Bits Bucket For November 15, 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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Sales, Production, Housing Probably Rose: U.S. Economy Preview.
Nov. 15 (Bloomberg) — Retail sales probably rebounded in October, production climbed and work began on more houses, allaying concern the U.S. expansion will unravel without the government’s help, economists said before reports this week.
Purchases rose 0.9 percent after dropping 1.5 percent in September, according to the median of 66 estimates in a Bloomberg News survey ahead of Commerce Department data tomorrow. Output rose for a fourth month and housing starts reached the highest level in a year, other figures may show.
Auto dealers last month saw demand improve even after the administration’s trade-in incentive expired, while the increase in construction showed builders weren’t deterred by the possible end of the first-time buyer credit. Rising exports to expanding economies in Asia and Europe may also spur increases in manufacturing, maintaining the pickup into 2010.
Residential Builders
A report from the National Association of Home Builders/Wells Fargo a day earlier may show an index of builder confidence increased, according to the survey median.
In coming months, gains in consumer spending may be restrained by rising unemployment, which reached a 26-year high last month and is expected to stay above 10 percent through the first half of 2010, a Bloomberg said earlier this month showed.
Mounting joblessness and idle factory capacity is helping tame inflation, Labor Department reports may show. The cost of living index, due on Nov. 18, rose 0.2 percent in October for a second month, according to the Bloomberg survey median. The index of wholesale prices, to be released a day earlier, may have climbed 0.5 percent last month.
“…allaying concern the U.S. expansion will unravel without the government’s help,…”
Funny then, ain’t it, how the Fed just reiterated its intentions to keep the FFR at zero percent for the foreseeable future, while Dough-4-Dumps was also renewed (with another Used Home Seller’s* promise to end it within six months).
*Also known as a “false promise”
Last year the Fed justified the drop to .25% on the Fed funds rate, as an emergency action to prevent a melt down. We’ve since been told several times that disaster has been averted, by the Fed and other various sources. If the meltdown and great depression has been taken off the table, how can they justify keeping the rate so low? It’s really a vote of no confidence by the Fed. They say it’s no longer an emergency, yet rates are being kept at emergency levels.
Green shoots of BS are a poor substitute for action to back up the cheap talk.
Green shoots of BS
Is usually where all the dogs go.
Maybe green shoots of BS is too harsh a characterization; how about green shoots of gas?
Why is nobody calling Bernanke on this? Where are the politicians to ask the tough questions? Rogue government.
The low discount rate just makes it possible for the Lenders to make more money because by all rights it should of brought main streets interest rate down to 2.5 % . In fact the discount rate hasn’t had very much bearing on what main street gets in interest rates ,especially credit card rates .
With the Government being the biggest insurer of loans that have been passed on to Fred and Fanny ,the rates are designed
for propping up the home sales sector .
The only area in which the rates reflect the discount rate are
the low rates of the saving accounts at Banks .
The current programs are designed to give money to the Banks and Investment houses in which they would not enjoy normally this kind of a spread or profit margin ,whatever you want to call it .
Our society has been forced to give a bail-out to the banks in more ways than just direct money by a Tarp program . If you added up the penalty of these artificial rates to Main Street ,its in the billions and billions of dollars that people are being cheated on rates ,so to speak . People on fixed incomes that
depended on a yield over .75 % are really getting clobbered and no doubt are being tempted into becoming more risky ,just to get a yield that keeps up with the cost of living .
In the meantime ,reform of the system and new regulations gets stalled . It would of been much cheaper just to let these Banks fail and than just give restitution in areas that it was warranted . Kinda scary when you realize that the Insurance Companies didn’t even have the money or reserves to back up the insurance they gave in a lot of cases .
The choice was made to rescue the culprits ,so that was the road that was chosen ,not something that the majority would of chosen I’m sure .
We have $100 at Chase bank earning 0.000%.
They win the limbo competition…
“People on fixed incomes that depended on a yield over .75 % are really getting clobbered and no doubt are being tempted into becoming more risky ,just to get a yield that keeps up with the cost of living .”
Agreed, it’s a terrible time to be silver.
Absolutely. This entire decade has been devastating to those who rely on fixed income (inlcuding the big pension funds).
Since many seem to agree that “the crisis” was brought on by Greenspan’s low rates, why are we trying to re-create the same mistakes?
They want a roaring economy before they they withdraw stimulus. Which pretty much guarantees some quality inflation I think.
“Mounting joblessness and idle factory capacity is helping tame inflation”
If we get rid of all of the factories and the jobs we’ll whip that inflation like nobody’s business!
“Probably?” “May have?”
Yeah, I MAY have already won the lottery.
Does this mean interest rates will have to go up? If the US’s banker (China) says jump, does that mean we say “how high”?
http://www.google.com/hostednews/ap/article/ALeqM5jW5lRBU9y7rFaogjstZYRdkaRPvQD9BVUU000
Certainly the wise Chinese bankers know you cannot squeeze blood out of a turnip. If they sent US interest rates soaring, it would kill the value of any long-term Treasury bond investments they own (and my understanding is they own a lot) and further cripple the American consumers who buy their export products.
So they’re just bloviating?
Totally! If they really thought low interest rates were problematic, how about sitting out the next bunch of treasury auctions? Let them put their money where their mouth is.
Thanks. Sometimes it’s difficult to interpret all this international posturing.
And of course they won’t. Because doing so will suddenly undermine the value of the dollar and their dollar denominated holdings. They will have to sharply revalue the yuan, which will end up wiping out a lot of export-driven marginally profitable undertakings both because they can’t compete with other countries, and also because Americans won’t be able to buy as much. They know that and “we” know that.
But just studying the extreme situations is not going to get us far. What could happen is some moderate tightening, reaching a somewhat different level of equilibrium. I think this will be advantageous neither to China nor to the US consumer, although it can only do good for the long term welfare of the US economy. I think some of the public posturing is to divert public blame to the other party, while mutually agreeing to shift to a different equilibrium point.
Yensoy,
I don’t think these guys in China mean well. You ever listen to the brainwashed guy on the street there? BO’s acceptance speech was censored. Every problem that might occur looks back at the US according to everyone you talk to. Bad environmental regs in China? US consumers fault. How about issues with the Yuan being inflated? US fault again,
What about the asymmetrical tree trade agreement with the US? Oh, no no. There is completely fair trade with China expect for industries that need protection. Oh, and we are Very protectionist. And expansionist. And butt out of Nepal.
“Because doing so will suddenly undermine the value of the dollar and their dollar denominated holdings.”
Wait — I thought we were talking about actions to raise US interest rates. Wouldn’t higher l-t T-bond yields serve to increase the value of the dollar (not undermine it)?
The concerns I raised were with respect to the value of l-t T-bonds — they would crash when l-t yields lept — and the ability of US consumers to buy stuff — they would buy less if crushingly high l-t T-bond yields added to job loss and interest rates on consumer credit.
I don’t think these guys in China mean well. You ever listen to the brainwashed guy on the street there? BO’s acceptance speech was censored.
Yes, every news tidbit passes through the government scrubber, and people seem to be at ease with knowing that someone is looking out for them. Weird as it may sound, I can see logic in the Chinese official view- “don’t waste your time reading news, we will tell you what you need to know”. This will work well as long as the country is doing well, which by any measure it is.
1.4T… however a lot of the banking guys say those are essentially held as cash because their banking system is highly unstable. Not sure how much they care about the yield.
If the l-t T-bond yield spiked up (as it did in the early 1980s), the value of l-t T-bonds would crash (as they did in the early 1980s). The silver lining: They would still remain just as liquid as The Precious™.
You should also put the size of that in perspective with the 75-80T bond market. So, it is kind of a drop in the bucket.
It’s the stump of a tail that wags the 800 lb gorilla.
Local discount store usually had 3-4 rows of Chinese Christmas junk; this year, two weeks early, there are 6-8 rows and they are twice as long, stuffed so that you can barely get thru them. I’ll be amazed if they sell 20 percent of plastic junk even with the sales in January.
Walk into any dollar store and 75% of the cr@p they have is from china.We are a throw away society.
