Bits Bucket For September 30, 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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Mortgage demand falls despite lower ratesSeptember 30, 2009 7:07 AM ET
All Thomson Reuters newsBy Lynn Adler
NEW YORK (Reuters) - U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge.
Home loan applications fell a seasonally adjusted 2.8 percent in the September 25 week, driven down by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests.
Borrowing costs inched closer to record lows, with average 30-year rates dipping 0.03 percentage point to 4.94 percent.
The 30-year rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group. A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.
For a related chart of mortgage rates, right click on the code: and select “Related Graph.”
Signs of life have emerged in both home sales and prices, helped by government stimulus programs including an $8,000 first-time home buyer tax credit.
The outlook for housing is split, however. Some in the industry predict another sales slide if the tax credit is not renewed and others say there will be a gradual recovery slowed by the usual winter sales malaise.
“We’re going to see another leg down, and if we lose the tax credit it will be a significant leg down,” said John Burns, president of John Burns Real Estate Consulting in Irvine, California.
The main concern is “shadow inventory,” or the stockpiles of homes held by banks or those about to go into foreclosure but yet to be put on the market, he said.
“The one really positive surprise recently has been falling mortgage rates,” and rates at 5 percent or less next year “could definitely help engineer a soft landing,” said Burns.
Another concern is that the first-time buyer credit siphoned demand from next year’s spring sales season, with buyers rushing purchases before the tax incentive disappears.
Existing-home sales in August fell for the first time in four months, but were at the second-highest pace in almost two years. Sales of new houses were below forecasts but up in August for the fifth straight month.
PRICES YET TO BOTTOM
Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, does not expect another leg down in home sales but is not convinced that prices have hit bottom because of the large inventory of unsold homes.
Home prices rose in July for the third straight month, surpassing forecasts and bolstering the case for housing stability, based on the Standard & Poor’s/Case-Shiller indexes reported on Tuesday.
“I’d rather be a home buyer than a seller right now because I still think the odds are in your favor of getting a good deal,” and the freefall in prices is over, Hoffman said.
But caution is advised with the pending demise of the tax credit, rising unemployment and the possibility of more foreclosures, S&P said.
Home prices on average have toppled by more than 32 percent from their peaks in the second quarter of 2006.
“I would definitely characterize it as a slow recovery in housing out of a very deep hole,” said Hoffman. “We’ve gone from the sub-basement to the basement, and maybe we’re going to get to the ground floor on housing by next spring. At least I think the process has begun.”
How can these morons not see the upcoming distress? All it takes is one look at the Zelman chart from 2006.
Your answer is your 4th word in your statement:
Mororns !!
Or maroons?
You tell ‘em Bugs!
i thought they were moops?
might help if I spelled it correctly - duh!
Morans!
Russ don’t insult my friend Terry Moran of ABC nightline, he is one shape dude.
I’m still waiting for him to be named Anchor of the Evening news…
one shape dude? Is that the latest NYC lingo?
eym uh diz lexiz…. iz shud bee…… sharp
see eye kan kumminkate wid da peeps 2.
Does anybody have a link to the Zelman chart? I used to have it bookmarked and can’t find it. Googled it too - no luck finding the actual chart, just the analysis.
Here’s a recent one:
link
ha ha! When I saw SouthFL’s query earlier, I almost posted “calling Packman!”
Just call me “Conan The Librarian”.
Thanks!
Ah, that chart is always a beautiful thing. Reminding me that we have just come through a sort of trough in resets. If PTB couldn’t effectively prop up prices this summer, they certainly will not be able to do it in the next couple of years. hahahahahahahahahaha
Keep in mind however - it’s likely that a good portion of mortgages that were set to reset in the coming years have already defaulted. If I’m underwater by 20% or so just due to home value loss, then I don’t care that my rate isn’t resetting until next year - I’m walking.
What I’m saying is I don’t think that chart really matters anymore. I think it’s overwhelmed by the effect of the equity losses that have happened. Yeah there will be some effect due to resets - but it won’t be a big tidal wave like a lot of people are making it out to be, IMO.
you may have a point there, packman
I disagree. The linked chart was created March 09. Every time it gets recreated, the authors ditch the loans that are already bunk. A quick look at the 2007 chart and the present chart shows that some of the same months are the same dollar volume of resets, which means I’m right. Recasts should have made each month higher (compressing the future years into the first couple), but they wind up being the same dollar volume, meaning something is getting thrown out.
There’s still a ton of mortgages to die.
(wife) “Hey, honey, I just lost my job!”
(husband) “Oh, no, now that makes two of us!”
(together) “Let’s go buy a house!”
Seriously. I’ve heard people say just that. Not kidding.
Option pay andmore Alt-As next year.
“Home prices rose in July for the third straight month, surpassing forecasts and bolstering the case for housing stability, based on the Standard & Poor’s/Case-Shiller indexes reported on Tuesday.”
In other words:
“House prices, inflated by toxic loans paid for by the tax payer via the silly $8000 credit and FHA loans, rose for the 3rd straight month, lending hope to those who want to keep the Bubble propped up and housing unaffordable forever.”
“Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, does not expect another leg down in home sales but is not convinced that prices have hit bottom because of the large inventory of unsold homes.”
a chief economist said this?
ONLY an economist could say that with a straight face.
OK, maybe politicians and CNBC anchors could too.
The NAR has a “chief economist” too. It’s like chief witch doctor / chief PR guy.
Yep, a chief economist said this.
Feels the Gilded Age all over again, doesn’t it?
In fairness, I think there’s a rational interpretation of his statement: not another leg down in sales VOLUME, just in sales PRICES.
In my little universe I corroborate jeff saturday’s post about falling mtg demand. Demand for my loans is at a big fat low. Have written exactly one new note this year, plus one cash-out refi. A few other people have approached me, but either they got a loan somewhere else or they got Cold Feet, Period.
Made some really big bucks lending money to Prudential and Hartford and Morgan Stanley. I say “made” because the bonds issued by these corps have now all recovered to high prices, low yields. So I sold them all. Now back in the typical HBB boat, what to do with $$$ now? (Still have some bonds in some other financial outfits, am likely to be outa all of em soon.)
* The Wall Street Journal
* SEPTEMBER 30, 2009
Mixed Data Reflect Fragility of Economic Recovery
By SARA MURRAY
Home prices rose once again in July, but a drop in consumer confidence in September underscored the fragile state of the economy’s recovery.
In the latest sign the housing market is stabilizing, home prices increased a non-seasonally adjusted 1.6% in July from the prior month, according to the S&P Case-Shiller home-price indexes released Tuesday.
It was the third-straight month of gains, though prices are still 13.3% lower than they were in July of 2008.
The government tax credit for first-time home buyers has helped spur demand, but with its expiration date looming, many economists are concerned about how strong the housing market’s recovery will be afterward.
“While housing is showing some signs of having reached a bottom, we need to recognize that it is a sector still on life support,” Richard W. Fisher, president of the Federal Reserve Bank of Dallas, said Tuesday, according to excerpts of his speech. “The market for housing will not become truly robust until market forces replace the prostheses of government support.”
…
Can someone please fill me in on how propping up the housing market became the Fed’s responsibility? I thought their business was monetary policy and full employment, not propping up one particular sector of the economy over others, especially when the one sector in question is clearly over-invested.
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* September 29, 2009, 10:53 AM ET
Fedspeak Highlights: Fisher on Government Support for Housing
By Phil Izzo
Dallas Fed President Richard Fisher, one of the central bank’s most outspoken inflation hawks, spoke to the Texas Christian University Business Network and assured his listeners that the Fed will remain vigilant on inflation. But he pointed to risks that remain in the system, specifically in the housing market, which has yet to show that it can stand on it’s own without government support. Here are some excerpts from his speech.
“But, remember the theme here — cautious optimism. While housing is showing some signs of having reached a bottom, we need to recognize that it is a sector still on life support. The Federal Reserve has been buying over seventy percent of the new mortgage originations in the MBS market — a process that has lowered mortgage rates and increased the availability of credit at affordable rates to a large swath of the market. The FOMC has announced its intention to slow its rate of mortgage acquisitions, in the hope that private funding will begin to emerge. And the market for the purchase of new homes has also been helped tremendously by an $8,000 credit for new home buyers.
Of course, there is some concern that the hope for a housing rebound could succumb to the headwinds experienced earlier if the efforts of fiscal and monetary authorities are allowed expire. Yet, that said, there is, in my opinion, a limit to the life support that can be provided by either the Federal Reserve on the monetary front or the Congress on the fiscal front. The market for housing will not become truly robust until market forces replace the prostheses of government support. We have thus indicated to the marketplace that, for our part, the FOMC expects we will complete the execution of our $1.25 trillion intervention in the mortgage backed securities market by the end of the first quarter of next year.”
I have a few questions for the economic historians in the virtual room:
1. Has the Fed attempted to prop up the housing market during previous housing busts?
2. Are the price supports sustainable, or will they crumble when the Fed (not to mention the federal government) gets around to unwinding its various market props?
3. Will the recent uptick in the Case-Shiller/S&P housing price index have a laxative effect on the shadow inventory (reportedly of 7m homes) which is constipating the banking system?
4. How much have banks’ balance sheets collectively improved due to the financially-engineered housing price bottom?
5. Who gets to pay for all the financial engineering? Or was it somehow funded by money that grew on trees?
#1. No….See 1981-82 & 1991-92
#2. No….When the rates rise and the incentives are removed, prices likely have another leg down “unless” we get back to 5% unemployment (unlikely for a very long time)
#3. No….The banks will continue to “leak” the inventory out preserving as much “principal” as they can…
#4. Probably a lot given what they have to pay for funds…Their spreads are huge…
#5. Your kids…..
“When the rates rise and the incentives are removed…”
What makes you think either of these will ever happen?
The Fed
Sept. 30, 2009, 11:08 a.m. EDT
No rush to tighten, Atlanta Fed’s Lockhart says
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — There is no rush for the Federal Reserve to begin to tighten monetary policy, said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, on Wednesday.
“I think it may well be some time before a comprehensive exit need be under way,” Lockhart said in a speech in Mobile, Ala.
…
“…given what they have to pay for funds…”
I believe even our financially unsophisticated household could do pretty well investing monies borrowed at a zero percent interest rate.
1) No
2) Prices will crumble if the Bailout support is removed, so it won’t be removed. Ever.
3) Uptick in prices will encourage more “infestors” and idiots to buy houses they can’t afford. The FHA will be there to help them (until it also fails) and after that, the taxpayer gets the bill.
4) I seriously doubt the banks’ balance sheets have improved at all. I also seriously doubt anyone will ever get the truth about their balance sheets since they’ll have to search for it in the 3rd level of L.
5) The taxpayer will pay for the Bailouts and bonuses via: permanently high unemployment and lower living standards in the present day and run away inflation in the future.
I agree. Housing prices are going to crumble for decades.
Retirees are hurting because of low interest rates. But Ben Bernanke doesn’t really care about retirees. His main objective is to lure these “idiots” back into the housing market with low mortgage rates. “Be good boys and girls, buy a house, and reap financial rewards.” That’s not going to happen. The golden age of real estate investment is over in a lot of markets across the country.
I think Ben Bernanke is watching too many televangelists on TV. Give your seed money to a builder and you will reap financial rewards. Praise granite counters. Praise Chinese drywall! Praise $500 a month HOA fees.
And in this foolish game, retirees are getting screwed. No one is going to be a winner. No one.
No doubt many retirees will be forced to sell their houses at any price. That in itself will lower house prices. How can many retirees live well on an interest rate of 2% plus Social Security? Even if you have a million dollars in the bank, that’s $20,000 dollars income.
It’s actually good that they’re screwing retirees with low interest rates, because those people vote. On the other hand, retirees will want to monetize their housing gains when they move into assisted living. So there are two competing drives. The policies that are propping up housing are keeping interest rates low. Dunno how the retirees are going to vote on it.
Do you have a source for the 7M figure?
Mine didn’t post, but see further down this thread…
The Fed is serving its charter members by trying to protect the value of mortgage holdings. Fed is a private institution and the big banks are the owners. They actually hold shares and vote on stuff. It is unbalanced because your vote count isn’t based on size though.
So, when mentioned as a regulator, it is a joke because it is actual self regulation. Not an outside party protecting the public.
It is in the Feds interest to have housing values proped up because it is in the banks interest.
There is some blah blah blah about who is the chair of the monster but that is a position that is more about public face and politics. Could put Ronald McDonald up there. Doesn’t matter. The board of govenors is another matter though.
>> What will it take for me to get off the fence? Oh I dunno, if there is a stupid big enough incentive I might pick up a place. I’m vested into the current situation pretty heavily. Big oil, big money, Mil-Industrial complex and all that.
I’ve got some emergency escape routes but they are emergency escape routes. You know, its the emergency tunnel to the storm sewer in case immigration/irs/the fuzz show up with all those back parking tickets and unfufiled promises to give money to the sherifs association.
If it get a lot cheaper to buy then to rent… prices are in line with incomes… and stupid incentives abound.
