Bits Bucket For December 10, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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American Dream 2: Default, Then Rent {repeated from a post late last night}
You beat me to it, tresho. No need to default, though, a couple of weeks ago I found a bigger rental and called my landlord to say we were moving. He said “No way, I’ll lower your rent if you stay.” We’re staying put for the time being. For once time is on our side.
taxpayers must unite against wall street
http://www.eastvalleytribune.com/story/148201
We had one lined up, approved, even fixed$$$the oil leak,
toldasked the RE renting agency to lower by 300, answer came back next day-compromise -$200. We stayed.Stress and $ of packing/moving/unpacking made the move vs stay a wash $ + stress.
Thanks to HBB crowd for ideas.
“Stress and $ of packing/moving/unpacking made the move vs stay a wash $ + stress.”
That is the landlord’s advantage. Unless a family lives very light on stuff, the hassle of moving would almost outweigh a rent increase in many cases. On the other side of the symbiosis, most landlords would have a hard time finding a new reliable renter willing to pay 2006 market rents at this juncture.
Good job on lowered rent. I have a buddy in the rental business. He tell them to move because he gets 50% of new mo rent of new tenant. Screw the owner. Less than 5% vacancy here.
“Swelling defaults could also mean more losses for taxpayers through bank bailouts.”
“The flip side of those losses, though, is massive debt relief that can help offset the pain of rising unemployment and put cash in consumers’ pockets.”
“Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That’s freeing up cash to use in other ways.”
“Ms. Richey’s family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently.”
Forget elections. Certain people have unilaterally determined what our taxes will be used for for the next generation, and we will not be able to afford anything else.
So maybe that’s what is behind all those signs of prosperity/recovery that some posters have been alluding to recently.
The malls are filling while the houses are emptying.
Isn’t that part of what happened in Japan? The adult children stayed home longer, living off parents instead of getting married and having their own kids. This meant that the young adults (especially young women) had lots more money to spend on clothes and going out with friends, etc. But sales of big ticket items were stagnant.
You’re on to something. A little while back there was a poll conducted in Japan that revealed that young adults there did NOT aspire to own cars. This was a marked departure from their parents, who closely associated cars with being socially aspirational.
These young adults appear to have well adapted to a lifestyle in which money is spent on travel, social engagements, and portable property. A half hour spent walking around the west entrance to JR Shibuya station will make this quite clear.
I think they have the right idea for adapting to the new global culture. So much so, I don’t envy them…I seek to emmulate them. Life is too short to play the banker men’s debt game, a.k.a. the American Dream.
What happens though when their parents die? You can only get a free ride so far.
There is inheritance of course, though I’m not sure what the taxes are on that. Also then they’ll need to pick up where their parents left off w/regards to property taxes, maintenance, etc.
Japan has luxury of zero population growth - that should be a huge advantage for them economically. You can keep the homeownership rate constant without building any new houses, and instead spending economic resources on other things (like building cars for Americans, etc.).
The fact that Japan’s economy has sunk so far to me is astounding, and IMO doesn’t speak well for this younger generation - at all. Or their prospects for the future.
Back in the 1980s, a friend went to Japan to teach English. He was treated to such scenes as Japanese kids throwing themselves onto the floor and launching into huge tantrums. All because they didn’t want to do the work that Chuck’s class required.
He was appalled, mostly because he would have never dreamed of acting that way in any of his classes. And Chuck grew up in Arizona, which isn’t exactly known for stringent classroom decorum.
After his teaching stint was over, Chuck came back to the U.S. He was very quick to call BS on the “Japanese miracle” that the American media were touting.
During a Tucson get-together back in 1989, Chuck told me that the younger Japanese didn’t want to work the way their parents did, and, in his words, “We can sit here and watch them fall.”
Indeed we have.
Eh, they’ll be okay and I am not so sure they’re looking for a “free ride”. Collectively they seem to be looking to reshape their world on their terms - something every generation has done since time began. If anything they are adapting to a new global reality, one in which the trappings of the postwar lifestyle are more burdensome to the individual (and society and the environment) than they are good.
And besides, while Japan gets the headlines for the birth rate story, most of Western Europe is in the same boat too. The question will be which countries get the population downsizing thing right, and which do not. After all, a reduced demand for natural resources might not be a bad thing going forward.
It isn’t a complete free ride. They are working, so they have money. They are unmarried and living at home so they can spend more of it on stuff other than rent/mortgage/raising kids. It is Japan so I bet they are saving a substantial amount too - part of the culture. They’ll pair off eventually, but you can shift a lot of spending in an economy if enough of the population that used to get married really young decides to wait a decade longer than they used to and the shift happens very quickly. In the US the shift is going on but much, much more slowly.
Understood - I didn’t mean to imply that younger Japanese are lazy shiftless non-working remoras. Just stating that there’s an expense now that many are not incurring that they will incur in the future.
In Japan of course it’s much more advantageous to live at home longer, since they have a much higher population-to-land ratio; that’s the main cause between the difference between them and the U.S. I’m sure.
Ideally the whole world will eventually reach a state of equilibrium - with zero population growth and even maybe population shrinkage, such that little or no new real estate development is done; where most homes are passed down from generation to generation, rather than each generation building new homes. Maintenance costs of course will still exist, though certainly that’s less than building anew.
Japan is a dying society. ZERO growth = death
They have too large a debt service that grows but every year fewer people to work and pay down that debt.
They used to save all their money and bought their own debt with it.
Now they will have to find outsiders willing to fund their debt.
Fewer people need fewer things, you end up with a death spiral.
Back in the 1980s, a friend went to Japan to teach English. He was treated to such scenes as Japanese kids throwing themselves onto the floor and launching into huge tantrums. All because they didn’t want to do the work that Chuck’s class required.
He was appalled, mostly because he would have never dreamed of acting that way in any of his classes. And Chuck grew up in Arizona, which isn’t exactly known for stringent classroom decorum.
After his teaching stint was over, Chuck came back to the U.S. He was very quick to call BS on the “Japanese miracle” that the American media were touting.
During a Tucson get-together back in 1989, Chuck told me that the younger Japanese didn’t want to work the way their parents did, and, in his words, “We can sit here and watch them fall.”
Indeed we have.
Interesting anecdote. Thanks.
Whatever happened to the days of “Americans look 1 quarter into the future… the Japanese look 25 years into the future!!!!” ?
20 yrs ago a neighbor had a Japanese high school exchange student. Nice enough boy….but lazy and not much of a student.
I teach English in two Japanese high schools. My students are very, very good. I have a friend who teaches in NYC. The graduation rate in NYC is 50%.
Japan has huge problems, no doubt. But when it comes to watching a country fall, I’m afraid that we’re watching the US decline in much worse ways than Japan.
Japan is in it’s 15th year of recession. It looks better than the US did at the peak of it’s last boom. Can you imagine what the US will or would look like after 15 years of decline?
knockwurst, you’re an English teacher.
Japan is in its 15th year. Possessive, right?
Yeah, I make that mistake all the time. I know, I know.
Google ‘prescriptivism vs. descriptivism’ and guess which one I am.
New population control. Kill the oldies on Medicare and only let couples have UNO nino. ( I’m in Ca)
“Ms. Richey’s family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently.”
That’s great news, because I make a living as a consultant for the Theme Park industry! I’m glad folks have their priorities straight.
From the Twilight-zone like viewpoint we are now forced to live in, this is a good thing for the eCONomy. Why?
1) The deadbeats have more money to spend after not paying their mortgage.
2) The banks (or whoever is supposedly being paid for the mortgage) don’t have to worry because the taxpayer will make them whole - the $500,000 house in 2005 is now and forever worth $500,000, even if no more payments are made on it and it falls down from neglect.
3) It is another slap in the face to honest people (like renters) who make their housing payments each month; why won’t these people wake up and smell the green shoots of the new eCONomy?!
Argh!
Of Course Not a 1 saves the windfall…for the next emergency…nope lets go to Disneyland..
————–
Ms. Richey’s family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently.
A school teacher with two rental properties in addition to the mortgage she decided not to pay, and a firefighter making 100K a year. Lovely.
Your tax dollars at work, California.
“Ms. Richey’s family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently. “We’re saving lots of money,” Ms. Richey says.”
We have been living lean and doing without vacations in order to pay-off our mortgage.
It sounds like you have been missing out on Disneyland vacations as the price of moral rectitude. The bankers who loaned you more money than the house is worth thank you for your compliance.
Why didn’t I leverage and refi ? Who cares about my FICO? Too late.
“The bankers who loaned you more money than the house is worth thank you for your compliance.”
I paid $80/sqft for my new spec-house in flyover country at the bottom of the 2002/2003 V-shaped recovery, and it’ll be paid in full in two years. I plan on leaving this frozen wasteland without taking a hit, or become an AZ snowbird if my San Luis Obispo plan doesn’t pan out. Fingers crossed!
I hope the Richeys and the Fernandez get whats coming to them. I`m sure they will -ownership or not you have a obligation to pay your contract. I do it and do so proudly…just like I pay my taxes so these over breeders can freeload. Karma is a *****. I`m sick of freelaoding americans…breed your rat and I pay for them. Sorry for the rant. Some people think behavior is acceptable…its not.
Regards,
Lane
Don’t apologize. You just said what most people who read this blog are thinking.
The real crime, and shame, is that the govt (both parties) has been so willing to bail out those banksters with our money.
Direct your anger, and your action, at the real culprits- the FED and the executive and legislative branches.
I agree.
I’m always amazed at how willing people are to publicly flaunt behavior of this type. Sad byproduct of our trailer trash reality TV culture.
Oh come now. I’m sure they earned, err, deserve that vacation. /sarcasm
These people should never have been qualified for the size loans they received. IMO, this is payback to the greedy banksters we all rail about here.
The real crime, and shame, is that the govt (both parties) has been so willing to bail out those banksters with our money. And govt apparently will be willing to do so in the future.
Direct your anger, and your action, at the real culprits- the FED and the executive and legislative branches.
Got pitchforks?
You have to remember reporters cut things and up and quote it in the best way to irritate the reader. They want you to react. So the article might say it differently than the people.
Bill in Carolina,
Not to disagree necessarily.., it’s just a little “equal time” that’s all. We spend enough time around here bangin’ the drum for the Evil this or the Evil that.
Try to remember, these were the very same people that throughout The Boom that were so freakin’ SMUG to all of ‘us’. I can only hope AZtoOR is right in saying they’ll get what’s coming to them, but why do I get the impression that’s just so much wishful thinking?
I’ll have to differ, I think they’ll come out smelling like a rose! Hell, they’re ‘already’ gloating over their faithful but FB neighbors. Maybe that is what this all about? The Right To Be Smug.
Thank you, Lane. And this is coming from another American who’s dang tired of the freeloaders here.
So tired, in fact, that I’m tempted to make my next move a non-packing experience. As in, I’ll have a “while I’m still alive” estate sale and sell my stuff off for whatever it’ll go for. What can’t be sold will be donated to charity.
And the house? Well, that’ll be sold too. For whatever I can get for it, and screw the neighborhood comps. (Oh, BTW, adios to all of you neighbor-jerks. Hope to never see any of you again.)
What about me? Hey, I’ve got a passport that needs some exercise. Time to take off from these shores and travel the world.
Wow — that is among the stronger reactions to the housing bust that I have heard. I have similar thoughts about throwing in the towel on long-range plans regarding home ownership. I will continue renting, so long as the government keeps handing out federally guaranteed subprime loans to help unqualified buyers purchase homes they cannot afford and which are likely to go into future foreclosure. Enjoy your debt albatrosses, greater fools!
Slim -
I used to work for a firm that relocated people every couple of years (when I left I was in the process of relocating).
The single guys in the firm, instead of moving all their ’stuff’ would sell it. Take the flat cash relocation fee ($10,000 IIRC, tax free), move…and buy new stuff. Every two years.
Was pretty wasteful from a resource point of vew, but the guys that had done it a few times had it down to a science what they needed to live. Bed, couch, table to eat at. Might drop $1,000 on new stuff when relocated. Some had tvs, most didn’t (mainly because they spent every night in a bar…but that is another story).
Anyway, thanks for jogging the memory!
Actually - wouldn’t it take *less* resources to do it that way? (Assuming you sell your old stuff rather than throw it in the trash)
The net is the same w/regards to furniture used, difference is that you use less gas to move it.
you vote with your feet. they’re betting that if you haven’t expatriated already, you’re quite unlikely to do so.
…oh, and if you do, they have that worked out too…you still have to pay income taxes (from dollar one on investments) even if you never set foot in the u.s.a. again.
you can renounce your citizenship, but they won’t let you do that without another passport — and if you do with unrealized cap gains in that portfolio of yours…they’ll come after you for 10 years.
you think you’re free? think again.
Lane,
I can understand your frustration and I have worked through my own over the past few years. These people will get what is coming to them.
As far as the contract they signed, I don’t hold any animosity towards them. Any mortgages I have signed all said that if I don’t make the house payment, the lender will take the property away from me.
After reading this blog now for over 3 years, it has influenced my thinking on people not paying their mortgages and now in my mind I hold the lenders much more responsible for making stupid loans.
After reading this blog now for over 3 years, it has influenced my thinking on people not paying their mortgages and now in my mind I hold the lenders much more responsible for making stupid loans.
And here’s grouchy Slim, agreeing with you. Wholeheartedly, in fact.
But the bankers want and expect you to continue to be a “debt slave”. They won’t receive any bonus, pony stock options, if you stop paying your loans.
Arizona Slim: you must be having a bad day. Either that or your sewer lines blew again.
We have acquaintances who are defaulting on about 5 properties (rental) that they own. Since they stopped paying the bills, and are pocketing the money their tenants pay, the wife and children are taking private tennis lessons, they just got back from a cruise, hired a live-in nanny and basically have the world by the kahonas. Their tenants know the drill, apparently don’t care and I feel like an idiot.
my landlord did the same thing, him and his buddy formed an LLC had 30 properties in CA and Florida. He pocketed thousands over 2 years. We got evicted by the bank. He wound up using the proceed to buy a place free and clear in La Costa CA with a nice ocean view. Still makes me sick.
“With an income of about $8,300 a month and a rent of $2,200, Mr. Fernandez says he now has the wherewithal to do things he couldn’t when he was stretching to pay the mortgage. He recently went to concerts by Rob Thomas and Mat Kearney. He also kept his black BMW 6 Series coupe, which has payments of about $700 a month.”
Public servants driving a BMW 6 Series coupe?
rms,
I hear you with BAD ear! No idea who Rob Thomas or Mat Kearney are but if you’re strategically defaulting ( I’d feel truly awful for catching the local blues “pick up” band for a $5 cover? )
Notice the teacher had also owned ( or put her ‘name’ on some papers ) several ‘other’ infestment properties. Where the real kick in the head comes from is that these are both state employees! There hasn’t been any disruption to their income? The Govenator has seen to it that their paychecks didn’t bounce.
Why hasn’t this affected their employment status in the slightest? WT Economist and I have stood alone advocating cramdowns, but only in excepting circumstances. Personally, given these two’s situation, I wouldn’t be talking about it in a bar ( let alone WSJ? )
No Cramdown For YOU!
WT Economist and I have stood alone advocating cramdowns
hey, I’m taking bullets for that too…
Ahem, move over guys. Slim’s in the line of fire too.
Well he does make almost $100K per year. However, I don’t want to hear any more politicians say that we need affordable housing for firefighters. (teachers, yes.)
Good grief, I make a bit more than that and I wouldn’t dream of spending that much on rent. I guess there is a big difference if you are dealing with 100% of retirement from defined benefit pension rather than mostly counting on a 401k. Oh, also if you believe in saving above and beyond retirement accounts, but that doesn’t seem to be in his frame of reference.
Why teachers? Why not just pay them more?
It’s also a scam. Communities would rather have “low income housing” for teachers and firefighters than let random low-income people move into their neighborhood. And they can feel all good-two-shoes about having low-income housing in Los Altos Hills, Atherton, or Beverly Hills.
Here in my area they are building “workforce housing” for all the poor teachers / firefighters / police. Price? Around $130/sqft+
Housing stupidity will never end.
A friends brother is a retired cop in Nevada. He gets a pension of almost $80k per year. He’s in his early fifties, so he’s got another 25 years at least. Those entitlements are ridiculous, and are breaking the backs of taxpayers.
$8300 a month is $100K per year. The article didn’t say if that was gross or net. If that’s his net take-home pay, then his salary is in excess of $140K. Yes, lots of public “servants” in Cali make that much.
The three most well off groups in this country:
1. Wall Street Banksters
2. Government employees
3. Retirees aged 65 and up.
“Retirees aged 65 and up.”
Decades of inflation have pretty well screwed the average fixed income retiree.
You got that right. Just distinguish between working government workers, who aren’t so well off, and those who retired (often in their 40s and 50s) who are.
And top executives from non-Wall Street companies are pretty well off too.
Working government workers who aren’t so well off? Yeah, there are some. But please check out the Federal GS pay scale. And don’t forget the Cali govt worker and his $8300 per month paycheck.
As far as retirees, the past inflation has indeed hurt the older ones. But, they are relatively few in number (simple actuarial consequences) compared to all the recent retirees. It’s the govt retirees, who have retirement incomes that are often equal to what they were paid when they were working, who pump up the group average.
If I worked for the government, I wouldn’t drive a flashy car. It sends the wrong message.
Of course, I don’t drive a flashy car now, mostly because my office is 4 blocks from my house and 90% of the driving I do is to and from the airport.
I have a first cousin who’s an assistant superintendent of a school district. For some reason, he feels he has to impress people! He’s got the Rolex watch and a big Lexus SUV. Why someone with a job that’s supported by local taxpayers would want to say, in effect, “I make too much money” is beyond me.
I should mention that he’s broke. He tried to get rich buying houses and flipping them. He’s still stuck with his house that he bought, two years later, and can’t sell it. His “net worth” is probably negative 200,000. Of course, he’ll be able to walk away from it, not pay taxes on his forgiven debt, and leave “Cousin Reuven” and all the other taxpayers the bill.
Does an LA county firefighter really make $100K/year? Sounds a bit high to me. That would be about 2 1/2 time what they make around here.
“Los Angeles County firefighter trainees earn $3,800.88 per month. Firefighters earn from $3,788.55 to $5,242 per month. Firefighter specialists earn from $5,602.09 to $6,244.55 per month. Fire captains earn from $7,700 to $8,100. Overtime shifts may also be available.”
This was from the LA times in late 2005. Assuming 3%/year increases doesnt get you to $8300, unless he is a Fire Captain.
If you go to : sfgate.com/webdb/citypay
you can search all of the SF Bay area cities and see all of the civil service employees that make big dollars.
Below is just the top 10 (out of 288) fire department employees from Vallejo that make over $100k:
Ivano G. Paoli Fire Department $350,212
James L. Higgins Fire Department $251,094
Lamonte K. Morris Fire Department $247,902
Russell S. Sherman Fire Department $238,725
Richard E. Mackenzie Fire Department $236,701
John A. Barbuzano Fire Department $236,467
Gordon C. Moncibais Fire Department $233,338
It’s the overtime.
Heh. My mother married an LAFD fireman. He had it made, good pay, great retirement..used his days off to do concrete work or sell houses, or play golf, go skiing at Mammoth or water skiing at Elsinore. In the 50s drove this little blue Volvo sport coupe of some sort.
He was a real swinger.
(Repeating my comments to this article from late last night):
Those of us who were renting before the housing bust don’t have to endure the shame of walking away from an underwater mortgage in order to achieve the new American dream.
Are people who fail to walk away from their debt traps properly termed stupid or irrational?
Professor Bear,
This little article could be a thread in and of itself. Again, I’d be reluctant to be discussing their little strategy at any level, let alone in front of the whole country?
Whatever they say about the “stigma” of strategic default diminishing ( “I” would know about it, and in the end, it’s ‘me’ that I have to live with ) and that would be a little more than I could handle and still manage to have any respect for myself. IMHO.
If banks feel no shame about turning their TARP salvation into bonuses, why should householders have any qualms about walking away from their garantuan mortgages?
“TARP salvation into bonuses”
Like water into wine, no? Dropped a post there but WT Economist and I have been vocal about considering cramdowns but when you get stories like this..?
Unbelievable! Free up cash and then go right back out and buy, buy, buy.
Had dinner last weekend and one of the guests was a RE. He said that the government only forgives the first $30K on the short sale windfall. These people in the story just maybe getting a 1099 post Xmas.
Why wouldn’t people do this? After seeing the much ballyhooed and vaunted “free market capitalism” exposed for the scam it is with bailouts for the ultra rich who caused the mess and a big “FU” to J6P, what would you expect them do?
What’s good for the goose, is good for the gander.
That about sums it up!
This is my kind of stimulus program:
…
For the 4.8 million U.S. households that data provider LPS Applied Analytics estimates haven’t paid their mortgages in at least three months, the added cash flow could amount to about $5 billion a month — an injection that in the long term could be worth more than the tax breaks in the Obama administration’s economic-stimulus package.
“It’s a stealth stimulus,” says Christopher Thornberg of Beacon Economics, a consulting firm specializing in real estate and the California economy. “The quicker these people shed their debts, the faster the economy is going to heal and move forward again.”
As the stigma of abandoning a mortgage wanes, the Obama administration could face an uphill battle in its effort to keep people in their homes by pressuring banks to cut their mortgage payments. Some analysts argue that’s not always the right approach, particularly if it prevents people from shedding onerous debts and starting afresh.
“The effect of these programs is often to lead homeowners to make decisions that are not in their economic best interests,” says Brent White, a law professor at the University of Arizona who has studied mortgage defaults.