I noticed that too, Carlos. In my town there’s a Garden Ridge, a store the size of Home Despot* that sells every cheap Chinese thing. Fully 1/3 of the store was Christmas decorations. Who has time to put all this stuff up?
———-
*In fact, this particular store had been an old Home Despot; they painted the walls but kept the same orange carts. There’s a strange irony in recycling a big-box shell and filling it with throwaway stuff from Asia.
We need to levy a “disposal fee” in advance for any such cr@p, and get around WTO restrictions by allowing the disposal fee to be refunded if and when this crap is recycled. $10 per pound seems about right. Even better, $10 per quart of stuff - collection is based on package volume, refund is based on compacted volume.
We’ll make some statements to the effect that we believe in a strong dollar policy. That should satisfy the Chinese.
It seems that the Fed would rather devalue foreign investors holdings and discourage new investment, than encourage new investment with a rising dollar. Seems kind of short sighted to me.
Unfortunately here I have to defend the Fed/USTreasury dept.
If someone is willing to lend you money (buy your debt) at 0.25%, you would be insane to offer more for it. This is exactly what is happening. Despite their talk and despite all the diversification they are doing, they continue to buy truckfuls of treasuries at whatever price is being offered.
While the world has put the focus on Americans’ profligacy, that is only one side of the coin - the other side is the willingness of the world to lend huge amounts of money to support this habit.
This is an old banker trick though. Offer you debt at a low low rate so you over spend. They collect fees and then when you have to roll that debt over in the future… oh boy… now you are getting the 29% interest rates. In this case they will probably get 5% but still, it would be crushing.
There is a long history of international creditors losing money to profligate spenders around the globe via default or devaluation. The US has no intention of honoring its debts. In fact, it has said so repeatedly to anyone foolish enough to lend the US money.
We’re going to keep interest rates low for an indefinite period. We’re going to double our national debt over the next 7 to 10 years. Although we don’t have the money, we’re going to borrow, spend, and print like drunken sailors. Our intention is not to increase savings or taxes. In fact, we’ll spend or print money we don’t have to induce consumption.
Recession not over until job recovery secure.
Freedom New Mexico ~ cnjonline
Washington intervention isn’t saving or creating jobs, so more is coming.
Figures released this month showing unemployment nationally at 10.2 percent suggest those who proclaimed the end of the recession when GDP rose 3.5 percent during the third quarter were more than a little premature.
Is a “jobless recovery” really a recovery?
The classic definition of a recession’s end is two quarters, not one, of increasing gross domestic product, and the National Bureau of Economic Research, which officially “calls” recessions and their ends, has even more exacting standards. The GDP increase was artificially boosted by the “cash for clunkers” program, which won’t be replicated, and the housing market may not yet have bottomed out.
Perhaps most importantly, as even an AP story noted, rising unemployment can easily sap consumer confidence as we move into what used to be called the holiday buying season (but in tough times may become the year of giving something homemade and more “meaningful”).
Consumer spending still accounts for about 70 percent of the GDP. If it doesn’t pick up dramatically, the third-quarter GDP increase could come to be seen as merely a blip.
President Barack Obama’s response was particularly lame. He crowed that Congress had just passed a bill extending unemployment benefits and not only extending tax credits for first-time homebuyers but adding a credit for people who have owned a house for five years to “move up” to a more expensive house.
“Consumer spending still accounts for about 70 percent of the GDP.”
It wasn’t all that long ago that this was considered to be wonderful.
We are fast approaching the point where goverment incentive programs such as cash for clunkers, homebuyer tax credits will no longer have any effect. The pool of buyers becomes exhausted from the first phase of the programs or buyers simply don’t have the funds to participate. Now what?
Stimulus 4…. Send out checks to everyone?
I know one thing for certain, if it shouldn’t be done the gubmint will do it. What are their options at this point? Painted into a corner, got to keep printing & pumping.
We passed the obvious exit many miles back.
“send out checks to everyone”
Might already be happening. Anybody know the last time Fed gov gave all those on unemployment insurance 3 extensions?
Anybody know the last time Fed gov gave all those on unemployment insurance 3 extensions?
Dad got 65 weeks of UI back in 1975-76.
thanks for info
No, a “jobless recovery” is NOT a recovery. I still think we’re seeing a cycle of globalization.
10 A class of worker jobs is sent overseas.
20 Economy falters with job losses.
30 Asset bubble comes along to make things “look” better just long enough to win re-election.
40 Bubble pops.
50 Gov steps in and borrows.
60 GOTO 10.
We’re going to run out of bubbles long before we run out of overseas cheap labor.
I still remember thinking about this bubble happening and saying… well… this is the one thing we can’t send overseas. At least we built the houses here.
That looks like an old “basic” program. Did you engineer the bubble with this module of code????????
Yeah, the bubble is MY fault.
I did some programming in my day. (In high school I was fluent in Basic, Pascal, and Fortran. Then I got frustrated with the nitpick error messages.)
I do believe you’ve found the only way to make Basic worse.
“Goto considered harmful”
Dykstra was more right than he could have ever imagined.
Home Builders get a gift! Wow, the candy crapping unicorn really DOES crap candy.
http://www.nytimes.com/2009/11/15/business/economy/15gret.html?_r=1&adxnnl=1&ref=business&adxnnlx=1258290051-0qoBpYwhRm6W654lJmdQpQ
That article was disturbing particularly this quote;
“So what do these companies plan to do with their refunds? Ken Campbell, the chief executive of Standard Pacific, said the money would allow his company to continue buying land”
So they run up the cost of land in the bubble, dump it on the banks (taxpayers) when it pops, then get a tax deduction (taxpayers again) and use that money to buy the land back @ 10 cents on the dollar..Wow.
It sounds like Megabank, Inc is taking a free ride on the FHA loan guarantee gravy train. It does not take an actuary to figure out that an FHA bailout is right around the corner, or that it will be implemented in a manner which gives the Congress no grand opportunities for political theater. I am guessing the FHA will simply be handed the money they need directly from the Treasury without fanfare, the same way the zombie GSEs are getting money to stay afloat. So long as noone calls these cash infusions “bailouts,” I suppose the US taxpayer will remain unharmed?
I want my FHA! (My FHA annual actuarial study, that is)
Posted by Barbara Kiviat Wednesday, November 4, 2009 at 6:48 pm
There’s been a lot of chatter recently about whether or not the Federal Housing Administration (FHA) is going to need a bailout. The FHA insures—but does not write—home loans, and thanks to the housing bust, the agency has had to dip a little further into its reserves than it probably would have liked to. That means the FHA might fall below its mandated 2% capital reserve ratio. We were supposed to get the agency’s annual actuarial study today, but last night the FHA said the report would be delayed. As HousingWire reports, FHA asked its inspector general to run some additional risk scenarios. The inspector general did—and based on those results the FHA called into question the accuracy of the report. All of which might make you think the bailout talk will have to wait for another day. Wrong!
You’ve failed to take Congress into consideration. Even without the report in hand, certain members are jumping up and down, nonplussed at the thought of funneling even more money into yet another housing agency. As Reuters reports:
‘A pair of House Republicans on Wednesday warned the Obama administration that Congress does not have the appetite for a bailout of the financially strapped Federal Housing Administration.
“If not addressed promptly, problems at the FHA may result in yet another massive taxpayer-funded bailout that this country cannot afford and which the American people will not accept,” wrote Republicans Darrell Issa of California and Spencer Bachus of Alabama in a letter, released Wednesday, to Housing and Urban Development Secretary Shaun Donovan.’
That’s a major slam on the FHA, considering that the agency was a key player in keeping the mortgage market going in the dark days of 2008. As skittish private lenders pulled back on credit, the FHA helped get a lot of deals done. According to SNL Financial, 3% of home loans written by Wells Fargo in 2007 were backed by the FHA. In 2008, more than 12% were. Bank of America saw a similar jump—from 2% in 2007 to 12% in 2008. J.P Morgan Chase went from less than 1% to nearly 10%.
…
ISTR somebody pointing out that if they had managed to ban the laundering of seller-financed Downpayer-Assistance-Programs earlier, they’d still have their required reserves.
Well, it is not making it illegal, but at least it isn’t charitable anymore.
(Go to irs.gov. Type “downpayment” into the search box.)
