Bits Bucket For September 22, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Reposting since I posted late in yesterday (well, today’s) BB:
Haven’t been around to post much, but had some time tonight to upload the latest version of the JT Extension, which had been sitting on my hard drive for a while.
Those of you who aren’t using it should give it a shot. Those of you who are should upgrade to the latest version, though honestly it doesn’t add any features - just a bugfix and a new popup item.
Joshua Tree Extension for Firefox
I’ve still got to update the User Guide for version 1.4, and want to integrate Lavi’s search engine, but haven’t yet figured out how to do so.
Thanks so much for doing this, drumminj.
Also, to Lavi for his search feature.
You guys are awesome!
Lavi please repost your ’search feature’ I missed it.
J this is terrific, thanks.
Lavi’s search is here
So… watching it all unfold.
More and more bankruptcies.
More and more unemployment that will lead to more foreclosures.
While the debt situation gets worse and worse.
Can feel the people slipping to the brink. If anyone remembers, foreclosures and price declines continued for several years after the last bust. Actually for many years. All the damage accumulates and things go on for a long while.
Obama struggling with putting more boots on the ground.
Meanwhile we are talking cutting weapons contracts to protect our guys on the ground.
Are we any closer to leaving Iraq?
Waiting for the next shoe to drop. Alt A time bombs going off. IEDs going off. My nephew is all gung-ho to get to Afghanistan. I should have stayed with the Army. Probably be happily dead by now.
Listening to people at work that traded up and are saddled with incredible debts and still rationalizing.
I am getting mighty weary of all this. And its got a long way to go.
Listening to people at work that traded up and are saddled with incredible debts and still rationalizing.
In a way that’s cathartic, no? As bad as one might feel about things, there’s solace to be found in not being as f*cked as the next guy
or the next child
“If anyone remembers, foreclosures and price declines continued for several years after the last bust. Actually for many years. All the damage accumulates and things go on for a long while.”
Everything system in nature strives to reach an equilibrium, and given the current conditions it is possible several equilibrium points will be achieved before things stabilize. Of course the MSM and government want to call any short term stabilization, ‘the bottom’, recovery is just around the corner.
“Everything system in nature strives to reach an equilibrium, and given the current conditions it is possible several equilibrium points will be achieved before things stabilize.”
It has been my experience that objects in nature strive to consume every available resource until the resource is exhausted and nature achieves equilibrium through massive blood-letting and die-offs.
“Probably be happily dead by now.”
Hang in there James. I remember what was endured through first GD, the Dustbowl, and WWII. Survivors went on to happier times. We will too. Material riches aren’t the only path to happiness. But our society told us that was the only way for far too long so now we endure the adjustment period.
A recent visit w/ relatives or friends not seen in a while has provided our family w/great distractions. There’s nothing like a nice tight hug to make you realize there’s more to self worth than what’s declared on your tax return.
“While the debt situation gets worse and worse.”
Gotta say, I see this point a bit differently. As each foreclosure occurs, the debt situation is getting better and BETTER, not worse and worse.
Each bit of debt that goes bad gets purged from the system, and the system as a whole is slowly healing.
The debt situation getting worse and worse was the period from 2000 thru 2005.
I disagree. Each foreclosure has the effect of adding more volume to the housing market and also has the effect of slowing eroding housing prices. This is not a good thing.
Eventually though you reach a critical mass of demand, where the prices have fallen enough such that the increased demand offsets the rate of foreclosures, causing prices to flatten and eventually start rising again, even in a normal (non-artificially-induced) market. It’s not a perpetual downward spiral, contrary to many people’s belief.
It happened in the early 1990’s. It can happen again.
As each bit of debt goes bad, someone (investor, tax payer etc) loses that amount of money, which is then not available to lend to the next person, and interest rates soar etc. I believe we are still very much teetering over the edge economy wise, and contrary to the press things are getting steadily worse.
The key thing is that this debt WAS bad from the moment it was written without proper underwriting.
The debt does not become bad when it goes delinquent—it already was bad; we just were in denial about that fact.
And the health of the system gets better as we come to terms with the reality, recognize the losses on the bad debt, and return to an economy that is not based on excessive leverage.
James, honey, go outside and take a walk to someplace lovely…your heart is too heavy for your spirit today.
Here’s a cyber hug.
*hugs James*
your heart is too heavy for your spirit today
Yeah, James, sounds like a good day for a walk, a bike ride, a swim, gardening … or a little light reading or viewing. Can you do whatever you really enjoyed when you were a kid?
50 jumping jacks, knee bends, pretend you are punching someone in the face ala boxing till you are out of breath. Whew
ahansen, that is going into my golden book of memorable quotations. I’m serious, if you ever publish your memoirs, I’m right there buying an author signed copy. I don’t givadam about the premium for the signature. Bless your luminous heart.
It seems that the “green shoots” chatter is starting to die down and that there are far more stories appearing regarding the continuing mortgage default crisis. I wonder if the press was trying to get out in front of the steamroller that they knew was fast approaching?
I automatically disregard any journalist or economist who even mentions a “V” shaped recovery when most data does not indicate this possibility. The newspapers here on Cyprus engage in this sort of journalism proclaiming that the economy is roaring back even as thousands of homes and vacation villas sit empty and the unemployment rate is at 9%. We may not all be of the same race, religion etc but some canards are pumped to the unwashed masses regardless of where you live.
I could’ve posted here or as a response to James. These people didn’t get the memo (posted this late yesterday) and the delusion lives on in Portland.
Place is still 50% empty, but…$250k for a 1Bd and $580k for a 2Bd condo as 40 of 41 auctioned condos are sold. Absurd.
http://www.oregonlive.com/news/index.ssf/2009/09/full_house_of_buyers_snaps_up.html
Its weird. Basically the first round of the bubble should have foretold what is going to happen to the second round of bubbloian knife catchers. But the mindset still drags on.
You have to wonder at what point do we think bargains will emerge?
My guess is that it will be after my time. Which should be short.
Not debating the affordability criteria that we have established though perhaps it will become wildly changed by the current situation. Even Neils 30% down may be challenged.
Inflation is such a major wild card as well. Seattle and west side LA are still living the bubble dream. We will be torn by long term deflation me thinks (yes my precious).
It is also possible that 50% sales went to insiders that didn’t pay open market prices. Fraud is the new black (refer to dresses here, not that I can match my clothes with out help).
I’d like to note on inflation as conceived by the Fed seems destined to fail. Basically the last two Fed chairmen and treasury secretaries both are creating debt inflation while increasing the wealth of the rich (ehm, these are both the same thing, see Obama mistake and Bush misleading et al). I’m going to assume that the middle class and poor will not be able to support a higher taxation rate to support this. Hence economic activity and bankruptcy will continue to cancel more of the debt until the richer class, sorry mummy, will bear more of the burden. Should include government debt and assuming we don’t do something asinine like Wiemar Republic .
All these policies seem to discount wage deflation due to outsourcing and or account for a general increase of velocity of money, that seems unsustainable with a tolerable rate of inflation.
Was in Ypsilanti MI at a pub this summer. Their Tee shirts had the motto “Beer is the proof god loves us” on them. Ahhhhhh. Beer.
I’m beginning to that believe “bargains” that you or I expect will never appear. I’ve been looking for houses and this is what I found:
Any dwelling someone might actually consider living in is wildly overpriced.
I see houses on the market that haven’t been maintained; that tells me people ran out of resources to maintain them 2-3 years ago.
As more people fall into foreclosure or money problems, there’ll be less maintenance (they won’t repair the house, don’t fix the roof, let mold be, etc…), until the house rots.
Modern houses are not like brick or concrete buildings in in the past or elsewhere — they can seriously rot.
Nobody has the inclination to do a good job maintaining their homes anymore, and as people get neg-equity, foreclose or it gets REO’ed, there’s even less motivation.
There’s’s rot, rotter, rottest to choose from, and this trend doesn’t seem to be ending anytime soon; esp as people run out of resources to maintain their properties.
What I’m seeing today, tells me people ran out of money to maintain their houses at least 2-3 years ago… And there’s no reason to believe the stock (of supply) will get better in 2014 or more.
So, for everyone who’re bidding their time and waiting for the nice house price crash — this means there’s nothing to celebrate and nothing to wait for.
In a way, this reflects the growing wealth disparity. People with money will maintain their house well, and those will consistently command a high price. People running out of money will gradually stay in rotting houses, and those are the ones becoming “cheap” and pulling down median sales price.
For the future consists of a lot of foreclosed homes at “crashed” prices, but at disgusting living conditions.
Wow, this is an angle of the housing bubble that completely escaped me until now. You’re not going to get a decent house at a decent price. It’s going to be a disgusting house at a low price, or still a nice house at a very expensive price.
A lot of “waiting” folks like me is going to be disappointed.
Does anyone actually try to figure out the total annual/monthly/whatever cost of maintaining a house? Wouldn’t that be a good thing to have estimated and disclosed by the builder and/or home inspector?
LehighValleyGuy,
Cost of maintaining a single family house is usually 1-2% of the house’s construction cost.
So if a house costs $300K to construct, you can expect annual repair bills of about 3K to 6K. 600K house would be 6K to 12K per year, etc. If you don’t budget/pay it, it starts to deteriorate.
The cost won’t also be “constant” either; it may be just 1K for 2 years, then roof repair comes in and you pay 10K, followed by repaving your driveway, another 8K.
The rule of thumb is to save 1-2% of the construction cost per year to a repair fund.
*MANY* people don’t do that kind of savings (so UnAmerican!), so instead they’ll do HELOC or refinance to pull “equity” to do repairs. Problem is, there’s been little credit left to do refi/HELOC after 2007. So people now just let their homes rot.
And you can tell when you visit any of these underwater homes. And it’s going to get worse the longer this drags on.
Americans haven’t been able to afford their lifestyle (home costs) for a while now, we’re just beginning to know it.
People have never been very good at maintaining their residency, otherwise HGTV wouldn’t exist.
I agree with HC. Up here in the Boston area, when me and Mrs. Chile and mini-chile go to an open house we tend to be pretty critical of the facilities (two of us are engineers).
We’ve started observing the various types of decay:
1) Old person decay: Things are “in their place” but anything requiring any maintenance other than dusting is starting to rot away. Electrical systems are usually ungrounded and overloaded, the basement shows water damage, and fixtures are old and tend to drip. Yard has weeds. A subcategory of this is “out of state kids holding on for too much after mom died decay”.
2) Out of their element decay: A nicer house that shows signs of neglect due to buying beyond their means. Signs of this are sparse furniture, empty basements, and oil spots in the driveway. There may be water damage in the basement, and the yard is overgrown. Sometimes features a 30′ x 20′ spot in the yard where the above ground pool used to be.
3) Divorce decay: spotted by the lack of clothing by one member of the couple in the master bedroom and photos of the kids on the fridge with only one parent present. May be a 30″ x 40″ spot of unfaded paint on the wall where the tv used to be. Usually things are in pretty good shape, but needs a good cleaning and the house is overpriced due to the need to get enough money to cover both parties.
Cost of maintaining a single family house is usually 1-2% of the house’s construction cost.
HC, thanks for this stat. I assume this applies only to new construction. What about older homes, is this something that home inspectors can estimate?
Older homes varies, you have to find out whether the previous owners have been consistent, or is there “maintenance debt” that you’ll need to pick up to get it into shape.
Some old homes are built like a rock, and need less work. On the other hand, you also have homes with decades of neglect.
Also, for older homes, you sometimes have to deal with asbestos sidings and insulation, which is a bitch to deal with if you ever need to get to fixing that.
Fixing homes is an endless task, not fixing is even more costly.
Our homes are built like a depreciable/consumable item; yet they’re bought like an appreciating asset. Imagine buying your car like you buy your home.
Chile ,add to the decay you mentioned the cooking away in the sun of many homes .Bugs and spiders start to take over a vacant house ,it can be fixed ,but its still a big job.
One of the things that I find annoying is when a nice simi-full gown tree dies because of neglect . Replacing landscaping can be pretty expensive also .
I use to paint every 7 years ,some people wait longer ,but
chances are these houses aren’t going to get painted on the outside for years . When I bought my house I had a fireplace check and cleaning also . Poorly maintained homes can become fire hazards pretty easy also .
It really is annoying when you see the realtors on TV telling these first time home buyers that the repairs or updating is a easy fix . I saw a real estate sales person tell a young person that they could add a wall easy, (the couple didn’t like the place because it was to open ). There isn’t any objections that the sales people don’t rack off as a easy fix.
I’m beginning to that believe “bargains” that you or I expect will never appear.
Even if those “bargains” eventually appear, what’s to say they won’t more than be offset by higher costs or impacts in other areas? For example, let’s say the cost of housing finally does come down to something approaching historical levels of affordability in San Diego, might any benefit in that area be more than offset by higher state and/or local taxes and decreased services, decaying infrastructure, etc.
I think one needs to look at a broader range of issues (housing costs, other costs, services, employment, etc.) and make decisions accordingly. If one is looking to lower their cost structure and otherwise maintain other things that might contribute to a higher quality of life, California is not going to be a good place to be located, even if housing prices eventually fall in line with the fundamentals.
I don’t think the California premium will get any less steep, it might actually grow.
I’ve seen this rotting house situation before…
Syracuse, NY went thru an economic crash in the 1990s. It began to emerge from this in 1997, at the same time I went house-hunting there.
Now, Syracuse weather is not exactly house-friendly. You get 8 months of winter, and only 2 months of summer to repair all the winter damage. (the other 2 months are iffy).
When the housing market began to recover in 1997, an insane situation developed where quality, maintained houses suddenly sold at a premium, while the non-maintained houses went unsold. There weas perhaps 10 months of homes on the market, but only about 1 month of quality homes. Even the newpaper kept quoting realtors about how crazy the situation was. they had never seen anything like it. Syracuse was supposed to be a big-time buyers market at the time, but that did not apply to the few quality houses that were getting multiple bids in a week.
Perhaps this is your future….
Oh yeah, the joys of home ownership.
We are in the process of re-remodeling a bathroom that we had gutted and completely redone 18 years ago. The window ledge in the shower is so badly rotted from water seepage that all its supporting 2×4s are being replaced. And we try to hire good contractors, keep up with repairs, etc.
After watching my parents’ once-well-maintained home start crumbling around them, and seeing their current state of barely being able to accomplish their ADLs, I wonder if I will recognize when it’s time to give up the house.
Well from reading this, maybe waiting for a teardown is the way to go. Save the foundation and the utility hookups and build what you want out of masonry block.
I’m beginning to that believe “bargains” that you or I expect will never appear.
Went ‘trulia’ hopping the other day. RM neighborhood. great street. $199,900. Gutted, 1,500′ studs, new elec/plum, teensy lot in big lot zone. So you have to finish this POS. Not bad, shaking my head, maybe..do comps, Finished older house 2,700′ bigger lot, $235,000. So, got some bank dreaming on the 1st house. Some prices are adjusting, but not so much. As you say earlier, the prime stuff is moving a little bit, but the fixers are still dreaming, and YOU get to pay to fix it.
Not yet.
the motto “Beer is the proof god loves us”
That’s a Ben Franklin quote IIRC.
This is proof of THE MORON GENERATION…..
$582K i would want at least a 2 fam. house let alone a 3 or 4 apt house to pay off the mortgage. geez….and this little airhead has a job and I don’t.
—————————-
Cambria Benson of West Linn tells her mom about her new condo, a 19th-floor, two-bedroom unit in the riverfront Atwater Place. Benson won with a bid of $582,000, 37 percent off the original asking price.
“Wow, this is an angle of the housing bubble that completely escaped me until now. You’re not going to get a decent house at a decent price. It’s going to be a disgusting house at a low price, or still a nice house at a very expensive price.”
Exactly. There is no happy ending to this story.
The houses will rot, and then the neighborhoods themselves will rot. What is the point of buying a place with a 15 to 30 year loan when in 10+ years you may be enjoying gang-bangers shooting each other up the street while they sell drugs from the local foreclosures?
She’s an attractive young lady - now she can be the poster girl for the urban condo tower FB.
Nope, not attractive at all. In grad school I probably taught a hundred girls just like that, about 60% hair and makeup, with badly bleached hair.