…
I just read that Kansas City and Rio de Janeiro made the cut:
12 Places To Go If The World Goes To Hell by Business Insider
The reason for Rio’s inclusion is hilarious but probably truthful;
Seeing as this city is already so post-apocalyptic, there shouldn’t be much to worry about if things really get bad. They already understand how to live at the edge of economic and social chaos.
I guess Rio’s OK if things get good or bad and that’s a combo that’s hard to find. Kansas City’s reasons are understandable too;
No matter what happens to the USA, Kansas City will probably be okay. It’s not at either one of the coasts, so you don’t have to worry much about security or a foreign invasion or rising sea levels. It is surrounded by plenty of farmland (suitable for raising grain and livestock), and it’s also at the intersection of several rail lines, so that if we experience an oil spike of unimaginable proportions, you’ll still have access to transportation — in fact, the city should thrive as a hub of activity.
http://www.businessinsider.com/ten-places-to-go-if-world-goes-to-crap-2009-10#rio-de-janeiro-9
I suspect that KC’s housing prices bubbled up by more than expected (at least judging from what my sister paid for a place a couple hundred miles to the east at Lake St Louis). Hence moving to KC carries falling knife risks that were not a factor in previous housing busts (at least for those who are foolish enough to buy a home at this juncture).
Nearby suburb Overland Park, KS, definitely experienced some froth, if not of Cali / FLA / NV proportions.
I suspect that KC’s housing prices bubbled up by more than expected
In areas like Overland Park (On Money’s best places to live list) maybe but even there the prices only rose from 175K to 240K in the past 10 years and the median household income is 99K. (Houses are less than 3X income)
http://money.cnn.com/magazines/moneymag/bplive/2008/snapshots/PL2053775.html
There was mortgage fraud in KC too but the stats are rational.
KC Median household income: $43,481
Median home price: $134,999 (about 3 times income)
Home price gain: (2-5 year): 9.57% (following inflation?)
source: Onboard Informatics
In October I traveled through VA, WA, MD, KS, MO, CA, RI, MA, NY, CT, VT and NH. The KC area seemed to be doing better than most parts of the country with Kansas posting a 6.8% unemployment rate compared to Oregon’s 11.3% and California’s 12.5%
KC and Lawrence KS are underrated. (And I say that having lived in desirable California locations for 22 years)
Kansas City features lows costs, high quality of life, a relatively stable housing marketing, and a pro-business culture. It is clearly a standout and worthy of further study
http://www.newgeography.com/content/00811-the-successful-stable-and-struggling-midwest-cities
I heard they also have cable TV now.
P.S. Denver was the only other US city to make the list: 12 Places To Go If The World Goes To Hell Business Insider
KC and Lawrence KS are underrated. (And I say that having lived in desirable California locations for 22 years)
I like them both myself, all things considered.
PB,
It’s been awhile but some time back Ben featured an article that.., in of -all- places, there was evidence of rampant fraud in certain areas of KC.
All the usual suspects, fluffed apparaisals, MEW-extraction, broken dreams. You know the drill. So no, they were not exempt. And I’d probably prefer to be swallowed up by a tsunami ( than live ‘there’? )
I’m not sure they took into account all of KC’s infrastructure and proximity to other things. Suspect they just looked at a map and decided the middle of the “flyover” must be safe.
Granted ,it is a major railroad freight transfer point and has a relatively diverse economy, but the city has little public transportation, very far flung car dependent suburbs, etc.
Also lots of military stuff nearby, depending on what kind of scenario you’re concerned about. Same for Denver: Cheyenne Mountain, etc.
Prices also a bit bubbly, tho not quite the extremes seem in some other places.
Yep, I’d go back to KC (and may have to, to help old daddy that just got kicked to the curb by his Trophy)
It will be a messy one fer sure -
I guess he forgot the old advice: If it flies, floats, or f#cks, rent it.
How soon is Tiger’s trophy going to kick him out?
Mortgage agency’s growth gives fuel to risky lenders.
Ginnie Mae enables the firms to issue more taxpayer-backed loans.
The trouble signs surrounding Lend America had been building for years. A top executive was convicted of mortgage fraud but still helped run the company. Home loans made by its headquarters were defaulting at an extremely high rate. Federal prosecutors alleged in a civil suit that the company falsified loan documents and committed fraud.
Yet despite these red flags, a little-known federal agency continued giving its blessing to Lend America, allowing it to do business in the name of the U.S. government. The Government National Mortgage Association, known as Ginnie Mae, authorized the firm to bundle its mortgages into securities and sell them to investors around the world — all backed by U.S. taxpayer money.
Until last week, federal housing officials said that Lend America met requirements for participating in the program run by Ginnie Mae, an agency in the Department of Housing and Urban Development, and allowed the firm to sell more than $1 billion in mortgages via Ginnie Mae securities.
Lend America is hardly the only lender with a troubled record that Ginnie Mae has endorsed. The agency has provided taxpayer backing to at least 36 other mortgage companies with a history of reckless lending, fines or other sanctions by state and federal regulators or civil lawsuits, according to an analysis of government records, court documents and statistics in a HUD database.
Ginnie Mae’s ongoing relationship with these firms allows them to swap the home loans they’ve made for new cash so they can make more loans, which can then be traded for even more cash to make even more loans. Housing experts say this dynamic turbocharges the type of bad mortgage lending that first helped trigger the financial crisis that battered global markets over the past two years. And ultimately, taxpayers are on the hook for the troubled mortgages.
“Ginnie is like an accelerant to a fire,” said Anthony Sanders, professor of real estate finance at George Mason University.
It’s going to be a long recession.
Taxpayers lose 61 billion on two loans so far…
Administration extends $700B bailout until Oct.
Audit: Taxpayers lose big on AIG, auto bailouts as Administration extends $700 billion fund ~ December 9, 2009
WASHINGTON (AP) — The Obama administration has extended the $700 billion financial bailout program until October, setting up a struggle between Democrats who favor using some of the leftover money to help generate jobs and Republicans who say it should be used to shrink soaring budget deficits.
The administration insists the bailout fund is still needed to prevent further turmoil in the banking system. In announcing the decision Wednesday, Treasury Secretary Timothy Geithner said extending the program also will help homeowners struggling to avoid losing homes to foreclosures and small businesses having trouble getting loans.
The decision came on the same day the administration acknowledged two key bailout programs lost a total of $61 billion. The bailout of insurance giant American International Group Inc. and the lifeline thrown to struggling automakers each cost more than $30 billion, according to Treasury data disclosed in a report from the Government Accountability Office.
“The decision came on the same day the administration acknowledged two key bailout programs lost a total of $61 billion.”
‘Tis a mere flesh wound!
Food Stamps Go to a Record 37.2 Million, USDA Says (Update2)
(Bloomberg) — A record 37.2 million people, or about one out of every eight Americans, received food stamps in September, as the recession drove a surging jobless rate, according to a government report.
Recipients of the subsidy for retail-food purchases climbed 18 percent from a year earlier, according to a statement posted today on the U.S. Department of Agriculture’s Web site. Participation has set records for 10 straight months.
The government boosted food aid as unemployment soared, heading to a 26-year high of 10.2 percent in October. The jobless rate cooled to 10 percent last month, the Labor Department said on Dec. 4.
“We’ve been working to get that money out the door” to families that need assistance, Deputy Agriculture Secretary Kathleen Merrigan said last week in an interview.
Nevada had the biggest increase in food-stamp participation rates from a year earlier, surging 54 percent, followed by a 46.5 percent jump in Utah, according to the USDA. Texas had the most recipients at 3.1 million, followed by California with 2.9 million and New York with 2.6 million.
So, that’s the reason food prices are going up. There’s more money available to buy food.
And in Texas, more money available to send back home to Mexico.
This is one area where I don’t mind paying more so that others can get a subsidy.
CCC,
Agreed, as long as ‘that’ is what they are going toward. No more of this selling them for 50 cents on the dollar and buying Old English 800. Food is good.
That’s part of why they switched to the EBT-type cards. Yes, it cuts down on the “shame” factor, but it’s also difficult to sell the EBT card on the black market.
Talk to a person that works at a grocery store that accepts them. In the hood they be eating steaks and shrimp.
Then they are spending more than their food stamp allotment. Allotment is something $132/month per person. As an experiment, I tried to write out a menu to live on $132 for food in a month, and eat well: 2 serving protein 3 servings veg, 1000 calories. It’s doable, but barely.
But we all know they aren’t eating well. I once got stuck in line behind a welfare queen who tried to put Red Bull on her EBT card. I switched to another line, because I knew she was likely to raise some trouble.
That EBT card really irks me off, when it comes to the illegals. First off, many of the couples have dual tax free incomes, and then the anchor babies get the EBT bennies. Secondly, they can accumulate all the cash (no max) for down payments on Escalades and Edpeditions, since it sits in an account and can be converted to cash.
I’m renting where the illegals are living big. I also see them buy butcher dept. meats. Must be nice to get free money.
I have a moral obligation to help my fellow Americans who need the help, not immoral freeloaders.
Cows lick man’s house…
I wonder if we can get rid of all the inventory by just letting cows eat them?
http://www.foxnews.com/story/0,2933,579641,00.html?loomia_ow=t0:s0:a16:g2:r2:c0.154516:b29240076:z10
Can anyone explain to me why a cow would want to lick a house? The only thing I can think of is that the house is covered in lead paint and it tastes sweet. Is there any other reason?
Cow are stupid. I once saw one chew the vinal top off a car parked by fence. (in the 70’s of course).
The cows need a constant source of salt. If they don’t get it they will lick the soil or what ever else they can find to get their mineral needs, including houses apparently.
Cows like to eat. If they run out of grass, they’ll eat trees, brambles, cardboard boxes , three-rail fencing, mobile homes. Canny range cattle have learned that if you lean on an outbuilding long enough, it will eventually fall over and give up its supply of wooden implements and feed bags. That’s always a good thing if you’re a cow.
One three thousand pound Brangus bull vs Your puny four-strand barbed wire? Don’t me him laff.
Cows like to eat. If they run out of grass, they’ll eat trees, brambles, cardboard boxes , three-rail fencing, mobile homes.
Cows in Arizona will eat teddy-bear cholla cactus.
If you’ve ever seen cholla, you’ll know why cowboys invented chaps.
And, if you’re brushin’ up against a cholla, you need the thickest, sturdiest chaps around.
Packman: To continue our discussion from yesterday …
If I loan a million dollars to Warren Buffett I will receive an IOU in return. Even though Warren has the actual dollars I am still considered to be a millionaire because I have Warren’s PROMISE to someday pay me back. Since everyone feels that Warren’s word is his bond there is no question that he will make good on his promise.
So in effect this one million dollars acts as it is in two places at the same time: Warren has the actual million, I have the promised million. Thus it is accurate to think that one of these millions - the promised million - has been created out of thin air, do you agree?
As long as Warren Buffett maintains his reputation I will remain a millionaire, that’s because I have an IOU from Warren which I can convert into cash anytime I want.
But what if I loaned a million dollars to Bernie Madoff? Bernie got the actual million just as Warren did and I got and IOU from Bernie just as I got an IOU from Warren so that means another million dollars was created out of thin air, right?
But this million dollar IOU from Bernie is different from the million dollar IOU from Warren because Warren is good for the money and Bernie isn’t. That makes Bernie’s IOU - Bernie’s promise - worthless. Bernie’s worthless promise makes the value of my promised million dollars disappear into thin air from whence it came, yes?
There are a LOT of promised dollars in our economy that are destined to disappear, a lot of IOUs that will not be convertable into cash. Instead if being redeemable these dollars will go poof.
Which means anyone holding these IOUs is hosed.
This is the point I am trying to make.
that’s because I have an IOU from Warren which I can convert into cash anytime I want
But what if Warren has spent $300,000 of the million he got from you. Then by your logic it can be argued you arent a millionaire anymore. You are now a thousandaire!
Thus it is accurate to think that one of these millions - the promised million - has been created out of thin air, do you agree?
No, there is only one million, the one you gave away, er, loaned.
But your premise is correct….alot of money is going to disappear…
Sorry to interject myself in a private conversation…
It doesn’t matter what Warren does with the million I loaned to him; It only matters that he pays me back.
If he pays me back then I am still a millionaire. If he doesn’t pay me back then I am broke.
See my lengthy response to all your points below. You’re wrong about the money being in two places at one time. IOU’s are not money. They may be redeemable for money, but they are not money, any more than a car (also redeemable for money) is money. Or stocks. Or houses, etc. etc. All these are redeemable for money, but they are not money.
Note - this concept greatly simplified for this conversation. In reality money really is just an IOU, however an IOU is not really money, unless it’s easily exchangeable. That latter point depends on the nature of an IOU. A check is an IOU, and is generally easily exchangeable for money (though sometimes not - e.g. if it’s unsigned, or if it’s signed by someone known to bounce checks). A handwritten note may also be an IOU, but is generally not readily exchangeable.
IOU’s aren’t money but psychologically they are an equivalent. If I lent Warren a million dollars, I’d think I’m earning a great interest rate and can redeem this at any time so I’ll feel free to spend my remaining money on stuff. If I lent it to Bernie I’m selling the house and moving in with mom.
IOUs are not money, but they are close enough such that one could put them up for collateral to trade for goods and services. This is what was happening with MBS and CDOs. Lots of companies were taking them as near-money. I have to agree with combotechie, lots of near-money is disappearing every day. The great inflation already happened, and we’re reverting to a time without so much near-money (although the Fed is desperately trying to inflate to maintain.
“reverting to a time without so much near-money”
LOL! Right, if that were the case, we’d all still be ‘flush’.
The IOU is not affected by what Warren does with the money. As long as he is still considered capable of paying back the loan, the fact that he did something with the cash is irrelevant.
What I don’t get is why combo counts the money twice. He says he still has it because he has Warren’s IOU, but does not point out that Warren doesn’t really have it because the obligation under the IOU.
Now, if the IOU is secured by a building Warren buys and is non-recourse, and the value of the building evaporates, I see the point. But it is only part of the analysis.
Warren can use the money I loaned to him to buy a Rolls Royce. I can use the IOU from Warren to buy a Rolls Royce. Thus the money acts as if it were in two places at the same time.
You can buy a Rolls-Royce with an IOU?
I can use the IOU from Warren to buy a Rolls Royce.
I dont understand. How can you use an unsecured note from another party as collateral? That’s like saying I lend someone $50 and he signs a note saying he is going to pay me back. I cant take that note and buy $50 in phone cards..
You could potentially sell the IOU thus turning into real money.
The only manner in which you can use the IOU from Warren to buy a Rolls Royce is by taking out a car loan (from the dealer or a bank) and using Warren’s interest payments to keep up with your car payments.
I agree with your fundamental idea, though, about the money seeming to be in two places at one time. When I ask myself how much “money” I have, I always include the book value of the mortgage loans I have made to all the people in the trailer parks. Because, as I like to brag on a daily basis, none of them is defaulting and none has seriously defaulted since 2003. Of course, I can’t spend any of the principal owed me, only the interest as it rolls in, and whatever prin is amortized at any moment. But that’s fine. And the banks woulda been fine if all those I/O mortgagors had kept on paying!!
“You can buy a Rolls Royce with an IOU?”
Of course, people do it all the time.
When you write someone a check are you not writing them an IOU? You may take possession of the Rolls Royce the moment you write the check but the seller doesn’t recieve the money for the Rolls until the check clears in the bank. If this check - this IOU - is no good because there is no money in your account then the Rolls dealer is hosed.
Which brings up another point. What if the bank is not trusted to clear the check? What if the Rolls dealer doesn’t trust the integrity of the bank and refuses to take your check from that bank? Do you still get the Rolls?
The answer is probably: No. The Rolls dealer not only has to trust you to insure the check will clear, he also has to trust the bank.
So, to continue on … what if the dealer doesn’t trust any of the banks to clear a check? What if nobody trusts any bank to clear any check? Wouldn’t our economy then come to a screeching halt?
You could potentially sell the IOU thus turning (it) into real money.
But maybe he doesn’t want gold.
I’m getting confused. A promissory note is not a check. You lent Warren Buffet a million because you know Buffet is worth more than a million. You wouldn’t lend me a million. Now the Rolls Royce dealer will lend you something less than a million (if the Buffet note is everything you have.) Let’s say half a million for a James Bond commander in chief inaugural car. Now dealer has a note from you. Dealer can now borrow from supplier for something less than half a million (if the half million note from you is everything HE has.) and so on, and so on, and so on…
“A promissary note is not a check.”
But a check IS a promissary note. And the promise to pay is kept when the check is cleared. If the check doesn’t clear then that means the promise is broken.
A check is a promissory note. And it is a demand note, which means you can get your money when ever you want it (bank clearing rules taken into account). The promissory note in question presumably has some term to it, so Warren knows he has access to the money for a while.
A post-dated check might be considered a note, but I doubt you’d be, um, “unsophisticated” enough to take it. A note necessarily entails some risk, which is why you as an individual won’t lend buffet money at a 4% interest rate. If the CHECK doesn’t clear today, you’re going to the courthouse today to try to fix the wrong (and potentially calling the district attorney.) We get confused with how things actually work and how they’re supposed to work. If we were in 17th century Massachussetts Buffet might be in stocks (the other ones) tomorrow, if he wrote you a bad check.
But a check IS a promissary note. And the promise to pay is kept when the check is cleared. If the check doesn’t clear then that means the promise is broken.
Exactly.
But what happens when a check clears?
E.g. if the IOU I got from Warren Buffet were a check, and I wanted to convert that check/IOU to cash, what happens?
(hint: the cash isn’t just created from thin air - it comes from somewhere specific)
Why would he want a Rolls when he can get a Hummer?
But as well as the million dollars, Warren now has a debt of a million dollars. So his net balance sheet is unchanged. He, however, is MORE LIQUID, and you are LESS LIQUID. That million dollars does not change his net worth. However, he can buy what he wants with it, wheras you would have to borrow money from others, presumably using the note from Warren as some sort of collateral. You have an asset that is proportedly worth one million dollars, but you can’t spend a dime of it without borrowing from others. People are now less willing to lend Warren another million because now the question is: “can he repay two million?” But if people become unsure about his ability to repay the original million, YOU will find that you have a reduced ability to borrow using his note as collateral. And of course this is where many banks are now. Because it turned out that they were lending to Joe Slobotnick, not Warren Buffett. And pretty much nobody thinks that they’re getting all their money back.
“Then by your logic it can be argued you arent a millionaire anymore. You are now a thousandaire!”
No luck finding a Youtube clip of SNL skit “Who Wants to be Groped by an Eleven-Thousandaire?”
“anyone holding these IOUs is hosed”
That’s true. However, getting back to “inflation vs. deflation” debate, there’s another very important point to remember:
Inflation does not necessarily mean (and does not need) rising salaries.
Inflation can mean currency devaluation -> IOUs become worthless, economy is collapsing so there’re no jobs, and currency is devalued to the point where cash in the bank is worthless.
Think about that.
Inflation does not necessarily mean (and does not need) rising salaries.
Inflation can mean currency devaluation -> IOUs become worthless, economy is collapsing so there’re no jobs, and currency is devalued to the point where cash in the bank is worthless.
Inflation also does not guarantee a rise in GDP or housing. It did in the past when people could bargain for higher wages, or send the wife to work, or spend savings, or borrow money. Now it will just shift spending patterns. If things deteriorate that badly people push wheel barrels full of money to buy bread they won’t spend anything on clothes manufactured goods or housing. The FED is walking a wire at this point. Massive inflation or deflation spells social unrest.
I have seen the future and it is this.
Excellent comment. Money is essentially created out of thin air. Where there was one million, now there are two. To extend the example: And if Warren loans it to me, and I in turn loan it to you? Do we now not have four million?
And what happens when it unwinds? Does not all the loaned money go to money Heaven? Is this not the essential argument for classic (Austrian?) monetary deflation?
Sorry if I am interrupting.
“And what happens when it unwinds” Does not all the loaned money go to money Heaven?”
Only the loaned money that isn’t paid back goes to money heaven. The money that IS PERCEIVED to eventually be paid back will remain in existence.
Also, money that goes to money heaven creates a scarcity of money. This scarcity increases the buying power of money that doesn’t go to money heaven.
Money is essentially created out of thin air. Where there was one million, now there are two.
No. See my points below.
Sounds like CDS’s to me, creating money out of
thin air and then putting it on the books…
Rancher!
But you’re missing the -best- part, then writing yourself mega-bucks BONUSES based on thin air!
DinOR
That’s what I’ve been doing this morning.
Writing myself checks that I can pawn off
to off to all my friends for cash. I just have
to remind them not to post to the bank.
I figure by this afternoon I could be worth
millions if I do this right.
Do you see anything wrong with this plan?
Rancher,
And why the hell NOT! ( Seems to work for everyone ‘else’? ) Of all the suits pulling that little stunt, the one that sticks in my craw was former Sec. Treas. Robert Rubin.
If anyone ’should’ have known better, it would be him.
DinOR,
The highway from Medford to KFalls had
a minus 11 yesterday morning. Ice everywhere. Tomorrow is going to be dicey
when the new storm front comes in with the
rain.
Rancher,
That’s where I got my ticket! Just east of White City. Not to cast them in a disparaging light for something as trivial as a speeding ticket, but the whole area just looked, I don’t know.., eerie?
Low fog freezing to the trees, kind of like it was out of “Van Helsing”?
Medford and Jackson county don’t ticket unless you’re 15 over the limit…so….
you were cooking. Make sure you go to
drivers school and you can have the ticket
expunged from your record.
Combo,
The subtlty here is that you forgot to go fractional reserve. Having $1M you lend that $1M to ten seperate guys. It’s fraud, but until you get caught there is $10M floating around. The only limit to how much money you can create is how many people want to borrow it from you.