IR-2006-74, May 4, 2006
WASHINGTON — Organizations that provide seller-funded down-payment assistance to home buyers do not qualify as tax-exempt charities, the Internal Revenue Service said in a ruling released today.
Down-payment-assistance programs provide cash assistance to homebuyers who cannot afford to make the minimum down payment or pay the closing costs involved in obtaining a mortgage. Such programs can qualify as tax-exempt charitable and educational organizations under Internal Revenue Code section 501(c)(3) when properly structured and operated. In Revenue Ruling 2006-27, released today, the IRS provides a detailed discussion of the guidelines – including two examples that meet – and one that fails to meet – the tests for exemption.
The ruling makes it clear that seller-funded programs are not charities because they do not meet the requirements of section 501(c)(3). Increasingly, the IRS has found that organizations claiming to be charities are being used to funnel down-payment assistance from sellers to buyers through self-serving, circular-financing arrangements. In a typical scheme, there is a direct correlation between the amount of the down-payment assistance provided to the buyer and the payment received from the seller. Moreover, the seller pays the organization only if the sale closes, and the organization usually charges an additional fee for its services.
A March 2005 report entitled, “An Examination of Downpayment Gift Programs Administered By Non-Profit Organizations,” commissioned by the U.S. Department of Housing and Urban Development (HUD), found that seller-funded down-payment assistance has led to underwriting problems and resulted in an increase in the effective cost of homeownership. A report from November 2005 entitled, “Mortgage Financing: Additional Action Needed to Manage Risks of FHA-Insured Loans with Down Payment Assistance,” conducted by the U.S. Government Accountability Office (GAO) found similar results.
“The IRS is increasingly concerned with organizations that are taking advantage of homebuyers who need assistance for a down payment to realize the American dream of homeownership,” said IRS Commissioner Mark W. Everson. “So-called charities that manipulate the system do more than mislead honest homebuyers and ultimately jack up the cost of the home. They also damage the image of honest, legitimate charities.”
The IRS is examining 185 organizations that operate down-payment-assistance programs. A particular organization’s tax-exempt status can be verified using the on-line database at irs.gov (click on “Charities & Non-Profits” and then click on “Search for Charities”). In addition, the agency has denied applications for tax exemption from over 20 organizations that seek to provide this service and is considering applications from a number of other down-payment assistance organizations.
Good lord. They were positioning themselves as charities?
nonprofits, with the little halos appurtaning thereto.
The government supporting high prices, insuring high-defaulting loans is just a somewhat sleight-of-hand, sophisticated transfer payment to the FIRE industries.
At least with straight up welfare, there’s no sleight-of-hand.
I know off topic, but I need some help….
If you look at the Alien 1 movie. At 46:34, when Ripley asks where Dallas is, there begins a classical music piece. Does anyone know the name of this song? I think it’s Nocturne, but I dont know. I used to have it and knew it’s name, but my CD was stolen and I would very much like to know that songs name. If anyone knows the song, could you please post it on here?
You guys on this blog are some of the most intelligent people I have met, and I know there are alot of classical music fans among you…
Thanks in advance..
Stpn2me
I couldn’t find a youtube, but I looked up the listings on the Alien soundtrack. The only classical piece is “Eine Kleine Nachtmusik,” which is a Mozart piece.
I don’t know which movement, but just plug it into Youtube.
I need for someone to actually listen to the movie. I dont think its in the credits. I havent found it yet.
This isn’t from Aliens 1, but it’s a nocturne (Chopin’s) and it’s from a space movie (”2001: A space Odessey”).
Enjoy.
http://www.youtube.com/watch?v=Cyd4EPxP_fs
http://en.wikipedia.org/wiki/Alien_(soundtrack)
Jerry Goldsmith did most of the scores, but he didnt do this one. This is an old piece and you only get about 10 seconds of it, but I know it’s well known, I just dont know it’s name.
Don’t you just hate that? I’m searching out a familiar sounding classical piano piece I hear at church once in a while but don’t know the name of. I even asked the pianist after the service once and then promptly spaced it out…duh…
Apple has an app for that (TM). I wish I remembered the name but you hold the microphone up to the tv speaker and it will tell you the name of the song.
Shazam…
For bit of Wagner and something a little closer to home, google-up “camel spider attacks infantry platoon in afghanistan”.
Ah,
Nice Combo….
Some of my friends took G.I. Joe with them on a mission, sort of a good luck thing. I dont know where he is now…
Step,
It’s gonna take me a few days to track down my copy of the old VTR, and I’ll have to sit through that gawdawfully scary movie for 46 mins, but I will make a point of figuring it out and letting you know.
What a difference a couple of weeks in November can make!
You don’t need to conduct a frackin actuarial study to figure out that $3.6 billion in reserves are insufficient to cover any unexpected losses on a $685 billion loan portfolio. In percentage terms, this cushion amounts to (3.6/685)*100 = 0.53%, quite a ways below its “mandated” 2% capital reserve ratio.
Another bailout, here we come!!! Finneus Housing Atrocity, meet your cousins Freddie and Fannie.
FHA: Housing’s Safety Net Begins to Fray
By Barbara Kiviat Saturday, Nov. 14, 2009
A for sale sign is displayed outside a home in Miami, Florida.
Joe Raedle / Getty
If you bought or refinanced a house within the past year, there’s a 1 in 4 chance you have the Federal Housing Administration to thank. The Depression-era agency, once the last resort of folks who were less-than-perfect credit risks, was practically forgotten during the real estate boom — anyone with a pulse qualified for a mortgage. Now the FHA has resumed its old role by propping up the housing market, since private lenders began shunning all but the least-risky loans. The FHA doesn’t lend directly but rather entices lenders do so by agreeing to cover any losses. The FHA stood behind fewer than 3% of new mortgages in 2006. In 2009, just three years later, the FHA insured nearly 30% of home purchases and 20% of refinances.
That hasn’t come without cost. As the FHA filled the void left by the private sector, it has assumed the risks of those loans. And now that a growing number of people have stopped paying their mortgages, the FHA has had to pay out more in claims that it forecast. The agency has just $3.6 billion on hand to cover any unexpected losses in its $685 billion portfolio. That paltry level of reserve funding, less than is mandated by the government, has left some members of Congress in a twitchy mood and some onlookers to wonder if the FHA will eventually need a massive infusion of cash.
…
Let’s all go out and buy a house with FHA backed financing. Then default. That should bring it to its knees.
C’mon, take one for the team, folks.
FHA does require a 3.5% down payment. That should protect taxpayers against any losses. Don’t be such a chicken little.
In all seriousness, the FHA is just another conduit to shift losses to the taxpayer. With foreclosure rate continuing to rise and many new mortgage resets coming, in the next couple years, the hosing of the U.S. tax payer has just begun.
“the hosing of the U.S. tax payer has just begun.”
I dunno. It might seem that way, but I rather agree with Ben. This “debt” will never be paid back. It’s just too way out in the realm of the ridiculous. Smoke and mirrors.
Eventually, in the not too distant future, the board will be swept and re-set.
In developed economies, this tends to happen via inflation.
One would think the problem occurred at the moment the money was loaned, given it would never be repaid. From here forward, we pay in cash or in kind, but pay we do!
The simplistic choices are :
Inflation - Everyone gets their money - it just is not worth what they bargained for.
Deflation - No one gets their money and the money they don’t get gets more valuable, but does them no good, because they don’t get the money anyway.
Bottom line, no matter how one twists the numbers, we need to come to terms with the reality that the horses are long and gone. Closing the barn door will not help.
Given we are rapidly losing jobs, and CC default rate stands at some 10% - 20% currently and is rising faster than interest rates, or as a result of rapid interest rate increases, I think we are going to see this spigot cut off pretty soon and all that follows with a jobless and credit-less society … but probably no inflation.
Honestly, I think there might be too many eyes on this right now to do it only via inflation. They might have to just refuse to pay the loans. Or shut down all new FHA guranteed loans and force a 100 year refinance at near 0% on whoever is owed the already accumulated debt.
Of course, it would require a new group of politicians getting elected, but it is possible. Not likely, but not impossible.
“This ‘debt’ will never be paid back.”
