Bits Bucket For September 16, 2009
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
May 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Real Estate Rebound Won’t Reap More Than ’04 Prices, Simon Says
Sept. 16 (Bloomberg) — Prices of U.S. shopping malls may return to 2003 or 2004 levels as consumer spending and the commercial real estate market recover, Simon Property Group Inc. Chief Executive Officer David E. Simon said. That would represent a decline of as much as 23 percent.
Simon, the biggest U.S. shopping mall owner, has $3.8 billion on its balance sheet and is looking at possible acquisitions, Simon said in an interview in New York.
“There is still a decent bid and ask difference between the buyer and the seller,” Simon said. “I think the sellers’ expectations certainly have gone down from where we were at the end of ‘07, early part of ‘08.” Prices may go “back to the ‘03, ‘04 period of time, somewhere in that range.”
Sales of retail properties in the U.S. fell 71 percent in the first half of the year, to $3.6 billion, according to New York-based research company Real Capital Analytics Inc. The announcement by Glimcher Realty Trust this week that it agreed to sell Lloyd Center, a regional mall in Portland, Oregon, for about $192 million is one indication that buyers and sellers are beginning to come to terms, Simon said.
“We’re getting closer,” he said.
Sellers are no longer demanding prices equal to 20 times the cash flow from a mall, Simon said. “I think those days are over. Yet are they willing to sell it at 12 times, and are we willing to part with our capital at 12 times? That’s the rub.”
“Sellers are no longer demanding prices equal to 20 times the cash flow from a mall, Simon said. “I think those days are over. Yet are they willing to sell it at 12 times, and are we willing to part with our capital at 12 times? That’s the rub.”
Maybe I’m missing something, but if mall sales prices decline from 20 times cash flow to 12 times cash flow, and mall cash flow isn’t coming backing even to 2003 or 2004 levels any time soon, how do sales prices of malls only drop to 2003 or 2004 levels? It would seem it would have to go lower than that.
‘Sellers are no longer demanding prices equal to 20 times the cash flow from a mall, Simon said. ‘I think those days are over. Yet are they willing to sell it at 12 times’
At one point in 2006, I considered trying to cover a possible commercial RE bubble on this blog. But I decided there was so much housing news it would be too much to follow thus a distraction. But things got silly with office buildings, etc, and I don’t think it can be denied there was a mania in that market. So we can expect a crash along with the related defaults.
Just look at the language; “sellers demanding…those days are over.” Going from 20 to 12 times cash flow in just a few years. Where was the reporting on a possible problem when it went up to 20?
Glad to hear that buyers are “snapping-up” malls now.
I might snap up a mall. I could turn the Macy’s into my personal mansion, and eat every night in my food court.
I suppose I could even work all day in my shoe outlet. What could be better?
Skating on your own ice rink?
>I suppose I could even work all day in my shoe outlet
Al Bundy?
Pretty soon, the shoeshine boy in the mall is going to tell us what a hot investment malls are.
I am seeing more smaller Milwaukee area strip malls advertised for sale.
Perhaps the forboding Winds of an early Autumn Recession have extinguished the Beckoning Flames in Ye Ole Candle Shopps.
Of course, you never had a light in your attic to open and invest in one of those novelty one trick pony stores in the first palce.
A franchise store for greeting cards and “collectibles” are the golden child of the bored housewife, who has a husband that buys them a hobby.
“A franchise store for greeting cards and “collectibles” are the golden child of the bored housewife, who has a husband that buys them a hobby.”
Anyone questioning this model need only visit Bandon, OR for confirmation.
Not qutie a candle shop, but our bathroom boutique is closing down. Her design business just fell off all of a sudden, go figure.
http://tinyurl.com/pjs3co
I seem to recall an article discussing the fact that developers are vying for the chance to convert some of these “dead malls” into housing (and not tear-em-down-and-build-it-new housing, either, but instead dividing the interior space of the malls into some sort of apartments). This would be fine and dandy were it not for the fact that (a) we already have way too much housing available in this country and (b) the thought of living inside a mall seems utterly terrifying.
One valuation method for commercial real estate is a cap rate. Cap is short for capitalizaton rate.
Generally speaking 20x cash flow is a 5% cap rate (5% being the reciprocal of 20). 12x cash flow is an 8.33% cap rate.
In other words, take the net operating income and divide it by your cap rate to arrive at the value.
As a publicly traded REIT, Simon’s shares are priced by the market continously and their acquisition and disposition activities are scrutinzed by the Wall Street analysts.
These analysts pay a great deal of attention to a company’s cost of capital and whether acquisitions are accretive or dilutive to earnings.
Just for fun, the website of a publicly traded REIT and replay an earnings conference call. The calls are usually on the Investor Information page.
I recall that in 2006, some Phoenix apartments were selling at a 3% cap rate (to out of state “investors”) at a time when that was lower than treasury rates. No problem here, ignore that red flag people…
My guess is that those Phoenix apartments you are referring to were priced as condo conversion deals, not as operating properties.
One lesson I hope I don’t forget is that when multifamily properties are being sold as condo conversions, then it’s a sign the market is nearing a top.
Another sign I missed in late 2006/early 2007 was when Sam Zell sold Equity Office Properties, one of the largest office REITs, to the Blackstone Group. When the icons in the industry are selling their stakes, that’s a pretty good sign that the top is in.
‘when multifamily properties are being sold as condo conversions, then it’s a sign the market is nearing a top’
Jack McCabe was telling that to anyone who would listen in the spring of 2005!
Yesterday I was working with a contractor on a pool in Lake Havasu CIty. I mentioned I had a lot of foreclosure work in Bullhead City, around Laughlin Ranch. He said, “they were selling those before they were built.” So there’s another sign anyone could see/remember.
Then we have the double whammy; selling condo conversion units before they were converted!
A good sign of the peak nearing is when financing becomes easily available for whatever is being hyped; it’s how the smart money gets-out.
Anybody see any good news out there? All I see is the manipulation of public opinion to get the suckers to spend. And, statistically, it seems to be working just enough to keep the wolf away. It’s kind of nauseating to see the Dow continuing to rise on hot air, which is also, psychologically, holding off (for NYC sellers at least) the fall’s NEXT BIG LEG DOWN that some of us might be hoping for. Ugh.
I’m with you, joe. I’m starting to ask myself if they can keep this party going indefinitely. I just keep telling house buyers to hang in there, but watching low-end prices increase this past summer was plain depressing. Hopefully we’ll have another decrease this winter. But I agree that a rising stock market gives people a false sense of financial security - when will this new bubble burst?
That hot air is the bubble caused by continued monetary inflation and aritificially low interest rates. Until unemployment comes down to 6%, those interest rates will continue to stay low. The people who have the ability to save are cutting down debt, tearing up credit cards, squirreling their money into money market funds and T-bills. The low yields on T-bills have investors looking for higher returns elsewhere. Where? Gold and stocks. Stocks have better protection against inflation than cash anyway.
If I was a physician (read: secure job) I would be mostly into stocks and precious metals these days.
Again, monetary inflation is going on big time, even though we have price disinflation in many areas. Price inflation follows monetary inflation.
And the best part is that the prices for things we need will go shooting up, but salaries won’t.
Ah, truly “Mission Accomplished” - the loss of the middle class will be “Change we can believe in!”
And the best part is that the prices for things we need will go shooting up, but salaries won’t.
And thus housing will fall even with inflation.
It’s funny Bloomberg had an article that China has increased their purchase of treasuries. I still think that much of the recent talk of moving out of the dollar is designed to drive cash from investors into the stock market and increase the fear of inflation despite the huge deflationary pressures.
“I’m starting to ask myself if they can keep this party going indefinitely. I just keep telling house buyers to hang in there, but watching low-end prices increase this past summer was plain depressing.”
The low end is swarming with “investors” right now. It’s disgusting, really. Though they certainly have a right to buy, it’s sad to see people who just want a home to live in have to compete with this crap. It’s the same old story. We’ve got a LONG way to go before this housing mania is over with.
“Another sign I missed in late 2006/early 2007 was when Sam Zell sold Equity Office Properties, one of the largest office REITs, to the Blackstone Group.”
I saw an interview with Sam Zell about this within the past year. He absolutely fleeced Blackstone, and he was laughing.
Oh, that Sam!
Bill in L.A. and REH … yes, you’ve got to wonder how the party in stocks can continue and screw the rest of the formula up! I remember fearing getting back in at Dow 7000 because I agreed with many here that it could plunge to 5000 or even 3000. But here we are, looking at a horrendous and BS-oozing 10K in a few days, no doubt. Obviously this is a simple way to look at things, but so many forces are swirling around (how about that PPT getting busy every morning, it seems, shooting prices up if there’s a plunge at the open?) that it’s hard to figure the odds on what’s next and who’s being suckered by whom.
White-knuckle time, just sitting tight.
My firm, a real estate research company, started reporting what commercial property was worth based on comparable sales, and what it was worth based on the capitalization of net income. They were two very different numbers!
Aside from perhaps retail, the fundamentals aren’t the real problem, compared with the late 1980s. The purchase prices are.
And the problem is so much more obvious with comercial real estate. The mix of housing for sale is different enough than the mix of housing for rent that comparisons are difficult. This isn’t a problem with CRE.
I wonder what all the public employees are going to think when their pension funds take another big hit.
was when Sam Zell sold Equity Office Properties ??
Good move and then a bad move when he bought a newspaper…
Bad move for the employees which owned 1/3 of the company, before zell bought it.
—————————————
Good move and then a bad move when he bought a newspaper…
Ben-
I want to buy some invest property, four plexes and tri’s, where do you see the best value? Inland CA has some deals, but lots of sec 8 renters tearing up the place or writing on the walls. Probably best to buy as local as I can.
When you are able to answer your question yourself, I’d say you’re ready to invest.
It’s always a good idea to buy as local as you can. Even to the point of buying triplexes and fourplexes in your neighborhood. After all, if you’re nearby, well, it’s a piece of cake to take a little stroll over to your property(s) to see how it/they’re being treated today.
GrizzlyBear - I take it you are not a teacher. More of a bitter old man with nothing to do.
I don’t know…I thought it was good advice.
Wow. My comment wasn’t meant to be harsh in any way. I was speaking the truth. Seems you’re a bit thin-skinned CVG.
I meant CCD, not CVG. Seems your handle is quite similar to another poster’s.
CCD, I thought Grizz’s statement had the ring of truth to it. I don’t believe she was being either haughty or malicious–certainly not towards you.
I wouldn’t put a penny into central CA real estate right now. Just take a drive along I-5 and look at all the “for lease” signs on those huge distribution warehouses. Scary scary scary, and nothing nothing nothing to store in them, as no one is buying.
Yeesh! A 3% cap rate? Don’t you want to have at least 8%?
That depends. Bear in mind that interest rates on Commercial Mortgage Backed Security (CMBS) mortgages were probably around 5% or less during 2003-2007, and the loans were written for 75-80% of the purchase price, sometimes more than 80%. You may want at least 8%, but when credit is available at 5% you’re going to be outbid.
The tricky part is coming up- most of those CMBS loans were written with 5 to 10 year maturities (balloons). What happens when the loan that was written in 2005 at 5% comes due in 2010 or 2012? The underlying properties are no longer trading at a 5% cap rate - they’re trading a couple or a few percentage points higher (meaning at a lower value).
Another large publicly traded mall operator, General Growth Properties (GGP) used copius amounts of leverage during the acquisition binge of the past few years. Google “GGP bankruptcy cmbs” for some intersting reading.
This is going to take time to work out.
To fill California’s gaping budget deficit, the government may squeeze retailers and retail real estate owners
http://retailtrafficmag.com/management/propmgmt/0826-california-budget-deficit-real-estate/
Man I found a nice commercial space that looked (on paper) like it’d fit our hacker space well. I offer $600/mo for 1 year, as-is, for the 2000sqft (about 40% of it is non-climate controlled high bay). Owner wants $2300/month. Across the street I can get 2150sqft with 60% high bay for $1000/month. Both will sit empty for a long while.
Both will sit empty for a long while.
That’s the part I don’t get.
Why not generate some income on a short-term lease to someone like you, and build in a clause to show the place as often as possible. At least then there’s some money flowing in while waiting for that perfect sucker.
I’ve mentioned before that I have some friends who’ve negotiated just such a deal in downtown Chicago for a space meant to be a nightclub. If someone bites at the full asking price, they have to be out in less than a month. They’ve been in this space for a few years now, at a fraction of the wishing price.
From what I can tell it’s because the owners don’t want the value of the property to go down by having less-than-ideal rents? Perhaps it messes with the valuation of it, or the resale price?
Right. Low lease rates drive the cap rate through the floor. Of course, vacancy sure doesn’t help their cause, either.
OT but funny…
Wauwatosa, WI. Fleeing copper thieves discovered by RE agent briefly return to ask him to “Please leave the door OPEN”
Only in America
http://www.wisn.com/video/20932759/index.html
“Why not generate some income on a short-term lease to someone like you, and build in a clause to show the place as often as possible.”
Because they are just as underwater as any other FB. To lower rents is to have to face reality. And for them, it’s the same as defeat.
Good stuff wmbz…Thanks…
and are we willing to part with our capital at 12 times? That’s the rub.” ??
This part says it all IMO…It does not matter what “the seller wants”…The real question is, what will it take to get “the buyer” to part with his cash…
Real Estate Rebound Won’t Reap More Than ’04 Prices, Simon Says
Simon Says: “Shop in the mall!”
Simon Says: “Buy the mall!”
Simon Says: “Sell the mall!”
“Buy the mall!”
Ha! Gotcha!
Melvin Simon, shopping center industry pioneer and chairman emeritus of the Board of Simon Property Group, has died at the age of 82 after a short illness.
Apparently he was a smart, kind, humble man, who donated lots of $ to cancer research and helped many without notoriety.
Comments about Melvin Simon from people around his town, not from some high paid PR person.
Is Everybody Dying to Get Out at the Top?
Four Economic Figures Dead…’Suicides’…
Dead Guys Tell No Tales
From Catherine Austin Fitts
Solari.com/blog
9-16-9
Rockefeller & Co. CEO Dies From Gunshot Wound
Catherine and News & Commentary, September 15, 2009 at 10:09 pm
By Charles Stein
James McDonald, chief executive officer of New York investment firm Rockefeller & Co., died Sunday, apparently from a self-inflicted gunshot wound, according to the Bristol County district attorney’s office in New Bedford, Massachusetts.
McDonald was found in a car behind an auto dealership in Dartmouth, Massachusetts, said Gregg Miliote, a spokesman for the district attorney’s office. He appeared to have shot himself, though the matter is still under investigation, Miliote said.
Financier Finn Casperson Dead in “Apparent” Suicide
Catherine and News & Commentary, September 15, 2009 at 9:09 pm
By Kim LaCapria
Ex-CEO of Beneficial Corp. Finn H.W. Casperson was found dead in an apparent suicide behind an office building in Westerly, Rhode Island.
