Bits Bucket For December 11, 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
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Happen to know a married couple in their early fifties that live in Paradise Valley, AZ. They told me yesterday that this month is the third month in a row that they have not paid on their mortgage for their 5 bedroom, 6000 SF 1.5 acre property on Mockingbird Lane. The wife in that equation works part time. The husband (architect) has had “no work” for over a year. They drained their retirement accounts feeding the alligator over this last year. The “property” was to appreciate and they could sell it and the capital gains would be the new retirement funds. Didn’t work out that way, of course.
Now, while I’m sorry they have a situation like that, what really torques me is that they don’t even TRY to save any money. They just got a new leased Mercedes. Thanksgiving they flew to Minnesota to see her family. Between Christmas and New Years, another vacation planned to Central America ! WTF?
Maybe this is what the “green shoot” economy is all about - homedebtors turned squatters who insist on the high life to the bitter end - whatever that turns out to be.
I have noticed this phenomenon, or at least the evidence of it in my area. I feel that the government has encouraged such behavior and is still in favor of keeping the consumer spending at all cost while the mortgage problems can all be worked out later after the “recovery”. Now is not the time to deal with it, we need a bubble fast to get the RE values back up so the banks will have some bargaining power. I am not joking, I really believe this is the plan.
I see it all the time. People aren’t happy unless they’re broke, really. It is like the anxiety of having money and not knowing what to spend it on is worse than having no money but wanting to buy something.
AKA, money just burns holes in people’s pockets. No one can think, “oh, gee, the transmission might go out on my car so I should keep $1000 in cash just in case…”
“People aren’t happy unless they’re broke, really.”
Unfortunately these people can now drag the rest of us down with them.
Unfortunately these people can now drag the rest of us down with them.
Yep - stinks.
(And the principle also applies to irresponsible companies.)
Seems to me if these fools are willing to keep spending on toys and vacations, they’re keeping the economy afloat, no? And according to these anecdotes, they’re not using borrowed money, but the money they’re saving by stopping payment on their mortgages. They sound like poster boys for the hbb to me. They’re (eventually) going to lower house prices, but in the mean time, they’re keeping the economy going. These morons should be our heroes.
Except for one thing - the banks have to make up their losses somehow. That “somehow” is pulling money back out of the economy, and at a faster rate than the fools buying toys and vacations are putting it in.
(Note that when I say “pulling money back out of the economy” I’m talking in inflation-adjusted, not nominal, terms)
In other words the acts of these fools defaulting and buying more stuff is causing inflation, and as such even though they cause the GDP to go up faster than it otherwise would - it also causes inflation to go up faster than it otherwise would. The economy ends up worse off than it would have been otherwise.
Unless we need inflation. Plus don’t overlook the immediacy of this ’stimulus’ spending and how directly it helps the employment rate, etc.
And is it the banks that are losing the money or the gov? If it’s the gov, think of it as a messy but effective way to give a jolt to a flatlining economy. If it’s the banks, they’re making plenty borrowing at 0% and lending thru credit cards at 20%.
It’s all good.
We never NEED inflation now that we are past the point where wages increase with inflation, or at all.
This is just another way to make more people into poor debt-serfs.
You need inflation if you’re in a deflationary death spiral.
“No one can think, “oh, gee, the transmission might go out on my car so I should keep $1000 in cash just in case…””
Not to mention saving for a security deposit and first/last months rent… unless they’re counting on moving in with their kiddies.
I’ve been splitting time between Palm Desert, CA and Miami, FL. In either place, I wouldn’t know there was any recession at all. Restaurants, packed, traffic backed up, parking a pain and people hauling bags & bags of junk. No one I know personally is suffering, but none of them got caught up in the frenzy, either.
When I was in Ft Lauderdale/Miami/South Beach for a few weeks in June, it was a ghost town.
Traffic was very light, South Beach was deserted, and empty dark condo towers lined the beaches.
Things must have picked up since then.
Florida in June is a ghost state every year. When we lived in Sarasota there were traffic back-ups routinely only during the months of November through April.
BS. Not one of my friends or acquaintances is spending money. Everyone I know is hunkering
down and being as frugal as possible, and these
people have MONEY.
One friend just sold his winter place in Yuma to free up some cash, another is staying
put this winter and not going south.
Everyone I know is prepping, squirreling away everything they can because they know the SIGTHTF soon if not sooner.
One good friend, who’s quarterly tax bill
is over a hundred grand, just sold two CRE building to increase his LARGE cash stash,
and he’s making provisions for his kids and
their families. These guys are running scared.
The only people still spending are the idiots.
It’s what I’m seeing here as well: half empty restaurants, no lines in stores. etc.
“The only people still spending are the idiots.”
-So everything is pretty much normal, then.
FWIW - my observation is that there tends to be various circles of friends/acquaintances that share characteristics w/regards to frugality vs. wastefulness. As such - I wouldn’t get caught in the trap of extending your immediate observations out to the rest of the world.
That’s why I like comprehensive data (inaccurate as it can sometimes be) a lot. For instance in this case - the overall U.S. savings rate suggests that, while people are saving somewhat more the last year or two - it’s still *very* low historically.
But without spending, things really do hit the fan, no?
It’s about the velocity of money, no?
Another point (eventually my other post w/link will show up) -
It’s worth noting that projections are for spending to increase this holiday season by 8%, as per J.D. Power - saw the article this morning though can’t find it online now.
And retail sales were up in November compared with last year.
That doesn’t seem to reconcile with your observations.
“The only people still spending are the idiots.
Don’t worry, there are plenty of idiots.
Rancher,
I’m not saying your friends are ‘idiots’ by any means but the time to put some distance between yourself and CRE ( was uh… NLTN 2005? )
I realize they’re are a lot of people “hunkering down” right now, but they’re all the -wrong- people! One of my best clients owns everything from strip malls to golf courses ( and everything in between ) and he’s basically shut down SEP Contributions for the “impending doom”.
In the meantime, a lot of good people are leaving and only the ones that “need da’ job” are staying!? I’m not advocating footloose & fancy free here.
Regarding retail sales…
They may be up so compared to last year so far, but remember last year was SO terrible it’s not necessarily that much of a sign of improvement in the economy.
Think there has been a bit of an initial shopping rush because talk of reduced inventories make people think some desirable items may be harder to come by later in the season and the hype around black Friday / cyber Monday sales.
We’ll see once the final season numbers come in.
Of our kids and spouses, there was one in particular whose job was most at risk. His company had layoffs and he had been given additional territories to cover as a result. He just told us the company is looking to hire someone to take back at least one of those territories and he’ll be training that person.
I checked the company’s web site and looked at the latest quarterly report (thru Sept 30). Revenue is up, although by only a small amount. This company’s fortunes are very closely tied to the fortunes of their industrial customers.
Also, we hunkered down last year and didn’t take our annual winter trip to Sarasota. We’re going this winter, and will be staying longer than usual.
Regarding retail sales…
They may be up so compared to last year so far, but remember last year was SO terrible it’s not necessarily that much of a sign of improvement in the economy.
I find it hard to believe that retail sales are up at all. There millions more unemployed now than a year ago and from what I have read CC debt is decreasing.
It doesn’t add up. I strongy suspect that we are being lied to, again.
two words, gas and auto.
I agree that a lot of people have this attittude, but I’m not sure it is the government that is encouraging it. I mean, yeah, the stimulous is there to provide spending to slow down the spending collapse, but it was passed based on an assumption that people would stop spending when MEW was not available (and assumption that the state and local governments really couldn’t handle the speed of the collapse). And I don’t think the amount of freed up cash from not making mortgage payments is really making up for MEW, do you?
Now, does our culture in general reward this behavior? You bet. It is fun to spend money (at least for most people). A lot of folks have a pathological fear of not appearing successful. Certain subcultures seem to think that being down on your luck is a sign that you don’t have enough faith in God to provide (see Prosperity Gospell). And the banks want it. And the stores want it. And that banks that service the loans for the securitized bond holders don’t want to get to forclosure because that ends their servicing payments, but the government? It is only encouraging this to the extent that it is not passing laws demanding that banks forclose more quickly. I don’t care what sort of administration we have, that is not the government’s business. If the stupid bond holders don’t want to get the houses sold now, while interest rates are so low that the people who still have jobs can way overpay by historical standards, that is their problem. Not the government’s.
“And the banks want it. And the stores want it… but the government?
Lol. You make it sound as if the government is not just a tool of the banks and the stores.
Polly, the stoopid bondholders ARE the government. Think GM. Well, every bank is in the same exact position - insolvent - the gov has just chosen to manage the problem differently because of the consequences. The system really DID fail, this is just the “safe-mode”.
No, they are not. The Fed does not control Congress. It may run amock without much oversight. It may manage to keep its records from being audited - seriously, would you want the self-aggrandizers in Congress to have access to every single written or electronic record in your office? You think they couldn’t find something embarrassing?
I took a class with Rick Mishkin while I was in law school. He is not an evil demon with snakes for hair, but he was a Fed govenor. They are not out to plot a take over of the world. Are they sometimes really, really stupid? Yes, see Alan Greenspan.
And you HAVE to remember that working for an agency that owns something is not the same as working for an investment bank that owns something. The reward chain from increasing asset prices in the latter is direct. In the former it is not.
I am working on a big report at work. If I worked at an investment bank or a law firm that works for an investment bank or a big company or a rating agency, I would get rewarded for getting to the answer everyone wants to hear. Very rewarded.
But I work for the government, so I get rewarded for doing a complete job on time and with carefully crafted language that doesn’t allow the people whose business is being described to claim that I am biased against them. But no one has EVER told me to change a number or hold back a valid conclusion. We are careful how we word our conclusions, but we don’t change them. Well, except for disclosure reasons, but that is a content neutral rule.
Now, can I speak for folks at Treasury? No. At the Fed? No. In Congress? Heck, no. But I can speak for the general difference between working the private sector (first priority is to make deals happen, even if means stretching interpretation so hard you can see the back of your own head) and public sector (tell thetruth because that is our job).
I’d love to hear someone who has also been in both places who thinks the whole thing is a big conspiracy, cause I just don’t see it.
“I’d love to hear someone who has also been in both places who thinks the whole this is a big conspiracy, cause I just don’t see it.”
How about a bunch of little conpiracies, do you see that?
Polly:
Isn’t that at the heart of whats wrong in right now our country. If you stand up and want real change you get your criticized for not being a team player.
I find thinking out of the box is so frowned upon today, and it scares me.
We are careful how we word our conclusions, but we don’t change them. Well, except for disclosure reasons, but that is a content neutral rule.
Is it not true that Washington DC is infested with thousands of lobbyiests, each of whom represents a special interest and each of whom is very well paid to influence Congress in any way necessary in order to get what they want?
TBTF= Government owned (taxpayer’s problem). When an entire (flawed) system is in jeopardy, a giant conspiracy is in order. Call it what you want.
