Bits Bucket For September 5, 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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Five More U.S. Banks Are Seized, Pushing Total for Year to 89
Sept. 5 (Bloomberg) — Lenders in Illinois, Iowa, Missouri and Arizona collapsed, pushing the number of bank failures to 89 this year amid continuing fallout from the worst economic slump since the Great Depression.
Illinois lenders InBank of Oak Forest and Platinum Community Bank of Rolling Meadows; Vantus Bank of Sioux City, Iowa; First Bank of Kansas City, Missouri; and First State Bank of Flagstaff, Arizona were shut by regulators, and the Federal Deposit Insurance Corp. was named receiver, the agency said in statements yesterday. Closing the lenders, with combined assets of $1.1 billion and deposits of $982 million, will cost the deposit insurance fund about $401 million.
Regulators have closed banks at the fastest pace in 17 years and more are likely as losses mount from soured real- estate debt. A total of 416 banks with combined assets of $299.8 billion failed the FDIC’s grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994, the regulator said in a report last month.
Yeah, rub it in. First State Bank with several branches in Ben’s (and unfortunately my) home town of Flagstaff AZ are among the casualties. I guess I get to go see if my SD box is still intact.
Ben, you going to be visiting any of the usual watering holes this weekend? I’m buying.
This is funny. I had an account with these guys in 2007, if this is the same bunch that had a branch downtown back then. I asked the person, “do you have any MBSs?” He said, “I think we sell them all.”
I thought to myself, you “think”? Uh-ohh. Anyhoo, I bailed on them not too long after that.
Yeah, I hope to be home tonight after a week on the road. Clean out your SD box and we’ll tear up the town!
Sure. Check your mail. Not like anything in there is likely to buy anything more productive than beer.
Six Million Home Foreclosures: Are FDIC Insured Banks the Next Time Bomb?
Andrew Butter September 01, 2009
Over a year ago, as Hank Paulson declared “The US Banking System Is A Safe and Sound One”, the market’s reaction to that piece of news was to short Fannie (FNM) and Freddie (FRE) into oblivion. A key issue there was holdings of mortgage backed securities, specifically RMBS; valuations of those assets depended on (a) their credit rating, (once the LTV started to slip the rules said they had to be downgraded, so the price tanked), and (b) a rule of thumb that the value of those assets was what an equivalent Treasury cost, less the cost of a CDS to insure them; when fear took over, the cost of a CDS went through the roof, and the so-called “market” (it never was a real market), froze. Then there was Lehman.
What drove that crisis was fear of the future, and the reason so much money was required to bail out the players ($2.7 trillion so far) was that previously if you had a “good credit score” you could borrow short-term Treasures, buy an RMBS on 100% margin, and make a fortune. But then the margins got called.
What happened was nothing different from a gambler going into a casino, borrowing from the house, using that money to bet on a “sure thing”, and losing. Fortunately for the gambler, the “house” decided he was too big to fail. If you or I were to do something like that, we would be lucky to get away with a pair of broken legs.
…
Mortgage giants struggle a year after takeover
A year later, exit from Fannie Mae, Freddie is a perplexing quandary for US government
WASHINGTON (AP) — A year after the near-collapse of Fannie Mae and Freddie Mac, the mortgage giants remain dependent on the government for survival and there is no end in sight.
The companies, created by the government to ensure the availability of home loans, have tapped about $96 billion in government aid since they were seized a year ago this weekend. Without that money, the firms could have gone broke, leaving millions of people unable to get a mortgage.
Many questions remain about Fannie and Freddie’s future, but several things are clear: The companies are unlikely to return to their former power and influence, the bailout is sure to cost taxpayers even more money and the government will have a big role in the U.S. mortgage market for years to come.
Fannie Mae was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government formed its sibling and competitor Freddie Mac.
The companies boomed over the past decade, buying mortgages from lenders, pooling them into bonds and selling them to investors. But critics called them unnecessary, arguing that Wall Street could support the mortgage market itself.
That argument has faded in the wreckage of the failed loans that led to the housing bust. Investors have fled any mortgage investment that doesn’t have the government standing behind it.
“No longer is anyone arguing that the private sector can handle this on its own,” said Jaret Seiberg, an analyst at Washington Research Group.
The government stepped in to take control of the two companies on the weekend of Sept. 6, after they were unable to raise money to cover soaring losses and their stock prices plunged.
A year later, the government controls nearly 80 percent of each company, and their problems are growing as defaults and foreclosures continue to skyrocket.
‘$96 billion in government aid’
Multiply that by 10 and it still wouldn’t save even one of these companies. These guys are gone, IMO, and now it’s just the wind-down.
I was in a GSE related house yesterday evening. Here’s what is complicated; it can have a WS name associated with it, or be called Fannie Mae, or what ever. There are actually more than one company used for each entity, and not just these GSEs. There are multiple BoAs and Chases, for example. Funny how we never hear a word about those 1000 off-shore special purpose entities of Fannies that the media went on and on about with Enron.
‘No longer is anyone arguing that the private sector can handle this on its own,” said Jaret Seiberg, an analyst at Washington Research Group.’
I am making that case, Jaret, and you are full of sh*t. It was the government that is primarily responsible for this. If the ratings companies and WS hadn’t built this house of cards around the GSE/MBS/etc, we probably wouldn’t be in this mess. And throw in the fools at the Fed, and I think we’ve had enough of government/quasi-government involvement in our housing financing, thank you very much.
“I am making that case, Jaret, and you are full of sh*t. It was the government that is primarily responsible for this”.
BINGO!!! + 100
The very idea that the “fault” lies at the feet of the private sector is pure propaganda.
Well, it’s a lot like the so-called deregulation debates we see. Washington will tinker with this or that, and then it doesn’t work, and they cry, “we’ve tried deregulation and see what it got us!”
The US government IS the housing finance market in this country, or was. Show me one housing bubble on the globe, and I can show you a central bank behind it. And who sets up these central banks? It ain’t the “markets” folks.
A lot of us will point out that government involvement almost always makes what they are trying to “fix” worse. The war on drugs, etc, I could go on and on. So what was the GSE mandate, after-all? To make housing, tada! MORE affordable! What a joke. When prices were skyrocketing and people were camping out for condos that were never built, what did the GSEs do? Dive headlong into subprime.
It’s frustrating to listen to the media and the special interests in DC twist this into something that begs for more government involvement in finance. Hell, they couldn’t even audit Fannie Mae! How can they “run” it?
The US government IS the housing finance market in this country, or was … A lot of us will point out that government involvement almost always makes what they are trying to “fix” worse.
I won’t pretend that I think what the government did over the past decade in housing was good policy, but a lot of us will counter that letting the private sector do exactly what it wants is also a sure recipe for disaster. To deny the private sector’s role in this is disingenuous. To deny the complicity between central banks, government, and the private sector is disingenuous.
Is the private sector no longer responsible for its own actions? Corporations jumped in headfirst, not just in the housing market, but in any available credit market — lending with abandon to any mope with a pulse, leveraging their own assets to absurd levels, and dreaming up ever more abstract financial vehicles to drive “sure thing” profit-taking. Is it government’s fault that businesses no longer followed sound business practices, or even common sense?
“Dive headlong into subprime.”
As a business decision, that was clearly a terrible idea. But it also most likely provided an expedient kludge to meet some Congressman’s social engineering agenda. If anyone who works inside the Beltway has yet realized that demand-side low income housing policy inadvertently serves to drive home prices out of reach for almost everybody, while setting up low-income households for future financial hardship thanks to unrepayable debt burdens, I sure have missed the story.
On a very fundamental level, most don’t understand what kind of cash cow housing finance really is.
Just for us here on this blog, we know but think about it….. a tidal wave of fools convinced they *need* a house to make themselves complete.
borrowed amount: $200,000
Term: 30 years
Rate: 6%
Interest paid is $255,000!!!!!!!!!!!! WTF!! And you haven’t even touched the $200k principal!!! No taxes, insurance, maintenance… nothing!
If that isn’t a cash cow of the 10th magnitude, nothing is. It’s no wonder the unholy alliance of fed reserve banks, federal govt and local govt(property taxes) set up a system and fostered an environment to make it easy to enslave people.
I know I’m stating the obvious folks but this dollars and cents issue can’t be overstated.
“Just for us here on this blog, we know but think about it….. a tidal wave of fools convinced they *need* a house to make themselves complete.”
Once such fools have been fully exploited, the resulting housing finance tsunami wave has to crest and crash back to below sea level before you can do it again.
“borrowed amount: $200,000
Term: 30 years
Rate: 6%”
Foreclosure in 5 years…
“To deny the private sector’s role in this is disingenuous.”
The private sector is not some kind of thinking, breathing creature, and such spurious personification of the private sector (or private markets) leads to misleading conclusions.
Think of the private sector as a collection of individuals acting in their self interests to cope with whatever kind of stupid market distorting rules the government throws in their paths and you will be on the right track.
To deny the private sector’s role in this is disingenuous
ET, the difference is, IMO, that the private sector can “suffer” for its wrongs, and ultimately will be self-righting. With the government, though, such things don’t happen.
Sure, both public and private sector screwed the pooch here. Even if the gov’t isn’t involved, the private sector likely will do “bad” things. But ultimately, if they’re “bad”, the market will punish them.
Unfortunately, we can’t punish the government.
“Is it government’s fault that businesses no longer followed sound business practices, or even common sense?”
I guess that depends on whose duty it is to regulate. Here is what one prominent economist recently said on the subject, in a speech about Adam Smith:
‘Researchers in recent years have found that the rule of law–defined as a system that emphasizes creditor rights and rigorously enforces contracts–facilitates the development of an efficient banking system and financial markets more generally; this development, in turn, supports growth. The quality of the institutions in a country–such as a sound regulatory environment, political stability, and the control of corruption–have important effects on growth. Economies with a high quality of governance, relative to other economies in their regions, including Hong Kong and Singapore in Asia, Chile in South America, and Botswana in Africa, have had some of the fastest growth rates in their respective regions in recent decades.’
With the US citizenry is viewed collectively as creditor, how exactly does a financial regulatory regime based on ad hoc bailouts of Megabank, Inc’s bad gambling debt serve to enforce Adam Smith’s rule of law?
The private sector is not some kind of thinking, breathing creature, and such spurious personification of the private sector (or private markets) leads to misleading conclusions.
Of course the private sector’s not a “thinking, breathing creature;” I never suggested it was. It does have laws of physics, if you will, that bind it together. And you ignore the issue: Does did the private sector play a role in this debacle, or can it all be blamed on central banks and government? The reductionist argument that it’s all the central banks or all the government ignores a fairly complex, mutualistic interplay between each and the private sector, an interplay you have noted yourself on many occasions.
Additionally, why are central banks treated as the (largely incompetent) controllers of all our destinies? A weird kind of Financial Predestination? To paraphrase your line, such spurious deification may lead to misleading conclusions …
Central banks do a lot central planning. Primarily they control (and monopolize) the money supply and set interest rates.
As money is the good exchanged as half of every transaction in an economy and interest rates are used by all companies to gauge the future state of the economy (the spend vs. save preference of consumers) in the decision process for capital goods… aren’t central banks the central actors of an economy and primarily to blame when the economy overheats and misallocates resources (in various bubbles)?
“Additionally, why are central banks treated as the (largely incompetent) controllers of all our destinies?”