Yep, and I feel I need to keep hammering out my mantra that one person’s debt is another person’s money.
If this debt isn’t paid then somebody gets hosed. If debt is loosely defined as “money owed” then a whole lot of people are due for a hosing.
For example: If the debt happens to include promised social securty expeditures and corporate pensions and lifetime medical benifits then retirees are hosed because the numbers needed to make good on these promises just isn’t there and probably won’t be there.
While I was out and about yesterday, I ran into a small group of retirees enthusiastically comparing Medicare-based insurance plans. I advanced the opinion that if they had any medical procedures under consideration, they should git ‘er done sooner rather than later, because Medicare is about to undergo a sea-change, with or without health care reform. I’m thinking after the 2010 elections, so there’s still time.
I was greeted with stunned silence, then disbelief. Nothing says clueless like a bunch of middle class American retirees.
“Nothing says clueless like a bunch of middle class American retirees.”
Or a bunch or soon-to-be middle class American retirees.
“Work is a blessing”, as the saying goes. I know of many who discovered the truth of this saying just a few months after they jumped ship.
Alas, a few months too late.
just a few months after they jumped ship.
There are so many choice unemployment metaphors that could be used here: jumping ship, being tossed overboard, walking the plank, rats leaving a sinking ship, going down with the ship, or scuttling the ship and leaving it by helicopter, like Mozillo.
In the case of the retirees I was referring to they willingly jumped ship.
After 30 or 40 years of jockying for and finally landing and settling into a high-paying cushy job in the company they decide to jump ship because they have a birthday that makes them retirement eligible, or the because the company offers them some measley and trivial financial incentive.
Several years later you catch their names showing up in the obituary column.
Having watched my income versus outgo lines cross, this “retiree” has been working for 3 out of the 4 glorious years of “retirement” that has been so generously granted after having worked for 53 of 55 years. Good luck to you boomers, X’ers, Y’ers and Z’ers watching those lines cross 20 years before mine did. These pols you’re putting into office are nailing down the lid on your retirement coffin. I have no answers, I just keep workin’…..
“…the hosing of the U.S. tax payer has just begun.”
The big increases in Megabank, Inc’s holdings of FHA loans offers a big hint about who the hosers are.
Snort. They do have some of the counter party risk offloaded in insurance companies. Those should also quickly fail. I expect unregulated derivatives have destroyed the insurance companies firewall between policy types as well. Similar to AIG.
Yeah, we’d love to bail these guy via inflation but it would have to be some crazy number like 30% per year for 4 years to make a dent.
Real economic activity would be crushed.
Why would any private insurer backstop the FHA unless they anticipated taxpayer bailouts to make them whole? Clearly the FHA is perfectly content to make loans which private lenders would never touch because they were sure money losers.
DEBT HIKE: The White House wants an increase of at least $1 trillion to $1.5 trillion in the national debt ceiling. Record budget deficits are pushing the national debt closer to the $12.1 trillion statutory limit.
Obviously, the denizens of the White House believe we can borrow our way back to prosperity.
Administration officials say the White House is open to any legislative vehicle that will raise the debt limit, by any amount. Although the Obama administration has pledged to bring deficits down to “sustainable” levels in the longer term, Treasury Secretary Geithner has focused recently on the need to keep up spending on economic assistance programs until the unemployment rate, which reached a 26-year high of 10.2 percent in October, comes down.
In other words, instead of trusting natural economic dynamics to straighten out the distortions the government has created through years of imbalanced budgets, the federal government believes it now has the power and responsibility to “heal” the economy by running even greater deficits! The result is enriching the rich, sustaining the poor, and battering hell out of the middle class.
Meanwhile, over at the Treasury Department the boys and girls reported on Thursday that the national debt was $11,991,219,535,897.86, which is only $109 billion under the limit. If Congress doesn’t raise the debt ceiling the government will have to stop peddling bonds and start living within the means of the taxpayers. Since Congress does not have any real sympathy for taxpayers (except in stump speeches) this august body will raise the ceiling, soon, by $900 billion or a trillion dollars.
“The White House wants an increase of at least $1 trillion to $1.5 trillion in the national debt ceiling. Record budget deficits are pushing the national debt closer to the $12.1 statutory limit.”
Lol. Why do they even bother asking anymore? Has there ever been a time when congress said “No” to raising the debt ceiling?
Lol. Why do they even bother asking anymore? Has there ever been a time when congress said “No” to raising the debt ceiling? No. Congress hems and haws, and bemoans our inability to live within our means, but they always approve an increase in the limit. IMHO the real question is why we HAVE a debt ceiling anymore. If the answer is always going to be yes, why do we go through this exercise in political theater every year or so?
ISTR a ~decade ago, some congressman pointed out that we could issue U.S. notes (rather than federal reserve notes) to make up the difference, and THAT law got changed real quickly.
What is the future of emerging economies? Their stock markets and currencies especially for India and Brazil. I was reading somewhere that 800 million people in India live on less than $2 per day. It makes me hard to believe that the consumer spending in India is going to pull the world out of recession. Moreover, the carry trade is causing a lot of issues and massive housing bubble in India, Australia, Singapore and Hong Kong is also a factor in their growth.
“What is the future of emerging economies?”
I loved the comment by one HBB poster about how Brazil is the country of the future, and always will be.
200 million people is still a lot of people
I’m not sure the carry trade is helping inflate house prices in India. In most East Asian countries, there seems to be a surplus of savings which ends up seeking a safe home often in USTs. In India I think there is a better mix, in fact India is overall savings deficient especially if it has to build & grow out of its present situation. Compounding the situation is that India has had a negative trade balance for a while now, mostly due to a huge oil import bill and not much export of finished products to make up for the difference. While it is tempting to bunch India and China, the two economies are more different than similar.
“While it is tempting to bunch India and China, the two economies are more different than similar.”
That’s exactly right. While I’m not the sharpest tool in the international economics shed, the “Chindia” business annoys me a bit, because I don’t get the conflation.
Aren’t they rather two halfs of the outsourcing coin? China for things that don’t require a huge number of people who speak english (mostly manufacturing) and India for things that do require huge numbers of people who speak english (phone support, application programming, etc.).
That’s your outside view of things, and the way it has turned out.
The mechanism of how it happened is as different as night and day. Chinese manufacturing was planned, every little step along the way, by the Chinese government. Indian “outsourcing” happened because the Indian government had no idea what was going on (otherwise they would have found some uniquely Indian bureaucratic way to kill the golden goose). Interestingly, each is now trying to get into the other’s space.
I’m not the sharpest tool in the international economics shed,
Just the ho e. Or Rake.
j/k!
I posted this late last night, but for those who would rather have a Sunday morning eye-opener instead of a Saturday night special, here it is:
A Graphic of Unemployment Spreading Like Cancer Across the USA the Last Few Years:
http://tinyurl.com/yjvndyk
The unemployed do not get mortgages, and/or cannot afford to keep one indefinitely. Which leads to more units staying and coming on the market. Which leads to selling pressure and lower prices. Which is why it is posted here, on the HBB!
That is an awesome graphic! NO county within 100 miles of the West Coast has an unemployment rate below 7 percent, and many are above 10 percent. How does that square with propping up the value of coastal housing formerly priced north of $500,000?
And Texas looks to be doing pretty dam good by comparison….Why ??
good by comparison….Why ??
land o wally world greeters?
Over 31 million people unemployed in the U.S.
The animation is stunning. I agree that the artificial props of real estate are about to fail big time. Following on the heels of the peak resets in 2010 and 2011 will be the massive tax hikes. The affordability rates on houses in California will plummet.
Curiously, it looks like one county - in North Dakota - has an unemployment rate of 1.9% and under.
Maybe it is time to consider real estate investments in North Dakota? The unemployment picture sure is different there, although I am not sure everyone wants to live there
.
Probably the location of the state’s biggest hospital - just a guess.
Oil biz. Bakken Field, still going strong so long as oil is > 60 bbl.
West Coast? Look east of the Mississippi. Except, of course, for the DC bright spot. Wyoming is oil jobs, and speaking of oil, check out Alaska.
I saw your Saturday Night Special last night. It was pretty depressing.