Polly you can have self-interest groups take over government and it’s legal I guess . These self interest lobby groups were
getting favorable laws and deregulation while also creating monopolies in the process . The special interest greedy evil ways created a meltdown of the financials systems in large part due to faulty lending , leverage, and credit expansion that drove the prices up
beyond reason ,and some people would say that the leverage games were a Ponzi-scheme .
The fact that the Politicians are so easy to lead around by the nose by the lobbyist is a pressing concern as well as the corruption that has seeped into the systems that are suppose to
be practicing fair business practice without fraud . Sitting it up so no Government agency had teeth to control the
destructive games these self-serving entities wanted to play,is a stacked deck . Its all about how to get rid of the
cops on the beat ,and how to fleece the Majority in the final analysis . The proof is in the pudding in what happened .
I’m sure that Wall Street thought they could continue generating money with the real estate always goes up myth ,but like all Ponzi-schemes ,they failed to conclude that people would not be able to afford the loans they were dishing out and real estate inflation in prices would come to a abrupt stop and reverse itself .
stop bec
Combo,
Yes, of course there are people who represent the interests of the people that pay them and try to get stuff that is good for their clients. Anyone can do that. It is constitutionally protected speech.
I have to attend meetings where people who represent folks who want stuff ask us to do it the way they want and tell us why they want it that way. Every once in a while they have a good point and we do it. Most of the time, their point is pathetic and we smile and nod and escort them out and then stand around in the hallway ripping apart what they said and agree to ignore it.
Again, can’t say what happens in Congress. The limit on “gifts” is so low for civil service employess that accepting a bottle of water, a pad of paper and an extra pen could put you in violation never mind an actual snack, so we always make folks come to our office and sit in our sad little conference room looking out over a dingy air shaft. Congress does junkets. Congress needs to think about campaign contributions. Congress has to get re-elected, so their behavior and priorities may vary.
This is not a conspiracy. It is the way the system is set up to work. If you want people to go to Congress to represent your interests, hire them. If you don’t have enough money, get some like-minded people together to pool their money and hire someone. Or do it yourself. Or yourselves.
The wealthy and powerful have always had an advantage. In this age of the internet, the less wealthy and powerful are in a better position than they ever have been because they can find eachother. If you don’t do it, that is your choice.
Brava, Polly. And thank you for your service to our Country!
Polly, while I agree with your description of yours and most others work in government, it unfortunately does not explain away the situations that create whistleblowers who are often wrongly prosecuted for being honest nor all the fraud committed up and down the line from the local to the federal level.
And while that is only a very small minority of the avg government employ, the damage caused is still tremendous.
And then there’s the lobbyists…
Its the lenders choice until they start creating massive violations
of Health and Safety and impose a risk on neighborhoods by not taking care of the foreclosures that are vacant .
You read any loan contract and in the fine print it talks about the
Lenders ability to levy the borrowers if they violate health and safety or don’t keep insurance on the property for that matter .
“pathological fear of not appearing successful”
Wow. What can I say Polly, when you’ve nailed it ( it -stays- nailed! ) And no, missed PITI payments can’t even begin… to fill the bonanza that was Once Upon a MEW.
I don’t believe there is a conspiracy on anybody’s part, and that includes the conservatives/republicans, and not even the banks.
I’ll employ Occam’s Razor. This is all The Tragedy of the Commons, plain and simple. Except it’s on a grand scale. People are grazing and increasing their own flocks faster than the grass can grow. [nobody is looking at the rapidly-depleting soil] They play their part in “the system” and simply choose not to see that the other end of the system is turning out waste products of homeless, poor, food-bank middle class etc.
And even if they do see what’s happening, their role in it is indirect.* They say: “Who me? I’m not doing that, I’m just playing the game…” which eliminates most of the guilt. The rest of the guilt is assuaged by advertising who whisper “no, you shouldn’t feel guilty…you worked hard… you deserved what you have…”
And in some way, I guess we’re all complicit to some extent.
* Except for health insurance companies which deny care and keep their customers sick and in pain. That’s really direct.
Having been close to the top of a certain now bankrupt Fortune 10 company, I can flat out tell you it IS conspiracy AND collusion.
And the government prosecutors and juries think so too.
Whoa - you’ve piqued my interest eco. Care to elicit details? If not here, then perhaps send me an email - see my info on the HBB facebook page.
Er, I’m not real fond of giving out any more identifying info than I have to.
But you already know I have a lot of knowledge of Houston.
Gotcha
I feel that the government has encouraged such behavior and is still in favor of keeping the consumer spending at all cost
I think people think that the objects they accumulate define who they are? Hence the obsession with buying stuff. The car companies use this inner mentality of self definition and exploit it to their advantage.
SUGuy,
No argument but I believe ( however painful ) these are necessary steps. Getting the ‘consumer’ ( yeah I know ) out of “MEW Mode” and back into Discretionary Income Mode is going to take time.
Right now it feels like time we don’t ‘have’ but it’s the only way OUT going forward!
Discretionary Income Mode requires discretionary income.
Check out this BBC film on Edward Bernays, nephew of Sigmund Freud and considered the father of pr (originally referred to as propoganda.) I found the film quite chilling when you consider the part he played in our culture as we experience it today.
http://benatlas.com/2009/11/the-century-of-the-self-by-adam-curtisays-and-the-pr-century/
Edward Bernays wrote in Propaganda (1928):
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”
Good find. One of my favorite bits of history.
At this point in time, we are all the products of the most sophisticated and pervasive propaganda system ever devised by mankind.
Most people don’t stand a chance.
Without the Internet, we would be a lot worse off.
Without the Internet, we would be a lot worse off.
+1 on that.
Before the internet, most news transfer was one way - broadcast from what is mostly a central core out to the masses, with interaction between the masses being very limited - mostly friends and family, who tended to be like-minded anyway. Now via blogs and such there is much more interaction between the masses, and thus a much wider check on the rapidly-shrinking broadcast medium; at least in terms of information flow.
It’s a good thing.
(as long as we keep “misinformation flow” to a minimum)
Carrie Anne…. You have posted one of the best films that could of been posted …I thank you a million times . The 4 part film is long ,but well worth it . It’s not the space creatures that are watching us ,its Corporate America .
You are correct, this is the plan:
- Reinflate the Bubble at all cost. Creating additional false wealth in the stock market, etc. is an added bonus.
- Get the bankers back in complete control so they can live their lives of opulance without being questioned.
- Destroy whatever jobs are left in this nation so that more people must live in debt and thus depend upon the bankers (and government); if they need the bankers to afford food, they won’t question them for looting.
- Reward crooks and punish the responsible until everyone understands the new “morality” which is that the only sin is to get caught.
Could it be that one of the future waves of forclosures will be in the richer classes? I think so.
I know several people with homes in the country club (85086) who’ve had their mortgages reset. One couple has the ability to hold on and another is letting the house go because the mortgage reset from $2400 per month to $6000.
Its already happening here. Tomorrow I am touring three REOs in fantastic school districts, all of which once sold for at least $700K. They’re much lower now, and all of them will be comp killers when they sell. One bank is already taking at least a $500K hit on one of them (based on asking price, and around here houses rarely go for more than list).
“comp killers”
Do any HBB readers have thoughts about how to help ensure the true comps (homes selling to end user buyers) get properly priced in while the false comps (e.g. lenders taking back a home at the full outstanding balance of a loan and report that as a sale price) get expunged so they don’t fraudulently distort price statistics?
Are the DataQuicks, S&P’s, RadarLogics and other high-end RE data services legally responsible for ensuring their reported average sale price statistics accurately reflect true sales, rather than lender misreporting?
Bear:
If we could teach Americans the right price is:……. can you rent it out in an emergency to good tenants and at least break even…let alone make a hundred or two a month…that would be the price I would buy at.
————————
Do any HBB readers have thoughts about how to help ensure the true comps (homes selling to end user buyers) get properly priced
When investigating any data source:
1) Check how the data source was produced and make sure it fits your needs. There are multiple ways of measuring most non-physical things, and they all make assumptions. If a data source doesn’t have any information on how it was produced, it is useless and not to be trusted.
2) If the data source is free, there is probably a statement accompanying the data which protects the provider against damages should the data turn out to be incorrect. If the data source is paid for, this can vary. Even with expensive data, claims are going to be limited to mistakes or fraud in data collection. If you misunderstand and misuse the data because you didn’t investigate how it was collected, that’s not going to be their problem.
IANAL, but this has been my experience with 3rd party data sets.
“If you misunderstand and misuse the data because you didn’t investigate how it was collected, that’s not going to be their problem.”
So what you are saying is that a data provider whose ‘median home sales price’ statistic exhibits severe upward bias due to the presence of non-sale transactions (e.g. banks taking back homes at the full loan amount and reporting this as a ’sale price’) would not be guilty of misreporting, so long as the fine print in the description of their methodology included loopholes for averaging in non-sales transactions with sales?
That sounds a bit suspect to me, but I am not an attorney (nor do I plan to be in any future life)…
If you have a market were foreclosures make up a high % of the market ,than foreclosures become the market value IMHO . Maybe you can add some value if a house isn’t destroyed or doesn’t have damage but market value appraisals are based on the entire neighborhood and you can’t just ignore how foreclosures bring down the value of the whole neighborhood .
Also what is happening is that the false market is correcting
and the made up values of the boom years are crashing because they were not in sink with actually incomes and true end-user demand .
A investor that gets a bogus loan with a 2 year investment plan cannot be considered a arms length willing and able borrower ,but rather a opportunist that contributed to false demand that was dependent on a Ponzi-scheme continuing .
So what you are saying is that a data provider whose ‘median home sales price’ statistic exhibits severe upward bias due to the presence of non-sale transactions …
Yes, this is exactly what I’m saying. That’s simply how they’ve defined median sales price, and without a legal standard for defining that term, they’re free to define it as they wish. Dishonest? Maybe. It depends on the context. Of course, when used in a NAR report just about everything is dishonest. Illegal? I doubt it.
As for the fine print, that’s usually what’s most worth reading! It’s where they put things they have to say but would rather you not actually read.
Could it be that one of the future waves of forclosures will be in the richer classes? I think so.
Dallas-area high-end home foreclosures soar
07:46 AM CST on Friday, December 11, 2009
By STEVE BROWN / The Dallas Morning News
stevebrown@dallasnews.com
High-end homeowners in North Texas are feeling a bigger bite from foreclosures, a new study shows.
This year in Dallas County, the number of million-dollar-plus homes posted for foreclosure jumped 24 percent. At the same time, net home foreclosure filings in the county declined 12 percent, the Foreclosure Listing Service said Thursday.
In Collin County, the number of high-price houses threatened with foreclosure more than tripled in 2009 from last year, the study shows.