1. It is a role they seem altogether too eager to assume.
2. It helps to operate in a rarefied Machiavellian atmosphere above the constraints of constitutional governance.
3. It also pays to have symbiotic relationships with too-big-to-fail financial corporations.
‘ET, the difference is, IMO, that the private sector can “suffer” for its wrongs, and ultimately will be self-righting. With the government, though, such things don’t happen.’
Oh really? So you are saying that governments in general are pretty much too big to fail, then?
“Central banks do a lot central planning.”
Not coincidentally, so did the leaders of the former Soviet Union.
“Funny how we never hear a word about those 1000 off-shore special purpose entities of Fannies that the media went on and on about with Enron.”
As a private (i.e., non ‘government sponsored’) entity, Enron did not get blanket protection under the government’s propaganda machine.
As a private (i.e., non ‘government sponsored’) entity, Enron did not get blanket protection under the government’s propaganda machine.
Just as significantly, Enron had gold-standard protection from the redoubtable propaganda machine at Arthur Andersen.
And neither Arthur Anderson nor Enron turned out to be too-big-to-fail, did they?
“And neither Arthur Anderson nor Enron turned out to be too-big-to-fail, did they?”
They were allowed to fail. They forgot to contribute to the pockets of our Congress critters.
And neither Arthur Anderson nor Enron turned out to be too-big-to-fail, did they?
A strategic miscalculation on their parts, and/or a simple failure to engage in the mutualistic behaviors expected of entities that wish to become too big to fail designates.
“A strategic miscalculation on their parts,…”
I think you may have earned the Leading Machiavellian Cynic award with that remark.
“A strategic miscalculation on their parts,…”
I think you may have earned the Leading Machiavellian Cynic award with that remark.
Yup, off the deep end with that rationalization.
I think you may have earned the Leading Machiavellian Cynic award with that remark.
While I am pleased to win any award here, especially one with the word “cynic” in the title, it should be noted that I was A.) being sarcastic, and B.) just tryin’ to put on my ol’ multinational corporation ethics hat — they weren’t guilty, they just weren’t successful in actualizing their vision and circumventing the obstacles at hand. What would Kenny Boy Lay Do (WWKBLD)?
Gee, ET, I was all ready to throw in the towel and concede the Leading Machiavellian Cynic award to you, but now that you say you had on your sarcasm tags, I am reconsidering…
Gee, ET, I was all ready to throw in the towel and concede the Leading Machiavellian Cynic award to you, but now that you say you had on your sarcasm tags, I am reconsidering…
F®cksticks!
(I think.)
Judging by the rally in them GSE shares, you’d think the good times are back again. Like I told the panicking Realtor (he is worried about tax credit renewal) yesterday, central planning never works for the masses. It works really well, however, for those feeding at the trough of unbridled stupidity.
If you like long stakes gambles, the zombie GSEs appear to offer great opportunities. But I suggest there is a big difference between a company whose share price has always traded on the range from, say, $50 to $60 over the past decade doubling to the $100 to $120 price range, versus a near-defunct GSE share price doubling from $1 to $2.
“A year later, the government controls nearly 80 percent of each company, and their problems are growing as defaults and foreclosures continue to skyrocket.”
Can you offer any explanation of why the stock prices double at companies whose ‘problems are growing as defaults and foreclosures continue to skyrocket’? Judging from the underlying economic fundamentals, I would think the prices would be asymptotically approaching $0.
Manipulation? Err..I mean…market makers supplying liquidity? (In a flash!)
Can you offer any explanation
Yes. I offer you this:
…”fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke.”
“Financial storm definitely passed.”
“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
“…there are indications that the severest phase of the recession is over…”
“There is nothing in the situation to be disturbed about.”
“… the outlook is favorable…”
“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
“… irregular and conflicting movements of business should soon give way to a sustained recovery…”
“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke.”
Right after an unexplainable 50 percent runup in six months? BTW, a 50 percent increase in share prices over six months occurs at an unsustainable annualized rate of (1.5^2-1)*100 = 125 percent.
All comments from aroung 1930 by any chance?
The principal “old saying” about Wall Street prices I follow is this: “The market can stay irrational longer than you can stay solvent.” Today’s current examples are the stock market prices of the bankrupt GM & the insolvent GSE’s. I don’t expect them to make sense. Wake me up when their per share prices are finally stable at zero.
“There is nothing in the situation to be disturbed about.”
Secretary of the Treasury Andrew Mellon, Feb 1930
I would guess the other quotes are from around the same period. My own personal favourite is
“Gentlemen, you are six weeks too late. The crisis is over.
”
Herbert Hoover
‘“No longer is anyone arguing that the private sector can handle this on its own,” said Jaret Seiberg, an analyst at Washington Research Group.’
Certainly not so long as the plan is to prop up housing prices at ‘affordable’ levels that local incomes can’t support.
By “not handle this on it’s own”, he’s not talking about repairing damage due to the housing bubble.
He’s saying it’s generally conceded that we need some massive GSEs to buy mortgages in today’s particularly ugly housing market.
He’s saying (look at the 2 preceding paragraphs) that private investors currently refuse to buy non govt-guaranteed mortgages.
—
Someone MUST buy mortgages or banks cannot do business.
For instance, if a bank has $1 M in deposits and writes a single mortgage for $1 M, that’s it.. it’s OVER. That bank has to wait about 20 years for that loan to be repaid before it can make another loan.
In a normal market, it’s easily arguable that private investors certainly CAN buy enough mortgages to keep the wheels turning, but not in today’s market.
“He’s saying (look at the 2 preceding paragraphs) that private investors currently refuse to buy non govt-guaranteed mortgages.”
And I’m saying that thanks to government intervention to support prices in the housing and MBS markets at above-market levels, the prices are too high for private investors to wet their little toes.
“Someone MUST buy mortgages or banks cannot do business.”
If the government stood out of the way (except perhaps to pass and enforce rules requiring honest accounting practices) and let the gamblers take their losses, liquidity would miraculously return to asset classes currently deemed illiquid.
not enough investors are gamblers.. not enough will buy paper directly from the banks for the sake of possibly earning a small profit.
The objective of the GSEs is to keep the lines of credit open. To do that they must keep the banks open, and to do that they must offer a secondary mortgage market with govt guarantees.
Otherwise nobody is gonna buy the paper. Banks will run out of money and the economy screeches to a halt.
That property prices are being artificially kept at high levels by GSE activity is just a minor repercussion of that effort to keep credit flowing.
“…not enough investors are gamblers.. not enough will buy paper directly from the banks for the sake of possibly earning a small profit.”
Certainly not when the Fed is extinguishing the risk premium!
you seem to be ignoring the point..
Without govt guarantees, investors will simply not invest in mortgages. This RE market totally SUCKS. There is TOO much risk.
Investors will simply find something else to invest in, or will keep cash.
Meanwhile the secondary market dries up, banks dry up and credit stops flowing.. I mean STOPS. And businesses fail, unemployment skyrockets, panic ensues.. etc., etc., etc.,etc…..
Govt decided to limit risk to mortgage investors as a means of keeping the economy going. You may not like the economy’s being artificially stimulated but the reality is that either there’s stimulation or there’s no economy. Take your pick.
Right Joe, without government subsidies, investors will use their money toward something that’s actually productive and has a chance, which would be so much better than just using taxpayer money to compensate those who gamble on housing and lose.
All those failed businesses will be replaced by businesses with potential, who will employ the idle doing something useful, and those who panicked will hopefully learn a lesson.
It’s called capitalism. It doesn’t work without creative destruction. What you are espousing is called socialism, and leads to even greater inequity in the future. You should take a look at Miser’s post to see what I’m talking about.
“Without govt guarantees, investors will simply not invest in mortgages. This RE market totally SUCKS. There is TOO much risk.”
You are misunderstanding the point. Absent market-distorting government intervention, such as hints that future bailouts or inflation will be engineered to relieve gamblers of their bad debt, or behind-the-scenes measures to prop up asset prices on a permanently high plateau, markets will price in a discount to reflect the risk to investors of purchasing assets whose value has fallen. A deeply discounted purchase price translates into a risk premium on expected future investment returns.
I refer you to the large number of foreclosure houses currently selling at deep discount for an illustration of the principle.
So, anyway, Joey is presenting us yet again with a false dichotomy. The Republican party has been using this tool for way too long now, and I really wish they would quit. It goes like this:
Look everyone, we have a problem. I have a solution for you and I want you to understand that this is the only possible solution. Any discussion of its flaws, or of alternative solutions, is unacceptable because we really only two options: My way or the highway.
In other words, if we don’t do it my way, then the entire economy will collapse, our country will be invaded by dirty religious zealots, and our women will all start to cry. Now you don’t want that, do you? DO YOU? (threatening glare)…
All those failed businesses will be replaced by businesses with potential, who will employ the idle doing something usefull, and those who panicked will hopefully learn a lesson.
Yes, Big V, but all that takes time.. YEARS.
Meanwhile, what sort of world do we live in? Do you want to see soup lines? Do you want to see naked children living in cardboard boxes?
You like the idea of millions of innocent civilians suffering for the sake of maintaining some “pure” capitalist market philosophy?
jeeze.. i am all for free, open markets operating without govt intervention on the philosophical level, but I do see the bigger picture and i do have some compassion..
See Joey, you’re still doing it. The old false dichotomy fear-mongering gambit.
No, we will not have soup lines and naked children living in cardboard boxes just because people who invested foolishly in real estate and real-estate-related derivatives are allowed to take their losses. The banking system will not freeze up, it will simply begin to act more judiciously in the way it hands out money. Yes, it will be harder to start up an imported-soap-and-handbag boutique, which is good because the market apparently doesn’t need an imported-soap-and-handbag boutique.
The only way we will end up with soup lines and naked children is if we do things the way you want to do them. Your method would allow so much risk and so many losses to accumulate that, eventually, no one would have the resources to respond, which would ultimately lead to a forced free-market correction of proportions even greater than what we’re seeing now.
Luckily for us, our government is purposefully set up to make it very hard for them to respond to anything very quickly. That’s why their current efforts to save the housing market aren’t working very well. Otherwise, we would have no hope.
This country can’t get back on its feet until it acknowledges the necessity of a free-market system that functions under the rule of fair and rational law.
..The banking system will not freeze up, it will simply begin to act more judiciously in the way it hands out money..
really? Banks will have money to hand out?
Are you gonna leave your money in the bank when the $hit hits the fan? Will anyone you know leave money in the bank?
go ahead.. ask me if i’m gonna leave mine in the bank..
Joe:
If capitalism were allowed to work, then some banks would be out of money to lend, and the FDIC would have to cover the loss to depositors. Those depositors would then turn to healthier banks as a place to park their money. That’s how creative destruction works. Those make poor decisions take losses, while those who make better decisions make money.
Now if we could only get the regulatory agencies to help prevent large-scale malfeasance, then the FDIC wouldn’t have to sweat so much about insuring all these off-the-hook institutions.
Sure, go ahead and tell us Joey (you FNM investor, you): Are you keeping your money in a bank? If not, what is it invested in? Don’t tell me — “Can’t-lose, government-backed MBS’s”. Am I right?
Big V.. ya got me…
Sure, i have investments and, while only a small part of it, some are related to MBS in the form of GNMA securities.