And seriously, there shouldn’t be a single half-mil residence in the entire state. Much less attached product.
I won’t argue, oxide. She’s an airhead twit bleached bimbo who can be the poster girl for the urban condo tower FB. How’s that?
She’s probably hitting the hip urban “loft” decorating shops as we speak.
“It was whooosh,” Christie Connard said, waving her hand past her head.
From the link;
“Cambria Benson of West Linn tells her mom about her new condo”
Her first name gives you a clue to the translation of this phone conversation with “mom”…
Hi mom, I got the condo !!! I can’t believe it..!!..I got it for $582,000….Can you please transfer into my checking account the $17,000. that I need for the deposit and be prepared to transfer the remainder of the money within 30 days….Oh, by the way mom, can you make it up her to Portland to help me shop for furniture, floor and window coverings ?? Your so good at that kinda stuff you know…
Well, gotta go…I am so excited !! Love you mom….
No doubt, verbatim, no doubt at all.
again,
“It was whooosh,”… waving her hand past her head.
What kind of taxes will Daddy, sorry Cambria be paying on that $582K 2 bedroom condo? What about HOA’s?
Like OMG….she’s soO going to have to cut back on her white outfit and white iPhone budget.
In case you were wondering why I post from Cyprus, here’s a little bit about where I work:
http://www.u2sr71patches.co.uk/1sters.htm
And in order to support the thesis of my last posting, here’s this:
http://tiny.cc/HZKYz
Sure would be nice to see the U.S. view this part of the world like it does the African continent, from a distance. Too much to lose, and so little to be gained.
Nice, Mugsy. Thanks for both links!
Fed Rejects Geithner Request for Study of Governance, Structure.
Sept. 21 (Bloomberg) — The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said.
The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”
Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”
“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”
U.S. lawmakers have also called for a review of the Fed’s power and structure, saying Fed Chairman Ben S. Bernanke overstepped his authority as he bailed out creditors of Bear Stearns Cos. and American International Group Inc. while battling a crisis that led to $1.62 trillion in writedowns and losses at financial firms.
No Work Done
While the report requested by the Treasury hasn’t been formally scrapped, no work has been done on the project, which was due Oct. 1, the people said. Treasury spokesman Andrew Williams declined to comment, as did Fed spokeswoman Michelle Smith.
The central bank is performing its own reviews of possible operational changes following the financial crisis. Fed Governor Elizabeth Duke is leading an internal study of the roles of the directors that serve on each of the boards at regional Fed banks.
“The institution is trying to keep a low profile,” said Vincent Reinhart
Does anybody else get the impression that the Fed isn’t worried so much about its “independence” as it is afraid what a public audit would find? My guess is it would find Paulson and Bernanke in bed. (so much for independence)
The great irony is indeed the claim that the Fed’s independence might be jeopardized. The policy measures they have taken in the wake of the financial crisis seem to have been coordinated in lockstep with the Treasury Department.
Ron Paul’s “audit the Fed” bill has 290 co-sponsors (fewer than was mentioned in an earlier rumor, but still a lot). Hearings in the House Financial Services Committee are tentatively scheduled for Friday, September 25.
just curious…are hearings open to the public? and if so how would go about getting admission?
Google house financial services committee. Find the calendar of hearings and locations. Show up very very early to the appropriate building (House buildings are south of the Capitol) and ready to go through a security screening (no knives, etc.). I’d recommend having photo ID with you as I can’t remember whether I’ve had to show my ID or not when entering the buildings. Don’t bring recording equipment. Stand or sit in line in the corridor outside the hearing room. Watch staffers, press, and maybe a few relevant executive branch employees plus the minyons of anyone testifying enter the room before you without getting upset. When the time comes, they will let in people to fill up the seats that are still available. Ususally there are quite a few.
I really only go when my office has reserved a spot for me and I’m always walking past tons of people waiting to get in. I don’t know when the guards get there to start letting people without key cards in the building, but 6 AM wouldn’t surprise me. The sooner you are there after the guards start letting the public in, the better off you will be.
If you interrupt the procedings, expect to be escorted out of the room. If you are there with a friend, bring a pad of paper and a pen so you can write notes to eachother rather than whispering. Take the stairs. The elevators take forever.
Michael, Even if you’re not there with a friend, take a paper and pen so you can take notes for your report to your friends at the HBB. (We’ll be with you on CSpan.)
How about a super secret 007 recording button on your lapel?
“The Fed was created by Congress and it is not part of the executive branch.”
So the Fed is a creature of the legislative branch, like the OMB? The Fed is an Art. I sec. 8 para. 5 institution?
Sounds like all the more reason that it’s appropriate that Congress would be involved in oversight of the Fed.
It would appear that the GAO already has the mission to perform oversight of the Fed if this is true.
http://www.gao.gov
Some lawmakers feel that the Feds overstepped their authority by bailing out AIG and creditors of Bear Stearn .
This bail out was the part that I didn’t get at all ,but it started with the Feds opening up the discount windows to these non-regulated
entities . At the time I was thinking that it was a sit up to a big bail out to non-bank entities . I suppose that Congress granted the authority by the “Blank Check ” ,no questions asked to Hank Paulson .
But you would think that it would of required a new law to do it to begin with in that it was a departure from norm and a true emergency would of required proof .
The Fed belongs to the banks. Congress only authorized it’s creation. It can revoke it’s charter but won’t since the banks control congress.
Ain’t America grand?
Census: Recession had sweeping impact on US life
Recession’s impact: US census data show longer commutes, delayed marriage, fewer immigrants.
September 21, 2009
WASHINGTON (AP) — The recession is profoundly disrupting American life: More people are delaying marriage and home-buying, turning to carpools yet stuck in ever-worse traffic, staying put rather than moving to a new city.
A broad array of U.S. census data, released Monday, also shows a dip in the foreign-born population last year, to under 38 million after it reached an all-time high in 2007. This was due to declines in low-skilled workers from Mexico searching for jobs in Arizona, Florida and California.
Health coverage varied widely by region, based partly on levels of unemployment. Massachusetts, with its universal coverage law, had fewer than one in 20 uninsured residents — the lowest in the nation. Texas had the highest share, at one in four, largely because of illegal Hispanic immigrants excluded from government-sponsored and employer-provided plans.
Demographers said the latest figures were striking confirmation of the social impact of the economic decline as it hit home in 2008. Findings come from the annual American Community Survey, a sweeping look at life built on information from 3 million households.
Preliminary data earlier this year found that many Americans were not moving, staying put in big cities rather than migrating to Sunbelt states because of frozen lines of credit. Mobility is at a 60-year low, upending population trends ahead of the 2010 census that will be used to apportion House seats.
“The recession has affected everybody in one way or another as families use lots of different strategies to cope with a new economic reality,” said Mark Mather, associate vice president of the nonprofit Population Reference Bureau. “Job loss — or the potential for job loss — also leads to feelings of economic insecurity and can create social tension.”
“It’s just the tip of the iceberg,” he said, noting that unemployment is still rising.
So fewer people are working, and the slack economy has taken a good number of trucks off the road, yet traffic is getting worse?!
OK all you HBBers who drive to work. Is traffic on your route lighter than two years ago, about the same, or worse?
It might be that people are unable to move closer to a new job. Maybe a delay of new construction? I can’t think of any other reasons for increased traffic with less workers and transport.
“OK all you HBBers who drive to work. Is traffic on your route lighter than two years ago, about the same, or worse?”
Hard to say just how much worse ….
For the past 3 years my commute down the interstates has been thru construction zones where they are:
+Widening the interstates
+Adding several new interchanges
+Expanding all the interchange roads for a mile on either side of the interstate
+Building lots of building just off the interstate
so overall, even without the road construction, my 12 mile commute is a bit worse than 2 years ago. Throw in the road construction and its much worse.
Only 3 more years of road construction left!
Yeah, I was a bit bemused by that one. Traffic in the South Bay Area (San Jose, Santa Clara) flies by in comparison to how it was 5 yrs. ago. The # of apts. up for rent seem to be increasing quite dramatically also.
Since the government started cracking down on driver’s hours behind the wheel, it’s pretty easy to see. About 10:00pm, all the truck stops and rest areas around here on the Plains start filling up with drivers taking their mandated rest.
Truck count at overnight rest stops looks like it is down about 30% vs. 2-3 years ago.
Not so bad yet. Really lite on wknds. Wait till Dec and Jan for update.
The top says it is from “Washington.” Assuming they mean Dc, not state, it is because of sprawl. Even if fewer people are working, they are travelling more miles because they moved way out into the boondocks to get a house. I expect that the downtown and inside the beltway traffic is not much worse, but the problems of that limited area are expanding to places that didn’t have it before.
Worse. Houston hasn’t been hit as hard, but we have sprawl like nobody else in the nation.
With 8% UE (the worst it’s been in 22 years) more people are either out looking for working, uprooted from their regular commute working a new job, or have to much time on their hands.
Also, despite the current economic conditions, we are still on track to grow 2% each year.
Much lighter. But I’m in a part of the county with a much greater unemployment rate than the coast line. I think the 5 and 15 freeways are as bad as ever, but the 8 is much lighter in my opinion.
More people are delaying marriage and home-buying, turning to carpools yet stuck in ever-worse traffic, staying put rather than moving to a new city.
One of the pluses of this downturn has been the decline in traffic, not nearly as bad as a few years ago.
But all the other changes noted don’t seem too different from the type of sweeping changes that might occur during a depression. Few of those changes should be a surprise to anyone that regularly reads this blog.
“had” - interesting what weight a little word can carry.
in Chicago, overall worse. For me, about 5 minutes extra on average every morning compared to a few years ago, and up to 10 going back home. Taking train much more often, when schedule permits (ie I can wait to get to work until 8 rather than 6:30-7)
Midday car traffic is way up too. One gets the sense that people are trying to fill their days up running around town, or maybe they are running between jobs?
Midday car traffic is way up too.
It certainly seems that way. Throw in a mid-day ballgame and it’s early gridlock.
Chicago’s roads are horrendous, and your ‘freeways/toll roads’. UGH. If it doesn’t have a major car sized pot hole on any given street, it aint Chicago.
“……declines in low skilled workers fro Mexico………”
My brother (Border Patrol Agent in SoCal) confirms fewer border crossers.
OTOH, none of the ones already here are going back……….
……….unless they have murdered or raped someone, in which case they can’t get back across the border fast enough.
The story on the radio this morning specified Palmdale as the longest average commute in the U.S. at 41 miles. At first I was puzzled why Lancaster wasn’t farther since it is 8 miles further out from LA and the same circumstances apply.
Then I realized that only about 50% of those living in Lancaster actually have a job. What is the average commute for a welfare queen?
* FDIC may borrow money from private banks
Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.
Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.
From Max Kaiser
“the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.”
Excuse me!! But why would you borrow money from solvent banks and use it to prop up the ’sickest banks’ instead of allowing the solvent banks to take over the ’sickest banks’? I guess we can’t allow some insider friends and cronies to get a healthy dose of reality.
Ron, your point about insiders may be right…but there’s actually a “reasonable” explanation for why solvent banks might prefer to lend the money to pay off depositors rather than actually take over the busted banks. Viz., THERE ARE TOO MANY BANKS and too many bank employees. Too many bank offices, etc. The “brand-name” value available from taking over failed enterprises (Merrill Lynch) has already been extracted. If you take over a failed bank, you have to pay off not only their depositors but also their bondholders and perhaps other kinds of creditors. FDIC pays only the depositors.
And, re-reading your post, I think you are “not getting it” that when FDIC steps in, the (failing) bank is finished.
Um, don’t you get it? Banks charge interest when they loan money. And they know the FDIC will pay the loans back. This is just another freebie for the big banks.
Bingo
All paths lead to funneling money to selected banks.
Precisely, Bill!
This is a back-door bailout for certain selected banks.
It is a way for the banks to invest their cash at rates way higher than Treasuries, while only taking on Treasury-equivalent risk.
If the solvent banks “lend” money to the FDIC, they avoid larger FDIC fees, and (this is the big one) no one can yell at them for not making loans to house buyers and small businesses because their capital is tied up bailing out the FDIC. All the pressure to make loans they think are going to go bad is gone. They are allowed to hoard the capital they need to absorb the losses they know are just around the corner. And they get to do it with a loan that is backed by the full faith and credit of the United States of America (or as good as).
It is kind of brilliant in its simplicity. But the social engineers who want private credit to start flowing like water again are going to be cut off at the knees.
I believe in the case of a bank failure (i.e. bankruptcy), the bondholders don’t have to be paid off - no? Or at least the bulk of them (the junior ones).
The whole idea of bankruptcy is that the entity that is left is worth more than zero, and thus is of some value to whomever might buy them out. The thing that gets them from “worth less than zero” to “worth more than zero” is the default of bonds.
Bailouts = perpetuation of failed entities (i.e. zombies)
Failure = economic Darwinism (i.e. improvement of the overall system)
This versus paying all the premiums back on the FDIC insurance or increasing the FDIC premium to represent the current state of affairs.
Fed Effort to Stoke Growth May Be Undermined by ‘Tight’ Credit.
Sept. 22 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke’s efforts to stoke a U.S. economic recovery may be undermined by the central bank’s other goal of restoring the banking system to health.
The Federal Open Market Committee, at the conclusion tomorrow of a two-day meeting, will probably maintain its assessment that “tight” bank credit is impeding growth. Lending contracted for five straight weeks through Sept. 9, a drop that in part reflects Fed orders to banks to raise more capital and toughen lending standards, analysts say.
A failure to restore the flow of bank credit carries the risk that the economic recovery will be slower than the Fed anticipates, or even that the U.S. lapses into another recession, economists say. That would make it more likely the Fed will keep its main interest rate close to zero for a longer period.
“They would be absolutely delighted if banks went out and raised a lot more private capital and then began to lend more,” said former Fed Governor Lyle Gramley, now senior economic adviser with New York-based Soleil Securities Corp. “Until that happens, the Fed has to continue to try to encourage economic growth through easy money.”
The FOMC, composed of Bernanke, Fed governors and regional Fed-bank presidents, is expected to release a statement at about 2:15 p.m. New York time. Economists surveyed by Bloomberg News unanimously forecast the Fed will leave its benchmark interest rate unchanged.
The central bank may also decide to extend the end date of its $1.45 trillion program to buy housing debt, now set to expire at the end of the year, and to gradually reduce the size of the purchases.
“will probably maintain its assessment that “tight” bank credit is impeding growth”
Interesting because I’ve had two credit card companies send me blank checks advertising low rates for a limited time to entice me into debt. I always pay in full so the offers are lost on me. On the other hand, those that would benefit are the most risky to lend to.
A friend is buying a house (don’t get me started.) I guess he has secured the loan but the appraisal came back like $24K lower than the agreed purchase price so he is trying to find another appraiser or something.
Anyways, he said he’s getting tons of calls now with people trying to sell junk tied to the mortgage. Two credit card calls where the card is tied to the equity or something, or points go to your mortgage, and he hasn’t even bought the place yet.
Loan is via BofA IIRC
I don’t know why your friend doesn’t say to the seller/realtors that they have to lower the price because the bank does not think the value is there . Why would a buyer try to get a new higher appraisal ,are they nuts ?
If the appraisal comes in higher then the house is “worth” more. D’uh.
They seem to be having little difficulty with “stoking” the stock market.
What I don’t get about bubble “recycling” operations: What limits the Fed from just pumping in enough dough to the stock market to, say, push it straight up to the level it reached before the recent Wall Street blowup? Do they pay any price for targeting a certain level of valuation?
A man finds a clue:
Gold - 100 Oz Pit Only (Comex)
COMEX: GC09Z
Market open 1,019
Change +14.20 +1.41%
Sep 22, 2009 9:20 a.m.
Quotes are delayed by 20 min
Previous close 1,005
LOL
The stock market should do well if the Fed continues to allow the dollar to slide…
Metals Stocks
Sept. 22, 2009, 9:03 a.m. EDT · Recommend · Post:
Gold rises above $1,010 an ounce as dollar’s slide resumes
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) — Gold futures rose Tuesday, moving back above $1,010 an ounce as a weaker U.S. dollar boosted gold’s appeal and as demand for gold exchange-traded funds showed improvement. Other metals also rose.
