Flying Blind
It’s Friday desk clearing time for this blogger. “When Congress voted overwhelmingly Thursday to expand the first-time homebuyer tax credit to include repeat buyers, it brought a ray of hope to segments of the Triangle housing market that have not had much to cheer about of late. The bill, which awaits President Barack Obama’s signature, adds a credit worth up to $6,500 for repeat buyers who have lived in their houses at least five years. The legislation also significantly raises the annual income limits required to be eligible to qualify for the tax credits.”
“Laurie Kelly, whose North Raleigh house is on the market for $430,000, is optimistic that the new credit will help her both sell her house and buy one in Virginia. Kelly’s husband recently started a new job in Washington, and the family’s house has been for sale since the summer. The Triangle housing market has a glut of houses priced above $400,000.”
“‘We have a beautiful home,’ she said. ‘We just have so much other beautiful competition.’”
“In Washoe County, strong activity at the lower end of the market has helped area home sales consistently beat last year’s numbers each month. Many attribute the sales pick up for entry-level homes to the tax credit, including some folks who admit to normally being leery about such federal programs. ‘I don’t necessarily agree with (the tax credit),’ said Ken Wiseman, broker-owner of Reno Rancho Realty. ‘But I must admit that it’s been very important for us here.’”
“‘I don’t think the market would be able to function on a normal scale without it. The whole market is essentially being propped up by the tax credit.’”
“Congress delivered an early Christmas present to the real-estate industry yesterday. Local real estate agents said the congressional action could lead to a busier-than-normal winter for home sales in Massachusetts. ‘I know it sounds self-serving, but I truly see this as a great stimulus (for the economy),’ said Gary Rogers, president of the Massachusetts Association of Realtors.”
“Nicolas Retsinas, director of Harvard’s Joint Center for Housing Studies, said the nation’s housing market is now on ‘government life support,’ so it’s important that the credit program was extended until next spring. But he said that, sooner or later, the housing market has to stand on its own two feet.”
“‘Tax credits borrow demand from the future,’ he said. ‘At some point, the government has to exit the subsidies business.’”
“Not everyone likes the idea of new tax credits for housing, including University of Wisconsin-Madison economics professor Morris Davis. He said home prices were stabilizing without further intervention and that extending the first-time buyer credit will cost the government more money and only move up home sales that would have taken place anyway over time.”
“‘There’s just a fixed pool of potential first-time homebuyers. So that means if you incent them to buy today, they are not going to be available to buy tomorrow,’ said Davis, whose specialty is real estate and urban land economics. ‘It’s basically the homeowner equivalent of ‘cash for clunkers.’”
“Becky Bowles, president of the Palm Springs Regional Association of Realtors, said it was fabulous that Congress extended the credit opportunities. ‘The credit makes a big difference to first-time homebuyers with limited funds available,’ she said, citing a recent survey from the California Association of Realtors that said 39 percent of those buyers would not be in a home in 2009 if the credit did not exist.”
“‘I think it’ll make a big difference in the people who are sitting on the fence,’ she said. ‘Everyone has figured out that we’ve reached a bottom, and there are incredible opportunities for buyers.’”
“Patrick Veling, president and founder of Brea-based Real Data Strategies, said the action by Congress holds potential to improve the lot of sellers trying to sell their mid-priced homes. On the other hand, Veling said one could argue that the overall economic strategy of artificially boosting the demand primarily through government insertion into the process is delaying the natural bottoming of the market.”
“‘Time will tell,’ he said.”
“Over the past few weeks, Michael Groendyk has raced against the clock. He’s scrambled to close on a home in Laurel Lakes, hoping to take advantage of an $8,000 federal tax credit. Now, it looks like the credit will be extended until next year. But Groendyk and his wife, Rebecca, who are in the their 20s, didn’t want to take any chances, with the original deadline looming later this month. They are scheduled to close on their new home in North Naples on Friday.”
“The Groendyks recently graduated from Western Kentucky University. They married in December and moved to the Naples area from New Jersey in May. The couple searched for a house for five months. They visited more than 60 and put in four offers before finally getting a contract. Two times they were outbid by other buyers, and another time they walked away in search of a better deal.”
“They are buying a foreclosure. The home has three bedrooms and two bathrooms and they are paying $249,000 — the list price. ‘We were pushing everything as hard as we could to get it closed in November — as soon as possible, really,’ he said. ‘We snuck it in.’”
“It is difficult to generalize about any group because there are always readily identifiable exceptions to the rule. Even so, the old saw about a Democrat seeing a man drowning seventy five feet offshore throws him both ends of a fifty foot rope and hurries off to ‘rescue’ someone else, while a Republican throws him a fifty foot rope and tells him to swim for it, appears to be relatively accurate.”
“What a mess we are in. On one side we have the Republicans who pretty much have a tin ear when it comes to recognizing human suffering and whose general response to someone else raising the issue is ‘get a job you dirty hippie.’ And on the other side are the Democrats who have such acute antennae that they perceive a problem even before it exists and who are institutionally and intellectually incapable of finding an actual workable solution. Not only are they incapable of providing a workable solution, most often their solutions make the problems even worse. ”
“A large part of the current economic downturn is due to the fact that the Congress required financial institutions to lend money to people who had neither the means nor the intention to repay it. Congressional Democrats engaged in years of hand wringing that the nation’s poor were being left behind in the surge of home ownership – the American dream. (It is the moral equivalent about worrying about the fact that fish cannot play the piano – they have no hands and the poor have no money. Sewing gloves on the fish will not work any better than giving loans to those who cannot repay them.)”
“But the Democrats never learn from a ‘failed solution.’ In the name of ‘economic recovery’ the Democrat Congress is right back with the same solution. This time it is the Federal Housing Administration. Committee Chairman Barney Frank of Massachusetts insists that these mortgages are needed to ‘keep prices from falling too fast.’”
“Just as a reminder that is the same Rep. Barney Frank who, along with the Sen. Chris Dodd, buried an investigation into identical lending practices at FannieMae and FreddieMac, declaring them to be sound institutions.”
“Fannie Mae will allow homeowners facing foreclosure to stay in their homes and rent them for as long as a year, as part of the US government’s latest effort to help troubled borrowers, while keeping more foreclosed properties from hitting the housing market. The initiative also would allow Fannie to keep inventory off already-saturated housing markets, and amounts to a bet the housing market would be stronger one year from now.”
“‘I’m sure Fannie is hoping that when they sell the properties, the values will be higher,’ said David Berson, chief economist for PMI Group, a mortgage insurer. ‘A year from now, we should be a year further into the economic recovery, and housing demand will be stronger.’”
“Japan is drifting towards a dramatic fiscal crisis. For 20 years the world’s second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending - and allowing it to push public debt beyond the point of no return. The rocketing cost of insuring against bankruptcy of the Japanese state is telling us the model has smashed into the buffers. Credit default swaps on five-year Japanese debt have risen from 35 to 63 basis points since September. Japan has decoupled from Germany (21 basis points), the US (22), and even Britain (47).”
“The IMF expects Japan’s gross public debt to reach 218 per cent of gross domestic product this year, 227 per cent next year and 246 per cent by 2014. This has been manageable so far only because Japanese savers have been willing - or coerced - into lending for almost nothing. The yield on 10-year government bonds has been about 1.30 per cent this year. The savings rate has crashed from 15 per cent in 1990 to near 2 per cent, half America’s rate. Japan’s $US1.5 trillion state pension fund (the world’s biggest) has become a net seller of government bonds this year, as it must to meet pay-out obligations. The demographic crunch has hit. The workforce been contracting since 2005.”
“Japan’s terrible errors are by now well known. It failed to jettison its mercantilist export model in time. It resisted the feminist revolution, leading to a baby strike by young women. It acquiesced in a mad investment bubble (like China now) in the 1980s, stealing growth from the future. It wasted its immense fiscal firepower, scattering money for 20 years on half-baked spending projects to keep the economy afloat. The quantitative easing was too little, too late, and this is the lesson for the West.”