Things are looking like a lot of monetary inflation of the M0 while slow rolling the debt. Perhaps price neutral for a long while as vel;ocity slows and cash supplies increase. Waiting for collapse in price of gold. Will get creamed on that insurance policy as well.
Comment by Professor Bear
2009-09-30 05:35:46
Can someone please fill me in on how propping up the housing market became the Fed’s responsibility? I thought their business was monetary policy and full employment, not propping up one particular sector of the economy over others, especially when the one sector in question is clearly over-invested.
————————-
Isn’t it odd that the Fed seems so concerned about housing prices now? Why weren’t they equally concerned when prices were rising through the stratosphere…which is the real culprit behind the “crisis” in the first place?
“Why weren’t they equally concerned when prices were rising through the stratosphere…”
Apparently, they can only see bubbles through the lens of the rear view mirror.
PB,
Since the motivation of the banks is profit and the bubble was very profitable; why would they care?
Basically the plan is going well for the banksters. They made obscene profits and dumped all the losses on the taxpayers.
I’m certain they could see the bubble.
The response is “Why would they care?”.
“Why would they care?”
I believe this is where tar, feathers and pitchforks could come in handy.
This is the bottom line. The companies - banks or whatever - are simply vehicles for the executives to enrich themselves. I don’t fault them for it, a lot of people look at their jobs that way. But, as long as banksters can continue this game, with the blessing of the politicians (at whose feet I really lay the debacle, because they are the regulators), they will continue running the game.
Eventually the system gets too big to bail. I don’t know if that time is now. But when it does actually get too big to bail, that’s when we get to tar and feathers and pitchforks.
Currently, a significant number of people have been jostled, but as long as they have their bread and circuses, they will remain in their torpor.
They would… if the populace had any brains.
But Dancing with the Stars is on right now and…
Like Winnie-the-Pooh, it’s not so much a bottom as hitting another branch on the way down.
“Home prices rose once again in July”
That was a long time ago
And then there is this
Sept. 30 (Bloomberg) — Mortgage applications in the U.S. fell last week from a four-month high, led by a decline in purchases.
The Mortgage Bankers Association’s index of applications to buy a home or refinance a loan fell 2.8 percent to 649.6 in the week ended Sept. 25 from 668.5 the prior week. The group’s gauge of refinancing decreased 0.8 percent and its measure of purchases dropped 6.2 percent.
The PTB better crank up those incentives to buy
“The PTB better crank up those incentives to buy”
They have already used big sticks to knock the current flock of fence-sitters off the fence and into the market. How big will the incentives have to be to get more knifecatchers to take one for team Fed?
Maybe a Renter’s Tax for “un’merkan behavior” where if you rent or otherwise have a positive net worth, you have to fork it all over unless you agree to buy something huge you can’t afford and make payments on it forever.
Have you ever noticed that when we write about what we fear most from the Fed/govt, we soon see our (HBB’ers) worst nightmares being publicized as the “next big thing” to save the housing market.
Seriously, the PTB is so desperate, they’ll try anything to “save housing.”
I hate to even post wild ideas anymore, for fear that the will become policy.
Don’t go giving them any new ideas, PTM.
“save housing.”
The idea that the economic situation can be fixed by ’saving’ the bloated housing sector is so obviously flawed that it is hard to imagine how policy wonks can even pretend to believe in this presumptive panacea.
it is hard to imagine how policy wonks can even pretend to believe in this presumptive panacea.
Not if those wonks have several houses they picked up as an “investment”
“The FOMC has announced its intention to slow its rate of mortgage acquisitions, in the hope that private funding will begin to emerge.”
Tell Fisher that I would be GLAD to buy up some newly-issued MBS’s, given a couple of caveats:
- that I only have to pay a true market-price for them (e.g. I won’t buy while the Fed is buying ANY because you are eff’ing up market pricing).
- that credit-standards return to historical norm or tighter (e.g. I would buy MBS paper as long as the backing mortgages are 20% down, 3X income / 30% DTI, etc.)
Given that the odds of those happening are essentially zero, the odds that I would step forward to buy the MBSes when the Fed stops are essentially zero.
Remember when subprime was going to be “contained” to $200 bn?
I wonder what has driven the big ($600 bn) rise in securities held by banks since last spring, right around the time the “green shoots” meme began circulating through the MSM financial press, to my recollection?
* The Wall Street Journal
* SEPTEMBER 30, 2009
Plenty More Bank Losses Expected Globally
Additional $1.5 Trillion in Write-Downs Forecast by End of 2010 Despite Rising Securities Prices
By BOB DAVIS
ISTANBUL — Rising global securities prices reduced the International Monetary Fund’s estimate of bank losses, but banks around the world — especially in Europe — still are likely to face additional write-downs of $1.5 trillion by the end of next year, the IMF said.
Overall, the IMF calculates that the global financial crisis will produce $3.4 trillion in losses for financial institutions, between 2007 and 2010, a chunk of which already has been recognized. That estimate is $600 billion less than the IMF forecast in April, largely reflecting an increase in the prices of securities held by financial institutions since then.
…
I apologize for my extra-snark from yesterday. I’ll be nicer today.
Meanwhile, from Le Bloomberg:
Pimco: Save More, Spend Less Economy Brings Total Return to 5%
By Thomas R. Keene and Susanne Walker
Sept. 30 (Bloomberg) — Pacific Investment Management Co.’s Bill Gross says investors should expect total returns on equities of about 5 percent annually as consumers curb spending and increase savings.
“Returns mimic nominal” gross domestic product, Gross, manager of the world’s biggest bond fund, said in an interview yesterday with Bloomberg Radio. “Nominal GDP is the growth rate of wealth on an annual basis. The new normal is 2 to 3 percent GDP and real growth of 1 to 2 percent.”
…The “new normal” for the global economy will be characterized by heightened government regulation, lower consumption and slower growth. The Standard & Poor’s 500 Index increased 13 percent on average in the five years ended in 2007, before falling 37 percent last year as economies slid into recession. During the last two bull markets, the S&P 500 posted an average total return of 18.5 percent a year.
The U.S. savings rate rose to 6 percent of disposable income in May, the highest level since 1998. Only 8 percent of U.S. adults plan to increase household spending, almost one- third will spend less, and 58 percent expect to “stay the course…”
Gross said he’s been buying longer maturity Treasuries in recent weeks as protection against deflation. “There has been significant flattening on the long end of the curve,” Gross said “This reflects the re-emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth.”
Consumer prices fell 1.5 percent in August from a year ago, according to the Labor Department in Washington. Prices have declined on an annual basis every month since March.
…Gross had said during the midst of the seizure in credit markets that Treasuries offered little value as investors seeking a refuge from turmoil in global financial markets drove yields to record lows in December.
…Program Extended
Fed policy makers last week committed to complete their $1.45 trillion in purchases of mortgage securities and extended the end of the program to March from December.
————-
There is a LOT of information in this article, and I don’t understand enough to comment on all of it. But it looks like Bill Gross is echoing the sort of general consensus that long-time HBB-ers came to a while ago: The real inflation happened between 2001-2008, and the government printed a little more to soften the landing. Now that the gov is weaning banks off the prinnting press and the consumers are having a collective come-to-Jaysus moment and throwing credit monkey off their backs, expect deflation (flat long-term bonds) as money is destroyed. Expect a bounce along the bottom followed by a return to fundamentals(?), which are slow in nature. No more quicksand-supported 12% returns, be happy with a solid 5%. Pimco appears to be adjusting its investments accordingly.
Am I close?
I think you’re pretty much dead on in your summary of Gross’ views. However, I have to question if long-term deflation is still the consensus view of ‘long-time HBB-ers’. I seem to sense more inflationary expectations. At least from the more prolific posters. Has the mood shifted? Or is there still a ’silent majority’ of deflationists?
There was intense price inflation in real estate in 2001-2008. There was intense monetary inflation in 2001 to present.
There has yet to be general price inflation. Price deflation will continue in real estate for several years as the option ARMs and ALT-As reset.
Deflation or stagnation will continue in wages.
Price inflation will occur (still occur) in health care, education, food, anything to do with oil in the next few years.
We saw in the 1970s that not everything inflated. Wages stayed stagnant.
This example is enough to show that we can have severe inflation in many things and no inflation or deflation in some things (cost of labor, cost of housing).
Don’t be fooled by the deflationists. Monetary inflation is always followed by general price inflation, so hang onto your gold.
What about the credit destruction across real estate loans. Is the money printing less than/equal to/or greater than money being destroyed via defaults?……..It’s hard to say/know imho.
-Vert
If any of us **knew for a fact** what would happen WRT inflation/deflation, we’d be exceedingly wealthy. IMHO, part of the plan is to make the outcome uncertain, so that we can’t all game the system.
Personally, I’m one of the long-term deflationists. I still believe we will have a tremendous deflationary undercurrent, but the PTB are trying desperately to inflate their way through it, as we all expected. It’s possible we have deflation and/or an currency crisis at the same time. IOW, U.S. citizens are going to be in a world of hurt, no matter how this plays out. However one can prepare for that remains to be seen…
Nice summary oxide…I tend to agree…
I could be happy with 5%. That would earn me enough to live on in retirement.
Given the hidden inflation of the last 6-7 years, maybe that 12% was really 5% anyway.
And of course 5% would work, if everyone got 5% and people weren’t able to use credit. Prices would have to adjust accordingly, or no one would be able to buy anything.
(Lack of credit in general is the reason why my grandparents were able to buy everything cash or check.)
I wonder when they are going to wheel out the PPT today?
No rest for the wicked.
I am expecting a PPT-engineered paint taping effort to produce a surprise stock market gain on the last day of the third quarter…
Man this market is rigged as ever.
Stocks are up - but only relative to the dollar itself.
Its already happened. This morning’s losses have already been erased. Just watch, it will close with a gain, even though there are no fundamentals to back it up, just “optimism” that things will get better.
It appears that I was wrong, they closed down after all.
“…they closed down after all.”
Plunge protection efforts may be bumping up against commodities price containment efforts… stocks down, dollar down, gold up, oil up… not a pretty picture from the standpoint of US markets.
September 29, 2009 - Views: 3,487
Ron Paul
Ron Paul’s biggest concern is personal liberty, which only small government can provide.
http://www.thedailyshow.com/
The congressman acquitted himself well — he managed to insert some ideas (not easy in this format) while coming across as genial and good-humored.
Note his artful dodge when asked about the loons at the Tea Parties. Oh, yes, there’s a real politician lurking in there.
And those tea baggers are nut cases too. So are the birthers, and the “let’s hope there is a military coup” crowd. These people all have one thing in common.
They are all enemies of the state.
Give me liberty or give me death.
Honestly? I thought the man sounded unhinged—and I was rooting for him. Stewart’s good education was apparent; his questions were subtle but pointed, and Dr. Paul talked right over them. I was most disappointed in his evasion.
Has anyone read Dr. Paul’s new book yet?
biggest concern is personal liberty ??
Why be concerned about something that is already gone ??
Spoken like a true American.
You questioning my patriotism EOE ??
You one of those, gun toetun, flag waven, evangelical neocon’s from the south who question everyones love of America except your own ??
Just commenting on the paradox of claiming there are no liberties by using your liberties (free speech).
I stand corrected…
Under any government, you only get the liberty you seize.
you only get the liberty you seize ??
I agree…I just difficult to size “any” liberty when everything is criminalized…
Thanks for post Prof. B., and yes, gold is showing resiliency @ 1K.
Actually, the people provide themselves liberty. They only permit government to restrict liberty to some extent until people realize that government is way too big and the political process is not effective to scale it back. Then they will have a revolution, as per the first paragraph of the Declaration of Independence.
Then they will have a revolution ??
How ??
How
Yes, HOW? Especially if we let liberals take away our only means of defending ourselves…
Step, no offense, but won’t you be the guy shoving a gun in my face on behalf of the federal government?
Which like most law enforcement in my jurisdiction means you would rather I be disarmed.
Personal liberty…with a little neo-Nazism thrown in for good measure. How can any rational person still believe in that kook?
with a little neo-Nazism thrown in for good measure
LOL - talk about kooks. How could you possibly justify that statement?
Oh I dunno the fact that nutjob took donations from places like stormfront and refused to give the money back.
“Took”, or was given? I seriously doubt that presidential candidates have the time to filter through all their (in RP’s case thousands of) campaign contributors. And AFAIK, generally contributions aren’t something that are refunded if a candidate loses.
You wouldn’t seriously propose that RP’s principles that even remotely resemble Naziism, would you? They are quite opposite in fact, in virtually every way.
The main appeal to organizations like stormfront is that RP’s principles are all about freedom, and a totally free society would more likely allow organizations like theirs to survive/thrive. But that’s true of all fringe organizations, across the spectrum. Any real Nazi only believes in freedom to the point where it puts them in power, and it then stops completely.
It was well documented that Paul was given $500 from the leader of Storm Front. He could have given it back. He chose not to. Politicans give back donations all them time. Yes you’re right someone can’t prevent someone else from sending a check. But you don’t have to cash that check either. And it was also well documented that stormfront had a link on its website to contribute to Ron Paul. Again, he did nothing about that. He could have easily blocked any donations that were sourced from storm front’s link. Again he chose not to.