The dollar renewed its slide, falling to a fresh one-year low against the euro as the Federal Reserve started its two-day policy meeting Tuesday. Meanwhile, holdings in SPDR Gold Trust (GLD 99.71, +1.35, +1.37%) , the biggest gold ETF, rose more than 15 metric tons to the highest level in more than two months.
Gold for September delivery gained $12.30, or 1.2%, to $1,016 an ounce. On Monday, the contract briefly fell below the $1,000 mark for the first time in a week. It had risen to $1,019.80 last Wednesday, an all-time high for a so-called nearby contract.
More actively traded, the December gold contract rose $12.80, or 1.3%, to $1,017.70 on the Comex division of the New York Mercantile Exchange. It had topped $1,020 an ounce on Wednesday.
“Gold is sustaining the $1,000 mark on the back of robust investment demand and a renewed decline in the U.S. dollar,” said analysts at Commerzbank in a note.
…
As usual, the MarketWatchers have a brazillian fundamental-driven explanations for why the market is going up. Ignore the sliding dollar!
Markets cruise ahead
Insurer AIG, cruise-ship operator Carnival and retailer Macy’s lead early advance on Wall Street.
How odd considering they are all targeted as most likely to file bankruptcy.
Perhaps the firms most likely to file for bankruptcy double as the firms most likely to get plunge protection services?
“A failure to restore the flow of bank credit carries the risk that the economic recovery will be slower than the Fed anticipates, or even that the U.S. lapses into another recession, economists say.”
So where are they going to find credit worthy borrowers who not already up to their eye teeth in debt?
If banks lend to the FDIC, that will further tighten credit.
This further enforces the idea that eventually they will be giving houses away when the tight money market comes on .The Fed bail outs did not advance the cause of creating a stable market . Waste of money in the final analysis .
If I’ve heard it once I heard it a 1000 times.
Couple down the road splitting up. He’s an out of work wood butcher (housing of course) she works at Walmart. Wife saw her yesterday…. he’s living in a cabin on their “property nearby” and goes to house to take shower after she leaves work work. They’re selling their shack…….. Fantasy price? $650k. When my wife laughed the woman said, “we’re not gonna give it away”.
I hear these tales of woe weekly now and they all have a common thread. One is out of work and their former occupation was either carpenter, realtard, plumber, etc….. always associated with shack building.
Household credit is shrinking…
Profits are shrinking…
Employment is shrinking…
Housing values are shrinking…
The wage base is shrinking…
But the recession is over? ~Bill Bonner
It’s different this time.the pros are saying we are in a new bull market, all is well.I keep listening to the bullshitters on cnbc and I just want to laugh.Saw some bimbo yesterday wearing a dow 10000 hat.I think it is all wishful thinking.
As long as the CPI hits the number it could very well look like growth.
Saw that today in passing. So should we go all in? It would seem that we are in a “Bull” market to stay, according to the cnbc talkers around closing.
Of course you should go all in… never mind that the big boys are getting all out.
County sees big drop in foreclosures, defaults
August stats indicate stabilizing, experts say
By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. September 22, 2009
A dramatic drop in home default notices and foreclosures last month may signal a stabilization of San Diego County’s housing market, market analysts said yesterday.
Some economists interpreted the August statistics as reflecting improving economic conditions. But they cautioned that the trend must continue for several more months before they can be certain.
Locally based MDA DataQuick reported a 19.9 percent drop in notices of defaults — the first step on the way to foreclosure — from 3,318 in July to 2,658 in August for San Diego County. The number was 6.7 percent lower than in August 2008 and the lowest since last November.
But the decline, duplicated elsewhere in the state, was at odds with rising delinquency rates, said DataQuick analyst Andrew LePage.
“Based on everything we hear from mortgage lenders and the government and private firms that put out delinquency numbers, there hasn’t been a letup in the amount of distress,” LePage said.
Normally, after borrowers fail to make mortgage payments for two or three months, their lenders file notices of default, and within six months, they foreclose on the properties.
What may be happening instead, LePage said, is that lenders are not pushing owners into default and foreclosure but are working with them to restructure their loans or arrange for short sales, in which the homes are sold for less than their loan balance.
It isn’t clear if these efforts will succeed — about half of all loan modifications have failed because the owners still couldn’t keep up with their revised payments.
But if the new efforts succeed under a new federal incentive program, it would mean fewer homeowners would lose their properties and the overall real estate market could stabilize next year and recover the following year, as many market analysts have predicted.
…
Leonard Baron, a professor of finance at San Diego State University, said the slowdown in foreclosures may simply be due to banks “clogged up” with so many defaults and foreclosures in the pipeline.
But for buyers who are able to purchase distressed properties, he said, they can count on a high return on investment. He said he personally bought a Chula Vista condo recently for $110,000 that previously sold for $300,000. The monthly mortgage payment of $800 is low enough to cover all expenses and produce positive cash flow as a rental.
“It’s a wonderful time to buy,” he said, but only in lower-priced areas.
Dustin Hobbs, spokesman for the California Mortgage Bankers Association, said the drop in defaults and foreclosures probably is due to more lenders and loan servicers agreeing to participate in the federal government’s Home Affordable Modification Program. It offers incentives to lenders to adjust mortgage rates and balances and owners to keep up with their new payments.
“You can make the case that the system is a little backlogged with loans trying to go through this program or another program,” Hobbs said.
Union-Tribune
In the Union-Tribune on Page C1
You are kidding, right, or rather they are correct?
Then how do they explain that lots of folks are still living in their homes months/yrs after stopping payments? And, according to the MSM today, a growing moratorium of “owners” are saying “Show me the Original note” while staying in their homes.
“Normally, after borrowers fail to make mortgage payments for two or three months, their lenders file notices of default, and within six months, they foreclose on the properties.”
This article says the foreign-born population in California dropped by two percent over the past years. How will the rich foreigners save the California housing market if they are leaving us? (Or is it that the wealthy foreigners are still coming here, even though the overall trend is exodus?)
Immigrant population declines in California
Number of Mexican-born falls 9 percent in county
By Leslie Berestein and Lori Weisberg
UNION-TRIBUNE STAFF WRITERS
2:00 a.m. September 22, 2009
The immigrant population in California is falling, a likely consequence of a depressed economy that has meant far fewer jobs to entice foreign-born workers, new Census Bureau data shows.
Especially compelling is the significant drop San Diego County saw last year in Mexican-born immigrants, long a major source of labor for the region’s lower-wage jobs in agriculture, construction and the hospitality industry.
After a largely uninterrupted increase in the county’s Mexican immigrant population throughout the decade, there was a drop of 9 percent, or 29,000 fewer immigrants, between 2007 and 2008, according to estimates released yesterday by the Census Bureau.
Among all county residents identifying themselves as foreign-born, the decline was nearly 2 percent, the same as in California.
While immigration growth in recent years has been slowing statewide as more recent arrivals head to lower-cost, job-rich areas in other parts of the United States, demographers believe last year’s decline is clearly tied to a rising unemployment rate and a scarcity of new jobs.
Nationwide, the number of immigrants remained largely flat.
“With the poor economy, we have a smaller volume of people coming north from Mexico relative to what we’ve had in the past,” said San Diego State University geography professor John Weeks. “It’s not people fleeing the country because of the recession, it’s because they’re not coming here as much as they have in the past because of the recession.”
…
Silly Bear,
You forgot the rich Chinese are coming to save us.
Wouldn’t it be in their interest to first wait until our asset prices have bottomed out?
I think that might closely coincide with a bottom in Chinese asset prices.
Since we haven’t had a census, where DO they get this info. from?
While the Census Bureau is known for its once-a-decade population counts, they are constantly doing research in the meantime.
Interesting case study — a nine unit condo in a less than ideal location in my Brooklyn neighborhood: farther from the park, subway and shopping, overlooking an expressway.
Completed in mid-2008, the one- and two bedroom apartments were put on sale for $600K to $800K, as much or significantly more than my better located rowhouse is probably worth. None sold.
Two bedrooms in the neighborhoods best apartment building, overlooking the park, have been going for $400K.
Now being offered for rent by Corcoran (ie. they are looking for Manhattanites not people from the ‘hood’) for $2,300 per month. You can “be the first to live there.” But Manhattanites can pretty much rent in Manhattan for that price now.
They didn’t pay their property taxes in June, are are accumulating interest with the city. The owner is identified as an LLC, for hopefully for the developers sake (but not the bank’s) the construction loan is non-recourse.
What will be the future? If it gets down to (say) $150K per unit, it might be worth some locals buying to rent it to their kids. I don’t see how it could be worth more. But during the bubble, it probably cost $400K per unit to build.
If you receive an email from the Department of Health telling you to not eat pork from cans because of swine flu…..
Ignore it, It’s just spam.
Nice… that took me second or two.
ROTFLMAO
Oh good one. Great one to wake-up too. How many people do you think will fall for this on the first day of Fall?
Fall
At 10 p.m. PST, Orion still not up. Soon, though.
Tired evaporative cooler belt finally shredded into pieces.
101 today. When the corn maze opens, maybe more snap in the air.
We have already carved our apple heads to dry.
The SF Bay Area seems to have experienced the same puzzling rise in delinquencies coupled with a drop in foreclosures as the Southland did in August. Could it possibly be due to the fact that there was a FORECLOSURE MORATORIUM IN EFFECT that just expired last week (September 15)? The journalists seem increasingly clueless these days.
Regarding the shadow inventory allegations, what I would like to know is the following:
1) Are banks colluding to withhold inventory from the market?
2) If so, is this legal?
3) If not, what party is responsible for committing this crime against would-be home purchasers?
Thomson Reuters
UPDATE 2-San Francisco-area home sales slide in August
09.17.09, 05:29 PM EDT
By Jim Christie
SAN FRANCISCO, Sept 17 (Reuters) - Home sales in the San Francisco Bay fell sharply in August from July as buyers found fewer bargains due to a slimmer inventory of foreclosed properties, MDA DataQuick said on Thursday.
The 14.3 percent decline in August sales was the third steepest on record for the month, and followed a 1.5 percent rise month-on-month in July, indicating continued weakness in one of the United Sates’ leading housing markets.
However, the region continued to crawl out of its housing slump as it posted the twelfth straight month of rising year-on-year sales.
Last month’s 7,518 sales of new and resale houses and condominiums marked a 4.0 percent increase from a year earlier, according to MDA DataQuick.
‘A thinner inventory of distressed properties for sale, hence fewer bargains, helps explain the relatively sharp drop in sales between July and August,’ the real estate information company said in a report.
…
Investors are growing concerned about a ’shadow inventory’ of distressed property they believe lenders are withholding from the market. Additional foreclosures placed for sale would increase drag on home prices and weigh on profits from resales and rents charged by real estate investors.
…
ECONOMIC, FORECLOSURE CONCERNS
Bay area buyers are concerned about job security, and how many foreclosures might yet hit the market, Walsh said. There are reports of mortgage delinquencies rising, yet the number of homes being foreclosed on has trended down lately, he added.
MDA DataQuick on Tuesday reported home sales in Southern California rose in August from year-earlier levels, but fell almost 11 percent from July as the region’s foreclosure inventory thinned and uncertainty rose among potential buyers.
…
I don’t think the banks have the manpower to deal with all their foreclosures. I can’t see them deliberately keeping a shadow inventory. What would be the point? They would have to be written off eventually.
Of course, they could start hiring people to deal with the foreclosures.
The point in withholding inventory is that an unsold REO can be valued at or above the bath the bank took on it due to the magic of mark to fantasy accounting.
If they wait it out long enough monetization of debt by the Fed devalues the currency and refloats all the holey boats.
I’m starting to believe it might actually work. Jobs? We don’t need no stinkin’ jobs.
While much of the country is too broke and unemployed to be able to participate in the rally, Wall Street bulls are partying like it’s 1999 again. Given how many companies are currently losing money due to shriveled sales, I am wondering where all the dough that is driving up those valuations is coming from? It almost seems as though somebody is dropping it from the sky out of a helicopter.
* The Wall Street Journal
* TODAY’S MARKETS
* SEPTEMBER 22, 2009, 8:44 A.M. ET
Futures Rise as Fed Mulls Rates
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
Stock futures gained, the dollar slid and commodities climbed as the Federal Reserve prepared to begin a two-day meeting on interest rates.
About 45 minutes before the start of trading in New York, futures on the Dow Jones Industrial Average were higher by about 50 points. The Dow declined by 41 points Monday after a rebound in the dollar weighed on commodities prices and the shares of energy and metals companies.
Futures on the S&P 500 and the Nasdaq 100 were also stronger. Changes in futures do not always accurately predict early market moves after the opening bell.
…
Printing money and distributing it to the partying Wall Street bulls is a convenient way to steal from mom’s and pop’s fixed-income pensions. It is hard for retirees to stand in the way of a central bank determined to print away their problems.
I think it is funny how all of our problems have disappeared.All they have done is print oodles of money and then say we are in a recovery, give me a break.
So long as the stock market is going up, where is the problem?
Poor Uncle Buck — he seems to get the short end of the stick whenever an infusion of green shoots leads to a stock market rally.
This one particularly caught my eye:
USD-CZK 16.9950
That exchange rate was 18.50 when we were there in July. So in the span of three months, the dollar has dropped by
(16.9950/18.50-1)*100 = -8.1 pct relative to the Czech Koruna.
On an annualized basis, this rate of decline is roughly
((16.9950/18.50)^4-1)*100 = 28.8 percent.
Got FOREX?
From Bloomberg:
CURRENCY VALUE CHANGE % CHANGE TIME
EUR-USD 1.4792 0.0112 0.7626% 12:37
GBP-USD 1.6364 0.0147 0.9080% 12:38
USD-CHF 1.0238 -0.0085 -0.8263% 12:39
USD-SEK 6.8036 -0.1032 -1.4941% 12:38
USD-DKK 5.0314 -0.0374 -0.7383% 12:38
USD-NOK 5.8402 -0.0637 -1.0789% 12:38
USD-CZK 16.9950 -0.1270 -0.7418% 12:39
USD-SKK 20.3660 -0.1610 -0.7845% 12:38
USD-PLN 2.8155 -0.0265 -0.9318% 12:38
USD-HUF 183.1450 -1.5002 -0.8125% 12:38
USD-RUB 30.0930 -0.2741 -0.9027% 12:38
USD-TRY 1.4786 -0.0134 -0.9014% 12:38
USD-ILS 3.7238 -0.0229 -0.6106% 12:25
USD-KES 74.7250 -0.0500 -0.0669% 10:05
USD-ZAR 7.3840 -0.0898 -1.2009% 12:39
USD-MAD 7.6913 -0.0542 -0.6991% 12:38
“All they have done is print oodles of money…”
Actually they have done far more than just print oodles of money and dropped them out of helicopters to be caught by whomever is quick enough. Rather, they have made major decisions regarding the allocation of fresh liquidity. For instance, buying mortgages directly supports the value of housing, representing a massive wealth transfer to current home owners — generally the wealthiest slice of the US population.
Is it part of the Fed’s Congressional mandate to pick winners and losers?
I guess the folks over at aig are happy.They appear to be a winner according to congress.they must have ponied up some big bucks for congress.Did you see the ceo of citi is going to make a 100 million for running the company into the ground?Who would invest in this company?I imagine that saudi prince is thinking twice about the might citi.Wasnt citi stock on the dollar menu recently?What a bunch of garbage.
This market indeed resembles 1999’s. Although most Internet shares had little or no earnings, the stock market kept going up because it kept going up.
Say what you will about central bankers, they know how to create manias. They are great at thwarting rational thought and encouraging herd like behavior.
Party on, Winston.
Krugman’s error:
- The man ran a column a while ago claiming the Fed had run out of bubbles.
- But he seemed to overlook the possibility that bubbles in stocks and houses might be recyclable.
- Recycling is good for the economy and the planet, right?
Hmm, green bubbles? Let’s not go there…
I’m not of the mind that we’re seeing another stock bubble. To me, this looks like a classic bear-market rally. The recent article in the WSJ about the DOW closing on 10K made mention of a number of periods in the past where significant rallies happened after major declines, the 1930’s being a good example. No different today
“Don’t fight the tape”.
“The [stock] market can remain irrational longer than you can remain solvent”.