“Substantial gains in net postings were found among executive, luxury and ultra-luxury homes,” George Roddy, CEO of the Addison-based statistical firm, said in the report. “The largest gains in net residential foreclosure posting activity were found among homes on the upper end of the Texas housing market.
“It’s been mounting for the last couple of years,” he said. “It’s indicative of where we are in the economy where it’s not just the little guy getting hurt but all the way up to the CEO.”
The next wave of foreclosures will indeed be the “rich.” It’s right on the Credit Suisse graph. The graph broke down the resets into Prime, Alt-A, and Subprime. The first hump was mostly subprime new buyers. The second hump contains a LOT or Prime borrowers on regular mortgages who did MEW into teaser loans. We’re just starting the second hump.
It’s time to Extend & Pretend. I move that these homebuyers be officially granted a loan modification provision granting them the option of deferring their payments … forever.
This will help balance the bank’s books, will even add to the bank’s earnings as the principal of the mortgage increases with each deferred payment, along with compounding of the interest owed.
(uh, sarcasm off, for those who don’t get it.)
Yes, and government mandated credit-limit increases to $100k for everyone and require cc companies to charge no more than 0% on balances and lower minimum payment amount to $0.00/mo. Now you would be talking about a revovery! Come on guys, lets spend our way out of this. Get out there and do your part! (And don’t waste any money on paying bills, that is just not productive spending).
Works for me
I’ve been wanting a new Corvette for a long time.
Paying bills is for losers!
If you’re going to go bankrupt, you might as well have a net worth of -200k as -100k. At some level, it is incumbent on those who are LENDING them the money to watch out for their own interests. What I hate is people who want debt forgiveness WITHOUT having to wear the “Scarlet B” on their credit reports. Also those who would like to keep dunning people for interest on debts that borrowers NEVER had any reasonable expectation of being able to pay. Isn’t figuring out who is likely to pay you back supposed to be the core competency of lenders?
Not if you can sell the debt up the food chain, especially if the top of the food chain is too-big-to-fail.
Bingo.
“If you’re going to go bankrupt, you might as well have a net worth of -200k as -100k.”
…or negative $ 100 trillion as negative $ 50 trillion.
The taxpayers will be paying them back, so I think they are cool with the current situation.
And I want to be clear here. It’s not that I think that the profligate are any less guilty that the “debt-pushers.” If anything, they’re often more guilty, they should know more about their personal finances than the banks do. But there will ALWAYS be people willing to borrow themselves to the poorhouse. As soon as one bunch has bankrupted, another bunch of optimists will be standing in line struggling to find somebody to sell their futures to. But there are a smaller number of people who have money to lend. And while they are a shifty and avaricious lot, they are generally better at watching out after their own best interests. And so we use bankruptcy to try and make extreme usuary not in their best interest.
High life is right. If they drain their whole retirement account in just one year, then they must have had very little in it to begin with — around $150K at most. Sound like a lot, but for two people in their early 50’s, that’s almost nothing.
Well yes. You can really shock people by simply taking their retirement savings, dividing it by their take home income and telling them that’s how long they can afford to be retired for. It’s not actually that bad, but really, even when you add Social Security, do people really think that they’ll be happy living on, say 40% of their current income?
Don’t the advisors recommend around 80% as a general rule unless folks are moving to a much lower cost area? Actually I think that is what a lot of folks count on. Moving and magically having no real expenses. And that is the issue isn’t it? People expecting numbers to just “work out” some how without figuring out if they really will.
During one of my two long bouts with unemployment, I took the Praxis test and got myself hired to start as a high school math teacher in the Jersey City schools. I expected to spend most of my time teaching practical math and algebra. I had every intention of making the kids do a research project during the year. Nothing out of line with their abilities - I didn’t think anyone was going to plan the fuel consumption requirements for a trip to Mars - but honest use of numbers to evaluate your life: what are the real costs of owning a car for a year? how much money can I save out of my family’s food budget by watching sales and clipping coupons and cooking in? What are the comparative costs per hour of going to the movies, renting a movie, and playing video games (taking into account the capital costs of each)? Compare the cost of buying furniture using a rent to own place, a credit card and saving for it in advance?
I thought the projects would stand the kids in good stead for college essays (if they went) or for interviews. Not that many 18 or 19 year olds outside of the fairly well off upper and upper middle class high schools have ever been asked to think about a problem that requires research and analysis (actually, let me exclude family farm kids - I bet they get plenty of experience with it watching their parents). And then we expect them to be able to do it all of a sudden after they are old enough to sign a legally binding contract?
Why?
Probably because the parents don’t want to deal with it.
How many times do you hear even adults say “Ewww. Word problems. Puke!”
One of the great challenges of life is that you are not presented everything in a distilled, watered down state. Anyone can solve y = c*x; but trying to determine the values that definie three variables in an effort to calculate the fourth? Difficult. Yet when was the last time the world presented the following out of the blue:
300 = 12 * x?
Instead of:
You drove 300 miles and then put 12 gallons of gas in the tank, what was your MPG?
Well of course that’s why the boomer retiree wave won’t prevent massive Florida price declines. The reason FL became a retirement haven is largely because it WAS cheap. It will become a retieremnt haven again after prices have fallen dramaticly from the unsupportable bubble heights.
Chile, we got our fill of that in 8th and 9th grade. Stop me if you’ve heard this one: A train leaves Los Angeles at midnight, going 62 miles/hour. At the same time, a train leaves San Francisco…
Of course in 8th grade the only thing students were paying attention to was each other.
“Of course in 8th grade the only thing students were paying attention to was each other.”
ROTFLMAO, Truer words were never spoken. For the typical 8th grader the only subjects that realy hold their attention are biology and anatomy.
People have mental blinders on. Everyone I know that’s retired haven’t changed their life
style one iota. Not one. But then, they planned
for it. If you were living on 10 grand a month,
that’s the life style you should plan on because,
brother, even if you don’t have the funds, you’ll
beg and borrow to do it.
i saw an article yesteray about how the recession is good for some families…you know…getting to spend more time with the kids and all.
hmmmm…what could possibly be the purveyor of these attitudes?
The person who wrote the article because he/she heard an editor moaning about how they needed something positive and uplifting to print around the holidays.
Who the heck do you think it is?
i think it’s american arrogance. the kind obama says we had before he came along.
we think we can just spend our way out of this. too many uemployed? just print more money and extend benefits.
we are still trying to inflate the FIRE economy…i think it is dead and gone.
sooner or later we have to pay the piper.
michael,
“FIRE economy”? Acronym or Inferno?
Finance, Insurance and Real Estate.
“Maybe this is what the ‘green shoot’ economy is all about - homedebtors turned squatters who insist on the high life to the bitter end - whatever that turns out to be.”
Eliminate “home” from “homedebtors,; and replace “squaters” with “panhandlers,” and you have described the collective situation of the U.S. as well.
Perhaps all those “deficits don’t matter” pols were men of the people after all.
At least they drained their retirement accounts before they gave up. They’ll regret that some day.
This behavior is not at all shocking, all the signs have pointed to it for an awfully long time. The question for individuals now is how each one of us intends to respond.
Given what my eyes have seen so far, the ownership society is looking more like the perfect mousetrap with each passing day. Does anyone ever stop to ask why exactly so many different parties want to put people into houses?
edgewaterjohn,
Not that anyone gives a rip, but doesn’t it seem a tad unfair to equity mkts. that they were in many cases facing wholesale liquidation to keep FAILED real estate infestments afloat ( if only for another few months, as was the case in the couple noted above? )
This is the connection I just can’t seem to get people to make. Were we overvalued going into the Fall of ‘07? ( Can there be any doubt? ) But what percentage of the ride from 14k to 6,400 was due to boomers buying time?
Wouldn’t you have to have an income stream to “lease” a Mercedes?
Not if you have a MEW cash stash.
cobalt,
Does the couple live at 1313 Mockingbird Lane? All of a sudden I have the Munsters theme song going through my head
if their timing was a few years earlier and they sold, it may have worked out. but, the masses always buy at the wrong time. buy, when no one wants to buy. i was glad to pay 81k for my house 7 months ago that sold for that in 1996 and sold in 2006 for over 200K. i expect another dip when the propping ends next year…it will be interesting if they can move enough inventory before all the stimulus is removed. i paid cash so no bank has their hand on my deed! but, what i never understood was buying and having a morgage consume all you income along with the new car and this and that. in the end, you are living for the banks. and, i don’t like the banks! all to impress all your neighbors..family…friends. i know my true friends and it never mattered what job i did,what car i drove, or my living arrangements. i am determined to remove the rest of my cash from the banks and close all my accounts. no cable or internet….ok i share with my nice neighbor and pay him a few bucks. the system is a big scheme to make you a slave to them.
Bogus recovery and stock market charade contuinue… Eddie?
I’m starting to worry his name is already destined for the dustbin of HBB troll history, along with BeaConst, Antonio Villaraigosa, LV_Landlord and Gekko. May the HBB’s illustrious trolls all RIP this holiday season…
Gekko was the bomb! A true legend in his own mind. I raise my coffee cup to him.
He was a much more formidable rival than our dearly departed pet troll of recent days. I never had so much fun going head to head with anyone here, with the possible exception of BeaConst.
To anyone who doesn’t know, BeaConst is short hand for Beacon Street, which is where MIT, the institution where the likes of Ben Bernanke, Ken Rosen, David Miliband and many other top players in the political-economics game were educated. Mr BeaConst liked to come on the HBB to insinuate about his connections to professors in the MIT econ department. Then he would brag of his real estate investing savvy, and to tell us about how we were a bunch of pessimistic gloomsters. After the crash, he was never heard from again.
PB, would you say that you’re NOT a pessimistic gloomster?
Las Vegas landlord was a interesting troll ,remember way back in 2005 and 2006. I always thought she was a hooker turned real estate investor/landlord .
“PB, would you say that you’re NOT a pessimistic gloomster?”
Let me first figure out how much my stock market investments went up this year and I will get back to you…
Ah the good ol’ days….
Too bad, I noticed this site about 6 months ago.
Housing Wizard,
The old joke in the military was: “I’d rather have a sister working in a whorehouse ( than a ‘brother’ in the Reserves! )
But in ‘this’ particular instance, I’m not sure going from pimping out yourself over pimping out properties was a marked improvement? IMHO.
Whatever happened to the kid who was always getting ready to move from FL to Oil City, PA or thereabouts?
He started posting links to severely off-color sites one night and got hissef banned. (Mercifully.) I was getting ready to track him down to his nest in his parent’s basement and throttle him into oblivion–or at least to Oil City.
Oly kept him going for MONTHS–even sang him Happy Birthday at one point!
It’s pretty late at night so I feel relatively safe unloading this confession, but I cannot contain my shame any longer.
I corresponded with KC Serin. (Not sure if that combination of letters will go through Ben’s filter….) There. I said it.