Casperson, 67, was discovered dead of what appeared to be a self-inflicted gunshot wound on September 7th, after police were asked to “check on” him. Casperson came from a wealthy family and moved with powerful people, and he was known for his political influence, fundraising and philanthropy.
Blagojevich Fundraiser Found Dead
Catherine and News & Commentary, September 15, 2009 at 8:09 pm
By Jesse Solomon and Justin Lear
Police are investigating the death of the former chief fundraiser for ex-Illinois Gov. Rod Blagojevich as a “death-suicide,” an Illinois mayor said Sunday.
Financier Christopher Kelly told police shortly before he died Saturday that he took an “overdose of drugs,” said Dwight Welch, mayor of Country Club Hills, Illinois.
Country Club Hills police found several drugs in Kelly’s black 2007 Cadillac Escalade, but they were not sure yet whether they were prescribed, Welch said. Country Club Hills is about 27 miles south of Chicago.
Kelly had recently undergone surgery and was taking drugs following the operation, Welch said. Welch said he did not know which drugs Kelly was taking.
Kelly, 51, of Burr Ridge, Illinois, was pronounced dead at Stroger hospital in Cook County at 10:46 a.m. Saturday, hospital spokesman Marcel Bright told CNN.
Newport Beach Financier Danny Pang Dies at 42
Catherine and News & Commentary, September 15, 2009 at 6:09 pm
By Ruben Vives and Louis Sahagun
Newport Beach financier Danny Pang died early Saturday at a local hospital, according to the Orange County coroner’s office. The cause of death has not been determined and an autopsy is planned for Sunday, said Larry Esslinger, supervising deputy coroner.
Police officers were dispatched to Pang’s home in the 2600 block of Crestview Drive about 3:30 p.m. Friday on a “medical assistance call,” said Sgt. Doug Jones of the Newport Beach Police Department.
Pang was pronounced dead at Hoag Memorial Hospital at 5:12 a.m. Saturday, Esslinger said. He had no further details.
The 42-year-old Pang has been accused by the government of operating a Ponzi scheme and of taking at least $83 million in inflated fees, salary and loans from his investment firm before it was seized by federal regulators in April. He had denied wrongdoing.
If this spreads to GS/BofA/Countrywide execs, we’ll know if some of the investigations are getting warm.
“He blew his mind out in a car,
he didn’t notice that the light had changed.”
Good one Bill. I’m trying to “wake up, get out of bed and that pesky comb won’t drag over my knotted head.”
Just watched McCartney play it live at Keiv. 400,000 people (2008) record attendance.
“………found in a car behind an auto dealership…….”
He must have been really upset that he missed out on “Cash for Clunkers”………or he owned the dealership, and hadn’t got his government rebate check yet.
Or maybe the thought of bringing his Mercedes into the Service Department again was just too much..
Bill: I think these homies KNEW the “lights had changed”.
Guns and drugs, guns and drugs. Just goes to show the moral degeneracy of our fast-paced society. Time was, disgraced financiers were content to simply defenestrate themselves….
Alas, many may not grasp the gravity of your statement.
Alas, many may not grasp the gravity of your statement.
I dunno. It may be high up, but it’s wide open.
And to think that it all started with a bounced czech.
Less collateral damage from the “fallout”.
Ahansen,
Did I ever send you the pictures of my unsuccessful entry in the Washington Post “peeps” diorama contest? If I didn’t, I’ll send it to you tonight. Relevent to your outstanding choice of vocabulary…
McDonald was found in a car behind an auto dealership in Dartmouth, Massachusetts
Dartmouth, MA is the next town over from where I grew up and one of our top picks for places we’re looking to buy an SFH. Talk about hitting close to home… I’m always suspect of these “self-inflicted gunshot wounds”. Wonder who he screwed over?
What do you call a 100 dead bankers at the bottom of the sea?
A good start!
In light of all the green shoots and the burgeoning recovery already underway, these four isolated incidents should be properly interpreted as exceptional cases.
Green shoots or gun shoots; that is the question.
How I’ve tired of the term “green shoots”. Please make it go away.
It needs to be the target in one of those gun shoots.
Home sales in Grand Junction, Colo., have taken a plunge
USA TODAY
The housing market in Grand Junction, Colo., is in reverse. Nationwide, the cities that were hit by the housing bubble are seeing home sales climb, while Grand Junction is watching sales tumble.
“The first quarter of this year was the worst quarter that we’ve ever had,” says Sandy Barger, chairman of the Grand Junction Area Realtor Association. In July, its home sales were down 42% from a year ago.
Grand Junction, the state’s largest city on the western slope of the Rocky Mountains, has been the victim of its own boom and bust.
Its economy is largely dependent on the gas and oil industry. In recent years, energy firms rapidly expanded and added many jobs, which attracted more people to Grand Junction. Home prices soared.
Then, when the recession hit, the price of natural gas plummeted and a lot of people lost their jobs. About 12 months ago, the housing bubble burst.
“It was a double whammy for Grand Junction,” says Martin Shields, regional economist at Colorado State University. “They were struck by the national malaise, and they are dependent on a sector that has been particularly hard hit.”
Before, home construction boomed; now, it’s halted.
‘Then, when the recession hit, the price of natural gas plummeted and a lot of people lost their jobs. About 12 months ago, the housing bubble burst’
It wasn’t that long ago that the resource areas were crowing about their immunity from price declines. I told a magazine in Calgary in 2007 that oil didn’t keep the Texas bubble from bursting; if anything it made the bust worse.
As an aside; the USA Today. I wonder what it must be like inside that place…I imagine they use crayons and aren’t allowed to walk with scissors.
Yeah, USA Today is not exactly known for their hard-core journalism. I have to say I’m a bit shocked they made it–I remember when it first came out and I just couldn’t believe that people would pay for something like that. But shiny colors make up for a lot, I guess.
Aside #2: Chicago Suntimes employees rejected the latest offer and it is starting to very much look like Chicago will be a one paper town.
one final aside–about 20 years ago Harvard Lampoon did a parody of the USA Today. One of the funniest things I’ve ever read, if you can ever get a hold of one it’s worth it.
A *lot* of hotels give USA Today to their guests; basically catering to the lowest common denominator. I venture that’s a very large percentage of their business.
One of my many definitions of hell is waking up at a Hampton Inn (or any such joint), finding only the USA Today at the door, and jostling with a swarm of khakis and corporate imprinted polos for a bland bagel.
Having lived that for awhile, I will say that they do indeed use crayons for that weather section.
I like USA Today, though I don’t subscribe. Must be the pretty colors. I asked for it in my hotel when given the choice between it and the London Telegraph.
Oh, how I hate USA Today. As a frequent traveler I have to wake up to that uninformative waste of trees outside my room every morning. I usually just leave them there on the floor until housekeeping starts piling them up somewhere inside the room.
I was staying at a hotel in Chicago a few weeks ago that offered to give me a 75 cent discount if I refused the paper. I was delighted, yet it still showed up on my doorstop every morning. No matter how much I complained I couldn’t get them to stop delivering it.
I wonder how many trees have been cut down for my “benefit” because of that lame collection of colored ink and paper.
I wonder how many trees have been cut down for my “benefit” because of that lame collection of colored ink and paper.
AaaaoooOooooohhhhhhohahoooooOOOOOOOOOOO….!
(that was a mournful howl.)
AaaaoooOooooohhhhhhohahoooooOOOOOOOOOOO….!
(that was a mournful howl.)
Wow…you are one heck of a gifted and talented Spotted Owl Olygal !
Thanks.
*ruffles wings and spins head completely around and around like a twirly chair *
Years ago, I was living in the foothills of the Sierra Nevada. I arrived home late one evening after shopping for groceries, opened the front door and was walking towards the kitchen when, out of the corner of my eye, I saw something massive aiming straight for my head and I hit the floor spilling the contents of my trip. It was a HUGE owl flying inside the house. The thing settled on top of the refrigerator. The sliding door had been left open with no screen, and the owl had just come right in.
I sat, in stunned amazement, as it eyed me intently, its head spinning slowly back and forth, then carefully cleaned up the groceries, making no quick movements as I didn’t want to startle the thing. It’s talons were huge and intimidating, and its overall large size was, no doubt, enhanced by the fact that it was inside the house. I had never seen an owl in person before, and this thing was less than 10 feet away. I stuck the groceries under the dining table, backed away to go wake a roommate, then grabbed a few towels from the bathroom.
I had my roommate stand in the middle of the room, holding a towel to direct the owl towards the door, and I went into the kitchen guarding my head and face with another towel as I tried to shoo the thing out. It took like 30 minutes, as the owl enjoyed every high perch in the house, until it finally just flew out the door. It was very memorable, though to this day I have absolutely no idea why it ever came into the house.
I KNEW you were related to Linda Blair Oly!!!
GrizzlyBear-
Cool owl story.
Newspaper have been in trouble for the past 100 years…
Between 1914 and 1926, as Silas Bent has pointed out,
the number of daily papers in the country dropped from 2,580 to
2,001, the number of Sunday papers dropped from 571 to 541, and the aggregate circulation per issue rose from somewhat over 28,000,000 to 36,000,000. The city of Cleveland, which a quarter of a century before had had three morning papers, now had but one; Detroit, Minneapolis, and St. Louis had lost all but one apiece; Chicago, during a period in which it had doubled in population, had seen the number of its morning dailies drop from seven to two.
- “Only Yesterday: An Informal History of the 1920’s”
And to think they only had dial-up back then.
More like wind up.
Aside #2: Chicago Suntimes employees rejected the latest offer and it is starting to very much look like Chicago will be a one paper town.
It’s been a long time comin’. And it’ll get worse before it gets better.
The Tribune is a shell of its former self, and morale there is pretty low. The Reader’s parent company was recently bought in a bankruptcy auction by a hedge fund (oh my).
“But shiny colors make up for a lot, I guess.”
As literate as most of the country is, it’s important to have lots of shiny pictures.
BLING, BABY!!
“one final aside–about 20 years ago Harvard Lampoon did a parody of the USA Today. One of the funniest things I’ve ever read, if you can ever get a hold of one it’s worth it.”
Dating myself a bit, but for me, it was National Lampoon’s International Communism and Terrorism issue 30 years ago.
I still have my copy of the “1964 High School Yearbook Parody”
“I had never seen an owl in person before, and this thing was less than 10 feet away.”
I think that you experienced one of those Whitley Strieber animal cover stories for an alien encounter. I am pretty sure that you were probed.
Al Neuharth, the founder and CEO of USA Today, lives about 20 miles from where I’m typing this (Cocoa Beach). Our local paper is a subsidiary, Florida Today (FT). FT is locally called the “mullet wrapper” because all its good for is wrapping up dead fish for sale.
Working in government in a position where I spend a lot of time with reporters, I can tell you that FT has laid off half its staff and won’t put an actual journalist on a story unless they can develop some kind of controversy. Everything else in the paper is either purchased from the AP or is a line for line reproduction of a press release from somebody.
They actually put the business section on the last page of the sports section. Of course “Real Estate” gets its own section, with the headline usually something like “The Bottom is in! Buy now or get priced out forever!”
My wife refuses to read the newspaper, since she believes that its full of nothing but lies.
NYTimes
Fight Looms in Congress on Tax Break for Home Buyers
Published: September 15, 2009
DALLAS — When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it.
As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.
In the view of the real estate industry and some economists, all that money is well spent. They contend the credit is doing what it was meant to do, encouraging a recovery in the housing market that is gathering steam. Analysts say the credit is directly responsible for several hundred thousand home sales.
Joseph and Chassity Myers are among the two million buyers eligible for the credit this year. The newlyweds heard they could get money from the government for something they were tempted to do anyway.
“It was a no-brainer,” said Mr. Myers, a commercial underwriter. “Owning something is the American family dream.”
The couple bought a two-bedroom condominium here in the spring for $171,000 and amended their 2008 taxes immediately, receiving their windfall by direct deposit a few weeks later.
Their home is now a monument to the government’s generosity. They bought a leather couch, a kitchen table, a bed, television stand, china cabinet, kitchen table, coffee table, grill and patio set.
“We did exactly what the government wanted us to do,” said Ms. Myers, a third grade teacher. “We stimulated the economy.”
“It was a no-brainer,” said Mr. Myers, a commercial underwriter. “Owning something is the American family dream.”
Uhhh…. that’s usually the end result when you don’t have a brain or are certifiably brain dead.
a leather couch, a kitchen table, a bed, television stand, china cabinet, kitchen table, coffee table, grill and patio set
In other words, they didn’t use that $8K for the condo at all.
What do you do when you run out of greater fools? Make more!
As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.
So - being that housing starts are “up” about 20% or so from their record lows early this year - safe to say that the housing market, even measured in terms of sales and starts, in reality has seen zero recovery so far?
And - safe to say there’s zero chance the stimulus will *not* be reinstated, and probably increased?
40% of the buyers were first time home buyers ? OK ,what did the move up buyers do (better know as short sellers or walkers) and how high was the investor % of sales ?
“…and how high was the investor % of sales ?”
I’m betting there’s quite a few folks out there that gave up working to speculate on houses. Now their previous skills are rusty and the job market sucks, so they have little choice but to believe in this turn around. They’ll keep flipping houses until it works or they’re broke.
Those that *need* the 8,000 to buy a home cannot afford to buy a home.
It’s about the same as making a baby. The hard part comes AFTER the first 5 minutes, as in the next 30 years.
“Those that *need* the 8,000 to buy a home cannot afford to buy a home.”
Bigtime. The Dough4Dumps merely kicks the can down the road if 8k makes or breaks a sale.
“We did exactly what the government wanted us to do,” said Ms. Myers, a third grade teacher.
Nice, lady. She’ll be useful to them in the future.
Two 1 BDRMs just sold in my building for circa 2003 prices. That shocked me because the neighborhood comps were otherwise plunging a few weeks ago. This credit no doubt played a role here.
That condo that couple bought used to be a crappy old apartment complex in a crappy part of Dallas (right by Love Field).
Skip,
You’re correct - that’s a dumpy old apartment/condo building right next to my vet’s office. $170K for that place is so far out of touch w/ reality, that the folks may be correct - it was a “no-brainer”. What’s really great is that right up the street are the folks that will eventually rob you.
skip’s words translated:
skip : crappy old apartment complex
The Lawn at Bluffview website : rebuilt and reborn Mid-Century Modern townhome community
$171,000 for a two-bedroom condo in Dallas. Oh my goodness. I wish txchick was around to comment.
171,000 should buy a very nice condo in Dallas. Including a 2 car direct entry garage
You can buy a very nice 3 bdrm, 2 1/2 bath, 2 car, wash rm, +/- 2000 sqft house in Houston for that.
“Their home is now a monument to the government’s generosity.”