I’m not of the mind that we’re seeing another stock bubble. To me, this looks like a classic bear-market rally.
I’m curious as to what you’re differentiation between the two is. Would a bear market rally not be a bubble?
Would a bear market rally not be a bubble?
It’s a matter ot technicals: i.e. a bear-market rally is a counter-trend that takes place within a longer-term decline.
I’m looking for a pullback on the S&P from somewhere just shy of 1100, with a possible close of the “window” at 1098. The S&P 500 peaked 1576.09 on 10/7/07. The downtrend I’m referring to formed when the S&P500 hit 1440.24 on 5/18/08 and declined from there (draw a straight line between the two and you’ll see what I’m talking about).
Some of the overbought/oversold indicators are in overbought territory now, combined with the test of the two-year downtrend, and the fact that we’re in Sept/Oct time-frame (which is historically a bad time for stocks), I’m looking for additional bearish signals of a pullback.
I would be surprised to see the S&P move forward from these levels without at least a consolidation period, if not an outright decline.
This would be yet another blow to the San Diego economy:
SAIC appears poised to shutter its San Diego headquarters
Defense giant may be on move
By Mike Freeman
Union-Tribune Staff Writer
2:00 a.m. September 22, 2009
SAIC’s San Diego offices on Campus Point Drive in University City serve as the corporate headquarters for the defense and government contractor. David Brooks / Union-Tribune - San Diego Union-Tribune
ABOUT SAIC
Full name: Science Applications International Corp.
Founder: Dr. J. Robert Beyster, who started the company in San Diego in 1969.
Type of business: Specializes in complex engineering and technology programs for U.S. military and intelligence agencies.
Employees: 45,000 worldwide, including 16,000 in the Washington, D.C., area and about 4,500 in San Diego
Motto: “From Science to Solutions”
San Diego may be on the verge of losing the headquarters of one of its few Fortune 500 companies.
SAIC, a sprawling defense and government contractor founded in San Diego 40 years ago, has a new chief executive in Walt Havenstein, and yesterday was his first day on the job.
When Havenstein was hired in June, SAIC said his primary office location would be in the Washington, D.C., suburb of McLean, Va., not San Diego.
…
Wow I worked for them twice. It was never exciting. The 2nd time around, I was constantly told that I’d never get a raise due to my lack of degree, other than COL. But I was never asking for a raise. I was bored out of my mind. My coworker who had a degree and played fantasy sports games on the web all day made $10K more than me. He didn’t care about the job at all, and didn’t have nearly the same skills.
SAIC, was never a huge fan. Rather see smaller companies with less overhead that distribute more of the winnings to the commoners take the gigs.
IMHO this move is long overdue. SAIC was a sub to Lockheed back when I was working at LMSC. Even then many of our meetings were at the McLean offices. I only went down to San Diego once to check out a production facility for mil-spec graphics displays.
Isn’t it obvious that a defense contractor should have its headquarters where the customer lives?
Besides which California isn’t “business friendly” anymore.
Electricity rates in CA are enough of a reason to move a large business. Albuquerque is calling.
“Type of business: Specializes in complex engineering and technology programs for U.S. military and intelligence agencies.”
Fancy phrase for “white welfare queen”.
“Type of business: Specializes in complex engineering and technology programs for U.S. military and intelligence agencies.”
They won’t be coming to Moses Lake, WA.
An article this morning on how Maryland is still the nation’s top earning state. Anyone want to take a stab at why?
DC.
Close to DC?
Did it go into detail which city has the highest paid earners?
Lemme find the link.
There ya go. Florida’s a real loser, with a decline in income.
http://money.cnn.com/2009/09/21/news/economy/highest_income_census/?postversion=2009092203
An article this morning on how Maryland is still the nation’s top earning state. Anyone want to take a stab at why?
Something to do with that big square thing jutting up into the middle. I can’t quite put my finger on it though.
And we have the stupid-high housing prices to prove it.
Anyone care for an oil-heated, Post-War shack for at least $200,000 with no central air? We have lots of things like there… no hope for an end to the Bubble in Maryland!
For those maybe interested in the current direction of the dollar ; to sum up, seemingly headed for the South Polar regions. Just a few ticks away from new 52 week lows on the dollar index today:
Last trade 76.061 Change -0.682 (-0.88%)
Low 76.011 2009-09-22 09:30:30, 30 min delay
52wk High 89.624 52wk High Date 2009-03-04
52wk Low 76.01 52wk Low Date 2009-09-17
Looks like a good day to roll around in the precious
Wondering why home prices seem to have settled on to a permanently high plateau? The Fed giveth, and the Fed taketh away.
As usual, the term “affordability” as used in this article refers to monthly payments, not principle balance.
* The Wall Street Journal
* AHEAD OF THE TAPE
* SEPTEMBER 22, 2009
Decision on Ending Housing Prop Can Wait
* By MARK GONGLOFF
The Fed is considering kicking away a fairly important prop for the housing market. But this will likely happen in slow motion.
Federal Reserve policy makers begin a two-day meeting on Tuesday. Investors widely expect them to leave their key interest-rate target unchanged at nearly zero, while reiterating Chairman Ben Bernanke’s recent declaration that the economy likely is recovering.
The real mystery is what they will say about their program to buy $1.25 trillion in mortgage-backed securities to support housing.
Some observers think the Fed will stretch mortgage purchases out rather than end them abruptly, as scheduled for December. Given that the Fed lately buys roughly 80% of all new mortgages, that gentler approach might make sense.
Any reduction in Fed purchases would likely affect housing affordability. In the six months before the Fed began buying mortgages late last year, 30-year conventional mortgages yielded an average of 2.4 percentage points more than 10-year Treasury notes, a useful benchmark for such long-term loans since most mortgages get repaid before 30 years.
…
“Given that the Fed lately buys roughly 80% of all new mortgages, …”
Has the Fed traditionally bought mortgages to prop up the housing market on an as-needed basis, or is this an entirely new ‘financial innovation’?
The fed is buying up all the shitty investments from the clowns on wall street and calling them assets.I guess if you cant sell them to anyone else they go to the fed.they sell them to the fed at face value when in fact the loans are probably worth about 50%.Wall street has the fed by the balls.
The Fed is a private company owned by the banks and opperating on a bizzare and vaugue charter from congress. So, the banksters pretty much decide where the money is going to go.
I’m guessing the idea is put all the bad stuff into the Fed for play money till the treasury gets sick of it.
The little tiff between the treasury secretary and fed board of govenors is possibly the first sign.
At some point the treasury can demand reserves back from the Fed and force them to contract money supply and sell off the impaired assets. I think there is some pressure to do so.
I’m likin’ the little tiff. Maybe Timmy found Ben’s bed less enticing than Hanky Panky did. I wonder if Obama has an influence in this.
I’m going to go out on a limb and say that “the tiff” is a dog and pony show. Our government being responsible and such. Don’t watch the magician’s hands, watch the ball.
‘…“the tiff” is a dog and pony show…’
Bingo, dude! Remember, both the Treasury and the Fed are now run by central bankers (one the other’s former boss). It would call Fed independence into fairly serious doubt if they acted as though they were sleeping together.
Where is the Fed going to store all the toxic assets they are snapping up? Do they plan to create a Superfund site?
House I made an offer on a few weeks back just dropped their price again. By $2000. Whoop-de-freakin-do.
I sent an email to the selling agent last week explaining the calculations I used for my offer price (that was flat out rejected with no counter). I outlined the comps I researched and all (which technically should be my realtor’s job, but that’s another issue). Ended with what I can bring to the deal - a rapid, guaranteed settlement with no seller assists.
That realtor got back to my realtor to say the problem is my offer is still $40,000 below asking. The next day selling realtor sent my realtor a spreadsheet outlining the $46K of improvements the seller made since 2007. These include a new heater, hot water heater, and roof. To me, those are maintenance issues (and probabaly would have been inspection issues) - not “improvements”. The only thing on their list that I deem improvements were the 2 updated bathrooms.
But I’m not upping my offer. I feel a little mean wishing this on them, but I hope their home sits on the market all winter long.
Ah, deferred maintenance, as if the ‘new roof in 2002!’ if some sort of freaking blessing.
Cost of maintaining a single family house is usually 1-2% of the house’s construction cost.
So if a house costs $300K to construct, you can expect annual repair bills of about 3K to 6K. 600K house would be 6K to 12K per year, etc. If you don’t budget/pay it, it starts to deteriorate.
The cost won’t also be “constant” either; it may be just 1K for 2 years, then roof repair comes in and you pay 10K, followed by repaving your driveway, another 8K.
The rule of thumb is to save 1-2% of the construction cost per year to a repair fund.
*MANY* people don’t do that kind of savings (so UnAmerican!), so instead they’ll do HELOC or refinance to pull “equity” to do repairs. Problem is, there’s been little credit left to do refi/HELOC after 2007. So people now just let their homes rot.
And you can tell when you visit any of these underwater homes. And it’s going to get worse the longer this drags on.
Americans haven’t been able to afford their lifestyle (home costs) for a while now, we’re just beginning to know it.
So more and more homes available on the market will just be rotting ones as we drag this recession on.
East:
you should include the price..how much is your $40K off their wishing price?
They started at $239,900.
Lowered to $237,400 (at which point I made an offer of $196,000 based on $171/sq. ft. which is what the comps average out to be - NONE of them are over $185/sq. ft. This asking price is $205/sq. ft.)
Today it’s lowered to $235, 400.
Thanks, you could tell them banks will only lend at less then 3 times income, and ask them how many $80K jobs do they know are available today.
Bid again, this time 2k lower.
Wait a month, bid again, 2K lower.
DId you look at the mortgage history? See how much they owe?
And that 2,500 off. LAUGHABLE. Ridiculous. Hope come to their senses.
I sent an email to the selling agent last week explaining the calculations I used for my offer price (that was flat out rejected with no counter).
Last week I passed upon a stray dog on Greenwich Avenue. The dog was taking a Bernanke right on the sidewalk. I sat the dog down and discussed with him why he shouldn’t be taking a Bernanke on the sidewalk. The next day I was walking along Greenwich again. The same dog was taking a Bernanke on the sidewalk. After he was done he looked right at me and dragged his Paulson along the sidewalk. He barked a couple times and then ran away.
I had a better chance of reasoning with that dog than you do trying to reason with a real estate agent.
“I had a better chance of reasoning with that dog than you do trying to reason with a real estate agent.”
I don’t know, UHSs “love helping people.”
What was the lil’ doggie’s name? Poopy? (Instead of puppy).
A good Bernanke in the AM right after breakfast is a decent start to the day and makes me feel more cheerful.
Love this. Henceforth, I shall use the names of various officials and politicians to describe bodily parts and functions.
Thanks, NYC, and you keep your Paulson in your pants today, ya hear? I’ll be sitting on my Geithner in front of the computer.
rofl
OMG,
You and NYCBoy has me laughing pretty hard.
Thank you both.
At least she gave the seller’s agent a chance to figure out how to do an Excel spreadsheet. That skill may come in handy someday.
I think the homeowners are the stuck ones. I think the agent would rather have a sale period, than none at all for months. I really believe it is the owners who BELIEVE they are right, and stuck.
eastcoaster
Good for you. Stand your ground. Evidently, you liked the place enough to still entertain buying it, but a roof, water heater, etc… is maintenance. Nuff said. Updating bathrooms, isn’t a 100% ROI either.
Prices are still ridiculous here in So Ca too. Architectural Digest isn’t showcasing the homes we’re looking at. Be patience, our price will come.
“I outlined the comps I researched and all (which technically should be my realtor’s job, but that’s another issue).”
You did the right thing in coming up with your own comps. Regardless of whether its the realtor’s job, they can pick and choose and will likely try very hard to avoid having foreclosures or distress sales among their selections.
“the problem is my offer is still $40,000 below asking”
I made an offer $400,000 below asking last April. Based on recent comps I figure the value is about $300,000 below asking. Seller and I are both hoping for a miracle: he is hoping a GF will appear and I’m hoping it becomes a short sale.
“That realtor got back to my realtor to say the problem is my offer is still $40,000 below asking.”
What an astonishing sense of entitlement and blatant ignorance of logic. WTF does it matter what the seller’s asking price is?
I get it, though. The realtor gets that the price is too high, but they want you to come with an offer that is above current market value. Almost sounds like one of those furniture going-out-of-business sales. Raise the price, then put it on sale and pretend you’re selling a bargain.
Yes, Eastcoaster-
let that bad-boy sit all Winter long -
see where their head is at mid-Feb, after no one has looked at it for 3 Months…
they may have had their attitude adjustment by then…
I hope everyone is doing well. I have a breather for a few days before I start my new gig next Monday. The bubble has certainly thrown my family some curveballs, but hey, at least I didn’t buy a house in Florida (yet).
My new gig is a federally funded position with strings attached. I if don’t do my job right, the county has to cut a check to the feds for my salary. It’s high stakes, but not too big of a deal — I know I will succeed. My old gig is a state agency that is listing. I won’t say that they are on the brink of collapse, because they aren’t, but they have some serious organizational problems to address. Turnover is running at about 60% — that’s serious.
I’d like to hear from parents that are ahead of me by 10-15 years (I just turned 33): how much did your child’s inclinations play into your decision on where to buy/rent? I ask because I grew up in the exurbs and had ready access to many cornfields, farms, woods, etc. My dad said he specifically chose that area because he wanted his kids to be able to play in the dirt like he did, and I loved it there. Just for scale, I was able to fire semi-auto 12 gauges with no bother. I realize that may be extreme these days, but nobody in my area cared. Since I am ascending rapidly in my profession, I am starting to wrap my head around possibly staying in Florida. The problem, I can’t stand the fenced-in backyards and small lots. Pinellas County is very dense and it is very expensive to get space in convenient locations. My friends and I joke that instead of throwing snowballs at cars as a teen, my boy will toss rotten mangos. Will he ever know the difference? My gut says yes, but my professional trajectory here is hard to ignore; I am having a hard time balancing that with my desire to give my family a “nature-y’ childhood.
Sounds like you are on the ball Muggy, and I wish you and your family the best. If I hadn’t got messed up in drugs a long time ago, I could “see” me at 33 being you. Life plays out according to the rule of life.
Good luck. Looks like you guys may miss the hurricanes, but it is still September, and you know what that means.
ATE
“Life plays out according to the rule of life.”
The Zen of Ate.
I’ll mail you some snowballs this winter
Some not-so-rotten mangoes in return would be a nice touch, no?
I have a grapefruit and orange tree. Would you like the rats and fruitflies in a separate box?
Muggy, do you have the same tree rats that eat out the inside of all grapefruits? Hollow shells of fruit drop occasionally.
My son is a huge impact on what I want. I want a yard that we can put a swingset in or a pool (one of those up and down jobs - not a permanent one). I want a place where his friends can come play and sleep over and I don’t have to feel like we’re in one, big room together. I want a place where we can finally get a dog. Can I get all these things renting? I suppose so, but the sfh rents are too high. I’m in a townhouse currently, but I lack the yard where I can put up the swingset/pool and I’m not allowed to have dogs (and don’t want a cat). Also, son had a sleep over the other night and I did feel like we were all on top of each other.
However, I’ve heard it many times over that kids really don’t care where they grow up - as long as they are in a loving home. And that I do provide.
eastcoaster
Baloney, kids care where they grow up. But here’s the truth, when you do find the nice affordable home with the backyard for him and his pals, boy will he be one happy kid. Just don’t let the emotional pull, obstruct your logic.
As long as you know you have a happy, well adjusted boy, you’ve done a great job so far. Feeling loved is the key to a happy life ($ or not).
IMO, most mommies won’t let the little angels out of their sight until they are 8-10 years old anyway, so as long as you have close access to a decent park, just take the kids to the park when they need some room to run around.
As long as the school districts are half decent, a relocation doesn’t seem to bother the kids much. At least until middle/junior high school, when their friends are a lot more important. Especially if their friends are a positive influence, vs having a bunch of worthless punks/punkettes; in which case, the farther you can get them in the rearview mirror, the better.
I had to relocate when my oldest was a senior in high school……we made arrangements for her to finish her senior year staying with one of her friends, rather than relocate her for six months.
“Just for scale, I was able to fire semi-auto 12 gauges with no bother.”