“Builder KB Homes falsely inflated appraisals by an average of $30,000 on each of the 20,000 homes it sold nationwide from 2006 through 2008, according to a lawsuit filed in U.S. District Court in Orlando on behalf of a Clermont homebuyer. The lawsuit alleges that the national builder worked exclusively with a Plano, Texas, appraisal company that handpicked appraisers who would ‘play ball’ and base their values on contract prices rather than the actual sales — a practice that helped KB Homes inflate home values at a time when they were actually falling.”
“The buyer who filed suit, Stephanie Sullivan, was unavailable for comment. She and her husband purchased a four-bedroom pool home in Clermont’s Southern Fields subdivision for $421,400 in October 2006. At the time, the house was appraised at $425,000, but a forensic appraisal performed later concluded it had been worth $360,000 at the time of the sale, the lawyer said.”
“Sullivan’s husband lost his job six months after the purchase and they were unable to make payments on the inflated mortgage, forcing them into foreclosure and bankruptcy, according to the lawsuit.”
“Frank Gregoire, former chairman of the Florida Real Estate Appraisal Board, said that, while he had not reviewed the lawsuit, he was aware of it. Some of the issues raised in the complaint were commonplace during the housing boom earlier this decade, the longtime Tampa-area appraiser said.”
“‘It was common practice for builders and subdivision developers to have pet appraisers,’ Gregoire said. ‘That was true not only for subdivisions but also for builders with a subdivision or development — and, in particular, for condo converters.’”
“As promised, federal authorities have amped up criminal mortgage fraud prosecutions. During the last week alone, cases were filed in U.S. District Court in Tampa against at least 11 people accused of lying to lenders and property appraisers to obtain millions in mortgage loans during the property boom that ended last year.”
“”Thirty of the defendants were charged in Tampa. The defendants include mortgage brokers, straw buyers and an unemployed day trader. The FBI sought an arrest warrant for Richard Likane, an unemployed day trader who authorities say had no income but managed to obtain two loans totaling more than $300,000.”
“According to court papers, he lied about his monthly income in obtaining a mortgage of $161,000 for 10808 Dragonwood Drive in Tampa in February 2006, a year in which he actually lost $3,000 trading stocks and had no salary or wages. In March 2007, he obtained a home equity line of credit for $195,000 on a property at 3857 Mariner Drive in St. Petersburg, falsely representing his annual income as $75,000 when it was zero.”
“In January 2008, Likane filed for bankruptcy and testified under oath that he had not been employed since 2000, and had been a day trader of stocks and a house flipper since then.”
“A group of at least 20 disgruntled former Trump Tower Tampa buyers plans to sue Donald Trump, accusing the New York tycoon of falsifying his role in the $300-million project that went bankrupt last year. Trump misrepresented himself as a tower investor when he was only lending his name to the project in a licensing deal with Tampa Bay developer SimDag Robel LLC, said Kenneth Turkel, a Tampa attorney hired by some of the condo buyers.”
“Scores of buyers plunked down 20 percent deposits on units that ranged in price from $700,000 to $6 million. Developers didn’t refund half the deposit money, and buyers aim to recoup losses from Trump though the courts.”
“During the Tampa unveiling in 2005, Trump told the St. Petersburg Times that he had a ’substantial stake’ in the condo tower. ‘I recently said I’d like to increase my stake but when they’re selling that well, they don’t let you do that,’ Trump told the newspaper.”
“Richard Golod, executive director for Van Kampen Investments said…’If the economy is going to get back on track, consumers are going to have to spend savings, or equity in their homes, or borrow.’”
“Golod was keynote speaker at the Economic Forum 2009 in Nampa Nov. 5. Golod said the turnaround has begun. In fact, it began in June and July, but few people recognized it, he said, noting that the federal government has been working hard to make certain the economy continues to move forward with few hiccups.”
“He said the housing and construction industry may never hit its norms. While some parts of the country are seeing a bottom, others are still in freefall. In the Treasure Valley there may be a 15-month supply of homes on the market, but places like Tampa, Fla., Las Vegas, Nev., Scottsdale, Ariz., and parts of California are seeing a five-year supply of homes.”
“Unemployment in Mohave County where Bullhead City is located is around 10 percent. The median house price here has fallen from nearly $190,000 in January 2006 to less than $93,000 now, a drop of more than 50 percent. Not so long ago this town on the Nevada border was in full boom mode. It was a magnet for people coming to work in the casinos across the Colorado River in Laughlin, plus Californians looking to retire here or have a second home at a fraction of the cost in their own state. Construction workers flocked here to build homes and roads. All told, successive booms turned Bullhead City from a fishing village just a few decades ago to being a city of more than 40,000 people.”
“John McCormick of McCormick Development helps run a number of family businesses – a water company, a construction company, a land development company and a real estate broker’s office – and says that many of the people walking away from homes here are either speculators or Californians who bought a second home here.”
“‘If they end up in trouble, it’s so much easier to walk away from a second home than a primary residence,’ he said.”
“Millions of American homeowners are ‘underwater’ on their mortgages - owing more than the value of their homes - and would be better off walking away. That is the suggestion Brent T. White, a University of Arizona associate professor of law, makes in his newly released working paper, ‘Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.’”
“White, whose article will be published in this month’s issue of Arizona Legal Studies, said fear, guilt and shame are what keep many homeowners from making rational economic decisions. ‘These emotional constraints are deliberately cultivated by the government and lenders who self-servingly tell borrowers that they have a moral and social obligation to pay their underwater mortgages,’ said White.”
“‘Meanwhile, lenders ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility,’ he added.”
“A federal judge rejected a request by Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp, to dismiss a U.S. Securities and Exchange Commission lawsuit accusing him of securities fraud and insider trading. In a Tuesday court filing, U.S. District Judge John Walter in Los Angeles also rejected requests by David Sambol and Eric Sieracki, respectively Countrywide’s former chief operating officer and former chief financial officer, to dismiss related SEC fraud charges.”
“Countrywide had been the largest U.S. mortgage lender before liquidity dried up in summer of 2007. The insider trading charge concerned Mozilo’s alleged exercise in 2006 and 2007 of more than 5.1 million stock options and sale of the resulting shares, leading to more than $139 million of profit.”
“According to the complaint, Mozilo set up the plan shortly after admitting in an email to colleagues that Countrywide was ‘flying blind’ as to the quality of its loans.”
“Real estate investor Barry Sternlicht is betting the Greenwich housing market is making a comeback. Sternlicht raised the asking price of his 5.8-acre estate on Round Hill Road to $5.95 million, although the town is headed for its worst year for property sales in more than three decades.”
“It was first listed for sale in June 2008 for $8.25 million, according to the Greenwich Multiple Listing Service and his broker. The price was reduced three times from September 2008 to April of this year. Sternlicht bought the place in November 1994 for $2.93 million, according to the Greenwich Assessor’s office.”
“‘We increased it because we felt like we were giving it away,’ and there was interest in the property, Sternlicht’s broker, Jean Ruggiero, said in an interview. ‘Just because people are lowering their price doesn’t mean it’s right, because he’s not a desperate seller.’”
“Richard Golod, executive director for Van Kampen Investments said…’If the economy is going to get back on track, consumers are going to have to spend savings, or equity in their homes, or borrow.’”
For sh*t’s sake, when are they going to stop this “borrow ourselves to prosperity” canard? Okay, gotta go look at property in Bullhead City…..
“consumers are going to have to spend savings”
You go first, Rich. Go for broke.
Kim,
LOL, right, have AT it! No, what Golong means here is.., in order to have immediate relief that will hopefully gloss over all our sins.
Yup. It’s I dare you I double dare you. Oh wait you fell for that trick? Charlie Brown meet Lucy holding the football.
1. what savings.
2. there is no equity.
3. those days are over.
Is the Fed’s printing press broken or something? I am missing your point…
No actually Richard I think the key for getting the economy back on track is to let the market set asset prices.
Damn, I think I’m in love! A simple fact layed out in a short sentence.