Their home is a Grand Monument to sheer and utter Government Stupidity and Current Savers and Future Taxpayers unending Grief !
Amen
“It was a no-brainer,” said Mr. Myers, a commercial underwriter. “Owning something is the American family dream.”
Their home is now a monument to the government’s generosity. They bought a leather couch, a kitchen table, a bed, television stand, china cabinet, kitchen table, coffee table, grill and patio set.
Americans have really boring dreams.
boring dreams
Agreed. That couple seems to have been programmed.
What do you want to bet that the stuff was all Potterybarn generic?
I don’t have a kitchen/dining room table set up because there isn’t enough room in my apartment, but I have the very nice bridge table with folding legs that my great aunts got for my parents as a wedding present. They were a generous (though not wealthy) bunch and the table has a leaf, is sturdy as all get out, and has lasted over 45 years. It will probably last another 45.
My TV stand is an old Grundig stereo my parents got in Germany in the early 60’s when he was in the airforce. Teak cabinet. The internals don’t seem to work, but I bet an electronics geek could get it running if the parts were available.
I wouldn’t trade either of them for the garbage those two probably bought.
Huh? The dining room is for pinball machines and classic arcade machines.
the Dining room in my house is where I destroy things with my dremmel tools.
the Dining room in my house is where I destroy things with my dremmel tools.
LOL - that reminds me of this from Dave Barry’s “manhood test” - the very first question:
1. Alien beings from a highly advanced society visit the Earth, and you are the first human they encounter. As a token of intergalactic friendship, they present you with a small but incredibly sophisticated device that is capable of curing all disease, providing an infinite supply of clean energy, wiping out hunger and poverty, and permanently eliminating oppression and violence all over the entire Earth. You decide to:
a. present it to the President of the United States.
b. present it to the Secretary General of the United Nations.
c. take it apart.
We had a Grundig for 35 years. We got rid of it because it was too big for our house–it’s small–and we were tired of moving it.
Are there any strings attached to this $8K? Is there a down payment requirement, an income requirement? Do they ask to see your tax return? Something, anything? Or is this just asking for more moral hazard?
I assume there are lots of “theoretical” limitations to the $8K, but in reality everyone just takes the money and levers it up to keep housing unaffordable. That is the goal, after all.
Its main intention was another bank bailout.
Basically none of the people who got the credit saw the money. It just went directly to the bank.
That was the real point of the giveaway. Just like the home interest deduction. Another giveaway to the bank.
Again, you have to wonder if its intentional or not. These guys out there, they try to make you think you are saving when your spending. Coupons, sales, tax credits… all spending. How many times did we hear about how much someone saved on the purchase of a house?
Spending is Not Saving.
But lots of clever marketing guys are making you think you are saving.
Good luck everyone. It seems like this war continues.
we got the credit … didn’t need it to buy a house, but it’s pretty nice in my savings
no strings. Had to be a first time homebuyer and there are income limitations, but for a couple it is pretty high
I think you have to not have owned a residence for the previous 2 (3?) years and make less than $75K.
I was just considering the criteria you mention, and thinking of what an injustice it would be to raise it to $15k, and eliminate the first time buyer and income restrictions as has been talked about. The higher net income individuals would unfairly enjoy even more of a benefit. The whole program stinks and needs to go away.
The higher net income individuals would unfairly enjoy even more of a benefit.
The last several administrations have been masters at claiming to not raise taxes on the lower classes, while indirectly doing exactly that.
Well, I’m NOT lower class.
My parents just weren’t rich and I didn’t get an an Exectutive Harvard MBA with a minor in White Collar Crime…so there.
Err…Ooops!
“It was a no-brainer,” said Mr. Myers, a commercial underwriter. “Owning something is the American family dream.”
I misread that as: “It was a no-brainer,” said Mr. Myers, a commercial underwriter. “OWING something is the American family dream.”
But, hey - nothing like no-brainers buying houses they can’t afford with other people’s money. That’s how we prop up the Bubble and keep the productive people unable to afford a house.
I’d like to encourage everyone to read the entire article. It contains some real gems:
“The National Association of Realtors estimates that about 350,000 sales this year would not have happened without the lure of the tax credit. Moody’s Economy.com used computer modeling to put the number at 400,000. ” Imagine how much more home prices would have fallen if those sales had not taken place.
“Now the sponsor of the original Senate bill, Johnny Isakson, REPUBLICAN [the lunacy is non-partisan] of Georgia, is back with a new bill that would give a maximum $15,000 credit to ANY buyer who stays in a home for at least two years. ‘The problem now is not first-time buyers, it’s the move-up market — the guy transferred from Chicago to Atlanta who can’t sell his house,’ said Mr. Isakson, a FORMER REAL ESTATE AGENT. ‘Without a new and more generous credit, he warned, there would be a downward spiral of home sales and more foreclosures, provoking a second recession.’ Emphasis mine.
“Mark Zandi, CHIEF ECONOMIST of Moody’s Economy.com, favors expanding the credit to ALL home buyers, EVEN INVESTORS, into next summer. ‘The risks of not doing something like this are too great,’ he said. ‘I don’t think the coast is clear.’ ” Emphasis mine.
And finally, a voice of reason:
“Dean Baker of the Center for Economic and Policy Research called the credit ‘A QUESTIONABLE REDISTRIBUTIVE POLICY’ FROM RENTERS TO HOME BUYERS, but said that he used it himself when he bought a house. He wrote on his blog: ‘Thank you very much, suckers!’ “
‘A QUESTIONABLE REDISTRIBUTIVE POLICY’ FROM RENTERS TO HOME BUYERS
“Questionable”? No, it’s not questionable. It’s wrong.
And I say this as a homeowner.
(well - partial homeowner, since it’s not paid off)
Imagine how much more home prices would have fallen if those sales had not taken place.
Yup. I’d have been able to buy something by now.
‘Thank you very much, suckers!’
Perhaps he has inside information about the $8K credit’s renewal prospects? Because if they don’t renew it, I could see another leg down in home prices…
University of California may raise tuition 30%
OAKLAND (AP) — The University of California has proposed raising tuition by more than 30% next year as part of its plan to address rising costs and deep cuts in state funding.
UC officials Thursday released a plan Thursday that calls for a 15% increase in undergraduate fees starting in the winter and spring 2010 terms, followed by another 15% hike next fall.
I don’t know of any college or university that isn’t raising tuition, 30% is a big pop. Enrollment has jumped big-time nation wide. In our town we have had the largest freshman enrollment of all time,this year.
The UC system here has been to cheap for to long…It just attracts to many out of state students…
But out of state students pay extra (a lot). And you can’t just show up and be reclassified as a resident for your Sophomore year. It’s a 3 year wait if you matriculate as a non-resident.
“It just attracts to many out of state students…”
Right — a brain drain from other states and even countries into California must have really hurt the economy…
No jobs, so people are going to school. Not necessarily a good plan though.
It’s a countercyclical plan — invest in your credentials while the economy is in the tank, then come on to the job market with superior credentials when the economy is once again hiring.
What do you find questionable about this strategy?
I did that. I put myself through law school 1993-1996 when the defense industry was in the tank.
Having NO students will definitely reduce costs. That’s bold, out of the box thinking.
Question? What are the most popular courses and what is being pushed, around the country? Here it’s engineering, construction management and journalism.
The group my wife works for is in construction management, they are laying off another 7 this week. Total of 26 this year.
I would not pay high tuition fees for a degree that may not help me pay the school loans back, maybe its just me. It must be the next “new paradigm”
I would not pay
highoutrageous tuition fees for a degree that may not help me pay the school loans back.“Here it’s engineering, construction management and journalism.”
Where is here?
Mid- S.Carolina
I didn’t know that USC had a strong engineering department. I’d have gone to Clemson for that.
“I didn’t know that USC had a strong engineering department”.
Yep, perhaps not as strong as Clemson, but it’s well attended.
Saw an old Harold Lloyd silent movie on AMC a while back, titled “The Freshman.” It came out in 1925 if memory serves me. The school he was going to attend was “a large football stadium with a college attached.”
That’s Clemson! (And a lot of other schools.)
Winthrop in Rock HIll, SC brags about being undefeated in football. (It’s a joke since they don’t have a football team.) Three of our four went there partly because it isn’t a big football/party school. The one who did went to the stame aschool as her of out state fiancee.
“The group my wife works for is in construction management”
If they’re managing shacks(hardly construction) then this should be no surprise. There is no end in sight for public money projects (heavy, highway, large civil).
They build schools and hospitals, and love taxpayers.
Two of the worst buildouts on the planet right there. Time constraints on public school projects are untenable.
“Two of the worst buildouts on the planet right there. Time constraints on public school projects are untenable”.
Really, didn’t know that, their group has been extremely successful at it for the last 20 years. S.C. loves to issue school bonds and their group loves to build schools. Hospitals and sickness care facilities have make them tons of money also.
So perhaps they are the exception, not the rule.
It has little to do with the success or failure of a CM outfit. CM outfits don’t develop the contract documents that spell out project length and liquidated damages, the engineer does.
School buildouts are very difficult due to the contractual obligations imposed because of the etched in stone school calender. It’s certainly not the exception and I’ll wager that the liquidated damages imposed on school buildouts is anywheres from 4-10X the amount on any other public money project.
Example: Middletown, NY high school, LD? $40k/day…. yeah you read it right.. $40,000 PER DAY.
By the way, CM is bread and butter. Just look at Gilbane if you need anymore evidence of that.
EE is the big one around here…
Local media is constantly running ad for trades schools…….but they are offering training in construction, electricians, heating and air conditioning, and health care.
Construction……yeah, right. H and AC? Don’t know enough about the business, but can’t imagine there is a huge demand for that, since housing starts are way down. ( My cousin just got a big discount, when she replaced the system in her house……….and when the a/c in my rental went tango-uniform a couple of months ago, a guy was there to fix it within 3 hours……..on Monday).
Health care? Everyone I know that is retraining is going off on that tangent. I’ve got a feeling that the health care goldmine ain’t gonna be there, by the time these folks get their degrees. Hearing that a bunch of retired nurses are coming out of retirement, because their retirement savings/401Ks have been destroyed.
If you’re trained in repairs, as opposed to just installing new plumbing, AC, and electrical systems, there’s all sorts of trades-work out there.
I’m speaking from personal experience on this. Earlier this year, I regaled you with the tale of my water line replacement. Not exactly a repair, but a replacement of an old line that gave up the ghost. So, maybe I should add replacement to the trades-training list.
Any-hoo, the plumbing company was one busy outfit. Mine wasn’t the only job they were doing that week. And the new water line has been working like a champ.
Now it’s time to get the exterior mortar and stucco fixed. I’ve found a couple of people who can do the work, but they won’t be coming around here until November. Reason: They’re booked up until then.
God bless nurses- the good ones at least (there are some really lousy ones as I witnessed this first hand when my mother was in ICU this past spring). I could never do the job. Cleaning up bedpans and bodily fluids, and dealing with the sick on a daily basis is too much for me.
My ex was an RN, so my view of nurses is biased, due to my direct exposure………I had to live with one.
I watched kids all day, then worked second shift, for five years, so she could go to RN school. Had to put up with a lot of $hit, from a (later to be convicted) crooked manager (to cook my books/billing), because I was not in a position to walk away from a job. Just a miniscule show of appreciation on her part would have done wonders………but no, I “owed” it to her to put her thru school.
Then she started watching too many television shows, telling her how nurses were God’s gift to humanity, and started acting as such.
Nobody held a gun to her head to become a nurse (wasn’t my choice, but you know how us guys are supposed to be “supportive”……….). She had a decent job to begin with.
Nursing can’t be that bad………I’ve seen three times as many direct friends/acquaintances die prematurely in my business, as she has seen as a nurse.
.
Why only raise tuition 30% ??
Why not automatically double tuition every year?
There seems to be no end in student demand.
There seems to be no end in student loans (guaranteed by taxpayers).
Just do it.
Next.
You forgot to add there seems to be no end in the UC regents giving themselves raises, then telling the faculty and workers they will have to take a pay cut, and then turning around and telling the students they need to cough up more money because their tuition is going up.
Greed is good.
But it’s for education! How can that be bad?
Timmy, you’re wrong about student loans. Kids are being hosed. Students are limited to $8000/year in subsidized loans. Subsidized means that they can defer payment as long as they are a fulltime student, but when they finish they repay at 6.8% interest. Unsubsidized federal loans accrue interest at 6.8% while the student is enrolled and are limited to $12,000/year. Private student loans are now at 9.8%. This is a disaster for a kid in a private school who can’t get help from their parents. And remember that these are non-recourse loans.
Non-recourse? What does the lender get in the event of default- the student’s diploma?
I believe the law is that there can never be a default( I don’t think they even make an exception for death ).
I had a co-worker whose IRS tax refunds were kept to satisfy her outstanding student loans.
Wouldn’t “non-recourse” mean the lender gets nothing, except the slight satisfaction of adding a red mark to someone’s credit score?
I think they meant non-dischargeable?
The college loans can not be discharged when bankruptcy is declared. This was part of the new bankruptcy laws.
Actually, they can, I think, just like the old BK rules. However, you have to show “undue hardship” an extremely high burden of proof.
Cancer, crippled, mentally ill, etc.
Been awhile since I did BK, but I read (skimmed) the 2005 mods when they came out.
Maybe I am wrong here.
What does the lender get in the event of default- the student’s diploma?
garnishment? if they can find ‘em
Lucky my younger is a senior this year, but fees went up 9% this year to $9300/year. UC is pretty full of themselves. They are still less than national average for state tuition, but not by much. This will put them in the higher end, and will push a lot of kids away (or break them by forcing them to get private loans.) I’m helping my niece with her room and board at Michigan this fall. In-state tuition there this year went up to $11,500. A 30% increase at UC will bring it to over $12,000/year, at a time when the middle class can ill afford it. What do you expect from faculty who voted to furlough teaching hours (administration didn’t let them do this, however.) Whatever happened to a good old pay cut or pension cut? What’s wrong with these people?
“Whatever happened to a good old pay cut or pension cut? What’s wrong with these people?”
Well, they chose to give their students and their parents a good old pay cut. Nothing wrong with that.
What were the good years when they cut pensions?
I should count my lucky stars then. It’s $5000 per year at UNC (Univeristy of Northern Colorado) in Greeley, CO. My daughter got a $2500 scholarship there. She’s living on campus this year, which is required for Freshman who don’t live at home in Greeley (and is a rip off). She’ll probably commute from home next year (30 miles each way) unless shhe gets a job as an RA.
That is why Cal Poly get 40k applicants for 4000 spaces. best bang for the buck if you are living in CA.
You think U.C. would be smart enough to know that raising 15% now and 15% later is actualy 1 .15^2-1= 32.25% fee hike. Wait… maybe they’re smart enough to know the reporters/public are too stupid to figure that out so they announced the hike that way on purpose.
Tom
Disclaimer: Cal grad here.