I encouraged him to keep writing about his experiences so we could prolong the fun of raking him over the HBB coals. At some point I expect to see a screenplay from the lad— or something equally non-redemptive. He didn’t quite qualify as a troll, but he was certainly iconic.
Gekko was funny. Every time I saw the name I would picture a gekko sunning itself on a tree.
Nevada swearing in 75 more foreclosure mediators
LAS VEGAS—The Nevada Supreme Court is swearing in 75 more mediators to the Nevada Foreclosure Mediation Program.
The new group brings to 170 the number of attorneys, hearing officers and senior judges available to help homeowners and lenders reach middle ground in the state with highest foreclosure rate.
Chief Justice James Hardesty will swear in mediators by videoconference Friday in Supreme Court courtrooms in Carson City and Las Vegas.
The Foreclosure Mediation Program began with 95 mediators in July.
Supreme Court spokesman Bill Gang says that after eliminating duplicate applications, officials have nearly 3,300 homeowners seeking third-party review to try to keep their homes.
About 500 cases have been heard. Another 1,000 are scheduled. Mediations are expected to conclude within 90 days of notices of default being recorded.
Ah, attorney full-employment act. Well, maybe not *full* employment, but you get the idea.
House underwater? Why not walk away?
Updated: Dec 11, 2009 6:38 AM EST
By Scott Kilbury – email
Foreclosures fell for the fourth straight month in the United States. the news isn’t so great for Arizona where they actually increased 8 percent from October to November.
One local scholar believes more and more homeowners would be foreclosing on their homes if they knew what was financially right for them.
“I’m not advocating walking away from your mortgage,” Brent T. White, University of Arizona Associate Professor of Law said. “But if they were simply looking out for their financial interest and their house were underwater, they should explore their options.”
White is in the center of a debate after publishing his paper: “Underwater and not walking away: Shame, fear and the social management of the housing crisis.
“Wall Street gets to maximize profits and minimize losses irrespective of concerns about morality, while main street is told to keep their promises,” White says.
White is an expert in behavioral economics and the law. He believes homeowners worry about the shame involved with foreclosure and have an exaggerated anxiety over what a foreclosure will mean for a person going through it.
Most people feel they have a responsibility to pay Their mortgage; but, they’re not legally obligated to do so in Arizona. It’s one of 10 states in the nation where lenders cannot legally come after a borrower who has walked away from their loan.
Dan Yybar is the Senior Vice President of American Home Loans in Tucson and has seen his share of strategic foreclosures. “This is why we’re in this mess. Cause someone says here take the keys, I can’t do this anymore,” Yribar said.
Yribar says he would be hesitant to give a person who foreclosed on his home another loan. “I would have a hard time giving them a loan,” Yribar said.
White said he knows of plenty of people who have walked away from their mortgage and had to wait two to three years before their credit history was repaired. He said they simply made big purchases that required credit, like a car or another home, and were better off had they stayed in the home that was worth less than what they were paying. He says it would take at least 10 years to break even in a property that is underwater and you would make that money and more walking.
“We need more homeowners to act like lenders forcing them to be more like homeowners and then they’d be willing to negotiate,” White said.
“White is an expert in behavioral economics and the law. He believes homeowners worry about the shame involved with foreclosure and have an exaggerated anxiety over what a foreclosure will mean for a person going through it.”
I’m for keeping the shame and exaggerated anxiety alive for as long as possible if it will keep the mortgage payments flowing into the banks.
(Okay, bring on the flames.)
Combo–I’ve been very much in agreement with you on this matter, but I wonder–after seeing stories the last couple of days about people who have stopped paying their mortgage but still are doing Disneyland trips, Mercedes leases, etc…
Maybe it is better overall for us that they’re spending all this cash in the wider economy rather than simply sending it to the bank. Yeah, the banks/investors are taking a hit and yeah, my tax dollars are propping up those said banks, but this way the money actually gets out into the world (and will end up being taxed which would mean some of it goes back to the govt).
Just wondering, I may be way off on this. One thing I do think: if everybody who is currently underwater does walk away, it’s gonna get ugly.
It’s better if they pay back the bank, so as to stem inflation. We’re better off resetting back to a true economy, which means people not getting benefits from money they didn’t earn.
Disneyland, Mercedes, etc. are luxuries. Our economy can do with out them.
The bank is actually worse off in the long run if everyone pays back their mortgage. Eventually they would lose their two main income streams - interest income, and bailout income.
(One can dream, can’t one?)
Effectively the taxpayer is making the mortgage payments.
If, say, 40% of a person’s income normally goes to paying his mortgage then it follows that he gets to spend 40% more on other stuff as soon as he stops making his house payments. This 40% gets distributed throughout the economy, which is a good thing.
But the 40% has to come from somewhere. This somewhere happens to be the taxpayer.
The result would be the same if at the beginning of each month the homebuyer receives a check in the mail from Uncle Sam to use to make his house payment. It’s as if the homebuyer is tapping into some sort of welfare program.
Nonetheless, if it helps maintain the velocity of money, one could argue that stiffing the zombie banks and spending on ‘luxuries’ is of more overall benefit to the economy.
Spot on. That’s what really burns me about this whole thing. Lots of wealthy people are indeed tapping into the welfare system; it’s insidious.
As has been stated on HBB (and elsewhere) many times - private gains, public losses.
I’d go along with the money-velocity-is-good-for-the-economy position if this velocity was the result of earned dollars rather than borrowed ones.
I agree with combotechie that it could get real ugly if defaults reach a critical mass .
But ,you guys act like the Banks are losing all the money . Its the loan investor and the taxpayer that is losing the money .
Remember most of these loans were put to CDO’s and sold as AAA investment grade paper during the Boom (or at least huge portions of mortgages ended up being sold this way ). You might have a portion of your investments in these funds and don’t even know it . There were retirement plans invested in these funds .
That’s why I always felt they should of sorted out where bail-outs should go and not just give cash to the Institutions to spend as they please . It’s very complicated who won and who lost when the meltdown started ,yet the crooks got hard cold cash to do with as they pleased .
It was very important to bust the systems that created the meltdown and than go about the process of logically providing money where it served the greatest good .The Feds could of just continued giving short term loans to keep the system going until all this was sorted out …instead we get the Hank Paulson “Fire ” ,which was a bait and switch con job.
Well it’s my understanding that banks held Fannie Freddie bonds as their reserves on an “almost the same as treasuries” basis. And apparantly alot of toxic MBS stuff was considerd “almost the same as GSE bonds.”
Jim ,the banks and investment houses were also investing in the Credit default swap world and a bunch of other unregulated
high leverage casino games . What a joke that some of these entities (like AIG ) couldn’t even pay off their bets . Its all about leverage with Wall Street ,especially when they are not regulated .
Why do you want homeowners to prop up banks that made bad business decisions? I would rather have rational homeowners who can legally walk away from their obligations and rent at much more affordable monthly payment levels do so. Not only will this provide ground-level stimulus, as all those households could stop wasting their money on unaffordable mortgages and start treating their kids to Disney vacations, but it would also help destroy banks which are terrible at banking, and might even spur impetus for true financial regulatory reform, rather than the fox-in-the-chicken-coop regulatory measures proposed so far.
“help destroy banks which are terrible at banking”
Why? Is that important? ( And people say PB has no sense of humor! )
I wouldn’t mind new banks taking over,as long as they overhaul the current regulations .
PB …If to many walk ,especially people who could actually afford the payment ,or they could if they got a loan modification ,than you get a Black Swan event . It’s like any extreme event ,it’s not manageable . While I do not agree with trying to prop up housing prices , I do believe that if everyone walked it would create a
event that would be to extreme of a event that would go beyond just the price of real estate . It’s all about how much loss the system can bear .
There is no question that people who can’t afford the loan they were given or can’t get loan mods ,or people who lost their job have no choice but to walk . But again I say just because a bank is servicing a loan doesn’t mean they are the bag-holder .
As long as they are going to make the taxpayers and future generations pay for loss and you get inflation as the final evil ,than you don’t gain anything in the long run if the defaults are to extreme .
I don’t want to prop up the banks or the investment houses ,but the banks and investment houses are not the ones that put their money into those loans .
Also there is a great playing of the systems going on right now in which money is being wasted on a bunch of game playing and continued fraud . You might be right PB that the only way the
corrupt systems will be corrected will be by total BLACK SWAN
extreme event that will force it ,but its more likely that a bizarre form of loss of rights and dictatorship in the name of emergency would take place .
“I do believe that if everyone walked it would create a
event that would be to extreme of a event that would go beyond just the price of real estate . It’s all about how much loss the system can bear .”
I am optimistic that there exists a patch of middle ground between systemic collapse that provides an inexorable impetus for truly reforming a broken system, and the kind that leads to emergency and dictatorship. Clearly the latter is not something to wish for, while the former is.
“I would rather have rational homeowners who can legally walk away from their obligations and rent at much more affordable monthly payment levels do so. Not only will this provide ground-level stimulus, as all those households could stop wasting their money on unaffordable mortgages…”
PB, you make a great point here. We need to encourage less percentage of income going to housing, in all its forms.
When I was just out of high school, qualifying for any housing meant one weeks pay equaled one months rent/lease/mortgage. Or one quarter of your monthly income.
Now it’s 2 weeks. Or half of your monthly income. Although some places still try to hold to the one quarter pay, they soon find out there aren’t that many qualified people.
Anyone believing any of these so called numbers is drinking economic mumbo jumbo cool aid probably the green kind:) Right now I’ve given up watching any numbers ( unemployment, approval ratings, jobs created, troops needed, etc) as they are all rigged to reflect and to promote optimism needed to suck all available wealth still out there to special interests and to reduce personal sense of choice and freedom through promoting culture of fear and dependency via dept. I personally know many people who have been in pre foreclosure for over a year not making any payments; how many are there? Once we start looking at the shadow economy and unreported real data we’ll have a better picture of whats going on.
“Once we start looking at the shadow economy and unreported real data we’ll have a better picture of whats going on.”
This “better picture of what’s going on”, if unleashed onto the unwashed masses, would probably cause the economy to freeze up.
“Right now I’ve given up watching any numbers ( unemployment, approval ratings, jobs created, troops needed, etc) as they are all rigged to reflect and to promote optimism…”
+1 I like your pessimistic view of things; refreshing to know I’m not alone.
ditto
Found out last night that one of our neighbors was invited to a “gold” party. I had to look this up, but it sounds like the modern equivalent of the Tupperware party.
Time to sell.
Since:
- At a tupperware party the goal of the host is to sell as much tupperware to you as possible.
- At a gold party the goal of the host is to buy as much gold from you as possible.
Shouldn’t that drive you towards be “time to buy?”
I’m struggling here - help me out.
I still have one Double Eagle one ounce coin left, and I am thinking about selling that one in two weeks when I go home on leave. Parked the money from the platinum and gold coins in a USAA savings account. I was on the Mustang GT kick, but now the wife has been looking at houses again. She had stopped looking at this site while I was home last week. Time to get her back on the bandwagon!