The way around the fraud is to buy off the King, so that he rules everybody must treat your IOUs as if they were real money.
I didn’t forget forget fractional reserve; I didn’t want to bring it up because it would cloud the simple point I am trying to make.
One small step at a time.
Agree. Fractional reserve and Fed fiat money creation add a whole different aspect, so let’s leave those out for now.
(though by doing so we’re negating the argument for inflation itself, but that’s not the discussion here - we’re discussing whether money is disappearing or not)
It’s erm, called fractional reserve for a reason. Individual banks are only allowed to lend a fraction of the amount that is on deposit.
fractions are defined to be < 1 by mathematical fiat.
You get to lend at most 1M out. That’s enough of a problem as it is.
And then what happens to the 900k that’s lent out (typical fractional value allowed is 90%)? It ends up another bank. That bank then loans 810k (new money) against the 900k in reserves. Then another bank loans out 721k (new money) against the 810k deposted.
Etc. etc. Eventually you end up with about 9.2x new money - or about $ 9.2 Million of new money created out of that original $1 Million.
(simplified case - in reality the reserve fraction varies a lot, depending on the asset type and other factors)
A cogent argument.
The flipside is if enough millions are converted out of thin air, their values goes down.
Which is what happened in the big credit expansion.
And is now being reversed by the big credit contraction.
In the big credit expansion, asset prices soared but the price of current goods and services did not.
The reverse must also be possible.
LOL - I also continued the conversation - below, before I read this post.
Breaking it down -
If I loan a million dollars to Warren Buffett I will receive an IOU in return. Even though Warren has the actual dollars I am still considered to be a millionaire because I have Warren’s PROMISE to someday pay me back. Since everyone feels that Warren’s word is his bond there is no question that he will make good on his promise.
So in effect this one million dollars acts as it is in two places at the same time: Warren has the actual million, I have the promised million. Thus it is accurate to think that one of these millions - the promised million - has been created out of thin air, do you agree?
Absolutely not. And I think this is where you’re tripping up. When you loan 1 million dollars to Warren Buffet - that does not make him $1M richer, because it’s a loan (or investment), not a gift. He can’t claim that money as an asset.
So there’s still only $1 million in existence.
As long as Warren Buffett maintains his reputation I will remain a millionaire, that’s because I have an IOU from Warren which I can convert into cash anytime I want.
You can? By what method? The normal method of doing so is to take money back from Warren - e.g. by selling BH stock. But in doing so - he now owes you less money.
You can’t just walk into a bank and say “give me cash for this IOU” and they’ll do it and that’s it. No - they have to get the cash from somewhere - and that somewhere is Warren Buffet.
Do you not have a checking account? If you did, you should know this stuff.
But what if I loaned a million dollars to Bernie Madoff? Bernie got the actual million just as Warren did and I got and IOU from Bernie just as I got an IOU from Warren so that means another million dollars was created out of thin air, right?
But this million dollar IOU from Bernie is different from the million dollar IOU from Warren because Warren is good for the money and Bernie isn’t. That makes Bernie’s IOU - Bernie’s promise - worthless. Bernie’s worthless promise makes the value of my promised million dollars disappear into thin air from whence it came, yes?
See above - there was no $1M created out of thin air, thus when Bernie doesn’t pay you back, there’s no $1M destroyed. He did something with the money - bought a yacht with it etc., and that money is out there in the economy. If he then says “sorry - can’t pay you back”, then you are indeed out $1M. But the rest of the world is $1M richer. In essence you’ve just gifted the world $1M.
There are a LOT of promised dollars in our economy that are destined to disappear, a lot of IOUs that will not be convertable into cash. Instead if being redeemable these dollars will go poof.
Again - IOU’s are not money. They’re not even cash. So when IOU’s go poof - cash does not go poof.
They may be redeemable for cash, but that is not a meaningless transaction. That cash that’s given to you during the redemption comes from somewhere. One such somewhere is that it came from you in the first place when you got the IOU.
Which means anyone holding these IOUs is hosed.
Agree on that. However the rest of the world is unhosed. They now have IOUs that they no longer have to make good on, and thus get to keep the cash that they otherwise would have had to give back to the IOU holder.
This is the point I am trying to make.
You got lots of red marks on your paper. Back to the text book.
Not so fast?
Are you saying that money was neither created nor destroyed and all this debt creation of money was imaginary?
Nope - not saying that at all. What I’m saying is that writing down losses doesn’t make money go *poof*, from a macro economic standpoint. It only does so from an individual debt standpoint (back to the original subject - which was Dubai’s investment in the W in Manhattan). But the money that’s lost by one individual (or entity) is gained by the rest of the economy.
From a macro economic standpoint it in fact it’s the opposite - writedowns in fact validate the existence of money that previously may not have existed. It causes fiat money to become permanently a part of the general money base, rather than eventually returning to ether from whence it came.
At least that’s my understanding, unless someone can convince me otherwise.
it depends on the type of loan. Transfer debt - which is what they’re talking about - is different to fractional reserve originated debt.
Issuing transfer debt can’t alter the money supply - issuing or for that matter repaying fractional reserve debt can alter it.
Agree.
Though I’ve never heard the term “transfer debt”. I’ve just heard it referred to as “full reserve”.
Human nature wins Combo’s argument. Tomorrow means little compared to today. Borrowed money is power as much as saved money is, in the today, and the debt has little weight. Give the average person a loan and they will spend the money just as if they had saved it. Spending promises. Spending the future. It does cause a distortion in consumption as though there were more money existing, for a time.
“So in effect this one million dollars acts as it is in two places at the same time”
not in the world of double entry bookkeeping. they are both an asset; however, to you and warren. $ 1 million cash to warren; $ 1 million receivable to you. Warren just has $ 1 million liability as well.
Cash is trash. Gold is not the enemy.
“…There are a LOT of promised dollars in our economy that are destined to disappear, a lot of IOUs that will not be convertable into cash. Instead if being redeemable these dollars will go poof.
Which means anyone holding these IOUs is hosed.
This is the point I am trying to make.”
Why all this “hypothetical crap?
Let’s re-write your “premise”:
“…There are a LOT of promised dollars in housing that are destined to disappear, a lot of IOUs/mortgages that will not be made whole. Instead of being redeemable (in 30 years time) these loans will go poof.
Which means anyone holding these IOUs/loans is hosed.
This is the point I am trying to make.”
Does that make anymore cents?
This was floating around a few months back but seems applicable here:
It is August. In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.
Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a €100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.
The hotel owner takes the banknote in hurry and rushes to his meat supplier to whom he owes €100.
The butcher takes the money and races to his supplier to pay his debt.
The wholesaler rushes to the farmer to pay €100 for pigs he purchased some time ago.
The farmer triumphantly gives the €100 note to a local prostitute who gave him her services on credit.
The prostitute goes quickly to the hotel, as she owed the hotel for her hourly room use to entertain clients.
At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his €100 back and departs.
There was no profit or income. But everyone no longer has any debt and the small town people look optimistically towards their future.
There was no profit or income. But everyone no longer has any debt and the small town people look optimistically towards their future.
That’s probably one of the neatest things I’ve ever read.
I remember that. It’s cute. Not very helpful though. And not very necessary or even economically helpful.
- Where did the $100 debt come from in the first place?
- In the real world - people charge interest on debt. And generally loan to people who they know can pay it back - not relying on outside unexpected sources of income.
Nevertheless - it’s quite easy to resolve this conundrum anyhow without the Russian tourist. The hotel owner can just offer a room to the butcher, in exchange for relief of his $100 debt. The butcher can offer a bunch of post-processed meat to his wholesaler to pay off his debt. The wholesaler can do some work on the farmer’s barn to pay off his debt. The farmer can supply some milk/fruits/veggies to the prostitute to pay off his debt to her. The prostitute can offer her services to the hotel owner to pay off her debt to him.
Nice thing about that is - the debt payoffs can occur at any point in time, at all points in the circle, without relying on outside money which may or may not come.
And after that’s all done - not only is the debt all paid off (same as before) but each person now has additional goods or services to show for it. The hotel owner got some tail. The butcher a nice hotel stay out of it. The supplier got some nice steaks out of it. The farmer got his barn fixed. The prostitute got some food out of it.
That’s a healthy economy. An actual increase in goods and services, zero change in the actual money supply, and a decrease in debt to boot. Yes, it is possible.
NYC passes energy-efficiency bills for buildings.
NYC council passes bills intended to reduce buildings’ carbon emissions, create energy code.
NEW YORK (AP) — New York City passed a package of legislation Wednesday intended to reduce greenhouse gas emissions from buildings, which are the city’s largest source of heat-trapping gases.
The City Council voted to pass several bills that Mayor Michael Bloomberg said will help achieve his goal of reducing the city’s carbon count by 30 percent by 2030 by making buildings more energy-efficient.
New York City’s hundreds of thousands of buildings — skyscrapers, hotels, stores, office buildings and apartment towers — generate the majority of the city’s emissions, according to a report released by the Bloomberg administration in 2007.
Building operations, which consume electricity, natural gas, fuel oil and steam, account for 79 percent of the city’s greenhouse gas emissions.
Among the legislation passed Wednesday is a law that requires owners of buildings larger than 50,000 square feet to conduct energy audits once every 10 years and to make environmental “tune-ups” to operations and maintenance systems, like replacing weather stripping and insulating hot and cold steam pipes.
The legislation initially required building owners to make more costly environmental improvements to their buildings, like major overhauls to heating and ventilation systems or replacing windows, but the Bloomberg administration dropped that because of opposition from building developers and real estate interests.
The mayor said this week that, in this tougher economic climate, requiring such improvements would unfairly burden building owners.
Also, the bill as originally written would have allowed landlords to pass along the cost of mandated building improvements to their tenants, even though the landlords would be saving money by reduced energy bills.
I do wonder what a “cold steam pipe” is. Something unique to the Big Apple I suppose.
NYC will get their 30% reduction through vacancies alone.
I suppose it’s the return line. I have a simple one-pipe system.
Meanwhile, I’m still waiting for the city to inspect my solar system. The cost of bureaucracy exceeds the cost of installation, which took one day, according to my contractor.
The whole permitting and inspection process has taken a year, and it took a year before that find a contractor willing to put up with it. They’d much rather install solar panels in Jersey.
The whole permitting and inspection process has taken a year, and it took a year before that find a contractor willing to put up with it. They’d much rather install solar panels in Jersey.
Jeebus.
Does that mean your solar panels are not yet operational, pending review from a bureaucrat?
No, they are operational. They’ve already been inspected twice by others, including UL and the utility, as required by the city.
Still, it’s insane that they are bribing me with massive subsidies, then taking the money back in massive bureaucracy.
Now you know WHY there is all that bureaucracy.
NYC has gone totally asinine. When I wuz a pup, my folks used to take us for a holiday family outing from the ‘burbs into the big city to see all the window displays. A fellow I know just got back from there and he said most of the great old window displays don’t exist anymore. Maybe they haven’t for a while.
Must have something to do with reducing emissions.
I remember the Christmas window displays in the 60s. Amazing.
I alos remember the stores being unique. Now they all sell the same crap everywhere in the world.
Virtually all the old department stores went broke in the late 1980s bust. There are lines to see the window displays on those that are left.
Kmart and Target don’t put quite the effort into it.
I grew up on long island and can remember when blooming dales had really good high end nice stuff that you didn’t find in Alexanders, Korvettes, Sterns, A&S, and Woolworths etc. Of course you had to travel to the city to buy it.
Those were the days?
The malls killed the window displays, but then again, the higher end malls do (or perhaps did) very nice decorating jobs. The bad news is you had to go to the malls to see the stuff.
We used to take our kids to the Gallerea and Northpark in Dallas and they loved it. Mall of America in Minneapolis has (or had) very extravigant decorations.
I use the past tense because with grown kids and online shopping, I haven’t been in a mall in several years.
A fellow I know just got back from there and he said most of the great old window displays don’t exist anymore. Maybe they haven’t for a while.
Yeah, well, Macy’s bought Marshall Fields here in the Midwest and managed to bugger up the great old window displays in the former Marshall Fields building downtown as well. Bah humbug!
To make it even worse, Macy’s bought Kaufmann’s and Hecht’s. My local mall had a Kaufmann’s and a Macy’s, and now it has TWO Macy’s which sell exactly the same Macy’s stuff. And it’s not even that big a mall.
The local mall known as the ghetto mall, had a Hects. Now it has a Macy’s. It kind of ruins the brand.
It is not a NYC thing. I grew up in Fargo, ND and the two dept stores had great Christmas displays then. Families from the farms (and us from the town) would come to town to see them. The dept stores are long gone and nothing has replaced them.
It had nothing to do with emissions.
http://tinyurl.com/yzvgrv6
Florida knocks CA out of the number 2 spot in the nation for foreclosures! NV is still kicking our butts though, they have one out of every 119 in foreclosure. FL has one out of every 165. NV must really be something to see (especially the bubble built communities!), FL is pretty bad, but that’s almost 50% worse again than FL.
I’m very proud of lady FL for knocking CA off for number 2. I’m not sure she has the legs to go after NV though.. Long hail NV, the true foreclosure king!
Statistics are confusing me. Your link says 307K foreclosures nationally in November, 53K of them in Florida. Because I was trying to find out where AZ ranked in this mix, I found a piece on abc15 dot com saying banks repossessed 77K homes in AZ in October. That can’t be right, can it? If it were, why wouldn’t AZ be number 2? Certainly AZ has a smaller population than FL, and these rankings are based on FC’s per capita, right? (OK, November isn’t October, but I’ve never seen AZ “ahead” of FL.)
“Florida knocks CA out of the number 2 spot in the nation”
Bouncing back from that loss to Alabama !
Yet the asking prices in Palm Beach Gardens, Jupiter and Hobe Sound seem like they are going up.
NV is still kicking our butts
Ha!
NV must really be something to see (especially the bubble built communities!)
Ironic Bears
lavi d,
Funny, sad… but, funny.
Has anyone heard more about the “VA Vendee Program”? I’ve heard there are scores of properties in Vegas. In short, the VA is looking to clear their books and ( you don’t even need to be a Vet to get VA terms )
The wife and I saw a foreclosure in Oakridge, OR that I kind of like the layout and the sign on the window said “Available through VA Vendee Program”. Just curious to see if anyone else had seen or heard of it?
At 31% for all of 2008, CA is still number one for the percentage of mortgage defaults due to “strategic reasons” rather than necessity (at least according to that WSJ article posted a the top of today’s Bits Bucket). I am frankly quite impressed with the financial acumen of California households. Megabank, Inc has nothing up on them from the standpoint of protecting their self interest.
P.S. We were watching the Disney version of A Christmas Carol last night. Every time they showed Ebenezer Scrooge counting his gold coins, visions of Megabankers counting their multi-million dollars of bonus loot flashed into my head.
…visions of Megabankers counting their multi-million dollars of bonus loot flashed into my head.
Instead of sugar plums?
“But for some, “the 2005 bubble people,” one Realtor calls them, the nightmare continues. ”
By Kimberly Miller
Palm Beach Post Staff Writer
Updated: 9:46 a.m. Thursday, Dec. 10, 2009
Home sales are up, home inventory is down, prices are stabilizing, and for many real estate watchers it appears the market has spent the latter part of 2009 in recovery.
But for some, “the 2005 bubble people,” one Realtor calls them, the nightmare continues.
Florida bumped California in November to earn the No. 2 rank nationally for the rate of foreclosures, with one in every 165 homes in danger of becoming bank-owned, according to a report to be released today by Irvine, Calif.-based RealtyTrac.
It bucked the national trend, which has seen four months of foreclosure decreases, including an 8 percent drop in November compared with October.
Statewide, Florida foreclosures increased 2 percent in November over October, and about 8 percent compared with the same time in 2008.
“There is a lot of property that sold in ‘03, ‘04, ‘05, and they are all upside down and if people lose their jobs, they are going to hurt,” said Douglas Rill, owner of Century 21 America’s Choice Realty in West Palm Beach. “Until that big lump walks through the market, it’s going to be an albatross, a damper, an anchor on the full rebound.”
In Palm Beach County, 3,321 foreclosure filings were recorded in November, nearly identical to October, but a 26 percent increase over 2008.
Treasure Coast counties saw foreclosure decreases in month-to-month and annual filings, with Martin County down 13 percent compared with November 2008 and St. Lucie dropping 32 percent.
Nationally, 306,627 homes had foreclosure filings in November. Nearly 53,000 of them, or one in six, were in Florida. Nevada ranked worst nationally in November, with one in 119 homes with a foreclosure filing.
Analysts said the national trend in the reduction of foreclosures can be attributed to an increase in banks processing short sales, the first-time home buyer tax credit, which was expanded and extended through April, and loan modification efforts under the federal Making Home Affordable Program.
Today, the Treasury Department releases its November loan modification report.
In October, 82,614 Florida loans were in a trial modification or had been permanently reduced.
Kathryn Lomax’s loan on the Royal Palm Beach home she bought in 2005 was one of them. She said she’s been working to get a modification since February.
“My husband’s company downsized in January. They took his company vehicle, cut his pay, so we requested assistance.”
But RealtyTrac experts warn that loan modifications may be a temporary fix.
” Modification is going to help a portion of people avoid foreclosure, but in over half of the cases, it’s just delaying the inevitable,” said RealtyTrac spokesman Daren Blomquist.
Still, it has cut this year’s foreclosure estimates .
RealtyTrac originally forecast there would be 1.4 million properties nationwide in foreclosure at the end of September. The number was 940,000
Well first off, ‘who’ created the “2005 bubble people”? It’s amazing after everything that’s happened realtwhores are -still- trying to spin at all? Just come clean already.
I have to admit, given FL takes honors for being the first to fall, I’m getting a little tired of hearing about all the “pain” going on down there. A lot of these people haven’t made ANY kind of a payment since ‘06 and if they’ve taken ‘any’ heat at all ( seems to me it’s only been very recently? )
In short, it’s the bubbliest, MEW-iest markets that are getting the most “benefit” and mileage out of the meltdown? First ‘in’, first out, walk-aways, the old “List and fly” etc. By the time Salt Lake City gets reached, there’ll be 4 squad cars on bull horns the minute the poor schmuck is outside of his grace period.
I hope to go to LV in the spring. No real love of Vegas though its an interesting diversion for three days or so, but I really do want to see for myself the decimated bubble communities. Not to gloat or anything like that but more just to see for myself the carnage that has been left by the bubble. Hopefully it will ultimately be just a very bad, once in a lifetime event.
Hmmm, didn’t some HBB-ers do that very thing earlier this year?
I hope to go to LV in the spring.
Drop me an email when you’re getting ready to go. I’ll send you info on where you can see some of the more fascinating mistakes.
Lavi’s a great tour guide so take him up on the offer!
Yes Slim, we meet in Feb. in Vegas to get a first hand look at the bubble deflating. Lots of fun and a really great group of people to get to know.
Hoping to do a DC meet-up in June!
Which weekend in June? I’d like to put it on my calendar!
that’s because I have an IOU from Warren which I can convert into cash anytime I want
Only if Warren has spent $300,000 of the million he got from you. Then it can be argued you arent a millionaire anymore. You are now a thousandaire!
Thus it is accurate to think that one of these millions - the promised million - has been created out of thin air, do you agree?
No, there is only one million, the one you gave away, er, loaned.
But your premise is correct….alot of money is going to disappear…
Everyone, please ignore this post..
Six Bogus Beliefs Held By Youth
December 10, 2009
By Toby Moreland
(Toby is a 25-year-old Floridian)
Young people are incapable of recognizing their own enemy. This is the essential condition required for the peaceful transfer of political power to a world dictatorship.
As a young man who recently received an “education” from one of the finest schools in the U.S., I can state beyond doubt that this condition has been met. In a society conditioned to champion personal ambition, self-expression and self-empowerment, the educated youth of today are kept intoxicated with illusions. Everyone is looking up, staring at the sun, and unable to stop and think for even a moment out of fear of losing their momentum up the ladder.
Here is the script my generation sticks to.
- Mankind lived in total ignorance until very recently. (Proof: widespread racism, religious fundamentalism, mistreatment and oppression of women, European imperialism, rabid nationalism, xenophobia, etc. were all norms.) Young women and minorities are especially prone to gobble this idea up and congratulate themselves for being an enlightened member of a progressive society. In the interest of being liked and getting laid, young white men follow suit.
- All types of ‘ignorance’ still exist today AND represent the primary threats to peace and stability. (Conclusion: Legislation to protect minorities (anti-hate, anti-religion) is natural progress and shall continue uninterrupted.) Religion has become like Al-Qaeda to today’s educated youth. It barely exists, but everyone is convinced it is a powerful beast capable of plucking a person out of his hedonistic bliss at any moment, if not carefully watched.
-Sexual restraint can no longer be taken seriously, as it was an invention of religion to control the masses and women in particular. (Conclusion: Get it when you can, while you can. It’s practice for someone you might really like someday!) There is a tremendous amount of pressure on young women to be able to “handle” emotion-free sex. They have been convinced, mostly through entertainment media, that taking sex seriously is a weakness. It is a bodily need detached from the rest of you. Combined with a social scene set around alcohol, young love is a messy, schizophrenic story where one is very lucky to find someone on the same page.
- Total Moral Relativity : there are no absolute truths, there is no reason to believe in anything too strongly, everything is circumstantial. (Conclusion: yes, everything is corrupt. It has always been that way. Power corrupts. We’re selfish. People are assholes. I’m an asshole, at least I’m willing to admit it.) Result: attitudes are uniform within social groups.
- Politics and religion are not to be discussed amongst friends, therefore they are not. Ever. (Conclusion: agree to disagree. Result: Even the smartest people are never exposed to ideas outside of the mainstream media/academia, but you cannot convince them of this.)