: )
Carrie Ann,
Thanks for finishing the Portsmouth refrain yesterday. I knew that people around here had good taste in music.
Slim here. These last couple of weeks have been a veritable Home Improvement Bonanza around the Arizona Slim Ranch.
Replaced the ugly retaining wall out front with a very nice rock garden. And I can’t say enough good things about the Watershed Management Group’s Water Harvesting Co-op. (Yes, I’m a member.)
The work that my fellow members did to install that rock garden was nothing short of amazing. Only took ‘em four hours too.
Then there’s the ranch house itself. It’s needed mortar and stucco repair, oh, since I moved in almost five years ago. Hired a couple of fixers who have been enjoying the Ranch ambience — I enjoy being hospitable to people doing work here — and the work that they’re doing. (They also painted the sides of the house. The soffits, fascia, and trim will get done in a few months, as they also need repair.)
You may be wondering: Did Slim go HELOC bonkers? Run up the credit card?
Nope.
All of this work is being paid for with cash. Not debt. So, it can be done.
Why don’t we just start a rumor that home improvements paid for out of savings increase the value of the home by 150% of what was spent while those paid for using credit only increase the value of the home by 75% of what was spent (still too high, but barely plausible if you have the exact same taste as your eventual buyer)?
It would be fun.
Okay, Polly, count me in. And when I visit Our Nation’s Capital, I’ll really owe you a drink .
Just let me know what sort of place you want - sorta dive about two minute walk from old executive office building? Former power broker place about a two minute walk from the Treasury building? Fancy shmancy rooftop? Actually, I’d have to do some research for that last one, but I know they exist. We have all types…
I’m here in D.C.tonight. Beautiful clear, crisp day. I love our nation’s capital. Having room service while enjoying the HBB.
As long as you don’t have to live there and commute to work every day. And as long as you don’t have to deal with egotistical capitol hill staffers, egotistical WH/EOB staffers, egotistical power broker lobbyists, or egotistical super-graders in any of the alphabet-soup agencies.
Except for the above, yeah D.C. is great!
Arizona Slim,
( And thanks again for the direction on ‘control fraud’ btw )
Why would anyone here have issues w/ that? It’s -your- house? Typically the only time I have objections is when the improvements themselves are ‘outsized’.
To be truthful, I probably ‘am’ one of those that are “throwing their money away on rent”. My wife and I love Klamath Falls and she heads down w/ me nearly every trip. The hotel bill is usually $125 to $200 ( even w/ gov. discount ) and given my drill pay is around $400, that actually ‘would’ make for a decent purchase there. A ways to go, but we always keep our eyes open.
Anyone who wants to see the future of the Western World needs to see the example of Japan.
This is what you get when your population is stagnating or decreasing. And before chiming in, all should be aware that research shows that most developed countries will have this problem soon.
Ask yourself one question.
How can housing prices rise when housing demand goes down (due to lower population)?
We have a very rapidly rising population in the US.
No, we don’t. Check the statistics.
From my recent readings the biggest difference between us and the Japanese is that, I think, about 92% of their gov debt is owed to its own people (the world’s uber savers) in its own currency w/the rest due to outsiders.
Here’s what we’re looking at:
http://www.stinkyjournalism.org/newsPrintDetail.php?id=161
We’re looking at about 30% of our national debt owed to foreigners. And of course no one will confuse us w/savers.
No, we don’t. Check the statistics.
It depends on who you count. But if we closed our borders then yes, we would be steady state.
The mistake that is made is that to keep a population at stable levels, the growth rate needs to be 2.1%
Anything less than that will eventually end up with a declining population.
The US is barely above 2.1%
So what? There’s just too many danged people around here, anyway, and a ton of anchor babies.
Population growth is NOT sustainable at this time. Not until we get a handle on the environmental ravages that currently confront us.
How’s that new water dealie working out in CA?
Read what I have said again, and do google search in case you don’t believe me.
There is basically negative population growth in the developed world, which is one reason why unchecked immigration is allowed.
The problem comes that, to state it bluntly, economies and all related things cannot grow when the customer base shrinks every day.
I’ve seen projections that say we will be adding 100+ million by 2050.
http://en.wikipedia.org/wiki/Sub-replacement_fertility
“…The US is barely above 2.1%”
This can be “rectified” …especially, after “winning” some type of war.
Population growth is NOT sustainable at this time. Not until we get a handle on the environmental ravages that currently confront us.
Population growth and environmental damages are not sustainable therefore the problems will be self-correcting which is just.
Living in Brazil, the “lungs of the world”, I glimpse environmental aspects here comparable to the USA’s 100 years ago.
Brazil won’t become more green in my lifetime but America wasn’t “green” either a century ago. And is America really “green” now or do we just offshore our environmental ravages?
We recycle beer cans, sport cute bumper stickers and tote canvas bags in America to “save the planet” but the damage is done and ongoing… We got ours and now we are even perverting economic laws and truths to get more.
There was a time when the hardwood forests of America stretched from the Atlantic Ocean to the Mississippi River.
If we can’t get our act together fast, the world’s environmental and population problems will be resolved naturally, and nature can be as terrifying as it can be beautiful.
“…and nature can be as terrifying as it can be beautiful.”
Now, I see that as bass-ackwards.
(You see what happens when an 11 year old American Kansas kid finds a copy of the “Tao Te Ching” while having x3 months off from “schooling” in the summer.)
But then I have lived through tornado’s… maybe that’s more the reason…the many sunsets, sunrises, clouds, harvest moons, celestial delights … came before those “turbulent” events.
“The mistake that is made is that to keep a population at stable levels, the growth rate needs to be 2.1%
Anything less than that will eventually end up with a declining population.”
SMF - what are you talking about?
If the population grows at 2.1%, it grows by 2.1%. You will never have declining population when you have growth, that should be elementary. (Although the US isn’t growing anywhere near 2%, it’s under 1% but definitely growing).
I think you’re mistaking fertility rate with growth rate. You need to average 2.1 children per women in her lifetime to maintain a population (i.e. 0% growth rate) - and that ignores immigration.
The US has NO foreseeable decline in population and in fact has one of the highest growth rates of any industrialized nation.
Read the article cited, please.
Essentially it boils to this:
You get married and have two kids. In the long run, you have not added to the population, since you and your partner have only managed to replace each other. I
You see?
Now it is simple fact, not deniable, that anything below 2.1% will eventually lead to population decline, like it is now happening in Japan.
Before disputing scientific FACT, get yourself some info.
You’re making a fool of yourself.
The 2.1 you cite is NOT a percentage and it’s NOT a growth rate. It’s a fertility rate measured and it’s measured in # of children per woman, percentage makes no sense.
As I said above, you need a fertility rate of 2.1 (roughly) to generate 0% population growth in a closed population. However, fertility rates ignore immigration. Again - the US has one of the fastest increasing populations among industrialized nations.
Please try to understand what you’re talking about before you accuse someone of disputing scientific fact.
ouch.
SMF
Go to the US Census website, there are three forecasts for the population. Most will be shocked to see the high end forecast for 2100 is 1.2Billion in the US. The low end is around 600 million.
The drop in housing prices at the low end is only for the next decade or so. 20 years from now, most new housing will probably be multifamily.
SMF,
In what could provide the death blow for the REIC, a lot of people are finding out that, well.., ‘other’ people aren’t all that weird/offensive?
You mean not ‘every’ single “needs a place of their own”? Not everyone that’s completed college needs a McMansion? The ‘day’ after graduation?
Right now we have our nephew living w/ us after his dad passed away. It’s… been a total GAS! ( Can’t imagine what it will be like when he’s 21 next spring and joins the rest of our bar-hopping crowd? )
During the bubble, everyone completely forgot what was ‘normal’ and started to do things that had never been attempted before.
You can even find out how big some homes for the really rich really are. Hugh Hefner has a 7500 sq.ft. mansion, but he also has much more $$ than most who bought homes of that size.
When my parents bought a 3000 sq.ft. mansion in 1996, that was considered rather large.