I am personally interested in what happens to those investments. And I have money in banks and I do not want to see bank massive failures. I’d like to see the economy suffer the least amount of damage possible. My family and friends are for the most part in similar circumstances.
I can only suppose that you have little or nothing to lose, don’t care what happens, and that’s why you’re so quick to promote your tough-love brand of economic destruction / recovery..
“In other words, if we don’t do it my way, then the entire economy will collapse, our country will be invaded by dirty religious zealots, and our women will all start to cry. Now you don’t want that, do you? DO YOU?”
That pretty much summarizes the TARP sales pitch in a nut shell. The only thing missing is the implicit threat: If you don’t do it our way and the economy collapses, we will use our MSM bully pulpit to blame you forever.
Joey:
Yes, I have a lot to lose. I have all my savings, I already lost my job, and I have my future.
If we do things your way, then you and I will both lose everything.
If we do things my way, then you will lose only your most irresponsibly placed investments, I will lose nothing more than I already have, and the both of us can get on our way to a brighter future.
“Sure, i have investments and, while only a small part of it, some are related to MBS in the form of GNMA securities.”
I guess the GNMA securities are OK, as GNMA is on the Fed’s life support recipient list:
Banks borrow more from emergency Fed loan program
By JEANNINE AVERSA (AP) – 1 day ago
…
The Fed’s weekly report also showed the Fed increased its purchases of mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. They averaged $624.4 billion over the past week, down $107 million from the previous week. The goal of the program is to drive down more rates.
…
Big V,
Sorry to hear about your job loss.
Me too, Big V.
Big V:
does anyone have positive news about getting a job?
This has played out in ways I didn’t expect
Joey,
From my understanding, that’s not how it works. With 1M in deposits, the bank will write 5-10M in loans (leverage the deposits to write the loans). I don’t think that the secondary market is an absolute “must have” for the MTG market to function (from what I understand, the secondary MTG market is kind of new, it used to function without this market).
Also, if banks could only write 5M in loans on 1M in deposits, I would argue that something else (positive) would happen, they would be more competitive with one another for deposits/accounts. Now they can get away with paying 0% (or near that) on deposits because they don’t really need the money to write loans. If they did need the money, we would see many more banks paying high yield on checking/savings accounts, which, IMHO, would be a good thing for everyone involved (well, except the banks).
The secondary market is a big reason that we now have banks that will do everything NOT to hold your money. They don’t care; they need a tiny fraction of the money to write a loan, and then they turn around and sell it (allowing them to write more), no need for big deposit bases.
..With 1M in deposits, the bank will write 5-10M in loans..
I think you’re referring to fractional reserve banking where $1M may eventually become $5-10M .. but that requires the cooperation of several other banks re-lending that money somewhere down the line.
There’s no way a bank is allowed to “leverage” deposits. If reserve is 5%, and a bank has $1M in deposits, it’s gotta keep $50K cash on hand, and can lend the other $950K.
A bank can lend some percentage of it’s deposits. Those loans can either be purchased in the secondary market (in which the bank then gets it’s money back and can lend it to someone else) or the bank must wait for the original loans to be repaid.
Now if we could only get the regulatory agencies to help prevent large-scale malfeasance, then the FDIC wouldn’t have to sweat so much about insuring all these off-the-hook institutions.
There has already been & continues to be a lot of large-scale malfeasance. The regulatory agencies & the US Justice department also need to go after the accounting fraudsters and chief executive pirates and their cronies.
I’d like to see the economy suffer the least amount of damage possible. What Joey seems to be advocating will not result in the least amount of damage possible. The economy has already suffered terrific damage. More damage is baked in to the current scenario. Someone will have to realize/eat the losses on ridiculously-overpriced real estate.
..More damage is baked in to the current scenario. Someone will have to realize/eat the losses on ridiculously-overpriced real estate…
tresho, (tresbo?) I completely agree… it’s baked in. Nothing will prevent the inevitable.
But we do have at least one broad choice.
We can either take our lumps a tiny portion at a time and experience relatively mild pain for a period of perhaps years, or we can let go and allow the sledge hammer to fall and crack the economy’s skull.
i know how instant gratification seems so appealing in so many ways, but sometimes a little patience is worth the effort.
Joey,
Have you thought about the fact that it is MUCH easier to spend only six months worrying about your job than to spend ten years worrying about it — and watch your purchasing power become greatly diminished over this duration?
The govt should definitely have backstopped the FDIC, SIPC and PBGC, and I’m willing to accept some public works projects to help keep people employed and help repair/improve our national infrastructure. These measures alone would have sufficed.
“Growth” by accelerating and growing debt burdens is NOT a good thing. People and businesses need to learn how to save and invest in themselves — a slower, but more sustainable approach to economic activity. Interest rates **should** be much higher, as this forces borrowers and lenders to be more cautious and circumspect WRT their “investments.”
Cheap money is the root of all malinvestment. It is the cause of this entire “crisis”…and we are doing it all over again. This is NOT sustainable, and will lead to very bad outcomes again, and again, and again.
MSM-cited ‘experts’ are contending that the US mortgage market could not function without the GSEs unless some other government-sponsored Frankenstein financial entities were created to replace them.
I have a far simpler suggestion: How about if we experimented with creating a competitive private mortgage banking system, devoid of government meddling, subject to a rule-of-law, with full repudiation of too-big-to-fail risk subsidized risk insurance programs to make whole any high risk gamblers who lose billions and billions of dollars? Who knows — perhaps Adam Smith actually knew what he was talking about?
Intelligent Investing Panel
Double, Double Mortgage Trouble
David Serchuk, 09.02.09, 06:00 PM EDT
The MBA wants to split up Fannie Mae and Freddie Mac. Perhaps it’s time.
Fannie Mae and Freddie Mac have defied so many predictions of doom that they seem almost eternal or at least cat-like. But now the two mortgage giants, once sponsored by the government now controlled by it, could really be facing their ends. The only trick is maintaining a functioning mortgage market without them.
…
I’m guessing lenders would line up by the thousands to lend to fully-qualified home buyers IF they believed the collateral was fairly valued, and if the risk premium were sufficient to tie up one’s money over a 30-year term (hint: it probably would not be 5%).
Chinese Girl Becomes Media Darling After Expressing Desire to Become “Corrupt Official”
September 4, 2009
Beijing – A six-year-old girl has become a media darling in China on her first day of school by expressing her aspiration to become a “corrupt official” when she grows up, state media said on Friday.
The young student stated her aspirations in a televised interview that was posted on a southern China website, leading bloggers to describe her comments as “a reflection of social reality,” the Southern Metropolis Daily reported.
“When I grow up I want to be an official,” said the girl, whose face was blurred to protect her identity.
“What kind of official?” the interviewer asked.
“A corrupt official because corrupt officials have a lot of things,” she replied.
Many chatroom users praised the child for her “realistic” outlook on life, while others expressed cynicism over rampant corruption in China.
On Monday my niece attended her first day of Kindergarten, and told the teacher that she wanted to grow up and play the accordion. Something tells me the Chinese girl will be more successful.
Wierd Al Yancovic played Accordion on a song called “Another One Rides the Bus” that he recorded in his bathroom. He submitted it to the Dr. Demento radio show. He’s done alright for himself
hey click on my handle….
lots of zydeco musicians just waiting for the record companies to quit forking over millions to 8th grade dropout rap starts.
The Fiddler’s Broken Wrist
The man who modified the swivel chair for modern use possessed a turn of mind I have admired for years. Clever people through the ages didn’t think of such an improvement, just as native Americans failed to grasp the concept of the wheel until foreign immigrants brought it to their attention.
The swivel chair innovator had a keen mind for other matters, too, such as new techniques in agriculture and manufacture, and he involved himself in politics with a great deal of success. He even found time to learn to play the violin and he became quite adept at it, although he usually referred to himself as a “fiddler.”
His fiddle playing came to an abrupt end on September 4th, 1786, the day before the British philanthropist Jonas Hanway died. ( Hanway also had a clever mind for he was the first Londoner to cover his head with an Oriental parasol when walking in the rain. He suffered much ridicule, but the idea of the umbrella soon caught on.)
It was a pleasant Monday and our 43 year old inventive fiddler went for a long walk with a friend. About four miles from his home he tripped and fell, breaking his right wrist. He got to his feet and continued the conversation, not mentioning the excruciating pain. He tightly grasped the broken wrist behind his back with his left hand and continued the walk home.
After reaching his house he told his companion of what happened and sent for a doctor. The wrist was improperly set and bothered him the rest of his life. And his fiddle playing was ended.
Not being able to play his violin was not his only distress. He couldn’t write, either, and he was a voluminous writer. That very afternoon he began to make laborious entries in his journal with his left hand.
The accident evidently didn’t diminish his interest in music. Four days later he attended a concert. A few days after that he went to an opera.
In mid-December, 1786, he wrote to a friend, “A dislocation of my right wrist has for three months past disabled me from writing except with my left hand, which was too slow and awkward to be employed often.”
In August of 1822 he still occasionally mentioned his injured wrist. To one William T. Barry he wrote, “Age, debility, an ancient dislocated and now stiffened wrist, render writing so slow and painful that I am obliged to decline everything possible requiring writing.” He was by then nearing 80 and both wrists were painful.
The shadows were lengthening in the summer of 1825 when he wrote, “At the age of eighty-two, with one foot in the grave, and the other uplifted to follow it, I do not permit myself to take part in new enterprises, even for bettering the condition of man…which has been through life that of my greatest anxiety.”
Surely the improvement of the swivel chair made life somewhat more comfortable for his fellow man. His efficient design of the moldboard for the plow was an enormous contribution to agriculture. Even his invention of a macaroni-making machine deserves applause. And it is said it was he who came up with the recipe for macaroni and cheese.
Among his major contributions during his years of public service was the construction of the decimal method for the money system of the United States. His words of 1792 resonate today: “…the public is no longer confident and serene…It has been urged, then, that a public debt, greater than we can possibly pay…has been artificially created…; that this accumulation of debt has taken forever out of our power those easy sources of revenue which, applied to the ordinary necessities and exigencies of government would have answered them.”
Two-hundred and sixteen years later we, the public, are neither confident nor serene. We know that something has gone terribly wrong with our financial system and we seem unable to fix it. Perhaps we should consult the inventive fiddler with the broken wrist….Mr. Thomas Jefferson.
J.Wrisley Dec. 8 2008
..His words of 1792 resonate today: “…the public is no longer confident and serene…It has been urged, then, that a public debt, greater than we can possibly pay…has been artificially created…; that this accumulation of debt has taken forever out of our power those easy sources of revenue which, applied to the ordinary necessities and exigencies of government would have answered them.” ..
that confuses me..
What was he trying to say? It looks like he thought the national debt level had risen beyond their ability to cope with it.
If so, since the nation and it’s huge debt kept chugging merrily along for another 218 years and counting, I have to conclude Jefferson was wrong.
I suspect his private debt had risen to a level where he was unable to cope with it, and he was looking for sympathetic voices among other Americans whose profligacy had put themselves into similar household credit crunches.
Good one joey.
Didn’t TJ die bankrupt?
Didn’t TJ die bankrupt? As long as you don’t die OF bankruptcy, how much is left over afterward is a moot point, except as far as possible heirs might be concerned.
What a darling little girl!
Everyone have a great labor day weekend! Me and Shorty are going to go eat barbed wire today!
