colonel William F. Elkins, after passage of the National Bank Act)
Snopes says that Lincoln quote was based on a forgery.
I posted it. It is a quote from the Countrywide book (”The Foreclosure of America”). It would seem altogether fitting if it turns out to be a forgery.
Yep. I guess the Berkley Publishing Group research team should put a link in their web browser to the snopes dot com web site, in order to avoid perpetuating frauds. (But then again, in a book about Countrywide, doesn’t perpetuating a fraud seem altogether appropriate?)
Why are politicians ignoring the will of the American people, deferring instead to the whims of unelected Federal Reserve officials? What if we, the American people, don’t want to guarantee subprime lenders??? Will our politicians glibly tune us out?
* The Wall Street Journal
* REVIEW & OUTLOOK
* AUGUST 10, 2009, 7:15 P.M. ET
The Next Fannie Mae
Ginnie Mae and FHA are becoming $1 trillion subprime guarantors.
Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.
Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?
Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.
Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.
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This is what you get when you don’t purge the fraud in the system .
The powers think they can scream “Fire Emergency” and skip the detail of the fraud in the set up of the system that crashed . Well maybe the same clowns that drove up the prices with cash back fraud are back doing their
game the system dance . The moral hazard of the Powers deciding to overlook the fraud that fueled the Mania .
Yesterday I mentioned the church that used to pay me by the $100s to play music for them now pays me in home baked bread. Apparently, they are not the only cash-strapped church out there…
* The Wall Street Journal
* AUGUST 11, 2009
Slump Strains Church Finances as Need Grows
By TOM BENNING
CARROLLTON, Texas — When leaders of Bent Tree Bible Fellowship Church sat down to plan this year’s budget, they knew that extra prayer was in order.
The slowing economy was squeezing the 4,000 members of this evangelical megachurch outside Dallas, prompting more families to ask for spiritual and financial help even as fewer could afford to give.
To cut 10% from its $6 million budget, the church froze staff salaries, stopped using a daily cleaning service and cut $10,000 from its lawn-care bill. It also laid off five of its 71 staff members, including a popular pastor.
More families ask for spiritual and financial help, even as fewer can afford to give.
“It was painful, like letting go a close family member,” said church board Chairman Kurt Baxter.
Across the country, congregations of all sizes and denominations are struggling with issues of faith and finance as the recession grinds on. Churches are scouring their budgets for wasteful spending. And many, like Bent Tree, have taken the unusual step of reducing staff.
While the collection plate no longer overflows, churches are seeing an increase in requests for support — be it for spiritual guidance, monetary help or career advice. And religious leaders have the added task of explaining job losses and pay cuts in spiritual terms.
Churches, synagogues and mosques have historically fared reasonably well during recessions, even as other institutions struggled. But the magnitude of the current downturn has caught up with places of worship, too.
Richard Klopp, associate director of the Lake Institute on Faith and Giving at Indiana University, said the economic climate for religious organizations is the worst in at least 30 years, forcing membership drives and construction projects to take a back seat to balancing the budget.
“This is the topic of conversation for congregations,” Mr. Klopp said. “All other conversations have ceased.”
Many synagogues are seeing more requests for waivers of membership dues, as well as a decrease in donations, said Rabbi Elliott Kleinman, spokesman for the Union for Reform Judaism, which represents about 900 congregations in the U.S. and Canada.
“There has been significant tightening of budgets,” Rabbi Kleinman said. “People simply have less money to give.”
A handful of churches across the country have faced foreclosure, and in places like Michigan, the cash crunch has been especially severe. When asked for examples of struggling churches in the state, Chad Woltemath, vice president of the Michigan state branch of the Lutheran Church-Missouri Synod, asked, “Do you want me to pull out some darts and throw it at our directory?”
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Churches, synagogues and mosques have historically fared reasonably well during recessions, even as other institutions struggled. But the magnitude of the current downturn has caught up with places of worship, too.
Churches were riding high on the bubble, too. The megachurches that sprouted all over the suburbs catered to the HELOC’ed SUV crowd, and those churches were not afraid to make enormous investments in PA systems, professional lighting and cameras, amenities for congregants, and so on. There’s plenty of church infrastructure that’s not paid off yet, and the tithes prob’ly aren’t rolling in like they used to when everybody was a millionaire on paper …
RIght. I am happy to take the bread of life as payment for my musical performances, as I am fully cognizant that my fleeting career as a well-paid weekend musician was heavily dependent on the now-defunct home equity ATM.
A question for all of our Mortgage Underwriting experts (assuming there is such a thing). I know next to nothing about how mortgages are underwritten, is it merely a formula where a person’s income and FICO score is combined with the zip code, and appraisal of the home, and some computer spits out an approval or do people look into more detail. The reason I ask is that I keep reading about walking away and foreclosure being this thing that only affects you for a few years. It seems odd to me that anyone would ever (or at least a really long time) would ever want to give a loan to someone who “ruthlessly” defaulted as regardless of credit score they would seem to me to be a bad risk. Does/will a review of this behavior actually factor into the underwriting process, or will these people really be able to get mortgages again in a couple of years?
Don’t really know how the industry is going to treat defaulters in the
future . Millions of people are claiming that they were actually victims
of the Lenders . Currently nobody is handing out credit based on
prudent risk factors IMHO. In a declining market you would usually want big down payments ,but the government wants to back low down loans
just to prop up the housing market . So, with Government interference ,
who knows what they will do .