The biggest idiocy that occurred was the spec McMansions thrown all over the place. If we had money to buy something that we really wanted, would we have someone else make all the design decisions, or would we chose what WE want?
Are you sure Hugh Hefner’s Playboy Mansion is 7,500-square- feet? That doesn’t sound right.
I would think Hefner stores his erectile dysfunction medication, Viagra, in a room that must have a minimum of 7,500 square-feet alone.
I haven’t been in the mansion ( lately LOL! ), but it must have at least 30,000-square-feet or more. However, it’s certainly under 55,000-square-feet, because the Spelling mansion is reported to be the biggest house in the Los Angeles area with 55,000-square-feet.
BTW, Hefner isn’t as rich as he used to be. I think a year ago he was trying to sell the house he owns adjoining the Playboy Mansion. I think it’s a smaller house. Most likely in the neigborhood of 10,000 to 20,000-square-feet. I read he was having money problems.
OK, I think it was one of his homes around the compound. The mansion is about 20,000 sq.ft.
However, I went to Zillow to check on home sizes around the area…what an eye-opener it is.
The house adjoining the mansion is smaller than I thought. It’s 7,300-square-feet.
I just looked briefly on the Internet.
The listed price was around $28M. That’s seems like a lot of money for a 7,300-square-foot-house.
Maybe the price includes free Viagra for life.
“everyone completely forgot what was ‘normal’ ”
Right, Ben featured an article about the PHX area where realtwhores found a whole new niche. Young, single women. Normally… many gals share a place or have room mates until they find their calling in life or get married.
Not in Bubbleland! I mean “why should the guys make all the money, right?” I mean if illegals can be considered an “untapped demographic”?
Demographic fun facts: In populations where the women become more educated, the birth rate declines. These populations also tend to be more industrialized then agrarian. That also tends to lower the birth rate.
Don’t forget the mantra about too many people a few decades ago.
Heck, this was even spoken of in the 1850. Recall what Scrooge stated about
‘reduce the surplus population’
Don’t forget the original dismal scientist, the Reverend Thomas Malthus.
I guess population is like inflation? As long as its going up its good, but if it goes down its bad.
Western society of late has been built upon having many contributing to a system while few take out from it.
Worked well during the baby boom.
Doesn’t work at all now, as we are beginning to find out now.
How can any business and economy grow when every year you have less customers?
Time to rethink the system?
Uh, with fewer people you have more of all limited resources (e.g. living space, water, food, oil) available per person, commodities become more affordable, people have more while working less. Quality of life improves. You no longer have the fake growth of inflated gross revenue numbers, just a much nicer place to live. And you can even start exporting some of your surplus resources to over-populated countries for a profit. Why do you think the countries with the highest living standards have the least population growth?
We may have had all the fake economic and business “growth” of inflation, but we failed to have to any growth in quality of life, which is the one metric that actually matters.
That makes so much sense. Especially when compared, in the long term, to our ponzi scheme of every-increasing population growth, which projected out into the future doesn’t offer a very pretty picture.
However, if what you say is true, why is Japan in such a panic about its declining population? Simply because it has so few resources?
ever-increasing
John P. Holdren and Paul and Anne Erlich or the Obama WH want to sterilize the population.
“John P. Holdren and Paul and Anne Erlich or the Obama WH want to sterilize the population.”
When you say it that way, you make it sound like a bad thing.
Seriously, can you not conceive of anything worse than failing to spam the physical environment with yet more pseudo-clones of oneself? Got something “unique” or “special” in your genes that has just got to be passed on? (I don’t)
Come, join me now with a rousing rendition of “Every Sperm Is Sacred”!
What a moron. Every human is special. You don’t like “overpopulation”, take your fanny over to some country where they actually engage in overpopulation beyond their local carrying capacity and DO something about it.
Stop preaching your idiocy here in America where we have plenty of local resources.
The birth dearth is one half of the ingredients, along with the credit bubble, that will mean economic downturn is only in the beginning and will last a generation.
Unless one or two unseen positive variables get fed into the equation.
The MSM and politicians are not talking about the decline in traditional families in all the developed countries.
They will discuss it eventually. Have to.
Most countries in Europe, plus Russia and Japan, give a lot of incentives for couples to have kids already.
They know it is a problem, but it is simply not widely discussed.
Yeah but it will be a generation or slightly more “to get a deer far enough into the Anaconda” to get the new population into the age of productivity (20s).
At least their homes are being built RIGHT NOW!
Why do housing prices have to “rise” and why does the economy have to “grow”? The quality of life has to go up. I don’t see the quality of life going down in Japan.
There will be some adjustment period but without immigration I think the Japanese will be more than happy to provide for the elderly, unlike here where we hope the third worlders we are bringing in will be happy to clean the bed pans of people who don’t look like them.
“…unlike here where we hope the third worlders we are bringing in will be happy to clean the bed pans of people who don’t look like them.”
+1 Gestalt shift tectonics happening to a land near you.
I have to agree that quality of life is the metric we should be watching. We can have the total dollar volume of our economy go sky high while tens of millions of people have no food, water, shelter, education or health care, and economists will call it a triumph. That economic growth must be great if you’re one of very few holding all the money. I guess that means that Cuba and North Korea are wildly successful models to follow, since the wealthiest people there keep experiencing great financial growth at the expense of everyone else’s quality of life.
Great posts there, guys.
“I guess that means that Cuba and North Korea are wildly successful models to follow, since the wealthiest people there keep experiencing great financial growth at the expense of everyone else’s quality of life.”
Say it ain’t so .. surely they’re not copying our Bucks-4-Bankers, “No Billionaire Left Behind” program in N Korea and Cuba. Or are they?
US Wage Disparity Worst Among 30 Nations
“With the unemployment rate so high in Collier County, his wife is still hunting for a job. He works as a sterilization engineer for Arthrex Inc., a medical device manufacturer headquartered in North Naples.
They are buying a foreclosure. The home has three bedrooms and two bathrooms and they are paying $249,000 — the list price.”
23 year olds thinking this is a great deal, idiots.
A sterilization engineer, I’m not sure what that is, but it doesn’t sound like a highly adaptable set of work skills. Ya gotta wonder what happens when his company is aquired, or his job outsourced or he otherwise falls on hard times. Sheesh, one income, likely vulnerable to becoming new parents in an economy in shambles and they want to become $Quarter Million Debt Slaves? They need some HBB counciling, stat!
It happened to me in the early 80’s (the last time UE hit 10.8%) and it was a lesson never forgotten. I do own a house now (fully paid for in less than 10 years), but I was damned careful when and how I bought it.
Speaking of HBB counselling, this guy needs some help:
“The ever expanding capitalist economy requires people to purchase the goods they produce. This was made possible by massive amounts of consumer credit.\
You cannot blame the worker for doing what he’s told-spend money to keep the economy stimulated and GROWING. The idea of an infinitely expandable economy is of course a fantasy,but no one complains when times are good.
And you can’t blame the worker because he loses his job when the smoke and mirrors system he was given collapses around him.”
I get the feeling this guy doesn’t understand how many people did opt out.
As long as medical companies are still making product in the USA there will be a need for sterilization engineers. ALL medical products that come in contact with the human body have to be sterilized to some degree.
For some products the requirement can only be met with highly toxic gasses. The FDA will also require that the process be shown to meet certain criteria. He has a good job, he can always find another startup needing his skills when they finally get to producing units for clinical trials.
If nothing else, they’ll learn a lot about fixing up a house. As in, it’s a lot harder than how it looks on This Old House.
Fixing up a house is truely one of life most expensive endevours. I have the movie “The Money Pit” in my library (VHS of course), great teaching tool.
“sterilization engineer” = bottle washer
No he is a High Tech Zero tolerance germ destroyer
———————-
bottle washer
I totally agree.
Not considering the house itself, this young couple will be living in a city with a much higher median age. I don’t know the exact Collier County median age, but it must be in the 50s. Most Naples’ folks are very affluent and don’t work. And many live in Naples part-time.