He’s got some decent ideas fiscally. He’s unhinged when it comes to foreign affairs. And if he goes away tomorrow it will not be too soon.
And Barry took $994,795 from those “kooks” over at Goldman Sachs. He chose not to give it back (at least, not directly out of his campagin coffers…)
I think you are dead on about Ron Paul, Eddie. I like his fiscal ideas but he would be a complete disaster on the international stage.
If you thought chimp was bad…just let RP have a shot at foreign affairs!
Ron Paul’s biggest concern is personal liberty,
Unless you’re a woman who wants an abortion.
Unless you’re a woman who wants an abortion.
Umm…RP isn’t pushing a platform of banning abortion. In fact, that’s one of the reasons I greatly respect him - while he’s pro-life, he doesn’t feel he should be trying to legislate that at the federal level.
So can you back up your statement that RP wants to actively infringe on the liberties of a woman who wants an abortion?
(btw, if you accept the premise of pro-lifers that life begins at conception, then one can argue he’s pro-liberty as well..in this case the right to life of the fetus. Please note that I am not pro-life..but I can see where the argument comes from on an intellectual level).
So can you back up your statement that RP wants to actively infringe on the liberties of a woman who wants an abortion?
That was the only thing I had heard about him that I didn’t like.
I just assumed that limiting or outlawing abortion altogether was one of his campaign planks.
If I had understood that he was at least agnostic on the issue of reproductive rights, I might have voted for him.
I just assumed that limiting or outlawing abortion altogether was one of his campaign planks.
My understanding (I can’t cite direct quotes on this) is that he didn’t feel it was the fed gov’ts business, and should be a state issue. As such, many took it as an anti-abortion stance. While that may be the outcome in some states (Roe v Wade overturned and states outlawing abortion), if one’s principles dictate that such a decision is outside the purview of the fed gov’t, then I think it’s a fair position to hold.
Personally, even though I disagree with his pro-life stance on an individual level, I have great respect for him being able to separate his personal beliefs from what he chooses to legislate, based on what he feels the role of federal government should be.
but he’s fine if states outlaw it, right?
but he’s fine if states outlaw it, right?
I don’t know..you’ll have to ask him.
If one believes life begins at conception, does it not logically follow that abortion is wrong/murder and should be outlawed?
While I don’t agree with the position, I can at least respect it. Am I right in assuming that you can’t see how that’d be logically/principally consistent?
September 29, 2009 - Views: 3,487
Ron Paul
Ron Paul’s biggest concern is personal liberty, which only small government can provide.
End the Fed
Texas congressman and former presidential candidate Ron Paul has exposed the core truths behind everything threatening America, from the real reasons behind the collapse of the dollar and the looming financial crisis, to terrorism and the loss of our precious civil liberties. Despite a media blackout, this septuagenarian physician-turned-congressman sparked a movement that has attracted a legion of young, dedicated, enthusiastic supporters… a phenomenon that has amazed veteran political observers and made more than one political rival envious.
No need to wait for others to join your own non-violent revolution against statism. I am taking the direct approach and finding as much liberty as possible, as per the advice of Harry Browne’s “How I Found Freedom in an Unfree World.”
Browne had an idea that I liked. Something to the effect that there’s nothing government can provide for us that we can’t provide for ourselves.
I get the gut-feeling if Ron Paul was at the top of the totem pole, much of the idealism, hot-air and self-righteousness espoused by his adherents would dissolve into bitter disappointment. Not defending the beast that is the Fed, but do you think big US business isn’t loaded with conniving, thieving, self-centered opportunists every bit as much as big government is? I don’t have to think about it, I know it is. There are no sacred cows in politics and business, just a whole lot of greed and flatulence.
The amount of greed is unchanged regardless of the size or nature of the government. The difference is that the size of the government (including the existence of the Fed or not) determines how much it can be used as a tool for exercising said greed by force. The larger the government - the more force can be used to exercise the greed to shear the sheep. The smaller the government, the more greed depends on the willing participation of the sheep, rather than the forceful participation. I’d rather have the former.
I’m fascinated by the belief, common among ron paulians and ayn randians (do I repeat myself?), that we can dismantle all regulation, and that will free us. From what? Corporations having at least some resonsibility for the stuff they produce? Environmental regulations? Anti-trust laws? Yeah, let’s throw off the yoke of big gov and replace it with that of our new corporate overlords- that’ll be a great improvement. (Oh, I bet somehow the ‘free market’ will prevent big bidness from crushing us, just like it *never* has before.)
Again I ask, when has this ever worked in history?
I suspect people said the same about Thomas Paine, Paul Revere, Sam Adams (not the beer), et al.
Cynicism against a gift horse gets you nowhere. If you cannot say anything good about someone who is the leading proponent of freedom you may as well give up right Ria?
If Ron Paul is the leading proponent of freedom then I don’t want to be free.
Mmmmmmm. Beer.
Housing bubble turns neighborhoods into “College Dorms”
residents voice concerns;
Police: So what?
“These homes that are being rented to students are causing issues with drinking, noise, parking, speeding and garbage,” said one resident. “They are hurting our property values.”
This is on the Main Line, where traditionally folks have settled to escape the hoi polloi.
The Philadelphia Story took place on the Main Line, and IIRC there was some pretty serious partying going on in that film.
Yes there was, however all the boozin’ and carrying on took place within the confines of the principals’ 750 acre estate!
FTA it appears there is an infestor or two run amok in one of the Main Line locales that doesn’t aggressively enforce its code.
That would explain the extraordinary number of apt. FOR RENT signs I saw when driving through the area yesterday. Tenants are moving out of their 1 BRs, tripling and quadrupling up in the ‘festor houses, and generally creating mayhem in the once placid neighborhoods.
It’s not so different here… (Saint John NB)
There was a short clip on the radio this morning about a condo complex on the waterfront that is late starting construction - supposed to be ready for spring 2010 - but hasn’t started construction yet - some of the people that sunk up to $ 40 K in deposits are now wanting them back. If something shows up on a news site I’ll post a link.
“some of the people that sunk up to $ 40 K in deposits”
Wow, that’s, like, $150k USD.
Nope, $153k…
Wait…
$155k
Muggy,
It’s $40K CAD. Like $38K USD.
He was kidding.
Haha, you’re both right. I was kidding, but I went the wrong way. That’s what happens when you ready, fire, aim.
Blue, how was the trip?
Observation:
Florida Association of Realtors’ stats for August came out the other day. It looks like it confirms that this year’s spring bounce was just that - a spring bounce. After peaking in June, median prices are starting back down again, albeit slowly.
Jan-08 208.6
Feb-08 198.9
Mar-08 205.6
Apr-08 198.9
May-08 203.3
Jun-08 205.5
Jul-08 193.6
Aug-08 186.9
Sep-08 175.1
Oct-08 169.7
Nov-08 158.3
Dec-08 155.5
Jan-09 139.5
Feb-09 141.9
Mar-09 141.3
Apr-09 138.5
May-09 144.4
Jun-09 148.0
Jul-09 147.6
Aug-09 147.4
P.S. Keep in mind these are median prices - so subject to all kinds of variances. Nevertheless, from tracking these stats for years now, I do see them as meaningful; they’ve “made sense” in the scheme of things.
Being that these lead the Case/Shiller numbers by a month - I’m willing to bet that the August national numbers won’t look as rosy as July’s just did. FWIW I also see a similar price slowdown in the DC area August stats.
From USA TODAY: “In the 1960s, Gerald F. Fitzgerald, founder of Suburban Bancorp of Palatine, Ill., was one of the first to begin paying more overdrawn transactions rather than bouncing the checks. He says he did so as a service to “good” customers.
The trend gained momentum in the 1990s when banker Sam Davis joined Strunk & Associates consulting firm. He looked into how banks could profitably extend small-amount loans to consumers. In 1996, the firm rolled out software nationwide that made it easier to automatically pay overdrafts. Firms such as Pinnacle Financial and John M. Floyd marketed similar programs.
Also in 1996, a Supreme Court decision and a bank regulatory rule effectively gave the industry authority to raise certain fees as much as they wanted. A new law forced some government benefit recipients to set up electronic deposit. Direct deposits made overdrafts less risky because banks could recover debts on consumers’ next pay day. The Truth in Lending Act, signed into law in 1968, sanctioned overdrafts, Moebs says, by defining them as credit, but not as loans subject to disclosures about interest rates.
These events created “fertile ground” for overdraft-fee abuses, which consulting firms spread through the industry, says Chi Chi Wu of the National Consumer Law Center.
Some consultants offered banks ways to boost overdraft and credit card revenue. A 2001 “checklist” from Profit Technologies — a firm that has worked with 19 of the USA’s 20 largest banks — has more than 600 strategies. Some are cost-cutting ideas such as printing a dispute form on the back of credit card bills to curb phone calls.
But most relate to income from fees. One strategy listed to boost overdrafts: “Allow consumers to overdraw their … accounts at the ATM up to the bank’s internally set limit.” To increase credit card fees, banks can “delay crediting of payments not received in bank provided envelop (sic) or for which payment coupon is not received for up to 5 days,” and “remove bar coding from remittance envelopes,” slowing the payment.”
Also in 1996, a Supreme Court decision and a bank regulatory rule effectively gave the industry authority to raise certain fees as much as they wanted.
I don’t understand. I thought deregulation of banks was strictly driven by Republican presidents. That statement must be a mistake.
I don’t understand. I thought deregulation was an unmitigated good.
My “I don’t understand” was more snarky than your “I don’t understand”.
I don’t understand. I thought deregulation of banks was strictly driven by Republican presidents.
And I don’t understand why the repeal of 0.006% of the existing banking rules is considered “deregulation”, while the regular addition of 5-10% more annually is ignored.
A. My comment was tongue-in-cheek (a response to all those that propose that Bush was solely responsible for all the banking deregulation).
B. Where do you get your figures?
C. The key isn’t the number of regulations, but the nature of them. One single large change can be more important than hundreds of small changes.
D. FWIW - I don’t see this change as being bad. Everyone likes to point out how the banks make big profits on overdraft fees, but they ignore the benefits of such things - e.g. the fact that the many of these fees actually protect the consumers (to some extent), by preventing bounced-check fees from the retailers themselves. Yes the banks are profiting from irresponsible behavior of consumers - but in doing so they’re alleviating:
- Profits the retailers would otherwise make in charging bounced-check fees, and/or
- Overhead expenses in dealing with bounced checks.
Where do you get your figures?
“Regulation in the Bush Years: Still Going Up”
www dot heritage dot org/research/regulation/bg2116.cfm
The key isn’t the number of regulations, but the nature of them. One single large change can be more important than hundreds of small changes.
Agreed. But how do you measure this? Given the mantra that “deregulation” has been occurring at various times in the past 30 years, you would think someone would have quantified this claim.
Thanks for the link - appears to be some good info in there (no time to look at the details right now).
Packman, the problem here is in the phrase “bounced check.” Checks bounced when they were made of paper, and it took a couple days to determine that there was an overdraft in the first place.
Nowadays, they check your account balance instantly, at the store or at the ATM. The issue is that the bank could easily just reject the transaction and avoid the bounce, but instead they quietly allow it to go through, knowing they’ll generate a juicy fee out of it. This is especially insidious at the ATM. Would a teller hand you cash at the window if she knew it were an overdraft?
That said, consumers should really keep better track of what’s in their checking account.
Packman, the problem here is in the phrase “bounced check.” Checks bounced when they were made of paper, and it took a couple days to determine that there was an overdraft in the first place.
Nowadays, they check your account balance instantly, at the store or at the ATM. The issue is that the bank could easily just reject the transaction and avoid the bounce, but instead they quietly allow it to go through, knowing they’ll generate a juicy fee out of it.
This is true, however:
- You’d be surprised how many people still use paper checks (I seem to always be behind them at the checkout).
- In many cases it may still be desirable to allow the balance to go negative and accept the fee. If I’m at a store and just bought something - I may be willing to pay the fee in order to not have to go back home and deposit more money, then return to the store to buy the thing.
That being said:
- I haven’t had an overdraft in about 25 years, so I’m not so much in tune with such things:
- I would imagine that the majority of people wouldn’t want to do what I just said; they’d rather avoid the fee and not make the purchase.
- I’m not sure whether or not you usually get instantly notified if you don’t have enough money in your account, or if you just find out about it later after the fee has been assessed.
- It seems like any person with an IQ above 20 who regularly flirts with a zero balance wouldn’t choose to use a bank that doesn’t inform them in real-time if their current purchase will make them overdrawn and thus subject to a fee.
Also - isn’t this kind of “profit mongering” exactly the same as cell phone airtime usage? Phone companies charge very high rates if you go above your allotted minutes per month; and they don’t tell you in real time when you’ve gone over - you have to actively check. How come there isn’t an outrage being made about this?
It all comes down to the nanny state thing - is it the responsibility of the government to protect stupid people from greedy people? My view is no - that doing so only serves to create more stupid people. Yes in a free market there would still be stupid people that would be taken advantage of - but IMO there would be less so.