How can the UC and CSU systems here in California always be so broke? They get massive amounts of taxpayer dollars. Much of it from folks who will never set foot on one of the many campuses.
Our local state college (CSU, Sacramento) has been tilting up space like crazy including buildings, parking structures, and a HUGE lighted billboard that seems to advertise local businesses more than school business. Since when does your local college promote Jiffy Lube?
What are they going to do with all that square footage for students and cars as they cut back on enrollment?
Anyone else see something similar in their local CA universities?
no but I’m seeing it at U Montana. It’s like…a bubble!
Cal Poly built an entire village: http://tinyurl.com/ofo3dw
INSANE!
Simple supply and demand. As long as college degrees are regarded as the only way to earn more than 32K yr and entry in to the “club” (almost any management these days), students will do whatever it takes to get one.
And as long as they are willing to do that, the schools will charge what the market will bear.
So is wage falling or not? One of the themes discussed on HBB is that wage will keep falling going forward, thus pressuring home prices even more than the high unemployment already have thus far. Looks like it may take at least the second dip of the predicted double dip in order for that possibility to occur.
NYT
Wages Grow for Those With Jobs, New Figures Show
Last winter, stories of companies cutting their workers’ pay were everywhere. FedEx said in December that it would reduce the pay of salaried workers by 5 percent. Caterpillar announced it would cut pay by up to 15 percent. The employees of a General Motors dealership near Philadelphia agreed to work one week for minimum wage.
For the first time since perhaps the Great Depression, it seemed possible that average hourly pay would actually begin falling, even before inflation was taken into account.
But that’s not what has happened.
Wage growth has picked up in the last several months, according to two different government surveys. You don’t hear or read nearly as many stories about pay cuts these days. Even though unemployment has reached its highest level in 26 years, most workers have received a raise over the last year.
………………..
The story about falling wages was — and remains — a reasonable one.
“There’s been a huge shift in power in recent years from labor to capital,” as the astute financial blogger Felix Salmon has written. Labor unions have shrunk, and companies can move operations to lower-wage countries. “Now that workers have lost their negotiating leverage,” Mr. Salmon wrote after FedEx made its announcement, “we might start seeing more across-the-board pay cuts.” If the economy were to weaken again, we still might.
So far, though, we haven’t. Between the collapse of Lehman Brothers last September and this June, the average weekly pay of rank-and-file workers (who make up 80 percent of the work force) remained stuck at about $612. Hourly pay rose a bit, but the increase was canceled out by a shrinking workweek. Since June — with the economy apparently starting to grow again, as Ben Bernanke noted on Tuesday — the workweek has grown and hourly pay growth has accelerated. Last month, average weekly pay rose to $618.
Aggregate incomes are down, because unemployment is up. That’s more important.
Also, don’t lose sight of the minimum wage increase.
Among those paid by the hour, 286,000 earned exactly the prevailing Federal minimum wage in 2008. About 1.9 million had wages below the minimum.
http://www.bls.gov/cps/minwage2008.htm
I’ve seen several articles that suggest the number of hours is way down so hard to imagine that weekly wages are stable.
The other thing they miss is that companies have been rapidly getting rid of benefits and shifting health care costs to employees.
Wages Grow for Those With Jobs, New Figures Show
Maybe if you work for the Federal Ggovernment.
I know people at HP that have had 1 or 2 pay raises in the past 10 years.
I know people at HP(EDS) that are getting a 30% pay cut.
Heh! I got a 100% pay cut at HP in July.
Was the 30% an across the board thing? I haven’t heard anything about this from my former co-workers.
We had a 5% cut earlier this year.
Wow. I don’t believe this for one moment. Living in Silicon Valley and talking to people: pay cuts, layoffs, reduced benefits. More contract workers hires or hiring for 30 hr. workweek, so no benefits have to be paid. Many companies have done temporary paycuts from 5-10%, with no indication for how long.
How much of this reported increase in incomes is due to the fact that comanies have fired more of their low wage workers than their higher paid ones????
I’m of the opinion that the top 2-3 layers of the payroll shouldn’t count in the averages……….those guys are getting paid in a completely different universe, when compared to J6P.
The new paradigm……..work on becoming the only person who knows how an essential system/program runs in your company. That way, when you screw up, ask for even more money, because you are the only guy that can fix it.
Seems to be working for our Wall Street buddies…….
Many companies have done temporary paycuts from 5-10%, with no indication for how long.
At HP we were told that the pay cuts were permanent.
That article is way past spin and right into propaganda land.
For J6P wages have been stagnate or falling in relation to real inflation…. for the last 30 years. Often, just plain falling in relation to itself. I knew many people at one company who were making 33% less on their paycheck than they were 15 years ago.
It’s one of the main reasons for the loose credit requirements and the bankruptcy “reform”. The FIRE sector is/was scraping the bottom of the barrel. One last grab before it all goes to hell.
Back to 2005? Lennox Financial is doing FHA refi’s with no income verification, no asset verification, and no appraisal:
http://www.lenoxfinancial.com/radio-ad-fha-refinance.php
Are these new loans FHA loans backed by taxpayers?
A large percentage of these new loans will obviously fail. Therefore one could come to the conclusion that the government actually wants this to happen. Government-approved failure is apparently the plan.
Yes, it is.
IMHO, we may not see affordable housing that is worth buying in most places for years. It looks like they can keep this stupid game going forever, with more fraud and more tax-payer funded Bailouts in a cycle with no end.
Sure, unemployment will keep rising as the fraud and Bailouts suck all the value out of the economy. But nobody cares so long as they “own” their McMansion.
Why settle for implicitly stiffing taxpayers, when you explicitly stiff them?
aren’t Fannie and Freddie underwriting 80% of the loans right now?
[per somebody's link from yesterday if I misremember correctly]
The other 20% probably has major contributions from FHA, VA, and the Dept. of Ag.
Every lender that offers FHA loans does this. It’s part of the FHA program and called a Streamline Refi. You can’t get cash out, it’s only a rate/term refi, and has to net the borrower a savings of at least $50/month or 10% reduction in payment (whichever is less). While you don’t have to verify income, you do have to verify employment. As long as the borrowers have a job, and have not been late on their FHA loan in the previous 12 mos then they can refi without an appraisal into a lower rate or shorter term. It’s actually a good program if you ask me. FHA is already insuring the loan, so why not allow the borrower to reduce their payment if possible? And you can’t go from a fixed rate to an adjustable, but you can go from adjustable to fixed. You can’t go conventional to FHA with this program, it is only FHA to FHA.
I’ve been shocked to see the runup in gold prices recently. I thought I was pretty smart getting out of some of my gold and silver positions last weekend at $1003 and $16.75 respectively, but prices have jumped up from there. The dollar is tanking while stocks and precious roar. I believe this is the head fake before October carnage in stocks which will also bring metals down. This is getting quite interesting. Also, capitulation in SoCal RE is taking its sweet time, but fall numbers have yet to show.
The dollar is tanking while stocks and precious roar. I believe this is the head fake before October carnage in stocks which will also bring metals down.
Why would tanking stocks bring the dollar up, and gold down?
Pay attention man. The dollar is down because other countries - led by China - are moving away from it as fast as they politically and economically can. The reason is the U.S. government debt. The U.S. government debt is generally inversely proportional to the economy these days, to some extent specifically the stock market in the form of capital gains revenue, but also in the form of bailouts of failed companies/industries associated with market failure.
If the market tanks again, look for the U.S. budget picture to get far worse. Keep in mind the future deficit projections are based on incredibly, incredibly optimistic revenue projections. Thus the downward pressure on the dollar will only get worse, and of course inversely upward pressure on gold prices.
Following up - here is a graph of the budget projects for the next few years.
Note the correlation of the green revenue stream with the stock market’s double top of 2000 and 2007 (not shown). It’s not coincidence - the government’s revenue stream is highly tied to the performance of the stock market.
Raise your hand if you believe the green line will actually follow that path, without having very high inflation? *Especially* if the stock market tanks again, or even if it stays flat for a while? No way in hades.
That is why gold is up, and will likely remain up (barring manipulation) even if we have another market crash.
The dollar and gold move in opposite directions? Not as much as people tend to believe.
..Since the dollar was freed to float against other currencies in 1971, the statistical correlation between gold and the dollar stands at around negative 27%, according to CPM’s research. That means over the past 38 years, if an investor bet that gold would trade against the dollar, he was only right 27% of the time…
www dot marketwatch.com/story/gold-dollar-break-past-safety-buying
His case was made in February, based only on about 45 days’ worth of correlation, where people were freaking out about both international markets and U.S. equities, thus dumping their money both into the $ and gold.
The chart itself shows a very inverse relationship, in the previous 4 months before that 45-day period.
The article doesn’t say what time periods were used for the correlation, but the statement doesn’t come close to passing the sniff test. One need only look at charts of the two (including the one in the article, in the period before the end of January) to see an obvious inverse correlation.
As I read it, the case was made by CPM research over a 38 year period.
www dot cpmgroup.com/main.php
That 38 year period was between 1971 (dollar begins to float against other currencies) and 2009.
“Why would tanking stocks bring the dollar up, and gold down?”
Because it did before?
And your points are valid too but in an economic world turned upside-down it’s hard to find any tried and true rule that works in the short term.
Little Al should use Yahoo interactive to plot GLD versus VFINX. Look at last September. What happened to GLD when VFINX dropped?
Gold is now at half the spot price of 1980, adjusted for inflation. There is a lot of room on the upside.
Gold has been trending down vs the BRL since Mid Feb however it looks like it has changed directions the past few weeks.
It is good to own some gold. And silver if you sleep well at night.
China, the biggest holder of Treasuries, raised its stake in U.S. government debt 3.1 percent in July to $800.5 billion. The country’s holdings of notes and bonds rose 2.5 percent to $633 billion. China’s position in Treasury bills increased 5.5 percent to $167.5 billion.
Don’t be too sure about China.
I see a lot of articles about China Greenspan and others bashing the dollar. I think this is a coordinated effort to keep people afraid of inflation depsite the huge deflationary forces at play. China increased their purchase of treasuries last month. If China was really planning on exiting the dollar do you think that they would telegraph that move??
Exactly. The fear of inflation can cause inflation as people rush to hedge against it or to buy now before prices go up. It’s a rather effective way to push a string.
China, the biggest holder of Treasuries, raised its stake in U.S. government debt 3.1 percent in July to $800.5 billion. The country’s holdings of notes and bonds rose 2.5 percent to $633 billion. China’s position in Treasury bills increased 5.5 percent to $167.5 billion.
Don’t be too sure about China.
That’s just one month - it jumps around a lot. The previous month China’s holdings actually *decreased* (it was 801.5B in May). The trend has definitely been flatter the past few months, vs. the previous rapid ramp-up. Last July they held only $550B, then ramped up to $739B ($189B increase) in just six months. The next six months though have only gone up to $800B - only a $71B increase.
Certainly China will continue to buy U.S. treasuries, but the rate at which the treasuries outstanding increase is moving in an opposite direction (up) of the rate of the increase of China’s holdings (down).
It’ll be interesting to watch this.
As a side note - from looking at that data - interestingly the U.K. has been significantly ramping up its holdings, such that it’s now buying U.S. treasuries at a faster rate than China ($89B the last six months vs. $71B for China).
Odd that the MSM hasn’t picked up on that.
and of course inversely upward pressure on gold prices.
YEEAAAAAHHHH!
There were some pretty smart people suggesting last week that gold was ready for another run. Trees don’t go to the sky, but in Zimbabwe the Gold/currency tree is so close to the sky it might as well be called the exception to the rule.
I would suggest that gold is for holding until it’s value will pay off your mortgage or allow you to buy a house outright.
Holding gold is preparation for economic disaster, when gold will be able to buy needed supplies and paper currency will buy less or nothing.
Why not cut out all the middlemen?
If you believe disaster looms on the horizon, forget gold. Buy supplies directly.
——-
Then again, everyone could buy gold and bid it’s price up to the sky, and we’ll all make tons of money when we sell it.
hmmm… i like that. It just might work with other things
Lets all buy houses and drive RE prices up.
“Lets all buy houses and drive RE prices up.”
Nice try. But almost everyone who can save any money whatsoever can save $1020 to buy himself an ounce of gold, while only a select few people (and financial institutions) have either the bank or the access to credit needed to buy houses.
So I am fully expecting gold to bubble in the near term, while houses will probably wait several decades or perhaps centuries before repeating the early-2000s performance.
‘Centuries’ ? You’re an optimistic bear.
“Holding gold is preparation for economic disaster”
I’ve got physical ounces that have risen in open market value by 271% since 2001. That would indicate to me that gold can be an excellent hedge against more than just economic disaster.
In my world results matter, you go ahead and talk the talk and I’ll go ahead and look to take care of my family long term.
gambling in commodities as a long term strategy to take care of a family?
You have a LOT more risk tolerance than I do.
You must have never read much on balanced investing. Fortunately for me and mine, I have and my investments are in a broad range of classes. A hedge to me is a gamble to you, so be it.
Gold at this point is, as the professor has stated, a measure of the value of the US dollar. If you don’t understand that yet, you never will.
Buying and holding gold is not “gambling in commodities”. Gold is money.
“I believe this is the head fake before October carnage in stocks which will also bring metals down.”
Ditto. Add to that the likelihood of ‘worse than expected’ results for auto manufacturers after Cash-4-Clunkers’ expiration, and you can see the makings of another leg down in stocks. This will provide the silver lining of a flight-to-quality move into the dollar and Treasuries and continued support of the low rate environment with no need for the Fed to step up Treasury bond purchases.
October is the cruellest month, breeding
Bears in the hopeful land …
October is the cruelest month, breeding
Bears in the hopeful land, nixing
Propensity to acquire, flat’ning
Green shoots with dull pain.
…
Hahahaha!
Man, I LOVE this blog.
Yep let’s see what happens when $ for Clunkers ends, when the housing credit ends. My guess is that the latter will get extended in the days or weeks just prior to or just after it ends, and possibly increased.
They put a dead line on it so that people feel an urgency to get in their and buy but when it ends just like $ for Clunkers their will be an immediate and severe decline in demand.
should say there
An article in the LA Times this week says that all is now well in SoCal - sales are booming.
Argh! More cases of lax regulation.
When will that rascally government learn, that whenever there’s a disaster it’s supposed to travel back in time, exercise appropriate oversight, and stop it from happening!
Charter crashes expose oversight failures
www dot usatoday dot com/news/washington/2009-09-15-air-safety_N.htm?loc=interstitialskip
You can blame a lot of this on the “Charter Brokers”, who sell charters without verifying that operators even have a certificate, much less comply with the regs. That, and a bunch of informal “buddy arrangements”, that never come to light, until there is a crash.