At least for me, I would not want to live in a city where I wouldn’t fit the demographics.
And if this guy does lose his job, how is he going to find another job in a city with a high unemployment rate? I don’t think Ft. Myers is much better. I think the Ft. Myers area was, or is, the foreclosure capital.
On second thought, you live in a city where you can find employment. Times have changed.
However, it is a mistake for this young couple to buy a house.
Every situation on hbb ends with “what if they lose a job”. People do and have before lost jobs. Ive lost a couple. Life goes on. Cant live your whole life in fear of maybe some day being unemployed.
During sober times in a far away land a job loss was ameliorated with a savings account, and if things got really nasty a home equity loan.
So by that standard nobody should ever buy a house, buy a car, have a baby, or make any long term plans because, well you might be unemployed at some point in the next 50 years.
I blame the media for a lot of this. It’s come to the point now where being unemployed is on par with getting a terminal disease. Oh my god, oh my god what will I do, I was laid off? It’s the end of the world!!!
People need to relax. I was laid off after the bubble bust. Found out I was out of a job on Thursday, I was playing golf in Florida on Saturday. I had a trip scheduled, I took it. Came back, freaked out for a couple of days that I was jobless. Then started making calls, sending emails to everyone I knew, and in less than a month I was back among the ranks of the employed. I didn’t even bother filing for unemployment. And this was during (at the time) the worst economy since the great depression, or so CNN told me every 12 minutes.
My point is everyone will most likely be unemployed once, twice, three time or more thoroughout their careers. You can’t live in a perpetual state of fear about it. When it happens, deal with it. But don’t live your whole life wondering what if, what if.
Eddie,
Availability to decent jobs and gainful employment is and always has beena major lynchpin in the health of the US economy. It is basic to economic survival and Ben the regulars have long recognized the importance of jobs and posted about it long before you joined us.
The loss of jobs and unemployment isn’t an a bunch of isolated incidents but a damaging and growing national trend of this recession.
College Notebook: More college grads unemployed
By Joel Dresang of the Journal Sentinel
Nov. 6, 2009
Number of unemployed among workers 25 and older, seasonally adjusted
Educational attainment Dec 07 Oct 09* Increase Percentage change
Less than high school 927,000 1,893,000 966,000 104%
High school only 1,786,000 4,239,000 2,453,000 137%
Some college 1,356,000 3,303,000 1,947,000 144%
Bachelor’s degree or more 946,000 2,192,000 1,246,000 132%
* preliminary
Source: Bureau of Labor Statistics
The Labor Department’s report on jobs today shows continuation of a trend we spotted last month: College grads are becoming unemployed at a faster rate than high school dropouts.
Based on preliminary household survey results from October, the number of unemployed jobseekers among Americans, 25 and older, with at least a Bachelor’s degree is up 1.2 million or 132% since the recession began in December 2007. For those with less than a high school diploma, the number of unemployed has climbed less than 1 million, still more than double the count at the start of the recession.
Economists say these numbers suggest the equal-opportunity nature of the downturn.
http://tinyurl.com/yj7bfkb
I’ll bet he was manipulated by his RE agent into this foolish purchase. Sounds like he had the right idea, bidding on foreclosures, at first, then got discouraged. If he had only wanted a little longer, he probably could get the same house for half the price.
“‘I think it’ll make a big difference in the people who are sitting on the fence,’ she said. ‘Everyone has figured out that we’ve reached a bottom, and there are incredible opportunities for buyers.’”
Becky, Becky, Becky… housing won’t reach bottom until the government stops subsidizing the market. And spending 8x income on a house may be an “incredible opportunity” for the sellers, lenders, and agents, but certainly not for the buyers. Saying that “everyone” thinks the bottom is in just demonstrates an ignorance of economic affairs.
Bam! Another one hit out of the park!
And I want to be out in the rowboat in the Bay, out there with my big mitt, poised and ready to catch the ball.
Yeah, gee, I must be pretty daft since I haven’t figured out that we’ve reached a bottom.
“for the sellers, lenders and agents”
! Aren’t they really what ‘matters’ here? I mean, if ‘they’ all make money and the borrower ( the only guy actually bringing anything to the party ) gets stiffed..?
( Hey, 3 out of 4 ain’t bad! )
Wasn’t but a week ago when I was talking to a fellow Tucsonan about the housing market.
The lady told me that her real estate keeps saying that it’s a great time to buy. I told that lady that the agent is saying this because it’s a great time for UHS to earn commissions.
I went on to tell her about historic metrics — median prices being 3x median income and rental house prices being 100-120x monthly rent. Then I compared these figures with current local house prices. (I’m such a blast at parties, aren’t I?)
Any-hoo, she thanked me for my info. (Of course, the acid test will be whether she resists the siren song of that real estate agent.)
Slim:
You can lead a moron to the figures, but you cant figure out the moron.
or something like that…
Got that same line yesterday from a UHS showing me a condo to lease for his friend. I made the mistake of asking if he had anymore leases and got that…’oh you should think of buying, it is a great time to buy now’.
I held in the laughter.
It was difficult. But since knee surgery, and at the top of the stairs when he said this, I didn’t want to get pushed down the stairs!
Well, if Fannie, Freddy or FHA owns the mortgage, a few more folks, the taxpayers, get stiffed. Heck, the buyer just walks, so he only gets stiffed to the extent of the down.
It’s a strange, strange world we live in, Master Jack.
Very few places have bottomed out. Even in a place like Sacramento, which crashed hard, the worst neighborhoods have fallen in price by 75%, but most neighborhoods have fallen by only 25-30%. That’s not enough to match median incomes.
We bought our house in Elk Grove for less than half of the bubble price, in an excellent neighborhood. True, it’s boring suburbia rather than chic historical neighborhood or neat downtown pad, but I wouldn’t despair just yet. Almost every average house I’ve looked at in stable neighborhoods (85%+ of long-term owners– after all, this is Elk Grove, which had huge numbers of crazy buyers) has dropped into the 3X median income for the city, if not for the county.
Certainly hasn’t bottomed out, but even the banks are waking up. Some friends of ours just went into contract on a house; the appraisal came back below the agreed price, and the bank accepted the lower, amended offer with great alacrity (two day turnaround– wish they’d been that wuick when we bought!) They’re starting to realize that they have to sell these things, even if it’s not for their wishing price.
I *won’t* speak of non-foreclosures. Those are still absurd. But you know, with so many lovely foreclosures around, why do you even need to care what silly prices the desperate are setting?
“…housing won’t reach bottom until the government stops subsidizing the market.”
Kim - this sentence should be put on a bumper sticker. Of course, I’m hesitant to stick it on my car and risk some real estate agent coming by and slashing my tires.
I ran into a former acquaintance recently, a Realtor, who looks a LOT different than the last time I saw her in 2005. She’s aged about 15 years, put on loads of weight and no longer smiles. You know, I almost felt sorry for her. Then I remembered that I’m evil.
One of my cousins is a UHS. He’s just one year older than I am, but he looks MUCH older.
According to others in my family, he has a taste for the finer things in life. What was absent from their description was how he was paying for them.
My guess: D-E-B-T.
I just found out that the DH of a good friend will be spending this weeking helping his 30-something sister pack up to move back home with Mom and Dad. It seems she too had a taste for the finer things in life.
Molly,
Collect your Award for “Post of the Day”! Excellent.
Noticed as much around these parts ( Salem, OR ) as well. Without all those flush commissions the membership at the fitness club are the FIRST thing to go!
So much for getting those roots dyed. As for aging, that part I ‘don’t’ get? There’s ZERO service after the closing and the buyer is on their own. As long as their comm. check was good..? Oh.., they’ve aged b/c the checks have dried up and their little RE Empire is crumbling! I____ get it.
*blushes* …Thanks, DinOR.
The RE agent I mentioned has a house in Palm Springs she’s (desperately) trying to sell because it’s “too hot and humid” in PS all of a sudden. Yeah, sure, it couldn’t be because she’s upside down on the two (!!) homes she bought in the area in 2005.