Ah, fer Chrissakes! Shorty is a complete Ass*sssho*le!
How many times I gotta announce this? I told you he tried to stamp on my head last Christmas! You just stay the heck away from him, Mr. Man, because Shorty will lead you wrong each and every time.
And take it from me, because I know.
We have the highest unemployment in decades and the stock market rises. Many reports pointing to a bad economy coming. Makes me not believe in the integrity of the institution.
You are supposed to marvel at the forward-looking rationality of the stock market: It has prophetic powers which enable it to foresee a verdant forest of thriving corporations where you can only see muddy water and central bankers armed with tweezers and microscopes detect green shoots.
The market has been to the mountaintop, seen the Promised Land, and is going there without us.
It’s pretty amazing, isn’t? A lot of the popular economic statistics don’t compare to the last economic contraction (they are much, much worse), yet the market behaves as if we’re going to recover faster than we did after the dotCon implosion.
I read this morning the government is going to make it easier for more people to ’save’ in these markets. This is not a fair fight anymore. 99 percent of these newly herded savers don’t know and can’t possibly know what they are up against.
Did you hear what that savings plan included?1) The ability to take your tax refunds in savings bonds 2) automatic 3% deduction for 401K’s, unless you ask to be omitted. 3) When leaving employment allow unused vac time to be put in retirement account. WTF, how about tax free savings accounts up to $20,000? They’re making it easier to save without the incentives to save. What a joke!
How about letting our parents deposit say up to $100K tax free into our IRAs tax free, such as from a sale of the house?
We would have to pay a penalty and tax if we took it out before we are 59 1/2
“They’re making it easier to save without the incentives to save.”
Incentives to save tautologically make it easier to save.
“I read this morning the government is going to make it easier for more people to ’save’ in these markets.”
Word to the wise: When the government puts into place a program to foster mass investment in one particular asset class, you can bet your bottom dollar that asset class is going to bubble up in value and plan accordingly.
And never forget that memorable scene from The Wizard of Oz, “I am the great and powerful Oz,” the Wizard bloviates, while smoke and thunder in the large room frighten Dorothy and her friends. But when she sees the man behind the curtain and realizes how utterly powerless he is, Dorothy heaps him with scorn for terrorizing her and her friends.
“You’re a very bad man.”
No, I’m a very GOOD man. I’m just a very bad wizard.”
Unfortunately, most of those in power today are neither.
Far as I can tell, it’s not about good or bad “news”, nor about good or bad economic indicators.
The stock market cares only about “certainty”… it feels good when it knows what’s coming, and feels bad when tomorrow is uncertain.
If the market feels reasonably sure about how things will be next week, stocks rise. If it’s uncertain about the future, stocks fall.
“If the market feels…”
- Markets don’t have feelings.
- Markets have no emotions.
- Markets don’t think.
Subsitute Wall St Analysts for “markets”"
“Market” as a noun can mean lots of things.. one of them is people, and people do have feelings.
www dot businessdictionary.com/definition/market.html
//en.wiktionary.org/wiki/market
www dot netmba.com/marketing/market/definition/
imo, the stock market cannot be understood if one does not recognize and accept the fact that feelings and emotions like fear and confidence are some of it’s most powerful driving forces.
IMO, markets cannot be understood if one does not understand the potential role of 800 lb financial gorillas armed with govt-provided liquidity to distort their ability to function properly.
High unemployement = low wages=lower cost of running a business. More than offsets for diminished demand for goods / services. Unless of course unemployment gets very, very high. But some things people have to have not matter what.
bingo
+10
‘High unemployment=lower wages=lower cost of running a business’ =diminished demand for goods/services- which eventually does lead to higher unemployment, and that describes the deflationary cycle.
Also I read this morning and want to than alph and Oly for their kind words. Yeah alph I am looking into temp work too. I mean I am going to. I think I can find something. I can get around Boss reference by using Ken reference, who quit for the same reason. What a mess, politics at the office. Have a good day everyone!
Did you quit your job?
Can you get “temp” work teaching math? (That has been an occasional sideline for me over the years…)
Good luck!
Prof. B. Thanks. But I don’t have the brains to teach math.
Prof: listen to this:
I lived in Tampa for 5 years. No.3 congestion, No.1 pedestrian fatalities, (Dateline was there doing an episode on it).
Today, I drove from Collinsville, Il., to see my friends in the little Christian town I was raised in, Greenville, Il. 45 miles. I have NEVER in my life, seen the crazy driving I saw today on Interstate 70.
Never.
It was raining, and there were a car load of family doing rapid lane changes @ 80 miles an hour, SUV’s rear-ending you constantly, (when another lane was available).
I don’t get scared easy. I was almost scared.
Thanks Prof. B.
I don’t really have the patience to teach the average math student. However, I have enjoyed training some very good ones (like our fellow SIU-E grad lil’ sis, now herself a math teacher and lovin’ it
).
That’s cool Prof. B. and I bet she is one smart math teacher too!
A thought occured to me last night. When I do find that inexpensive home that I desire for my own and make it mine, as I continue to accumulate savings, just where am I going to park those savings where they’ll be safe until retirement? Everywhere I read says don’t leave your wealth in the US dollar. But then the story is other markets are really no safer. Are treasuries really safe if our country’s currency defaults? Precious metals could be seized.
I confess and, perhaps, need clarification from the experts. Does anyone else feel confusion about where the safest protector of wealth will be? Truly I’m not trying to be a troll. I’m scared that anything I “save” will disapper before I can use it. Am I showing my “reptile brain” in considering that possession is 98% of the law? These ideas are my temptation and make me consider larger properties and less savings.
It is obvious that you are not a troll CarrieAnn. I don’t know the answer to your question, though I’ve thought about it for quite a while. We might as well be living in the Matrix as trying to figure out where to invest. Maybe it is just an old fashion house of cards.
For myself it simply boils down to finding a the intersection of what I want to have and do with what I can afford, without debt. That intersection is pretty large.
Ha! If there is something that you hear at every turn, it is most likely not true.
“…just where am I going to park those savings where they’ll be safe until retirement?”
Diversify, diversify, diversify. Especially be sure you are not underweight in dollar hedges: multinational corporations with large oversee operations (e.g., oil companies); international currency plays, such as Everbank currency CDs; international stock and bond mutual funds; gold and precious metals (if you are into that sort of thing) etc.
Everything cannot simultaneously drop in price, as the price of one asset is implicitly denominated in terms of others. For instance, when Wall Street stocks were crashing last fall, wouldn’t it have been nice to be long dollars and Treasurys? True diversification provides blanket protection against any one asset class falling in value.
And part of that diversification strategy must be:
Spend some of your money today… while you know you will get value for it… and while you have the health to do it.
I have a list of adventures and places I want to go see. I spend money to do these things… and can rest assured.. that the money I spend today get’s me value today that i can not be sure will be there in the future.
Part of the diversification strategy should be to spend some money on things that are very important to your life goals while you can. Also… my advice is to spend money on those life goals while you are healthy. You can not know for sure what your money will be in the future… you can no know what your health will be in the future.
Buy from the embarrassingly weak. Sell to the invincible herd — especially if it’s suffering from an extraordinary popular delusion. It doesn’t matter what asset class. Wash. Rinse. Repeat.
I hear you. I think about this a lot. Sad times there is no way to save money. One must either spend it or risk it. Commodity money once could be used to transfer or store value… our current money is only good for transferring and one must do it quickly as monetary inflation steals value from it slowly but surely.
In a possible global deflation nothing seems safe, nothing seems able to hold value. If all deflates for awhile the dollar may grow in value for a bit but what then happens? We all know there is debt to pay (http://usdebtclock.org).
I see real estate going down in value now and that it was propped up with the largest debt bubble known to man. Yet it still has intrinsic value. Do dollars, stocks or bonds? Can I hold on to the land and pay the captive rate of taxes that the state can and will extort from me for owning it? Will these tax rates climb too high for me to hold on?
That is the conundrum crander.
I don’t want to be housepoor like the clueless before the bubble peaked. But when I see dangers at every market turn I wonder if in reality all roads lead to perdition.
I appreciate everyone’s comments.
Professor or any student of currencies, if the dollar ended up being replaced w/another currency couldn’t we take a hit if we were in stocks, bonds, commodities, or anything denominated in the US dollar. Even when I consider the Canadian markets there is mention of an Amero, something a former Mexican President has confirmed is being planned. If I don’t understand what the replacement ratio would be of dollars or loonies to Amero aren’t I still playing roulette w/that investment? Will Asian markets continue to look strong? There appears to be quite a few arguments on that one.
“…couldn’t we take a hit if we were in stocks, bonds, commodities, or anything denominated in the US dollar.”
1) Assuming US corporate stocks would live on independently of the US dollar, why couldn’t they simply be denominated in whatever currencies survive the dollar (including the possibility of a successor US currency)?
2) The same comment applies to non-US stocks, except even more so.
I try to categorize various assets into two class:
Those assets that have a global market and those assets that do not.
My house in GA does not have a global market. Lumber and raw materials that go into a house do have a global market. Food grown down the street from me will not necessarily be consumed in my state or country… global market. Energy will always be in style and will be bought by the highest bidder with the best economic prospects. … global market.
Long term, I have to believe that globally competitive commodities relative to the $US will always be a good bet. Remember to think relative to the $USD.
Assets that are expensive to maintain, difficult to move, and have no global market are subject to local economic conditions and the relative wealth of the folks that are able to purchase it. A huge home in a country where no one can afford it is not worth much… not global market.
A few wild cards are technology… pharmaceuticals… and other intellectual property based services companies. Choose carefully, but the outputs of these types of companies… global market.
Good points.
Sorry to hear about your conundrum, CarrieAnn. I’m sure many of us share the same concerns (I certainly do!).
IMHO, PB had the right approach regarding diversification. If you’re looking into foreign currencies, I’d diversify across those, too. We hold a basket of FCs and foreign sovereign bonds. Not saying that’s a good bet, just that it’s our bet. Also agree with some commodities, intl stocks/bonds, and a little gold/silver probably won’t hurt, either.
Good luck!
Should this news be interpreted as a sign that a truce in the War on Savers is in the works, or is it more of a Trojan horse? I suppose if private savers are encouraged to buy more government debt, it will take away some of the burden from the Fed…
Sep 5, 2009, 6:02 a.m. EST
A call to savings
Obama announces new moves aimed at getting workers to save for retirement
By Andrea Coombes, MarketWatch
SAN FRANCISCO (MarketWatch) — Americans will be encouraged to save more for retirement under a series of moves the Obama administration unveiled Saturday.
In his weekly radio address, President Barack Obama said the Treasury Department and the IRS will issue guidance that will provide incentives for Americans to set aside money in their nest eggs by, among other things, making it easier for employers to automatically enroll workers in 401(k) plans and by letting taxpayers use their tax refunds to buy U.S. savings bonds.
“We have to revive this economy and rebuild it stronger than before. And making sure that folks have the opportunity and incentive to save — for a home or college, for retirement or a rainy day — is essential to that effort,” Obama said.
“If you work hard and meet your responsibilities, this country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement. That is why we are announcing several common-sense changes that will help families put away money for the future,” he said.
…
Smells like Argentina. They won’t confiscate your retirement savings out right. However, they’ll ‘encourage’ you to convert it to government bonds. Carry on, folks.