As I recall, the neighbors used to do this when I lived in Long Beach CA. But perhaps you’all didn’t do it from a moving car.
Muggy,
I am aways ahead of you. Here is something to consider. Your kids inclinations won’t affect where you live; where you live will affect your kids inclinations.
Another thing. Your kids will not love the things you loved. The world has changed and every kid is different. Your kids will look back in 33 years and remember the things that made them happiest. And they won’t be the things you think they should be.
Your life with your children will shape you as much as it shapes them. It will be far different, and better, than you can imagine. Play it by ear. Make sure they have as many fun, strange, scary but safe experiences as possible. Teach them that trying in the face of failure is better than winning.
“And they won’t be the things you think they should be.”
I don’t know, I wrestle with this. My pops took me fishing, train-watching, hiking/camping, etc. Those are the things he wanted me to remember and those ARE the things I remember.
If you spend time with your kids doing things YOU like to do they will treasure it more for the time spent than for what was done, and may even end up liking the same things.
I grew up on an acreage surrounded by farms. I have found that wanting same as an adult is more for me than for my kids but they certainly enjoy the go-cart, guns etc. I imagine it would be more so if we had a boy.
I have found that wanting same as an adult is more for me than for my kids but they certainly enjoy the go-cart, guns etc.
Good, so you trained your 5 midget hench-gals well. Approval!
I didn’t get a chance to follow up on the CRA discussion from yesterday. A key argument was given that there wasn’t any evidence presented that CRA contributed to the bubble and crash. Well, here it is.
First let me summarize my personal view:
- CRA was certainly not *the* singular cause of the bubble. In that respect, the title of the article posted was correct.
- CRA was indeed not involved in the majority of the faulty loans made during they “heydey” of the bubble (2002-2006 period). This is shown clearly in the posted article.
- CRA was however, a driving factor in the start of the bubble. It helped get the ball rolling, and was probably the biggest factor in doing such. In this respect, I consider the CRA to be analogous to JATO (Jet-Assisted Take Off) - it wasn’t the payload, or even the primary vehicle, it was just the thing that got the momentum going.
- CRA wasn’t however the *only* thing that got the bubble going - there were other factors, but they were lesser and later, until 2000 at least.
First, revisiting a chart of home prices (this I posted yesterday). Note that home prices started their rise in 1997, and by early 2000 had met the peak of the 1990 bubble already, which at the time had been the highest bubble on record. The majority of the volume of the bubble itself was after 2000 - and most (including me) agree that the primary factors for that volume itself were the deregulation acts that took place arond the 2000/2001 timeframe, Greenspan’s low interest rates, and the owenership society initiatives. But make no mistake about it - the momentum for the bubble was already there before any of that took place. Prices had already gone beyond historical inflation-adjusted highs. We were already in the bubble by late 2000.
Previous to that time period, what specifically then may have caused the bubble to have started? I know of two specific things:
A. Clinton’s push/expansion of CRA in the early and mid 90’s.
B. The Taxpayer Relief Act of 1997, creating the 250k/500k capital gains exemption.
Certainly the actual enactment of CRA itself in 1977 wasn’t a cause, since that had happened 20 years earlier. But you can’t ignore the big push in the 1990’s (more on that in a minute).
The Taxpayer Relief Act almost certainly had *some* effect. It’s virtually impossible to weigh how much effect, since it’s mostly a psychological thing. All I can say is this - keep in mind that simultaneous to this the tech bubble was also very much building at this time, and stock prices in pretty much every sector were skyrocketing. So most people who would be driven solely for investment purposes would most likely not have done so in housing (which before then had shown miserable returns the previous 7-8 years), but would invest instead in stocks.
Let’s get specific with CRA in the 1990’s now.
First, starting with a December 1993 White House press briefing on the subject:
(more specifics follow)
Sure enough - the home ownership rate started up dramatically in 1995, right when the CRA legislative changes took effect. Note that the 250k/500k capital gains exemption was still 2 years away, so wasn’t a factor driving the home ownership increase.
There are lots of other logistical details of how the various changes were enacted - the Community Development Banks, the Community Development Financial Institutions Fund, and lots of other things that I just don’t have the time to go too deeply into, beyond what’s here. It appears there was at least some federal funding associated with the CRA push, though detailed numbers vary.
As a result of the changes, lending in CRA rose significantly in the mid/late 1990s. From a U.S. Treasury report:
(emphasis mine)
As another note - I’ve seen it said (not yesterday) that the CRA didn’t have any effect since it didn’t have any teeth, with no fines levied. I think it’s clear from the links above however that it was pushed quite hard. I do know of one specific fine - Chevy Chase Bank (mid-Atlantic area) paid an $11 million fine in 1994 for non-compliance. There are probably other examples; that’s one I’m aware of.
I’ve also seen claims that CRA had no effect on redlining, since redlining was already outlawed by the Fair Housing Act of 1968. However the FHA only outlawed redlining of individual owners, not of geographical areas. This practice continued to take place until the early 90’s legislative changes, and was in fact the reason why Chevy Chase Bank was fined - for redlining of geographical areas.
So it’s clear, to me anyhow, that CRA did have a significant effect on creating the bubble, and was in fact the primary driver in the early stages. Its effect was overwhelmed by the housing speculation in the 2000’s, including the non-CRA subprime and prime lending - but the trigger for all of that speculation was the perception that “home prices always go up”, as apparently evidenced by the already-seen gains before then, and as driven by in large part by CRA.
Wow, Packman — you must be a glutton for punishment. Let the personal attacks begin!!!
I plan to save and re-use that, since it comes up a lot. I’m a big fan of recycling!
(much of it is stuff I had already saved)
Thanks for taking a hit for Team Truth at the hand of political demagogues.
I’ve been one of the naysayers, but alas, very busy today. I want to read through your considerable research before responding.
You danced around my question last night, PBear, substituting ‘could’ for ‘would’ in your response, so I’ll repeat the question(s) for you and Packman now:
If there had been no CRA’s, would we have had a housing bubble? Would we have had a dotcom bubble? Would we have had a stock market bubble? Are these bubbles related, say by easy money? Are CRA’s the origin of these other bubbles?
IMO it’s relatively pointless conjecture. It’s like asking if the Steelers would have won the Super Bowl last year if Ben Roethlisberger wasn’t the quarterback, with the implication that if so then therefore he couldn’t be credited with winning the Super Bowl.
In my estimation, without the CRA yes there probably would have been some housing bubble, because I think that the PTB were hell-bent on using housing as a medium for the next credit bubble - they would have used whatever other tools they had on hand and/or created some additional tool. Personally I think the dot-com bubble just provided a golden opportunity to make the housing bubble even bigger, by providing a great excuse to set interest rates very low 2001-2004.
That’s my tin-foil-hat side talking.
My non-tin-foil-hat theory is that without CRA there probably would still have been a large bubble; due to the various financial regulation changes, but it would have been spread more across a broad base of asset classes. It probably would have been slower and therefore not *as* large, since I believe bubbles are more limited by time than by actual volume.
Okay, I actually agree with most of your points. I was inferring from some posts that the CRA’s were somehow responsible for the whole housing bubble, and without them there would not have been one. I don’t think any of us who criticized the posts were denying that CRA’s were contributors to the mania, and may have played a role in getting it started. ‘A’ role, not ‘the’ role.
I should add that I think easy money and deregulation *caused* the bubbles. Obviously everyone involved played a role, many involuntarily.
Since some expressed amazement that someone might offer advice to a prostitute as to how to hide her profession when filling out financial forms, here’s an article that explains how and why it’s usually done.
(Apparently, prostitution has been going on for a long time, and the need to ‘whitewash’ the money is quite common. Shocking!)
http://www.slate.com/id/2229094/
It only took me three days to get this subject out of my system. And I get no personal joy from arguing with political attack dogs.
Woof! Woof! Still dancing around that question, though.
No CRA’s, no housing bubble? Did CRA’s cause the other bubbles that were occurring at the same time?
Thanks packy, good summation.
Now I have question…did the “lenders” make $$$$$$$$ less than in relation to these two statistics below:
“The number of mortgage loans made by CRA-covered institutions and their affiliates to these borrowers and areas increased by 39 percent between 1993 and 1998, while such institutions’ loans to other borrowers increased by only 17 percent.”
2nd question: Did the 39% to 17% difference in their “supply chain” represent the “lenders” simply rushing to fulfill gov’t compliance or was this a vector to achieve compliance AND make money $$$$$ based on loan fees applied to people who they otherwise would never have made a loan to in the first place?
Thus… the “lenders” meet gov’t compliance, make even more money $$$$$$$, and remain “ethical” in their business contribution to America’s future.
Sounds to me like the “lenders” made hay while the sun was shinning…leaving main street to re-till the soil for future harvesting with taxpayer “soil enhancements”
Not sure about your first question, but in relation to this:
2nd question: Did the 39% to 17% difference in their “supply chain” represent the “lenders” simply rushing to fulfill gov’t compliance or was this a vector to achieve compliance AND make money $$$$$ based on loan fees applied to people who they otherwise would never have made a loan to in the first place?
The risk for the lenders was reduced by the mandated increased roles of Fannie and Freddie to buy subprime/CRA loans in the 1990’s, e.g. as part of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which mandated that HUD set specific goals for subprime lending by them.
Also there was some direct Federal funding tacked on, e.g. from the white house press link above:
The proposed reform package we are unveiling today follows the President’s directive and fulfills the promise of the law. It will channel billions of dollars a year in new credit into America’s distressed communities, while at the same time reducing unnecessary burdens on banks.
Read: allowing the banks to profit at taxpayers expense - already planned in 1993!
Didn’t PB post that CRA loans in the mid 90’s represented single digit percent of all loans. Your post notes that
In 1998 alone, these institutions made $135 billion in mortgage loans to these borrowers.
Pretty small # compared to total mortgage loans.
CRA loans are considered subprime because they were made in higher risk neighborhoods. I’ve seen quotes that suggest that they had a lower percentage of high risk loan structure. It would be nice to know
1. What was the average down payment vs non CRA
2. What percentage were ARM,no doc, balloon payment ect compared to non CRA.
I’d like a detailed picture . Throwing around numbers that suggest after CRA more money was loaned to poor and middle income communities doesn’t support the conclusion that CRA caused the crisis. CRA was designed to make sure these communites received more lending on more favorable terms. You have to show that the loans were structured in a way that was significantly worse than other loans at the time and that the CRA rules caused this.
The bubble was caused by securitzation, fraudulant ratings agencies,massive leverage, and profiting by gambling other peoples money . Without these things we would not be where we are today. If the bubble was caused by artificially low interest rates and CRA then there would be no collapse today because we still have artificially low rates and CRA. The thing that has disappeared is securitization because everyone knows that there is no gold in those nuggets sold by the banks.
In 1998 alone, these institutions made $135 billion in mortgage loans to these borrowers.
Pretty small # compared to total mortgage loans.
No.
Total mortgage borrowing in 1998 was $356 billion, so $135 billion is certainly not an insignificant part of that.
So you are saying that CRA accounted for > 1/3 of all mortgages in 1998?
The link below suggests total mortgage borrowing was 800+ billion in 1997.
http://www.dallasfed.org/banking/fii/fii9802.pdf
This was actually an interesting read
At that time the term subprime was strictly related to the borrower not the structure of the loan.
They noted that in 1997 53% of subprime loans were securitized vs 28% in 1995 so securitization was growing rapidly before 2000.
The numbers in the doc you post include all mortgage originations, including refi’s it appears, whereas the $356B number (from the Federal Reserve z1 data - table F.218) just includes net new borrowing (which can actually be negative).
The verbiage in reference to the $135B number is vague so it’s not clear which that more closely matches up with - it probably does refer to new originations (the $800+ billion, minus whatever part is refi’s, since I doubt much CRA is used for refi’s). Either way though - it was still a very significant portion of the market; enough to cause prices to rise inordinately; i.e. start a bubble.
BTW thanks for the link - that’s some good info in there as well.
(This post will probably show up before my initial response, since that had a link in it).
I’d like a detailed picture . Throwing around numbers that suggest after CRA more money was loaned to poor and middle income communities doesn’t support the conclusion that CRA caused the crisis. CRA was designed to make sure these communites received more lending on more favorable terms. You have to show that the loans were structured in a way that was significantly worse than other loans at the time and that the CRA rules caused this.
Even if this data is available - sorry, I don’t have time to do this level of research. I’m spending way too much time doing the research I am.
The bubble was caused by securitzation, fraudulant ratings agencies,massive leverage, and profiting by gambling other peoples money .
Well - being that the legislative changes that enabled all the new gambling didn’t start to take effect until December of 2000; how do you explain the fact that housing prices had already achieved record highs before then, by 2000?
Financial Services Modernization Act of 1999 - took effect July 2001
Commodity Futures Modernization Act of 2000 - took effect December 2000
SEC rule change removing margin restrictions for investment banks - took effect April 2004
Those are the main ones I know of - if I missed any let me know.
I would like to also refer to PB’s “false dichotomy” statements from last night. You can’t say that “CRA caused the bubble” or that “deregulation caused the bubble” - there is no one single absolute cause. It was a combination of many contributing factors, including both of those.
The bubble was caused by securitzation, fraudulant ratings agencies,massive leverage, and profiting by gambling other peoples money .
Well - being that the legislative changes that enabled all the new gambling didn’t start to take effect until December of 2000; how do you explain the fact that housing prices had already achieved record highs before then, by 2000?
My take is that low interest rates and rising incomes drove prices higher in the 90’s. Some of that was real growth rather than a graph of prices we need a graph of affordability. You could view it as bubbles on top of bubbles. The 2000-2008 bubble sat on top and was a much larger less stable bubble that burst. Prices as far as I know have not gone to below 2000 levels yet in most places.
My take is that low interest rates and rising incomes drove prices higher in the 90’s. Some of that was real growth rather than a graph of prices we need a graph of affordability. You could view it as bubbles on top of bubbles. The 2000-2008 bubble sat on top and was a much larger less stable bubble that burst. Prices as far as I know have not gone to below 2000 levels yet in most places.
Return salvo:
- Interest rates were lower in the mid/late 90’s - but they had already been low for a while before the bubble started. The fed funds rate bottomed in 1992-1993, and was significantly higher in the mid/late 90’s. Mortgage rates bottomed several times, with the first in 1994 - over a year before the homeowership rate started up, and three years before prices started up. (I’m actually quite surprised at that - I would have though that there was significant pent-up demand during the higher-rate period that would have been released in 1994 by the low interest rates, but that’s apparently not the case.)
- If rising incomes were a factor, then they would have driven up all prices not just housing. The home price graph link above though shows how house prices rose *more* than other things, starting in 1997.
Good job Packman, After a quick read of your posts and reviewing my posts and facts, I’m going to up my guess. Now I think CRA could be 2%-4% responsible for the magnitude of the bubble which is up from my last educated guess of 1%-2%.
I still put the responsibility for the bubble at about 20-25% each for big financial firms, The Gov, and the Fed with the Fed in the lead.
To your question:
how do you explain the fact that housing prices had already achieved record highs before then, by 2000?
If houses should normally rise with the rate of inflation they would achieve record highs just about every year there is inflation.
If houses should normally rise with the rate of inflation they would achieve record highs just about every year there is inflation.
However I was referring to record highs after adjusting for inflation. Check the graph.
The normal course of history shows that housing remains pretty darn close to the published CPI, with the occasional bubble (late 70’s and late 80’s, before the respective recessions) and dips (during the GD). This is the classic chart published by Robert Shiller BTW - my graph is from his data.
“Now I think CRA could be 2%-4% responsible for the magnitude of the bubble which is up from my last educated guess of 1%-2%.”
Those numbers mean next to nothing, given the seamless interconnection between prices at the low end (where a legally mandated CRA-related flow of funds might have contributed to driving up home prices above affordable levels) all the way up to the most expensive home prices. Prices at the bottom provide a lower bound on the price for the next-least desirable real estate, and all the way up to the most desirable housing prices, in a mutually-interdependent chain.
No prof., they are an educated guess based on the facts and numbers I posted and the numbers posted by others including you.
And thanks packman for the clarification.
The “real estate always goes up” dogma existed A LONG TIME before the CRA.
In the aviation business, there is rarely ” one cause of a crash. It is almost always a “chain of events” that causes a crash.