- Communism is a legitimate ideology, only it has never worked. (Result: my generation leans heavily to the left. As the Republican party has become synonymous with Christianity, pro-life, wealthy, white, war, big business, etc., it is no wonder why. Government involvement in industry seems inevitable to everyone, but few are able to envision future consequences.
With these unquestioned six beliefs alone, defenders of humanistic internationalist doctrine are created. Good, intelligent kids that are just trying to do their best and find their place in the world while fulfilling their parents’ expectations have been conditioned to unwittingly serve and defend the interests of a small group of psychotic criminals.
You young folks think that you invented everything.
Kid who wrote it is bucking for an internship at the Heritage Foundation or similar situation. Not a bad way to get a job in this economy.
The libs call it “wingnut welfare.”
Growing up in the Mid-West then living half my life in California, I think he made some good points albeit pertaining more to the coasts than fly-over country.
As I’ve heard on right-wing radio: what do you call a Communist once he has four kids? A Republican!
Only if he has a job.
Five Communists. Six if the original Communist is still maried.
Interesting post . But the question is ,what would happen if a society
of people became to selfish ,to self-serving ,or a fraction of that
Society became that way and they happen to be in power positions ? What would happen if law and order was a concept to be broken at
any chance a person had to break the law because it wasn’t enforced ?
Strong rules of laws and regulations seems to be necessary, especially since religion and fear of damnation isn’t the driving force it use to be .
The fine balance of the bee hive ,if not maintained ,will destroy the entire human Beehive . Everybody has a different idea on what a functional Beehive is and that usually involves some self-centered idea
that pads their own pockets at the expense of others . In America we have always pushed the concept of working hard to get a piece of the American dream ,but what happens when the American Dream was a Ponzi-scheme to enrich a small percentage of the population ,while the masses are enslaved by debt/inflation ,making the American dream a illusion . If you go to College ,but you can’t get a higher level job for your efforts , the Society you live in let you down . If all the jobs are going overseas for instance ,the Society you live in doesn’t give a damn about your welfare just starting out in life .
The systems went out of balance and the young people are being robbed of bright futures . It’s not right and it needs to be corrected .
Housing Wizard,
Amen. Or… we could just tell them that “opportunities” are no longer confined solely to the U.S! Now that we have made them “Global Citizens” they have -more- control over their future as they are now welcome to seek job openings any where in the world they might care to live?
DinOR …oh you mean all those high paying jobs in other Countries
where those people are struggling for jobs also …..Americans are going to get those jobs ….plus they have to leave their homeland .
Housing Wizard,
Yeah I suppose I was being a little flippant about that? Right, like you’re going to be able to step of the plane in Bombay, get an apt. for awhile, cruise Craigslist, land a job, no questions asked!?!
Come to think of it, I could be a lot more open minded about the entire issue of offshoring if it were a more level playing field. Today? Forget it.
DinOR …exactly as you say ,no level playing field .
It started in the 1970s. Right out of high school, I could get a job that would pay for a very cheap used car and very cheap place to live. That’s with NO experience and NO college. And if that job didn’t work out, I could have another one within a week. By the end of the 1970s it was going away. By the 1980s, it was gone.
These days? You can have decades of experience and still not be able to get a job that pays a living. For most young adults, it’s either a relatives/family connections business or waiting tables/bartending job that let’s you pay the bills or a McJob where you can’t. A phrase that was coined in the 1980s, BTW.
That young folks never think they will have to pay for the socialist programs they want implemented.
Fortunately for old folks, young folks still believe they will also get the benefits that they are paying for old folks to have.
Not so.
That young folks never think they will have to pay for the socialist programs they want implemented.
I think if you look at the voting records it’s been the older generation that’s been doing the voting.
Exactly. The young aren’t voting because they know the game is rigged. sot their attitude is “the faster is goes out of control, the quicker it will destroy itself.”
I tried voting several times.
It never worked once.
Why are these considered “myths”? I don’t have time to go through them in detail, but most of this looks pretty reasonable to me.
“Mankind lived in total ignorance until very recently.”
-Yes, this is almost without question true. Just look at history, 200 years ago we were savages with guns and swords.
“All types of ‘ignorance’ still exist today AND represent the primary threats to peace and stability. ”
-Yes, this also seems to be true today, especially in countries with “too much” religion. Almost all the recent conflicts have been between an “ignorant” country and a 1st world “enlightened” super-power.
“Sexual restraint can no longer be taken seriously, as it was an invention of religion to control the masses and women in particular. ”
-I see this trend as well. I don’t really have a comment on it, other than to say, I’d much rather live in today’s sexual climate than that of 100 years ago. I realize others disagree.
“Total Moral Relativity : there are no absolute truths, there is no reason to believe in anything too strongly, everything is circumstantial.”
-This is a wonderful thing, IMHO. People need to think and question for themselves, and yes, there are no real absolute truths, only shades of gray. I’m not at all concerned about this; the only people who scare me are those who claim this not to be the case (which is typically people who are proclaming moral purity, while, at the same time, committing acts that Charles Manson couldn’t morally justify).
So, I ask you, what’s the problem with the beliefs above? Perhaps because I am one of the youth of the current generation, my view is so skewed I can’t even see my own problem! Perhaps I am proving your point, I’m college educated, and certainly see the world through those eyes (described above).
“there are no real absolute truths”
Then that statement itself is false.
Aaaah.
The following statement is true,
the previous statement is false.
So, I ask you, what’s the problem with the beliefs above?
Trick question?
How could anyone convince someone who believes “there are no real absolute truths, only shades of gray”, that there are problems with the above beliefs?
According to Chaucer’s Canterbury Tales, there was a lot of “emotion-free” sex occurring 900 years ago.
I found Canterbury Tales to be fairly unreadable.
Fecaltime!
Fecaltime,
Sadly we’re about as far removed from even English in the 1950’s to today’s rapper/gangsta perversion as we were from Chaucer ‘then’.
Still, I’d prefer him over that ‘other’ fraud!
Skip,
LOL! Was that The “Wife’s Tale” or the “Miller’s Tale”? ( Hey, they were all pretty raunchy now that you mention it? )
My favorite part from the Miller’s Tale:
This Absolon gan wype his mouth ful drie.
Derk was the nyght as pich, or as the cole,
And at the wyndow out she putte hir hole,
And Absolon, hym fil no bet ne wers,
But with his mouth he kiste hir naked ers
Ful savourly, er he were war of this.
Abak he stirte, and thoughte it was amys,
For wel he wiste a womman hath no berd.
He felte a thyng al rough and long yherd,
And seyde, “Fy! allas! what have I do?”
Skip,
“Fy!” indeed. When I was in HS we had a librarian that walked, talked and lived GC. He really made him seem to come alive as he knew well all of the references at the time.
bow chicka wow wow !
i have do idea what it says but it sounded dirty!
michael,
Uh… I think it was a ‘dude’?
Young people are incapable of recognizing their own enemy.
I think Toby was looking in the mirror when he wrote this.
10 to 1 he is out their trying to get laid as well. All the while feeling guilty about it and bemoaning the fact that women don’t have to live with a chastity belt.
“Religion has become like Al-Qaeda to today’s educated youth. It barely exists, but everyone is convinced it is a powerful beast capable of plucking a person out of his hedonistic bliss at any moment. ”
Ah yes maybe he hasn’t been watching the news lately. Does anyone with a brain doubt that fundamentalism of any relegion leads men to the conclusion that those who do not follow fundamentalist ways should be killed. Christian,Mormin, muslim, jew, hindu you name it.
Politics and religion are not to be discussed amongst friends. The reason is that people who are radically religious have given up on reason and acceptance of those that are different. They are only there to convert you. I love it when relgious people come to my door to convert me. I invite them in for coffee, but I would say very little gets accomplished. I point all the evidence that refutes their book. I point out the multiple cases in history where religion has behaved in an evil way and they read me text from their holy book. PS I’m not an athiest just don’t believe in organized religion or that there is a book that contains the one and only truth.
Communism is a legitimate ideology, Yes I see on the news all of those pro communism rallies on college campuses???????????? Toby thinks of any gov ownership as communism, but thinks nothing of driving on our highway system and would be pissed if Halliburton bought his local highway and set up tolls, or used their ownership position to squeeze other businesses.
Toby is an idiot who has grown up in an insulated religious world and thus spews this garbage. There are plenty of young people out there with diverse opinions, their is a lot of territory between Toby’s religious nirvana and communism.
Ah yes maybe he hasn’t been watching the news lately. Does anyone with a brain doubt that fundamentalism of any relegion leads men to the conclusion that those who do not follow fundamentalist ways should be killed. Christian,Mormin, muslim, jew, hindu you name it.
Right on!
10 to 1 he is out their trying to get laid as well. All the while feeling guilty about it and bemoaning the fact that women don’t have to live with a chastity belt.
Not sure if he’s bemoaning about the chastity belt, but I suppose a happy middle ground can exist. I have less than a decade on Toby but I have wondered about the “sex without feeling” myself. We, man want to spread our seeds to as many women as possible. It’s evolutionary. But what would an “honest” man think of his wife or partner who has beaten him into his own game? Would Tiger Woods still be sharing a roof with his wife if it was the wife who’s been effin’ around?
but thinks nothing of driving on our highway system
What’s so great about US highway system anyway? It was a total waste of money and resources and encouraged decades of auto indulgence resulting in today’s precarious situation. Without Eisenhower, we would still have had plenty of roads and you know we may have built more railways and other public transportation systems, which we are looking to rebuild.
About the interstates: no we wouldn’t and it wasn’t all about commercialism, but strategic mobility during war and especially mobility during and atomic war.
It also took away the monopoly of the railroads.
Politics and religion are not to be discussed amongst friends. The reason is that people who are radically religious have given up on reason and acceptance of those that are different.
Yes but this problem is on both sides and I think about equally. When I lived in the Bay Area many people were afraid to even admit they were Christian or Christian Light because the more “enlightened” ones would often scoff at them and ridicule their beliefs and then refuse to take them seriously. This surprised me at first because most these people preached acceptance and love of diversity.
Fundamentalism of any relegion leads men to the conclusion that those who do not follow fundamentalist ways should be killed
In some cases true however the vast majority of religious people are not even close to being fundamentalists. We should not throw the baby out with the bathwater.
The left and right need to find some common ground quickly. We need to step back a bit and realize that most Christians are not nutballs and most Liberals are not Un-American.
“-Sexual restraint can no longer be taken seriously, as it was an invention of religion to control the masses and women in particular. (Conclusion: Get it when you can, while you can. It’s practice for someone you might really like someday!) There is a tremendous amount of pressure on young women to be able to “handle” emotion-free sex. They have been convinced, mostly through entertainment media, that taking sex seriously is a weakness. It is a bodily need detached from the rest of you. Combined with a social scene set around alcohol, young love is a messy, schizophrenic story where one is very lucky to find someone on the same page. ”
This is new? Kid, you should have been around in the late 1970’s. We really knew how to party then!
All this blubbering about “what’s wrong with kids today” is making me think I accidentally stumbled into some kind of AARP Bi#ch session.
I just want them to get off my lawn.
Guys, there are some things that you cannot teach. The lesson doesn’t sink in, until it is learned first hand.
I’ve made my yard into the sort of place that the kids wouldn’t want to play in. For starters, there’s a big mesquite tree with large thorns. I also have more than a little bit of cactus.
And the front retaining wall that sometimes was a hangout for undesirables? It’s a goner. Had it taken down and replaced by a rock garden. With sharp rocks.
In case anyone cares, this “Toby Moreland” guy does not exist. Makes for a slightly interesting google search, though. Appears to be a made-up character on a conspiracy site.
You also see a lot of left wing liberal types that have no clue really what it would be like to live under a total communist structure . I think the Political machine and the power elite play these different groups ,
while they take the money .
My father use to say in essence that it was all about the struggle
between the have and the have not’s .
Eric Hopper wrote a book many years ago called “The True Believer”,that really outlines the methods that power groups are people use to
control people . First Hopper said in essence that the controllers create a enemy for the group to fight against to keep them preoccupied .
When you think about certain cults the methods to get the dedication
of their followers is standard practice . Today it’s interesting how self-interest groups that rob the Majority manage to keep that Majority sidetracked on every issue but discovery of their motives .
I’ve been thinking about interest rates. My plan to purchase a house is based on the fact that I have a large down payment and as rates went up, prices would have drop in line with rate increases. And as such, my down payment would purchase more of the house and I’d have lower amount to pay off. Interest rates going from 5% to 8% in the next 3-5 years is going to increase the monthly mortgage interest by 60%. I would expect prices to have to drop considerably (30-50%??) for people to afford the monthly payment. I seriously doubt wages are going to increase 60% in that time frame. But as I extrapolated what might happen if interest rates increased 60% I realized that this would crush housing.
My questions are–Will the powers that be allow rates to go to 8% or above in the near future? Can they realistically stop them from rising when we leave the recession? If they do rise to that level, will it really decimate housing like I think?
Hobo, I think it that housing is going to be destroyed no matter what happens. At the moment, everything depends on the government spigot.
1. If the government leaves the printing press on, we’ll eventually have inflation and Ben won’t have much choice but to raise interest rates, CNBC be damned. Housing will crash in a 2-3 years.
2. If the government shuts off FHA/Fannie/Freddie, then banks are going to have to make loans the old fashioned way — by demanding very good credit, proof of income, and some gizmo called a “down payment.” Housing will crash in 2-3 weeks.
Where does the shadow inventory come into this? I don’t know, except that those shadow homes are depreciating as we speak, both monetarily and physically.
oxide,
And… about a million other ways for housing to circle the drain even ‘we’ can’t see from here. Like the scene from Apollo 13 where they need about 300 events to happen in perfect sequence to even have a ’shot’ at re-entry, and any (1) of them can de-rail the whole effort.
will it really decimate housing like I think?
Only if credit remains tight. People will buy houses regardless of what the interest rate is. They will follow the myth of the “American dream”…
Credit isn’t tight now. 3.5% downpayments, subsidized by cash back tax credits and mortgage rates under 5%? Not tight at all.
“…People will buy houses regardless of what the interest rate is.”
I’ll take that bet,
Lets compare house sales @ 3.9% 2005…to…house sales @ 18.7% 1982
Oh, I guess you win…
house sales @ 18.7% 1982
Damn,
Were they really that high? Makes a case for paying cash!
Yes, I bought my first house with 10% down @ 17% interest a little before the peak. It was a 3 bdrm/2 bath ranch on half an acre with a beautiful view. Cost less than $25K.
“Were they really that high?”
Indeed they were. And gold was somewhere around $800/oz too if I remember correctly. But back then my attention focused on Ozzy/vanhalen/keg parties/girls. You know… important stuff…
$486,086.86 @ 14+% = $5,759.51
+ Taxes
+ Insurance
+ above payment not going into savings
Now do you see why Sir Greensissspent was “Knighted” by the Queen of England!
“My questions are–Will the powers that be allow rates to go to 8% or above in the near future?”
Since governments are the biggest debtors out there, you can bet they are going to fight rising interest rates every way they can. For example, $12 trillion in debt will cost $480 billion a year at 4%. $480 billion is 18% of government receipts (using known 2008 numbers).
“Can they realistically stop them from rising when we leave the recession?”
I would love to know this. Supply and demand suggests that tricks to keep interest rates low will reduce supply of loanable funds. The fact that banks aren’t lending their own money, only the government’s (through GSEs) supports this concept. AZ lender’s difficulty finding new business suggests the same (people won’t borrow at reasonable rates seeing the GSEs unnaturaly low rates). So either the government has to keep lending until they go ‘Weimar’ and collapse the currency, or they have to let interest rates rise to the point that private lending will resume. I can’t conceive of a third option.
“If they do rise to that level, will it really decimate housing like I think?”
I know what you mean here, but I want to phrase it differently. It won’t decimate housing, it will allow prices to fall in line with fundamentals. It will decimate note holders.
A rise in mortgage interest rates to 8% is quite possible in the next 5 years, but this need not kill housing. Housing is already dead and interest rates have come down that much, so you can see that there is no one to one relationship between housing prices and interest rates — it depends on why interest rates are rising or falling, and on what else is happening in the housing and credit markets. Mortgage interest rates will rise in the future because so many people are now defaulting and government efforts to prevent defaults are further raising the risk in mortgage lending.
Your problem is that housing prices are likely to fall further and you will be able to buy more home with the same down payment and annual interest cost even if the interest rate itself rises.
The solution is not to worry so much about whether interest rates are going to rise and fall, but to ask yourself if you can afford a house that you want to live in for at least 5 years for less than you can rent it, given your current and expected income, your available down payment, the mortgage interest rate you now face, and the costs other than interest that ownership will bring.
This is not an easy question, but gets to the heart of the matter of home ownership. Unless you are contemplating a floating rate mortgage, nominal interest rates are largely a diversion
The current collapse in prices has to do with the end of absurd teaser rates, non-amortizing loans, undocumented income loans, etc. and the end of the perception that housing prices can only go up that motivated many small time investors.
It is perfectly plausible (and even expected) that an increase in interest rates will cause prices to go down even more.
The housing market has more than one variable. Pretending it does only makes you look ignorant.
Sorry, that was kind of harsh. Feeling stressed today.
However, the basic point stands. Just because A (house prices falling) happened without B (increased interest rates) happening, doess not mean that B, when it does happen, can’t cause even more A.
The big issue with home ownership is the concept of what environment do you face in 5 to 10 years when you want to sell . Will it be a tight money market with higher interest rates making it impossible to sell without losing money ,or maybe impossible to sell at all . With the artificial tampering of the government these days ,one has no idea what the terms will be
for future real estate transactions . Real estate sales are highly dependent on financing because most people can’t buy a house for cash .
Will somebody tell the Government that you can’t inflate a mania after it’s crashed ,especially when the values were based
on a easy credit Ponzi-scheme . When the incentives are withdrawn the market goes to where the market really is .
Exactly. Moreover, when B happens, more of A is likely to happen (unless government price fixing stops the invisible hand from functioning properly).
…doess not mean that B, when it does happen, can’t cause even more A.
…when B happens, more of A is likely to happen
Ergo, B of A!
LOL d
If interest rates get that high, we’re probably going to need a new law preventing foreign ownership of U.S. real property, with all the dollars in the possession of our potential colonizers. We’re all Mexicans now!
Earlier post eaten by offensive words? We’re probably going to pass a law prohibiting foreign ownership of land, as so much of the dollars are in possession overseas. Third World.
“I would expect prices to have to drop considerably (30-50%??) for people to afford the monthly payment.”
Did you ever consider moving to Palmdale? (See first post in today’s Bits Bucket…)
Nice idea
Well, none to sure about “Palmdale” ( but I’m -definitely- looking into openings at the Fire Dept? )
I had to go to the mall last weekend to mail a package (White Flint Mall has a post office that is open for most of the day Saturday and Sunday afternoons). Now, we were having a light snow storm that day and Washington area folks are wimps about driving in the stuff, but it was very very quiet. Not completely dead as the parking lot wasn’t empty by any means, but the halls and stores seemed less busy than even a normal, not pre-holiday weekend.
Did not check the slightly less upscale mall in the immediate area as it does not have a post office. It could have been mobbed.
Don’t know about the malls, but I recently visited the strip malls up the Pike and could barely find a parking space, late morning on a weekday.
Depends on the one you go to. The strip mall with the Trader Joes never has much parking. I still can’t figure where all the people are. You can usually find a spot in the rows across from Pearl Paint.
A lot of those strip mall areas have more parking along the side or the back that are less full. For some reason, people have this deep seated fear of walking an extra 20 to 40 seconds.
“…late morning on a weekday.”
Ummm, unless that was the early lunch crowd, a packed parking lot at that time of a weekday is not a good sign.
Polly, if DC-area people have their milk, bread and toilet paper they do NOT go out while it is snowing. No matter how light it is, and no matter that there will be no accumulation.
How I wish that were true. The folks around here also seem to have a pathological fear of brushing snow off the roof, trunk and front end of their cars. When the snow is powdery, you can be driving in a white out behind these folks.
But, I acknowledge that the mall may have been under utilized because of the weather.
We were at Columbia Mall (big regional mall between DC and Baltimore) sunday between 10:30 and 12:30. It was busy but not like previous years.
My anecdotal observations are that Black Friday at the outlets along Rt1 north of Rehoboth Beach were PCAKED PACKED PACKED but I also noticed that the discounts were significant.
I was wandering around the Glendale Galleria in Cali last night. Easy parking and easy walking around the place. Lots of sales people offering to help. Didn’t see much in the way of special offers or sales which I thought was interesting.
Perhaps Christmas buying was all done over Thanksgiving weekend?
Real Estate Refugee,
I can’t speak for others, but I absolutely -love- being sold! God, I can’t tell you what it was like over the last ten years walking into any kind of retail and being quickly “sized up” as being a cheapskate!
( That way the Help can get back to what’s ‘really’ important! ) Namely flirting w/ each other and taking “urgent” cell calls! Now that they’re at least somewhat hungry again, it’s great when they ask if they can help you and actually make eye contact.
Now, we were having a light snow storm that day and Washington area folks are wimps about driving in the stuff, but it was very very quiet.
They need some of that flinty Chicago toughness.
They need some of that flinty Chicago toughness.
Most people in the DC area can’t drive in snow, but Chicagoans get all namby pambly when it rains, which I’ve never quite understood.
Yeesh, when I lived/went to school in Michigan, we just slogged through the rain. Yes, we complained about it. And we also got suicidally depressed over the endless stretches of gray days during the rainy/snowy season, but we slogged through.
combo - continuing our conversation from yesterday:
You’re incurable. You just can’t grasp the concept of a zero-sum game, at least in the context of money changing hands in the economy.