Her only saving grace is that her husband works full-time (after retiring from the gov’t). He won’t pay for anymore botox, though. Had to put his foot down about something and he’s already footing the bill for her Jenny Craig program.
“because it’s “too hot and humid” in PS all of a sudden”
Oh Lord, what next. And it’s not like they were fooling anyone? Here’s what I could never understand about this whole flipper/RE crowd, the avg. guy is lucky to put away maybe 5-10 grand a year in his/her 401k, right?
But they had absolutely no reservations whatsoever when their rented-money-shacks were Zillow’ing for that each and every week! Ahem, if RE really ‘was’ that great of an investment, dont’cha’ think prices would have ramped up a LOT earlier..?
And of course anyone can play. When people protect their FICO’s more vigilantly than their W-2 payin’ jobs, you’ve just gotta know something’s wrong.
because it’s “too hot and humid” in PS all of a sudden.
It is BEEautiful here. What the heck.. you are right, they have to be upside down, cause it is gorgeous here. Mid to high 80s.
Humidity 10%… yeah, really humid.
“I ran into a former acquaintance recently, a Realtor, who looks a LOT different than the last time I saw her in 2005. She’s aged about 15 years, put on loads of weight and no longer smiles. You know, I almost felt sorry for her. Then I remembered that I’m evil.”
Realtors in my area like to send magnetic sports schedules or calendars and such. I received one a couple of months ago, complete with agent’s photo on it. My husband noted that she was the same one who sent us a calendar last year, and pointed to last year’s photo. She died her hair, but it was the weight gain that really changed her appearance, so much that I didn’t recognize her. I thought I was being snarky, but less so now since you’re all noticing it too.
She’s aged about 15 years, put on loads of weight and no longer smiles.
And now she shops at Wal-Mart.
OMG!! I SWEAR on this book of carpet samples that’s where I ran into her! In the baked goods section (I am not making this up).
No wonder she hung her head. I’ve always shopped there, so didn’t think much of it at the time.
LOL.
Going around the e-mail circuite these days is a set of pictures about “the shoppers at Wal-Mart.”
Ok, to be fair, I go there at times too, also Target or Kmart.
Heck I bought a case of $3 Sauv. Blanc at Grocery Outlet last summer - and I didn’t even need Olygal’s urging.
I even went to three Wallyworlds until I found one selling the Blu-Ray player for $98 - about half their stores sellhe same model for $148.
What’s the big deal about the health club? If you aren’t working much, you have plenty of time to just go on walks and cook healthy meals rather than fast food.
Going around the e-mail circuite these days is a set of pictures about “the shoppers at Wal-Mart.”
Went to Costco yesterday and all I saw was old white fat people, old white retiree fat couples . Not a single CA license plate in sight. It must be the Snowbirds stocking up for the winter. STG the parking lot was packed, no one knows how to drive and when I got inside-it was swarming/jam packed with obese retirees. Amazing. Wish I had the video cam with me.
Don’t we just love that Barney Frank wants $15 billion more for Freddie-Fannie. Get rid of subsidies you idiots (an apology to real idiots).
I do not see the point or long term reality of maintaining house prices in the stratosphere when unemployment is high and wages are stagnant at best.
Other issues which are not being addressed, are issues like rapidly rising medical costs and other forms of inflation which are eating at our ability to afford these homes on the other side, so the candle is burning at both ends.
Conclusion - none of these programs will help in the long term, and all will suffer the law of unintended consequences.
Well, why isn’t this asked; what’s the point of using tax money to prop up housing prices when there was massive fraud all over the place and these amounts were never anything but an illusion?
Answer: Anything that keeps the hoi-polloi from sharpening their pitchforks on the bus ride to Washington is a good move.
what’s the point of using tax money to prop up housing prices
We all know the answer to this question… it is to prop up the financial system. The government needed to slow down the rate of decline of housing prices, otherwise banks and financial institutions that hold the paper would be crushed. This has always been about the banks solvency and supporting the financial system.
Don’t over-look the tax base of local and state governments both of which have huge pension liabilities. In addition, hoards of poor folks are ready to set their communities ablaze if the gravy train stops.
Massive Fraud now seems to be The American National Policy in The Corporate State of America.
Hey mikey, he’s in New Zealand, I say go ahead…post as: aladinsane2
New Zealand…Sheesh the last time I saw him was on the beach with flippers, an old inner tub and a heavy looking bag.
He made it!!
Way to go aladinsane
So true, Ben. Why is it that only a rare few understand this? Why?
“I do not see the point or long term reality of maintaining house prices in the stratosphere when unemployment is high and wages are stagnant at best.”
Try looking at the situation from the perspective of a bank with lots of REO or real estate derivative assets (e.g. MBS) and perhaps you will see the point.
From Wall Streets view I think it makes perfect sense and is a reason to pay out bonuses.
“I do not see the point or long term reality of maintaining house prices in the stratosphere when unemployment is high and wages are stagnant at best.”
Try looking at the situation from the perspective of a bank with lots of REO or real estate derivative assets (e.g. MBS) and perhaps you will see the point.
Your point is valid PB but is it not also pertinent to your ongoing questioning of why the FED appears to be manipulating housing prices irregardless of their original mission?
1. Yes.
2. ‘Irregardless’ is not a word.
Professor,
1. Yes Since you know the answers to your own questions, I assume you are using repetition to repeatedly make an important, well known point.
2. ‘Irregardless’ is not a word. Thank you, and I do know about ‘irregardless’ regardless of the perception.
‘Irregardless’ is a word. OK, it’s not a really good word but it’s a really fun one to use, especially in front of really erudite, academicish people.
Lots and lots of Open house signs on a Friday.
Usually seen on Sat/Sun.
“‘Tax credits borrow demand from the future,’ he said. ‘At some point, the government has to exit the subsidies business.’”
Come on, Nick — can’t you see that US residential real estate subsidies have reached a permanently high plateau?
PB,
Too funny. Right, forget about anything resembling ‘reform’ in the tax code where RE is concerned. The defective house of cards ( MID/prop. tax ded./CGE ) are not only here to stay, we can just keep adding more!
Oy vey.
Yes, but as long as you can “contain it” …what matter it?
“…parts of California are seeing a five-year supply of homes.”
Really? MLS supply seems to be rather low in SD. I wonder what part of CA they reference?
Perhaps El Centro…or Yuma…or Bakersfried…or
Geez, sorry Mr. Bear.. I threw in Yuma…what was I thinking (close proximity) ?
“These emotional constraints are deliberately cultivated by the government and lenders who self-servingly tell borrowers that they have a moral and social obligation to pay their underwater mortgages,’…‘Meanwhile, lenders ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility.’”
Sounds like self-serving behavior is spreading to the serfs. I don’t think that was planned on.
Slim here with the Tucson spin on this story: The University of Arizona is crowing like a rooster about it. Take, for example, their news release.
Sotto voce: I used to work in a UA campus PR office. I know firsthand that when a campus-generated story goes national, the whole publicity machine goes bonkers. It’s kind of like winning the national men’s basketball championship.
Too bad the article is littered with grammatical and spelling errors. Is that the state of AU’s educational system?
Yes, unfortunately. A
nd, IMHO, more than a little of what you’re seeing has to do with the quality of the current UA PR people vs. who they replaced. The people they replaced were giants. I learned a lot from them.
You’re not kidding
“This situation is exasperated in a number of states…”
LOL
Well, it might be exacerbated to the point of exasperation.
packman, a response to something we discussed the other day–
Here’s where I got the idea that if Japan stopped buying Treasuries we’d be in deep doo doo:
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
http://www.treas.gov/tic/mfh.txt
Here’s where they were at the end of 2006 (scroll down to bar chart: Foreign Ownership of National Debt)
http://www.marketoracle.co.uk/Article1571.html
People have worried for over twenty years now about what would happen if Asian nations stopped purchasing US Treasuries. So far, so good…
Would it be mutually assured financial destruction as their halt in lending results in our halt in spending on their goods and services?