Amen.
I hate that bank fees are always used as the #1 reason to overhaul the whole capitalist system. Mikey Moore drones on endlessly about bank fees. The vast majority of fees are easily avoidable but people are so lazy that they look to the nanny state to do even that for them.
I’m not sure whether or not you usually get instantly notified if you don’t have enough money in your account.
Well, I think they used to do that years ago. If you were at a restaurant, the waiter would quietly inform you that your credit card “didn’t work” and did you have another one. The ATM machine would reject your ATM card. Now, they just don’t tell you at all, leaving you to find out on your monthly statemnet.
(I don’t know about debit cards at restaurants; I think banks started the fees before ATM cards turned into general-use debit cards.)
Concerning nanny state, there is some happy medium between Good Faith and Personal Responsbility. We can’t all be experts at everything — we have to trust that the doctor or the lawyer isn’t gypping us on matters we don’t know about. There isn’t always time for a second opinion.
Oh come on. How hard is it to know that when you spend more than is in your checking account, you’ll be dinged with a $35 fee and that if you’ve got $100ish in the bank you shouldn’t go and buy a $97 meal because maybe, your balance is now $96 after your last ATM fee went through?
Does the government have to mandate every single thing that happens to us? What’s next? A law that says Publix has to email you the second they lower the price on milk because if they don’t you might go to Kroger and pay an extra $0.25 since you didn’t know that Publix was having a sale? Where does it end?
I agree with you in theory. However in practice it’s not just a matter of making sure your account isn’t overdrawn.
Just when you think you’re in the black on your accounts, one of the institutions sneaks in a fee because, oh, say:
YOU DIDN”T USE YOUR ATM CARD ENOUGH TIMES THIS STATEMENT PERIOD
buzzzzz
YOU LOSE NOW YOU PAY FEE
I understand they send disclosures ahead of time before they put these sneaky little bastids in place, but who reads every stinkin’ disclosure that comes in the mail?
And that is what they expect, and what they count on, and what works for them. Unless you become really dedicated to stickin it to The Man, and attend to every statement and disclosure religiously.
If the fees were $500 I’d agree with you. But the fees are $5, $10 maybe. If you’re that close to the edge, that a $5 or $10 fee puts you under $0, then sorry, it’s your own fault for poorly managing a bank account and we don’t need an entire new bureaucracy created to manage it for you.
And you don’t have to read every disclosure that comes your way. I can’t remember the last time I paid any fee on any bank account. The only exception is every now and then I use one of those grocery store ATMs and the bank charges me $2.50. But I know that is coming, it has been like that since as far back as I can remember. Use my ATM, no fee. Use another, expect a big fee.
Is there anyone out there who is surprised that they get an ATM fee when they use another bank’s ATM? If that is the case, they have bigger issues - ie being about 20 years behind on current events - than ATM fees.
Who has time to read bank disclosures.
Who has time to read house closing statements.
See the parallel? Not knowing that your bank has fees associated with overdrafts is kind of like not knowing your mortgage is an ARM. Sorry - but if you’re too clueless to understand the basics of your bank account, then you shouldn’t have one. You need to let your mommy do your shopping for you.
A friend of mine had an issue, and noticed that the bank processed everything in an order to generate the most fees possible.
gee, I must have a good bank. They won’t let a debit go through if they’re holding on to new deposits longer than I expected. It’s pretty irritating - last time my paycheck had been sitting there a couple times, and I had moved an extra $400 to saving, and wham my debit attempt failed. Guess it’s better than a fee.
I just wrote a check instead, and the store didn’t look at my balance availability.
A friend of mine had an issue, and noticed that the bank processed everything in an order to generate the most fees possible.
That’s now a common tactic, which I believe would be outlawed under proposed legislation.
A friend of mine had an issue, and noticed that the bank processed everything in an order to generate the most fees possible.
Right. It’s not just about NSF anymore.
I’m not for bureaucracies or nanny states or Mikey Moore.
So I check my accts online frequently to make sure that God forbid one of my accts doesn’t drop .01 below the threshold where I can earn whatever pittance of an interest rate applicable.
And I don’t see the parallel between mortgage closing documents, which will be a 30-yr encumbrance with serious repercussions, and a disclosure notifying the customer that there will be a monthly charge if the minimum ATM uses are not met. That’s like comparing a pimple to a brain tumor.
It’s funny. So many people here complain about low interest rates on CDs from banks. And yet so many also want the banks burdened with obscene nanny state regulation to wipe their customers’ a$$ every morning.
Guess who pays for this regulation? It isn’t the bank shareholders. It’s you and me in the form of even lower interest rates on savings. That 1.75% will be 1.65% so the bank can send Mr. Moron a letter every 10 days informing him he may go under $0 balance yet again.
“A friend of mine had an issue, and noticed that the bank processed everything in an order to generate the most fees possible.”
Very large lawsuit going on here in Texas for exactly that reason. A small business is suing their bank and has proof that the bank was “stacking.” They are also seeking class action status. I’ve had it happen to me with proof they held a payable until other payables came in.
So it’s not about “being stupid about your account.” It’s about deliberate theft by the bank.
As for the regulations, there would be less of them if they conducted business a little more honestly. Current events, anyone?
So many people here complain about low interest rates on CDs from banks.
People complain about it because it’s due to the federal reserve keeping rates lower than the private market would. The banks are going to take their spread regardless - whether they’re paying 10% or 2%.
The Truth in Lending Act, signed into law in 1968, sanctioned overdrafts, Moebs says, by defining them as credit, but not as loans subject to disclosures about interest rates.
It’s credit, not a loan. Ho boy, playing around with words again. Shades of the University of California priding itself on not charging in-state “tuition”, merely collecting “student fees” instead.
“Doublespeak.” Orwell would be proud.
says Chi Chi Wu of the National Consumer Law Center.
Yes.
Yes folks we have a winner. Who should we award an academy award for this achievement?
FDIC Goes Broke
WASHINGTON — The government said the fund that protects consumer bank deposits has fallen into the red and will remain there into 2012, a pointed symbol of how the aftershocks of the financial crisis will reverberate for years as banks continue to fail at a high rate.
The negative balance is a headache for the Federal Deposit Insurance Corp., which runs the fund. On Tuesday, it proposed the unprecedented step of having the banking industry prepay $45 billion in fees by the end of the year to give the government more breathing room to handle future failures.
http://online.wsj.com/article/SB125423323602549299.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
The FDIC needs money to pay its real estate investments - the 60% share in buying out the Corus properties.
(shakes head)
“FDIC Goes Broke”
Isn’t this a rather meaningless statement, given that they have access to a large line of credit from the Treasury?
Speaking of that - I haven’t heard any updates on that - at one time Dodd had introduced a bill giving them up to $500 billion line of credit, but haven’t heard what became of that. I believe before they they had (or have) authority to borrow up to $100 billion.
Anyone know?
Don’t you worry about it… I’m sure that money is long gone and safe in some banker’s pocket somewhere… now, back to work!
I don’t remember the last time the FDIC went broke. This type of news could cause a small run on the banks. The Fed will keep a keen eye on the bank withdrawals.
SU: That’s what I was thinking…
Run on banks,
Did the Fed ever go “broke” b/4?
Do you guys honestly think that when the FDIC “runs out of money” that they’ll just throw up their hands and say “Sorry - all out of money. You’re on your own!”?
See my comment/query above on the FDIC line of credit. For all intents and purposes - it’s infinite.
No, they won’t throw up their hands and walk away. But if there is a run, the banks will put a withdrawl limit on all accounts to slow down loss. If that does not stem the tide a bank holiday will happen. How long will it take “them” (I love that word) to print & distribute those shiny new bills? And will they be worth what they were before said crisis? More? Less?
Which begs the question: Do you have the funds/resources on hand to survive a month without access to reserves?
Which begs the question: Do you have the funds/resources on hand to survive a month without access to reserves?
Yes very much so - though this brings a question to mind I’ve often wondered about.
If there did end up being a “bank holiday” (or whatever) - I wonder how that would work with regards to automatic bill pay now? Many people have bill paid automatically - in such a case would these payments be postponed until the bank re-opened? Presumably so. In my case actually my largest monthly bill - the mortgage - is done this way.
Conversely though - what about people who have things like direct deposits, but do all their bill paying automatically? E.g. I would imagine lots of people will go ahead and send a mortgage check in the mail on Wednesday, knowing it will be covered by automatic deposit on Friday - however what if a bank holiday is declared for that Friday and perhaps into the following week? Such people could be hosed, if when the banks reopen the one that has received their mortgage check attempts to withdraw against it before their employer does the automatic deposit.
Of course this is all very hypothetical - just some thoughts. A bank holiday would logistically be a nightmare.
I’ve often worried about direct deposit for that same reason. DH’s company does not offer any other option.
Packman,
That is why the bank you use is important even with FDIC insurance. I don’t see much likelihood of a bank holiday caused by a liquidity issue lasting more than a few days. You would be surprised how quickly Congress can get its act in gear to do something like increase the maximum federal debt ceiling when it needs to. But, yeah, it could theoretically happen. Having a checking account at more than one bank is not a bad idea either.
Yet another reason to love USAA. A run is very unlikely despite it not falling into the “too big to fail” category because the members have confidence in it.
I’ve thought about using USAA actually - I use them for insurance. I might just switch for checking. Question for you (going off-topic) - do you know how they are with regards to auto-pay? E.g. right now I have auto-pay done for most of my utilities and such, and that’s a big plus for me - I’d want to keep that ability. Thx.
They have it, but I don’t use it. I prefer to decide when to pay bills and to confirm that I agree with the amount. Probably paranoid, but you hear enough human interest stories about folks who get $3 million phone bills and, well, I just don’t like giving someone else that kind of access to my bank account.
The regular bill pay system is excellent. Transfers that are done electronically take one or two business days. Transfers that require them to send a paper check require 4 days lead time. And you can see when your insurance bill is posted right away. I have two credit cards with them too. The website is great. Bill pay service is free with automatic deposit of your work check and may be free in other circumstances as well. I recommend calling them up. Nice folks. Not outsourced.
They also reimburse you for fees on withdrawals at other banks ATMs up to a certain limit each month.
They also reimburse you for fees on withdrawals at other banks ATMs up to a certain limit each month.
Glad you brought that up - that actually would be a big sticking point otherwise, since they of course don’t have local ATMs for me. I’ll have to check into it.
For the bill pay thing - generally I do the “manual but online” bill pay thing - it’s very easy but does require active action on my part, which is nice. But it does require the bank to have a relationship with the utility, which is an issue for many smaller banks.
Thanks for the info.
How long would it take to click computer blips to people’s accounts? Tell people they can use debit cards and checks, but limit their cash withdrawals.
I’d imagine blips won’t fare well in that environment- and who pray tell accepts a check nowadays? Tell ya what I’ll paypal you $5K and you only have to give me $4.5K when TSHTF. Deal? That’s 10% for 30 seconds work…
That was just an illustration and not a chide. This just spooks me a bit so when I apply my feelings onto what I guess 200M might be feeling it makes me resemble a pickle sniffin mustache tin foil suit wearing johnny.
“I don’t remember the last time the FDIC went broke. This type of news could cause a small run on the banks.”
I’m curious if you know of anyone who’s noticed outside of the hbb crowd.
Surprisingly - that article doesn’t mention that apparently the bill to provide the FDIC a $500 billion credit line did pass - at least according to this WaTi article.
Regulators expect the cost of bank failures to grow to about $100 billion over the next four years - up from an earlier estimate of $70 billion. Faced with that sobering news, they voted Tuesday to require banks to prepay $45 billion in premiums to replenish an insurance fund that will start running dry Wednesday.
…
Ms. Bair didn’t rule out the possibility of the FDIC tapping its $500 billion credit line with the Treasury Department, if the economy unexpectedly worsened. “But today is not that day,” she said before the vote.
As another comment - I find it absolutely incredible that the FDIC’s fund balance only peaked at about $52 Billion in 2007, given that it insured about $4.4 Trillion in deposits, and that the credit bubble was roughly on the magnitude of about $7-10 Trillion of new lending - above and beyond normal levels.
“WASHINGTON (AP) — To prevent inflation from taking off, the Federal Reserve will need to start boosting interest rates quickly and aggressively once the economy is back on firmer footing, Fed officials warned Tuesday.”
http://finance.yahoo.com/news/Officials-Fed-will-need-to-apf-1511169380.html?x=0
O.k., rates go up and the cost of housing goes…
once the economy is back on firmer footing
No hurries - they have lots of time.
Exactly. Think of this as a Fed head fake.
Plenty of time….See Gross statement in earlier post…You think he see’s any “Firm Footing” anytime soon ??
Maybe somebody better at crunching numbers can clarify this business of “rising” house prices for me. Are we talking an average or median here? So if more houses are selling (under pressure, let’s say, as Alt-A and prime borrowers hit the skids) in the middle to upper ranges — though at slashed prices from last year — would that not be reported as a “rise” in prices?