Want to know another dirty little secret? Why do you always see FAA Press Releases calling out American Airlines and Southwest Airlines for maintenance issues? Because they are pretty much the only guys left who have in-house heavy maintenance operations…….everyone else has farmed it out. And if it is done out of country (like a lot of it is now), the FAA is OBLIGATED BY TREATY to accept the signoffs of the overseas operation, with no oversight at all.
Another little tidbit I learned an FAA guy I know………if they don’t have a travel budget, to travel to the operations they are supposed to be overseeing, there isn’t any oversight. I’m betting that there are a whole bunch of government regulators (SEC, perhaps?), that have the same issue.
IMO, bad/asleep-at-the-wheel regulation is worse than no regulation at all.
Almost ever single regulatory agency has been gutted since Reagan began the trend.
“Free market” and all that, ya know?
“Hey taste this. Does that taste funny to you? GGAACCCKKK!!” THUD
Foreclosure victims maybe? Ya can’t make this stuff up!
http://www.kansas.com/197/story/970373.html?storylink=omni_popular
A trash dumpster is a place to deposit stuff. No inconsistency here.
Ewwwwwwwwwwwww.
Sorry SanFranQL:
Couldn’t pass it up. Just be glad alph didn’t hit it first, it would have been worse.
That wasn’t directed at you ATE-UP. It was directed at the two idiots in the news article.
Check out “700 N. Waco, Wichita” on Google Maps………that big brown building on the east side of the road is the county jail…..east of that is the County Courthouse/Sheriff’s Office.
As there are no other businesses in the area that would be open on Saturday evening, I’m betting that all involved were recent residents of the county jail.
“Come on babe.. lets do it behind that dumpster.”
“What kind of girl do you think I am??”
“I think you’re my kinda girl..”
“But there are people! They might see us.”
“Well.. we could just climb inside the dumpster.”
“Inside?? Are you crazy?? It’s a big garbage can!”
“It’s not as big as my love for you.”
“Oh! hehe.. you’re so sweet. OK.”
I thought it was kind of beautiful too, joey. Their love could make a dumpster smell sweet. (But the noise drew muggers.)
New phrase: banging like a lid on a dumpster in a hurricane!
“Why don’t we do it in the dumpster?”
My theory is that the Powers running the recovery ship had no intentions of exercising regulation in lending . It’s all about the transfer of toxic assets
from one set of books to another and crossing one’s fingers that those
assets won’t go down in value more .
Regulate lending?
The problem they were (and still are) attacking with their emergency lending programs was the credit crunch. It’s all part of an effort to unclog the constipated lending situation, not regulate it.
People fail to appreciate how vital a steady supply of working capital is to keeping the business world’s wheels turning. Like oil in an engine, money must continuously flow throughout the economy, and the easier it can do so, the better.
Businesses don’t keep a vault full of cash in the back room which they can raid whenever they need some money. Banks have the vaults. Businesses borrow from banks.. often.
If nobody’s lending, businesses simply fail… can’t pay the bills or their employees.
Business provides jobs, so employment almost directly depends on the easy availability of credit to business. Restrict credit and things quickly grind to a halt.
HW,
With a 5-10 year horizon, do you think those assets will go much further down in value? And if they do, will streatching out the pain have been a worse option than doing nothing?
RIO …In answer to your question ,it all depends on how many people walk and how much supply keeps coming and how much damage
the neighborhoods take on by foreclosures ,and how many new jobs are created ,and all that jazz. It really doesn’t help that the government is backing loans in which the buyer doesn’t really have any skin in the game ,as usual .
Maybe some markets have reached their bottom ,with others due to fall more ,but overall supply and demand will win out ,but the government may step in and pay people to buy houses ,and maybe throw in a car to boot .
Thank you,
My guess is maybe 30% of markets have hit bottom if our Big Brother does nothing else. If there’s massive intervention all bets are off but as we all know, any false bottoms will come at price.
But hitting “bottom” still doesn’t mean real estate won’t be a dead asset class for a long time.
Agree Rio .
“…crossing one’s fingers that those assets won’t go down in value more…”
It’s not a stretch to interpret efforts to support the value of residential RE as indirectly targeted at propping up the value of toxic MBS and other residential-RE related assets.
Biggest Monte game in history!
(So Ca) Southland home prices move north for fourth consecutive month
http://www.latimes.com/business/la-fi-home-prices16-2009sep16,0,3082527.story
IIRC, I read/or hear that the banks are using the loan balance as the REO value amt., and when the home goes back to the bank, it’s recorded as a sale? Serial refi’s included. Correct me if I’m misinformed, please.
As we know, sometimes the median price rising does not mean prices are rising. When expensive houses have meaningful price reductions, more of them sell which affects the median price, bringing it up.
However, the price per square foot of similar houses could be falling as I think it still is in S. California and most places.
I know what the median price is, Rio. You explained it so well, evidently you do too.
Dataquick numbers are the important ones, since the MLS is full of lots of tricks. I have access to it. I never take it at face value.
My background is in shopping centers.
“when the home goes back to the bank, it’s recorded as a sale”
It gets recorded the same as a sale on the public records. It is not recorded as a sale in the MLS because if the bank takes it back at sheriff auction, no realtor/agent is involved.
Our crown jewel of ignorance from mt state, S.Carolina!
“There’s nothing in the Constitution that says that the federal government has anything to do with most of the stuff we do.”
~S.C. Rep. James Clyburn
mt = my
And unfortunately, there’s nothing in the Constitution that specifically bars the federal government from becoming involved in most of the stuff we do.
Well, except for the 10th amendment, but who cares about that.
Yep.
Just to spell it out:
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
(emphasis mine)
Much as I love SC, some weeks I’m embarassed to admit it.
Where are you in SC? I lived in Charleston Columbia Florence and Beaufort…..i left just a few months before Hugo hit…lucky me.
Greer. It’s actually my husband’s home town. We have his grandmother’s house. Our oldest daughter has his parents’ house which is next door. I grew up in Hartsville and Rock Hill. We’ve lived in Sumter, Florence, and Columbia. The Greer area isn’t bad except it’s always been hard for my husband to find good work here for some reason. We would like to move in a couple of years. We just aren’t sure where yet.
This acutally makes sense, though it’s badly worded. The Constitution identifies Federal Govt responsibilities, and according to the 10th Admendment everything else is a State responsibility. The Fed has many programs that aren’t covered by the Constitution. This probably came up in the context of health care reform.
“This acutally makes sense, though it’s badly worded”.
He was a school teacher here in S.C. for years, helps ’splain’ why we consistently score at the bottom, year in and year out.
South Cackalaky has a long history of wanting out of the Union. Maybe they’re planning to secede again. How do they plan on keeping those all you can eat seafood buffets in Myrtle Beach filled with Yankees? Just think what the effects a trade embargo would have on Wings and Eagles beachwear stores! I guess they plan on running the Union blockade to smuggle in the hermit crabs.
I’m not sure what happened to it, but a few years ago there was a Christian movement that wanted upstate SC to secede.
Hell so does Vermont!
I would love for the fedal gubmint to stay the hell away from States issues, but to late. Far to many gubmint leaches now, they need their nanny to guide them.
The policy uncertainty over whether the Fed will opt to rein in future inflation seems to be reaching a boiling point. Some are going so far as interpreting the rhetoric about keeping future inflation under control as propaganda to hide some kind of secret plan to promote inflation.
Bernanke May Accept Slow Recovery to Fight Inflation (Update2)
By Craig Torres
Sept. 16 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke, who yesterday said the U.S. recession probably has ended, may have to accept a slow recovery and high unemployment as the price for defending his inflation-fighting credentials.
…
“At the end of 2010, the story may not be whether they exited correctly, but how did they allow this outcome to occur,” said Laurence Meyer, a former Fed governor and vice chairman of Macroeconomic Advisers LLC. in Washington. “The definitive marker of the end of easing was the decision at the August FOMC meeting to allow Treasury purchases to expire.”
‘Moderate Growth’
The FOMC’s June forecasts show unemployment above 8 percent in the final three months of 2011. A majority of FOMC members also forecast inflation will be below their long-run preferred range of 1.7 to 2 percent next year, Fed minutes show.
“If we do in fact see moderate growth, but not growth much more than the underlying potential growth rate, then unfortunately unemployment will be slow to come down,” Bernanke said yesterday, noting that the economy faces “headwinds” such as tight credit. “It will come down, but it will take some time.”
At the same time, the Fed could startle markets if it decided to buy up more government debt, expanding the balance sheet even further. Gold futures reached an 18-month high of $1,013.70 an ounce on Sept. 11 as the U.S. Dollar Index, which values the greenback against six other currencies, dropped to its lowest level in almost a year.
Inflation Concern
“Those buying gold believe the Fed is going to be accepting inflation if not even promoting it,” said Axel Merk, whose $370 million Hard Currency Fund is up 11.3 percent year to date on investments in precious metals and foreign currencies.
…
One possible way forward:
- Bernanke takes one for the team by creating inflation and taking the blame.
- Someone else eventually comes in as the reincarnation of Volcker in 1979 to rein in inflation, after the collective debt burden has loosened up sufficiently.
No kidding PB ,it will most likely go that way . I think that they will
come up with some non=person to blame however .
There will eventually be run-away inflation (but not in salaries - just a huge price increase in things we need and a decline in living standards.) We will be told that this is “good” since it props up the stock market. Then, after the economy enters a near-permanent shambles, they’ll talk about how “no one could have seen it coming” and blame some retired member of the Fed, who’ll write a book about it, etc.
Nothing will change since the current situation benefits the crooks.
Wouldn’t signs of economic strength normally portend a higher dollar? What am I missing here?
Currencies
Sept. 16, 2009, 12:20 p.m. EDT
Dollar slides on fresh signs of economic strength
Japan’s Fujii not eager to intervene to weaken yen
By Laura Mandaro & Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — The U.S. dollar slipped against its major rivals Wednesday after a fresh show of strength in U.S. manufacturing buoyed stocks and encouraged sellers of low-yielding assets.
Still, the greenback came off yearly lows reached in early in the U.S. session. Investors also weighed data that showed non-U.S. investors sold U.S. assets in July, but China and Japan were net buyers.
The dollar index (DXY 76.32, -0.22, -0.29%) , a measure of the greenback against a trade-weighted basket of major currencies, fell to 76.337, down about 0.2% from its level late Tuesday. It had dipped to 76.187 earlier.
…
Good for Main Street = Bad for Wall Street
And visa versa.
It may not always be true, but it seems to be true about 80% of the time.
Metals Stocks
Sept. 16, 2009, 12:04 p.m. EDT
Gold futures rally to 18-month highs; inflation fears fan rise
By Polya Lesova & Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — Gold futures on Wednesday rallied to an 18-month high on expectations that a rebound in the global economy would fuel inflation, heightening demand for the precious metal as an alternative investment.
“Gold has found its footing in the low $1,000-an-ounce and looks set to launch an assault on the all-time record nominal high,” said analysts at GoldCore in a morning email.
The record intraday price for a front-month gold contract is $1,033.90 an ounce set on March 17, 2008.
On Wednesday, gold for December delivery rose to an intraday high of $1,023.30 an ounce in electronic trading on Globex.
The contract was recently up $10.5, or 1%, to $1,017.20 an ounce. December gold is not the front-month contract, but it’s the most actively traded contract.
“The catalyst for the rally was the weak dollar,” wrote analysts at Commerzbank in a note to clients.
…
If there are no worries about future inflation, why are metals stocks roaring?
Anyone who knows anything about inflation (unlike these reporters, apparently) realizes that inflation can be baked into the cake many months before it shows up in the data. Hence it is impossible to use a superficial look at current output and prices to gauge future inflation risk. Metals stock prices are a better indicator, thanks to rational expectations.
U.S. Economy: Output, Prices Point to Growth Without Inflation
By Courtney Schlisserman and Timothy R. Homan
Sept. 16 (Bloomberg) — Reports on industrial production and consumer prices today showed the U.S. economy is emerging from the economic slump without spurring inflation.
Output at factories, mines and utilities climbed 0.8 percent last month, exceeding the median estimate of economists surveyed by Bloomberg News, data from the Federal Reserve in Washington showed. The Labor Department said the cost of living climbed 0.4 percent, and was down 1.5 percent from August 2008.
…
I bought my gold coins when gold was at $900 an ounce. My platinum was at $1100…..this could get interesting…
Bullish contrarian signal for the dollar noted:
Dollar Pessimism Highest in 18 Months as Growth Outlook Rises
By Matt Townsend
Sept. 16 (Bloomberg) — Investors turned the most bearish on the dollar in 18 months as signs of a recovery in the global economy reduced demand for the currency as a refuge, a survey of Bloomberg users showed.
The world’s main reserve currency will fall and Treasury yields will rise over the next six months, according to 1,851 respondents in the Bloomberg Professional Global Confidence Index. Their outlook on the economy improved for a second month, after saying it worsened every month since the index began in November 2007.
The U.S. Dollar Index fell yesterday to the lowest level in a year as a decline in foreign-exchange price swings encouraged investors to borrow the currency at record low interest rates to finance the purchase of assets in countries offering yields as much as 8.1 percentage points higher than deposit rates in America.
“You’ve had a lot of people being in the dollar that are going to exit when it isn’t a necessity as a safe haven,” said Fabian Eliasson, a survey participant and head of U.S. currency sales at Mizuho Corporate Bank Ltd. in New York. Eliasson said he expects the dollar to weaken.
…
Anyone please,
How do I make italics or bold text on this blog? I have a mac.
Thank you
I’m pretty sure it’s just HTML tags.
Matter of fact, there’s a little explanation of the tags you can use right above the “Add comment” button.
Easiest way is to use Firefox with drumminj’s add-on:
http://home.avvanta.com/~drumminj/dist/joshuatree_1_4b4.xpi
I second the motion on the Firefox add-on. It rocks the house.
Thank you all, I’ll look into it.
U.S. mortgage demand drops, supply caps improvement
Wed Sep 16, 2009
NEW YORK (Reuters) - Demand for U.S. home loans fell by more than 8 percent as fixed mortgage rates rose last week in a banking period shortened by the Labor Day holiday, the Mortgage Bankers Association said on Wednesday.
Total applications were nonetheless at one of the highest levels seen since early June, with borrowers still eager to take advantage of the federal first-time home buyer tax credit before the program closes at the end of November.
Borrowing costs stayed relatively low, which continues to foster demand for potential buyers. But there is growing concern about whether housing can sustain its recent momentum once some key government rescue programs end.
As a result, the real estate industry is pressing Congress to extend the tax credit to all buyers and increase the size to $15,000 from $8,000 in a program now set to end on November 30.
Another concern is the end-2009 deadline for Federal Reserve mortgage-related debt purchases of up to $1.45 trillion — aimed at keeping loan rates down.
“If the first-time home buyer tax credit expires at the end of November and if the Federal Reserve were to significantly scale back their mortgage (bond) purchases early in 2010, the housing market could hit a wall very quickly,” said senior Bankrate financial analyst Greg McBride in North Palm Beach, Florida.