The CRA was (in NTSB speak) a “contributing cause”. Some people want to elevate it to the “primary cause”, to deflect attention away from what I believe was the “primary cause” (securitization of debt).
‘Some people want to elevate it to the “primary cause”, to deflect attention away from what I believe was the “primary cause” (securitization of debt).’
Though many posters over the weekend accused me of saying this, I never did (though perhaps one of the links I posted may have suggested something this outlandish). I totally concur that out-of-control securitization, driven by Wall Street’s subprime mortgage lending kingpins (aka Megabank, Inc cartel members) was the root cause, and CRA may have merely greased the skids for this type of crazy lending to flow into low-income areas.
Maybe - I haven’t looked that deeply into the details of securitization; it’s piquing my interest now though.
One thing of note to me is this, from Wikipedia:
As estimated by the Bond Market Association, in the United States, total amount outstanding at the end of 2004 at $1.8 trillion. This amount is about 8 percent of total outstanding bond market debt ($23.6 trillion), about 33 percent of mortgage-related debt ($5.5 trillion), and about 39 percent of corporate debt ($4.7 trillion) in the United States. In nominal terms, over the last ten years, (1995-2004,) ABS amount outstanding has grown about 19 percent annually, with mortgage-related debt and corporate debt each growing at about 9 percent. Gross public issuance of asset-backed securities remains strong, setting new records in many years. In 2004, issuance was at an all-time record of about $0.9 trillion. [7]
I’m not sure I’d say securitization was *the* primary factor, given that only 30-40% or so of mortgage debt was securitized even at the peak. Corporate debt had a higher securitization level, but wasn’t the first to fail - it’s only failing now because of the initial residential debt failures dragging down the general economy (for the most part).
My #1 factor is still Greenspan’s policy mistakes in reaction to the 2001 recession, particularly the low interest rates for an insanely long period.
In the end though all the factors are very intertwined, e.g. “securitization” isn’t necessarily independent from “CRA” even, since as part of CRA for instance Fannie bought a significant amount of securitized debt (CRA loans).
To add to that - as a side note - with regards to “securitization” as a cause - I think that’s fairly general. Per Wikipedia securitization existed since the 1970’s actually.
The key thing to come along in the 1990’s (see measton’s link) was the technology making securitization a lot more feasible/popular/efficient (deadly). Previous to that it was so cumbersome it was not used so often. The advent of the new algorithms and such allowed for things to be sliced and diced and repackaged a lot easier.
So in the end - the primary blame could fall squarely on the creation of the computer.
In the end though all the factors are very intertwined
For sure…
Here’s a little shocker for you this morning….
http://www.opednews.com/articles/LANDMAR….
Quote:
MERS as straw man lacks standing to foreclose, but so does original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a “security.” The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief.
Yes, I have heard of some of these cases in the Tampa Area. So I guess I should “buy” a house and makes sure it’s registered through MERS, and then just stockpile cash for 5 years until all of this gets sorted out. IIRC, the lady I read about in the last article like this represented herself in JVille and won. Nobody knows who owns her house, and MERS was not given the ability to foreclose.
Here it is:
http://www.tampabay.com/news/business/realestate/article989450.ece
One word: Sweet!
I wouldn’t call the situation ’sweet’. This is just more delay in sorting out the housing market, for administrative/legal problems.
If MERS truly collapsed, it would take the whole system with it. Its too big to fail and the legal arguments these homeowners made are not really relevant except to slow things down. We will see MERS close the technical loopholes and/or get a federal law passed authorizing how they processed these loans. While I appreciate the David and Goliath aspect here, the bottom line is that these people did not pay their mortgages and I don’t think they deserve the benefit of any doubt.
Skeptic
True but we have a Constitutional right in America to face our accusers and cross examine them….and ask why we can’t negotiate a settlement just like in any other type court case, and have a neutral 3rd party aka Judge/Jury to decide the outcome.
the bottom line is that these people did not pay their mortgages and I don’t think they deserve the benefit of any doubt.
We will see MERS close the technical loopholes and/or get a federal law passed authorizing how they processed these loans.
No bill of attainder or ex post facto Law shall be passed.
Art I., Sec. 9, U.S. Constitution.
Happens all the time….
“Art I., Sec. 9, U.S. Constitution.”
There are a lot of Con Law reminders flying around these days. I don’t know whether to laugh or cry.
Cry, I always say that whenever I hear another lawyer citing the Constitution, they are cooked Folks - MERS can’t go under and the Feds won’t let it happen either, they are too big to fail and Timmy and Ben and fools on the hill will “fix” this if it really gets out out of hand.
I like Judge Boyko:
“The Court will illustrate in simple terms its decision: “Fluidity of the market” — “X” dollars,
“contractual arrangements between institutions and counsel” — “X” dollars,
“purchasing mortgages in bulk and securitizing” — “X” dollars,
“rush to file, slow to record after judgment” — “X” dollars,
“the jurisdictional integrity of United States District Court” — “Priceless.”
Lets take this ONE STEP further
what about credit cards and the FED? say I default on a credit card and the Fed gives Discover Billions to cover the losses….can they sell the paid off debt to a collection agency and sue??
And how could you prove it?
Long-time posters here will recognize the irony in this MarketWatch headline. A few years back, an army of trolls came out of the woodwork to flame those of us who suggested Wall Street was heavily dependent on the housing market.
Home prices stalling rally
Data showing home prices higher, but less than expected, steal steam from early stock gains led by insurer AIG, cruise-ship operator Carnival and retailer Macy’s.
Olygal,
You are a FALL baby.
Happy Birthday to you
Happy Birthday to you
Happy Birthday dear Olygal
Happy Birthday to youuuuuuuuuuuuuuuuuuuuuuuuuuu
And many moreeeeeeeeeeeeeeeeeeee
Here’s another one for you:
You say it’s your birthday
It’s my birthday too–yeah
They say it’s your birthday
We’re gonna have a good time
I’m glad it’s your birthday
Happy birthday to you.
Yes we’re going to a party party
Yes we’re going to a party party
Yes we’re going to a party party.
I would like you to dance–Birthday
Take a cha-cha-cha-chance-Birthday
I would like you to dance–Birthday
Dance
You say it’s your birthday
Well it’s my birthday too–yeah
You say it’s your birthday
We’re gonna have a good time
I’m glad it’s your birthday
Happy birthday to you.
Is it Oly’s Birthday??!!
Happy Birthday Oly!
Me and Shorty decided to bake you a cake. I walked over to his stall after reading SanFranQualityLady’s declaration.
We are relly, hoofin’ it up deciding what to make though. Shorty started out with a cobimnation of Aunt Jemima’s pancake mix, some bridle bolts that are rusty, and pieces of sparrow bones…
Well, I’ll let you know after we talk further…
HAPPY BIRTHDAY OLY GAL!!!!!!!!!
Sorry spelling, but was in hurry to get back to Shorty’s Place. !!
Thanks for the merry birthday wishes, Mr. 8!
I simply cannot wait to see this no-doubt wondrous cake.
Oh, hey—don’t let Shorty stir the cake batter. He will make a terrible mess, and he has a bad attitude. You will find this out when he tries to stamp on your favorite hat. Hopefully, since you guys are now all baking buddies, like Emeril, he’ll only try to stamp on your favorite hat when your head isn’t actually inside your favorite hat.
Thanks.
Why happy birthday too ya, Oly!
Oly-
Happy Birthday.
I think you deserve a Koi fish (symbol) on your birthday, since you’re so special. In the Japanese culture, it symbolizes courage, achievement, and overcoming life’s obstacles, and coming out stronger than ever. May you live long and strong. You’re the best! Happy Birthday.
Thank you, darling awaity, and thank you, Kim. I mean it.
Happy Birthday, Oly.
They have a stylish, even elegant, appearance.
Well, of course.
*Adjusts pretty tiara, which has become askew *
But does this mean I must brush the moss out of my hair and take the frogs out of my pocket? Because I won’t! Nohow! They’s stylish frogs, anyway. I could glue them to my shoulders, like epaulets.
Actually, I think I’m more Libra-ish, being born right on the cusp of the equinox. I learned this from a college room-mate who was enchanted with astrology and liked to catch me and analyze me. As a result I know lots more about astrology than I ever wanted to know, and which I still wish I didn’t know. Those college room-mates. I also had a room-mate once who was studying to be a mortician.
I never ever let them catch me and analyze me.
I think moss and frogs are fine - elegance is in how you carry yourself, isn’t it?
elegance is in how you carry yourself, isn’t it?
Why, I’ve always thought so, too! Anyway, I’ve never been any good at brand recognition. It took me a year to remember what kind of car I was driving. I would say vaguely, ‘Umm….it’s little and white and has four wheels on it?…”
I’m an advertisers nightmare, surely. Oh, wait—unless it’s a tree. I know all the brands of trees. But I only pay attention to the most elegant trees…
Elms, Ash, Oaks, Willows, Sequoia, Aspens.
*gasp! *
You clearly know your tree brands!
This reminds me……..today is my sister’s birthday.
And to paraphrase, for those of you who may be wondering……
“I know my sister, and I know Olympiagal from her posts. And take my word for it, my sister is no Olygal…….”
I’d offer to give you your “birthday spanking”, but I think you would like it WAAAY too much.
And take my word for it, my sister is no Olygal…….”
What do you mean by this, Mr. Man? You hate me because I’m old now, is that it? Do you mean she’s not so noisy as me? Do you mean that she carries no frogs in her pockets that she takes out and licks periodically in order to moisten them? In meetings?*
Oh, yeah—I replied to your post, only it ended up further down the thread for some reason.
*Naw—I only did that once.
And it’s not like it’s habitual. I can stop any time I want.
By golly Oly, Happy “B” Day! Kiss a frog today, just to see what happens!
I hoist a tongue taco in honor of your B-Day! Have a good one. (How old are you again?:wink:)
my wink failed- I hate it when that happens!
(munches tongue taco morosely)
Hey look at alpha!
you’re welcome. anytime.
lol- Nothing to see here folks, move along!
it works again! 
I stopped looking at the HBB last night after the tongue taco post because my computer was all twitchy. Dare I go read more? Hmmm…Probably not.
Anyway, I love tongue tacos! Also tacos de ojo, except I balk at corneas. There was this one small stand—on Calle Vincente Guerrero I believe it was— in Zihuatenjo, MX, and they would effortfully haul out the nice fresh very large cow head and thump it down on the splintery wooden counter and helpfully point out the tenderest potential taco bits.
*Starts to drool *
Hey, I’m getting more cheery by the minute!
I think we all went to bed after the tongue taco climax/nadir. Dennis said something about Tod’s Dunkel. I’m not sure if it was dirty or just German.
I’m not sure if it was dirty or just German.
Goodness, what a coincidence!I’ve decided to be both, this new and fresh upcoming year.
Multi-tasking, you know.
Although I can only be a quarter German, (my gran is German) so I’ll have to make a diagram of how to allocate the ‘dirty’ part most efficiently. (Because that’s how we do it, we Germans–efficiently, with brisk skill and firm facial expressions and stuff.)
“Dunkel ist das Leben: ist der Tod.”
Dark is life: is death. Refrain from Mahler’s “Drinking Song of Earth’s Sorrow.” Probably the most pessimistic music ever written - Chinese poetry translated into German.
Hope your drinking lots of beer on your birthday Olygal.
Here’s something for all you beer drinkers:
http://www.brewholstercult.com/
or
http://www.holsterup.com/
very cool!…and those girls look like they like a party, too…
Oh, thank you so much, you guys. I mean it.
I’m 37 and I feel morose. One of these days when I go into an unfamiliar bar* I won’t get carded. The bartender will instead ask me if I want a motor scooter to get to my table.
Normally on my birthday my custom is to think about all the good things I have and how lucky I have been and have at least a little party and a bonfire, and in any case to prance around in a tiara like a dingle whilst singing Happy Birthday to myself again and again loudly and annoyingly, but today I told everyone not to call me, and when someone unwisely did call me anyway I snarled and ordered them to go get me a bamboo cane from the Dollar Store and then hung up. I don’t think I like this new custom, so next year I’m going back to the old ways.
And maybe I’ll have a frisky bamboo cane to help me hobble around the bonfire!
*Obviously this won’t be in Olympia.
HAPPY FABULOUS BIRTHDAY OLY!
It only gets better.
And some parts are saggier, but oh well! Elbow sag is something you can play with later in life. Your welcome. something to look forward too! Everything drops after 50, so live it up girl while it is where it was supposed to be!
Man, we should form a club or something!
My mom’s birthday is today, too! I was her present, 20 years ago. A nice red squirmy present with healthy lungs.
At least nowadays I’m not so red and squirmy. The healthy lungs part, though, has remained.
I just now talked to her on the phone and she said she’s thrilled that she wakes up feeling good with no aches at all each and every day, and that when I’m 57 I will think back to 37 with fondness about how adorable I was. And I said, ‘Yeah, but YOUR body is treated like a precious Temple of the Lord, whereas MY body is treated like a Tijuana carnival, assuming the Tijuana carnivals also falls out of fir trees now and then, so I may not last as long, and secondly, you’re not cheering me up at allllllll.
But I didn’t get too grumpy, because she is a very sweet-tempered, righteous and well-meaning mom.
It’s really quite annoying a lot of the time.
Ooops, that post was supposed to rely to X-GS fixers post about his sister having a birthday today as well.
My sis is a prototypical “Housewifes of Orange County”-type, with all the baggage that implies.
I’m still trying to get my head around what Olygal’s story is……I think it starts with something like:
“I grew up in a strict conservatively religious household, but went ape$hit when I went off to college/Peace Corp./military……..”
I’d read your autobiography before my sister’s……
My sis is a prototypical “Housewifes of Orange County”-type, with all the baggage that implies.
Are you serious?! I find such a family relationship hard to join in my head to you. Are you sure she’s your sister? Maybe something went wrong.
“I grew up in a strict conservatively religious household, but went ape$hit when I went off to college/Peace Corp./military……..”
Oh my, you pay good attention. Thank you. Except I wouldn’t describe it as ‘apesh*t*e.’
Well, okay, maybe I would.
Except I didn’t have to go anywhere to get the military crap. You must have missed my post about being 8 years old and dressed up in a home-made camouflage dress.
You see, modest Christian girls ALWAYS wear dresses, even when they are 8 years old, and they’re going out to learn to poach deer.
Let me clarify…..she is a “Housewife-of-Orange-County-that-went- to-seed” type………. If she WASN”T my sis, I would probably not have her on my acquaintance list.
This was the one in 2006 who swore on a Bible that her 50 miles-from-Downtown LA house was worth $750K, and would be worth a million in five years, at which time she was going to sell, put the kids thru college, and retire at 50.
Yer just a pup, Oly–I was well ensconced in kindergarten when you popped out. You’re barely even a cougar.
You’re barely even a cougar.
Ummm…
Oh, yay…?
Thanks, Mr. ‘Positive-Thinker’.
*grumble *
I was well ensconced in kindergarten when you popped out.
And I bet you deliberately consumed your paste-sticks, too! And would never stay on your mat at nap-time, either. So there.
Cheer up! You’re getting closer and closer to retirement age. Pretty soon you won’t have to care how you look. (Yes, I was known as the ‘nap-time prowler’ in kiddiegarden.)
I got psychic powers!
*clashes magical rings together *
** subsequently explodes **
Dangit!
You are not old. You are a young 37.
Well, yes, I am. now. Albinos age differently, I guess. Thank you Jeebus,
Now I get carded and college boys chat me up, but what’s gonna happen next year, when I’m old? Or when my liver catches up to me?
It’ll be Dorian Gray time!
Oh, no!
packman,
Can’t remember if you were the one that posted about the Ford C-Max.
Ford bringing the C-Max microvan to U.S.
Here’s a link to the article: http://tinyurl.com/mfcmow
Not me - but thanks for the link. Interesting. I’m glad to see us going with smaller cars, especially for things like local commuting. Smaller cars have a stigma of less safety, but I think mostly unjustly so - I think the size factor has been offset by tons of improvements in safety. There was a youtube video the other day in fact showing a 2009 Chevy Malibu vs. a 1959 Bel Air, and the Malibu (much smaller) won hands down.