You state that I would be worse off in the Madoff case - having less cash in the end - but it’s not about “me” - it’s about the economy as a whole.
Continuing your example of $1m invested with Buffet vs. Madoff:
In the case of Buffet - sure I’d get my money back, but only after it had been extracted out of the economy.
In the case of Madoff - sure I wouldn’t get my money back - but the money would remain out in the economy.
Assuming that million dollars is real money* - then both of the above have the exact same result with regards to the overall economy. In the Buffet case - $1 million exists in the economy the whole time - moved from me to Buffet, dispersed out, then collected back to me. In the Madoff case - $1 million exists in the economy the whole time - moved from me to Madoff, dispersed out, and that’s it. It’s still there. It still exists - contributing to the price equations.
* If the money isn’t real money - e.g. created by me by fiat and/or fractional lending - then it’s different. Then the act of creating or loaning that money creates new money. In the Buffett case - if I’m paid back then the money is then removed from the economy (assuming it’s taken off the books); and thus we have a period of inflation followed by a period of deflation. In the Madoff case though since I just write off the loss - the new money remains in the economy. Thus we have inflation followed by no change.
Probably should ignore this post - I posted it before realizing that combo had restarted it above. The main discussion is above.
I believe I see Combotechie’s point.
Consider as an example the millions of HELOCs used to buy Harleys, jewelry, vacations, second homes, luxury SUVs, etc. At the same time this “wealth” was buying all of the junk, it was on the lender’s books as an asset worth somewhat more than the original amount of the loan due to expectations of repayment with interest. In addition, this “asset” was used on the lender’s balance sheet as a basis for making further loans.
Now, “poof!” the borrower decides not to repay. All of the expensive junk is still there but the “asset” on the lender’s books ( which is also used as a basis for making further loans of the same type ) no longer exists. Even though the sketchy book keeping rules now encouraged by FASB say that it does.
How am I doing, Combo ?
… used to buy Harleys, jewelry, vacations, second homes, luxury SUVs, etc.
Question - what happens when such HELOC money is “used” as such? Does it just disappear up a chimney - gone forever?
If not - where does it go?
China?
Not too sure about Harleys and most jewelry, but I’m not aware of our homes being built in China, nor our SUVs (except for some components perhaps - e.g. drywall and such). Vacation money only goes there if you actually vacation in China.
You bring a good point though - of course no country is an island. Lots our money has of course been going to China, Japan, etc. - though less so the past couple of years. A large portion of this money though then comes back in the form of U.S. treasuries, which then goes to pay government workers’ salaries, which goes towards buying new stuff - etc. etc.
pmseatac,
By me, you’re good. Those of us in the PNW got a “pre-view” of this from the Tech Bust. Among the ones that “minded our knitting” and didn’t tap out every last DIME of home equity at our avail.., we didn’t have any “toys” to carry us through the lean times?
Those that did had ample Rv’s, boats and Harley’s to sell at a discount to create “cash flow” once their unemployment ran out. Remember, we didn’t even -begin- to get traction in the economy until early 2004. But rather than sync-up w/ the balance of the Nation, we had our Bubble comin’ and damn it we’re going to take full advantage even if it kills us!
Down here in Podunkville, the bubble is still
present. At least in a smaller form.
Just gimme the prize, dude.
http://www.guardian.co.uk/world/2009/dec/09/obama-nobel-peace-prize-snub
Methinks that Obama is adding more fuel to the “I don’t deserve this” fire.
repost (because this is such a great idea).
I’ve got this great idea on how to re-flate the economy. GIve the banks trillions and have them “invest” the money in the stock market. Then have them manipulate the market higher by trading back and forth between themselves. Next, have them pay huge returns on the government’s investment and make lots of noise about it. I think if we do this, the public is so dumb that they will never think its a scam and the plan will work. Should we try it?
This requires proper execution. So, have the traders stand around in a circle. Name this circle a “trading huddle.” Pass stocks back and forth until made to stop.
This is also known as a circle jerk.
Roidy
You’re about 30 years behind.
Gaming the system began in earnest in the 1980s. “Greed is good” ring any bells?
Sound of Big Ben and numerous carillons ringing.
Proposing a system of sound money?
I doubt Americans give a damn.
“Restoring soundness to the dollar will remove the government’s ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies and cosponsor of the
“Free Competition in Currency Act.”
Rep. Ron Paul, the aging physician from Texas is at it again, pushing the House of Representatives to set the stage for an honest money system in the United States. His plea will fall on deaf ears. The banking cartel likes the present system of fiat currency, although Americans are presently getting a taste of the disaster it creates.
http://www.lewrockwell.com/paul/paul619.html
Who won the game and when is American Idol on?
Victory?
Geithner: don’t declare victory too soon in crisisDecember 10, 2009 10:04 AM ET
All Thomson Reuters news WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner said on Thursday the government had to beware declaring victory too soon after managing to avert complete financial collapse by bailing out the nation’s banks.
“History suggests that exiting too soon from policies designed to contain a financial crisis can significantly prolong an economic downturn,” he said in prepared remarks for delivery to a Congressional panel that oversees the Troubled Asset Relief Program or TARP.
Geithner said investments made in banks through TARP were returning more money sooner than thought and the next few weeks will bring “substantial income” from more sales of warrants to buy stock in banks that are repaying bailout money.
But Geithner said he had requested that TARP be extended through next October 3 in order to be able to respond if necessary should financial conditions suddenly worsen
I knew this isn’t popular here, but good for Timmy. He’s basically admitting that they are anticipating a W-shape recovery.
btw, I saw on Nightly Business Report that BoA is going to repay their $45 billion in TARP money by “selling stock.” Selling stock?!? If they were so on the brink of collapse, then why didn’t they sell stock a year ago instead of demanding TARP? Oh right, they wanted the free gov float and low interest rates.
(and I still think it’s pretty funny that all the gov had to do to get its $45b back was cut the executive pay in half. How much can the executive pay possibly be? 2-3 billion tops? And yet, BoA gave up their $45 B play money just for 2-3 billion in pay. I guess it matters whose pay is being cut.)
I knew this isn’t popular here, but good for Timmy. He’s basically admitting that they are anticipating a W-shape recovery.
And I’m going to add to the unpopularity by saying that we’ve been impaled on the pointy part of the W.
And for extra measure I’ll third by saying we’ve no idea what the landscape would look like had they -not- intervened.
I mean other than totally barren.
“…after managing to avert complete financial collapse by bailing out the nation’s banks.”
The central bankers at the helms of the Fed and the Treasury are mighty quick to claim credit for saving the global economy from collapse, and lethargically slow to acknowledge how their system of free too-big-to-fail bailout insurance was a key factor that led to the collapse.
Psycho and socio paths are like that.
“Trade your paid off 1-4 year old sedan to live in a 4300 square foot 4 bedroom + den Custom on 1/3 acre in Exclusive Gated Vasaro
House appraised for $1.1 million, was rented below market at $5500 monthly
It is in short sale, which means at some point the house will be sold
(Guaranteed 3 months and we have one that has gone 19 months)
Your car is your complete payment!”
http://phoenix.craigslist.org/evl/bar/1493631130.html
But who is going to pay for the gardeners and maids and the back taxes? I don’t even want to think about the HOA.
Economic Report
Dec. 10, 2009, 10:16 a.m. EST
Initial jobless claims rise 17,000 to 474,000
Total jobless claims, including extended benefits, top 10 million
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) — The number of people filing claims for state unemployment benefits rose by 17,000 to a seasonally adjusted 474,000 in the week ending Dec. 5, while the total number of people claiming benefits of any kind topped 10 million, a sign of very sluggish hiring, the Labor Department reported Thursday.
First-time claims — which measure new layoffs — rose for the first time in six weeks in the week after Thanksgiving. Economists surveyed by MarketWatch had expected initial claims to fall to about 450,000.
…
Wait a sec, I thought the unemployment went down to 17,000 or something (definitively 5 figures) for November and the stock market rallied on the news. Now we’re back to 400,000+?
Aye Captain,
Ya canna create so many jobs so fast, the engines canna take it! They’ll blow!
Maybe they should put in a workfare requirement for those on extended UI, to get people doing something useful to the community. I’d imagine just sitting around with no openings is causing them to wither on the vine. And the longer they do so, the less likely private employers are to hire them.
What would they do? There are plenty of unemployed managers who could figure that out.
Maybe they should put in a workfare requirement for those on extended UI, to get people doing something useful to the community. I’d imagine just sitting around with no openings is causing them to wither on the vine. And the longer they do so, the less likely private employers are to hire them.
They could do cleanup along streets, right of ways, and in public parks.
No, wait a minute. That’s work that Americans just won’t do. Quick, call in the private contractors who hire the illegal aliens.
Actually, that’s the work that county inmates and “community time” offenders do.
WT;
Its Illegal to hire and not pay the Unemployed for an Intern job.
And yet that will solve the problem of having big gaps on your resume. And no cleaning up the parks for someone with a 4 yr college degree..
I would love to intern for Polly….i would learn so much…but the FLSA prohibits working for free in a for profit company unless you are in college and can get credit.
When Bernanke and Geithner are done printing we’ll all be millionaires. We’ll be driving million dollar cars and living in multi-million dollar homes.
When Bernanke and Geithner are done printing we’ll all be millionaires. We’ll be driving million dollar cars and living in multi-million dollar homes.
Wrong, we’ll still be where we are now. Wall Street will be full of billionairs, mainstreet will be full of well homeless people looking for bread.
Yeah, I also think that’s pretty much 100% certain that no matter how this plays out, and who is in charge.
I blame it on Star Trek, people watch too much Star Trek and it makes them think humanity will get it’s act together someday.
Dr. Evil:
“I will ask for… A MILLION DOLLARS!!”
we may indeed all be millionaires, but when everyone is a millionaire it won’t mean a whole lot.
The glorious Zimbabwe experience awaits!
Unforgettable!
mrktMaven,
Given at the height of the boom they had houses in Compton with bars on the windows going for “$750,000″ how hard is that to believe? Ya’ bust me UP!
mikey and Leigh,
Lawrence Yun was on WPR this morning….it was at 6AM, so I wasn’t up to listen, but I’ll have to listen later.
http://clipcast.wpr.org:8080/ramgen/wpr/jca/jca091210a.rm
Unfortunately the million dollar car will be a Honda
a rusty, crappy one.
I wanted to bounce a question off of the wiser heads here at the HBB. It’s regarding typical residential construction costs in the mid-atlantic area. I am helping a friend design a 1000 square foot addition to his house on the outskirts of Rehoboth Beach Delaware. The neighborhood is actually on unincorporated county land between Rehoboth and Dewey Beach for those familiar with the area.
We just received a bid from a general contractor for around $200 per square foot. I consider this absolutely laughable in this economic climate and made that quite clear to the contractor. He got a little indignant and claimed that’s the typical rate for the area and that I didn’t know what I was talking about. I call BS on that. I find it hard to believe that run of the mill stick built residential construction should cost more than $100/sqft in that area given the current economic situation.
Anyone here on the blog care to weigh in on that?
Oh the irony.
I’m very familiar with the area as I built two large facilities there earlier in the decade. To advance the irony further…. one of my superintendents formerly built houses there and I asked him how much he can build for and make money(it was a test really). His answer? $50/sq ft. That was 2005 and the only good estimating application out there (RS Means) suggests the same number. No you won’t have crushed fine china for skimcoated walls, radiant heat, blah blah blah but you’ll get a new structure for that price.
Your friend is getting ripped.
Typical contractor think!
$200 a square foot for 100 square feet.
1,000 square feet is 10 times 100 square feet, so the cost will be 10 times the cost of the 100 square feet!
The square footage cost should always go down as the square footage goes up!
JackO
ding ding ding…. we have a winner!
Purchase a construction cost estimating book from RS Means. That’s what I did when I had a lot of work done some years ago.
According to building-cost dot net, the contractor isn’t far off.
I plugged a few numbers into their calculator. I assumed a 6-corner 1000 sq ft structure with no attic or basement, central HVAC, and high-end inner and outer walls and fixtures, built in Dover. Total cost: $217,351.
If you use standard walls and fixtures, the cost drops to $166K.
Oxide…. the “contractor” is way off. WAAAAAAAAAY off.
Most of that money was materials cost. Maybe there’s still a bubble in commodities.
they need to go to the Habitat Re-store.
(Materials cost)(2) +5%=Retail price, general speaking.
I would agree. Talking construction costs only right? $100/sq ft is right at where homes around me are going for, in northern VA. No reason why they should be higher there, except maybe taxes and fees and such - though they should be *that* much different.
I’m not a contractor/appraiser/etc. though.
Seems like you could pull up records on various houses in the area, and look at the assessment values which break out house vs. land (though I’m not sure if that breakout is public).
Follow-up - never mind on my post. I missed the part of it being a 1000-sq ft addition, rather than being a full house itself. (Yes, reading comprehension is your friend)
I’m sure the pricing for additions would vary considerably depending on the conditions - what are the room types, how will they integrate with the rest of the house, does it include roof, new or adapted foundation, etc. oxide seems to have found a good resource.
building-cost is based on new construction too. But a 1000 sq ft addition is huge. It’s larger than the original Levittown houses. As long as the addition isn’t one big ball room, it may as well be new construction.
Good quality stick framed additions can be done
for $65/sq.ft. You can drop it even more if the
contractor is a friend. Anything more is for
amenities and can include basements and attics.
$200 a sq/ft is laughable. We have contractors in
our area that advertise for building at cost + 10%,
some will do it for 5%.
Time to shop.
Thanks guys!
I do primarily commercial work so my BS-0-meter for residential isn’t as finely tuned but $200/sqft just doesn’t pass the sniff test.
I am going to pick up a current copy of Means so I’m a little more knowledgable on the subject.
No doubt Means is your best bet. There is no other.
Spinning off from the interest rate discussion above. I’ve had some thoughts I wanted to put out there.
Interest rates are of course at or near all-time lows in the U.S., pretty much across the board:
- Mortgage rates (below 5% for 30-year fixed)
- Treasury rates (averaging 2-3% for current offerings)
- Money market rates (below 1% I think still)
- CD rates (also generally around 1-2% except for high-risk)
- Fed rate of course still at 0-0.25%
- etc. etc.
My discussion would be - can they, and maybe even should they, continue at these low rates essentially forever? Several aspects are involved:
A. Changes in economic growth model due to low rates - e.g. people will put more money into things like stocks, commodities, etc. instead of low-yield CD’s, Treasuries, etc.
Do low rates actually encourage economic growth - by people investing in “stuff”, generally in anticipation of coming inflation? Investing in this “stuff” is itself a way of fueling the economy - e.g. investing in stocks helps companies have extra capital, investing in houses helps the bottom line of housing companies, etc. However investing in CD’s and even Treasuries also helps the economy, in the way these investments are used by the borrowers. So moving aware from these investments has a negative effect.
B. Inflation expectations of remaining at low rates.
This is a toughie for me. Of course the general agreement is that if the Fed keeps rates really low for “too long”, that inflation will soon follow. But will it? Seems to me the act of keeping rates low only would fuel inflation if we have a true recovery - such that people actually start spending a lot more. However what if the recovery never comes - e.g. like in Japan for 15+ years now? In our case (and Japan’s perhaps) - we’ve built up so much debt that lowering interest rates may never actually trigger an increase in spending. Perhaps it will lessen a decrease in spending. But what if there is so much overhead now going forward in the economy - higher taxes/overhead due to government growth, higher overhead due to debt servicing itself, etc., that we never have a significant increase in actual consumer and business spending - even if interest rates stay low? Will this mean that the expected inflation from said low rates just never comes?
C. Removal of one of the government’s (Fed’s) tools for future economic stimulation.
The government/Fed has of course has often used low interest rates to try to fuel the economy out of recession. In 2001-2004 of course these low rates contributed greatly to the growth of the housing bubble and associated economic boom (though whether it could be considered a boom is questionable since it was debt fueled. Nonetheless unemployment did go down, etc. - things normally associated with a boom).
Might we end up in a situation where we go from a long-standing stagnant economy, to a new downturn, while rates are still extremely low? If so, then what? Or might we just never have a “new downturn” after a stagnant economy - because a downturn generally involves popping of a previous bubble - and there are no bubbles in a stagnant economy (at least major ones)?
The core question is - is there a “natural” level for interest rates in a normal economy - and if so, what is it? And what are the consequences of never getting back to that “natural” level?
i. low interest rates generally lead to a misallocation of assets. Instead of investing money into some project that has a high long term benefit/return resources are more easily squandered. See housing bubble.
ii. Without the FED’s manipulation Interest rates will of course fluctuate depending on supply, demand and credit worthiness. Yes, that means people with no downpayment, poor credit and low income wouldn’t be able to get a loan….how unfair!
iii. The consequences of never getting back to the natural level are that assets will be allocated in a sub-optimal fashion leading to sub-par outcomes.
For example compare the US and the Soviet Union (or better yet, West and East Germany since they started out from a very similar position) from 1950 until 1989. One did a fairly reasonable job in allocating assets and keeping their workforce motivated, the others didn’t.
Especially in Germany the standard of living in East (= communist) and West (= capitalist/socialist mix) was almost identical in 1950.
In the East government officials were responsbile for asset allocation and in the West it was mostly the responsibility of private enterprise. Look back 39 years later, outcomes did vary. Even extremely poorly managed economies manage to limp along pretty much indefinitely but the results are far below of what they could be.
i. low interest rates generally lead to a misallocation of assets. Instead of investing money into some project that has a high long term benefit/return resources are more easily squandered. See housing bubble.
Is it really just “low” interest rates that result in misallocation - or is it universal/manipulated rates that cause it? E.g. if the Fed raises rates way up high - mightn’t that cause an a swing to another type of mis-allocation of assets? Seems like the problem is that you have a virtual monopoly on rates (set by the Fed), and they’re applied universally across all assets classes - not individually based on asset class or risk. However given no choice but to follow the Fed on this, such that we will always have universal/manipulated rates - are we really better off with higher rates? Would higher rates (though still universal) cut down on the misallocation?
I guess it depends on the investor that looks for a high return AND for the return of the principal….so Greek government bonds are out. I would think that projects that offer a reasonable return and good safety are more easily funded than risky projects that offer a speclative return.
Say I want to invest $1 million by loaning it out. I can either do that by putting up the money so Mr. Big Spender can buy a Ferrari or buy building a hydro electric power plant.
If the Big Spender wrecks the car or runs out of money I am screwed. If the power utility goes out of business I still have a claim on the power plant that produces electricity which I can sell. Therefore I am likely to be content with a 5% return on my money if the project “makes sense” while I might demand 20% to finance risky ventures.
So naturally risky ventures will be starved of funding while worthwhile ventures will still have access to relatively low rates. So subprime borrowers would have never been considered for a loan, which would be a good thing.
The FED manipulating rates diverts money from projects worthy of funding to unqualified borrowers. Gamblers on Wall Street, sub-prime borrowers, shop-a-holics and various other big spenders that are high risk or have limited means of repayment.
Long term the outcome is most likely still better than in East Germany, but not as good as it could be….just my $0.02
Proof that the health insurance industry is playing games with health care reform.
Yes, believe it or not, it’s possible for a collusion of individual CORPORATIONS to form a Group of: “TrueDeceiver’s ™”
When this happens it’s called “TrueDeceiver’s ™” Inc.
Who are the people behind this?
Get Health Reform Right describes itself as a “project of organizations whose shared mission is to ensure consumers continue to have access to employer-sponsored healthcare plans.”
We are concerned about federal legislation that would create new government bureaucracies that would unravel the workplace healthcare system where more than 160 million people get their coverage.
Under the “Who We Are” tab on GetHealthReformRight.org, the following organizations are listed:
* Association of Health Insurance Advisors
* America’s Health Insurance Plans
* American Benefits Council
* BlueCross BlueShield Association
* Council of Insurance Agents & Brokers
* Healthcare Leadership Council
* Independent Insurance Agents & Brokers
* National Association of Health Underwriters
* National Association of Insurance and Financial Advisors
* National Retail Association
Would you expect any different reaction to a plan that proposes taxpayer-subsidized competition?
competition?
So how do you gauge “competition” without listed prices?
Huh? You ask for them maybe?
(Is this a trick question?)
I’m precisely aware of how much I pay for health insurance. I would presume that if a public option became available, that I would be able to find out the price of that also. I would then gauge the option of whether to choose the public option vs. my employer’s option. Much like today I gauge whether to choose between various plans within my provider’s set, including using available price information.
“I’m precisely aware of how much I pay for health insurance.”
Interesting, and are you “precisely aware” of the “fine print” of each policy & “how-the-”Corporation”-interprets-each-said-fine-print-thus -clearly-stated?
Sigh.
I can be if so desired… yes, and mostly did just recently in fact when choosing between plans. At some point though it becomes counter-productive to look at all the fine print, when each piece of fine print doesn’t affect the equation that much.
What’s your point? Are you honestly suggesting there would be less bureaucracy in a government-run health plan?
Government run health care is always better.
You can always bribe your congressman/senator to make a call to a doctor/hospital on your behalf.
What’s your point?
But, but,but…what do you mean: I must have had that lesion on liver since I was 3 yeas old and therefore, it’s a pre-exsisting condition, and thus the operation that you won’t give me a price estimate for doesn’t really matter since you’re not “allowed to “cover it” under my current insurance!!!!!????
(Now remember kids, ALWAYS read the “fine print” when you have the time & are so inclined to “educate” yourself, that applies to head shampoo as well…)
Typical American insurance consumer = 1
Medical Insurance provider = 0
Are you honestly suggesting there would be less bureaucracy in a government-run health plan?
There would be less bureaucracy, IF it were a Single-Payer System.