“Saturday night special” Oh no, can’t resist, I feel a song coming on..
Two feets they come a creepin’
Like a black cat do
And two bodies are layin’ naked
Creeper think he got nothin’ to lose
So he creeps into this house, yeah
And unlocks the door
And as a man’s reaching for his trousers
Shoots him full of .38 holes
(Chorus)
Mr.Saturday night special
Got a barrel that’s blue and cold
Ain’t no good for nothin’
But put a man six feet in a hole
Big Jim’s been drinkin’ whiskey
And playing poker on a losin’ night
And pretty soon, Big Jim starts a thinkin’
Somebody been cheatin’ and lyin’
So Big Jim commences to fightin’
I wouldn’t tell you no lie
And Big Jim done pull his pistol
Shot his friend right between the eyes
(Chorus)
Oooh Saturday night special…
For twenty dollars you can buy yourself one too…
Oooh let me tell you all about it…
Well hand guns are made for killin’
They ain’t no good for nothin’ else
And if you like to drink your whiskey
You might even shoot yourself
So why don’t we dump ‘em people
To the bottom of the sea
Before some ole fool come around here
Wanna shoot either you or me
(Chorus)
Ooooh it’s a Saturday night special
And I’d like to tell you what you can do with it too…
- Lynrd Skynrd
Ahh Sweet Home Alabama a fav of mine.
““Saturday night special” Oh no, can’t resist, I feel a song coming on…”
SF Gal - That song was on my mind this morning when I repeated the post. We must have listened to a lot of the same music in our lives!
Happiness is a Warm Gun
Joe Anderson
She’s not a girl who misses much
Do do do do do do, oh yeah
She’s well acquainted with the touch of the velvet hand
Like a lizard on a window pane
The man in the crowd with the multicoloured mirrors
On his hobnail boots
Lying with his eyes while his hands are busy
Working overtime
A soap impression of his wife which he ate
And donated to the National Trust
I need a fix ’cause I’m going down
Down to the bits that I left uptown
I need a fix cause I’m going down
Mother Superior jumped the gun
Mother Superior jumped the gun
Mother Superior jumped the gun
Mother Superior jumped the gun
Mother Superior jumped the gun
Mother Superior jumped the gun
Happiness (is a warm gun)
Bang Bang Shoot Shoot
Happiness (is a warm gun, momma)
Bang Bang Shoot Shoot
(When I hold you in my arms)
Oooooooooh, oh yeah!
And when I feel my finger on your trigger
Oooooooooh, oh yeah!
I know nobody can do me no harm
Oooooooooh, oh yeah!
Happiness (is a warm gun, momma)
Bang Bang Shoot Shoot
Happiness (is a warm gun)
Bang Bang Shoot Shoot
Yes it is, gun!
Happiness (is a warm gun)
Bang Bang Shoot Shoot
Happiness (is a warm gun)
is a warm gun, yeeeaahhh!
Joe Anderson? It’s Lennon/McCartney innit? Mostly Lennon IIRC. I always thought it was creepily predictive of his own murder.
Good find cobalt. Thanks.
Double digit inflation. Double digit UE. Yeah, I’m just loving deregulation and free market economics.
Bidding wars resume in Manhattan, thanks to tax-payer funded Wall St. bonus pools. Thanks Uncle Bernake!!!
NYT
Published: November 13, 2009
A TWO-BEDROOM apartment on the Upper West Side is listed at $1.595 million and sells within two weeks after nine prospective buyers race to outbid one another, ultimately pushing the price to nearly $1.8 million.
Sound like the pandemonium of the last real estate boom, when anyone with a pulse could get a mortgage and it seemed as if prices could go only up?
It wasn’t. Try last month.
A year after the economy headed into a tailspin and at a time when most New Yorkers are still wondering whether real estate prices have hit bottom, brokers say that bidding wars are back. They are breaking out in all sectors of the market, from $400,000 one-bedrooms in Brooklyn Heights to $7 million apartments with grand park views at 15 Central Park West, and from stately Park Avenue prewar apartments to new condominiums in Williamsburg.
In many cases, the jousting buyers start and end below the asking price. But in others, multiple bidders are pushing prices well above list price. To add a confounding twist, many of the bids are being made by buyers willing and able to pay all cash.
Brokers say that bidding wars are almost always set up by listings that are “priced well,” and by that they mean 20 to 30 percent below the high-water marks of early 2008.
“Thanks Uncle Bernake!!!”
The name is Bernanke. Rhymes with ‘hanky-panky,’ not ’snake.’
So my mis-spelling was correct all along then.
First drop in sales in a decade despite public funding…
Demand for Solar Cells and Panels Set to Decline, Consultant Predicts
The solar industry is poised to experience a 17 percent drop in sales in 2009, despite the massive amount of public and private money supporting the sector.
Solar power companies are expected to sell about 4.6 gigawatts of solar cells and panels in 2009, compared with about 5.5 gigawatts in 2008, reports GreentechSolar, citing estimates by Paula Mints, a principal analyst at Navigant Consulting. Mints says that it would be the first time the solar market experiences a drop in sales.
Germany is expected to account for 56 percent of these sales, taking market shares away from Spain, which experienced a decline after the government capped the country’s solar incentive program at 500 megawatts.
Gonna to cut back on flux capacitors!
Large, expensive houses where desperate owners are underwater seem to be catching fire with startling regularity around here. Maybe something about bad mortgages causes the paper they’re written on to spontaneously combust?
http://www.azcentral.com/news/articles/2009/11/13/20091113abrk-scottsdalefire1113.html
I saw a case a few months back where the owner of the property was determined by cellphone records to be right in his neighborhood when his house caught fire, even though he claimed to be out of town … OOPS!
the owner of the property was determined by cellphone records to be right in his neighborhood when his house caught fire Any more details would be much appreciated, this is a classic story!
Aren’t those italian fires? iirc
Yep those friction fires occur when the inability to pay keeps rubbing up against the mortgage payment.
We had big problems with that back in the early 80s.
Houston was hurting badly due to the drop in oil prices and thus RE as well.
We called them “remodeling accidents.”
Funny thing is the one ‘restaurant ‘property on 111 edge of hill, always burned. Was owned by EYEtalians.
Sinatra’s gang has a holdout-Clubhouse, nearby. Named for Dolly/mom.
Property kept empty for quite a few yrs. Irony alert.
It is being turned, right now, into a mega church.
Got some dirt on the ‘pastor’. But that is for later.
My wife and I are taking the autotrain, with 2 cars, to Sanford, FL arriving on Wednesday morning Dec 10. She is not comfortable on the Interstate or in heavy traffic. We want to take it slow and easy. We plan to drive both cars through the Orlando area south to Sarasota area (around Lakewood Ranch).
I’ve heard that I-4 through Orlando can be very tough to drive, and was wondering if taking the Central Florida Greenway toll road around the east side of Orlando to connect back to I-4 south of Orlando would be less stressful on both of us?
Once we get south of Orlando to say exit 58 of I-4, we could take Route 27 south toward Sarasota if I-75 was too much of a challenge, but that may be a hectic road also.
Do any of you folks have experience with these roads for weekday travel?
I-4 between Orlando and Tampa is the scariest road I’ve ever driven on. The only time it is reasonably safe is when it is so congested that the traffic is virtually at a standstill. It makes I-95 look sane.
I’d take another route. Any other route.
Thanks Techno.
“I-4 between Orlando and Tampa is the scariest road I’ve ever driven on.”
Why? How fast are people driving?
It’s not the speed so much as the level of disregard for life and limb. They are just insanely aggressive.
Theys likes they’s NASCAR.
Help with Orlando traffic please.
My wife and I are taking the autotrain, with 2 cars, to Sanford, FL arriving on Wednesday morning Dec 10. She is not comfortable on the Interstate or in heavy traffic. We want to take it slow and easy. We plan to drive both cars through the Orlando area south to Sarasota area (around Lakewood Ranch).
I’ve heard that I-4 through Orlando can be very tough to drive, and was wondering if taking the Central Florida Greenway toll road around the east side of Orlando to connect back to I-4 south of Orlando would be less stressful on both of us?