Committee Chairman Barney Frank of Massachusetts insists that these mortgages are needed to ‘keep prices from falling too fast.’
I just wanted to point out something about this quote. Some of you may remember back when Barney started in on his various ideas to prop up housing that the general consensus of the board was that he was too stupid to understand that prices had to come down to be affordable, you can’t reflate a bubble, etc. I said you guys were wrong. I told you that Barney is too smart not to realize that prices had to come down and that I was sure he was primarily trying to slow down the collapse. Looks like I was right.
I also said that he would never say such a thing in public. Looks like I was wrong about that.
Congressmen want the collapse to happen more slowly so that the people running local government in his district have time to adjust to the collapse in revenue. Ahh…you say. They won’t face a collapse in revenue, they will just raise the mil rate. Well, MA has a law called prop 2 1/2.
(from wikipedia) “Under Proposition 2½, a municipality is subject to two property tax limits:
Ceiling: The total annual property tax revenue raised by a municipality shall not exceed 2.5% of the assessed value of all taxable property contained in it.
Increase limit: The annual increase of property tax cannot exceed 2.5%, plus the amount attributable to taxes that are from new real property. ”
So, you see, towns in MA did not get 30% more money in a year in which there was a 30% increase in values (well, maybe they did, but only because the newly built McMonstrosities added new property to the tax base). The increase on taxes on the previously existing property base was limited to 2.5%.
Now, my understanding is that despite these rules, MA towns and cities still loved the increase in prices, partly because new development got them way more money than the 2.5% increase they could normally expect, but also because it forced their mil rates down which allowed them “space” to increase rates in the future and not hit the absolute 2.5% limit. Well, now it has hit the fan. If property values plumet and new development grinds to a halt, they are going to have to bump the mil rate up to 2.5% and still may have less money than last year. And once the mil rate is at 2.5% that is it. They will have to ask for an override every year or actually constrain the budget.
An MA congressman has lots of reasons to really really want the prices to fall slowly. He is protecting the people who run the cities and towns in his district from having to cut fire/police/schools/public works a lot and very quickly despite having contracts reflecting bubble assumptions already in place. You may not like it, but it is reality. I may not love it, but I understand it. Yet again, it all comes down to the math.
Nice post, polly. I enjoyed it.
Once again, we have a derivatives problem. Only this time, the derivative refers to the slope of the curve that’s plotting price decreases vs. time.
Bingo!
“…. district from having to cut fire/police/schools/public works a lot and very quickly despite having contracts reflecting bubble assumptions already in place. You may not like it, but it is reality. I may not love it, but I understand it. Yet again, it all comes down to the math.”
And a belief that “Oh no, we couldn’t POSSIBLY cut fire/police/schools/public works” back to levels where they existed 10 or 20 years ago! After all, back then America was just a 3rd world country and we all barely had escaped the caves and were on the edge of starvation!
Why, oh why would you want to cut back services to those dark age levels? Think of the children! What would they do if the police arrive in 8 minutes instead of 5 minutes to take statements and record the crime scene? Think of all the evidence that would be lost in those 3 minutes!
I don’t think the number of cops has much to do with response times in suburban MA. If you only have 2 cars on duty overnight, response time will be all over the place anyway.
These towns, do, in fact, have more occupied areas than they did a decade ago. The real issue is you can’t cut salaries, benefits and change working conditions when you are in the middle of a contract which is the better way to save money, rather than just cut headcount. You save a heck of a lot more money closing an entire elementary school than you do just increasing class size and firing a few teachers, but that takes time too. And it makes no sense to stop updating a sewer line in the middle of the job. You can cut back on all of these things, but it takes a few years to do it properly.
Of course, the mayor or selectmen don’t want to cut at all because they like getting the police and fire endorsement for re-election, but the next guy who promises not to cut again will just get caught in the same budget squeeze. You can lie to voters over and over, but you can only lie to the public servants once. Their wallets remember.
Here in Tucson, the local fishwrap reports:
“City voters overwhelmingly rejected Proposition 200, the once hotly debated public safety initiative that would have required mandatory minimum staffing levels for the Tucson Police Department at significant taxpayer expense.”
Wasn’t even close. The wrap also said:
“With roughly 98 percent of the votes counted late Tuesday, the proposition was trailing by roughly a 70 percent to 30 percent margin.”
So, shut down the elementary school already! Most schools are doing fantastic jobs of turning out future unquestioning drones who are obedient to authority but rarely educated with any critical thinking skills.
Our cost/student is outrageously high compared to when our academic performance standards were better, and also much higher than other nations.
Of course, this would mean that parents might have to do a little work in regards to their “darling” offsprings’ education. Like pay directly to send them to private school, hire a tutor, or teach them themselves. Or pool together with other parents and hire a teacher themselves. Ouch, sounds like almost as much hard work as getting out a mortgage calculator and seeing if their income will really allow them to afford that McMansion!
They are also doing a great job in creating Ghetto Consumers for the Rap and Hip hop Nation..swearing music, Pole dancers, bling bling, lotto and other pitiful time wasters.
————————————–
So, shut down the elementary school already! Most schools are doing fantastic jobs of turning out future unquestioning drones who are obedient to authority but rarely educated with any critical thinking skills.
Oh no, we couldn’t POSSIBLY cut fire
ie: incomes/retirements.
I really shoulda found a fireman, in days long ago.
“…to understand that prices had to come down to be affordable”
O.K., let me put this in as a simple set of terms as possible:
“In relation to what?”
1. everyone
2. the top 10% wage earners
3. the bottom 10% wage earners
4. those with only “golden nuggets”
5. those with “excellent credit”
6. those with “less than excellent credit”
7.
I’d continue but there’s a realestate UHS beating on me with a nerf bat YELLING: “ALL REALESTATE IS LOCAL”…
(Hwy, chemically balancing his life blood with red red wine drips…Yells back: “BUT WHO BUYS THE MOST HOUSES!”)
“THAT DOESN’T” MATTER!…WHACK! WHACK! WHACK!”
(Hwy incredulous look on his face): “REALLY?” …ouch!
From Bloomberg News:
“U.S. state and local government pensions are underfunded by $1 trillion and may need to seek federal guarantees for their debt, according to Orin Kramer, chairman of New Jersey’s Investment Council.”
“Pension underfunding eventually will make it impossible for some governments to raise money in bond markets and will require federal intervention through explicit or “implied guarantees” of municipal debt, Kramer, 64, said in an interview today at Bloomberg News headquarters in New York.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZCJ6B6hlvUE&pos=6
Or they could, you know, not meet their pension obligations.
No, no, no! You can’t ask the former government worker who retired at 85% salary at age 55 to suffer any more! Look at how hard he/she worked down at the local government office providing such valued and efficient services. And with a friendly smile too!
Cruel and heartless is what you are (and me too).
Sunoco today announced pension freeze and no more medical bennies in retirement. Yahoo had it posted before the article got replaced with greener shoots.
“‘We have a beautiful home,’ she said. ‘We just have so much other beautiful competition.’”
It’ll take a “beautiful salary” & “beautiful fico” to close the deal Laurie, (excluding those that are willing to part with their cash in these current times.)
Someday, it might even require a “beautiful downpayment” too, but not yet.
It will take a “beautifully guaranteed career” at the “beautifully secure local company” to last as long ast he mortgage on that “beautiful house.”
Mortgages are for federal employees, doctors, dentists, and nurses. Just about everyone else can have their “beautiful fat incomes” outsourced.
Dentists are taking huge hits to income. People cutting way back on cosmetic stuff.
Once in a Lifetime
And you may find yourself living in a shotgun shack
And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful wife
And you may ask yourself-Well…How did I get here?
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the money’s gone
Once in a lifetime/water flowing underground
And you may ask yourself “How do I work this?”
And you may ask yourself “Where is that large automobile?”
And you may tell yourself “This is not my beautiful house!”