One study estimated U.S. private insurer administrative costs at 30% of total healthcare costs, versus 17% for the single-payer Canadian system. Harvard & Canadian Institute for Health Information
The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance.
Krugman-NYT-One Nation, Uninsured-June 2005
Neither is perfect but I’d take Canada’s system over ours any day.
* Association of Health Insurance Advisors
* America’s Health Insurance Plans
* American Benefits Council
* BlueCross BlueShield Association
* Council of Insurance Agents & Brokers
* Healthcare Leadership Council
* Independent Insurance Agents & Brokers
* National Association of Health Underwriters
* National Association of Insurance and Financial Advisors
* National Retail Association
In short, the usual suspects. Okay, everybody, bend over ’cause here it comes again.
Or simply “BOHICA”
End justifies the means.
Then again, how’s it any worse than bussing and paying acorn and sieu to support the obamacare?
Here Basura…. let me say it for you.
The poor insurance companies!!!!
Let’s all support the Health/Medical Industry’s “Do Nothing!™” advocate group…the more Americans “Do Nothing!™” …the better $$$$$$$$$$$$$ …“they” like it!
Fred Reed on the Not-So Subtleties of Money, Power, and Healthcare:
HOUSTON—The remote outskirts of this city stretch forever across featureless land under gray skies, endless parking lots mostly empty, nasty malls, elevated highways roaring and almost uncrossable by pedestrians, of whom there are almost none. It reminded me of hell designed by a concrete manufacturer. Highrise office buildings erupt like square thumbs, one like another, home to god knows who or what. It is chilly. Across the asphalt in an undistinguished building, beneath the howl and blatt of the elevated highway, preposterously, was a gorgeous Italian restaurant, all lovely dark wood and good design. I could never figure out what it was doing there. For five days I oscillated between wretched television in my hotel room and this improbable elegance.
Business was slow, as the restaurant had just opened. On long empty afternoons I was usually the only customer. At night things picked up.
When trapped in a small world, you get to know people. A couple of waitresses in their early twenties, white, high-school grads I’d guess, waited. Customers would appear later. We chatted. They reminded me of people I had grown up with in the rural South. Their grammar ran to “If he don’t come by three….” They are not bad people, nor bad citizens. None descends to the moral level of a congressman. But they are not polished.
Lives at the low end of things run to the complex. One had two children by an earlier husband, now in the slam for assault and robbery, and a third by a boyfriend whom she planned to marry. She spoke with pride of her sprats. Her three-year-old knew her letters and colors and could count to twenty and learned her story books by heart in nothing flat—indicating that her mother was reading to her. Strange as it may seem, intelligence exists outside of Swarthmore, unschooled mothers are not necessarily bad mothers, schooled ones frequently are, and grammar does not always cohabit with responsibility. These girls were not the shiftless reprehensibles beloved of conservative politicians. They were pulling their weight as best they might. It was just hard going.
In our nation’s curious capital, people know nothing of uneducated young waitresses who juggle long hours and children, without having even one illegal nanny. DC is a world of secure jobs and money, where everyone has been to university, often to a Calvin Klein university like Harvard, and brains in the ninety-ninth percentile seem unremarkable. We are making three hundred grand a year; why can’t they? This otherworldliness accounts I think for a certain surreal quality to Washington’s debates. For people with high-end Blue Cross, health care has something to do with Keynes and free enterprise and ideological catfights. For a young mother with a sick kid and no money, it doesn’t. But Washington doesn’t know this.
Let them eat cake.
But is there actually any cake left?
cobaltblue,
Another good read on that topic is:
“Nickel’d & Dimed” by Barbara Ehrenrich. She did a “Black like Me” tour of min. wage jobs from coast to coast and wrote about it. Or rather l-i-v-e-d to write about it.
Well, let’s stay “on message” & on the “Do Nothing!™” train & support the “TrueDeceiver’s ™” …because to do otherwise, is to give a wink to the current democraps & help to bring about the rapid collapse of “America the Beautiful!”
By Kristen Gerencher, MarketWatch Dec 10th 2009:
“Assertion: The bills are too big, and changes should be tackled one by one instead of all at the same time
It’s been 15 years since the U.S. came even remotely close to passing comprehensive health reform. While this year’s attempt is ambitious, people who decry the scope of the bills underestimate how many moving parts need to work in unison to achieve the desired results, Nichols said.
“It’s got to be done as a package,” he said.
For example, health insurers would be newly required to accept all comers regardless of their preexisting conditions in exchange for a new requirement that individuals have coverage or face financial penalties.
Addressing cost control without extending health insurance at the same time wouldn’t work either, Nichols said. “You cannot get to serious cost containment without the salve of coverage.”
“The status quo is not sustainable,” he added. “The people who argue that having somebody pay a dollar more or lose their extra glasses in their Medicare Advantage plan is somehow equivalent to leaving 50 million uninsured and doing nothing to contain the cost growth that’s eating our economy alive, that’s just folly. That’s what opponents are trying to get Americans to accept yet one more time.”
It reminded me of hell designed by a concrete manufacturer.
I love that metaphor.
Hey! What happened to the real cobaltblue? (Good find CB. Good post.)
The author’s description of Houston is dead on. As for “…almost uncrossable by pedestrians…” he is wrong. You WILL die if you try to cross the freeways on foot. Period. If you break down and have pull onto the median emergency lane, STAY THERE. A tow truck or cop will find you soon enough. But get away from your car by walking a few hundred feet up or down the emergency lane. Some folks think cars in the emergency lane are for target practice. With their own car. No joke.
And he is also right about the ivory tower mentality. “Let them eat cake” indeed.
“In our continuing efforts to provide the highest possible care…contain costs…your monthly premium will increase to…”
Yesterday in the mail. Again.
Along with the denial of service notification for a procedure they had previously approved and which I had undergone on their say-so.
Again.
Oh, and a full color three page fold-over advertisement addressed to “occupant” trying to get me to sign up with them “at a rate affordable to your lifestyle needs”.
I cannot WAIT to have the OPTION of PURCHASING Medicare. Even if it’s twice as expensive as Blue Crass, it will be worth it just knowing I’m helping to put them out of business for good.
I cannot WAIT to have the OPTION of PURCHASING Medicare. Even if it’s twice as expensive as Blue Crass, it will be worth it just knowing I’m helping to put them out of business for good.
And remember, it wasn’t too long ago that the Blues were non-profit orgs. Y’know, sorta like those mythical co-ops we keep hearing about.
And what if the government plan does something just as bad, or worse? How are you going to put THEM out of business?
Bribe your congressman/senator.
This is how you do it in many countries.
Why would the government do that? The private plan does it because every time they deny a service they make more profit and earn huge bonuses for the bosses who make the rules. The government plan will have no profit motive. They will pay for covered items and deny coverage for items that are not covered. And the lists of which is which will be published ahead of time and in detail.
Polly, please stop this! Stop making so much sense!
When I come to D.C., I’m already owing you a drink. Now I owe you more than one.
They will pay for covered items and deny coverage for items that are not covered. And the lists of which is which will be published ahead of time and in detail.
And the list will say exactly how much is to be paid to each provider for each item, allowing every patient to use the providers of his/her choice, taking into account education, experience, training and outstanding medical school loans. And it will anticipate all future and/or experimental treatments, and skilfully balance the risks and benefits of all such treatments to each patient, determining the optimal reimbursements. And all future morbidity risks and administration costs will be accurately projected, so that budgeted costs will always be right on target.
And there will be no possible disagreements about the meaning or applicability of this list, so there will never be a need for administrative appeals or lawsuits, because everything will have been spelled out in great detail by personnel skilled in simultaneously maximizing the welfare of patients, providers, and taxpayers, by virtue of having been freed from the grubby low-life motives of advancing their own lot in life.
Unbelievable. People b$itch and moan about TBTF but then want to hand over control to the ultimate TBTF, the Federal Government.
Of course there will be disagreements about interpretation. Anything you write down is subject to disagreements about interpretation. But take out the structure that rewards people for denying cancer treatments to a 25 year old with lymphoma because you find that he didn’t disclose an episode of jock itch that was cured with over the counter ointment when he was 16 and you fix a lot of stuff that is wrong with the current system.
Just because it won’t be perfect doesn’t mean it won’t be better.
Oh, and insurance companies deny experimental treatment too - all the time. If you want experimental treatment - stuff that has not yet been proven to WORK - find a study or pay for it yourself.
As for the providers? Yeah, they will know how much they are going to be reimbursed because they are already familiar with the system. One of the Washington Post people reported that CMS (the people at HHS who deal with the stats on Medicare) estimate that over 98% of doctors would take the Medicare reimbursement rates for new patients, because, you know, they actually get paid. Unlike the private insurers who approve procedures and then take it back or claim the patient isn’t covered at all - by reason of undisclosed jock itch.
And the list will say exactly how much is to be paid to each provider for each item, You left out the current operation of Medicare, very similar to their rest of your post. I am leaving out the demographic problems which will soon hit Medicare hard.
Uh-oh. I now owe Polly yet another DC drink. (Umm, Polly, will you have a designated driver for your ride home? Or will you need an escort to the nearest Metro stop?)
Maybe we will just have to be more creative with the activities. Terra Cotta Warriors at National Geographic’s Explorer’s Hall?
Anyway, I always take Metro to work. Driving to downtown DC on a weekday does not fit my definition of fun. Lots of people do it. Too many people if you ask me. Hence the not fun part.
Terra Cotta Warriors at National Geographic’s Explorer’s Hall?
Has anyone seen that exhibit yet? It’s only a block from my office and I’m itching to go see it.
LHVguy,
The whole point of the so-called health care reform movement WAS getting business out of the practice of medicine. Looks like that particular fantasy has fallen by the wayside….
If worse comes to worst, we always have the option of purchasing medical services directly from the provider. In spite of having what I always thought was “good” insurance, I seem to be doing precisely that these days. If we could have a public health service as ubiquitous and well-run as the US postal service, I would be a happy citizen–and gladly pay for the privilege of having something that equitable and consistent.
Wouldn’t it be ironic if the government uses the existing private insurance industry as “contractors”? It couldn’t possibly be the monied interests that ultimately benefit from our pain, could it?
HAHAHAHA!
Of course they will use the existing companies as contractors. But they will change the motivations for the people who do the work. Now, they get punished for having too many “medical losses” (ie paid claims) and rewarded for finding bogus pre-exisiting conditions so they can deny claims of people who have become sick.
Under a government plan they will get rewarded for not paying out bogus claims (there will be audits) and not denying proper claims (there will be some sort of appeal process and audits).
And the big bosses at OPM will be senior executive service whose pay maxes out at about $170K.
I cannot WAIT to have the OPTION of PURCHASING Medicare. Even if it’s twice as expensive as Blue Crass, it will be worth it just knowing I’m helping to put them out of business for good.
I expect that the option to purchase Medicare for people 59-64 years old will cost about 400% of BC/BS’s current average nationwide charge for the same age group. This will be accompanied by BC/BS & private insurers all dropping patients over 59. The private insurers will still wind up processing & paying Medicare claims as they are already doing, so they’re not likely to go out of business. They will likely be less profitable.
They will likely be less profitable.
And I’m shedding big crocodile tears for them.
They will likely be less profitable.
And I’m shedding big crocodile tears for them.
I try to consider public issues by balancing all aspects. Insurance companies can only stay in business by paying out less in benefits that they take in from premiums & investment income, +/- government subsidies. I don’t think that will ever change.
Top of the Dow to you, mates!
We note that on November 23, November 25, December 1, December 2, December 3, and December 4 the DJIA reached a high between 10,500 and 10,550, but never traded over 10,550.
Todays high has been 10,444 (so far).
Have we seen the “top”???
Obviously, time will tell, as it always does.
I don’t think the bear’s through eating, when everyone least expects it, Wham, a big chuck is taken out of their azz.
The stock market appears to have reached a permanently high plateau.
The state in which I reside, gave up on vehicle inspections years ago.
D.C. junks car safety inspections: Will others, too? ~ USA TODAY
While budget-strapped governments are hunting down any expendable “fat” in their budgets, some car-safety experts worry that one local government’s cutback could trigger a trend that leaves cars with faulty brakes and worn-out wipers on the road.
The District of Columbia recently decided that its periodic motor vehicle safety inspections were flab. Performed at a D.C. facility along with emissions tests, the safety checks were junked for an annual savings of about $400,000. In justifying the cut, the D.C. Council cited a lack of data proving periodic safety inspections save lives.
Safety advocates, who’ve worked to expand periodic safety inspections beyond the 19 states that still require them, worry that others will decide to rethink the cost. They acknowledge that the way crashes are reported makes good data hard to come by, but argue that the current economy makes it even more important to check that drivers are maintaining their vehicles.
“Safety inspections are particularly needed in hard economic times, because when you’re on a tight budget, you tend to skip the badly needed maintenance,” says Clarence Ditlow, executive director of the Center for Automotive Safety advocacy group.
Ditlow estimates that 12% to 33% of all crashes can be tied to poorly maintained cars. He says he prefers inspection programs in which the state does the checks over those using service stations, but says either system helps keep unsafe cars off the road.
Weren’t those “safety inspections” a major source of graft? Pay $50 to the mayor’s slush fund and your car magically passes?
CA never had such an inspection program. I guess if your car passes the draconian smog checks there it presumably is in good overall working order.
Besides which much of the DC traffic is cars commuting in from VA and MD.
I would rather they spent the effort making sure everyone had adequate liability insurance.
“I’ve been thinking about interest rates….”
You need to get out more.
Ooooops…..WTF?
Haven’t had “Mandatory Vehicle Inspections” around here for something like 20 years.
For some strange reason, the bloody carnage that the twerps from the Center for Auto Safety whine about has never occurrred. Mainly because if a car is that poorly maintained, something in the drive train will break and immobilize the car a long time before the brakes go bad.
“Clarence Ditlow”
What a perfect name for a spineless bureaucrat.
For some strange reason, the bloody carnage that the twerps from the Center for Auto Safety whine about has never occurrred. Yup, mandatory inspections are basically a jobs-and-profit plan for organizations which provide it. Their advocates ‘estimate’ the damage a lack of mandatory inspections causes, but they simply pull the data out of a place where the sun doesn’t shine.
NH was the last state I lived in that mandated ’safety’ inspections. The inspector even partly disassembled my front wheel bearings to verify they were OK. Then they left a washer out on reassembly. I didn’t discover this until months later, too late for redress of my grievance. That inspection actually put me in danger.
Performed at a D.C. facility along with emissions tests, the safety checks were junked for an annual savings of about $400,000.
In Pennsylvania, the twice-annual State Inspection is mandatory. And you go to the garage or car dealership of your choosing.
Somehow my post from yesterday got eaten….
While urban and suburban real estate is still generally under pressure, the rural market is holding up better in many areas, thanks in part to buyers such as the Dawleys. Sometimes dubbed “ruralpolitans,” these city and town dwellers are looking at land as their new safe investment, one they hope could prove more stable than their jobs and 401(k)s—and provide a better lifestyle.
Motivations can vary, but typically there are three groups: young people buying land as an asset or investment, with vague hopes to live on it someday; exurban commuters who have jobs in big towns or cities but want to escape the sprawl; and back-to-the-land types who want to dabble in hobby farming. While the 76 million-strong baby boomers eyeing retirement represent the largest ruralpolitan segment, they’re being joined by a growing contingent of 20-to-early-40-somethings freshly imprinted by this recession’s pain.
The guys who got rich in the gold rush weren’t the miners, but rather the guys who sold stuff to the miners. I wonder whether there’s a similar opportunity to sell farm gear to these city slickers.
Linkey….
http://online.wsj.com/article_email/SB10001424052748703735004574571742502599748-lMyQjAxMDA5MDAwMzEwNDMyWj.html
Dell McCourie has a bluegrass song, “40 Acres and a Fool” which is hilarious.
I read that article. I haven’t observed a group of clueless dumb-a$$es like those in a good long while.
I recall seeing a television program about this once. It was quite a while ago though, all I remember is that the pig was the smartest of the bunch.
snark off/
“…I wonder whether there’s a similar opportunity to sell farm gear to these city slickers.”
Satellite Internet
Off-grid small “energy” generation & storage equipment
Improved home insulation products
x4 wheel drive @ 30+ mpg implement mobility vehicles
FedEX / UPS delivery systems
The future is not your ’70’s x6 hippies & x1 VW van movement…
Ask me how I know!
How do you know?
I “utilize” all of the above “farm” equipment…for my “home” & non-farm “bidness”
Also, much improved “selection” of:
wine
beer
movies
clothes
used books
knowledge research
(Hwy, sounding like Yul Brynner in the King & I)
“etc, etc, etc…”
Don’t forgot emergency air transport systems. My neighbor keeled over in the snow yesterday and the heli crew that evacuated him were the same guys who came for me…an odd sort of reunion indeed.
Baaaaad Mountain, Hwy. Beware of black ice on the Bodfish.
Baaaaad Mountain, Hwy
Yeah, still… it has its “advantages” for those of us who “willing choose” the associated risk of isolation due to “somewhat-difficult to-get-to-then-not-much-to-do-once-your-there” mindset…
Don’t forgot emergency air transport systems. My neighbor keeled over in the snow yesterday Many times here in the midwest, when a patient really really needs emergency air transport, it is not possible due to horrible weather conditions. The ER doc has to conjure up some way to move them on a very dangerous surface to more advanced care, and may have to go on the ride with the patient to do things the paramedics are not allowed to do.
And sometimes local creativity & gumption comes into play. I knew a man in ND with known heart disease who had yet another case of unstable angina during a blizzard when the roads in his entire county were closed by the sheriff, it being impossible for the road clearing crews to keep the roads open for more than a few minutes at a time. All air transport was grounded. His neighbors solved the problem by using two (2) snowplows running side by side, using their GPS & radios work together to clear the highway just a few feet ahead of the ambulance carrying the patient, all the way to a Fargo medical center. He got there fine.
“His neighbors solved the problem by using two (2) snowplows running side by side, using their GPS & radios work together to clear the highway just a few feet ahead of the ambulance carrying the patient, all the way to a Fargo medical center. He got there fine.”
Reminds me of the story on Click & Clack about the Serbian dodging bullets & lacking “jumper cables” would take a battery and turning it up side down use it to “jump start” another vehicle…
(Hwy notes that escrow papers in America are 32+ pages and counting)
There are already companies selling farm equipment to the yahoos. Look in any issue of the hobby farm magazines like Mother Earth News (yuppie hippie), Backwoods Home (survivalist), and of course, Hobby Farm.
More expensive condo problems in downtown Boise.
Hosac thought he’d have the rest sold and his loan paid off by the end of 2008.
But the economy went sour. Lending tightened. Potential buyers stayed away. Hosac has not sold a unit since 2008.
“The market just stopped,” he said.
Last week, Royal Plaza filed for bankruptcy under Chapter 11 of the federal bankruptcy code to reorganize the company’s debt.
Hosac said he is also working on a plan that could provide financing for buyers and adjust the prices of the units. Prices range from $275,000 to $830,000 for the remaining units, which are on the third through sixth floors.
I remember when the steel frame went up for this high-rise building. At the time I thought it must be a commercial building, since it’s on the trending-into-commercial-area west side of downtown Boise. Turns out it was condos. That’s not where condos belong in downtown Boise anyway: it’s getting into the used-car lot, pawn shop, etc. part of downtown. I’d think condos would sell better in the cultural/restaurant part of downtown.
Linkey….
http://www.idahostatesman.com/business/story/1002296.html
Condo’s?
3rd - 6th floor?
Boise?
Prices range from $275,000 to $830,000…
The HBB chorus chimes in: (Hey, it’s almost X-mas)
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
I yearn to have a Boise condo within walking distance of a pawn shop.
How about an $800K Boise condo within walking distance of pawn shops and strip bars?
Y’know, I don’t think I’m the target market for the strip clubs. Wrong gender. And I’m too old to be hired by those places.
But a pawn shop? If it has good deals on used stuff, I’m there!
Just proves it’s all about “location, location, location”. Not too many places you can hock a watch for some cash, go clubbing, and then stagger home with your new girlfriend, all without having to worry about a DUI.
It’s hard to put a price on amenities like that.
LOL, packman.
“…It’s hard to put a price on amenities like that.”
Especially, since at those particular “pawnshops” you’ll find an abundance of: GOLD, GUNS & neo-nazi’s
must we politicize everything?
…It’s hard to put a price on amenities like that.
If Boise were full of neo-nazis, then why would they have a Holocaust memorial park do
If Boise were full of neo-nazis, then how come there’s a Anne Frank Holocaust Memorial park downtown, and the oldest continuously-operated Jewish temple west of the Mississippi?
“If Boise were full of neo-nazis…”
Now DennisN, I said: ‘Pawn shops” …now lets argue…
Same reason the USA has a base in Cuba.
“$830,000″
Apparently everyone wants to live in Boise, or at least own an investment condo there…
DennisN,
Refresh my memory? Did we happen to drive past that one? I mean there seemed to be so many. And Eagle was a mess! Why I’ve always wanted my very own abandoned subdivision?
Was that the one on the top of the hill by the Train Depot? Just curious.
No the old train depot is south of downtown, not west. West of downtown is where the I-184 connector dumps you off.
DennisN,
Oh right, right. It was such a tour it was kind of hard to keep it all straight? As an aside, we ( like much of the West ) are having pretty much identical weather to your’s and I’d have to say overall, I’d much prefer “Clear & Cold” to Overcast and Useless.
Spend, baby, spend! We needs Mo ‘ Money!
Screw the taxpayer, we don’t answer to the serfs.
Dems to lift debt ceiling by $1.8 trillion, fear 2010 backlash!
In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.
“We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion — nearly twice what had been assumed in last spring’s budget resolution for the 2010 fiscal year.