I’m starting to see *lots* of smart cars around me, even on the highways. Saw a convertible one the other day.
Smart Cars are ridiculous. Sure they cost less, but their mileage is not much better than my Corolla. And I refuse to buy a two-seater car. I wonder how high they bounce.
They are made by MBZ and are really sturdy. Ol geezer across the street, the one I swim with at night, drives one and loves it.
YO peeps we have over 50 years of smart cars:
http://microcarmuseum.com/virtualtour.html
I’ve been looking at an S&P earnings chart and one of the S&P 500. The earnings chart expresses Wylie Coyote like behavior. In fact, earnings have never been this low, between 6 and 8 dollars.
In comparison to the S&P chart, however, it looks like earnings don’t matter. It looks like market participants are expecting and pricing the last recession and recovery. If you recall, however, the fed lowered interest rates and ignited a household spending spree. That’s unlikely this time around.
More importantly, however, as I observed the price action following Lehman’s collapse, it appears traders were more concerned about losing access to their trading capital held in a failed institution than actual earnings. As a result, they sold any and everything.
Got a link to those charts? Is that the same data as this perchance?:
www2 dot standardandpoors.com/spf/xls/index/SP500EPSEST.XLS
The earnings chart is from chart of the day. You can find an S&P stock chart anywhere.
“Chart of the day”? Where?
Thanks.
Happy Birthday Ms. Oly.
May you live forever!
Happy birthday Oly, may you not live forever.
(remember the Struldbruggs from Gulliver’s travels)
But please do live a long life and a healthy one.
Also remember the immortal protagonist of de Beauvoir’s All Men Are Mortal. IIRC, after generations worth of amassing power and glory, overwhelming ennui set in.
Not all companies are partaking of the green shoots rally…
Ten Big Companies That Are Veering Toward Bankruptcy
Posted Sep 18, 2009 12:21pm EDT by Vincent Fernando and Joe Weisenthal in Investing, Media, Products and Trends, Recession
Related: AMD, LVS, S, M, GT, MYL, HTZ
From The Business Insider, Sept. 18, 2009:
Despite a few green shoots in the economy and a rocketing stock market, many large companies are still struggling to avoid bankruptcy.
A new report by Audit Integrity identifies some high-profile names “that have the highest probability of declaring bankruptcy among publicly traded firms.”
Which companies appear the worst off? We took the list and removed any company with a market cap under $3 billion. We then ranked the remaining names by a simple measure of the market’s perceived bankruptcy risk - Market Cap (MC) divided by Enterprise Value (EV). The less MC vs. EV, the less residual shareholders’ value (above what debt holders can claim) the market is pricing-in for the company. Thus a lower MC/EV means the market thinks the company is more likely to go bankrupt.
…
Whoh. Some big names there.
AMD…Macy’s…Sprint-Nextel…Goodyear…Hertz…and CBS? How the heck can CBS go bankrupt?
UH car mfg. are in deep doo doo so they advertise less, and you need People to run radio and TV stations there is only so much you can automate and you can’t outsource it…and you still have unions in the major cities.
—————————
How the heck can CBS go bankrupt?
Home Prices Rise 0.3% in Sign of Halting Rebound (Update2)
Sept. 22 (Bloomberg) — U.S. home prices rose 0.3 percent in July from the previous month, less than analysts’ estimates, in a sign that the housing recovery is tenuous.
The house price index fell 4.2 percent for the 12 months ended in July, the smallest decline this year, the Federal Housing Finance Agency in Washington said today. The monthly gain was lower than the 0.5 percent increase forecast by 12 analysts in a Bloomberg survey.
“The general economic recovery is weak for one reason: because the housing recovery is weak,” said David Crowe, chief economist of the National Association of Home Builders in Washington.
The U.S. housing market is struggling to stabilize after a three-year slump slashed values 28 percent and led to record foreclosures. While a federal tax credit for first-time buyers and lower prices are bolstering demand, the unemployment rate at a 26-year high has kept many buyers out of the market.
Employers have eliminated almost 7 million jobs since the recession started, the biggest drop of any post-World War II economic downturn. U.S. President Barack Obama and Federal Reserve Chairman Ben S. Bernanke are considering whether to end support for the housing market that has been the source of the global financial crisis.
“The general economic recovery is weak for one reason: because the housing recovery is weak,”
Ergo in order to get the economy back on track, it is imperative for the Fed to reflate the housing bubble (while never once even mentioning there ever was a housing bubble to begin with).
I am going to an auction today. House sold in 95 for $1.1mill. They tried to get $699k for it this summer. Bank took it back at $519k. Now at auction, I believe it has a reserve. Should be interesting.
Hopefully the ” must get the $8k rebate” crowd at all costs is not at this event.
The unemployment rate is a measure of the number of unemployed workers as a percent of the labor force, rather than, say, the whole population. The size of the labor force can therefore affect the unemployment rate–more people giving up their job search and taking themselves out of the workforce can push the rate lower, while more people popping back into the workforce to look for jobs can push the rate higher.
Indeed, between the third quarter of 2008 and the second quarter of 2009, Michigan ranked highest among states for its average rate of unemployed plus discouraged workers, as well as its rate of unemployed plus all marginally attached workers (including discouraged). Marginally attached and discouraged workers are those who have given up looking for work and are not counted in the labor force.
The Labor Department reported last week that Michigan has a 15.2 percent unemployment rate–well above the 9.7 percent national average. If workers had not dropped out of the workforce, however, it would appear that the state’s unemployment rate has the potential to be significantly higher.
With the current method of measurement, the unemployment rate should stay relatively stable. Let’s say the official rate is 10%. A bunch of people get laid off and start looking for work, which should push the unemployment rate to 12%. However, the rate only goes to 11% because some of the people in the original 10% notice the increased competition for jobs and decide to give up. In other words, increased layoffs lead to increased helplessness for others. People entering the search pool ‘crowd out’ others creating smoothed unemployment statistics.
Just an update on the STUPID RE market in So Cal. It is ridiculous right now. First time buyers are frantically making offers on anything and everything just to get the tax credit. I have held my tongue somewhat with my clients, simply hinting that waiting to buy might be a good idea, but starting yesterday, I am outright saying this market is stupid. Enter at your own risk. I am pointing out that getting 8k back from the gov’t when you are in a bidding war, bidding up the price 30k doesn’t make sense. Probably going to piss off some agents, but oh well. There are multiple, and I mean a ridiculous amount of offers on most homes priced 400k and below. We’re talking 40-80 offers! WHAT?!?!?! This is ridicuous, and can’t last. THe multiple offers are somewhat artificial, because I suspect it is the same 40-80 people in an area making an offer on any home within their price range. Buyers are putting tons of offers out there hoping that one gets accepted. They’re all bidding against each other on the same homes! DUMB! Whether they extend the credit or not, I think this will all come to an end in November. Either they don’t extend the credit (highly unlikely) and a bunch of people who were relying on the credit to pay back a family member for their down payment “gift” no longer can buy a home, or they do extend it and there isn’t as much of an urgency to buy NOW. I’ve had it with the market. It makes no sense.
Thank you to this blog and all of the posters. I come here for a dose of sanity in what is otherwise an insane world.
Home grown morooons in So Cal. Are they the same crowd that ran out to buy a new Ford Focus for the $4500 Cash for Clunkers rebate? Mom and dad could have both done that and made $1000 more than the Dollars for Dumps credit. Now, what can I sell these foooools?
“Home grown morooons in So Cal.”
Thanks CentralCoastDude.Harsh, but no truer words spoken.
Does anyone use a paper and pencil with T accounts anymore… s i m p l e stuff.
Ha, likely so. I had one client who went out and bought a second car, a prius to get the tax credit for buying a hybrid about a year ago. He already had a car. Now he has 2 car payments. And his tax credit is long gone…gobbled up in about 8 payments, guy still had 52 payments to go, plus the 36 left on his other car. Genius.
Wow, I thought people who bought “2 T-shirts for $30!!” instead of $18 for the one shirt they needed were silly.
“If you offer people free money, they are going to take it.”
-some politician somewhere, on some news broadcast
I didn’t realize how true it is. How wasteful. Thanks for sharing, socal.
so cal lender
Thanks for your perspective and first hand experience reference. We’re sitting here waiting to re-enter with a 100% down payment, in the $400K-(real world, not bubblicious price) range, and it just pisses us off.
I can’t believe how stupid this $8000- credit mania is. That’s the cap. Did any of these buyers read Form 5405, or is the FHA loan for the cap amt? (and it so, bfd) The California credit isn’t that lucrative either. I just don’t get it.
Seriously, and I mean it, isn’t that amazing?
Did any of these financial wizards think about waiting for home prices to deflate and save $100K on the loan balance. It just boggles my brain, how utterly stupid these $8000- credit buyers are. Meanwhile those of us who are allergic to debt, who live at or below our means, are being punished.
How is it in bank shareholders’ interests to make loans on overvalued collateral?
Fed Growth Effort May Be Undermined by ‘Tight’ Credit (Update1)
By Scott Lanman
Sept. 22 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke’s efforts to stoke a U.S. economic recovery may be undermined by the central bank’s other goal of restoring the banking system to health.
…
A failure to restore the flow of bank credit carries the risk that the economic recovery will be slower than the Fed anticipates, or even that the U.S. lapses into another recession, economists say. That would make it more likely the Fed will keep its main interest rate close to zero for a longer period.
“They would be absolutely delighted if banks went out and raised a lot more private capital and then began to lend more,” said Gramley, now senior economic adviser with New York-based Soleil Securities Corp. “Until that happens, the Fed has to continue to try to encourage economic growth through easy money.”
…
So long as the Fed and Dough-4-Dumps are keeping home prices artificially propped up, wouldn’t it make sense for private lenders to sit on their heals and wait for these programs to expire? Unless, of course, the government agrees to provide free (taxpayer funded) default insurance on the mortgages (think FHA and GSE loans). In that case, why not take the risk of catching falling knife collateral?
DJIA = 10K ain’t all that no more…
A new bubble
The first is that around 1995, the market suddenly entered a bubble. The bubble argument is so well known now, and so well established, that I’m not going to waste your time repeating it. Events of the last 15 years have surely made the “irrational exuberance” case pretty well.
But if the chart of the Real Dow shows a bubble which began in 1995, it raises the alarming suspicion that this bubble is far from over. Long-term trend lines might put you at around Dow 6,000 or Dow 8,000 today, but Dow 10,000 looks above trend.
And as Ben Inker, head of asset allocation at fund giant GMO recently pointed out to me, stocks have spent so long above long-term trends that logic, and historical experience, would suggest they are likely to spend more than a few days last March below it.
…
Mr. and Mrs. America, we can assure you that we have done everything possible to ensure that your deposits are insured. (Sure you have…)
CORRUPTION: Reverse-Insurance?! (FDIC)
Let me pose a question to you.
Let’s say you own a $200,000 house free and clear.
Let’s further say that you would like fire insurance. Just in case you are a klutz in the kitchen, for example.
So you sit down and write yourself a fire insurance policy. You promise to pay yourself $200,000 to rebuild your house if it burns to the ground.
You then put your “insurance policy” in the safe and pat yourself on the back - you’re insured!
Now, you want to re-do your kitchen and add a pool, so you go to the bank to get a mortgage to finance those improvements.
The mortgage company would accept your self-written policy as proof of insurance, right?
Oh wait - they’d call that fraud?
Well gee, what’s this then - ?
Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.
Of course it would. Writing insurance on yourself is a highly-lucrative business, especially when you can charge interest to the supposed insurer who you are supporting!
Insurance is supposed to work the other way around - you are supposed to pay into a pool to cover the risk of loss that some people in the pool might suffer.
Who would have thought that a government agency would actually contemplate paying the insured party for the coverage on their own risk?
In a world where we had a rule of law this would be identified instantly as what it is: rank, outrageous fraud.
(From K. Denninger)
..Writing insurance on yourself is a highly-lucrative business…
i don’t quite get this..
The FDIC is funded by the banks that it insures. Banks pay the premiums, but that money is depositor’s money. The FDIC’s insurance fund is funded by some portion of our bank deposits.
In effect, we (depositors) currently are insuring ourselves.
If someone else (like a bank with surplus money) wants to contribute to the cause, who cares..
The point is that the FDIC will be paying them above-Treasuries rates for accepting Treasuries-risk.
It is a give-away to the banks selected to loan money to the FDIC.
It’s a give away if future bank failures don’t eat up all their money. Seems risky to me… extra crispy risky.
And seems understandable that those banks would both demand and deserve something extra to take on that risk.
From a depositor’s POV i don’t see any downside.
Even from a taxpayer’s POV, where will the FDIC get more money if the fund is eventually drained? From the Treasury, no doubt.
Am I wrong in thinking that we’re all in this together.. because economic recovery is “too big to fail”?
MANTECA, Calif.—The FBI has arrested a Manteca mother and daughter accused of defrauding lenders of about $5 million from home sales.
Prosecutors say 49-year-old Helen Sotiriadis and her daughter, 23-year-old Irene Sotiriadis, sold 30 residential properties to Cambodian nationals between March 2006 and November 2007. But a complaint filed Monday alleges the women inflated the buyers’ incomes on loan papers and promised them refinancing would drop their monthly payments.
Prosecutors say the women never did any refinancing and the homes went into foreclosure.
FBI agents arrested the pair Sunday after they got a tip that the Sotiriadises were planning to relocate to Greece.
Attorneys for the woman insist their clients were not trying to flee prosecution.
Proper sentance: Send them one way to Cambodia each w/ a $100 bill and the clothes on their backs. Maybe a toothbrush…
Another entry for the “The US is too FUBAR to fix” file. (sorry, haven’t got the “tinyurl” thing figured out yet).
Story in Time Magazine about how France is cracking down on illegal immigrants……most of them young Afghan males, trying the get into the UK (no National ID card), so they can get away from the Taliban.
So we have our guys in the ’stans, so they have the “freedom” to GTF out of Dodge? Old-fashioned me is asking why are we fighting for their “freedom”, when they aren’t willing to fight for it themselves……especially when the “freedom” we are fighting for is to help a society that is only marginally less repressive than the people we are fighting against.
Just my opinion, but the country would have been better served (and cost less in manpower/casualties/resources) if Bushco had put enough troop into Afghanistan just long enough to find OBL, and put his head on the end of a long stick, instead of going off on the Iraq tangent. All Iraq did was show everyone alternative means to get around our technological superiority……..so nobody is intimidated by us anymore.
If we are really interested in preserving our “freedom and way of life”, might I suggest that those 150,000 troops be deployed on our southern border? We have had a defacto invasion going on since 2000, which has degraded the quality of life in towns all over the USA, especially out here in flyover country.
Too bad we aren’t being overrun by Mexican lawyers, politicians, and businessmen undercutting Walmart prices by hiring illegal labor. We’d have had a secure border 20 years ago.
That and a phenomenal birth rate.
This post is in direct response to the recent partisan bickering on this site. I’m really tired of it, and I feel that I am safe in saying that many of us are.
This is from Ron Paul’s Campaign for Liberty website. It’s entitled entitled “Next They’ll Have Us Salivating” by Tom Mullen.
I have never posted something this long, but I’m so disillusioned with the closed-mminded and knee-jerk reactions of posters I had once deeply admired that I feel the time has come for a little teacher-directed metaphorical slap back to reality.
Know they enemy, people.
“Third parties and other tiny constituencies aside, American political discourse is dominated by our two major political parties. Their primary goal in any debate is not to reach the truth, but to enlarge their voting base. Having discovered long ago that appealing to the voters’ feelings is more effective than appealing to their reason, there is little more to most political dialogue coming out of politicians and activists than ad hominem attacks against their opponents and empty jingoism that similarly appeals to conditioned emotional responses rather than any rational position or argument (and once in a while, they cry). Perhaps this has always been true in politics; perhaps it will never change.
“However, what is truly frightening is how successfully these parties have been able to train average Americans to think and act as they do, and ultimately to cast their votes likewise. For anyone that has given their allegiance to either of the major parties, no dissent or even discussion of that party’s platform is permissible.