And you may tell yourself “This is not my beautiful wife!”
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the money’s gone
Once in a lifetime/water flowing underground
Same as it ever was…Same as it ever was…Same as it ever was…
Same as it ever was…Same as it ever was…Same as it ever was…
Same as it ever was…Same as it ever was…
Water dissolving…and water removing
There is water at the bottom of the ocean
Carry the water at the bottom of the ocean
Remove the water at the bottom of the ocean!
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/in the silent water
Under the rocks and stones/there is water underground
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the money’s gone
Once in a lifetime/water flowing underground
And you may ask yourself “What is that beautiful house?”
And you may ask yourself “Where does that highway go?”
And you may ask yourself “Am I right?…Am I wrong?”
And you may tell yourself “MY GOD!…WHAT HAVE I DONE?”
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/in the silent water
Under the rocks and stones/there is water underground
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the money’s gone
Once in a lifetime/water flowing underground
Same as it ever was…Same as it ever was…Same as it ever was…
Same as it ever was…Same as it ever was…Same as it ever was…
Same as it ever was…Same as it ever was…
“…Likane filed for bankruptcy and testified under oath that he had not been employed since 2000, and had been a day trader of stocks and a house flipper since then.”
I wonder if his mother knows?
Amazing.
“Trump told the St. Petersburg Times that he had a ’substantial stake’ in the condo tower.”
Sounds like Donald “Pucker Lips” sTrump had more like x20+ stakes… nasty “legalese” pointy ones too and he drove them deep into their hearts.
Puckerlips
“Unemployment in Mohave County where Bullhead City is located is around 10 percent.”
Physics + Biology
Well, perhaps I can use this “desert sit-u-ation” to illustrate to Mr. Cole that its not just temperature that can make a person sweat.
“A large part of the current economic downturn is due to the fact that the Congress required financial institutions to lend money to people who had neither the means nor the intention to repay it.”
Sigh, here we go again….yeah I feel so bad for Mozillo and those other poor lenders who were “forced” to make all those loans, securitize them and sell them off to suckers, and get insanely rich in the process. Oh cruel fate! Fannie/Freddie were definitely propping up the market, but Congress didn’t have to “require” anyone to do anything. Greed did.
You can feel free to blame Frank/Dodd et al for the lousy policies now i.e. tax credits for all, but I don’t like historical revisionism.
“Fannie/Freddie were definitely propping up the market, but Congress didn’t have to “require” anyone to do anything.”
Mozillo wouldn’t have been writing them if he hadn’t known that he could pawn the toxic garbage off on Phoney/Fraudie.
Yes, the congressional affordable housing mandates to Phoney/Fraudie did play a part.
They were actually a relatively small part of the securitization market during the boom, they’re just the entire market NOW. There were plenty of suckers buying private securities as Goldman Sachs watched the cash roll in. The article I quoted seemed to be pulling out the old “CRA is responsible” canard, which is tripe designed to conceal the fact that the regulatory system had been utterly gutted by Bush. But yeah, if you want to believe that crafty old Jimmy Carter set a 30 year time bomb to destroy the housing market, go ahead. As I said, the Dems are completely responsible for the disastrous policies designed to prop up unsustainable prices now, but the bubble wasn’t due to “minority lenders” or whatever.
Jimmy Jazz,
Thank you. I’ve been banging on that for about a year and half only to be told time and again “Yeah, but, Wall Street blah, blah, blah”
Right, WS said, “hey, why don’t you politicians lean on these mortgage houses to underwrite loans to anyone w/ a pulse that way we can thin the ranks here on the street when this blows up in our faces.., and..? uh..,”
Yeah, it’s like blaming the bubble on underwear gnomes.
blaming the bubble on underwear gnomes.
LOL
No more gnomes-laundry is done!
Wasn’t poor Mozilo even forced to make poor Dodd take one of those “Friends of Angelo” loans? The abundance of innocent victims in this bubble just tugs at my heart strings…
If $8,000 is going to motivate a 400k home purchase then the bubble continues.
“‘We have a beautiful home,’ she said. ‘We just have so much other beautiful competition.’”
It’s a flippin’ house you moron. A house. Not Nirvana, not Heaven but a goddamn house.
The language these deluded idiots use point to a perversion and fetish of indescribible proportion.
My friend in Rochester lost an offer on her house because, drumroll, the Florida buyer can’t sell his…
Florida to Rottenchester? Thats like trading a turd for a bucket of puke.
It is leaders like Senator Bernard Sanders who give me hope for America’s future. Thank you, thank you, thank you. If you run for President of the USA, you have my vote. We need leaders who see the right course of action and relentlessly lead in that direction.
Investment Banking
Senator Seeks to Break Up Banks ‘Too Big to Fail’
November 6, 2009, 1:08 pm
Senator Bernard Sanders, the Vermont independent, is taking aim at banks that are considered too big to fail. He introduced legislation on Friday that would force the Treasury Department to break up all financial institutions whose failure could cause a major disruption to the nation’s financial system.
“If an institution is too big to fail, it is too big to exist,” Mr. Sanders said in a statement. “We should end the concentration of ownership that has resulted in just four huge financial institutions holding half the mortgages in America, controlling two-thirds of the credit cards and amassing 40 percent of all deposits.”
The four banks cited by Mr. Sanders are Citigroup, Bank of America, Wells Fargo and JPMorgan Chase. Three of those banks have made major acquisitions as a result of the financial crisis. But Citigroup, which received a $45 billion government bailout, is in the process of selling off nonbanking assets.
Mr. Sanders’s legislation would give Treasury Secretary Timothy F. Geithner 90 days to compile a list of commercial banks, investment banks, hedge funds and insurance companies that he deems too big to fail or “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.”
Within one year after the legislation became law, the Treasury Department would be required to break up those banks, insurance companies and other financial institutions identified by the secretary.
The bill has no co-sponsors, but Mr. Sanders told DealBook that support would be coming. “I have talked to a number of senators and I think that there will be support,” he said.
…
If you,Bernie Saunders, run for President of the USA, you have my vote.
+1,000,000.00
Yep. I love Bernie Sanders.
I remember Sanders was dead set against the bail-outs . I got a big kick out of how Sanders brought up that Hank Paulson made 1/2 billion in 7 years working for GS. I actually like the guy . During the Tarp Hearings
Sanders brought out charts and made a convincing case for not giving
these bail-outs and he called it right in every way that it was a Wall
Street bail-out .
I remember Sanders was dead set against the bail-outs
But it doesn’t matter what he actually did because someone said the word “socialist” already right?
So the government organizes rescue mega-mergers for surviving financial companies to make them even larger, and assumes huge stakes in some of those companies (e.g. Citi, AIG), and is then going to tear them apart a year later? What would that do the taxpayer investments in those companies? It sounds like an incredibly stupid plan, although it might have been a great thing to do before the mergers and bailouts. I guess the senator has great powers of hindsight.
I’m all for the bank break-up he’s proposing, but not for a Sanders presidency. His party while he held only a VT office was not “independent” but explicitly “socialist.” If you think the public employee unions are molly-coddled now, just wait till you see how President Sanders would treat them.
“‘There’s just a fixed pool of potential first-time homebuyers. So that means if you incent them to buy today, they are not going to be available to buy tomorrow,’ said Davis, whose specialty is real estate and urban land economics. ‘It’s basically the homeowner equivalent of ‘cash for clunkers.’”
That’s why I call it Dough-4-Dumps.
P.S. Sorry for my tremendously negative attitude. I am inclined to blame it on my mom’s dad, who was fond of maintaining that WPA (Work Progress Association = depression-era jobs stimulus program) stood for “We Piddle Around.”
Last Friday (Oct 30) I guessed there would be 5 new bank closures by FDIC, but there were 9. THIS Friday there were 5. I was ahead of my time! (well i need SOME excuse)
why try to move up to another deprecieting asset. in the NEW america, proverty is the new status symbol. dont believe me? ask your congressman. he may even send you that new govt video titled ” watch the jones move into their new cardboard box”.