“I don’t think that the Fed is going to do anything rash,” he said. “I think they will slowly back away from the table so as to keep a lid on mortgage rates.”
Just about the only thing that’s been driving home sales are gubmint give-a-ways, and mortgage backing. The push now is for $15,000.00…. I am not sure that will fly, but the $8000.00 will be held over, I’ll bet.
well, Govt’s pretty much committed to play the hand all the way to the end.
While some might think certain companies were deemed too big to fail, the fact is the government’s effort to revive the economy is too big to fail.
“…the government’s effort to revive the economy is too big to fail.”
Agreed. The question is whether the government’s long-term interest in reviving the economy is best served by providing special risk subsidies to banks that are deemed ’systemically important’ — i.e., large enough to bring down the world financial system if they go under.
There’s no telling if the effort would be better served by using other methods. Economists are welcomed to argue about that forever, as i suspect they will.
But tough love was not, is not and likely will never be on the govt’s list of options.
Investors who are only interested in making money might acknowledge that… and perhaps see some way to profit from it.
Oh there will be plenty of tough love, joey.
For you and me and the rest of us average tax payers.
Plenty.
Not that anyone in gubmint cares what anything costs.
Totally misleading headline!
Senate’s 10-Year Health Care Would Cost $856 Billion- CNNMoney.com
The chairman of the Senate Finance Committee unveiled a summary of his long-awaited health-care reform bill Wednesday.
< More nonsense from news media. No senator, banker, or economist on the planet has any idea what a dollar will purchase in the way of “health care” or anything else over the next decade.
Congress is pulling our legs when it pretends to know what future costs will be because it can only guess what the purchasing power of a dollar will be next year, let alone ten years from now.
By 2019 the dollar could have died and we’ll all be doing business with some other form of money. How can sound planning be done with the phantom currency that presently passes for “money?”
That $86 billion per year year on those who have been paying taxes and getting nothing. Too much?
So what do Medicare and Medicaid cost per year? What is the cost of taxpayer funded private health insurance purchased on behalf of federal, state and local retirees?
And check out table 459 of the Statistical Abstract of the United States. The tax subsidy for employer-funded health insurance of excluding from federal income taxation is $185 billion per year, worth more the more you earn and the more you get. The cost of state and local income tax exclusions are on top of that.
The cost of benefits for those who already get benefits probably goes up more than $85 billion per year. But that’s too damn much to ensure younger generations get something.
Universal health care, or eliminate Medicare. Either is defensible, depending on your ideology. What we have now is not.
Point is ‘they’ can not know what it will cost 10 years out. S.S. is going to run out and the point in time is changed yearly.
Don’t worry about sickness care you’ll get it, count on it. The cost is a completely different point.
Bill over 10 years costs less than Iraq war and wall street bail out which occurred over a much shorter time period. As opposed to the above waste of resources a health care bill will actually improve the lives of most Americans.
“Bill over 10 years costs less than Iraq war and wall street bail out which occurred over a much shorter time period”.
Completely different issues, and still you can’t know true costs. If we close all of our bases world wide, how much would that save in ten years? The list can go on and on.
Once again, not to worry you will get your sickness care. Possibly as early as 2014.
You act like the money spent on the Iraq war was not a totally voluntary and superfluous expenditure.
Otherwise, it would have been included in the past 7 budgets instead of the supplemental budgets.
Thank you, measton.
Go, precious. Go.
‘I’m going to die’: Ocean Shores’ only doctor calling it quits
http://www.seattlepi.com/local/410227_doc16.html
Dr. John Holm is Mel’s doctor, and the doctor for 4,000 others. He’s the only doctor in Ocean Shores. But it’s been a long time since he got a paycheck.
“From this clinic…about 17 months,” he said.
No paycheck for more than a year. How has he lived?
“Well, I moonlight. I cover emergency rooms,” said Holm.
The problem: Medicare and Medicaid don’t pay enough to cover clinic expenses and malpractice insurance.
Holm has loaned the clinic $290,000. He took out a $200,000 mortgage on his house to keep food on the table. But it still isn’t enough…
I love Ocean Shores. I’ve got a friend with a family cabin there, so some of us go out there a few times a year. The wind never stops blowing off the sea so all the trees grow at an angle, and the houses are weathered gray and anywhere you go in town you can hear the boom and rush of the waves. The little town is figuratively swallowed by the sea. It’s great. I love Ocean Shores. But it is one fading town, for sure.
They claim to have 4,000 residents!?
I bet at least 3,000 of those 4,000 residents are 60+, and the leftover 1,000 residents are surely parakeets or cats or something.
I got so nostalgic I forgot to add my thought: I bet health care reform is the number one topic of discussion in the town of Ocean Shores.
And I ask… Who is going to get pummeled with obamacare?
I read that no longer are they requiring employers to provide it.
They will require YOU to buy it though, and if not, you can expect a penalty from the IRS… Up to 3400 a year.
It is the same system that MA has, and it is absolutely disastrous.
The people that are going to get pummeled are hard working people like this Dr. like the Dr. yesterday with the Ob-GYN practice, and in the end, every worker in the states.
Obama for the workers… Yeah right…As long as they are union, that is.
That is sad. How far is it to the next nearest doctor?
I don’t know. I bet a far ways. I’m pretty sure Humptulips doesn’t have a doctor.
(Hahaha! Did you notice how I managed to work in the name ‘Humptulips’ into our discourse? I was dyin’ to come up with a plausible reason. So, thanks. Of course—it’s still sad. )
Ocean Shores has absolutely NO economy. It’s no surprise the only doctor is leaving. The town might just cease to exist at some point.
Define ‘exist’. Does that mean that people breathe on their own there? Because if that’s the requirement—then it’s already gone.
But I don’t care. I said I love Ocean Shores and I meant it.
…of course, I’m uncanny and unnatchrell by nature, so there is that.
cs monitor article
When democracy mixes with poverty the result is often explosive – literally. The Oxford academic Paul Collier proposed in “Wars, Guns and Votes” a formula to explain this volatile chemistry. He believes that the critical point lies at a per capita income of $2,700 per year. Below that level, democracy has a difficult time taking root.
The destitute blame the government for their plight and, since voting alone does not bring improvement, they inevitably see violence as a better way to make a point. In contrast, in societies above that level, citizens have a stake in the system and are therefore much more determined that it should succeed. The voter with a stable job and a secure place to live is a signatory to the social contract understood by Jean Jacques Rousseau, whose political philosophy underlay the French Revolution.
The possibility that “democracy kills” should not come as a surprise to anyone who has paid attention to events in Iraq, Afghanistan, or Zimbabwe. It should, nevertheless, be stressed that the fault lies not with the idea but with its implementation. Democracy, unlike cake and coffee, does not come in “instant.” Success should not be measured by the speed with which elections are arranged.
A lesson lies in the experience of Germany and Japan after World War II. The US began planning reconstruction well before the war was over, and accepted that political reform would have to be accompanied by comprehensive economic development. Yet if that sort of slow mentoring and management (not to mention money) seemed essential back then, why has a much more impatient, poorly planned approach been taken to the infinitely more complex problems of Africa and the Middle East?
Anastasio Somoza, the brutal Nicaraguan dictator deposed in 1979, once told a reporter: “I would like nothing better than to give Nicaraguans the same kind of freedom as that of the United States. But it is like what you do with a baby. First you give it milk by drops, then more and more, then a little piece of pig, and finally it can eat everything … You have to teach them to use freedom.” Somoza was a vile character, worthy of derision. Yet on that point he was probably right. Democracy is a culture; it has to be learned. Europeans, remember, took centuries to get it right.
We need to rid ourselves of the politically correct attitude that all people are capable of immediately becoming good democrats, or at least should be allowed to make their own mistakes. As the experience in Germany and Japan demonstrated, building democracy cannot be rushed. It must be accompanied by sustained economic development. And, most of all, it cannot be achieved at the point of a gun.
interesting article on asafoetida:
after the w-s
saudiaramcoworld.com/issue/200904/devil.s.dung-the.world.s.smelliest.spice.htm
I thought this was what people used instead of garlic so their hands wouldn’t take on the garlic aroma. I never used it but now I know if I ever do get it not to be repulsed by its uncooked odor.
I remember as a kid reading a novel set in the late nineteenth or early twentieth century in which a boy character has to wear a stinking asafetida bag around his neck to ward off disease. Either the character or I thought that it might have worked by driving away infectious people - along with everybody else - by the smell.
It sounds interesting. In January I am going to be the house guest of the friend who sent me the article. Perhaps we can experiment there; she has awesome spice shops nearby.
I know she’s eaten durian fruit, so she might consider it.
Fry up some raw cashews, then sprinkle with asafoetida and salt….yummm
ccdude, How do you handle the asafoetida - grind, grate, crush? I assume you must sprinkle it into the cooking oil, since the article says that you have to cook to destroy the stinky compounds. Then how do you store the remainder?
lots and lottsa “must sell” ads are popping up on craigslist lately.. someone mentioned it yesterday.
I follow RVs and asking prices on stuff below about $10,000 are falling hard and fast.
It could just be end of Summer for rec vehicles, but there’s a hint of desperation in the air.
———
But who knows what motivates some people..
“Don’t be trying to hit on me.”
http://bakersfield.craigslist.org/rvs/1374846206.html
I can’t help but wonder if i would get a better deal if i do hit on her…
Hilarious!
Thanks.
Lots and lottsa “must sell” ads are popping up on craigslist lately.. someone mentioned it yesterday.
Yes, a nice discussion about buying boats and motorcycles.
Yesterday evening I called to ask a question about a little boat I saw on craigslist, just a minor question, not to make an offer, and he cut the price in the first breath out of his head. Then called back later and left a message lowering it again.
Desperation? What desperation?
..think to ask him if he had any… books?
I CAN’T HEAR YOU!
*sticks fingers in ears *
La la la la….
“Don’t be trying to hit on me.”
Judging from the grammar, I probably wouldn’t be hittin’ on her, even if she had all her teeth.
I’d hit on her, b/c if she says that there is a 10% chance she is hot. I’d have to see her first though…
$2500? That’s a whole lot of crystal meth.
Good find, joey.
A whole country song in one two-line ad.
So very Bakerspatch….
I’ve known JC Moore for 30 years, I told him in Jan. that Gubmint Motors would shut him down. Super lib, team Barry voter, but a good fellow, sorry to see them go. They would have gone away under team McCain also.
Business The State Cola, S.C.
Wednesday, Sep. 16, 2009
Jim Moore Cadillac closing after 42 years
After 42 years on North Main Street, Jim Moore Cadillac is closing.
The dealership sold the last of its new car inventory on Monday and will be taking its last service calls today, owner JC Moore said.
Moore got a letter in June from General Motors saying his franchise agreement would not be renewed and he would not be able to buy any more new cars.
“Up in Detroit, they decided they didn’t really need a standalone Cadillac dealership here in Columbia,” Moore said. “We were disappointed, of course, but also realized that there wasn’t a whole lot of point in fighting it.”
Increased competition among luxury car dealers in the Columbia area has taken a toll, Moore said.
GM sent letters in May telling 1,100 dealers nationwide that they would be terminated, but they did not publish a list of affected dealerships.
That was just one day after Chrysler cut loose 800 dealerships, including 11 in South Carolina, after filing for bankruptcy protection.
The automotive industry has lost thousands of jobs during a lingering recession. GM’s move was part of a larger plan to drop 2,600 of its 6,200 dealerships nationwide as it struggles to restructure and become profitable again.
Moore’s father, Jim, bought the dealership in 1967. Moore started working for his father two years later at age 20. He has been with the company for 40 years.
A Cadillac depreciate more than an ice sculpture.
A coworker of mine just bought a house in Phoenix for alot more than she could afford. She was initially looking at houses in the 100k and less range, but was overbid in all cases. She ended up paying $140k to get her dream house. Her reason for buying now was to take advantage of the tax credit. Is the tax credit responsible for most of the buying activity out there? The same way “Cash for Clunkers” caused a temporary bubble in new card buying (and now the dealers are ghosttowns again of course.)
I hope, that for your sake, that you can keep from bursting into uncontrollable fits of laughter when you’re around this coworker.
OTOH, one good guffaw might be worth it. Just to get it outta your system.
I believe it has had a great deal to do with sales. A real-a-tor told a neighbor of mine the the three home sales that she had made in the last two months were “tax credit’ buyers.
I do know the HB’s and NRA are blitzing Central Control for an increase and extension.
NRA or NAR?
I know really deep down you want to line them all up and shoot them
Ooops! Yes I meant NAR and yes I would first in line on the firing squad… ;- )
They will extend the tax credit for sure, but not talk about it until the final hour. Anything to get people off the fence and spend.
From moneynews.com:”The U.S. economy has not begun to climb out of the worst recession since the Great Depression, but the “terror” that followed last year’s near-collapse of the financial system is gone, due in part to government intervention, Warren Buffett told Reuters on Tuesday.”
BTW: while driving I heard that the Glenn Beck show was going to call BB a liar tonight on tv (don’t have it) saying that the government was selling government bonds to a third party and then buying them back a week later.
He’s probably referring to the thing in PB’s post the other day, from Chuck Butler:
Comment by Professor Bear
2009-09-10 19:08:05
Here is some tinfoil hat discussion from Chuck Butler’s EverBank news letter, which unfortunately, does not strike me as implausible:
Review & Focus
September 1, 2009
…
The Fed has always had a T-bill purchase policy; that’s how they would add or take away liquidity in the markets. I have a fundamental problem with that, too, but that’s for another discussion. For now, I want to discuss their policy of buying longer-term bonds — what is often described as Quantitiative Easing. The numbers begin to get pretty wacked, folks, but stay with me here… $300 billion of Treasuries, $200 billion of agency debt, and $1.2 trillion of mortgage-backed securities, all between March and September of this year.
The Fed doesn’t tell us from whom they bought their Treasuries; they just seem to show up on their inventory of bonds. But we have to assume they buy their Treasuries from the Primary Dealers. The reason I say so is simple: in August, there was an auction of 7-yr Treasury Notes. It was reported as “all bought” with the Primary Dealers picking up $10 bn of the issue. That’s quite a large piece to have to chode down for the PDs, but had they not stepped in to cover the auction, it would have been a “failed auction” which would have sent out warning signals to the marketst that the U.S. could no longer financie its deficit spending!
A couple of days later…47% of that $10bn worth of 7-yr Treasuries showed up on the Fed’s books. They had bought them from the PDs in an apparent back room deal!
This is shady, under-the-table stuff, folks, and tells me the Gov’t knows things are worse than they are leading us to believe, and are directing the Federal Reserve, which is supposedly independent!
…
Cap & Tax…
Obama Admin: Cap And Trade Could Cost Families $1,761 A Year
September 15, 2009 9:03 PM CBS News
The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.
A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year.