When I read this, I’m thinking desperate spinning … certainly not seeing more than 1% of listings showing an increase in price on Trulia or Redfin, to name a couple of sources.
nycjoe:
When you read about “rising” home prices without further clarification, the background information is usually based upon whatever series of data and comparisons leads to that conclusion.
For example, during the height of the mania in the early parts of this decade; rare was the month-to-month number that would be declining, even if the numbers were not seasonally adjusted, and even at the end of the summer selling season. It just didn’t happen.
Still, most sources quoted year-to-year (e.g., July 2008 to July 2009) differences as this removes not only seasonality but removes errors introduced by the seasonal correction. However, when prices initially started their month-to-month decline (either seasonally adjusted or not); sources were quick to point out that the year-to-year number was the proper comparison.
From 2007 to late 2008 it was almost universal to quote year-to-year numbers; but late 2008 it became fashionable to quote month-to-month, seasonally adjusted numbers. The reason was the month-to-month numbers started showing gains while the year-to-year numbers remained (and still do to this day) a decline. This continued through the normal spring rise (again, seasonally adjusted).
Likewise, for median or average - it is usually whatever meets the needs of the reporter, in most cases what shows either the minimum decline or the maximum rise. Unfortunately, either the median or the average are both flawed, but the current thinking by most is that median is a more representative number to use. During the start of the decline the average price gained some traction as the upper end remained sticky and the lower end completly dropped out; now that the upper end is dead and the low end is seeing some rise due to the Kifecatcher-Enhancement-Program ($8,000 credit), the median is gaining favor.
In other words, there are lies, dammed lies, and statistics.
Realty Trac
Rick Sharga, a Senior VP of RT, did an interview with Blomberg News, and in Ca alone, 92,326 homes went into foreclosure in August ‘09. He discussed the myth that the worst is behind us. Bad loans to begin with, and then add unemployment, were part of his comments.
Linkee ??
http://www.realtytrac.com/contentmanagement/
09/09/2009 click it to see video
scdave -
After you click go to video news release and click it. The video should be there. I watched it this morning, before I left.
Thanks…
http://www.realtytrac.com/contentmanagement/
09/09/2009 August numbers (video interview w/ Realty Trac)-click it
(2nd try. If duplicate, I’m sorry.)
Case-Shiller takes a lot of those factors into account which is why the numbers don’t always correlate to reported median price changes.
it is usually whatever meets the needs of the reporter
To this day, I firmly believe that a lot of the wishful reporting we saw during the beginning of the decline (late ‘05 through 2008) was due to most people in the media owning homes.
Nice breakdown BC, thanks.
I disagree. The large media outlets are in NY and DC where there is a higher than average renter:owner ratio. If anything, you’d think the reporters would be cheering a real estate crash since they were most likely renters, especially the younger ones who couldn’t afford a $1M 2 bedroom apartment in NYC.
No, like most things in the MSM, it was incompetence plain and simple. Besides it’s easier to take a press release from the NAR, make a few changes and submit it to the editor as opposed to actually researching a story.
I disagree. The large media outlets are in NY and DC where there is a higher than average renter:owner ratio.
We’re most likely thinking of different branches of the MSM.
I was thinking about reporters on city papers here in the southwest - CA, AZ, NV - who most likely, by the time they got to the point in their careers that they had regular bylines, were drinking the Kool-Aid they were writing about.
Not to mention the newspaper’s biggest advertising customers for decades out here has been the house builders.
“Are we talking an average or median here?”
Think of averaging the changes in price for homes that sold at least twice over time in a way that adjusts for when they sold. This is what a repeat sales index (like Case-Shiller/S&P 500) does. In principle, what results is a quality-adjusted index of housing price changes. This approach avoids confounding changes in the quality distribution of homes that are selling with quality-controlled price changes the repeat sales index is supposed to measure.
It ain’t over til it’s over
IMF warns of further recession risks
Banks round the world have still to reveal about half of their likely losses resulting from the financial and economic crisis, the International Monetary Fund said on Wednesday, warning that there was still a “significant” risk of another downward lurch in the global recession.
http://www.ft.com/cms/s/0/3d7b9bde-ad44-11de-9caf-00144feabdc0.html
Are the IMF gloomsters having trouble seeing all the green shoots sprouting up all over the planet?
Forbes 8 reasons to worry about housing here are my favorite
Although home prices have plummeted from their stratospheric levels of 2005 and 2006, they are still well above their historical norms. The Case-Shiller Home Price Indices, for example, shows that home prices in 20 major cities are still 41% above the level of January 2000 (at the peak in July 2006 they were 106% above that level). A report from the Census Bureau this month shows that incomes have not grown this decade. How are Americans supposed to afford 41% more house with no increase in income? While home prices may not revert all the way back to their long-term average, by at least this measure, prices are still very high.
The Mortgage Bankers Association projects that foreclosures will continue to rise into 2010, as borrowers who are barely hanging on get washed out. That means the flood of foreclosed properties will get worse before it gets better, driving down prices and making it more difficult for people who want to sell their homes for other reasons. Foreclosures could becomes especially bad for holders of adjustable-rate mortgages. The most dangerous of these were “option ARMs,” which essentially let the borrower pick the amount they paid each month, and anything unpaid was added to the balance of the loan. Eventually these loans “recast,” meaning they are no longer allowed to balloon, which can cause monthly payments to soar. A report by the ratings agency Fitch said that of a pool of $189 billion option ARMs it studied, 88% have not yet recast. In other words, most of these borrowers still have big payment jumps coming that could drive them into foreclosure.
The market has been terrible for three years. Many Americans who might like to move have simply been waiting things out. Banks have put so many homes into foreclosure that they are backlogged in actually releasing the homes onto the market. And homebuilders are still bleeding money as they sit on vast tracts of undeveloped land that they’d like to slap homes on as soon as they find some buyers. Every time things start to look good, this shadow inventory starts to come back on the market, keeping prices low.
“While home prices may not revert all the way back to their long-term average,”
Hmmm, and why wouldn’t they?
Haven’t you heard, “they’re not making any more land”!!!!
Because the long term average includes some years of extremely high interest rates which pushed prices down a lot. If rates continue to be low (either because of intervention or because a crummy economy makes a fairly low return competative with other investments), then prices may not revert all the way back to the historical mean.
Sorry but I beg to differ. The Case/Shiller data (red line) shows otherwise - the high interest rates of the early 80’s pushed prices down some, but only back to their previous historical norms, after a small late-70’s bubble.
That being said - one could say that we’re in a “new plateau” of a higher historical norm, due to a few factors:
- Fed funds rate may stay lower than historical norm, indefinitely.
- Other factors propping up housing may stay in place indefinitely - e.g. mortgage interest deduction, equity gains deduction, etc.
However despite that though, IMO we will almost *certainly* overshoot below historical norms in the short term (2-3 years) due simply to the massive overbuild during the bubble; and due to other economic factors such as debt levels.
People had the option of increasing their household incomes in the 80’s, mostly by sending the second adult to work. I think we have reached a constraint on increasing household income. Also, additional burdens (huge student loans and childcare costs stick out to me) are constraints on the ability to increase the amount paid for a house that were much lower in the 80’s (low or no student loans and day care regulations were non-existant so a neighbor who stayed home would watch your kid for a little extra a week). And this may be the biggest factor, in the 80’s credit standards were tight and getting looser. Now they are loose and could stay the same, but will probably get tighter if we move back to commercial lending standards.
Yep - one thing vastly overlooked is the amount of wealth driven in the 70’s and beyond by the increase in dual-income families. Employed persons as a percentage of population went from 35% in the early 1960’s to 48% by 2000. That and the massive debt increase during the same period were “low-hanging fruit” that drove prices higher, and that just isn’t there any more.
Oh come on! It’s a well known fact that if you aren’t working 3 jobs, you’re just lazy!
See? There’s plenty of slack out there!
Prices of a lot of things will remain 41% above their historical norms. It’s called a lower standard of living. Get used to it.
We have a winner!
Every time things start to look good, this shadow inventory starts to come back on the market, keeping prices low.
Every time things start to look good, this shadow inventory starts to come back on the market, [competing with government attempts at] keeping prices
lowhigh.Oh bugger — just when it seemed like stock prices were always going up again, suddenly they aren’t…
market pulse
Sept. 30, 2009, 9:52 a.m. EDT · Recommend (4) · Post:
U.S. stocks drop sharply along with Chicago PMI
NEW YORK (MarketWatch) — U.S. stocks thudded steeply lower on Wednesday after an index of manufacturing activity in the Chicago area dropped.
The stock market’s movements have nothing to do with fundamentals, but rather only on how the Keynesian beauty contestants appear in the eyes of the judges…
MARK HULBERT
Wall of worry
Investment advisers have grown more skeptical in recent days, and that bodes well for the chances of the Dow topping 10,000 again.
http://online.wsj.com/article/SB124148169574985359.html
Nice post Ann…There is another “big” problem with completing unfinished homes in California…There is a 10 year statute for construction defect liability…Any contractor that finished those homes along with the bank as the owner “may” be assuming any construction defects that exist in those partially finished homes..
Not too many of these in Boise, but there is one place where there’s about 16 units of partially-constructed townhomes where the builder walked after getting the frame up, the roof on, and the OSB nailed up. They stopped there and didn’t even put up the Tyvek to protect them. The places have been sitting for over a year now and the OSB is taking on a patina of black mold on the outside.
May 5? I thought we covered that story months ago…
Bloomberg (video) interviews Elizabeth Warren one yr later on TARP
http://dailybail.com/home/elizabeth-warren-on-tarp-one-year-later-too-bigger-to-fail.html
Elizabeth Warren quotes
The things we were worried about a year ago we should still be worried about today.
The FDIC is managing the smaller banks that don’t get the help that the big banks get and they are failing in big numbers.When they fail the amount of bad debt on their books is at unpresidented levels. They aren’t just failing they are failing big!.
Stress test worse case scenario, we’ve blown through those numbers.
When money comes back from TARP the treasury will be able to hold onto it and lend it again.
Elizabeth Warren is my hero!
Repo men are really getting busy:
http://www.youtube.com/watch?v=uaPeNoJX2hA&feature=email
My girlfriend and I made this with her daughter.
This song is too funny if you can get a copy… (foul language rap) One of my best friend’s dad was a repo man- we dedicated this song to him.
The Coup : Repo Man Lyrics
[singers]
Who is the motherf’ker rollin through the hood?
Who is the motherf’ker up to no good?
Y’all know who he is
Y’all know JUST who he is!
Who is the motherf’ker takin your bank?
Who is the motherf’ker always on the gank?
Y’all know who he is
Y’all know JUST who he is!
[E-Roc]
Now WHO’S that motherf’ker who rollin down my street
Every other week, jackin sh!t, while ya sleep
Creepin through the cuts, heartless don’t give a fcuk
if ya broke, “Did you pay last month’s car note?”;
Ohh, I be scrapin, scratchin for bones
I got the cellular phone I just picked up on loans
Keepin up with them Jones put my a-s-s in debt
Now who’s the motherf’ker tryin to take my sh!t?
It’s the Repo Man, addin interest rates
He’s got “BREAK-YO’SELF”; on his license plate
He took my color TV, the dining room set
The microwave, my daddy’s Corvette
If you in debt, he’s gon’ get yo’ a-s-s for somethin
I heard - it’s No Future in Yo’ Frontin
So let it be known, black folks don’t own
they just give us this sh!t on loan!
[singers]
Who is the motherf’ker rollin through the hood?
Who is the motherf’ker up to no good?
It’s the Repo Man
It’s the Repo Man
Who is the motherf’ker takin your bank?
Who is the motherf’ker always on the gank?
It’s the Repo Man
God DAMN it’s the Repo Man
[Boots]
Seen him slidin through the town about eleven o’clock
A 1994 850 and the tires were stock
He’ll make a visit to your house like without no knock
And if you pulls out a pole it wouldn’t be no shock
I gives a fcuk how much you bench press, if you ain’t pushin up
that twenty-five percent interest, your property gets chin checked
Reposessed, now your ride is at the shoe department, dressed for less
He gives a fcuk if youse a mobber with three toddlers and a infant
He’ll take the TV and the carpet in the living room that’s stain resistant
It’s like living in the house wit yo’ daddy pearchin nice
You can own a chair, but it’s still Pop’s merchandise
and ain’t no gettin up and movin outside
The Repo Man got clientele worldwide
But trip on this, when you think you step ahead
Cause most likely, you one paycheck ahead
of the Repo Man
[singers]
Who is the motherf’ker rollin through the hood?
Who is the motherf’ker up to no good?
Y’all know it’s the Repo Man
It’s the Repo Man!
Who is the motherf’ker takin your bank?
Who is the motherf’ker always on the gank?
It’s that Repo Man
God D-A-M-N it’s the Repo Man
Which one’s the girlfriend, and which one’s the daughter? They look like they’re the same age!
You guys must have had a lot of fun with that.
CIT Group is preparing an exchange offer that would eliminate as much as 40 percent of its more than $30 billion in outstanding debt, The Wall Street Journal said, citing anonymous sources. The exchange would hand control of the company over to its bondholders and wipe out common stockholders, according to the report.