Maybe you can have her scout around for “goldware” parties that might be happening in your neighborhood when you are home?
I heard that the 2011 Mustangs will have even more ponies under the hood. You might want to wait.
Gold parties are the equivalent of shoeshine boys buying stock in 1929. If even the Great Unwashed are doing it, it’s time to do the opposite.
I’ll throw out a guess and say that the price of gold will depend heavily on the employment rate. This country simply cannot afford another jobless recovery. Those jobs that went overseas, or were insourced, or were replaced by automation,* simply have to come back, or be replaced by new jobs. If somebody creates new jobs in energy/healthcare/education as Obama campaigned, gold will drop like a rock. If those jobs are job replaced, then America will turn into Pax Romana, where half the citizens are on the dole. At that point it’s best to go on the canned-pea-and-AK47 plan.
—-
*I count the Internet as the new automation. As surely as robots displaced armies of assembly line workers, Microsoft Office and Google replaced armies of clerical workers and researchers.
Sorry, I mean “if those jobs are NOT replaced,” we’ll turn into Rome.
“Buy when everyone is selling. Sell when everyone is buying.
– JP Morgan –”
The hosts of these parties are sending a glaring signal that this is a good time to sell.
P.S. Unlike Tupperware, gold lasts virtually forever. The only thing about gold that doesn’t last forever is the euphoric desire to own a personal horde. So your analogy is completely off base, as anyone who has ever discarded melted Tupperware can explain.
“P.S. Unlike tupperware, gold lasts virtually forever.”
Does that mean there should never be a shortage of gold?
The only kind of gold shortage one should ever expect to see is that due to hoarding behavior. As I have oft pointed out here, you cannot eat it, make love in it, sleep in it, drive to work in it, learn in it. medicate yourself with it or entertain yourself with it (unless you find it stimulating to wear bling). Gold is pretty much worthless unless many other people believe it is worth something and are willing to offer valuable goods and services in exchange for the pleasure of adding to their hoards of The Precious™.
Unlike tupperware - gold cannot be created.
(at least not without incredible expense and/or radioactive side effects)
Unlike Tupperware, gold serves few practical uses (unless you like wearing bling, or have some specialized industrial use for it).
Unlike gold, you cannot carry a significant amount of tupperware in your pocket to trade for other things, including things as expensive as cars and such.
“Unlike gold, you cannot carry a significant amount … in your pocket to trade for other things, including things as expensive as cars and such.”
I would love to see some statistics on what percentage of car purchases are funded with gold pocket change. That is a phenomenon of which I was unaware. We used a piece of paper with our signatures affixed to pay for our last car purchase, and it worked just fine.
* The Wall Street Journal
* HEARD ON THE STREET
* DECEMBER 11, 2009
Gold Trades on Luster and Bluster
By LIAM DENNING
Imagine that all mining of gold ceased tomorrow. The gold price would spike initially. Miscreants might ransack neighborhood church altars. Suitors of “single ladies””heeding singer Beyoncé’s exhortation to “put a ring on it””would bankrupt themselves.
Then what? Apart from bars going up on stained-glass windows and a sudden outbreak of bachelorhood, civilization would survive. You can’t eat, drink or burn gold. The story of King Midas is, after all, a cautionary tale, not an ode to bling.
Yet the argument that global output of gold has peaked is being deployed to justify another leg up in prices from Thursday’s $1,125.70 an ounce. Barrick Gold CEO Aaron Regentreckons“peak gold”may already be upon us; although it is worth remembering his company has just unwound its hedges, leaving profits more levered to rising prices.
Unlike oil or food, however, gold isn’t consumed. Some 86% of the world’s 5.24-billion-ounce stash rests in vaults or on people’s bodies, according to the World Gold Council, so genuine shortages look unlikely. And high prices curb demand, especially for jewelry. Declining production, therefore, might offer some support to prices, but not necessarily at today’s level. When mine output stagnated between 1992 and 1996, the spot gold price rose by all of 4% to $368 an ounce.
Above all, phrases like peak gold should trip alarms. Investors buying into similar arguments for oil in 2008 suffered big losses.
…
I would love to see some statistics on what percentage of car purchases are funded with gold pocket change. That is a phenomenon of which I was unaware. We used a piece of paper with our signatures affixed to pay for our last car purchase, and it worked just fine.
Past behavior is not a guarantor of future behavior. The crap hasn’t actually hit the fan yet.
Term life insurance is worth nothing - until you really need it, then it’s worth everything. That’s why people pay good money for something they never end up using.
Gonna have to bring out the trump card here -
No one ever got laid buying their wife or girlfriend tupperware for Valentine’s day.
My gold crown in my mouth allows me to eat…
I would love to see some statistics on what percentage of car purchases are funded with gold pocket change.
———
Instead of cars, you’d do better to ponder sailing ships purchased with bags of dabloons by scurvy pirates! Savvy? ARRR!
Umm, unfortunately, I think tupperware also lasts forever. But that is even further off topic than speculating in gold.
I don’t get why people would go to these traveling gold-buying shows at hotels when they can go get melt value at the local gold/silver exchange.
Couldn’t you argue that ‘everyone’ is the many people selling gold jewelry etc. at these parties? And only when these same people are *buying* gold at silly parties will it be time to sell?
There is always a supply side (sellers) and demand side (buyers) in any market. The question is, why is this market (savvy gold buyers using the Tupperware format to increase their gold holdings) even arising at this point in time, and for how long will they seem so savvy?
No one ever got laid buying their wife or girlfriend tupperware for Valentine’s day.
Cmon, PB, he has a point there…
The “old” gold jewelry is more valuable in bulk. The refiner charges a fee of about $100 to melt it and analyze the gold content. If you were to sell a couple jewelry pieces on your own direct to a refiner about 50% of your return would be wiped out due to refining charges and shipping. It would be better to sell to someone at a party who would give you 80% and spread the refining charges between several people.
The sell your old gold ads have been around for a couple years already. They could be more of a factor of higher unemployment and higher gold prices, meaning people need cash.
Do people bring lots of gold to these gold parties?
If so, gold parties probably are of great interest to strong arm robbers.
A blast from the past: Pyramid Parties were all the rage in the late Seventies. At one party one had to have on their person at least one-thousand dollars in cash in order to attend. About fifty people were at the party when a couple of heavily armed men with ski masks went in and robbed them.
With enough helicopter drops of cash, perhaps the Pyramid Party industry could see a revival soon?
Nah. Wheelbarrow parties. IMO Wheelbarrows could well be the next bubble.
At one party one had to have on their person at least one-thousand dollars in cash in order to attend.
They wouldn’t take checks?
My P.S. to all the above gold discussion:
FWIW - even though obviously I’m one of the big gold proponents on the board here, I posted a few weeks ago when it was approaching $1100 that I thought that, based on my off-the-cuff view, that we were getting into bubble territory, as my view is that its current worth is somewhere around $1000. Actually IMO it’s value (not its price) is affected more by political events than by financial ones at this point, because our future financial state is derived from current political activity.
My pro-gold postings generally reflect my counter-arguments to many folks’ views that gold is worth virtually nothing, or that its worth is derived only from its commodity value, or its cost to mine. My point (which I’ve stated often before) would be that it’s definitely worth a significant amount - primarily not as a commodity (electronics and jewelry) - but rather as insurance; specifically against fiat money collapse - either slow or fast. As such - it is indeed by its nature very hard to gauge a fundamental value, and therefore an extremely speculative investment. However that doesn’t mean it doesn’t have intrinsic value. I won’t go into why where - you’ve all seen or could easily find the arguments, and decide for yourselves.
Guess I don’t want to keep beating a dead horse, just wanted to put that context out there.
Now, I realize following any one authority or expert sets you up for disappointment - look at many of the feverent Obama supporters who watch unemployment go up while bankers get rich (or while more troops go into Afghanistan) are now realizing.
Forget Peter Schiff was:
- right about getting out of Nasdaq Stocks in 2000
- right about buying gold starting in 2002 due to government money printing
- right about the housing bubble blowing up
- right about the banks going bust and government bailouts coming
- right about unemployment continuing to rise despite government intervention
- right about foreign stock outperforming US stocks during the crisis
- right about the dollar collapsing
But how twisted must you be to publish a letter on your web site and mailing it to the Wall Street Journal in 2004 predicting people should/would take out a negative amortizing no down payment (alt-A) loan for a house they couldn’t afford with a 1% teaser rate, forget about taking care of the house at all, taking out any equity with home equity loans that accrues during the bubble years, and plan to default (after living free of charge for a few months while the sheriff backlog of foreclosures and government programs like the HAMP delay things) only to eventually move into a nicer home at a very low rent?
It is hard to believe anyone would predict that - Peter notes in his video blog today that he figured back then people would toss their credit rating to save money - so why should we expect people struggle to pay mortgages now (even with government induced reductions) on homes they will NEVER have equity in? CNBCs report that on 30,000 mortgage modifications have been made permanent in 6 months of HAMP does not bode well for the future!
So fast forward to Dec 10 2009 and now the Wall Street journal publishes Peter’s prediction (just with a different author listed and with the benefit of hindsight).
http://online.wsj.com/article/SB126040517376983621.html
If the guy thinks gold is going to $5000, you have to at least consider his track record.
“…look at many of the feverent Obama supporters who watch unemployment go up while bankers get rich (or while more troops go into Afghanistan) are now realizing.”
Just had a jib-jab ping-pong “Flashback”:
“…look at many of the feverent Cheney-Shrub supporters who watch homeownership go up while bankers got rich (or while more Xe contract workers go into Iraq & Afghanistan) are now realizing.
yeah, same old story stock bubble, housing bubble, oil bubble, and Now the GOLD BUBBLE. if i had the gold i owned in 1991-1994…i would be a seller now. but, i would have had to hold that gold 17-18 years to finally sell it for a nice profit. buy now and you will never get the cash back.
Probably used the wrong analogy.
I meant that if my neighbors are being invited to a gold party (which I’ve never heard of in my life), if everyone is talking about gold now, that screams “bubble” to me.
Yup…these guys are too smart by half, as they realize that BB and other Fed official are just pretending when they announce their plans to unwind asset purchase programs and keep inflation under control when the economic recovery is solidly underway.
The gold parties are not indicative of a gold bubble. They are indicative of people needing cash enough to sell their jewelry at a fraction of the PM value. Like taking the pawn shop to them.
Rio is the new Dubai. Sick of hearing about the next big thing. Are humans inherently immune to learning anything?
When it comes to real estate, capital is always on the move. City vs. Suburb, Rust Belt vs. Sun Belt, Dubai vs. Rio. S.S.D.D.
FWIW - there could be two more different countries. The Rio poster on the board here pointed out some very interesting stats the other day, including how Brazil has an extremely low amount of real estate debt - like about 2% of GDP (U.S. is 77%). That is one huge difference. I’m not sure of any actual figures of Dubai debt, but it is certainly huge of course.