Almost every numbskull I know with a $250,000 and up mortgage has that huge tax refund spent on bills, before they even get it. Usually to pay for the last summer’s vacation.
Really? It goes that far back? Finishing paying off Christmas kind of makes sense….
My parents used to use to the refund to pay for summer camp - for the summer that followed the refund.
Credit card balances, Polly. Summer vacation + Christmas hopefully=tax refund. Savings=zero. Wash,rinse,repeat.
I can’t wait for the fear-mongering to begin on this one. Everything the man does these days seems to attract a bunch of howler monkeys.
Just like the 8 years before him.
In case you are labeling me as a fear mongerer, please clarify what in my post suggests this. I personally disagree with government-sponsored initiatives to herd households into making collectively foolish decisions, such as investing in houses. My disagreement with such policies is decidedly nonpartisan.
A real change would be to reward savers AND encourage savings. I’m not blaming anyone because I’m not naive enough to have expected real change.
I don’t see anything sinister here, just more abject stupidity. Another useless government gimmick. Sheesh, just end the backstopping of Megabank, and let interest rates rise to levels that fully price in the lending risk in today’s environment. Problem solved, savers will be far happier. Why does this continue to be too much to ask?
+100,000, ITSF!!!!!!
Yesterday someone asked about their DVD player. I was reading on my Blackberry so I couldn’t reply.
It’s a software issue in the player. When you hit eject, it wakes up. I wouldn’t be surprised if all the buttons trigger the wake up. It might start to spin the disc, and perhaps it’s software is busy waiting for data to come from the read. Then when you hit eject after 2 seconds (perhaps after it’s getting data from the disc) it stops the spin and opens the tray. Done better eject would just trigger door to open. But it’s in sleep mode, maybe the software really wants to get to the resume point before aborting playback.
Bad design. The documentary the Corporation has a neat fact about Apex Digital, a brand of uber cheap DVD players. 23 Americans make up the company IIRC, and outsource all engineering, R&D and manufacturing to China. They made billions and billions of dollars, with only 23 or so on staff.
This is what I suspected as well. What kills me is that usability is being sacrificed in the name of “design”.
I just watched The Corporation (for the second time) and didn’t catch that factoid. Was it in the “added features”?
Here is a nifty explanation for one large chunk of America’s underwater mortgage problem: $1.45 t down the home equity ATM consumption drain. Thanks for all the encouragement, Alan!
Finance and Economics
The wealth effect
Withdrawal symptoms
Sep 3rd 2009
From The Economist print edition
Most new borrowing during America’s housing boom was for spending
…
It could be that an unseen influence, such as greater optimism about future earnings, pushed up both house prices and debt. So the authors use their granular data to first establish a link between the two, which is apparent in the aggregate figures up to 2006 (see chart). They found that house prices and household debt increased most where the supply of new housing was limited—in places that are hemmed in by hills, rivers or the ocean. But in cities where housing supply is very “elastic”—where homes can easily be built to meet demand and prices did not rise—debt barely rose either. This suggests that house-price rises led to more borrowing.
How much of this was simply down to new buyers needing bigger home loans? By limiting their sample to those who were already homeowners in 1997, before the boom in housing and credit, the authors were able to measure how much of the rise in debt was the result of cashing in on higher home values. They reckon almost 60% of increased debt between 2002 and 2006 came from this source. Put another way, every $1 increase in home values led to a rise of 25-30 cents in borrowing. That is far bigger than some long-standing estimates of the wealth effect from rising asset values, which are in the 3-5 cent range (though these include the response of renters, too).
Money released from housing equity was not funnelled into other forms of saving. Homeowners in cities where house prices rose quickly were less, rather than more, likely to invest in other properties. Funds raised against rising home equity were not used to pay down other debts. And fewer households invested in financial assets, such as shares and bonds, when house prices were rising. All this suggests that almost all of the $1.45 trillion the authors estimate was borrowed against rising home equity was used for spending.
…
They found that house prices and household debt increased most where the supply of new housing was limited—in places that are hemmed in by hills, rivers or the ocean. But in cities where housing supply is very “elastic”—where homes can easily be built to meet demand and prices did not rise—debt barely rose either. This suggests that house-price rises led to more borrowing.
—————————
I’d argue that it was the increased borrowing that led to higher prices — which encouraged more debt to “free their equity.” Chicken or egg?
It seems to me that we are getting used to reading about loses in billions of dollars on a regular basis. When I read about losses in millions I think not so bad it is just chump change for the printing presses.
Construction Loans Falter, a Bad Omen for Banks
By FLOYD NORRIS
Published: September 4, 2009
EVEN as the economy may be starting to recover, banks across the country are confronting a worsening outlook for their construction loans, an area that boomed for much of the decade.
Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks.
http://www.nytimes.com/2009/09/05/business/economy/05charts.html?_r=1&ref=business
Hey SU,
Nice game today, huh? Too bad about the OT loss but I think SU football just set off on a whole new course!
Sorry for OT everyone.
Sorry I did not see the game. We were too busy shopping and packing for a trip to France today.
Enjoy your trip to France! Lucky you!
Hi. Fed workers are scheduled to get a 2% pay raise. Pay raises in this economy !! Don’t tell me Fed workers are not overpaid. Saw an (expensive) display ad in the WSJ about a week ago for a “brand manager” for the US Mint. Salary ~ 135K. If the mint actually makes money retailer coin collections fine. But how much branding do you need to do when you’re the US Mint ?
But how much branding do you need to do when you’re the US Mint ?
Exactly. This is not rocket science. Disclaimer I’m in the private sector and probably overpaid. Or at least I’ve been doing what I have been doing for so long my job seems easy. Polly you work for the feds but are worth every cent not doubt. You should get 4%
“Polly you work for the feds but are worth every cent not doubt. You should get 4%”
Well that ain’t gonna happen. We do have a few opportunities to earn some small bonuses. For example, my boss nominated me for a “manager’s award” this year. $250 before taxes. Better than not getting it, but it certainly isn’t enough to motivate a person who prefers to coast along. Especially since I didn’t know they existed until he showed up with the certificate.
Just wanted to tell everyone again, that government workers don’t get cost of living increases like Social Security recipients or federal retirees. There is some fictional increase that is set by a formula I have never seen and is based on comparable wages - what you would have to pay to get someone to do the same job in the private sector. Evidently, this magic formula would result in the whole federal work force getting a 10% to 15% increase in one year unless Congress passes and the president signs a bill specifying some other amount. This ALWAYS happens because the country can’t afford that much of an increase in wages in one go. Its size is very political, especially since the federal civillian unions argue that the civillian service should get the same one as the military. Actually, I suspect the whole thing should be re-examined since the original formula was probably based on an assumption that other comparable jobs had similar pension benefits and that is much less likely to be the case now.
When you see federal employees who seem as if they are paid way too much, it is probably because they have done the same job for so long that a combination of step increases and annual increases over 30 years or more makes the wage look high for their title, which may not have changed at all. Not too many feds are all that well paid in the first few years, at least if they are professionals. Then again, these days the security part has more value than it used to have, but that is harder to quantify.
I searched USAjobs for all positions at the US Mint. Didn’t see the one you mentioned, but this was my favorite:
http://jobview.usajobs.gov/GetJob.aspx?JobID=81628129&JobTitle=Systems+Thinking+Advisor&jbf574=TR*&FedEmp=N&FedPub=Y&vw=b&re=0&caller=basic.aspx&pg=1&q=US+Mint&AVSDM=2009-09-02+13%3a50%3a00
Anyone want to move to DC to be a “Systems Thinking Advisor”? If you are in the main Treasury building my office isn’t that far away…
Oops. That was nasty. Go to USAJOBS.com. Go to the search by agency part and click through the Department of the Treasury. Search US Mint. You’ll get 4 items. I think the funny one is the third one.
“Systems Thinking Advisor”
Maybe that’s the job for NYCdj.
He could start by replacing the muzak.
Classic job description…”bona fide”, “Hard-Charging”. Thanks Polly.
Do you want an opportunity to help lead fundamental change across the United States Mint?
Do you have what it takes to train and facilitate a Senior
Leadership Team of bona fide Hard-Charging Executives towards continuous improvement of the U.S. Mint’s business processes?
If the foregoing questions describe you, we invite you to attempt to join a premier and unique organization - the United States Mint - on our continuous journey of providing Excellence for the American People.
You bet with kick azz zydeco, rock and blues to make your day go faster and put a smile on your face…I would be worth $150K easily!
——————————————————-
Maybe that’s the job for NYCdj.
He could start by replacing the muzak.
““brand manager” for the US Mint”
That is priceless! As if the best-known brand on the planet needs a brand manager… Wow.
In case you decide to buy a foreclosure home, be sure to avoid buying a former meth house without either reflecting cleanup costs in the purchase price, or making sure they have already undergone detox. I’m not sure how meth lab contaminants compare to Chinese drywall in terms of their respective toxicity.
Meth houses need to be decontaminated
September 5, 2009
Health and law enforcement officials across the country are becoming increasingly alarmed at the number of homes being sold that were once used as meth houses or laboratories. The problem developing is that former homes where meth was either used or manufactured are in fact health hazards to anyone currently residing in them due to the residual poisons that were soaked into the walls, window treatments and flooring.
Health officials say the number of people incurring health issues is constantly increasing to the point where several states are beginning to pass laws that require a home seller to disclose if the house was ever involved with meth at any level.
For every pound of meth that was cooked in a home, five to seven pounds of chemical waste products are created. From this waste, a variety of long term health problems can occur including but not limited to: headaches, blisters, damaged lungs, liver or kidneys.
…
My question: How soon will the ’surprise’ extension of the Dough-4-Dumps stimulus program be announced? And how much downpayment assistance will be included in the revamped program? $8K in tax credits just doesn’t cut it for ‘affordable’ California housing valued north of $500,000.
Dough for Dumps?
by Peter Schiff
…
I propose the “Dough for Dumps” stimulus program. Here’s how it would work:
Homeowners struggling to make payments on environmentally inefficient homes can apply for government aid to destroy their old homes and receive guaranteed loans to buy newly constructed houses, provided they are furnished with the latest “green” advancements in energy systems and building materials. As with the “Cash for Clunkers” program, this plan would solve many problems at once.
First, it will help put a floor under falling home prices by reducing the glut of houses currently on the market. The best way to stop prices from falling, and thereby reduce the foreclosure wave, is to reduce supply.
Left alone, the market would do this by lowering prices, which would bring more buyers into the market. But this approach falls on the back of homeowners whose only crime was to overpay for a house. A more socially equitable method would be for all taxpayers to shoulder the burden through a government bulldozing program.
In addition to contracting the supply of homes, the program would also stimulate the economy by providing funds to hire environmentally savvy builders and contractors (not to mention the workers needed to demolish the old homes). The resulting demand would help to reduce unemployment, especially in the housing sector. Government incentives and subsidies could also give an important boost to the developers and manufacturers of “green” windows, solar heating systems, furnaces and water systems.
Once this program has rejuvenated the real estate market, citizens should also be encouraged to burn their old furniture and clothing, thereby sparking demand for new goods from our nation’s struggling retailers. When you think about it, the possibilities are endless.
If these proposals seem ridiculous, it is because they are. But they are no less ridiculous than the “Cash for Clunkers” program that inspired them. All are examples of the “broken window” fallacy of economics, which argues that economic activity can be stimulated by the need to replace something that has been destroyed.