A spokesman for the company declined comment on Wednesday.
CIT Group spent the summer trying to stave off a potential collapse amid mounting loan losses and rising funding costs. It has been devastated by the downturn in the credit markets and is attempting to restructure its operations to remain in business. CIT in the past relied heavily on cheap, short-term debt to fund its operations — a type of funding that essentially evaporated during the peak of the credit crisis last year.
The financial firm, which received $2.3 billion in federal bailout aid last fall, received a $3 billion emergency loan in July from some of its largest bondholders and completed a debt repurchase program in August to help ease its cash crunch. Those measures appear to still be short of saving CIT Group, which has said in the past it would need to continue to reduce its debt burden to survive.
Hello everyone,
Listening to Heather Headley (In My Mind)…..
Life is good….
Hope you are keeping safe and eating well, stpn2me.
Half of folks who had loan modifications default again.
http://seattletimes.nwsource.com/html/businesstechnology/2009973839_apustroubledmortgagesreport.html
It’s OK, so long as the loans are taxpayer guaranteed (at least for the lenders, that is…).
BTW, I am wondering to what extent making good on loan guarantees will prove to be the principle channel through which taxpayers are charged for the cost of govt-sponsored housing price supports?
Since the direct bailouts seem to stir up a bit of anger in the masses, I think these guarantees and other “hidden” bailouts are the primary ways they will rip-off the taxpayers.
Gee, no one could have seen THAT coming.
“Half of folks who had loan modifications default again.”
+so far.
Fixed it for you….
Always good once in a while to stop, reflect and ponder how things are going across America for Jane and Joe Sixpack these days.
To sum up, the kids are hungry, the fridge is empty, the cupboard is bare, there’s no cash in the house, the job is history, the car stopped running, Mom is sick, the bills are due, the bank account is overdrawn and the credit cards canceled.
Sounds like the playing field is being levelled to 3rd world status.
Who ate all the green shoots?
fit a pick-up truck in there somewhere and you got yourself a mighty fine country song.
was listening to Country last night, switching between the sirius stations, when I hit a gold medal classic:
“She’s actin’ single
And I’m drinkin’ double”
Add in a line about the dog dying and you’ve got a hit country single…
I’ve always liked carpentry references myself:
“The first time I SAW her, I was HAMMERED
But it was PLANE to see, we’d been through this DRILL before -And yes she was BOARD…”
You probably can take it from there…
You probably can take it from there…
Level with us. Did you nail her?
That’s funny. I was gonna do it 2. Also, “board” is spelled wrong.
It seems that there are periodic articles in the paper here about:
Foodbanks with empty shelves.
Health vlinics for the indigent that are swamped
Collections by charities are way down
There are also plenty of letters to the editor that complain about the lack of jobs, etc. while the local PTB beats its chest claiming that unemployment is under 8% and everything is great, especially when compared to other parts of the country.
One thing that is evident here: fewer illegals. The local Walmart used to be swamped with them. Today, not so much. Many have left for greener pastures.
The unemployment rate in metro Detroit is 17.7 percent and rising.
The population decline has slowed, because there is nowhere else to go, and people can’t sell their homes.
I often wonder what percentage of the population have become nomads, moving from one town to another looking for work. I am told by public library staff that there is a steady flow of people who show up, get a library card, use it to reserve a PC for periodic use for a couple of weeks to job hunt, and then move on to the next El Dorado.
Most construction workers are nomads and always have been. Done it myself.
Many folks I know travel a lot for business.
This country has always been very nomadic and even more so since the invention of mechanized transportation.
from Ron Paul
It has been argued that full disclosure of details of funding facilities like TALF and PDCF that enabled massive bailouts of Wall Street would damage the financial position of those firms and destabilize the economy. In other words, if the American people knew how rotten the books were at those banks and how terribly they messed up, they would never willingly invest in them, and they would fail. Failure is not an option for friends of the Fed. Therefore, the funds must be stolen from the people in the dark of night. This is not how a free country works. This is not how free markets work. That is crony corporatism and instead of being a force for economic stabilization, it totally undermines it.
If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don’t want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore
I liken american voters to women who date/marry wrong kind of men and regret it rest of their lives.
Yes I am bitter. Wish I knew how to read from a teleprompter….
So in other words, Ron Paul wants the Fed to come clean on exactly how it executes monetary policy? Or am I missing something?
DING DING DING! We have a winner!
Hey, you’re supposed to be rebutting Ron Paul, not quoting him!
Moody’s exec denies claims of inflated ratings
Moody’s executive says ex-analyst’s allegations of inflated ratings are groundless
By Marcy Gordon, AP Business Writer
On Wednesday September 30, 2009, 11:13 am EDT
Buzz up! 0 Print.WASHINGTON (AP) — The chief credit officer of Moody’s Investors Service told Congress Wednesday that a former analyst’s allegations of inflated ratings and conflicts of interest at the firm are groundless.
Richard Cantor testified that the firm reviewed the complaints by ex-analyst Eric Kolchinsky, who was suspended from his job, and found them to be “unsupported.” Kolchinsky has refused to cooperate with Moody’s inquiry into the matter, Cantor said.
Kolchinsky told lawmakers he believed Moody’s violated securities laws by issuing credit ratings the firm knew to be inaccurate.
“They still went forward and issued the rating,” he testified to the House Oversight and Government Reform Committee.
The panel’s chairman, New York Democrat Edolphus Towns, says the allegations, if true, “indicate troubling behavior” in the credit rating industry.
Another former Moody’s employee, who was responsible for compliance, warned federal regulators in March about what he said were deficiencies in the firm’s monitoring of municipal bonds.
Red: You’re gonna fit right in. Everyone in here is innocent, you know that? Heywood, what you in here for?
Heywood: Didn’t do it. Lawyer fu**** me.
How could the people who rated CDO’s possibly be wrong?
Lets see, i pull up to a short sell house and look around i say to my self i will wait till it goes lender owned for a better deal and a easier process to buy.
I then go to another house that is listed by a realtor and of course it is priced 200k higher because the sellers need to make money on it? Wonder why this cycle of housing is turning out to be groundhog day, it is going to be a very long haul to recovery the likes many have never seen.
“Lets see, i pull up to a short sell house and look around i say to my self i will wait till it goes lender owned for a better deal and a easier process to buy. I then go to another house that is listed by a realtor and of course it is priced 200k higher because the sellers need to make money on it?”
The problem is you’re “pulling up” to houses. Quit looking, period!
Doesn’t anyone in Washington have the sense to realize that it is patently ridiculous to gear housing prices higher when it was overpriced housing that got us in this pickle in the first place?
Think of all the money a generation of Americans could save with lower cost foreclosure homes. Heck, some families might be able to pay their loans off in 15 instead of 30 years. The other 15 years could be used to send their kids to college, save for retirement, and start new businesses.
Why can’t they just give us a chance to build real wealth instead of the fictitious Ponzi kind? Instead, they are going to raise our taxes to help us pay for these same overpriced homes. In essence, we’ll be paying three times for the same mistake — once for the bubble, a second time for higher prices, and a third for the gearing. It blows my mind.
Because the banks and the ceo’s of GS MS JPM ect won’t make money and that is what the game is all about.
Bingo.
Why can’t they just give us a chance to build real wealth instead of the fictitious Ponzi kind?
Because the plan all along has been to offshore the producers of real wealth and the only thing left are speculative ponzi schemes?
It blows my mind too mrkmaven. Totally blows my mind…
It is like watching A bad horror show, and there is no “off” button.
An anecdote:
Last year when I told folks that this was the “new normal” I was dismissed as a pessimist. Fast forward to now, and I get a lot of nodding heads instead. People are scared. Local chain eateries are empty, even on Fridays and Saturdays (notice how they now all have “complete dinners” for $10: appetizer, entre and dessert.)
Sorry, but the PTB have decided that our consumer driven economy can work without consumers.
It’s Magic!
Anecdotal from acquaintance: her son and his family moved to Michigan, rented a house they found on CL. Turns out its actually a REO that the bank put in the hands of a property management company, so they were able to sign a year’s lease!
More of that “shadow inventory” the banks are sitting on?
Volcker speaks to WSJ:
http://tinyurl.com/y9vyqcg
I like Volcker; however, why should we care about what he has to say? He’s just window dressing — like AAA on subprime loans. It’s not like he has any influence. The best thing he can do right now is resign in protest.
+1 Million
Come on Ben, humor is good for the soul:
http://www.youtube.com/watch?v=uaPeNoJX2hA&feature=email
So the woman doing the repo’ing was pretending to be pregnant so the folks being repo’d wouldn’t slug her? LOL. baby was slip, sliding awaaaaay.
Funny. Reminded me a little bit of the Canadian series Trailer Park Boys.
I can only wonder what “Crocodile Dundee” would have done to the lady with a “pregnant pillow” if she showed up to repose his “Land Cruiser”?
Are there any UC or Cal State employees here? I heard that due to the furloughs most instructors are looking for jobs out of CA. And the worst part is the professors are taking the days off that they lecture on. So not only did the students pay more this year, they get less. CA is in big, big trouble.
Are there any UC or Cal State employees here?
Long ago we had a poster here that worked at UC Davis…She was always lamenting about how unhappy she and her co-workers were and they could not wait to leave California if I remember right…
I think she did leave California, but might have returned again(???).
That was Gwen… who changed her name to deflationary jane, IIRC.
——————–
Though we’re not connected to any state universities, we do know people in state and municipal govt. From what we’re hearing, the pain is just beginning for the state of CA. There are no “green shoots” here.
Couldn’t have happened to a nicer state.
PTT in FULL Force.
From Yahoo finance had some nice graphs
Unfortunately, the inventory of houses listed for sale may severely understate the actual inventory of houses owners want to sell. This, in turn, may be creating a far too rosy picture of supply and demand.
Amherst Securities has produced a scary analysis of this “shadow inventory” overhang, which Amherst estimates is a shocking 7 million houses. (The consensus is only 2-3 million).
Seven million houses represents 1.4-times the number of houses currently sold in the country each year. So this represents a massive overhang. As these houses hit the market in future years, they will keep pressure on house prices. This will likely either lead to further declines in prices or delay the recovery.
The build-up of shadow inventory, according to Amherst, is the result of three factors:
•High “transition” rates. More mortgages that fall behind by 30 and 60 days are progressing through to default.
•Low “cure” rates. Fewer delinquent mortgages than usual are returning to performing loans.
•”Liquidations” of delinquent loans are taking much longer than usual. The banks are taking longer to foreclose and holding foreclosed properties to avoid putting pressure on prices (and thus triggering writedowns). Mortgage mods are delaying foreclosures. Many houses are early in the foreclosure process.
We have wrapped many of Amherst’s charts into the presentation below. Here is the firm’s bottom line:
We are concerned that, in light of this housing overhang, the stabilization we have seen in home prices the last few months is temporary
Seven million houses represents 1.4-times the number of houses currently sold in the country each year.
Question though - is that seven million empty inventory, or for sale inventory?
If it’s empty inventory - then comparing it with the number of sales per year is apples and oranges - what it should be compared instead is the number of new houses built per year. The being the case - guess what? 7 million is actually 14 years’ worth of inventory, being that new home starts are running at about 500,000 per year.
P.S. Got a link?
Safe Harbour No More Sprott Asset Management
…..PDF……
http://www.sprott.com/Docs/MarketsataGlance/09_09_MAAG.pdf
Oly Gal: Got your message this a.m., and knew dead thread. Thank you for asking, and yes I am fine, lovely lady. (I mean that as a friend, ya know).
I was gone a couple days. Me an’ Shorty went to Chernobyl for a camp-out. By the fire, Shorty was lamenting, (with a tear running down his snoot), that…
Back home, there has been a shortage of sewer rats to eat, and you know, make a little mulligan out of. I got to thinking…
With the wisdom I have learned here, I gleaned the following:
1. > Sewer Rats = > Defecation.
2. > Defecation = > Food.
3. > Food, = > Money.
4. > Money = I now defer to Prof. B., for further analysis.
What do ya think, Oly… known’ Shorty and all?
Delude yourselves with lofty asset prices so we can sell you cheap chit.
– Chinese Proverb
I don’t think any Chinese philosopher ever said that.
Aren’t they (our Chinese lenders) deluding themselves when they accept our worthless assets as collateral?
Confucius say, “They not make more land, but fools are endless. Susan researched it.”
Crude rises 4% as U.S. data show rising gasoline demand-
NEW YORK (MarketWatch) — Crude-oil futures rallied more than 4% Wednesday, after government data showed a surprising decrease in gasoline inventories last week as demand increased and gasoline imports slumped.
http://www.marketwatch.com/story/oil-futures-rise-above-67-as-the-dollar-falls-2009-09-30
Anything to run up the price. During the greatest depression since the great depression, the fat cats have been able to park crude oil, and gasoline, at unbelievably high prices given the circumstances. Global demand has fallen off a cliff, tankers sit parked offshore, the economy continues it’s tailspin with neverending job losses, and yet these pukes are making hay at the pump. I just filled up a few days ago. It was $3.07 per gallon. Why are we paying more than $3 per gallon when crude is down more than 50% from it’s highs? PRICE FIXING.