Once we get south of Orlando to say exit 58 of I-4, we could take Route 27 south toward Sarasota if I-75 was too much of a challenge, but that may be a hectic road also.
Do any of you folks have experience with these roads for weekday travel
The biggest danger on Orlando roads is getting carjacked
http://blogs.orlandosentinel.com/news_local_orlandocrime/carjacking/
or simply shot
http://www.google.com/hostednews/ap/article/ALeqM5h-lMlosmyaug–zsgpyDbv3pxMtgD9BT1T9O5
I spend one week in 5 in Orlando, have been doing this for the past 9 years, and every year it gets more and more scary.
Has this spilled over into MouseWorld?
So, um, what is so dang special about buying property and living in FL? So what, FL has a few coasts, bugs and gators.
Can’t wait, Now is the time to buy.
couldn’t resist.
I regret buying a house in this neighborhood
11 Nov 2009 — Some residents in southwest Albuquerque near Blake and 98th, said that homes left unfinished by builders are attracting crime. They said the situation is even worse at night. The Jernigans blame the houses scattered up and down their street that were abandoned two years ago. Constuction [sic] on the homes stopped because there was not enough money to complete them. “I don’t think anyone will want to live out here, with the way the neighborhood is. If we had to sell today, we would be in a hole,” said Jernigan. In really arid parts of the country, FB’s are not underwater, they are just in a hole, kind of like a grave they dug themselves into.
That whole area of Albuquerque, even the Flying J truckstop there, has always given me the creeps.
No kidding. And ten years ago…there was nothing there. The Google Earth photo is great: house, house, lot, lot, lot, house, lot….etc.
One thing that creeps me out is that the newer developments don’t have street lights - it’s light pollution - so the neighborhoods are pretty damn dark. I guess it’s nice and all, but if you have an unfinished or abandoned subdivision with no street lighting - yikes..
Acorn and the Housing Bubble
The liberal pressure group helped Congress write the affordable housing rules that got us into trouble.
By EDWARD PINTO ~ WSJ
All agree that the bursting of the housing bubble caused the financial collapse of 2008. Most agree that the housing bubble started in 1997. Less well understood is that this bubble was the result of government policies that lowered mortgage-lending standards to increase home ownership. One of the key players was the controversial liberal advocacy group, Acorn (Association of Community Organizations for Reform Now).
The watershed moment was the 1992 Federal Housing Enterprises Financial Safety and Soundness Act, also known as the GSE Act. To comply with that law’s “affordable housing” requirements, Fannie Mae and Freddie Mac would acquire more than $6 trillion of single-family loans over the next 16 years.
Congress’s goal was to force these two government-sponsored enterprises (GSEs) to purchase loans that had been originated by banks—loans that were made under the pressure of another federal law, the 1977 Community Reinvestment Act (CRA), to increase lending in low- and moderate-income communities.
From 1977 to 1991, $9 billion in local CRA lending commitments had been announced. CRA lending by large banks increased dramatically after the affordable housing mandate was in place in 1993, growing to $6 trillion today. As Ellen Seidman, director of the federal Office of Thrift Supervision, said in a speech before the Greenlining Institute on Oct. 2, 2001, “Our record home ownership rate [increasing from 64.2% in 1994 to 68% in 2001], I’m convinced, would not have been reached without CRA and its close relative, the Fannie/Freddie requirements.”
The 1992 GSE Act was the fuse, and the trillions of dollars in subsequent CRA and GSE affordable-housing loans would fuel the greatest housing bubble our nation has ever seen. But who lit the fuse?
http://online.wsj.com/article/SB10001424052748703298004574459763052141456.html
‘who lit the fuse’
Who rated the loans AAA, packaged and sold them off, and made fortunes in the process? Not poor, innocent Wall Street! They were forced into this by government mandate. Therefore even less regulation is best for Wall Street. Who says so? Why the Wall Street Journal says so!
‘Socialists forced us to do this! Please free us from their clutches!’
There are a few posters on this blog who seem to have in mind some kind of false dichotomy — either the blame for the bubble should properly go to liberal “affordable housing” programs / laws / advocates (FHA, CRA, ACORN etc) or it should go to Megabank, Inc’s Real Estate Industrial Complex, including the NAR, the NAHB, the Wall Street-sponsored national McCrapShack building companies, ratings agencies, the subprime mortgage lending kingpins, the Wall Street securitizers, etc.
How about the novel theory that CRA lit the fuse and Wall Street provided the explosives? I see no evidence that one party or another in the REIC was solely to blame. Let’s blame the whole system and figure out what went haywire, as stage one in fixing it, rather than Balkanize the debate through creating false dichotomies between the innocent and the culpable.
That’s crazy talk, PB. Better to argue endlessly within the established left-right dichotomy, right?
That’s right. After the barking moonbats and the right-wing extremists finally finish their epic battle over the MSM airwaves, nobody will have sufficient energy to notice Megabank, Inc’s financially-engineered ongoing systemic theft from the American middle class.
amen PB.
Smoke and mirrors and distractions to boot.
‘nobody will have sufficient energy to notice Megabank, Inc’s financially-engineered ongoing systemic theft …’
That’s precisely why every time the blame is being placed on the CRA’s etc, I point out that it was Wall Street who engineered and profited from the scam. I have never denied CRA’s playing a role in the so-called lighting of the fuse. But I’m not too blind to notice the sources of the CRA explanation, and how artful a dodge it is to blame this immense theft perpetrated by and for the well-connected, as being really all caused by ACORN etc.
You spot straw men well, why not scapegoats?
Sorry, alpha, did not mean to seem like I was singling you out. I just want to make sure an inclusive approach is used to finding scapegoats, rather than blaming one group of scapegoats while ignoring another.
No worries, PB. I enjoy being challenged or I wouldn’t post here.
But I do worry that the ‘CRA’s as cause of the bust’ has become the mantra of the dittoheads. It’s really a perfect ‘blame the victim’ switcheroo that goes to show why the big boyz make the big bucks. They can rob us blind, make us attack the victims of their scam as being the cause of it, and exonerate themselves from blame and stronger regulation all at the same time. They ain’t stoopid. We’ve gotta be smarter.
Exactly alpha-sloth. That’s exactly how they get away with it.
Not that there wasn’t plenty of FBs and specufesters scamming, but they didn’t underwrite and approve their own loans, now did they?
Also, it’s been shown time and time again here that the number of required low income loan approvals were the minority of bad loans made.
These are the facts.
make us attack the victims of their scam as being the cause of it, and exonerate themselves from blame
While they dust off their hands, adjust their, um drawers, and walk away or sail off into the sunset, forgetting the ‘fistfight’ behind them.
Rule number one: follow the money.
Follow. The. Money.
WSJ had an article about someone who made $20 Billion last year for his clients (including 4 Billion for himself).
How did he do it? By betting against the housing business!
http://online.wsj.com/article/SB125823321386948789.html?mod=wsj_share_ybuzz
I have to give OwlGore credit for one thing, creating a world wide scheme, that will make him the worlds first “carbon credit” billionaire.
The wheels are fast coming off the global warming hoax, but he got his.
Gore’s presentation on climate change draws 800 as 200 protesters gather outside. ~ Palm Beach Post
BOCA RATON — Confused Palm Beach County voters helped thwart Al Gore’s 2000 bid to become president of the United States, but he was introduced as “president of the planet” when he returned here Saturday night to deliver an environmental lecture.
The former vice president spoke on climate change at the Mizner Park Amphitheater to a crowd of about 800. More than 200 protesters gathered across the street from the event, and their boos and chants could be heard inside the amphitheater as Gore began his presentation.
“It’s an interesting twist of fate here in our own backyard that former Vice President Al Gore has taken on a new platform and is now a catalyst for world change,” said Marci Zaroff, an “eco-entrepeneur” who introduced Gore.
“So, in essence, he’s president of the people. He’s president of the planet. And the work that he’s doing is more important than any other work that could possibly be done.”
“Cap & Tax — Don’t Be Fooled: Al Gore Will Make billions,” read a sign carried by Alan Tudor, who drove from Tampa to attend Saturday’s protest.
“Gore’s Favorite Green Product? Your money in his pocket,” said another sign.
I didn’t know you could spell Goldman Sachs as “A l G o r e.”