Unfortunately, many of our “best” economists subscribe to the notion. But society gains nothing from redundant activities. Digging holes just to fill them up does employ workers, but the work offers no benefit to anyone not receiving the wage. Absent government incentives, such a job would create no profit and could only exist as a result of a subsidy from someone else. Such work also prevents workers from accomplishing tasks that create real wealth and actually benefit society.
…
Hmm. Looks like you should have trademarked Dough for Dumps, Prof. I bet Peter will be talking about men wearing bras next. And geoducks.
I am perfectly content to play the part of the defunct economist whose memes are coined by the guys standing on soapboxes, shouting into microphones and beating their chests.
P.S. I always suspected a former poster who called himself watcher was Peter. We have a way around here of drumming gold bugs off the blog…
Peter, if you’re ‘watching’, feel free to use any of my material. All I ask is to be named ambassador to Fiji.
…when you’re a senator
Peter, if you’re ‘watching’, feel free to use any of my material. All I ask is to be named ambassador to Fiji.
Don’t be such a piker, slothy. Why settle for a puling little ambassador-ship?
Demand to be made ‘God-Emperor: Anointed of Heaven.’
With a giant helmet, and also a scepter that shoots laser beams at those who perturb your ruminations.
Otherwise, look, I’m sorry—I simply cannot respect you.
I think that’s supposed to be my next gig, Oly. Too bad for Slothy.
PB, may I suggest an edit:
We don’t want to see one of our favorite HBBers declared defunct.
One could do worse in life than playing the role of Keynes’ “defunct economist.”
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
– John Maynard Keynes –
Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
Okay, so you’re not declaring yourself extinct, you’re actually revealing your secret design to exert mind control over future PTB?
That’s better, then.
“…you’re actually revealing your secret design to exert mind control over future PTB?”
The future has already arrived.
Barn door left open
All of the horses have fled
Hurry, shut the door
G20 will curb bank bonuses
Bonuses for bankers throughout the Western world will for the first time be subject to limits and checks as soon as next year after the G20 pledged to embark on an international crackdown on financiers’ pay.
By Edmund Conway
Published: 8:19PM BST 05 Sep 2009
So the battle has commenced?
Do you have any super powers or secret weapons, a hidden lair? Or just the mind control over already-arrived future PTB?
Now that the PTB are discussing serious reform, the next big risk is whether they will actually follow through, or if lobbyists for Megabank, Inc will successfully thwart their efforts. Hopefully the world’s finance ministers will stay the course to end the heads-we-win, tails-you-lose compensation practices whose induced moral hazard problem nearly destroyed the world’s financial system!
* BBC World Service
Page last updated at 17:47 GMT, Saturday, 5 September 2009 18:47 UK
G20 pledges tougher bank action
Alistair Darling: “We are going to enter an era where people are not being rewarded for reckless behaviour”
Finance ministers from the world’s most powerful economies have agreed a series of measures to try to regulate the global banking system.
They want a system that rewards long-term performance rather than short-term risk-taking.
However the G20 meeting in London did not agree on specific limits on the amounts individual bankers get paid.
Britain, the US and Canada opposed the idea, but the Financial Stability Board is to examine the issue.
It will report back to the summit of G20 leaders in Pittsburgh, Pennsylvania later this month.
…
The only weapon in my arsenal is the still, small voice of truth, plus Ben’s willingness to allow my posts through his filter.
still, small voice of truth
Sounds powerful, enduring, ready for protracted battle.
Talk is far cheaper than action on bankers’ bonus reform. If they don’t manage to fix this, then we can look forward to a continuation of the shock capitalists’ too-big-to-fail financial disaster bailout management regime going forward.
G-20 Ministers Back Stimulus, but Pay Limits Remain Elusive
By NELSON D. SCHWARTZ and JULIA WERDIGIER
Published: September 5, 2009
LONDON — Finance ministers of the largest industrial countries vowed on Saturday to keep their multitrillion-dollar stimulus efforts in place, but at a meeting here they failed to agree on any firm limits on bankers’ bonuses, a sign of the deep rifts that remain between American and European leaders.
…
This excerpt from a NY Times article suggests what I have suspected: The health care plan debate conveniently serves to diffuse public pressure for financial sector reform.
G-20 Ministers Back Stimulus, but Pay Limits Remain Elusive
Article Tools Sponsored By
By NELSON D. SCHWARTZ and JULIA WERDIGIER
Published: September 5, 2009
…
“The ministers agreed on broad principles to reform bankers’ compensation, including an emphasis on rewarding long-term performance, but asked the Financial Stability Board, an international regulatory body, to come up with specific recommendations on bonuses to be presented at a Group of 20 summit meeting to be held in three weeks in Pittsburgh.
That was a setback for French and German ministers who had been pushing hard in recent weeks for a more concrete plan to address bonuses, amid rising public anger that just months after they were rescued, major financial institutions are returning to old habits and rewarding executives who take excessive risks.
In Europe, where Germany’s chancellor, Angela Merkel, is running for re-election later this month and the British prime minister, Gordon Brown, faces a general election within the next year, bonuses have been met with controversy.
While bonuses are still a contentious issue in the United States, they have been overtaken recently by the debate over health care reform. Negotiations between the American and European delegations over bonuses grew tense Friday night, according to one official who insisted on anonymity because he was not authorized to speak publicly.”
…
Now, alph, don’t talk that way about geo-ducks, at least. Not in the same sentence anyway.
“A more socially equitable method would be for all taxpayers to shoulder the burden through a government bulldozing program.”
Is this guy for real?! How is it “socially equitable” for the many to pay for the mistakes of a few? Did I wake up in France this morning??
I am pretty sure he was being sarcastic, recycling Bastiat’s “Broken Window Fallacy.”
I was pretty sure he was shooting for something along the lines of “A Modest Proposal”. Google it if you haven’t read it!
”I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled …”
Try getting that satirical in modern America, and some ignoramus will take it at face value and get all hysterical over it…
Actually he was only talking about Papist babies.
It’s quite amazing to read that the California brown lawn epidemic has spread as far east as the Mississippi River valley. Thank you, Megabank, Inc!
Yard upkeep on abandoned and foreclosed homes
Quincy not showing Obama’s webcast
Saturday, August 29, 2009 at 8:37 p.m.
QUINCY, IL — You’ve heard and read about countless foreclosures throughout the Tri-States and across the country.
Here’s a question that hasn’t been addressed as much — who takes care of the lawns and bushes of those foreclosed homes, especially when there are so many to deal with these days?
Although the answer differs depending on the situation and where the home is located, I took that very question to Quincy’s city planner.
KHQA’s Rajah Maples found out that not only is this recession a tough time for property owners, it’s also created a busy and expensive time for city crews.
City Planner Chuck Bevelheimer said Quincy ordinance prohibits grass and weeds from being above 10 inches. The city encourages residents to report problems to its inspections office, and those complaints are on the rise this summer. Bevelheimer said there are two reasons behind that. .
“Yes, we have had more foreclosed properties to deal with,” said Bevelheimer. “Traditionally, you wouldn’t have to deal with those, because people would be taking care of their properties, but we’ve had your typical suburban house that’s going through foreclosure.”
…
“President announces measures to make it easier to save more. One new idea: Turn tax refunds into savings bonds.”
Call me cynical, but now that the government is straining for every last cent, the timing on this leaves me suspicious of their actual intent . . .
California beat them to it.
Call me cynical, but now that the government is straining for every last cent, the timing on this leaves me suspicious of their actual intent
What’s to understand? The administration is very much aware that foreigners will be less likely to invest in the debt of this country going forward and this is a thinkly veiled attemt to have US citizens make up the shortfall by using their savings…
We are heading the way of Japan more and more…
wow, my bad on the spelling… should have been “thinly” and “attempt”.
That’s okay. I like thinkly.
I like ‘thinkly’, too.
From now on that is the only way I’m going to say it.
That plus the fact that there were new tax incentives offered for saving.
I’m really beginning to worry that the poo-poo is about to hit the fan. Maybe that’s why gold is going up again. I haven’t read the Mogambo Guru for a while, I wonder what he’s saying these days?
he’s saying gold’s going up (does he ever not?)
Though entertaining, his stopped-clock message is quite easy to distill:
“The markets are FUBAR; buy gold now to protect yourself against incipient financial Armageddon.”
Where’s Mr. Sane when you need him?
In New Zealand, counting his gold and watching our country falling apart
In New Zealand, counting his gold and watching our country falling apart
You know, I was fond of Alad, but really—-he’s gotta be feeling pretty stoopid right about now.
When he left the HBB didn’t he mention something about roaming citizens with guns? Mad Max-time? He ought to join up with obschina and predict the passing of the entire cult of Western Civilization.
Although I guess he only has to wait for long enough, and sooner or later all bad predictions come to pass…
(yawn)
Here’s one Mad Max fan who hopes to make some money off the phenomenon.
lets see, turn your tax refunds into savings bonds. Interpretation-
This country is broke and its your duty as a citizen to support my
“change”
Obama
My way to fix America is to get rid of entitlements and get rid of income taxes and sales taxes. Just BK the whole system, get rid of the Fed, let the banks fail, and readjust the whole market with a new currency issued by the Congress.
To avoid war you could sell Alaska to your current treasury holders. You rolled the debt dice and you lost.
Volunteers take on foreclosure blight
By MCKENZIE CASSIDY, mcassidy at breezenewspapers dot com
POSTED: August 31, 2009
City code enforcement officers, staff from the Community Redevelopment Agency and other volunteers decided to improve the entrance to the city on Saturday by mowing the grass at the foot of Cape Coral Bridge.
The 2.5 acre property at the end of the bridge, formerly owned by Cape Grand LLC, is what motorists first see after crossing from Fort Myers. In some places the grass was as high as one foot and overtook curbs as well as the end of sidewalks.
After cutting the grass, volunteers hope the city will be more eye-catching for visitors.
“It is community pride,” said John Jacobsen, executive director of the CRA. “This is what it is going to take for this city to succeed.”
Unkept lawns have been an issue in the city for almost two years since the Cape Coral and Fort Myers metropolitan area was named the foreclosure capital of the United States. As families and companies foreclosed their properties and left the city, no one was left to maintain simple things like front yards.
Volunteers on Saturday said they weren’t planting trees or dropping mulch.
“We are going to mow all of the grass, not going to do any landscaping,” said Jacobsen. “By law you have to mow your lawn.”
…
“…foreclosure capital of the United States.”
Is anyone compiling a list of how many US municipalities are claiming that title? I have certainly lost track, but I believe the number is large.
Look for the Funeral Home advertisement. Plannin ahead. Is this the start of O Bama’s death counseling ???
I don’t see any yard sales in my ‘hood this summer, compared to maybe one a week a couple of years ago. I am thinking most folks who needed to sell used junk to raise cash are currently running low on junk. I guess low inventories are ordinarily interpreted as a green shoot sign of recovery, though?
Past and Future Collide at a Yard Sale
By JENNIFER STEINHAUER
Published: August 22, 2009
MORENO VALLEY, Calif. — In neighborhoods in economic distress, upheaval comes in bits and pieces, often only recognizable in total much later. But on an unusual Saturday morning this spring, the past and future of Beth Court, a troubled cul-de-sac here, converged in plain view at a multifamily yard sale.