A second memorandum, which was prepared for Obama’s transition team after the November election, says this about climate change policies: “Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation.”
The documents (PDF) were obtained under the Freedom of Information Act by the free-market Competitive Enterprise Institute and released on Tuesday.
These disclosures will probably not aid the political prospects of the Democrats’ cap and trade bill. The House of Representatives approved it by a remarkably narrow margin in June — the bill would have failed if only six House members had switched their votes to “no” — and it faces significant opposition in the Senate.
One reason the bill faces an uncertain future is concern about its cost. House Republican Leader John Boehner has estimated the additional tax bill would be at $366 billion a year, or $3,100 a year per family. Democrats have pointed to estimates from MIT’s John Reilly, who put the cost at $800 a year per family, and noted that tax credits to low income households could offset part of the bite. The Heritage Foundation says that, by 2035, “the typical family of four will see its direct energy costs rise by over $1,500 per year.”
Gosh, what a surprise.
When an Airworthiness Directive is issued by the FAA, they give an estimate for the cost of compliance.
Their estimates are 50-100% below the “Real-World” cost.
Market Ticker guy video for today is beyond sobering.
I just emailed my Smith Barney guy and told him “liquidate everything”.
Does the Market Ticker guy moonlight as a shoeshine boy?
U.S. home builder sentiment highest since May 2008
Wed Sep 16, 2009
NEW YORK (Reuters) - U.S. homebuilder sentiment rose in September to its highest level since May 2008, the National Association of Home Builders said on Wednesday, bolstering the view that the battered housing market is stabilizing.
The NAHB/Wells Fargo Housing Market index climbed to 19 from 18 in August, in line with the forecast in a Reuters survey.
Government programs that have pushed down U.S. mortgage rates and instituted an $8,000 tax credit for first-time home buyers have stimulated demand, the industry group noted in a statement.
Restoring and maintaining stability in the housing market is critical for economic growth.
The sentiment index plunged to a record low of 8 in January and has since steadily climbed. Readings below 50, however, mean more builders view market conditions as poor than favorable.
“Today’s report indicates that builders are starting to see some glimmers of light at the end of the tunnel in terms of improving sales activity,” NAHB Chief Economist David Crowe said in a statement.
Sounds like first-time home buyer tax credit renewal and expansion is in the bag.
I concur.
Since our countries economic stability is based on the housing market, it is imperative that the housing market continue to be propped up by whatever means necessary. For infinity and beyond!
I do think the $8000.00 continuation is in the bag, not so sure about the $15,000.00 but I would not be surprised.
We should take odds.
Heck for that matter - let’s start an ETF. That seems to be the in way to speculate these days.
‘Public Option’ government would cut costs, improve service
Scott Ott Examiner Columnist
News fairly unbalanced. We report. You decipher.
White House sources said today that President Obama may soon propose legislation that would save Americans billions of dollars each year while improving service by creating a ‘public option’ version of the federal government.
The new entity would introduce ‘choice and competition’ to the lethargic big-government market, currently dominated in many areas of the country by a single player.
“The executives who work in the U.S. government now have no incentive to trim expenses, or to serve the needs of average Americans,” said an unnamed White House source. “That’s because they have no competition. Costs skyrocket. People get the brush off, or have to contend with miles of red tape to accomplish simple things. If the federal government had to look over its shoulder now and then because it had a scrappy competitor, that would provide incentive to improve.”
Once the ‘public option’ federal government gets established, citizens could choose whichever they prefer, the source said, “Stay with the old, sluggish, expensive government, or switch to the new, nimble version that’s subsidized by tax dollars from the old one. It’s completely up to you.”
“If you like U.S. Government Classic, you can keep it,” he said. “No one will be forced into the public option. But if the one you have doesn’t suit you, you’ll no longer feel hopelessly trapped, victimized by a bureaucracy that’s focused more on power and money than on the needs of citizens.”
President Obama reportedly likes the plan because it can be executed “without adding a single dime to the deficit.” The estimated 10-year cost of $20-$30 trillion will be funded primarily through reducing waste and inefficiency in the existing U.S. government, and by taxing the Treasury Department’s tax revenues.
Ha! I love it.
It’s about time. I also heard Jimmy Carter thinks it’s not racist “at all”, so now everybody can listen to the rhythm of the falling reign, telling me just what a fool I’ve been.
Choices are always good, as in:
Tweedle Dee or Tweedle Dum
Sauruman or Sauron
Yin or Yang
Paper or Plastic
Bone Us or Bonus
If anyone can tell us all about racism, it’s Mr. Ethnic Purity himself:
That phrase ethnic purity continues to haunt Democratic presidential candidate Jimmy Carter this
morning. He used it three days ago saying there was nothing wrong with city neighborhoods trying to
maintain ethnic purity, he specifically mentioned groups like Poles, Czechs, French Canadians, as well as
blacks, and the controversy flared, and Carter, campaigning in Pennsylvania, has been hit with the
question time and time again. Robert Hager reports.
icue.nbcunifiles.com/icue/files/icue/site/pdf/33592.pdf
Jimma Carter needs to STFU and go back to the farmhouse, eat a p-nut and drink a Billie beer…
Team Barry, and Barry have stated they don’t see it that way. Talk about a worn the hell out boogie man.
I’ve stood outside of Jimmy Carter’s place in Plains, GA, and, believe me, it’s no farmhouse.
If I treated my clients the way health insurers treat theirs, I’d be out of business. Abusing the people who’ve granted me the privilege of being in business just wouldn’t be smart.
Note that I used the word “privilege.” That’s what being in business is. I earn the right to stay here by doing right by my clients.
As for employer-based health insurance, the sooner that system disappears, the better. Why? Because in order to get that coverage, you have to disclose the most personal aspects of your life to your employer. And, in most cases, those things are none of your employer’s business.
As for me, I’m self-employed. Which means I have to try to find affordable insurance in the individual market. For several years, I’ve been covered, if you want to call it that, by a Health Markets (formerly called Mega Life) policy sold via an organization called the National Association for the Self Employed (NASE).
After I purchased the policy, I learned that this insurance company has been sued by several state attorneys general. There have also been class action suits. Do a Google search on “NASE class action” and you’ll find plenty of information.
I’ve tried to get on the Arizona state plan for small business people, the Healthcare Group, but guess what? Our legislature recently passed a law that excludes sole proprietors from this plan. Thanks a lot, legislature.
So, I continue with NASE/Health Markets. Let me tell you, if and when that nationwide public plan goes into effect, I will cheerfully kick that NASE/Health Markets policy to the curb.
All I can say is, I hope I live long enough to do so. I’m 51 years old and already avoid/delay regular checkups and tests because I fear that, if something is found, the cost of treatment will bankrupt me to the point where I will lose my house.
So, that’s where things stand for me. Too bad that such things are allowed to happen in the richest country on earth.
Slim,
Another prime candidate for a public OPTION in health insurance choices.
What do they have on Obama to make him back off this sensible concept? Why NOT allow folks like us to purchase from the same pool of plans (note, I said “purchase”) as federal employees? Even the insurance companies acknowledge that folks like you and me are getting royally skewered without the power of collective bargaining to mitigate our costs. We are literally subsidizing everyone else’s medical care.
You and I are in the same boat.
Like it or not, it looks like I’m going to end up being a contract employee.
Can’t get health insurance at ANY Price. (Over 50, overweight, on blood pressure meds, and cholesterol meds due to my family history………had a kidney stone in 2003, otherwise haven’t needed to go to the hospital since 1981).
Something is fundamentally wrong with a system that burns thru a lifetime of savings, if you end up paying out of pocket for a 2-3 day visit to the hospital.
I’ve been making the case to my family that everyone would be money ahead if i whacked myself, if I ever came down with a terminal disease……..At least as long as the health care industrial complex continues as it currently exists.
Or GS:
hide your assets, that’s the problem you are too rich for medicaid.
Put the house in the kids name with living rights…..
Of course your kids cant be spendthrifts or file for BK either.
Asking prices on the more upper end houses in California’s Central Valley aren’t cratering but they are coming down substantially. The region may not be everyone’s cup of tea. But I believe the bubble started faster here than in other areas and began deflating sooner.
Our five-year commercial office space lease expires soon; we plan to renegotiate it downward.
From Matt Latimer’s amazing GQ piece “Me Talk Presidential One Day” —about his time as a speechwriter in GW’s White House:
http://tinyurl.com/ol7fwc
“…We had to reassure the American people that everything was going to be okay. As it turned out, Secretary Paulson had a plan that would fix everything: a $700 billion bailout of the financial system. The plan, like the secretary himself (who’d been pretty much a nonperson at the White House), seemed to come out of nowhere, as if it had been hastily scribbled on a sheet of paper in the secretary’s car on his way to work. Basically, it could be summed up as: Give me hundreds of billions of taxpayer dollars and then trust me to do the right thing….”
Thanks for that. The latest Vanity Fair has two articles of interest, “Henry Paulson’s Longest Night” and “Good Billions After Bad.”
The former is illustrated with a portrait of Paulson looking like the cat that ate the canary.
There’s also a (very) long-form article about last fall’s implosion in the new New Yorker. It’s titled Eight Days That Shook The World.
Here is a real crock of bullsh!t if one ever hit the MSM. Anyone who considers the conditions in the US housing market prior to the 2007-2008 meltdown “free market” has no clue about the myriad layers of government subsidies and social engineering mandates that pretty much left what could otherwise have been a well-functioning US housing finance system FUBAR.
Adam Smith never said that capitalism worked without a rule of law. But given the laws were generally rigged to vacuum money from the populace into the hands of the FIRE sector in the ever-crescendoing Ponzi scheme which was mortgage securitization, and the biggest players knew they would get free bailouts when the whole rotten structure collapsed, the inexorable march to financial panic was baked into the system.
“More broadly, the events of that week are likely to redefine the debate over the role of markets in a democracy, and even the nature of capitalism. At least since the Reagan revolution of the early nineteen-eighties, free-market ideology has been ascendant, with even Democratic Administrations following its precepts of market discipline, limited regulation, and unfettered rewards. George W. Bush was only its latest exponent, governing on a platform of economic growth and lower taxes. Yet it was Bush, and his Republican appointees Paulson and Bernanke, who orchestrated the virtual nationalization of the U.S. financial system. Although a vocal minority continues to argue that the system should have been left to the forces of creative destruction, the overwhelming consensus is that free-market principles failed to address a global financial panic. In an intellectual debate that has been going on since the Depression, Lehman’s failure may mark a victory of John Maynard Keynes over Adam Smith—the government interventionists over laissez-faire capitalists.”
Dumb observation of the day: The dollar is looking mighty oversold at the moment, given weak recovery prospects and a flight of speculative money into gold and other PMs on conjecture that dollar weakness will continue going forward.
The stock market looks overbought too but that doesn’t seem to keep it from going up.
My favorite Blast from the Past:
“Patient zero” bought a house in Stockton, California, in 2003 after getting a subprime mortgage. He defaulted on that mortgage 39 months later.
“He was a client of Countrywide. He got a $250,000 mortgage five years ago, He did not have to put a nickel down to get the loan. The value of real estate in Stockton, California, where he bought his home had been rising at 10% a year for four years. He was a good credit risk not because of his income but because the value of the asset he bought was bound to go up 100% by the end of this decade. Two months after his mortgage reset in 2006, he lost his job. He was in default less than 90 days later.”
“Somewhere in the Countrywide archives are his number, phone number, and most recent forwarding address. He is still looking for permanent employment.”
Date: September 14, 2009
Contact: Jeff Gozzo, (916) 319-2053
Lieu Announces Introduction of Monitored Mortgage Workout Program
Program Would Help Those Hurt by Wall Street Excesses
(SACRAMENTO) – On the one year anniversary of the Lehman Brothers collapse, Assemblymember Ted Lieu (D-Torrance) today announced the introduction of AB 1588, the Monitored Mortgage Workout Program, which would provide for state-appointed monitors to ensure homeowners have a chance to work out with their lenders a plan to prevent home foreclosure. Such monitors are critical to the Obama Administration’s Home Affordable Modification Program.
AB 1588 is sponsored by Los Angeles Mayor Antonio Villaraigosa and jointly authored by Assemblymember Lieu, Speaker Karen Bass and Assemblymember Pedro Nava.
“As distressed homeowners continue to be at the mercy of lenders unwilling to modify their loans, it is imperative that we do whatever we can to keep people in their homes,” said Assemblymember Lieu. “I am honored to work with Mayor Villaraigosa and Speaker Bass on a much needed tool to help California families.”
…
According to the program’s provisions on that page, it looks more like welfare for lawyers and bureaucrats.
Bank doesn’t agree with the Monitor’s proposal? The FB can take the bank to court if he wants to.
oh well.. it might mean some FBs keep feeding their alligators.. mowing lawns.. taking care of things for a few years, so it’s not all bad.
The fewer properties that have been abandoned for a long time, the better it’ll be for bottom feeders.
CIUDAD JUAREZ, Mexico – Gunmen burst into a drug treatment center in the northern Mexican border city of Ciudad Juarez and shot to death 10 people, the second such mass killing this month.
Police say nine men and one woman were killed in the attack just before midnight Tuesday at the Anexo de Vida center in Mexico’s most violent city. Two people were seriously wounded.
Enrique Torres, a spokesman for Chihuahua state police, said Wednesday the identities of the gunmen and the motive for the attack have not yet been established.
Ahh the war on drugs
Why not legalize it? Use the Great Depression II as the excuse. CA needs the tax revenue!!!
Actually, the government of Mexico should legalize it.
Think of the possibilities for “drug tourism”…………
-Marijuana cafes in Tijuana and Juarez.
-”Coke Condos” in Cabo.
-Meth dispensers in all those factories in the border towns.
San Diego and El Paso would have to build new airports.
Hey read this:
Mexico Legalizes Small Quantities of Some Drugs
http://www.narconews.com/Issue59/article3785.html
And this one:
Argentina Legalizes Personal Marijuana Use
http://narcosphere.narconews.com/notebook/kristin-bricker/2009/09/argentina-legalizes-personal-marijuana-use
These countries think their prisons have more important things to worry about.
Larry Fink is spewing the most nauseating BS on CNBC right now, saying all the right things about how there needs to be more regulation of the markets, etc., or we’ll face another crisis down the road. What a bunch of horsesh!t. These crooks are trying to paint themselves as guardian angels of the economy when they were the perpetrators of the scam. There’s a special place in hell for these leeches.
Wash, rinse and repeat, it’s change a person would be a fool to believe in.
Review in Bloomberg article today on the regulatory steps the administration is NOT considering:
The [current] White House proposals are meek compared with what the U.S. did under President Franklin Delano Roosevelt, according to Charles R. Geisst, a finance professor at Manhattan College in Riverdale, New York, and author of “Wall Street: A History.”
The Glass-Steagall Act of 1933 forced then-mighty J.P. Morgan & Co. to split in two, creating Morgan Stanley as a standalone investment bank.