I’m in the process of purchasing a motorcycle. I got tired of all this gas crap. Though it pains me some, I may even sell my truck which I purchased new in 2005. It was to be “the last truck I’ll ever buy” but, alas, things change. The GMC hasn’t been nearly as reliable as I had hoped, and given that the warranty just expired, and I’ve just turned 70k on the clock, this is probably the best time to unload it. I’m thinking of buying a ratty, older diesel truck for when I have to tow/haul, and using the motorcycle for errands, etc. Down the road, I’ll buy a little gas sipper Honda or something. F*** these pigs. My consumption of gasoline, BTW, is waaaaay down from last year.
It looks like the failed attempt to paint Wall Street’s tape on the last day of the third quarter came at the dollar price of a big spike in gold and oil prices.
That’s why every day that passes without the need for me to own a car is considered a blessing.
What is so darkly amusing about high fuel prices is that they hammer the same people that the pols are always blabbering about helping to keep in their houses.
I saw a sgas tation this morning with regular for $2.09.
Must be much cheaper in CA.
I meant CO. Nothing is cheaper in CA- except perhaps great tacos from street vendors.
except perhaps great tacos from street vendors.
Cuts down on animal control costs, as well.
Get a KLR 650. Great dual purpose bike, 50 mpg. Goes anywhere, handy as Armageddon set in.
Housing Crisis Might Affect Crime Rates
http://www.channel3000.com/houseandhome/21157866/detail.html
Speculators can’t sell and end up renting, but don’t do background checks? Where have I heard this before?? (Hint - HBB, of course).
What really scares me is the prediction of the phantom inventory of 6,000 condos in the Madison/Dane county area. That’s 3x the condos listed for sale today for the whole county.
But no bubble here.
That was a confusing story. I couldn’t understand whether crime was increasing because the places were empty therefore theft was occurring; or whether criminals were actually moving in, or whether the drive-by meant more crime.
Landlords don’t typically do a criminal background check, but they do check credit reports. In the bay area, I do believe there is another database that checks evictions, that apt. rentals check.
I drove through there recently and it’s amazing how the sky line has changed. Then you look at the number w/o lights and you realize no one is living in these units. What’s more there are more on the way according to my Father in Law.
What kind of condos in Madison? It’s been years since I’ve been there. Downtown towers? Low-rise VMU?
I lived in the country between Mt. Horeb and Blue Mounds for a while.
Hey Mad Boy,
Even the small, quaint farming city of Darlington, Wi. has gotten in on the condo game and converted some old main street store front buildings into condos for “active seniors”. It’s a really nice quiet town with great people and they do a great job on small town fairs, festivals and Xmas pagents and parades. But condos ?
Priced at about $134 k with a view of the main drag and a monthly association cover charge fee of $340 plus about 3k property taxes, they’re gonna need “rich active seniors”. Hey, but the heat, ac and elevator activities are Free old peeps
This picturesque town’s latest claim to fame, Johnny Depp spent a couple of days in the old courthouse filming Public Enemies, anual canoe/kayak races if the Pecatonica river depth cooperates and lots of cows.
The birds (rats) are starting to sing…
Ex-Moody’s employees allege misconduct-
WASHINGTON – Two former Moody’s Investors Service employees detailed allegations of misconduct at the big ratings firm as lawmakers took aim at a credit rating industry they condemned as rife with conflicts of interest and needing reform.
http://news.yahoo.com/s/ap/20090930/ap_on_bi_ge/us_moody_s_whistleblowers_congress
“as lawmakers took aim at a credit rating industry they condemned as rife with conflicts of interest and needing reform.”
How quaint. The lawmaking industry itself is already at the lower depths of the corruption cesspool and morbidly infested with graft from top to bottom.
Too bad the credit ratings industry can’t appoint a czar to regulate Congress, to complete the rotten three-ring circus in DC.
Young adults don’t trust financial institutions: survey
Puget Sound Business Journal (Seattle)
Young adults between 18 and 29 years old don’t trust traditional financial institutions very much, according to a new survey commissioned by Microsoft Corp.
Two-thirds of the survey respondents said they won’t invest money in the stock market and more than half said they won’t invest in a 401(k) or other retirement plan. Slightly less than half said they’d invest in an insurance policy and 22 percent said they would not even deposit money in a bank.
The survey was conducted by KRC Research in Washington, D.C., and asked 500 young people questions about finance.
The youths, which Microsoft describes as the “millennial” generation, weren’t too optimistic about the future of U.S. financial institutions. There are an estimated 80 million U.S. youths in the “millennial” generation, Microsoft said.
More than 80 percent said they believe that more financial institutions will fail in the future and 80 percent said that U.S. financial institutions don’t deserve any more bailout money.
“The financial crisis has created a deep sense of mistrust in millennials, which is keeping the next generation of wealth on the sidelines,” said Colleen Healy, general manager of U.S. financial services at the Redmond computer giant (NASDAQ: MSFT), in a statement.
“The financial crisis has created a deep sense of mistrust in millennials, which is keeping the next generation of wealth on the sidelines,”
Next generation of wealth? That’s almost funny, considering that they are loaded with student loans and $10/hr part time jobs.
And something tells me they’re not getting their animal spirits worked up over economic recovery or financial results.
How does this compare to 10 or 20 years ago? Did 20-somethings ever invest in a 401k in large numbers? I suspect the answer is no and this great revelation is not so great after all.
It’s a story for the reasons that In Colorado pointed out: no money and much debt.
Which means they can’t be fleeced because they having nothing TOO fleece. Which means the PTB might have to actually find an honest way to make their bonuses.
For the Ron Paul followers here. Enjoy!
Ron Paul on The Daily Show with Jon Stewart 9/29
http://www.youtube.com/watch?v=jrsWXlSzyF0
Anti-Graffiti Plan Raises Stakes for Homeowners
Wed, Sep 30, 2009
Looking to prevent your home from becoming a tagger’s canvas? The city of LA has a plan that asks homeowners to pitch in or pay — whether they want to or not.
All new buildings in Los Angeles — including homes — must have anti-graffiti coating under an ordinance approved unanimously by the City Council on Tuesday. Homes in the tagThere is an exception if the owners promise to remove any graffiti on their property soon after it appears.
The ordinance will take effect 30 days after being signed by the mayor.
The anti-graffiti coating must cover the walls and doors from the ground to a height of at least nine feet. The coating is mandated on all buildings, unless owners sign a “Covenant and Agreement Regarding Maintenance of Building (Graffiti Removal)” with the Los Angeles Department of Building and Safety.
That contract would require owners to remove any graffiti on their buildings within seven days of the graffiti being applied, or within 72 hours of being notified by the department.
Failure to abide by the contract could result in a $550 fine.
The Arroyo Seco Neighborhood Council opposed the ordinance, saying in a statement: “While this may be a well-intentioned effort to keep businesses, etc. from being ‘victimized’ by graffiti twice — once by taggers, then again by the possibility of a city fine — allowing graffiti to stay visible to the public for seven days effectively rewards taggers, providing them with more than twice the window to showcase their vandalism, and makes ongoing removal efforts worthless.”
City law had previously required only that commercial structures have anti-graffiti coating or impermeable surfaces, such as ceramic tile or baked enamel. It also did not include the exemption for owners who sign an agreement to quickly remove the vandalism.
We passed the same law in Texas.
Punish the victim! Hooray! Nope, no comminism here!
Oh wait…
How about you sign an agreement that gives you the right to stake out your house at night and any punk that tags your property gets beat, tazered, pepper sprayed, etc. (you get the idea)?
Robiscrazy for president!
So there we have it. The heat is on and this guy exits the building!
Bank of America’s Ken Lewis to Retire
WSJ
BY KATHY SHWIFF
Bank of America Corp. Chief Executive Ken Lewis, his company faced with multiple government probes, will retire at the end of the year.
Excerpt from another Automatic Earth archive…
(Oly, how do u spell Ex-Lax? )
Even those who own homes free and clear will find that, in a frozen property market, they can not move to where the jobs are, or to a more suitable property with some self-sufficiency potential. If they lose their jobs, they may lose their homes through being unable to pay the sky-rocketing property taxes that municipalities will introduce in a desperate attempt to fill the gaping holes in their own budgets. This is why we suggest that people generally rent rather than own (unless they own a homestead free and clear). Renting amounts to paying someone else a fee to take the property price risk for you, and that is a very good bet under today’s circumstances. Rents will fall a long way in a deflation, and although landlord default is always a possibility (perhaps meaning more than one move), that risk is preferable to losing the bulk of one’s assets in a property price collapse.
The middle class has been comprehensively fleeced by the debt trap, and the consequences for social stability will be extremely unpleasant once the chickens come home to roost. Except for a few of the super-rich, we will all share in the misery to come, and none of us can expect a bailout. Whether we’ve been gorging ourselves on the Gingerbread House or merely nibbling at it, we now find ourselves in a cage.
“…we now find ourselves in a cage.”
And the gilding is wearing off…
China to cut back industrial expansion
By Justine Lau in Hong Kong
China has issued a stark warning about the risk from rising overcapacity in the economy, saying it could hamper recovery and lead to a surge in non-performing bank loans.
The State Council, the country’s cabinet, issued a new plan to combat overcapacity in seven industries, barring new aluminium smelters for three years and criticising “blind expansion” in parts of the steel and cement industries.
FT
Geez, Ronny Raygun, think what this does to the “trickle Down” Economic theory of the “TrueBeliever’s™”
Super rich are $300 billion lighter:
“The financial crisis cut the net worth of the nation’s 400 most wealthy individuals to $1.27 trillion this year, according to published list.”
By Ben Rooney, CNNMoney.com staff reporter
September 30, 2009
“…The losses were driven by turmoil in the capital markets and plunging real estate values, according to the magazine. but fraud and divorce also took a toll.”
“…Among the newbies is Jeffry Picower, who the magazine describes as “a longtime investor with Bernard Madoff who is alleged to have extracted billions of dollars from Madoff’s fund before it collapsed.”
“This year only 28 members added to their wealth, including banker Andrew Beal, who tripled his net worth to $4.5 billion buying cheap loans and assets”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
&
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Mr. Bear something just for your eyes:
Via Thomas Sowell…(Trickle-Down Ignorance (April 2, 2005) Quote: “If education provides anything, it should be an ability to think — that is, to weigh one idea against an opposing idea, and to use evidence and logic to try to determine what is true and what is false.” (Hwy notes: “Sowell has never espoused on whether Lincoln was on the side of “right”, but being that he has the “seal of majesty” from Stanford via North Carolina, what matter it. thus he comes to this: “5) Many modern ideological struggles can be traced to two visions: the vision of the anointed and the vision of the constrained realist: Sowell lays out these concepts in his A Conflict of Visions, and The Vision of the Anointed. These two visions encompass a range of ideas and theories. The vision of the anointed relies heavily on sweepingly optimistic assumptions about human nature, distrust of decentralized processes like the free market, impatience with systemic processes that constrain human action, and absent or distorted empirical evidence. The constrained or tragic vision relies heavily on a reduced view of the goodness of human nature, and prefers the systematic processes of the free market, and the systematic processes of the rule of law and constitutional government. It distrusts sweeping theories and grand assumptions in favor of heavy reliance on solid empirical evidence and on time-tested structures and processes.)
“As much as I enjoy most of the messages from readers, there is no way that I can answer more than a small fraction of them. The messages I don’t reply to at all are those from obviously ignorant people who offer insults instead of arguments. However, a recent column has brought forth more than the usual number of uninformed denunciations, so it may be useful to other readers to explain why they should not take such nonsense seriously when they encounter it.”
Or, as Jay Leno says: “Oh, shut up!
Knight, Frank H.
(1885-1972):
Table of Contents
Preface
Author’s Preface
Part I Introductory
I.I The Place of Profit and Uncertainty in Economic Theory
I.II Theories of Profit; Change and Risk in Relation to Profit
Part II Perfect Competition
II.III Theory of Choice and of Exchange
II.IV Joint Production and Capitalization
II.V Change and Progress with Uncertainty Absent
II.VI Minor Prerequisites for Perfect Competition
Part III Imperfect Competition through Risk and Uncertainty
III.VII The Meaning of Risk and Uncertainty
III.VIII Structures and Methods for Meeting Uncertainty
III.IX Enterprise and Profit
III.X Enterprise and Profit (continued)
The Salaried Manager
III.XI Uncertainty and Social Progress
III.XII Social Aspects of Uncertainty and Profit
Footnotes
(Hwy wonders why (Part II Perfect Competition) precedes: (II.VI Minor Prerequisites for Perfect Competition)
Therefore:
George Joseph Stigler (January 17, 1911 – December 1, 1991) was a U.S. economist. He won the Nobel Memorial Prize in Economic Sciences in 1982, and was a key leader of the Chicago School of Economics, along with his close friend Milton Friedman.