The other is natural resources - Brazil is packed, Dubai has virtually zero.
You are probably right. This time its different… Does it ever end???
Oops - meant:
“FWIW - there couldn’t be two more different countries.”
Inflation vs. Deflation debate has been settled as of this morning. By my girlfriend. When I woke up this morning I felt adventurous, so I turned to her and asked for some “inflation”. She looks down, then up at my face and said “Nope I see deflation” and went back to sleep.
So folks, deflation ahead.
You need a stimulus program.
Extend & Pretend.
Roll it over and try to get a better interest rate.
LOL…
Yours was my fav, alpha!
Ohhhh. Excellent, sloth.
Start printing money and use it for a bailout.
Call Tiger Woods post haste and ask his advice.
Prediction: Tiger goes on Oprah- “I’m a sex-addict and I’m seeking treatment.”
If your tender offer and merger proposal are rejected, consider the hostile takeover. You can always insert a stay at home clause into the working document and provide satisfaction to both parties.
Delicate but persistent collective bargaining may land you a sweetheart deal!
If I read you correctly, and I think I am, this merger “proposal”, more likely or not will not end well as the up-front capital requirement (in the form of some shining object) will lead to years of balance sheet negative cash flow, resulting in possible post-merger spin-off of smaller and ungrateful entities, which results in more negative cash flow, which at 10 years down the road may finally lead to the originally acquired party becoming dissatisfied with the original merger agreement and mounts an hostile split-off resulting in losing 50% of your balance sheet assets plus years of negative cash flow payments to the said dissatisfied party.
Consider whether renting might work better for you than owner occupation.
Good lord, people!
…and here I thought wild and wet weather was bad.
How about squatting?
Treasury Yield Curve Steepest Since at Least 1980 After Auction
Dec. 10 (Bloomberg) — Treasuries fell, with the gap in yields between 2- and 30-year securities reaching the widest margin since at least 1980, after a $13 billion offering of 30- year bonds drew lower-than-forecast demand.
———————————-
My take - 2010 is going to be very, very, very bad for everything except short term USD cash (long term bonds, most other currencies, stocks and commodities are going to sink hard)
One very smart fund manager has said his next big bet is a big rise in long-term interest rate, especially in the MBS arena. If this becomes reality what you predicted will probably come to reality as well.
TBT anyone?
What does that “very smart fund manager” think will stop the Fed from keeping long-term interest rates low for the indefinite future, as they have emphatically signaled they intend to do? Anyone who claims to know where long-term rates are headed but cannot answer that question is talking up his arse, IMO.
I didn’t read what he thought about that in particular. But I think it is highly questionable as to how long can any government keep intervening in a market as large as the Treasury and MBS market for an extended period of time effectively (of course you would have to defined “extended” and “effectively” yourself).
Yes it has succeeded so far, but that just means the risk is now shifted to it failing (or at least not as successful) sometime in the not so distant future.
TBT anyone?
I’ve had a significant amount since March, actually. As long as the debt keeps rising (will it ever not?), it’s an excellent complement to GLD.
The Fed has the short end of the curve pinned to the mat, and is also doing what it can to prevent the long end of the curve from pulling free to fully price in the inflation risk premium. I have this vision in mind of a bunch of circus ringleaders trying to keep their big tent staked down to the ground as an approaching tornado is trying to tear it free. Good luck with that!
Could a Spike in Bond Yields Cause the Economy to Stumble in the New Year?
By Larry D. Spears, Contributing Writer, Money Morning
In normal times, at their most basic level, bond prices follow some very simple laws of financial physics: When interest rates rise, bond prices fall and bond yields rise; when rates fall, bond prices rise, and bond yields drop.
However, bonds could break those laws of financial physics in the New Year - and in a big way. That could inflict some real financial pain on the U.S. recovery, the dollar, the shuddering housing market - and could even ignite a major stock-market reversal.
The U.S. Federal Reserve continues to hold rates on U.S. Treasury securities to artificially low levels - a strategy central bank Chairman Ben S. Bernanke just this week said the Fed intends to adhere to for the foreseeable future.
…
The U.S. Federal Reserve continues to hold rates on U.S. Treasury securities to artificially low levels - a strategy central bank Chairman Ben S. Bernanke just this week said the Fed intends to adhere to for the foreseeable future.
By what means, I wonder? They finished buying them directly in October. They’re also buying them through the banks, though the Fed’s MBS purchases will wind down in a few months. Is this a warning shot that they may announce another direct-buy program I wonder?
typical Orlando CL 3/2 pool home foreclosure. No takers. Don’t believe the hype about these deals being “snapped-up”.
http://orlando.craigslist.org/reb/1504967549.html
How about that. For the price of a fancy SUV.
Like the pool. House needs to go. Slab. Barf.
Not only is that place BFU, but so is the neighborhood.
Love the decorative tree stump.
And 3/2 at 1100sqft? Holy cow are those rooms small! Even a 2/2 at 1100 would still be small.
No takers? No surprise.
another…
http://orlando.craigslist.org/reb/1504967992.html
Needs some TLC, huh?
More like tough love than tender love. I think even Tom Silva would cringe at this place.
I used to rehab worse. This would make a great flipper but not at that price.
In case this new Matt Taibbi article hasn’t been introduced on the hbb, here it is.
http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout
“How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we’ve been seeing on TV this fall who Obama really is?”
You go, Matt!
Even the tingle-thigh brigade is starting to wake up.
He was obviously brought into a smokey, dark back room somewhere filled with mysterious men who showed him secret footage of the Kennedy assassination, just like every president since since Johnson.
He must have got the message.
“When Good People Get Bad Loans or Buy at the Wrong Time”
I just cannot get over yesterday’s WSJ article about the moral dillemma faced by Palmdale homeowners.
I would love to see a followup piece about the lender side of the equation: How do Megabank, Inc’s loan officers work through the moral quandry over whether to offer sufficiently low modified mortgage payments so that walking away and renting is not a more attractive (not to mention perfectly legal) financial option for the homeowner? And do Megabankers feel any compunctions about hiding mortgage losses off their balance sheets?
…
Ms. Richey, the teacher, arrived in Palmdale in 1999. In 2004, she and her husband, Timothy, bought a two-story home on Caspian Drive, near Avenue O-8, with a no-down-payment loan. They took pride in the amenities they installed: a powder room with granite countertops, a backyard pool and play area, and the purple-and-turquoise fantasy playroom upstairs for their three daughters.
But the value of the house plunged to less than $200,000 in 2009. Their $430,000 mortgage, with its $3,700 monthly payment, began to look more like an unwanted burden. By May, amid troubles getting tenants for two rental properties she also owned, Ms. Richey decided the time had come to cut a deal with America’s Servicing Co., a unit of Wells Fargo & Co. servicing the mortgage on the house.
After three months of wrangling, she says she finally received a modification approval. The new monthly payment: about $3,300, far more than she had hoped. A Wells Fargo spokesman confirmed the bank offered Ms. Richey a modification under the Obama administration’s Making Home Affordable program, and said, “The Richeys turned down the lowest payment we could offer.”
Ms. Richey and her husband had already been working on Plan B — exploring the neighborhood’s “For Rent” signs.
On one trip, they drove by the house at 3152 Club Rancho Drive. It was bigger than their house on Caspian, had a pool with three waterfalls, and boasted a cascading staircase that Ms. Richey says she could picture her daughters descending on prom night. The rent was $2,195 a month.
The situation presented Ms. Richey with a quandary now facing more than 10 million U.S. homeowners who owe more on their mortgages than their houses are worth.
On one hand, walking away from her home would be easy. California is one of 10 states that largely prevent mortgage lenders from going after the other assets of borrowers who default. But she also had to consider the negatives. Her credit could be tarnished for years and, perhaps most importantly, she feared her friends and neighbors might ostracize her.
“It was scary,” she says, noting that people tended to keep such decisions to themselves for fear of being stigmatized. “It’s still very hush-hush.”
Tom Sobelman, whose family of four lives across the street from Ms. Richey, at 3127 Club Rancho Drive, sees mortgages as a moral as well as financial obligation. He’s still paying the mortgage on an investment property he owns nearby, despite the fact that the rent is about $1,000 a month short of covering his costs.
Mr. Sobelman, 37, argues that people who choose to default are unfairly benefiting at the expense of taxpayers, who have put trillions of dollars at risk to bail out struggling banks. “All these people are gaming the system, and I’m paying for it,” he says. “My kids are going to be paying it off.”
Mr. Sobelman has plenty of company. In a recent study of people who owe more on their mortgages than their houses are worth, economists Luigi Guiso, Paola Sapienza and Luigi Zingales found that about four out of five believe defaulting on a mortgage is morally wrong if one can afford to pay it. But they also found that the people become 82% more likely to say they’ll default if they know someone else who defaulted.
Moral or not, the individuals who want to shed their mortgage debts are quickly transforming the Palmdale real-estate market.
Adam Robbins, who runs the local Realty World franchise and manages about 80 properties, says about 90% of his prospective tenants are people in Ms. Richey’s situation. So he and other rental managers are loosening rules to accept people who have been through foreclosures.
“Those are all good people,” he says. “They just got bad loans or bought at the wrong time.”
…
“The banks have no incentive to care when they are not required to keep the loans that they originate on their balance sheet. I can’t see this improving until we have a return to sound lending standards.”
— Stephen Cooke
Most people would love to MAKE 3700 a month.
although i have never defaulted on a credit card(always paid off every month) or home loan….i can say that if i had bought one of these homes in 2004-2006 and i had no skin in the game….well i’d walk! i feel no moral obligation to any bank. i never played the game, but i have had credit cards shut off and limits reduced by these same banks. even with a credit score over 800. so, in affect although most of us never joined in the speculation we all are impacted by the banks actions. the true losses by the banks are in their gambling in the derivative markets. well, the banks got bailed out and although the housing speculators were too greedy…they did not get the bailout. the banks with the help of the fed allowed all the easy lending so to me they are the real criminals! so, now the Public,you and I, owe all this money due to their gambling. when i think about it the speculators were only doing what the banks were doing! and, the taxepayers are the only losers.
As mentioned before, my list of the three most well-off groups in America.
1. Wall Street banksters
2. Government employees
3. Retirees over 65
Here’s an article about Group 2. Nineteen percent of federal employees make over $100K.
www dot usatoday dot com/printedition/news/20091211/1afedpay11_st.art.htm?loc=interstitialskip
How do you think govt salaries (fed, state, local) compare to the private sector? Without researching anything, I’d go out on a limb and say govt salaries are about 50% higher than those in the private sector (excluding Group 1).
that is very interesting.all the state workers here in ca keep bitching about furloughs.There is no money to pay their high salaries right now.When firefighters are making 100k plus we have a problem.CHP is also raking in the dough.