The leadership is betting that it’s better for the party to take its lumps now rather than risk further votes over the coming year. But the enormity of the number could create its own dynamic, much as another debt ceiling fight in 1985 gave rise to the Gramm-Rudman deficit reduction act mandating across-the-board spending cuts nearly 25 years ago.
Already in the Senate, there is growing pressure in both parties for the creation of a novel bipartisan task force empowered to force expedited votes in the next Congress on deficit reduction steps now shunned by lawmakers.
Insanity: Doing The Same Thing (Obama)
Karl Denninger
Market Ticker ~ Dec 10, 2009
There is dumb and then there is dumber. Our President has crossed from one to the other, no doubt egged on by the failure of his policies thus far to take root.
WASHINGTON - President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to “spend our way out of this recession” until more Americans are back at work.
You can’t spend your way out of a debt problem any more than you can drink yourself sober.
http://www.321gold.com/editorials/denninger/denninger121009.html
Ok, Albert Einstein famously claimed that doing the same thing over and over again and expecting different results is insanity.
This is true.
However, the popular interpretation is that we must then do something different, and then we aren’t insane by definition.
There is a small problem with this outlook: A. Einstein did NOT say to do something different. He only said to quit doing whatever it is that one is doing. He also did not claim that the original action was or had to be insane although it usually is.
Note: That last line is an assumption on the reader’s part.
So, we have Roidy’s Corollary:
Don’t just do something, stand there.
… and that just about sums it the heck up.
Roidy
Ok, Albert Einstein famously claimed that doing the same thing over and over again and expecting different results is insanity.
It’s also the definition of persistence.
There is dumb and then there is dumber. Our President has crossed from one to the other, no doubt egged on by the failure of his policies thus far to take root.
I wish these people would figure this out.
Either Obama’s an evil genius who, after majestically routing the Clinton power-trust, is bent on enslaving the American people in a Socialist dystopia.
Or, he’s a bumbling idiot, tool of the various interest groups that engineered his immaculate inauguration by trading on race guilt and people’s desperate hopes.
If it’s #1, well, no one ever called W Bush any kind of “genius”, so I suppose that’s a small step forward.
If it’s #2, then we’re right back where we were before the election.
“If it’s #2, then we’re right back where we were before the election”.
My bet is door #2, we (the people) step from one pile of #2 to the next. Power, money & control, nothing has changed except a few playa’s.
So, how’s it going to end… Mr. Munger?….. Badly!
I’ve always believed that Obama is an accidential president. I believe that HIllary was the annointed one by the Dems and Obama was just for show. Unfortunately, the law of unintended consequences took root, and Hillary, much like Nixon in 1960, did not come off very well in the TV, Internet, Sound bite world that is current day politics. So, much to the chagrin of the Democrat power structure, the Obama candidacy took on a life of its own.
Unfortuntely for us, Obama does not come close to having President of the US. Hopefully, the US can survive. It survived Warren Harding and Herbert Hoover, but those were simpler times. Time wil tell.
Insanity is trying to process the words as if they had some meaning. I think not. From here it is all farting sounds.
Look at what they have done with a trillion or so, given 99% of it to their monied buddies on Wall Street. Suddenly a few bil promised to be thrown on main street is going to make all better…..F.A.R.T.
Debt spending on tax cut is not that same as debt spending on job creation. And neither is the same as debt spending on war.
Saying is not doing.
Keynes did not live long enough to see the ultimate collapse due to the influence of his political-economic beliefs about the efficacy of spending away your problems on subsequent generations of macroeconomic policy makers. But we get the pleasure of experiencing the fruition of 3/4 century of Keynesian stimulus first hand…
Dear Barack, Spare me your emails
TruthDig
Barack Obama’s faux populism is beginning to grate, and when yet another one of those “we the people” e-mails from the president landed on my screen as I was fishing around for a column subject, I came unglued. It is one thing to rob us blind by rewarding the power elite that created our problems but quite another to sugarcoat it in the rhetoric of a David taking on those Goliaths.
In each of the three most important areas of policy with which he has dealt, Obama speaks in the voice of the little people’s champion, but his actions cater fully to the demands of the most powerful economic interests.
http://www.thenation.com/doc/20091221/scheer
Darn good article!
Have said it before and will say it again.
Don’t listen to Obama. Words don’t mean sh*t to this guy. Watch his actions. He’s a smooth prevaricator, worthy of an Oscar node.
Obama speaks in the voice of the little people’s champion, but his actions cater fully to the demands of the most powerful economic interests.
Unfortunately, this appears to be the case.
Oh well. Maybe he’ll get his act together or we’ll find someone better in a couple years.
or worse maybe. Angry people make bad decisions.
I voted for him and so far I’d have to agree with the Nation article. I see no effort to stand to the financial elite. Too Big to Fail has gotten bigger. Health care is shapping up to be a boondoggle to insurance companies and if they tax insurance benefits the middle class will be paying for it. The war is harder to call. No good choices to make. He had a lot of political capital he could have brought to the fight and he didn’t.
I have the desire to kick brother barack in the balls….one word: Afghanistan. Forfeit the Nobel Mr. Warpig.
More Easy Money for Wall Street
The sales pitch for financial-reform legislation pending in the House claims it would put an stop to “too big to fail” bailouts for the leading banks. The reality is the opposite. The federal government would instead be granted unlimited authority to spend whatever it takes to prop up the big boys when they get in trouble. Only in the next crisis, Congress won’t have to be asked for the money. The financial rescues will be funded by the secretive Federal Reserve, not the Treasury, with money the Fed itself creates.
And the emergency lending could be pumped into any financial institution in trouble–not just behemoth commercial banks but investment houses like Goldman Sachs, insurance companies, hedge funds or any other pools of private capital whose failure regulators believe would threaten the system.
This sounds nutty and it is. A permanent security blanket for big boys of finance could further inflame public opinion. Only the public isn’t likely to know. The crucial terms for Fed financing are set by an innocuous-sounding amendment offered by Representative Brad Miller of North Carolina. Any financial holding company designated as a “systemic risk” and subject to stricter regulatory standards “shall have the same access to the discount window lending of an appropriate Federal Reserve Bank as is available to a member bank of each Federal Reserve bank.”
http://www.thenation.com/doc/20091221/greider
No big surprise if Congress’s version of financial reform resembles a wolf in sheep’s clothing!
SU GUY …What your talking about is a bad dream . Any way they can keep the current corrupt and faulty Casinos going and have a bail out back up that is done without transparency shows just how much they don’t want to correct the very systems that created the meltdown .
I see this proposal as a extreme violation of the Constitution ,and it
seems like taxing without public knowledge . Rather than have more checks and balances the power groups are seeking
no transparency . I guess they didn’t like the heat they took when the public found out about their bail-outs .
The gull of Wall Street and the Lenders to want a never-ending taxpayer paid back up to their greedy rip off games ,when they should be shut down , or limited in Casino games or highly regulated actually for what they pulled on this Society . Look ,they did in 1929 ,they created a meltdown in 2007 ,and they will do it again .
Bagehot
Class war III
Dec 10th 2009
From The Economist print edition
Gordon Brown has attacked both the posh and the rich. He may ignite another sort of class war
Illustration by Steve O’Brien
NO TWO ways about it, David Cameron is posh. Boris Johnson, the mayor of London, is posh. On the other hand Lord Sugar, a recently ennobled businessman, is not. Nor is David Beckham: both are rich, but neither is posh. Get it?
If you are British, and especially English, you will. In Britain, class and money overlap, but only partially, like circles in a Venn diagram. Not all posh people are rich (some are shabby genteel, scrimping and saving for the school fees), and vice versa. Class is a magical amalgam of education, occupation, accent, vocabulary (“lounge” or “sitting room”), outlook and habit.
All of which is by way of saying that, properly speaking, Gordon Brown has launched not one grudge-based political campaign, but two. One is against the toffs, epitomised in a recent swipe about Eton, Mr Cameron’s old school. The other is against the rich, beginning in last year’s pre-budget report (PBR), when the government invented a new top rate of income tax. That has continued in Mr Brown’s incessant criticism of Conservative plans to raise the threshold for inheritance tax, and, stealthily, in this year’s PBR on December 9th. Neither will help him much.
http://www.economist.com/world/britain/displayStory.cfm?story_id=15065282&source=hptextfeature
You’ve gotta hand it to Gordon Brown. He takes a licking, but he keeps on ticking.
Desperation, My Dear Watson.
“Another class war?” When did the first one end?
“Another class war?” When did the first one end?
England vs. England. I know who I’m rooting for.
http://www.chinadaily.com.cn/china/2009-12/10/content_9151129.htm
finally…a solution i can get behind. although i would make it a 1 child per person policy…not a 1 child per family policy. a man and woman that has 2 children are simply replacing themselves in the population…so it would be carbon neutral.
for those that want more than 2…i would set up a trading market. people who do not want any could sale their right to procreate on the open market to those who want more than 2. of course if you have more than 2 without the rights…you would be fined…subject to reasonable jail time of course for lack of payment. i thought about maybe just taking the extra offspring away but i don’t want to be considered an extremist.
I will keep my right to procreate in the open market, thank you.
Wooooo! Procreating in the open market. Now that would be something to see. Ya selling any tickets?
wow…i posted this sometime this morning and it’s just now showing up.
So if a couple divorces after having one child, who gets the “right” to have another one? Or do they split it?
And despite the musings of a few people with some tin foil in their wardrobe, it is nearly impossible to go to jail for not paying money. A lot of other stuff can happen from wage garnishment and frozen bank accounts, but just non-payment of money? I’d like to see a case where the person involved was not also committing fraud or actively encouraging others to commit fraud.
What, an over supply of graduates?
“Employers and career experts see a growing problem in American society — an abundance of college graduates, many burdened with tuition-loan debt, heading into the work world with a degree that doesn’t mean much anymore.”
This is from Time Magazine
“The problem isn’t just a soft job market — it’s an oversupply of graduates. In 1973, a bachelor’s degree was more of a rarity, since just 47% of high school graduates went on to college. By October 2008, that number had risen to nearly 70%. For many Americans today, a trip through college is considered as much of a birthright as a driver’s license.
“Marty Nemko, a career and education expert who has taught at U.C. Berkeley’s Graduate School of Education, contends that the overflow in degree holders is the result of many weaker students attending colleges when other options may have served them better. ‘There is tremendous pressure to push kids through,’ he says, adding that as a result, too many students who aren’t skilled become degree holders, promoting a perception among employers that higher education doesn’t work. ‘That piece of paper no longer means very much, and employers know that,’ says Nemko. ‘Everybody’s got it, so it’s watered down.’ “
‘That piece of paper no longer means very much, and employers know that,’ says Nemko. ‘Everybody’s got it, so it’s watered down.’ “
Mean ole Slim’s out looking for subcontractors again. And, quite frankly, I couldn’t care less what their major was, where they went to school, and when.
I’m looking for people who know how to produce W3C-valid CSS and XTHML. Proficiency with CMS packages like Drupal and WordPress is also a must.
Now, I’ll admit that to most of you, the preceding paragraph reads like Fluent Computerese. And it is. But what I’m laying out is the skillset I’m looking for. Likewise, one’s proficiency with it.
Skills and proficiency don’t seem to come hand in hand with pricey degrees from name-brand institutions. That’s not been my experience. If you’re a fellow webhead and have experienced something different, post it h’yar!
Well A-Slim, I know what you’re talking about, but what level of proficiency are you looking for? Do you need people who can program for Drupal and Wordpress or just be able to set it up and use it?
How much CSS and XTHML are you talking about? Most design programs throw in the basic amount automatically these days.
And how about forms? Auto responders? E-mail redirects? Shopping cart? Databases? PHP? SQL? Spam Blockers? Metatags and keywords? Java? Javascript? C? Flash?
Well A-Slim, I know what you’re talking about, but what level of proficiency are you looking for? Do you need people who can program for Drupal and Wordpress or just be able to set it up and use it?
How much CSS and XTHML are you talking about? Most design programs throw in the basic amount automatically these days.
And how about forms? Auto responders? E-mail redirects? Shopping cart? Databases? PHP? SQL? Spam Blockers? Metatags and keywords? Java? Javascript? C? Flash?
My answers: I need people who can create Drupal and WordPress themes from valid CSS and XHTML. And the validator I use is the World Wide Web Consortium’s (W3C) validator.
As for your second graf, where such things as shopping carts and databases are mentioned, if the project require them, I’m looking for good subcontractors. And I pay promptly.
I’m looking for people who know how to produce W3C-valid CSS and XTHML. Proficiency with CMS packages like Drupal and WordPress is also a must.
Now, I’ll admit that to most of you, the preceding paragraph reads like Fluent Computerese. And it is. But what I’m laying out is the skillset I’m looking for. Likewise, one’s proficiency with it.
How many people meet your criteria? Are you offering enough to entice them to leave their current jobs? It’s obvious you’re not willing to train anyone.
I’m not looking for employees. I’m looking for subcontractors who know what they’re doing.
Who would you hire?
- A kid who spent the last three-four years in the armed forces, that you could train to fill your position, or
- A kid who had spent the last 4-5 years partying at an Ivy League school?
Most everyone on Main Street would pick “A”.
Most everyone in D.C. or on Wall Street would pick “B”.
Which illustrates that we don’t have so much a racial divide in the USA, as a cultural divide.
A kid who spent the last three-four years in the armed forces, that you could train to fill your position
I recently hired a Marine veteran to do exterior work on my house. She and her partner did a fabulous job.
All things being equal, I’d prefer someone who knows how to think independently and analytically, and has the contacts to effect results.
Kind of depends on what you intend to “train” them to do, neh?
I’d pick B if their GPA was above a 3.5.
Your blanket statement is lame.
‘That piece of paper no longer means very much, and employers know that,’ says Nemko. ‘Everybody’s got it, so it’s watered down.’
BS. No, “everybody” doesn’t have it. Your jobs got offshored along with J6P’s. And the economy got trashed by Wall St.
Welcome to the club.
ITEM: In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.
~~ We said it would happen soon, but we thought a trillion dollar increase in the debt ceiling would be pushed. Wrong! Looks like $13.9 trillion will be the new limit, an increase of $1.8 trillion!!
Perhaps Congress will pass the increase on December 23rd, the 96th anniversary of its creation of the Federal Reserve. ??
From Krugmans page
OK, that’s way too strong. But Alistair Darling’s new super-tax on bank bonuses sounds like a good idea, on first read. Or as Justin Fox puts it, why the heck not?
Are we afraid that the best and the brightest will leave high finance and pursue other occupations? That strikes me as a good thing: everything we know suggests that the rapid growth in finance since 1980 has largely been a matter of rent-seeking, rather than true productivity. (As Paul Volcker says, it’s hard to come up with any clearly productive financial innovations of recent decades other than the ATM).
Or are we worried that it’s just unfair to discriminate against high-earning bankers? Bear with me while I stop laughing. More seriously, the whole sector has just been bailed out at immense taxpayer expense. Some payback seems entirely reasonable.
So, the details need analyzing. But on the face of it this looks entirely reasonable.
Banker bonus bashing is the new black! It is nice to see the bank robbers served even the smallest token slice of justice.
The New York Times
France Joins Britain in Move to Curb Big Bank Bonuses
By STEPHEN CASTLE, KATRIN BENNHOLD, and STEVEN ERLANGER
Published: December 10, 2009
France has agreed to join Britain in levying a supertax on banking bonuses in a combined assault intended to step up pressure on other nations — including the United States — to follow suit.
On Friday, President Nicolas Sarkozy of France plans to announce a windfall tax “equivalent” to the 50 percent levy just unveiled in London by the Labour government of Prime Minister Gordon Brown, said Christine Lagarde, the French finance minister, in an interview Thursday in Paris.
“We have been advocating this for a long time, and we are delighted to see that Gordon Brown is taking that stand,” Ms. Lagarde said. “The president,” she added, “thinks he is brave to take on the City.”
…
Are we afraid that the best and the brightest will leave high finance and pursue other occupations? That strikes me as a good thing: everything we know suggests that the rapid growth in finance since 1980 has largely been a matter of rent-seeking, rather than true productivity. (As Paul Volcker says, it’s hard to come up with any clearly productive financial innovations of recent decades other than the ATM).
The grandson of a former neighbor got his Ph.D. in physics. And took it to Wall Street. My chemical engineer father’s still grinding his teeth about that one.
Krugman distorted what Volcker recently said. Volcker plainly denied there was any recent financial innovation beyond ATM’s. Volcker’s blast against the finance industry got virtually no attention in the US MSM.
“…Volcker’s blast against the finance industry got virtually no attention in the US MSM.”
The score, from Her Majesty… “The Queen of England”: (Everyone kneel)
Sir Greenissspent = 1
Volcker = 0
I think that’s what Krugman is saying, No distortion at all.
“Are we afraid that the best and the brightest will leave high finance and pursue other occupations?”
We should forcibly send Wall Street’s best and brightest minds over to Afghanistan to establish Islamic banking operations. If they can do for the Afghanistan economy what they have done here at home, our troops will be able to come home soon.
Oh goody, something “interest”ing from behind “The O.C.” Curtain
December 10, 2009 9:01 AM
By JON CASSIDY THE ORANGE COUNTY REGISTER
Police tracking 2 suspects in home invasion:
“Three men were arrested Tuesday night on suspicion of breaking into the Newport Coast mansion of a prominent former subprime lender.”
“…Sadek made and lost a fortune in the subprime mortgage business. Quick Loan Funding, which he founded in 2002, wrote about $4 billion in subprime mortgages before it collapsed in 2007.
With his earnings from Quick Loan, Sadek lived a high-roller lifestyle. He bought the Newport Coast mansion, a fleet of exotic cars and crashed some of them in a movie he financed called “Redline.” He bought a condo in Las Vegas where he became a high roller at the blackjack tables.”
Hey the reported inserted a “punch” line!
“…Police did not immediately say whether the men who paid Sadek a visit Tuesday night were collecting on a debt or were there to rob. They were taking cash and jewelry…”
I was awake around 3 AM channel surfing, ran across an infomercial peddling a book and CD called Flip&Grow rich. The slick haired ‘author’ Armando Monte Carlo or some such name was saying, there has never been a better time to get into RE! Blah,blah blah.
He will show you how to make 50,$100,000 dollars in a few short weeks. The book and CD are ‘free’ just pay shipping. I know they just play the percentages, and follow the P.T.Barnum rule, “there’s a sucker born every minute”.
On another channel… Cash Flow Notes, earn 5,10,$20,000.00 a month, part time selling cash flow notes.
Thats Armando Montelongo from “”Flip this House”.
Y’know, you really oughta sleeping at such an early hour.
True, but I go to bed early 8:30/9:00 and rise around 4:30 everyday. Been doing that for about 30 years now.
When I wake up that early, I turn on KXCI, Tucson’s community radio station. And, invariably, the music’s so good that I can’t get back to sleep.
OK, never got to watch that show, don’t have cable. Enjoyed reading about some of the bullsh!t they had on though.
The poster boy for everything that is wrong in the Real Estate business.
Up thread there was a post that the money in the gold rush was not made by the prospectors, but by those selling supplies to the prospectors.
This is exactly the same thing.
Oh, maybe the the Health/Medical Industry’s “Do Nothing!™” “TrueDeceiver’s™” advocate group are on to something after all, forget the democrap “Frankenstein” approach, let’s go with the my name is “Speedy Gonzales facelift™” method:
You all know that “The O.C.” has voted repubican since 1888 right?
“Plastic surgery tour of Real Housewives.”:
“People think three to five weeks must elapse before a facelift patient can go out socially, he said. “That notion should be dispelled. I say seven to 10 days.”
Is tonight’s episode titled “Fiesta de la Facelift”?
That’s the word in Newport Beach, and it sounds apt.
What fans of Housewives may not get to see:
December 10th, 2009 posted by Colin Stewart OC Register
US residents gorging on data bytes: study
If the data devoured in the United States last year were converted to text there would be enough books to bury the country under a pile seven feet (two meters) deep, according to a study released Wednesday.
US residents consumed about 1.3 trillion hours worth of information from radios, televisions, computers, newspapers, mobile telephones, and other sources, according to researchers at the University of California, San Diego.
That translated into an average of nearly 12 hours spent daily by each US resident watching television, listening to MP3 players, scouring the Internet or tapped into other sources of data.
The information tally was the equivalent of 3.6 zettabytes of data, or 34 gigabytes per person per day. Thirty-four gigabytes of digital data would fit on about seven standard DVD disks.
Radio and TV remained the dominant sources for data flooding people’s lives, accounting for 60 percent of the total hours, according to the study by the university’s Global Information Industry Center.
“Despite this, computers have had major effects on some aspects of information consumption,” researchers Roger Bohn and James Short concluded.
“Thanks to computers, a full third of words and more than half of bytes are now received interactively.”
Radio and TV remained the dominant sources for data flooding people’s lives, accounting for 60 percent of the total hours, according to the study by the university’s Global Information Industry Center.
Good news to this community radio station volunteer.
Only about 4% get long-term mortgage help.
Servicers provide permanent modifications to 31,382 troubled borrowers, according to first report issued by Treasury Department. An equal number have been denied.
NEW YORK (CNNMoney.com) — Only about 4% of troubled borrowers have received long-term help under the Obama administration’s foreclosure prevention program, Treasury officials said Thursday.
A nearly equal number of trial modifications have been denied permanent assistance, the report showed. The reasons include not making monthly payments on time, not submitting all the necessary paperwork, or not qualifying for reasons such as insufficient income.
The report, the first comprehensive tally of permanent modifications made, shows that loan servicers have converted 31,382 people from trial adjustments to long-term assistance as of Nov. 30.