While at Chicago, he was greatly influenced by Frank Knight, his dissertation supervisor. Milton Friedman, a friend for over sixty years, comments it as a remarkable feat since only three or four students ever managed to complete their PhD dissertation under Knight in 28 years of his service at Chicago”
3-4 PH’ds in 28 years imagine that…”sit up straight, correct your posture…too much pressure on the pencil lead…” next!…
Chicago’s econ PhD program has a reputation as a Darwinian winnowing operation…
Sept. 30 (Bloomberg) — Morgan Stanley Chief Executive Officer John Mack, who struggled to return the bank to profitability amid the financial crisis, said a single regulator should oversee financial institutions worldwide.
“A better system would be one uber-regulator,” Mack said in an interview in New York for Bloomberg Television’s “Conversations with Judy Woodruff,” parts of which will air today. “We do need an overall systemic-risk management that everyone buys into. It’s not a U.S. systemic boundary — it’s a global systemic risk manager.”
Globilization has done so much to weaken labor there is only one other thorn in the side of top banking management, those regulators.Why not use globilization to weaken banking regulation as well. A nameless regulator that no politician would have any influence over, brilliant.
“…it’s a global systemic risk manager.”
“A better system would be one uber-regulator,”
Earth meet Sun…Sun, give to Earth…freely!
News from: “The O.C.”
(Hwy thinks they might have went with “green” except Halliburton still has a “no bid” contract in Iraq for the “green zone” thus, it was “cost” prohibitive…”
Amid luxury, mall site is haven for graffiti, homeless:
Failed shopping center in Newport Beach has attracted city ire.
By JEFF OVERLEY
THE ORANGE COUNTY REGISTER
“…In one shop, a box of Cap’n Crunch and an empty can of Del Monte fruit cocktail suggested squatters, and while a reporter snapped photos this week, a young man emerged from a building and rode away on a beach cruiser.”
“…In July, it was learned that the site was up for sale – either as a whole or in parts – and an agent described “extremely” high interest. That official did not return a call for comment”
“…City officials this year threatened to seek a court-ordered receivership if problems weren’t addressed, and requested that the properties be painted to conceal graffiti.”
“Landowner Allied Retail Partners went with dark gray, and the whole area is now the color of a Navy battleship”
Mr. Bear, how far is “The O.C.” …from San Die-go?
O.C. house building down 85% in a decade:
September 30th, 2009, posted by Jeff Collins OC Register
“…After falling 84% from 1999 to 2008, Orange County house construction this year so far is down another 12% from last year. (Click on chart at right to enlarge.)
Suddenly, it was a 4th night…
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
&
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Total drop in OC house construction, 1999-2009:
(1-(1-0.84)*(1-0.12))*100 = 86 percent. I sense a bottom coming up pretty soon here…
What think Ye?
(Hwy, thinks Bakersfried… got “statically lost”)
“But this year’s drop is the smallest decline among California metro areas, according to the latest building permit figures from the Construction Industry Research Board. Highlights of its August report include”:
Town Permits Yr. change
Madera-Chowchilla 44 -74.1%
San Diego 1,185 -34.9%
This is by far the most stunning drop in a construction stat that I have seen to date:
Drop expected for apartment values in 2010
By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. September 25, 2009
…
The session, sponsored by the San Diego County Apartment Association and the local chapter of the CCIM Institute for certified commercial investors, also featured former San Diego City Councilman Fred Schnaubelt and University of San Diego economics professor Ryan Ratcliff.
Ratcliff said while economic indicators suggest the recession has ended, unemployment will be slow to fall and California’s state budget problems will likely delay any recovery.
“I can’t see the light around the corner, but I can see a glow around the corner that suggests the light at the end of the tunnel is coming up real soon,” Ratcliff said.
There’s only darkness on the construction side, according to a report on building permits released yesterday by the Construction Industry Research Board. The Burbank-based group said a record low of just four multifamily housing units was authorized in San Diego County in August, down from 32 in July and 451 in August of last year. Year to date, there have been only 778 units approved, down from 2,431 for the same period last year.
…
News from: “The O.C.”
(Hwy thinks they might have went with “green” except Halliburton still has a “no bid” contract in Iraq for the “green zone” thus, it was “cost” prohibitive…”
Amid luxury, mall site is haven for graffiti, homeless:
Failed shopping center in Newport Beach has attracted city ire.
By JEFF OVERLEY
THE ORANGE COUNTY REGISTER
“…In one shop, a box of Cap’n Crunch and an empty can of Del Monte fruit cocktail suggested squatters, and while a reporter snapped photos this week, a young man emerged from a building and rode away on a beach cruiser.”
“…In July, it was learned that the site was up for sale – either as a whole or in parts – and an agent described “extremely” high interest. That official did not return a call for comment”
“…City officials this year threatened to seek a court-ordered receivership if problems weren’t addressed, and requested that the properties be painted to conceal graffiti.”
“Landowner Allied Retail Partners went with dark gray, and the whole area is now the color of a Navy battleship”
A new wave of financial alchemy is emerging on Wall Street as banks and insurers seek to make soured securities look better. Regulators are pushing back, saying the transactions don’t have enough substance and stand to benefit bankers and ratings firms.
The deals come as Wall Street firms, buoyed by surging markets, are seeking to profit from the unwinding of the complicated securities that helped fuel the credit crisis. Regulators, meanwhile, are struggling to prevent a recurrence of the crisis.
The popular deals are known as “re-remic,” which stands for resecuritization of real-estate mortgage investment conduits. The way it works ..
I can’t read the rest of the article but my guess is it works exactly the same. You take a mountain of wortheless paper, bundle it together and give it a fancy name. Then you cover it with a worthless insurance policy, you bribe a rating agency to put a tripple A rating on it, and you then sell it to pensions, charities, the elderly, the greedy, and foreigners.
Slice & Dice is Dead!
Buy Gold! Buy Gold! Buy Gold!
Buy bullets! Buy bullets! Buy bullets!
Buy sugar! Buy sugar! Buy sugar!
Geez, I haven’t heard the words “Saudi Arabia” since Cheney-Shrub left office…what’s up?
http://www.randpaul2010.com/
Dr. Rand Paul, son of Dr. Ron Paul, has thrown his hat into the ring as a candidate for the GOP nomination to run for a seat in the U.S. Senate. Naturally, the corrupt and worthless national GOP party leadership has their own candidate in mind, and are lining up corporate donors who will naturally call the tune if “their” bought-and-paid for puppet gets elected - business as usual, in other words.
Enter Rand Paul. More than 13,000 small donors have just raised $1,000,000 for him in the quarter ending at midnight tonight - a feat that will stun the Republicrat, er, Republican party so-called leadership. Rand Paul would be a voice of fiscal sanity and TRUE conservatism, not the phoney snake-oil peddled by the GOP neo-con con-men.
Those who piss and moan about the direction this country is headed in, but fail to actively support principled alternatives to the Republicrat Duopoly status quo that is leading this country to ruin, have absolutely no moral right to complain when they are part of the problem. I would urge HBB readers who feel government has gotten too big, too powerful, too grasping, and too unaccountable, to vote for a REAL change, not the fake Obama variety.
Filed under: “Oh Ye, of little faith!”
“We were unable to find an alternative source of lenders,” Ryerson said. “They’re just not there.”
“Mammoth is the latest of numerous Orange County owners to default on commercial real estate lately.”
“Ryerson said the core problem is the same one that’s afflicted other commercial property owners. The economy has cut occupancy levels, which in turn, lowered property values. With properties worth less than is owned on short-term construction loans, new financing couldn’t be arranged at a time when credit continues to be scarce.”
“Yet rather than turn the keys back over to lenders, Mammoth is hoping to hang onto its assets until the economy recovers — and their values rebound — in about three to five years.”
“We were facing two things: foreclosure and bankruptcy. Bankruptcy is the answer we chose to take,” Ryerson said. “It’s just a matter of time before the values come back, but that time frame could be three to five years.”
O.C. property investor seeks bankruptcy rescue
September 24th, 2009, posted by Jeff Collins OC Register
“It’s just a matter of time before the values come back, but that time frame could be three to five years.”
————————-
Multiply this by many millions of individuals, and we understand why so many want to see the “green shoots” they are pumping in the MSM — and from every platform in the political and business world.
This is also what I think will be the most devastating aspect of this downturn…the duration will be even more damaging than the depth. This is why all the attempts to bail out the various players is the worst possible choice. It will extend the duration of the recession beyond what most people can physically and financially endure.
Bulls are beside themselves about the recent performance of the Case Shiller house-price index: Prices have risen for three straight months!
This happy (if short) string of data has given rise to the widespread belief that the housing bust is over, that buyers can safely return, that folks who want to sell their houses are smart to “rent for a year until the market has come back.”
Keep dreaming, says David Levy, of the Jerome Levy Forecasting Center. House prices have plenty further to fall.
David’s first point is that, like the stock market, house prices don’t fall in a straight line. It won’t be surprising to have false downs along the way.
Also, housing “affordability” measures, which bulls point to as indicators of the budding recovery, are too simplistic, David says.
And then there is the shadow inventory issue that we discussed earlier. Although David thinks Amherst’s “7 million units” of inventory that has yet to hit the market might be high, he does see shadow inventory as a problem.
DON’T BUY YET!
LOANS & CREDIT
OCTOBER 1, 2009
Are Distressed Homes Worth It?
By M.P. MCQUEEN
Home buyers are finding that the battered real-estate market offers just as many opportunities for headaches as for bargains.
Seth and Crystal Grotzke, both 25 years old, recently bought a bank-owned two-bedroom, two-bathroom townhouse in Edina, Minn., for $110,000—when similar homes in the same development were selling for as much as $131,000. But exactly one day before the scheduled July closing, the Grotzkes learned there was a second, unpaid mortgage. Because of the foul-up, the couple was forced to live in Mr. Grotzke’s boss’s basement for more than a month. They finally closed on Aug. 31.
“We knew there would be title issues, but none that would last for that long,” says Mr. Grotzke, an assistant pastor. He adds that buying a foreclosed property is a way for God to “teach you patience.”
Lots of home buyers are learning about patience these days. In August, nearly a third of overall housing sales were distress sales, according to the National Association of Realtors, up from 18% in March 2008, when it began tracking such sales. The figure includes both foreclosures and so-called short sales, in which the lender agrees to accept less than the full balance of a mortgage in order to unload the property.
In some parts of the country, such as Bakersfield, Calif., Las Vegas and Lakeland, Fla., distressed properties constitute half or more of all sales. So far this year, there have been nearly 411,000 sales of U.S. properties in some stage of foreclosure, according to RealtyTrac, which publishes a national database of homes in default, auctions and bank-owned homes.
Those numbers aren’t making it any easier to buy distressed property. Bidding wars are erupting for the lowest-priced foreclosures. Experienced investors with cash are elbowing aside first-time buyers who need mortgages. And banks generally sell property “as is,” without the defect disclosures required of other owners. Short-sale buyers, for their part, often face delays of weeks or months as they wait to hear back from lenders—and from the institutional investors who bought securities based on the mortgages.
…
Here is a recommendation on the Rydex Inverse Government Long Bond Strategy fund, which would go up if l-t interest rates rose. Hoz recommended this a couple of years ago (bless his heart) but I fortunately doubted his judgment. Of course, nobody could have seen the Fed’s l-t T-bond yield and mortgage rate buydown program coming, could they?
Given the Fed’s apparent resolve to contain l-t T-bond yields, where is the upside risk to owning such a fund?
The Wall Street Journal
ROI
SEPTEMBER 30, 2009, 7:08 P.M. ET.
Worried About A Mortgage Rate Spike? You Have Options
By BRETT ARENDS
Good news for prospective home buyers: You can find 30-year mortgages for less than 5% again. But those rates may not last . And these days it’s almost impossible to lock in a rate while you hunt for a home. Banks—for understandable reasons—now want to evaluate a property before pre-approving borrowers.
Mortgage rates have been falling in concert with sinking interest rates on long-term Treasury bonds. The two are closely related, through a complex mechanism involving mortgage-based securities. And if mortgage rates start rocketing again in the next few months, a rebound in long-term Treasury yields will likely be the cause.
People who worry that rates will spike again before they find a home can protect themselves by investing in a mutual fund that tracks long-term interest rates. Or they can buy call options on one of those funds instead. If Treasury rates suddenly skyrocket, you may make back what you would lose on the mortgage rates.
This may sound like some incredibly complex footwork, and most people will shy away from trying these moves. But considering the cost of even a slight rate change over the life of a mortgage, they’re worth considering.
After all, if you’re looking to buy a typical $200,000 home, a rise in mortgage rates from 5% to 6% will cost you an extra $1,300 a year for the next 30 years.
Several funds track long-term interest rates. Among them are two exchange-traded funds that you buy like shares on the stock market, the ProShares Short 20+ Year Treasury fund (TBF) and the ProShares UltraShort 20+ Year Treasury fund (TBT). There is also the Rydex Inverse Government Long Bond Strategy mutual fund (RYJUX). (Technically, these funds track the inverse of the price of long-term government bonds, which in turn is inversely related to the yield.)
…