Yep, wmbz has a HO for anyone he doesn’t agree with, ie:gore etc.
didja notice?
I AM TORN..
I have been looking for a home in SO CA ( SF valley ) for past 3 years when prices started falling….last week we saw one and we liked it. It was build in 20s and remodelled 2 months back…New roof, marble bathrooms, recessed lighting, manicured lot ( around 7000 sq ft ) , new roof , new electricals etc..Pretty much its in moving condition new new stove, microwave and even a fridge… Size is about 1700 sq ft. asking is $600K.
It sold in 2005 for 660K or so….. max price reached was in 2007 about $745K…
with all the remodelling does the $600k look attractive? Great neighbourhood, school district ..
Please let me know what your thoughts are.
Poke out my eye, man!
What would that place rent for?
“Size is about 1700 sq ft. asking is $600K.”
Go for it. Enjoy your tiny falling knife real estate investment. We will look forward to hearing about how the price of houses in your hood dropped to under $400K in the next several years…
“I AM TORN”…
You may be torn now, but in a few years you will be ripped to shreds. However if you like the place and have plenty of ready cash to burn, go for it, especially if you plan to stay there for the next decade.
Just my opinion of course.
“You may be torn now, but in a few years you will be ripped to shreds.”
You can say that again.
Rip Torn?
Rip Taylor.. ….. bhahahahaha
School district? For god’s sake, move to flyover country. You can get that same house on a couple acres for $200 K. And hire a private tutor for the offspring.
Instead of going to Podunk in “flyover country” just stay in that neighborhood you want to buy in, but stay as a renter.
It never ceases to amaze me about people thinking it’s a great idea to move to flyover country merely because houses are cheap there.
The houses are cheap in flyover country for good reasons!
BTW: California has it’s own flyover country. Anything east of the coastal range mountains and east of LA county. Exceptions are the upscale ski resort areas where condos cost a fortune.
I understand your sentiment, but I like that whole “no mortgage thing.” And it’s true, you can’t really move to podunk when you have a job. But unless this guy takes home $300K a year (with no threat of layoff), he shouldn’t buy ANYthing at $600K.
A few years ago I did a back-of-the-envelope calculation: A married couple both working at Wal-Mart in Buffalo are more able to afford a house than a $300K manager in California. Such is the power of flyover country.
I knew this gal in LA who bought a house in Dallas-Ft. Worth because it was a near new five bedroom and it was $125,000. Back in 2006.
Her boyfriend was a wealthy dermatologist who lived in Beverly Hills, earning $50,000 per month. He quit his job, sold his $5,000,000 house, and moved in with his girlfriend.
I hope she likes it there. She is first generation Chinese-American and from what I understand, Dallas is “Imaginary Friend” country.
Dallas is “Imaginary Friend” country.
I used to live there and…say what???
Bill and Oxide… you’re both right. This risk associated with either moving to podunk or signing up for a 30 year sentence on the house debtor treadmill is too high for my tolerance. Renting=mobility=freedom=options. As mentioned before, I can write a check for a house in anytown USA but my work is centered in and around NYC. Work is the only reason I’m here as I have ZERO interest in living here. Honestly, I hate it but it’s what I put up with in lieu of the alternative…… which is eeking out a living in Podunk….. Been there, done that.
SAVE YOURSELF.
I’ll be there in 2+ hrs, lie in the middle of the street and I’ll drive over …YOU.. I might even back up and do it again. If it would make you feel any better. Do NOT do it.
Don’t do it.
It ain’t attractive, even for a falling knife.
What we are all saying is, RENT a nicer place in the neighborhood for schools for far far less than a mortgage would be.
I don’t care where you live, 600K for 1700sqft is stupid.
He did say it was a remodeled 1920s home, so you can’t exactly compare the square footage cost with a typical crapola tract house. A 1920s house will likely have old growth hardwood floors, real brick fireplaces that actually burn wood, if your lucky some California tile which is quite valuable, real plaster walls, and hardwood built-ins. When I see the fugly McMansions with their faux flagstone and tortured Mediterranean “design” sell for 900K or more, I’d gladly take less square footage for a older home built with authentic materials.
Eddie is that you? Come on now you can admit it.
No, it’s joey.
It’s in the SAN FERNADO FREAKING VALLEY!
Are you nutz?
Did Mr Sutton anticipate the lengths the Fed, the Treasury, the Congress, and all Obama’s horses and all of his men would go to in their efforts to prop up the housing bubble? I concur that no reflation would occur without massive distortionary government intervention in the housing market, but how about now that we have massive distortionary government intervention for the explicit purpose of propping up home prices? It kind of clouds up the crystal ball a bit, no?
Intelligent Investing Panel
The Real Estate Bubble Won’t Re-Inflate
Chavon Sutton, 05.18.09, 06:00 AM EDT
Over time, homes track with inflation and bubbles rarely re-inflate. In fact, some housing markets will break below historic averages.
The latest Case-Shiller Home Price Index is in, and it shows continued, steep declines in home values across the country. The Forbes.com Investor Team weighed in on what these latest numbers mean and discussed possible regulatory solutions. Overall, our industry observers see a long, slow slog back to normal for real estate as excess inventory is burned off.
One reason any recovery could take a long time is because bubbles rarely re-inflate. “Real estate, over a very long period of time, has done just slightly better than the inflation average,” says Ken Shubin Stein, head of hedge fund Spencer Capital Management. “Now … real estate overshot it for a long time. If it’s going to get back to the average it will undershoot it for a long time.”
The dot com mania, of which Y2K mania was only a small part, was the only thing that pulled us out of the S&L debacle.
Wait, I also remember RE picking back up again around 1997, but I think that was because there was so much dot com stupid money floating around.
Eco,
I recall the dotbomb dough appearing in parts on NewEngland in 2000.
BusinessWeek
Cover Story November 5, 2009, 5:00PM EST
Why This Real Estate Bust Is Different
Unrealistic assumptions, layers of investors, sky-high prices, and possible fraud will make it hard to clean up the mess in commercial real estate
By Mara Der Hovanesian and Dean Foust
Reading this story leads me to believe no bears will go hungry in 2010. In fact, between the anticipated commercial real estate financial Armageddon and the ongoing residential real estate foreclosure crisis,
I am willing to predict we will be drowning in bear food.
YIKES!
It’s Orwellian… Yet plenty of dupes will think it will only “penalize” the rich. So they will be all for it!
Everyone in Britain could be given a personal ‘carbon allowance’
Everyone in Britain should have an annual carbon ration and be penalised if they use too much fuel, the head of the Environment Agency will say.
Lord Smith of Finsbury believes that implementing individual carbon allowances for every person will be the most effective way of meeting the targets for cutting greenhouse gas emissions.
It would involve people being issued with a unique number which they would hand over when purchasing products that contribute to their carbon footprint, such as fuel, airline tickets and electricity.
Like with a bank account, a statement would be sent out each month to help people keep track of what they are using.
If their “carbon account” hits zero, they would have to pay to get more credits.
Those who are frugal with their carbon usage will be able to sell their unused credits and make a profit.
Lord Smith will call for the scheme to be part of a “Green New Deal” to be introduced within 20 years when he addresses the agency’s annual conference on Monday.
An Environment Agency spokesman said only those with “extravagant lifestyles” would be affected by the carbon allowances.
He said: “A lot of people who cycle will get money back. It will probably only be bankers and those with extravagant lifestyles who would lose out.”
However, some have criticised the move as “Orwellian” and say it will have a detrimental impact on business.
This is a dark day for carbon units everywhere!
California conundrum:
Would it be letter to let housing prices bottom out at levels sufficiently affordable to attract a young, vibrant, well-educated work force, or is it more important to avoid letting property tax assessments settle out at fundamentally determined levels which would drop the bottom out of the property tax base?
Call it the Education Apocalypse.
By 2014, according to projections by the state Finance Department, there will be 640,000 more college applicants in California than colleges and universities have room to handle.
Colleges are already turning away students. The San Diego Community College District put between 10,000 and 20,000 on waiting lists this year, “and there’s no sign that 2011 or 2012 will be much different,” said Rich Grosch, president of the district’s board.