“If you are talking with someone who identifies him or herself as a Republican or a ‘conservative’, the mere suggestion that the United States government should consider decreasing military spending or changing their nation-building foreign policy results in a vitriolic, ad hominem assault of the most vicious nature. Often, the response will reference positions that you not only did not take but were not remotely related to the discussion you were having before you questioned party dogma. You may criticize the war in Iraq and find yourself attacked as ‘godless’ or an atheist or even a traitor, while your subject goes on to tell you why you are so wrong about supporting amnesty for illegal aliens, regardless of the fact that the subject of illegal aliens was never heretofore mentioned and you happen to oppose amnesty for illegal aliens.
“Similarly, when talking with someone who identifies him or herself as a Democrat or a ‘liberal’, any mention of support for a free market will elicit a similar attack. You may be called a racist, a fascist, selfish, or greedy amidst a blustering diatribe about the importance of the separation of church and state and religious tolerance, which are likewise subjects that heretofore were not part of your conversation and which you may well agree with wholeheartedly.
“One must recognize at this point that you are not engaged in a debate. The person you are talking to is no longer reasoning, but instead giving conditioned responses to words he or she has been trained to react to with abhorrence and intolerance. In most cases, you can expect no chance to redirect the person back to the discussion you were having nor any chance to make a further point, as your opponent will likely continue to cut you off and ultimately withdraw from the conversation, having heard nothing beyond the trigger word(s) that set the absurd reaction in motion.
“If the whole encounter seems bizarre, consider the associations that were likely revealed during it. Anti-war equals godlessness (is God pro-war?). Free market equals racism. Property equals greed. Neither Orwell nor Burgess could have imagined a victory over reason so complete. Soon, like the iconic Dr. Pavlov, our masters will need to do no more than ring a bell to direct our thoughts, feelings, and actions.
“Without reason, there can be no liberty. Reason - the law of nature - is what allows us to discover the natural, non-aggression limit to human action. It is what defines liberty and distinguishes it from the state of war. It is doubtful that any one of us has not been guilty of abandoning reason at one time or another, although there are some that are certainly guiltier than others. It is also clear that there are those who would go on exhorting our passions in order to cloud our reason and therefore rob us of our liberty, for their own gain at our expense.”
Ok teach….
When are we going to demand our public schools get rid of the Ghetto language?
We have allowed this disgrace to go on too long, it feeds the criminal justice system and keep those people out of the main stream
I feel this is a serious threat to our country…Rap and Hip hop has been exploited so much and what real good has come out of it?
A few people have “made it” and so has baseball, NBA, but its time to stop the damage to our country.
The KKK would be happy today with how this all turned out.
——————————————————–
feel the time has come for a little teacher-directed metaphorical slap back to reality.
I personally do not allow any street language in my classroom (I teach 9th and 10th grade History and English in a southern California high school, to be clear). While my students are respect these rules in the classroom, once they walk off school grounds, their mouths run the way their young brains direct.
The short answer to your question is parenting, DJ. In the absence of that, there is very little any caring adult can do.
so.. Paul’s telling me i’m one of Pavlov’s dogs? He’s telling dems and repubs that they are naive, dumb animals and are being manipulated? I find that hard to believe. Paul’s no fool.
nope.. that was written be someone else.. Tom Mullen?
hllnwlz .. tell me how that website is connected to Ron Paul.
“This is from Ron Paul’s Campaign for Liberty website.”
Why doesn’t Paul’s name appear anywhere on the About page… How deep would I need to search to find Paul’s endorsement?
http://www.campaignforliberty.com/about.php
Not sure if it’s “his site”, but a quick glance around the site though will tell you it’s pretty much all about RP and his principles.
Wikipedia has a page.. Campaign for Liberty.
Paul founded it with a portion of the money “left over” from his last presidential campaign… a portion of the $4.7 million left over, according to that page.
From their contributions page:
Campaign for Liberty is a 501(c)4 lobbying organization which neither supports nor opposes candidates for public office …
Is Ron Paul in favor of all lobbyists or just those who lobby for him?
Sorry, I could have worded that better. It was during my prep period and I was trying to do too much, as usual.
However, I did disclose that the article I included was written by Tom Mullen in my original post.
while i did miss the Mullen name in your post and that was my fault, i still question if Paul would talk down to people like that.
While it might be music to the ears of his devout followers, it cannot be meant for public consumption.. at least i hope not.. for his sake.
Thanks for this post, hllnwlz. I like it…a lot.
Canada’s Prime Minister Stephen Harper is on CNBC, and he’s talking about the Canadian economy. He is delusional when it comes to his own country and the financial health of it’s citizens. He completely ignores the real estate bubble, and the effect it will have on their spending and consumption. I don’t think million dollar shacks in BC are conducive to excess disposable income.
Maybe he is just getting back from a few weeks in Cottage country
I warned San Diegans, or those who are thinking of buying a home in San Diego 2 years ago SD could be losing its biggest private employer at the time… sure enough, its getting closer. Most folks I worked with have already been axed or moved to cheaper areas of the country to live, namely Orlando, Somerset, Little Rock, and Oak Ridge. If you don’t think losing one of three of San Diego’s only Fortune 500 firms isn’t going to decimate local home prices, you are in for a treat as all these high paying engineering jobs go away:
SAIC appears poised to shutter its San Diego headquarters
Defense giant may be on move
By Mike Freeman
Union-Tribune Staff Writer
2:00 a.m. September 22, 2009
http://www3.signonsandiego.com/stories/2009/sep/22/saic-appears-poised-shutter-its-san-diego-headquar/?business&zIndex=169995
I have to wonder what happens if Qualcomm bails? SAIC is huge in San Diego.
HP is dumping a lot of folks from its Rancho Bernardo campus.
IC,
Do you keep tabs on Corvallis? Any news there?
I noticed. My daughter’s vocal teacher’s husband just received a pink slip there yesterday. I have long been jealous of folks in my hood who could walk across the street to work, but it would turn really sour if you located here to work for HP, only to lose what you thought was stable employment within walking distance of home.
SONY already pulled their facility out of Rancho Bernardo, bull dozed everything too.
Friend’s father was forced to an early retirement at HP in Rancho Bernardo last year. It seems all the good jobs are disappearing from the area.
From the LA Times. I know we’ve discussed this a bunch of course - here’s an article from the other day (not sure if already posted):
Homeowners who ’strategically default’ on loans a growing problem
A study shows that people who abruptly and intentionally abandon their mortgages often have high credit scores, in stark contrast with most financially distressed borrowers.
Reporting from Washington - Who is more likely to walk away from a house and a mortgage — a person with super-prime credit scores or someone with lower scores?
Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to “strategically default” — abruptly and intentionally pull the plug and abandon the mortgage — compared with lower-scoring borrowers.
…
More key stuff from the article:
Among researchers’ findings are these eye-openers:
* The number of strategic defaults is far beyond most industry estimates — 588,000 nationwide during 2008, more than double the total in 2007. They represented 18% of all serious delinquencies that extended for more than 60 days in last year’s fourth quarter.
* Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they’ve fallen behind on other accounts.
* Strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and have cratered since 2006. In California last year, the number of strategic defaults was 68 times higher than it was in 2005. In Florida it was 46 times higher. In most other parts of the country, defaults were about nine times higher in 2008 than in 2005.
* Two-thirds of strategic defaulters have only one mortgage — the one they’re walking away from on their primary homes. Individuals who have mortgages on multiple houses also have a higher likelihood of strategic default, but researchers believe that many of these walkaways are from investment properties or second homes.
It’s nothing personal, just business.
Wow.
Here’s an explanation for the dollar’s drop today. IMO this is quite a bombshell.
UK Telegraph:
US backing for world currency stuns markets
US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is “quite open” to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.
The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.
“The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation,” he said.
Mr Geithner later qualified his remarks, insisting that the dollar would remain the “world’s dominant reserve currency … for a long period of time” but the seeds of doubt have been sown.
…
The Chinese proposal, outlined this week by central bank governor Zhou Xiaochuan, calls for a “super-sovereign reserve currency” under IMF management, turning the Fund into a sort of world central bank.
The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a “widely-accepted means of payments”.
US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is “quite open” to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.
Even if the powers-that-be are contemplating such a sea change (which seems somewhat surprising), why would Geithner make a public statement about it?
Floating a trial balloon, plain stupidity, or some other reason?
Floating a trial balloon
that would be my guess.
“…some other reason?”
Affirmation of the strong dollar policy, perhaps?
i dunno if i’m convinced it was just a slip of the tongue.
“Cheap dollar” translates to “Buy American”.
A cheap dollar is also inflationary. In a sense, he’s calling China’s bluff. ‘You wanna devalue the dollar? Go for it! Thought you were preaching against us doing it, though.’
As usual, the dollar is our currency, and everyone else’s problem. It’s good to be the king.
Association of American Railroads just released stats for week ending September 12.
The big number (IMO) is the 26% drop in trailers/containers vs. 2008. September-October are the peak traffic months for these, with shipments of merchandise for Christmas.
We decided to refrain from getting each other Christmas presents this year (except for the little kids). Nobody has the time/money/energy for it. Looks like there won’t be anything to shop for, anyway.
I’ve noticed a distinct lack of discussion about “it” toys this year. They usually have figured that out by September, haven’t they?
I think I’m going to go back to the National Geographic warehouse sale this year for gifts. Covered most of the munchkins on my list that way last year.
And talking about flat screen TVs is getting old….
National Geographic Calendars make great gifts.
Weather Channel calendars are cool, too.
We always know when we are screwed around here, when Jim Cantore shows up in our neighborhood for a “Live Remote” ……….or the NWS National Severe Storms Lab “Doppler on Wheels” trucks roll into town.
That is one huge clue isn’t it?
If I was gay, I’d have the hots for Jim Cantore.
(Him, or Mike Rowe from “Dirty Jobs”)
X-GSfixer, you’re in KC? I forget.
Right now i have a Craigslist scammer on the hook.. he’s using the eBay motors Vehicle Purchase Protection Program scam.. (eBay as escrow company).
Asking price is half of blue book, but he’s having money problems and assures me the vehicle is in perfect condition, in and out.
i dunno what i want to do about it.. play with him for a while or just cut the line. Anyone know a way I could cost him time and effort without wasting my own time and effort?
joey,
You
you
San FranQualityLady; What does that mean, seriously, I don’t know.
me??
this prick is trying to steal my money… no better than a street thug.. a low life cyber purse snatcher who’d brain some little old lady for a couple bucks.
deserves a public flaying.. or a freakin noose.
Agree 100%. Just giving you a bad time.
You she-devil !
Why is it bad for eBay thugs to steal, but perfectly OK for bankers to do it? Is it that bankers wear suits and ties?
I considered that a compliment and read it with a wink in my internal reading voice.
Ate-Up:
Joey…what is his rating………..you should never buy any expensive item from a low feedback seller
UNLESS you can inspect it and pick it up in person….that means is very close by. also NO paypal or escrow… cash only in person.
it’s not even an ebay seller.. was an ad on Craigslist from a local city.
The ad was quickly flagged but not before I inquired. I thought it was just a fairly good deal until I looked up the blue book value.
The scam is the buyer submits the money to “eBay” and then the vehicle is delivered for up to a week’s inspection.
eBay holds the money in escrow for the buyer’s protection.
For those who are unaware, eBay doesn’t do that or get involved in any sort of outside deals or negotiations not directly happening on eBay.
This guy aint very smart.. i could keep him running in circles for awhile if i wanted to. He might be good for 10 or 20 replies.
Next step is for me to give him my name and address so he can get things going with eBay (send me some fake documentation).
From his (her?) language skills, I’m sure he’s American but could be anywhere in the country. Vehicle is parked in fantasy land.
This from a person I have known for yrs.
“I just think demonizing insurance companies is not helpful. Most are non-profit.
Can you tell me What INS corps are Non Profit?
BCBS used to be, but have pretty much lost that status; at least from what it appears on Wikipedia. Funny this should come up - we just had a meeting today discussing our new benefits, which being changed to BCBS, and the question came up about them being nonprofit or not, and what that means.
BCBS is comprised of several individual groups, some of which are public and non-profit, like WellPoint (stock symbol WLP).
Not sure about others though.
CSAA..
(calif state automobile association) .. CSAA began to offer Automobile insurance in 1913 and Homeowners insurance in 1974.
AAA..
The AAA (pronounced “triple-A”), formerly known as the American Automobile Association, is a 50 million member North American not-for-profit automobile lobby group, service organization, and seller of vehicle insurance. Its national headquarters are in Heathrow, Florida.
wikipedia.
—-
CSAA insures people’s property when nobody else will, like if it’s in a highly dangerous area.. flood, fire or whatever… in conjunction with State mandate IIRC.
“non-profit” = for profit
Black is white.
Up is down.
No means yes, and vice versa.
Fair is foul and foul is fair,
hover through the fog and filthy air.
Still think the Fed will be audited?
http://money.cnn.com/POLLSERVER/results/48388.html
Vampires never look into mirrors. And so far as I am aware, central bankers only look through rear-view mirrors.
Commentary
The Buzz
The hypocrisy of the Fed
The Fed is reportedly looking to monitor banker pay in order to discourage excessive risk-taking. But aren’t the Fed’s easy money policies encouraging risk?
By Paul R. La Monica, CNNMoney dot com editor at large
September 18, 2009: 12:42 PM ET
THE RESCUE
NEW YORK (CNNMoney.com) — Are there any mirrors in the headquarters of the Federal Reserve? If so, I think it’s time for Ben Bernanke and his colleagues to look into one.
The Fed, according to a Wall Street Journal report Friday, is said to be considering a plan that would allow regulators to closely monitor and even change the pay practices at financial firms in order to make sure that these companies aren’t encouraging excessive risk-taking.
Considering that the mess that we find ourselves in is partly due to big banks and insurance firms failing to recognize the many subprime warning signs in order to satisfy Wall Street’s myopic focus on quarterly profits, reining in bonuses and other compensation tied to stock performance may not sound like a bad idea.
But riddle me this Bat-readers: Isn’t it more than a tad hypocritical for the Fed to be trying to tell banks that too much risk is a bad thing?
…
Bank of America Seeks to Pay Back Federal Aid
One year and two bailouts later, Bank of America is moving to extricate itself from Washington’s grip.
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John Gress/Reuters
Kenneth D. Lewis, Bank of America’s chief, is trying to smooth relations with regulators.
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Times Topics: Bank of America Corporation
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With the financial industry on the mend, the giant bank announced several measures on Monday to reduce its reliance on federal aid. The moves are likely to presage a wider effort to repay the many billions of bailout dollars that propped up the bank during the worst of the financial crisis.
But the upbeat news came as Bank of America’s troubled takeover of Merrill Lynch — a watershed moment of the financial crisis — continued to reverberate through Washington and Wall Street. Bank of America on Monday defied a request by Representative Edolphus Towns, Democrat of New York, to divulge more details about the star-crossed acquisition. Few expect the controversy to end there.
Despite the uproar over the Merrill deal, Bank of America and its leader, Kenneth D. Lewis, are moving quickly disentangle the bank from the federal bailout program. The bank said that it would pay the government $425 million for unused federal guarantees against losses at Merrill.
Rest of story here: http://tinyurl.com/lrpzaq
..Bank of America is moving to extricate itself from Washington’s grip…
I’m jealous.
And we have breach of 76 on the dollar index.
Will we soon set a new all-time low, below 70.7?
I have a better proposal to get the mortgage market going again: Take away the props the Fed and Treasury have put in place under home prices, and let them revert to affordable levels. The mortgage market will magically revive, once the collateral is properly valued. And hopefully a few more members of the Megabank, Inc cartel of firms formerly known as too-big-to-fail will go belly-up in the process.
The Financial Times
Wells Fargo urges US to boost mortgage market
By Francesco Guerrera, Greg Farrell and Saskia Scholtes in New York
Published: September 15 2009 22:21 | Last updated: September 15 2009 23:30
The US government should help revive the moribund market for big mortgages by getting Fannie Mae and Freddie Mac to buy large home loans from banks, the chief executive of the lender Wells Fargo urged on Tuesday.
In an interview with the Financial Times, John Stumpf, whose bank originates a quarter of all US mortgages, called for an increase in the size of loans purchased by Fannie and Freddie, the troubled finance groups controlled by the authorities.
…
If you have the ba!!s keep the mortgages on your books you losers. Don’t dump your crap on the taxpayers.