But 30,650 people in trial modifications have been denied, according to Treasury officials.
A total of 759,058 trial modifications have been started since the program launched in the spring. The number of troubled borrowers currently in trial modifications rose to 697,026, up from 650,994 a month earlier.
“Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications,” said Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office.
Banks and the administration have come under fire in recent months as delinquent borrowers languish in trial modifications. Lawmakers lambasted servicers and Obama officials at a Congressional hearing Tuesday for not doing more to help homeowners facing foreclosure.
The low number of permanent modifications has fueled concerns that the $75 billion plan will fall far short of its goal to help up to 4 million delinquent homeowners.
Recession Road Trip
Dec 9 2009, 2:35PM
DAY 176: BROOKLYN, NY
Brothers Tartamella: Newly Trained “Caulkers” Ready for Cash
“I wear this T-shirt because his superpower was will power,” James Tartamella tells me, pointing to the Green Lantern symbol on his chest. “The greatest green energy is the green energy within us.” James and his brother Joe each suffered a direct hit from the recession, but are rapidly adapting to seize opportunities created by the swelling wave of green jobs.
The brothers Tartemella are sons of Italian immigrants, whose parents left Sicily in the 1950s to seize the opportunity of America. Both credit their father for endowing them with a relentless drive and tireless work ethic. “To this day, I don’t know anyone who works as hard as my father. I don’t care what nationality they are,” Joe says.
http://thehousingbubbleblog.com/?p=5773#comment-1717261
ATK to lay off 800 next year
December 10, 2009 3:37 PM CST
ATK Space Systems announced today it will lay off 800 employees in 2010, with the first 500 terminations taking place in February and another 300 in May.
In a press released issued this afternoon, the company indicated the “continued ramp down” of the Space Shuttle and Air Force Minuteman III programs has led to the layoffs.
The layoffs will take place mainly at ATK’s three Utah locations, one of which is near Box Elder County’s Promontory.
“ATK has been working to minimize workforce reductions by transferring employees to other active ATK programs, as well as helping to place employees with other companies,” ATK spokesman George Torres said in the media release.
ATK will also offer a voluntary layoff option for employees who would like to pursue other options, Torres said.
Employees who are laid off will receive a severance package, continuation of health care benefits for several months and access to COBRA for 18 months.
All,
I have finally found my house after over 3 years of renting.
http://tinyurl.com/yzohcfb
If you look closely at the gate you will see some green on it. That green thing is a saguaro cactus. I have found AZ in OR!! Bank owned home that has been winterized. Been empty for about a year now. I offered the bank $325,000 and they told no. “I think I insulted them with my low offer”. This house started being listed around $600,000. Today it is listed for $458,000.
Please help me, I have getting weak and may up my offer on the place.
Sale History
1.) 05/14/2007 sold for $812,500
2.) 03/31/2000 sold for $465,000
3.) 02/29/1996 sold for $238,000
Nice place. Make them the same offer as before.
Or you could ask them if they will lease it to you.
I agree that $325k is right. Nice outdoor kitchen.
Steaky time!
My advice is never ever get too attached to any deal specially a house. You will lose. There will be too many great deals yet to come in your direction for a long time. If you think this house is good (which btw is gorgeous) you aint seen nothing yet. I say hold off. Make a slightly higher offer in about a month then leave it alone. You are selling money. If the bank wants to own your money they have to bring this house to the table as a payment.
“My advice is never ever get too attached to any deal specially a house. You will lose. ”
The truth doesn’t get any more truthful than that.
1969.
Make sure the plumbing isn’t galvanized. Galvanized only has about a 50 year lifespan depending on how it was installed.
If the ceilings have popcorn, it’ll be soft and full of asbestos.
Lead based paint was still common at that time as well.
These could be deal points for negotiations.
Oh yeah. Check the electrical. Possibility could be aluminum.
Great advice from all as usual.
You are not going to believe this, but the listing agent said there was an offer higher than my offer and it was turned down by the bank. Isn’t it amazing how a house can site vacant for months and just as you make an offer, another one has been made??? /sarcasm off
I still told the real estate agent that I am working with to go ahead and submit the offer - which he did.
The queen moonbat and her ilk don’t give a flying sh!t about our military men and women, but they love to piggy back on them…I loath politicians, there is bound to be a special place in hell for them, I hope.
Debt limit to rise with Defense bill: Pelosi
WASHINGTON ~~ Dec 10, 2009
WASHINGTON (Reuters) - Legislation to increase the federal debt limit got a boost on Thursday when House of Representatives Speaker Nancy Pelosi said on Thursday that it would be combined with a must-pass military spending bill.
“We need to have a vehicle so that the Senate can vote on it, and it is our intention to have something on the Department of Defense bill next week,” Pelosi told a news conference.
The tactic greatly increases the legislation’s chances of clearing Congress before the Treasury Department runs into the current limit of $12.1 trillion, as it will give lawmakers political cover at a time of growing public concern about the nation’s spiraling debt.
But it could alienate Republicans who usually line up behind military spending.
Republicans on the House Appropriations Committee, which oversees the military spending bill, wrote to Pelosi that they would vote against it if it included the debt-limit increase.
The Treasury Department has said it needs Congress to raise the debt ceiling by the end of the year to allow the government to keep funding its operations.
The House will increase the debt limit by $1.8 trillion, Appropriations Committee Chairman David Obey said in debate on the House floor.
That would be enough to cover the government’s borrowing needs through 2010, according to other lawmakers’ estimates.
I guess they feel that since Bush had 8 years of reckless spending with nothing to show, now it is their turn. My only hopes is they spend it on US infrastructure and not in Afghanistan. Looks like CA is getting a 200mph train.
“…Looks like CA is getting a 200mph train”
But, but, but…the 1-800 “customer service” number will be answered in:
1. Anaheim, CA (press 1 for Spanish…press 4 for English…press 8 for Disneyland)
2. Poverty, India
3. Poverty, Philippines
4. Poverty, Anyplace that can learn “broken English”
Mr. Bear, George Will wants to know if you send a “Happy Holidays!” card to your “root canal” dentist specialist.
“…Like the Fed, dentists are always important and urgently desired when pain is intense. But they are rarely objects of their patients’ affections.”
Something even I never imagined: George Will …vs…Rash Limpbaughs:
“America is committed to democracy – and to circumscribing democracy’s scope in order to minimize the damage it can do by improvident responsiveness to untempered gusts of public passion.”
George Will: Playing politics with the Fed:
By GEORGE WILL
Syndicated columnist
December 10, 2009
OC Register
dentists are always important and urgently desired when pain is intense. Nope. Real men use hunting knives or pliers for all their urgent dental needs.
“Real men use hunting knives or pliers for all their urgent dental needs.”
Perhaps, there still are REAL men, but 99.9% of knives & pliers come from China.
My dentist always expresses his gratitude for the free financial advice I dispense when I visit him. Last time I visited him (just last week), he thanked me for all the money he made in the stock market this year by acting on my suggestion to buy stocks during my previous visit early this year.
“…Like the Fed, dentists are always important and urgently desired when pain is intense. But they are rarely objects of their patients’ affections.”
P.S. Unlike the Fed, my dentist never encourages me to eat loads of sugar in order to increase the importance, urgency and frequency of my visits to his office.
“P.S. Unlike the Fed, my dentist never encourages me to eat loads of sugar in order to increase the importance, urgency and frequency of my visits to his office.”
Note to the world: Mr. Bear does not have false teeth!”
My dentist always expresses his gratitude for the free financial advice I dispense when I visit him. Does he give you a discount for this? It would only be fair. I read an account of a dentist who gave his general surgeon a stiff tip after seeing how much less the surgeon charged him for his appendectomy, compared to how much the dentist charged for a root canal.
He is a super nice guy — uncharacteristically gentle and generous for a man of his profession (think the opposite of Steve Martin’s character in Little Shop of Horrors). He even offered to provide a free orthodontal examination of my kids’ teeth…
Stock Market = 1
Gold = 0
Housing market = -100
“But they are rarely objects of their patients’ affections.”
My dentist is a true gem. In fact, his name is Gem.
I’m way late to the party (littleman busted his chin and needed to get glued up!), but here is may take on the Combo/Packman issue:
I am with Combo, but for a slightly different reason. Didn’t rampant inflation already occur? People were going to the mortgage store with wheelbarrows full of cash.
The poofy dollars are going poof… so I agree with Packman that many of those dollars made it into the economy (boob jobs, three fountain pools, squirrel food, etc.) in the early 00’s, but the assets they were traded for, turned out to be worth much less (going on now = deflation).
An H2 in 2005 seemed like a great way to show the world you the think it’s your bitch, but how about now?
*The ideas in my post are not entirely mine
“littleman busted his chin and needed to get glued up”
He and I have something in common. I busted my chin when I was little, and still have the scars to show for it…
“He and I have something in common.”
He also hates Megabank. You guys should grab a beer sometime.
“…You guys should grab a beer sometime”
Let me guess: he has a wee, wee, bit of Irish in him?
I will look forward to the opportunity two decades hence. Maybe the housing market will have bottomed out by then, and we can coach our sons on making financially prudential home purchase decisions.
Didn’t rampant inflation already occur? People were going to the mortgage store with wheelbarrows full of cash.
The poofy dollars are going poof… so I agree with Packman that many of those dollars made it into the economy (boob jobs, three fountain pools, squirrel food, etc.) in the early 00’s, but the assets they were traded for, turned out to be worth much less (going on now = deflation).
I agree - kind of.
I’ve stated several times something to the effect you’re saying. We had massive inflation (in price, money supply, and debt levels) on the front side of the bubble, and then had some deflation (in prices at least) on the backside. I believe we’ll have significant inflation (in prices) in reaction to the backside, as the attempts to pump up the economy continue. We’re seeing it already actually somewhat. Home prices are up the past few months due in large part to stimulus. Oil/gas prices are up. Stock prices are *way* up. Bond prices are up. A lot of things like luxuries are down some, though I don’t think there’s good tracking for that so it’s hard to tell.
I believe in 2007/2008 we did have significant deflation - primarily in the housing sector (thus not showing up in the published CPI numbers). This wasn’t money supply deflation though, it was only price deflation. Money supply - by all counts - increased during that period. Money movement slowed somewhat though I think.
Banks with access to TARP and zero percent Fed-funded loans and bankers with megagazillion dollar bonuses are in a far better position to overcome the asset collapse hurdle than your typical Main Street household with an unemployed adult worker struggling to just get by.
Household Wealth in U.S. Rises, Revisions Show Plunge (Update1)
By Bob Willis
Dec. 10 (Bloomberg) — Household wealth in the U.S. increased by $2.67 trillion in the third quarter as stock prices and home values climbed, and revised data showed Americans have a larger hurdle to overcome.
Net worth for households and non-profit groups rose to $53.4 trillion from $50.8 trillion the prior quarter, a second consecutive gain, according to the Federal Reserve’s Flow of Funds report today in Washington. Revisions put the loss of wealth between the third quarter of 2007 and the first three months of this year at a record $17.5 trillion, compared with a previous estimate of $13 trillion.
“We knew we fell into a real deep hole,” said Mark Vitner, a senior economist at Wells Fargo Securities Inc. in Charlotte, North Carolina. “It’s encouraging to see we’re at least making progress in digging ourselves out of it. American households are having to lower their sights as to how much wealth they hope to accumulate over their lifetimes. This is going to impact consumption habits for years to come.”
…
“…This is going to impact consumption habits for years to come….said Mark Vitner, a senior economist at Wells Fargo Securities Inc. in Charlotte, North Carolina.”
A banker, summarizing to Americans about addiction…how odd.
(Hwy inserts Neil Young’s: “The Needle and the Damage Done”)
“…how odd.”
Not at all. Modern bankers are addiction specialists.
HWY …notice how the Banker thinks it ok for them the thrive and dig themselves out of hole ,but the consumer just has to get use to …whatever downgrade .
Link below is a bloomberg article regarding Picard’s work in recovering money for Madoff investors.
http://bloomberg.com/apps/news?pid=20601087&sid=aal0Jcs9w33A&pos=6
I don’t think any of the Madoff investors should get a cent for their losses, including the loss of their original investment! These investors were getting 15 to 20% annual returns the past 15 years and are now crying in their beer that they didn’t understand 15% returns means they were in a high risk investment and they could lose all their money? I have dragged along these past 9 years in stupid T bills/bonds earning a paltry 2% because it was a portion of money I could not lose and I understand and respect the basic laws of risk and reward. I lost money on stocks and mutual funds last year, how come I don’t get my original investment back like the Madoff investors do? Huh huh?
Where can I find a some Madoff-like funds that will provide me ammunity from loss? Let me in!
http://bloomberg.com/apps/news?pid=20601087&sid=aal0Jcs9w33A&pos=6
If a MBL baseball player was batting 0.040, I am guessing he would be fired.
But it’s all good, as the idea of forcing non-parties to home purchase transactions to cross subsidize buyers of homes they cannot afford and lenders of amounts of money that are unlikely to be repayable out of the borrower’s income is a loser from the starting gate. Dumbocrats, indeed…
Foreclosure relief program is stuck in first
JUST 4 PERCENT IN FINAL STAGE
Thousands now risk losing mortgage help
A plea painted on a home ni (SIC) San Antonio. Many are calling for changes to the foreclosure relief program. (Eric Gay/associated Press)
By Renae Merle
Washington Post Staff Writer
Friday, December 11, 2009
The government’s foreclosure relief program is sputtering, according to government data released Thursday showing that the pace of help being offered to struggling homeowners slowed last month and many borrowers are at risk of losing the aid they have already received.
The program, known as Making Home Affordable, faces a frustrating set of challenges. Only about 4 percent, or 31,382, of the 728,000 homeowners currently in the program have moved from the initial, or “trial” phase, to a permanent loan modification. That leaves thousands of borrowers in limbo and in jeopardy of losing their mortgage help because they have not turned in enough paperwork to prove they qualify.
Already about 30,000 homeowners who entered the program have been dropped because they did not qualify after all, did not submit required documentation in time or failed to make all of their payments, according to data released by the Treasury Department. Under the program, borrowers’ mortgage payments are lowered to 31 percent of their income for an average savings of $550 a month.
…
“average savings of $550 a month”
Amortize that puppy over 30 years at a 4.81 percent interest rate, and you are talking real money — over $100,000 of housing market stimulus, in fact.
I have a modest proposal for 2010:
1) Fire the central bankers at the helm of the Fed and the Treasury.
2) Appoint Elliot Spitzer to the Treasury Secretary post, and have him crack down on Wall Street fraud.
3) Appoint Paul Volcker or someone with a similar no-BS approach as Fed chairman and restore the FUBAR banking system to normal functionality.
Jonathan Swift - A Modest Proposal
”I have been assured by a very knowing American of my acquaintance in London, that
a youngan old healthychildbanker wellnursedfed is ata year50 years old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled …”“I have a modest proposal for 2010:”
Seems kinda of complicated, why wouldn’t 14+% interest rates solve many of the derivatives problems?
1. End speculation
2. Make people sit around and say what the f*** happened?
Hwy thinks that sometimes “Pause” is a good thing!
Confucians say: “He that hesitates is lost!”
Taoist say: “He that is lost…knows something!”
You aren’t going to see 14% interest rates while BB is still Fed Chair…
PB , I would like to see guys like Elliot Spitzer and Volcker in key positions
instead of these characters that are simply trying to maintained the failed systems in which the corruption is off the charts .
Do we have to just watch the current decision makers fail time and time again and endure watching the consequences of their decisions
that seems to be based on faulty logic ? Well, maybe the master plans if there are master plans will work ,but it just doesn’t jive for me .
I like Spitzer too, but his past transgressions weaken anything he might try to do. There are some that say Spitzer’s antics were revealed only because he was getting to close to the powers at be. Shame.
I thought I liked Volker, but not crazy about some of his recent omments:
“Mr. Volcker, siding with his successor, Ben Bernanke, strongly endorsed the Fed retaining what he called “hands-on regulatory and supervisory powers” over the banking system to “effective discharge what I have always considered one of its principal responsibilities – to contribute to and maintain financial stability.”
A proposal by Senate Banking Committee Chairman Christopher Dodd (D., Conn.) would take much of the responsibility for supervising banks away from the Fed so, as the senator puts it, it could focus on monetary policy.”
http://blogs.wsj.com/economics/2009/12/09/volcker-no-time-for-return-to-business-as-usual/
“I like Spitzer too, but his past transgressions weaken anything he might try to do.”
Alpha males will dally. At least he didn’t have as many mistresses as Tiger or Slick Willy (at least that we know about)…
Spitzer will never be able to hold a high ranking Government position again . He’s a great commentator however ,currently .
I think I have it (four weeks and running, no less!)…
If my symptoms don’t disappear by this time next week, I am getting tested. Will keep y’all posted…
* The Wall Street Journal
* DECEMBER 11, 2009
About 1 in 6 Americans Hit With Swine Flu
New CDC Estimates Show Number of Cases Surged in the Fall; Toll Is Particularly Heavy for Adults Under Age 64
By BETSY MCKAY
Approximately 47 million Americans, or about one in six people in the U.S., were sickened with swine flu from April to mid-November and 9,820 of them died, the Centers for Disease Control and Prevention said Thursday, indicating the new virus spread widely before cresting last month.
The new numbers reflect a substantial increase in illnesses between mid-October and Nov. 14, as a fall wave peaked and then began to decline. About 213,000 people were hospitalized during the period, about the same amount as in a normal flu season, the CDC said.
The CDC estimated in November that as of Oct. 17, 22 million people had been ill and 3,900 had died. A small portion of the difference between the old and new estimates was due to corrections for late reporting, the CDC said.
Nonelderly adults and children made up the vast majority of illnesses, hospitalizations and deaths from April through November, reflecting the heavier-than-usual toll this virus has taken on the young. “Many times more children and younger adults, unfortunately, have been hospitalized or killed by H1N1 influenza than during a regular flu season,” said CDC Director Thomas Frieden.
With 85 million doses of H1N1 vaccine made available for ordering since October, many states have stopped limiting doses to high-priority patients such as pregnant women and children and started offering them to the general population. That means more vaccine should become available through outlets such as clinicians and retail pharmacies, and the CDC has started offering the vaccine to its employees, Dr. Frieden said.
He urged people to seek an inoculation and said he plans to get a nasal spray vaccine in a few days. “We’re at the beginning of December. Flu season lasts until May. And we don’t know what the future will bring in terms of H1N1 influenza,” he said.
“We know that the more people who get vaccinated, the lower the likelihood there will be additional cases or a third wave,” he said.
…
Hope you get better PB . I had something for a good 5 weeks ,the first two weeks were a bitch .
I happen to be looking at NOVA (PBS STATION) yesterday and I went back to a article from 2006 regarding the 1918 flu . Strange ,but they called that flu HINI also. A Doctor actually brought back that flu of 1918 in the lab and was studying the way in which it transfers from human to human .
“I think I have it (four weeks and running, no less!)…
If my symptoms don’t disappear by this time next week, I am getting tested. Will keep y’all posted…”
Get Well…FAST!, geez Mr. Bear…no worries, MegaBank Inc. will still be around for quite some time…
(Hwy was thinking there was an “edge” to your postings, beyond the “usual suspects” that have earned you so many weekly coveted “Eeyore Awards”)
* The Wall Street Journal
* OPINION
* DECEMBER 10, 2009, 7:14 P.M. ET
Do We Really Need a Systemic Regulator?
Based on what we now know about AIG, it’s unclear ‘too big to fail’ institutions are in fact too big to fail.
By HAL S. SCOTT
The principal assumption underlying the financial regulatory reform legislation working its way through Congress is that certain financial institutions are “too big to fail” because of the severe consequences of “interconnectedness”—a word that entered our lexicon during the financial crisis.
The problem is presented as follows: There are major financial institutions that are systemically important because their failure can, due to interconnectedness, bring down other large financial institutions. A chain reaction of such failures is unacceptable since it would disrupt our economic system. The chain reaction must be stopped after the fact by the use of taxpayer-funded bailouts that avoid the kinds of losses for investors or counterparties that would normally occur in bankruptcy. Finally, taxpayers need to be protected by new regulations designed to protect against the failure of these major institutions.
But how severe is the threat from interconnectedness? Last month’s report by the Special Inspector General for the Troubled Asset Relief Program (Sigtarp) on AIG is illuminating. While the report’s focus is on whether Goldman Sachs unduly profited from the Fed’s rescue of AIG, more significant is its discussion of why AIG even received an $85 billion rescue. It does not appear to be because counterparties would have failed as a result. According to the report, Goldman had adequate collateral to protect itself against an AIG default. Indeed, the collateral was cash whose value would not have been decreased by a “rush to the exits.” There is no reason to assume other counterparties did not follow similar collateral practices.
Viewed in this light, FDIC Chair Sheila Bair’s proposal to increase the losses secured counterparties must bear in case of a financial institution’s failure seems misguided. Counterparties whose exposure to credit losses is fully backed by collateral are after all “secured.” Treating them as if they were unsecured—forcing them to take a “haircut”—in the case of a financial institution’s failure would only increase the risks of chain reactions.
…
PB ,if you go back to my posts this is what I was saying all along . GS would of waited in line with the other creditors of AIG and would of been a little poorer ,thats all . Besides ,Paulson didn’t say he was going to use the money for credit default swaps pay-offs . Remember all the talk about good bank/bad banks assets .
What kind of a Congress/Senate do we have that they would give
700 billion to Paulson (a guy who was a ex GS CEO ),based on him screaming “FIRE “.
The real question is why should the FEDS/Treasury include unregulated
systems in bail-outs . The purpose of the Feds was to protect the regulated banking system and protection of that system would of been not allowing them to play in unregulated areas ,such as credit default swaps to begin with .