At 8:30 a.m., music was blaring from a house threatened with foreclosure, as children sold homemade baked goods to those who came to look over cribs the children had outgrown. A few doors away, the owner of a house to be sold at a bank auction was unloading a large still-life painting her husband had picked up in Mexico; she had never liked it anyway. Another neighbor, out of work since last summer but still keeping up with the mortgage payments, had his junker Jaguar up for grabs, too.
Yard sales, much like strawberries and report cards, remain pleasant signals of summer’s imminent arrival. But for Beth Court, a block of eight houses that has been shaken by the recession and the foreclosure crisis and that The New York Times has visited since January, this sale was in a way also a moment of planned anxiety, when life’s woes were willingly exposed in exchange for cash.
…
The woman in a duplex across from us use to have a yard sale almost every weekend. Now she’s down to about one a month. I don’t think she ever sold very much. Certainly she had the same junk for weeks.
Similar story here. Our neighbors across the street held no fewer than four yard sales over the past three years, but none so far in 2009.
Thanks, PB, that was a GREAT article. I read it twice, I liked it so much. All sorts of gems sprinkled liberally throughout.
And speaking of yard sales, today I went out to a few since a bunch of them were clustered here on Steamboat Point. It’s interesting to me to see what stuff people have. It’s their life writ small and jammed on a table for 25 cents.
‘Stuff’ is interesting to me, because we Americans are just wallowing in heaps and mounds of stuff, and so much of it is entirely useless.
What I think is interesting is the fondness for antiques I observe in a lot of people, including me.
I have a chair on my porch that I found in the woods—yes, really. I just stumped up and there it was, in the freakin’ wilderness—it’s wood and is only patchily painted with light milky green paint, it was mostly in flinders and mossy when I gathered up the pieces and hauled it home and glued and screwed it back together. I had to make a foot for it with a bit of oak and my wood chisels, and I left a little cavity to hold secret messages. Then I painted the screw heads bright red but didn’t mess with the paint. The wood itself is rock hard, otherwise it would have had mushrooms growing out of it. I think it’s hickory or something; it’s not oak or maple.
Now, normally I would have left such a bizarre object alone in the woods and not tampered with a mystery, but it seemed to me that these assorted bits of wood were asking me to help it become a chair again, so I took it, and now it’s a chair again.
Yes, I’m getting to the point!
Anyway, EVERYBODY wants to sit in the thing when they see it, and then has to be hauled out so someone else can sit in it for a time and also experience the joy.
And it is indeed an awesome chair and very comfortable, with a hollow for your bu*m and arms angled exactly right. But what’s the infatuation with what is really only a beat-to-cr*ap resurrected chair?
I thought about this one night, (while sitting in my chair, of course) and I think it’s a hunger for authenticity. We’re surrounded so constantly by ticky-tacky ‘Made in China’ crap, that something made well, made with purpose, is refreshing and rare. It pleases the spirit.
Whatyer think on this subject?
I love something well made, made with a purpose, something made in America, home made.
Anothe reason I find you a classy lady. How is your Mom doing?
Authenticity……. Can that be interpreted as quality and durability?
For example, one of the items I occasionally scour the flea market, thrift stores, and garage sales for are Levi jeans made in the USA. They fit and the buttons, pockets, rivets, etc. don’t break.
Another example, my SA 1911 A1 pistol is one of the last ones to be made in Geneseo IL USA. I think Springfield 1911’s are now made in Brazil, don’t shoot as well as my older model, and have a horrible finish.
Anything with a “Springfield” logo should be made in Springfield MA. That’s where my M1 Garands were made.
M1 Garand…mmmmm (Homer Simpson drool). Robert no have in his collection. Maybe a M14 (20 round removable magazines ya know).
But, can’t argue with you re the Springfield logo given the history of the company dating back to the American Revolution.
Well go join up with CMP.
http://www.odcmp.com/
, and have a horrible finish.
Of all your good post, this is the point that I’d most like to see fully explained.
The surface finish of the steel and accompanying furniture (wood grips). Kinda like paint job and trim on a car.
Oh.
For example, one of the items I occasionally scour the flea market, thrift stores, and garage sales for are Levi jeans made in the USA. They fit and the buttons, pockets, rivets, etc. don’t break.
And you can sell the right Levis to Japanese collectors for Big Money.
Or rockabilly dudes.
Or you can just wear them.
Do the Japanese still collect vintage Levi? Thought that was years ago.
“Now, normally I would have left such a bizarre object alone in the woods and not tampered with a mystery, but it seemed to me that these assorted bits of wood were asking me to help it become a chair again, so I took it, and now it’s a chair again.”
This is a lovely reversal of the Austrian economics fable about the foolish man who burns the legs of his chair in order to heat the room where he sits.
“I thought about this one night, (while sitting in my chair, of course) and I think it’s a hunger for authenticity.”
+MAXULONG, Olygal. Or at least, I hope that you are right.
Authentic is the design aesthetic that speaks to me the most—and has for years. It matters less to me what something is made of than that it is being honest about what it is made of.
So much stuff these days is pretending to be what it is not. Fake wood furniture, fake stone veneer on houses, fake, fake, fake, Fake, FAKE! I hate that sh*t!
I like stuff that is what is looks like through and through. No thin veneer panel pretending to be wood when it’s just sawdust and glue on the inside.
Trouble is, it’s gotten harder and harder to find stuff that is actually real over the years. If as a culture we started actually yearning for the authentic, it would be great IMHO cause then maybe we’d start producing decently built stuff again.
Rant off…
If as a culture we started actually yearning for the authentic, it would be great IMHO cause then maybe we’d start producing decently built stuff again.
————————-
I think there’s a business opportunity in there somewhere.
Google now has an amazing feature which could potentially help with remotely conducting the Ben Jones “brown lawn” vacant foreclosure home litmus test. For example, type in ‘Beth Court Moreno Valley’ on the Google search line, then zoom in to the street level, at which point a 360 degree photographic view replaces the aerial map perspective. Click on the arrows superimposed on the image to conduct a virtual walk through the neighborhood, and see the brown lawns on abandoned properties for yourself.
My only question regards the vintage: Are the brown lawn photos current?
Beth Court
A Cul-de-Sac of Lost Dreams, and New Ones
Article Tools Sponsored By
By JENNIFER STEINHAUER
Published: August 22, 2009
i saw some Google “street views” that were at least a couple years old..
One was a casino in Vegas. The Barbary Coast on LV Blvd and Flamingo had long before become Bill’s Place when Harrah’s bought it..
Views of one street / home i track in San Francisco was outdated by at least a year.
btw.. it now offers street view in lots of foreign countries .. you can see the Eiffel tower .. visit most of London’s points of interest.. I think they’ve covered parts of the Far East.
I wonder if there is some hope that Google will see the value to prospective foreclosure home investors of more frequent updates to those neighborhood views. There must be some kind of profit opportunity which could potentially be exploited to fund such a change in the refresh rate on those street-level images. Still better would be a comprehensive mapping of all foreclosure homes, bank-owned REO, vacant homes, homes with delinquent mortgages, homes with tax liens or NODs, etc.
i guess you could do it.. and sell it.. and maybe make money.
I think Google Earth offers real-time satellite camera views. I dunno how good the resolution is but i’m sure it can pick up a brown lawn. It also offers slanted views.
Earth probably uses the same satellite cameras that give Google maps the “satellite” view, which can zoom really close up most in populated areas (but that’s not real-time camera shots).
The Earth service has different levels for different prices. There’s a free one that requires a minor software installation.. I think people have complained it’s good enough to track someone and it’s use could be an invasion of privacy..
I don’t see how stills of houses on lots with brown lawns would raise privacy concerns?
I don’t think Google has “real time” imagery. The best it may have is a few days or weeks old, called “near real time” imagery. Various government agencies have a tough time getting real time imagery and they own the cameras.
lopoks like you’re right, DennisN
From wikipedia’s page:
Age: Images dates vary. The image data can be seen from squares made when DigitalGlobe Coverage is enabled. The date next to the copyright information is not the correct image date. Zooming in or out could change the date of the pictures. Most of the international urban image dates are from 2004 and have not been updated. However, most US images are kept current. Google announces imagery updates on their LatLong Blog in form of a quiz, with hints of the updated locations. The answers are posted some days later in the same blog.
City-data forum has several people saying they are trying to rent places but have bad credit in our area (Norfolk, VA). They are all surprised by how very expensive rentals are here (not great incomes for most either). Theme in common is they tend to have dogs, but a bunch sound like little lap dogs that belong to seniors. All seem to be 50+.
I’ve always wondered could you build a neighborhood out of storage shed like materials and rent the units for like $200 each? Common bathroom/kitchen? It’d be fun to put up fancy ads saying coming soon for developments like this, and watch the public outcry.
The Drudge report on 9/2/09 reprted, that Osama Bin Laden is going to be giving a gift to Muslins.
09/09/09
Why do I have a gut feeling, that something bad is about to happen?
Just remember what my grandma’s kitchen placard said, “A Watched Pot Never Boils,” and cheefully go about your business on 09/09/09, enjoying the light traffic as you do so.
cheerfully
What makes you think the majority of Muslims would want a gift from Osama Bin Laden?
At end of yesterdays blog, there was comment on the Newsweek article/link re: A Cupcake Bubble.
I was noticing something similar via Tv and the shows for contests. I noted a lot of decorated cake shows and that made me think, too late to get into this niche as it is full for anyone and probably over populated.
As other areas, gold and so forth, if you hear to much about something, dayindayout,YI/YO then it is probably the beginning of the end, or fully saturated. The same with the jobs market and what little jobs we have here in the US, corporations have allowed immigrants to to satiate the job market for lower waged jobs and then corps/biz owners can lower their pay because there are PLENTY of workers to fill the spots, thereby lowering the middle income level.
It is called COntrol of the middle class and manipulation of wealth in the USA.
Tim Hawkins - The Government Can
http://www.youtube.com/watch?v=LO2eh6f5Go0
G-20 Calls for Lower Bonuses, Higher Capital at Banks (Update2)
Bloomberg dot com
By Gonzalo Vina and Simon Kennedy
STORY TO FOLLOW.
Last Updated: September 5, 2009 13:53 EDT
Sponsored links:
Bernanke’s Debt Solution
Central Banks To Change Value Of Money - What It Means For You.
UncommonWisdomDaily dot com/Financial
drumminj,
I read late last night that you were happy after a date Thursday night. Good!
I hope she’s your type - a woman whose favorite kind of car is the one with a Ron Paul bumper sticker
Inquiring minds want to know: will she (occasionally) look good in a tin-foil hat?
ahansen,
Do you have any comments to add on this one?
Shahien Nasiripour
Questions Arise As FDIC Fails To Disclose Key Details On Bidders For Failed Banks
First Posted: 09- 4-09 08:20 AM | Updated: 09- 4-09 10:57 AM
…
When banks fail, the FDIC effectively takes them over, with an eye towards returning them to the private sector as soon as possible. In the past, the FDIC typically solicited bids from other banks. Now, private equity groups have been added to the list of eligible investors. Regardless of what type of investor is ultimately chosen to take over a failed bank, the FDIC is required by law to choose the “least costly” bid.
As first reported by American Banker, it’s documents from those very deals that the FDIC has largely not released, despite numerous official requests via the Freedom of Information Act, the law that ensures public access to U.S. government records. While the winning bids are disclosed, most of the losing bids are not.