Roosevelt’s effort was “antitrust legislation to break the power of the New York City money-center banks,” Geisst said. While today’s titans such as JPMorgan Chase and Goldman Sachs “have the same sort of influence, for some reason most people here [where's that?] do not want to alienate them.”
Real estate dis-ease is more like it…
Real estate unease
Projected foreclosures stir industry concerns
Matt Wrye, Staff Writer
Posted: 09/12/2009 03:12:04 PM PDT
Updated: 09/12/2009 10:24:28 PM PDT
As real estate veterans nervously eye the projected rise in mortgage delinquencies in 2010, they’re clamoring for more government-fueled homebuyer incentives, investor incentives and industry regulations that would hopefully bring the housing downturn to its knees.
“We need all of it,” said John Young, president of Rancho Cucamonga-based Young Homes, about changes needed in the appraisal, home building, mortgage banking and real estate investment arenas.
But one economist says this push probably won’t do much, given the overwhelming amount of homes projected to go into foreclosure, and the ones banks are already sitting on.
“All it’s going to do is make them happier,” said Chris Thornberg, owner of San Rafael-based Beacon Economics, about the changes the real estate industry’s biggest trade associations are pushing for.
“It’s probably not going to do anything.”
…
Praise God that there are at least a few honest economists on the planet.
…
There’s been a slight uptick in Southern California homebuilding - and an even better jump in existing home sales - but the number of projected foreclosures remains worrisome.
Nationwide, foreclosure activity - which includes mortgage defaults, foreclosures and auctions - has been rising for 43 consecutive months and isn’t likely to slow down until 2011 or later, according to Rick Sharga, senior vice president of RealtyTrac, and Irvine-based real estate data company.
Between $60 - $100 billion in “Alt-A” and option-adjustable-rate mortgages are beginning to reset, with the bulk of them hitting homeowners in the second quarter of 2010, Sharga said.
The bad news: “Loan modification programs will not solve either of these problems,” he said about these types of mortgages.
Thornberg says a “double dip” in California real estate prices isn’t unimaginable.
“If (the coming foreclosures) overwhelms the market, prices will continue to fall,” he said.
The government’s bailout of banks, its bank-to-bank loan guarantees and huge investments injected into Fannie Mae and Freddie Mac is only propping the system up, Thornberg said.
In fact, “enormous” problems are still at hand, such as the mortgage-backed security pools that are tainted by nonperforming mortgage investments.
If there’s a bright spot going forward, “we’re going to have cheap housing coming out of this,” Thornberg said, “which is good.”
Praise God that there are at least a few honest economists on the planet.
“’The housing market is clearly braking right now. I think 200,000 [job losses] might be conservative.’ Thornberg added, however, that the state’s economy isn’t likely to suffer severe damage from this slowdown.”
-Get Stucco
It’s kind of sad to see how GetStucco could pull a better forecast out of his arse than the highly-paid Anderson School forecasting team could muster…
“First the Anderson School forecasters were early with their dire warnings about the unsustainable overvaluation of RE, and now that the market is clearly tanking, they are pulling their punches. I find Thornberg’s assertion that 200K or worse lost construction jobs will be “no big deal” for the mighty CA economy to be entirely unconvincing. What other sector does he believe will replace all these lost construction jobs? Does he think that there will be no related loss of jobs in the mortgage lending sector or real estate sales sector? What about retail, which has been the ongoing beneficiary of the great housing-ATM-financed consumption boom?”
I wonder if Thornberg now thinks 11.9 percent unemployment is “no big deal”?
The even bigger deal is that California’s recent weekly initial claims for unemployment benefits has been running near 120,000 (June-July 2009 figures) — I would guess at the highest rate in state history. On an annualized basis, 120,000 jobs a week translates into 52*120,000 = 6.24 million jobs per year — probably not sustainable, since California only had 16,260,000 working stiffs as of July 2009.
Another striking factoid from that EDD report I linked in above: The CA state unemployment fund crossed to deficit as of early 2009 and is currently $2 bn in the red.
PB, you’ll really like Peter Morici, economist at the University of Maryland’s Robert H. Smith School Of Business. He comes on DC news radio Tuesday mornings and states things that one almost never hears on the news. The news has a news cycle, and they interview high profile people who seem credible, and who make themselves available. People like this are usually industry mouthpieces.
It looks like housing will lead California out of recession. Never mind all them homes that sit vacant save for the occasional college-aged or CEO weekend reveler.
Wednesday, September 16, 2009, 9:00am PDT
UCLA Forecast: Recovery will take into next decade
Sacramento Business Journal
Although the worst recession in seven decades likely ended in the current quarter, its negative effects will linger well into the next decade, according to the UCLA Anderson Forecast.
The good news is that the housing market is beginning to pick up, the report pointed out, while trade in and manufacturing of California’s export goods are beginning to increase. “Though the consumer goods and services sectors remain very weak, consumer confidence surveys and the response to the ‘cash for clunkers’ program provide indicators that consumer demand may be on the verge of recovery and the implosion of hospitality, retail, wholesale and transportation employment may be coming to an end,” the report said.
However, a major downside is unemployment. More rapid growth than can be expected over the next twelve months would be required to bring the unemployment rate down, and the report expects little growth through the middle of 2010 and a take-off towards the latter part of next year.
Economists expect joblessness to increase to 12.2 percent by late this year, up from the 11.9 percent in July, while California unemployment stays in double digits into 2011.
…
Season tickets are going for a steal at Yankee Stadium next year, as prices on some of the most expensive seats in house are cut significantly.
About 3,400 field-level seats that sold for $325 will go down to $250 or $235.
All 1,200 seats in the Delta Sky Suite will decrease in price, as well as the majority of the seats in the Legends Suite.
First-row tickets in those sections were costing as much as $2,500 at the start of this season.
The Yankees say 97 percent of all tickets will either remain the same price or decrease.
Oops: “Pulled Forward” Demand Really IS False!
“I told you so”
Sept. 16 (Bloomberg) — Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said nationwide industry sales are off 19 percent so far this month after a government purchase- incentive program ended.
“We are going to see harsh reality in September,” Sergio Marchionne, the chief executive officer of Fiat and Chrysler, said at the Frankfurt Motor Show. He described the U.S. industry results as a “disaster.” Fritz Henderson, CEO of General Motors Co., said the market is “very weak” this month.
Disaster eh?
But but but I thought all those “cash for clunkers” buyers were people who wouldn’t have bought a car otherwise?
Looks like that was a load of BS out of the administration…. just like all the other so-called “stimulus” programs.
Just another example of pulling forward demand, which works exactly once per application, but then leaves a gaping, sucking hole where demand would have been in the subsequent months.
PS: Expect them to try some sort of BS similar with the expiring “Home Clunker” $8,000 rebate program that is ending in a couple of months. The two problems with it are the same as the problems here - the consumer is tapped out and can’t afford to buy (witness the FHA default rates in excess of 20%!) and those who DO buy anyway find themselves in a financial position they cannot really afford and didn’t think through.
In addition you further drain the demand pool and thus when the “stimulus” ends (and all must eventually end) you find yourself with no real buyers left!
All this faux “demand” being generated by the so-called “stimulus” is just doing more damage to the economy - damage that is accruing and will come to the surface with devastating effect.
(From K. Denninger)
My prediction: Home sales will slow WAY down in the coming months. Why? Well, for one reason, they tend to do that in the fall and winter. Something about people having other things on their minds. Like the holiday season.
And there’s another, non-seasonal, factor. That is job insecurity. There’s a lot of that going around, and when people aren’t sure whether they’ll have their current job for much longer, they’re not out there house-hunting.
Add to those factors the coming expiration of Dough-4-Dumps plus continued high delinquency and foreclosure rates and you have the seeds of the next leg down in housing prices.
Another good post blue. It amazes me, and I know very little, how these idiots cannot discern the future.
I didn’t know the ‘bankster’ term was that old: After ten weeks of stormy trial, Chicago’s John Bain, 64-year-old founder of a chain of twelve small banks that failed at one crack last year (TIME, June 22, 1931), was last week convicted of conspiracy to defraud depositors. Scottish immigrant, onetime plumber, Bankster Bain had prospered in real estate, then branched into banking.
Henry Gibson of Laugh-In, recently of Boston Legal passed away from cancer today. He was 73.
Mary Travers of the group Peter Paul and Mary passed away from cancer today. She was 72.
Patrick Swayze of Dirty Dancing, Ghost, etc.. passed away from cancer yesterday. He was 57.
I really hate cancer.
Very late to this, but yes, this ain’t right. What is it that causes this self-destruction, which is what cancer is. Is the way we live, or the way we handle it?
nycjoe,
It just hit me hard because my mom is fighting stomach cancer right now and she’s 72.
Very sad to hear that, SFG. Best of luck and treatment to her. As you said, it is a despicable disease.
My thoughts are with you, SFG. I agree 100%.
Any chance the former Treasury Secretary and current Fed Chairman will get subpoenaed?
* WALL STREET JOURNAL
* SEPTEMBER 17, 2009
Cuomo Calls In 5 BofA Directors
Audit Panel Draws Subpoenas in Probe Of Merrill Purchase
BY LIZ RAPPAPORT, DAN FITZPATRICK AND JOANN S. LUBLIN
New York state’s attorney general, Andrew Cuomo, ramping up his investigation of Merrill Lynch’s purchase by Bank of America Corp., issued subpoenas to the five directors on the bank’s audit committee at the time of the deal, according to people familiar with the situation.
Mr. Cuomo, who also is weighing possible civil fraud charges against BofA Chief Executive Kenneth Lewis, also plans to subpoena all 15 of the Charlotte, N.C., company’s directors as of early December, when shareholders approved the deal.
…
Now that the residential RE bailout is in place, I guess it is time for the Fed to bail out commercial RE.
Financial Times
Fed focuses on property exposure
By Tom Braithwaite and Krishna Guha in Washington and Nicole Bullock in New York
Published: September 16 2009 21:29 | Last updated: September 16 2009 21:29
The Federal Reserve is reviewing banks’ exposure to commercial real estate, the troubled sector whose slide poses a risk to many institutions because of the wide distribution of loans and mortgage-backed securities.
In its regulatory role, the Fed will look into a cross-section of banks to build a picture of how resilient institutions are to the troubled market. It is keen not to characterise the exercise as a “stress test”, which has come to evoke the audit of 19 large banks earlier in the year.
A cross-disciplinary team will look at the variety of commercial real estate assets on banks’ balance sheets, encompassing loans and commercial mortgage-backed securities.
The Fed’s own Beige book reported last week that the economy continued to stabilise during July and August, but loan demand and commercial real estate remained weak.
Commercial property prices are now 26.9 per cent lower than one year ago and 33.9 per cent below the level seen two years ago, according to an index compiled by Moody’s Investor Service. Values on commercial property prices are now 35.5 per cent below the peak seen in October 2007.
Commercial real estate ”is ground zero for the distress happening over the next 3 to 5 years,” said Rich Friedman, head of Merchant Banking at Goldman Sachs on Wednesday. It will be five to six years before there is any real improvement, Mr Friedman added. Real estate deals were often more leveraged than the buyout deals done at the height of the bubble, precisely because there was so much leverage, to refinance will be a huge challenge.
“The deterioration continues,” said Richard Parkus, analyst at Deutsche Bank. “There’s been no dramatic acceleration…but there’s been no slowing.”
…
No problem. The rule of thumb is this: every day the stock market must rise, as surely as the sun.
Let the madness begin
Sept. 17 (Bloomberg) — Builders in the U.S. probably broke ground in August on the most houses in nine months, another sign the industry that precipitated the worst financial crisis since the Great Depression is stabilizing, economists said before reports today.
Housing starts rose 2.9 percent to an annual rate of 598,000, according to the median forecast of 74 economists in Bloomberg News survey. A report from the Federal Reserve Bank of Philadelphia may show factories strengthened this month.
From US census
Seasonally adjusted annual rate of new home sales = 433,000
Now for some math
598k-433k=165,000 houses to be added to the already large glut of new homes on the market.
Not sure if the new start # is seasonally adjusted but still it looks ugly.
“Builders in the U.S. probably broke ground in August on the most houses in nine months, another sign the industry that precipitated the worst financial crisis since the Great Depression is stabilizing, economists said before reports today.”
Awesome! Lower home prices on the way, soon
Actually it’s probably worse than this because future sales are being stolen and the rate of sales will drop when the credit ends.
Oh that’s right hte credit won’t end.
Sept. 16 (Bloomberg) — A year after the bankruptcy of Lehman Brothers Holdings Inc., credit-default swaps have lost their stigma for disaster and are contributing to the growing confidence in the credit markets.
The cost to protect against a failure by New York-based Goldman Sachs Group Inc., Charlotte, North Carolina-based Bank of America Corp., and 12 of the other biggest derivatives dealers dropped 66 percent in the past six months, according to an index of swaps compiled by Credit Derivatives Research LLC. While the U.S. struggles with the slowest recovery since 1945, the market where investors protect themselves from default and speculate on corporate debt shows confidence is the highest since June 2008.
“…credit-default swaps have lost their stigma for disaster and are contributing to the growing confidence in the credit markets.”
Let me make a wild guess here: The Fed manipulates the price of these somehow to make it look as though all is well…
Geez, Buy Gold, Buy Gold, Buy Gold! What do you need a road map?
Another example of real estate sucking out available resources from the economy: The best and brightest engineers and mathematicians and physicists going to Wall Street instead of industry:
You might guess that Wall Street is now shunning physicists, mathematicians, and engineers, but you’d be wrong. Talented people with quantitative backgrounds are more welcome than ever…
The culture of Wall Street is already relying less on traditions and personal connections and more on complex technologies. Juhua Zhu, who has a Ph.D. in electrical engineering from Princeton and is now a vice president at Morgan Stanley….
Those changes are carving out a need for more math whizzes and data crunchers. “Quantitative jobs demand research talent—people who can read any text in a technical field and reach a high level of expertise in a short amount of time,” says Alp Atici, a Columbia University math Ph.D. who works as a quantitative researcher at hedge fund Citadel Investment Group. ”People with Ph.D.’s in science and pure math are usually accustomed to much harder and deeper research texts.”
A shame that these people are going into financial machinations instead of industry, advancing the technology and perhaps coming up with inventions that create real wealth.
Link for previous post:
http://www.spectrum.ieee.org/at-work/tech-careers/the-rise-and-fall-of-the-quants
I’m wondering who benefits from skyrocketing home prices. I think it’s a myth that homeowners benefit from them because if they wish to monetize their gains, they still need a place to live, and the other house prices have climbed as much as their house, in many, if not most cases.
So… why the national policy to keep house prices as high as possible?
Oh wait - just answered my own question - tax revenues. Plus this rewards the FIRE industries (Finance, Insurance, Real Estate).
Well, instead of erasing the post, I’ll share the observation