By 2025, if current trends continue, 41 percent of jobs in California will require college degrees, while only 35 percent of Californians will have graduated from college, translating into a shortage of 1 million college-educated workers, according to the Public Policy Institute of California, or PPI, a think tank in San Francisco.
Although those projections are not quite as dramatic as the silver-screen image of Los Angeles swallowed by earthquakes and tidal waves, the Education Apocalypse could turn out to be a pretty destructive force, potentially demolishing the state’s status as a high-tech mecca and eroding the economy.
“Because of our high cost of living, companies find it hard to attract young scientists and engineers to move here, which means we have to grow them here,” Pete Garcia, chairman of the San Diego Regional Economic Development Corp.’s Development Foundation, told a meeting of business and education leaders Friday. “But right now, the numbers we’ve got coming out of college are dismal.”
PPI demographer Hans Johnson said the state faces two choices: “We could have a less-educated work force, meaning it will be harder to draw business here and harder to have new industries springing up. Or we could work together to find ways to improve the education system.”
…
Well, small businesses are also regulated to the point where they don’t like California much either. Some bigger companies are moving out as well.
Education, heh. I feel as though I got a good education in California, but around about my sophomore year in high school they had one of those perennial funding crises that meant students were having difficulties getting the classes they needed to graduate on time in the UC system, so I ended up looking elsewhere for my degree.
Nowadays, I look at the primary school education and even the good places have to put up with so much crap that I’m just going to homeschool. I don’t trust the state to educate my child; while there are many wonderful teachers out there, they’re underfunded, overworked, and have to put up with the most insane strictures. Besides, *we* can do on-site learning, field trips, museums… no permission slips or buses necessary.
What do you think is the chance this home will sell for near the list price of $552/sq ft, when comps have recently sold for $245/sq ft?
Good luck with that marketing plan, fools!!!
7862 ENTRADA DE LUZ EAST, SD - Rancho Bernardo, CA 92127**
Neighborhood: Rancho Penasquitos School District: POWAY UNIFIED
Beds: 4 Type: SFR Sq. Ft.: 7,603 Lot Size: N/A MLS #: 090051458
Baths: 5/2 Built: 2006 $/Sq.Ft.: $552 List Date: 09/10/09 On Market: 66 days
Comparable Homes $836,950 $245/sq.ft.
Last Sold N/A N/A
The seller has requested that we hide price estimates for this home.
Recently Sold Comparable Homes
Averages Beds/
Baths Sq.Ft. Year Built Sale Price Price/Sq.Ft.
3/4 3,174 2003 $836,950 $245
Address
Beds/
Baths Sq. Ft. Year
Built Date
Sold Dist.
(miles) Sale Price Price/
Sq. Ft.*
1. 7604 CAMINO DE LA ROSA
SAN DIEGO, CA 92127 2/2 1,053 2003 10/27/09 1.0 $181,500 $172
2. 7657 VIA CORTONA
SAN DIEGO, CA 92127 3/4 3,117 2003 10/26/09 0.9 $836,000 $268
3. 14779 VIA BETTONA
SAN DIEGO, CA 92127 4/5 3,802 2003 10/22/09 0.7 $975,000 $256
4. 14587 VIA BETTONA
SAN DIEGO, CA 92127 3/4 3,544 2003 10/20/09 0.9 $750,000 $212
5. 7658 VIA VIVALDI
SAN DIEGO, CA 92127 3/4 3,342 2003 10/15/09 0.8 $805,000 $241
6. 8104 RUN OF THE KNLS
SAN DIEGO, CA 92127 4/6 5,646 2007 10/13/09 0.7 $2,275,000 $403
7. 8174 DOUG HL
SAN DIEGO, CA 92127 N/A/N/A N/A N/A 10/09/09 0.6 $880,000 N/A
8. 7565 CRESCENDO LN
SAN DIEGO, CA 92127 4/4 2,867 2003 10/09/09 0.9 $810,000 $283
9. 7565 CRESCENDO LN
SAN DIEGO, CA 92127 4/4 2,867 2003 10/09/09 0.9 $18,000 $6
10. 8222 SANTALUZ VILLAGE GRN S
SAN DIEGO, CA 92127 3/3 2,327 2003 10/07/09 0.3 $839,000 $361
Looks as though prices from 2003 to 2009 for comps came down from $975k to $830k, or about 17%. It looks similar to price drops in Hermosa Beach.
California coastal RE is a slow bubble burst compared to its farm belt.
I wonder what effect the witch socialist Pelosi will have on high end Ca RE when she pushes for the massive tax on upper incomes? I guess nothing. An income tax is not a wealth tax.
These guys are on the right track. The time is ripe to end too-big-to-fail. Miss this opportunity, and your children will have to live with Megabank, Inc’s systematic theft of the common man’s wealth.
Too big to exist
It took the House nearly 2,000 pages to draft a health care reform bill. Vermont Sen. Bernard Sanders needed far less paper to come up with a bill calling for the breakup of failing financial institutions within a year.
Sanders introduced the “Too Big to Fail, Too Big to Exist Act” on Friday. In just two pages, he outlined a simple remedy to avoid a repeat of last year’s massive taxpayer-funded bailouts.
If enacted, the bill would give Treasury Secretary Timothy Geithner 90 days to “submit to Congress a list of all commercial banks, investment banks, hedge funds and insurance companies that the Secretary believes are too big to fail.”
The treasury secretary would then have one year to “break up entries listed on the Too Big To Fail List, so that their failure would no longer cause a catastrophic effect on the United States or global economy without a taxpayer bailout.”
“If an institution is too big to fail, it is too big to exist,” Sanders told Bloomberg News last week.”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,” Sanders said, citing Bank of America, Citigroup, JPMorgan Chase & Co. and Wells Fargo & Co. “We should break them up so they are no longer in a position to bring down the entire economy.”
Rep. Paul Kanjorski, D-Pa., who is chairman of a House
Financial Services Committee panel on capital markets, said last week that he is considering introducing a similar measure in the House that would break up large financial firms.
“Nowhere in the world in the future will there be gigantic tsunamis coming out of nowhere and striking the entire world’s economy,” he told Bloomberg News last week.
Naturally, the financial world opposes any attempt to rein in the considerable power it now has over the global economy. But Sanders is absolutely right about breaking up the financial behemoths whose rapacious behavior almost plunged the world into a depression.
Back in the 1990s, when Congress passed legislation removing regulatory limits on financial institutions, Sanders was one of the few who warned that deregulating the financial industry could lead to disaster.
But breaking up the big banks is not enough. We also need a return to the kind of financial regulation that was imposed in the 1930s, starting with a restoration of the Glass-Steagall Act of 1933.
Back then, after wild speculation ended with the stock market crash of 1929 that brought on the Great Depression, the Roosevelt administration pushed for restraints on Wall Street. Glass-Steagall separated government-insured commercial banks and the non-federally backed investment banks. By keeping consumer and speculative capital separate, it made it possible to understand the activities of all financial organizations.
In 1999, Congress repealed Glass-Steagall and replaced it with the Gramm-Leach-Bliley Act. It allowed the stockbrokers, insurance companies and banks to merge for the first time since the 1930s, and ushered in a new era of financial irresponsibility.
By reinstating the regulatory firewalls that were ripped down a decade ago, re-regulating the energy markets to end rampant speculation in oil and regulating or abolishing the various financial instruments that are at the heart of the current financial crisis, we can avoid having to pay for another costly bailout.
Sounds good to me! In fact, it’s what I’ve been saying all along. Break up the too big to fail firms, AND reinstate regulations that keep the new-formed banks in line and seperated from the Wall Street investment banks.
It was a system that worked pretty damn well for a long time. And collapsed spectacularly shortly after we quit it. Co-inky-dink I think not.
It wasn’t the size of the bank(s) that made the system fragile, it was the high level of leveraged debt, everywhere. Rearranging the deck chairs does not solve the debt dominoe problem. Reserve requirements put more space between the dominoes. When reserve requireements went to zero, we were doomed to expand until failure.
“Nowhere in the world in the future will there be gigantic tsunamis coming out of nowhere and striking the entire world’s economy,” he told Bloomberg News last week.”
Yeah, pull my other leg.