“We don’t know whether the government got us the best deal,” said Kenneth Thomas, an independent bank consultant and finance lecturer at the University of Pennsylvania. “We’re not talking millions — we’re talking billions of dollars.”
…
¿ɹǝuʍoǝɯoɥ uʍop ǝpısdn uɐ ǝɹ,noʎ uǝɥʍ suǝddɐɥ ʇɐɥʍ sıɥʇ sı
(Sorry, I couldn’t resist)
How did you do that Carrie?
Yeah, how did you do that CarrieAnn?
Yah Yeah hoze di youse doo dat carrie ann
For you:
http://www.youtube.com/watch?v=sgA4-bLcoN8
Cool dj, Cool.
I simply loved it. Great job, dj.
Now, I am into Long Cool Woman…, and Air that I Breathe. Guess I am staying up a little later than I thought.
THANKS DJ !!!
Actually, I don’t know which of the three I would pick as the Hollies “best”. !
Breathe=breath tired but happy! Thanks again dj!
“Just remember ATE its really not about age………we have dumbed down our country so much
people are Scared to death of hiring anyone smart today.
We have No leaders, gawd i wish i could find a mentor with some ballz today.
At least you have references, I really don’t have anyone to look up to.”
Drifting off toward sleep, I was running around yesterday’s Bits…
I hope you hit the lottery, or anything, that is great for you in life. I am second place here in my hopes. You are a great guy. I wish the best job on you that is possible to wish. You are a quality person.
Ya Bud,
Greg
ATE:
Thanks man, that’s what is good and not so good about this blog.
The good part is we can give our opinions and maybe get a little pep talk in return.
The not so good: we are all spread out …just imagine if 10-20-30 of us were all in the same area…we could really put our heads together in weekly/monthly HBB meetings and make a serious difference on a more personal/professional level.
You’re exactly right, and I thought of it many times too.
That’s awesome! Can you do an underwater homeowner, now, please? PLEASE???
Todays SlateDotCom has a great article on CRE - The Skyscraper That Lost a Billon -
Not really OT: buying quality and then maintaining it over the years, as opposed to buying bling and tossing/replacing it every few years.
I spent today performing my every-two-years maintenance on my gas BBQ.
It’s a three burner “Turbo” model made by Barbeques Galore. Back in 1991 when I bought it, Barbeques Galore’s models were all made in Australia to fine quality specifications. The burners are cast metal with holes drilled for the gas to come out and burn - much better control of the flames that way. The grills are cast iron. The cart is jarra wood, some extreme hardwood version of eucalyptus they have in Oz. The metal hood is porcelain black coated. They give a 5 year unconditional warranty.
Over the years I’ve fixed it up and see no reason to replace it anytime soon. The original cast iron burners rusted out at about 4.5 years, so at 4 years 10 months I brought my sales receipt with the rusty burners and rusty grate into the store. They gave me new ones with no questions asked. I also brought in the propane tank at about 3 years because I could smell gas even when disconnected - I barely got into the store with the tank until someone grabbed it from me, took it outside, and handed me a new tank no questions asked.
After warranty, I’ve replaced the cast iron burners with cast stainless steel, replaced the grills once, replaced the tank pressure valve, and taken the wood cart down and sanded/stained it. A treatment with auto rubbing compound keeps the porcelain looking decent.
Today I did my maintenance on the BBQ: take it all apart, clean it, and added two wood supports to the cart. The upper portion of the cart was held together with a single cross board, lying right under the BBQ. It had charred part way through so I added two cross boards of the same dimension wood. Since jarra isn’t available in the US I got some heart redwood from Lowes. After a new coat of stain I reassembled it and it’s good as new - at over 18 years old.
The original unit was somewhat expensive in 1991. IIRC I paid $500 for it. But it’s kept up for 18 years now and I think it will last another decade or two. A classic design.
Do you guys buy quality and then keep it up?
“Do you guys buy quality and then keep it up?”
What’s quality anymore? Can one buy a decent (meaning 20+ year lifespan) grill anymore? Or are “planned obsolete” models the only thing available?
When and if I ever own a house again I will be buying older and antique wood furniture that can be refinished. But I don’t really want to buy an antique frig (although my 13-year-old Kenmore is humming right along and still hasn’t had a single problem) so those types of purchases will be harder to find. But if possible, I’d rather pay more and get something that will last forever as I never feel the need to have the latest edition of anything.
If appraisals are coming in lower than what GFs armed with Dough-4-Dumps are willing to pay, then the appraisal must be too low? Or is it that another borrower has been handed an FHA loan that he will likely never be able to repay?
Thank you, Andrew Cuomo!
“Supporters see changes as a hope for a return to sane lending”
New rules for home appraisals under fire
Critics see changes as roadblock to recovery
By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. September 6, 2009
Just as San Diego County’s housing market seems ready to rebound, a new impediment is threatening to stymie any improvement.
New rules governing appraisals, a key step in mortgage lending, are leading to mistakes, delays, lower home valuations, higher costs and worse service for would-be buyers, industry experts say.
“They are stopping or delaying sales,” said Peter Dennehy, senior vice president of Sullivan Group Real Estate Advisors.
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The new code was worked out last year between New York Attorney General Andrew Cuomo and mortgage-finance giants Fannie Mae and Freddie Mac, which applied the rules nationally.
In a real estate transaction, a buyer makes an offer that is accepted by the seller, opens escrow and seeks a loan from a lender or via a mortgage broker. The buyer pays for an appraisal, costing $400 or more, and the lender uses the results to determine how much to lend.
If the appraisal is lower than the sale price, lenders typically will not fund the difference, and buyers must increase their down payments or sellers must lower the price to seal the deal.
Now, buyers and their agents generally are not allowed direct communication with the appraiser before the appraisal in completed, and they say they are having trouble fixing mistakes.
“Agents can’t talk to appraisers. Loan officers aren’t supposed to give them anything,” said Michelle Morris of Coldwell Banker Home Loans.
Because appraisers are paid a flat fee for their work, they are not inclined to make changes, industry observers say. And lenders do not press appraisers to raise values, remembering the freewheeling lending of just a few years ago that resulted in millions of foreclosed properties.
While defenders of the new system say complaints about incompetent appraisers amount to an “urban myth,” critics say the system could impede the housing recovery.
The code of conduct “is deflating real estate values and poisoning transactions that would otherwise close,” said Robert Fields, broker and owner of Century 21 Carole Realty, a San Diego escrow company and mortgage brokerage.
Just as the new code was going into force, some San Diego neighborhoods were experiencing multiple offers and overbids, sometimes prompted by low-ball listings posted by lenders hoping to ignite bidding wars for their foreclosed properties.
Because appraisers rely on past sales to evaluate present deals, there is a built-in lag effect in an appreciating market, in which sales completed several months ago are lower than current prices being offered. So far this year, MDA DataQuick reports that the overall San Diego County median has risen from a low of $280,000 in January to $320,000 in July.
It takes an experienced appraiser to be able to spot a market turn such as this, one block at a time, experts say. But agents report that many nonlocal appraisers are submitting inaccurate valuations because they do not know the territory or understand current pricing trends.
With an estimated one-third to one-half of all transactions covered by the new code, San Diego residential appraiser David Eshelman said the change in procedures could result in unintended consequences for local housing.
“Because the appraisers are missing the sales prices, it’s creating lower comparable sales to be used the next time around,” Eshelman said. “It’s that snowball effect — you get one bad number, and it’s another bad number, and it goes on from there. It could conceivably have an adverse effect on values in San Diego.”
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Nobody should get too excited about rising home prices yet until we see how the market holds up once Dough-4-Dumps and foreclosure moratoriums are ended. Otherwise, what we thought was a rise off the floor may instead prove to be a stimulus-induced dead cat bounce.
Common Sense
Deals await in housing market
Data suggest prices have started to rise
By James B. Stewart
THE WALL STREET JOURNAL
2:00 a.m. September 6, 2009
Suggestion to G-20 Leaders:
How about if members banks of the Megabank, Inc too-big-to-fail club are charged special bailout insurance premiums so that the next time they collectively blow up, everyone else does not get stuck paying the cleanup costs???
G-20 Leaders Propose “clawback” Scheme For Bankers’ Bonuses
Sun. September 06, 2009; Posted: 02:01 AM
(RTTNews) - Finance Ministers and Central Bank Governors of G-20 countries, at the conclusion of the two-day meeting in London, have agreed to put in place a “clawback” scheme which will ensure that bonuses paid to financial sector workers will be linked to the long-term success of the deals they make. The scheme also provides for forfeiture of the bonuses if the deals fail to deliver the expected success over the period.
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Series Overview: Examining The Financial Crisis
by Marilyn Geewax
Treasury Secretary Henry Paulson addresses a news conference.
Timeline: A Year Of Financial Crisis
September 5, 2009
Monday marks the one-year anniversary of a frightful day that changed economic history. On Sept. 7, 2008, the federal government stunned financial markets by announcing its takeover of two mortgage giants, Fannie Mae and Freddie Mac.
That was just the beginning. In ensuing days, Bank of America took over Merrill Lynch; Lehman Brothers collapsed; credit markets froze up, and insurance giant AIG grabbed at an $85 billion federal rescue.
In a new series, “Financial Crisis: One Year and Counting,” NPR examines the wild events and the efforts of the Federal Reserve, Treasury and Congress to avert an economic catastrophe. The series will count up the costs of both the crisis and the cure. Preview stories in the series:
Imagining life on the other side of recession
By Dean Calbreath
Union-Tribune Staff Writer
2:00 a.m. September 6, 2009
Photo of Dean Calbreath
Call Dean at 619-293-1891
As a flickering light begins to shine at the end of our economic tunnel, it’s increasingly apparent that when we finally do make it out of the darkness, the other side of the tunnel will look a lot different than what we’ve seen before.
As happened with Southern California auto factories in the recession of the 1980s and San Diego’s aerospace plants and savings-and-loan industries in the early 1990s, some industries will not emerge from the current downturn intact.
Economists say banks could be in for a prolonged period of consolidation, as the lenders who had the most exposure to the real estate market throw in the towel.
“With the financial world turned upside down, it seems like we’ll be getting a handful of huge banks, a lot of tiny community banks and not much in between,” said Kelly Cunningham, economist at the National University System Institute for Policy Research.
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Hi everyone,
Hope you’re enjoying a lovely holiday weekend.
I just have to get this post in between social obligations today.
First , thank you for all your contributions regarding my future wealth query in the Bits Bucket yesterday. They all provided good food for thought.
Secondly, I owe a follow-up regarding the work peer of my husband that was not allowed to cash in his 401k. It appears that in his original contract when he set up the account, he had agreed not to remove any of the money unless he left the company. Apparently he was a more recent hire than the person who was able to cash in his 401k last summer and they had different agreements.
Third, my ndsıpǝ poʍu ʇʎdǝ ʇɹıɔʞ can be performed with a little help from the website: reface.me.
Thanks for the Hollies youtube link NYCdj. That was awesome. My Mom who was only 19 years older than me was into the British invasion bands as well as Motown Sound. So that stuff was the soundtrack of my early youth. Thanks to your link, I listened to a few Hollies pieces as well as Herman’s Hermits. My favorite Hollies song (being under 10 years old when these songs were hits) was Bus Stop.