I bet Fire/Police are the only two industries in California that do not hire illegal aliens.
Wrong.
California and other western regional Fire Departments use probationer/prisoners and illegal aliens to do the actual hot-shot dirt and shovel business of fighting wild fires.
“I’d go out on a limb and say govt salaries are about 50% higher than those in the private sector (excluding Group 1).”
That’s true everywhere in New York State except Manhattan. When Wall Street is hot, they tax Manhattan and ratchet up pay and benefits for public employees with seniority and those retired. When Wall Street is down, they cut the pay and benefits of new public employees, raise taxes, and reduce public services.
Thus we have high government labor costs, poorly paid new public employees, high taxes, bad services.
Groups 1,2,and 3: Co-conspirators in perpetuating the scam. This would be a list of “employees” in “the most corrupt corporation” in America. They have everything to lose (and pretty much nothing to contribute to the necessary rebuild).
30% is closer to the truth.
It’s tough to make a comparison. How much does a “private” firefighter make?
I moved from private sector to public sector and my salary is almost the same. (benefits not much different either) No 50% here…
And what about our famous wars industry? Stepn2me would know the difference between greensuit pay and a Halliburton contractor…
The big difference is in pensions vs. 401K.
Stepn2me would know the difference between greensuit pay and a Halliburton contractor
The difference is night and day, even between officers and contractors. Most technical jobs are 150K+….
I am a network systems engineer. I was just offered a job 200k+. The job is somewhere other than N.C. and is with a little known contractor, although it is owned by a disabled veteran.
In my area (Southeastern Virginia), gov’t contractors are #1 in salary I think. Beat out the group that sounds like it would include people that have their own businesses.
Little known fact: there are more government contractor employees than actual government employees.
How did this happen? Something about “smaller government” ring a bell?
lol…Good one ecofeco!
“smaller government”
“We’ve created the best “smaller government” money can buy” …Ronnie Raygun
Honestly, with Obama I think we are seeing what happens when we elect a guy with a razor thin resume and no experience outside the public sector.
When my favorite repub candidate got knocked out of the primaries I thought it would give me a good reason to pull for Obama. That is until I read a detailed profile on him in the Economist. Basic conclusion was that there was no substance there. He admitted that people saw him as a blank canvas, to project whatever they want onto.
Somewhere else I read or saw an interview where he inferred that his primary job is writing and delivering speeches. Yeah, that’s great and all, but not his key job.
So anyway, voted for McCain. My wife still tells me that anyone who would pick Sarah Palin must have very poor judgement, to which I can offer no refute.
Honestly, Obama makes me miss Bush, who made me cringe. Obama doesn’t make me cringe in quite the same way, but it just feels like a lot of wasted effort and a massive mis-utilization of resources.
I guess Bill Clinton looks better and better every day, because he honestly is the last person to inhabit the white house who possessed any shred of fiscal responsibility.
folks, sorry for the threadjack, this was meant to appear way higher up back in the discussion of obama, obviously
No problem. We take open criticism of Obama wherever we can get it.
Really? Blame Obama????? C’mon, turn off Rush.
CCD
Did you bother to read the Taibbi article up the thread? Obama was elected on a platform of ending the wars and laying the smack down on Wall Street. He has done neither. In fact, its easy to argue he made a complete about-face from what he said in the campaign. He is a stooge, running the show for the elites who torpedoed the economy to begin with. Don’t get me wrong, I KNOW McCain would’ve done the same, but I was hopeful Obama would bring real change. Sadly, I believe the time has gone where voting can bring meaningful change, if it was ever there at all.
Sometimes I wish the Chinese/Russians would just go ahead and nuke DC and do us all a favor.
“Obama was elected on a platform of ending the wars ”
Now I don’t remember that. I thought that Afghanistan was the “good” war we should have been fighting instead of Iraq.
That sure came to bite him in the a$$ didn’t it.
No worries, Lincoln didn’t win the “war-he-didn’t-start” in his first 10 months in Office either…
Since I am a Redneck in good standing, here is a lighter moment in “fly over country:
A State Trooper pulls over a pickup on Highway 16
and says to the driver, ‘Got any I.D. ? ‘ . .
and the driver replies ‘Bout wut?’
Roidy
P.S. I know it’s OT
I had to read it like six times, but I got it.
That is one of those jokes that does not read well, like:
If Iran invades Turkey from the rear, will Greece help?
Uh Oh. I “got it” immediately. I’m pretty sure I know what that says about me.
Roidy
I had an interesting lunch conversation with an older gentleman (guessing he’s in his early 70s) the other day.
He’s semi-retired but still works part-time because he likes to keep busy; I’m pretty sure he doesn’t need the money. He’s also a long-term real-estate investor. I believe he owns about five SFHs, and I got the impression they are all or almost all paid off.
He acquired his houses the old-fashioned way: each time he “moved up”, he kept his old house and rented it out, and he upgraded about every ten years or so. He bought his first house in 1959.
One of the interesting anecdotes was that he kept his first house, even though when he was upgrading a few years later (2nd child would have been a real squeeze in a 1-bed house!), he was underwater on it. I hadn’t realized that RE in the area was down in the early ’60s. He had purchased the house for 10K in ‘59, and figured it would only sell for about $8K in ~’62.
But he kept it, and rented it out. Turns out that even though RE prices were down, he was still about to rent it slightly cash-flow positive; IIRC, he was getting something like $25/mo above his note.
I pointed out that today’s underwater folks have no prayer of renting it out for a positive cash-flow, and would most likely be bleed significant cash if they made the same choices.
I was unable to convince him that this time will be different. The funny thing is that he has preached the RE gospel to his five kids, and one of them lives in Phoenix and has a couple of rentals there. He says she is underwater but cash-flow positive on them, so he’s not worried; but I got the impression that she acquired them during the bubble years, so I don’t see how she could possibly remain so for long–the vacant inventory is so high, it has got to be driving rents down rapidly. And if she’s underwater, she has no exit to head for when she starts bleeding cash.
He did argue that in the long, long-term view, inflation is essentially guaranteed, because the Fed will always fight deflation tooth and nail, and target/allow a slow inflation. In his opinion, that guarantees house-price inflation to levels that will always make a purchase price seem like a great deal several decades later (e.g. like his first $10K purchase). Many of his houses now return ANNUALLY cash equal or above their original purchase price. I think he has a point there, in the very long-term view.
Where we differed, though, was whether that made is pointless to try to time entry/exit on a short-term view. I still believe that the present pricing is unsustainable for most people even in a good economy, and is the direct result of decades of lower and lower lending standards. That continuing reduction of standards is clearly unsustainable, so the pricing trend-line is likewise unsustainable.
Any thoughts on his position?
Depends on whether you think that the postwar era of growth is over and done. Other on this board have observed that we began competing with the rest of the world during the 70’s, and as we all know it has just gotten progressively more competitive as the BRIC’s now compete in so many more facets of our economy.
In my view, this means that our incomes will come down and our standard of living will gradually reduce as we begin to come to equilibrium globally. In this scenario housing has to adjust downward so people can afford to rent or buy.
Alternatively, somehow the economy gets more competitive and we invent something to sell to the rest of the world and we continue as a rich, advanced country. Article in business week a bit back talked about how the US has no incentives for high-tech manufacturing compared to ROW. In one case, a company tried to buy shuttered semi fab facilities in CA, but found them completely destroyed an unusable, messasage being that we have let our productive capacity in high tech go to rot.
IF you can buy good houses and
IF those houses are in good areas and
IF you can get those houses for a fair price and
IF you can find good tenants and
IF you can fix the damages yourself and
IF the neighborhoods, houses, and tenants don’t go south on you over a long period of time and
IF you are OK with some percentage of your time away from your primary job is going to be spent at your second job
THEN
I’d agree that being a landlord over the long term is a good bet.
Yep.
I looked into the possibility of getting into the landlord biz some years ago. I decided that to make it worthwhile I would have to simply quit my full-time job and do only that - either that or else have almost no social life (including wife/family).
So I decided I may at some point do it, but only after I retire (or semi-retire, as the case may be).
IF those houses are in good areas and
those areas stay good. Predicting the future is hard.
Beijng a LL takes a special personality type. A friend of mine acquired a total of 6 SFH’s (marginal slum units) in the 70’s, and over time paid them all off. So by the time he retired, he had assets worth six or seven hundred thousand dollars into which he had little hard dollars. But, he did have a ton of sweat equity. He spent most of his non working hours doing something to those houses. Winters for a LL in cold country is miserable.
I on the other hand, bought a rental unit, worked it for about three years and concluded I did not have the patients to do it long enough for the unit to ever return any money. I sold it for a loss and considered it a good lesson.
So what kept happening to your patients?
In case anyone is looking for a great investing opportunity, this one just now showed up in my e-mail:
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WASHINGTON – Private security guards working for Blackwater USA participated in clandestine CIA raids against suspected insurgents in Iraq and Afghanistan, The New York Times reported Thursday.
Blackwater, now renamed Xe Services, disputed there was any contract for secret raids. The reported role would point to a much deeper connection between the company and the spy agency than has been previously disclosed and raises concerns over the legalities of involving contractors in the most sensitive operations conducted by the U.S. government.
The “snatch and grab” raids took place regularly between 2004 and 2006, the Times reported, when the insurgency in Iraq was escalating and security throughout the country was deteriorating.
These cooperative arrangements with financial and military mercinaries have the same effect of stripping the US gov and tax payer wealth. Convoluted schemes are devised to keep the gravey flowing. How much more did it cost us to pay Xe/Blackwater than to have our own military perform the raids. Is this yet another way to obscure what we were doing and where the money was going? It’s the same with insurance, private or public option is one debate but gov mandating and subsidizing insurance is the worse possible option. Unfortunately it looks like that’s exactly what we are going to get.
I bet its cheaper to use Blackwater than to have our army do it. think about it for a moment. Weren’t we just talking about overpaid public servants? How many Blackwater guys have fat DB pensions? Guarantee you they are all 401k’ed.
Blackwater is billing over a $1 billion dollars a year to the US Government…
Blackwater = Xe
As in: “Zee, how war & turmoil & fear …make zee profits for a private CORPORATION!
Given what we’ve seen on wall street do you trust a gov official who will likely end up on Xe’s board at some point to accurately determine the cost of a military operation that you believe will not end up being exposed by the press.
“Blackwater, now renamed Xe Services, disputed there was any contract for secret raids. ”
Sure there wasn’t at least not one that a reporter could get his or her hands on. It’s classified or it was called a security mission. No reporter will ever be allowed to look at it.
The average man on the street knows he is getting screwed when he finds out the air force paid $600 for a hammer. How do you price covert operations it’s like Star Wars, how much should a lazer weapon cost??.
Easy. You find mercs and talk to them.
So why doesn’t the gubmint just give everyone a job?
For feds, more get 6-figure salaries
Average pay $30,000 over private sector
USA TODAY
The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data.
Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months — and that’s before overtime pay and bonuses are counted.
Federal workers are enjoying an extraordinary boom time — in pay and hiring — during a recession that has cost 7.3 million jobs in the private sector.
The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.
When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.
The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules.
“There’s no way to justify this to the American people. It’s ridiculous,” says Rep. Jason Chaffetz, R-Utah, a first-term lawmaker who is on the House’s federal workforce subcommittee.
Jessica Klement, government affairs director for the Federal Managers Association, says the federal workforce is highly paid because the government employs skilled people such as scientists, physicians and lawyers. She says federal employees make 26% less than private workers for comparable jobs.
USA TODAY analyzed the Office of Personnel Management’s database that tracks salaries of more than 2 million federal workers. Excluded from OPM’s data: the White House, Congress, the Postal Service, intelligence agencies and uniformed military personnel.
The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.
“The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.”
This number is interesting, but a comparison on this broad a scale (most federal employees vs. the entire private sector) doesn’t strike me as all that meaningful. The more meaningful comparison would be done on a job-by-job basis: federal job vs. similar private sector job.
I mean, how many low-paying jobs (cashiers, short order cooks, etc.) does the federal govt. employ, versus, say, professional-type jobs (analysts, accountants, lawyers, etc.)? My guess would be not nearly as high a percentage as in the private sector. Also, are federal contract employees included in the data?
MG
Wake me up when anyone of them is getting a 7 figure salary.
I’d like to know why they used that 170,000 number. Seems fishy. Was there a standard wage increase of say a few thousand dollars that moved a large number of employees over this number?? When exactly did this change occur. Obvious agenda otherwise they would have given us more details on this group.
I think $177K is the absolute max for senior civil servants in the senior executive service. That might not include location adjustments. Not sure. So that number is just people getting pegged against the upper limit of their income range.
Earmarks ‘robust’ in House $1T spending bill. USA TODAY
A $1.1 trillion spending bill laced with budget increases and more than 5,000 congressional pet projects passed the House on Thursday amid criticism from Republicans and watchdog groups.
The package — which combines six annual spending bills into one — includes $447 billion in operating expenses, with an average increase of 10%, and more than $600 billion for Medicare and Medicaid.
It was approved 221 to 202 and now moves to the Senate. No House Republicans voted for the bill, and 28 Democrats broke with their party to oppose it.
“At a time when we have record deficits, the American people are concerned about the deficits and the increasing debt, and yet I’ll guarantee you that we found a million here and a million there to fund somebody’s little pork project in some state in America,” House Minority Leader John Boehner of Ohio said.
Rep. Jim McGovern, D-Mass., called the bill “an opportunity to reverse years of neglect … to our roads and bridges, neglect to our lower-income neighbors and friends, neglect to our education system, neglect to our veterans.”
Projects, known as earmarks, are inserted into annual budget bills at the request of members. Stephen Ellis of Taxpayers for Common Sense said his organization identified 5,224 earmarks in the bill worth about $3.9 billion.
“They’ve given earmarks a haircut, a slight trim, but they are still there, and they are pretty robust,” Ellis said.
Among the earmarks:
• Democratic Sens. Daniel Akaka and Daniel Inouye, both of Hawaii, secured $3.15 million for a Financial Education and Pre-Home Ownership Counseling Pilot Program in Hawaii.
Jesse Broder Van Dyke, an Akaka spokesman, said program grants will help identify successful methods of financial education and counseling services, and establish program models for others to deliver those services.
• Rep. Dan Lungren, R-Calif., secured $930,000 for maintaining exhibits at the Aerospace Museum of California in McClellan. “This is still part of the overall property that was essentially the Air Force base that was closed … over a decade ago,” Lungren said. “So this is part of the continuing process of making that whole area viable.”
Lungren, who voted against the bill, said if all members gave up their earmarks he would do the same.
• Rep. Leonard Boswell, D-Iowa, secured $750,000 for the World Food Prize Foundation, which has undertaken a $29.8 million project to convert a century-old library in Des Moines into the Norman E. Borlaug Hall of Laureates.
The federal money would go toward educational exhibits on Borlaug, a Nobel Peace Prize winner, and his efforts to end world hunger, said Jane Slusark, a Boswell spokeswoman. “The World Food Prize’s Hall of Laureates will teach our children and grandchildren about the state’s deep rural roots and the great men and women who have contributed to feeding the world,” Boswell said.
Ellis said he is not taking issue with these specific earmarks. He added, however, “I am sure there are millions of dollars that have been wasted in this legislation on these parochial projects.”
Wait - I thought the February stimulus bill was supposed to be the end-all collection pot for all pork? You mean it wasn’t???? GASP!!!
It didn’t even take a friggin’ year.
i am finding the commercials for the sony reader/amazon kindle quite compelling this christmas season. anyone have any thoughts or experiences with e-readers?
e-readers?
For us old timers who are used to turning the page,
it’s not comfortable. Laughing.
Agree, Rancher. I’m waiting for one that opens up like a book, and displays color illustrations. Then I’ll go on a Kindle rampage for classics and whittle my physical books. Complete works of Shakespeare, $2.49. Complete Mark Twain, $1.00. Art of War, free… but why is 1984 still 10 bucks? Oh well…
The Gutenberg project has all of those online for free (see the Australian Gutenberg project for Orwell’s work).
When they build one like that, a fold out with
both pages displayed and can show color, I’ll buy one..sheeesh..they can store 350 books
which would keep me in clover for months.
So do they format them in black-reverse type for the Millennials? since they seem to like look that so much…
I was interested in checking out the Nook, but it looks like it’s sold out until early next year. I’ll stick to paper. I can read normal books in the tub or during airplane takeoff and landing.
A 50-year-old Alamo contractor accused of shooting a jewelry-store owner was on the verge of losing his cul-de-sac home and intended to rob a man he had treated as a friend in a desperate attempt to stay afloat, a prosecutor said Thursday.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/12/10/BA511B26R9.DTL
Posted a few days ago.
It’s amazing how the news lags in some areas. My newspaper is almost always a day behind.
Easy money could have a high price
From the perspective of US financial markets, a Japanese-style lost decade has defined the performance of equities and bonds since the start of 2000.
From the heady days of the technology bubble, the S&P 500 is 11 per cent lower over the decade, when you include the reinvestment of dividends. In contrast, an index of long-term Treasury bonds has risen more than 116 per cent, according to Barclays Capital.
The doubling in the value of long-term Treasuries helps explains why the famed “bond vigilantes” of prior decades have been missing in action. This has largely been a decade of disinflationary forces thanks to the internet and globalisation. There have been two very aggressive cycles of rate-cutting since 2000 by the Federal Reserve and it is little wonder that bonds have been the big beneficiary. Instead of “bond vigilantes” worried about inflation and rising deficits, the decade is described by some as one where “risk vigilantes” have ruled the roost.
When the technology bubble popped, the risk of a nasty recession and deflation meant markets moved quickly to price in big rate cuts. On that score, the Fed delivered – an extended period of easy money softened the blow of recession in 2001, sowing some of the seeds of a massive mortgage and credit bubble which culminated in the financial crisis of 2007/2008.
Today, the current policy prescription of even cheaper money has many worried about the value of the dollar and the risk of higher inflation in coming years, given the outlook of massive budget deficits and record issuance of US Treasuries. Amid fears of a new financial bubble in commodities and bonds, some forecast the Fed could start raising rates late next summer and wean the US economy off easy money. Except, by next March, the Fed will cease its planned purchase of $1,250bn in mortgages. The central bank’s hefty purchases this year has encouraged investors and banks to buy either corporate bonds and/or Treasuries.
That has kept market rates low, but as new mortgages and other debt is priced into the market next year and the US Treasury keeps pumping out government bonds at a record pace, the odds of the clearing price for debt rising are very short.
Unless the private sector is rapidly hiring workers next year, rising long term rates could easily derail a sustainable recovery.
http://www.ft.com/cms/s/0/8c6cf19e-e682-11de-98b1-00144feab49a.html
Fellow HBBers, the tale continues. Some of you may recall almost two years ago when I ended up an accidental squatter in a house I was renting as the landlady declared BK and left me on my own. I moved out after a few weeks. The house has been empty since then, a cute bungalow in a small town in Utah close to some cool canyon country.
Here’s the details: the LL bought the house in 1990 for 30k, the going rate there, a small town with few jobs. She worked as a librarian for about 25k, plenty good money for that town, everything was cheap. She refinanced the house for 102k with Countrywide, spent the money and went BK and moved. The house was on the market when I lived there for 150k, totally ridiculous for this town.
BOA bought Countrywide and now owns the house. They listed it at 68k. I offered 25k at that time and was turned down. They dropped the price again and had a contract for 38k. The deal fell through because BOA told them originally they would finance the house, but declined after an inspection (needs tons of work). Keep in mind, BOA owns the house. They called me back, the house is now 34,500.
I’m thinking of offering 15k. More just to gig them than anything, but now I’m afraid they may take the offer. Oh well, it really is a cool house in a great location (if you disregard the town itself, which has now been totally abandoned since the oilpatch crashed).
This is just a precursor of things to come, if you’re wanting a house, wait. This will come to your town, too.
Wow. 15k for any roof in God’s Country sounds like a good deal to me. It’s in south Utah right?
How big is the yard?
.22 acre, lots of big trees and mature shrubs, very nice. Two story bungalow.
The house needs a lot of work, but it’s a beautiful area. I’m very tempted…
“I’m very tempted…”
Hey Losty,
Offer them $28,000 @ 5%
I ran the calculator… comes to $150.00 a month
I’ll split the payment with ya, if you let me put up a tipi/yurt for seasonal vacations, you get to live year round for $75.00 & utilities
I’m SERIOUS!
Hwy50
Oh, maybe we can just pay it off in 3 years…seriously!
The bank wants cash, but maybe we could get them to trade for some Squatter’s Beer!
It’s a thought, though, wow, can’t beat that for cheap living. Well, OK, you could live for free, which is my real goal.
So tell you what, you buy it and I’ll caretake it for you for free, how’s that for a deal?
OK? I’ll even buy you a burger at Ray’s every once in awhile.
Too bad they want cash, or I would seriously consider it, though.
“…So tell you what, you buy it and I’ll caretake it for you for free, how’s that for a deal?”
Seriously, if you think its worth your “security skills” & “animal husbandry” benevolence…I may be able to work this out…get Mr. Ben to give you my contact address.
Geez Mr. Ben, just think a “stimulus/spending” deal right here happening on your blog Dec 2009! “Foolishness” & “Optimism” may be NEW colors in the 2010 Crayola crayons box! $28,000 is $2,000 more than I spent on my 1st house in Nebraska in 1981…
(Hwy’s been around the block on his motorcicle, there are some places in Utah that somehow just don’t compare to SE Nebraska)
Hey Losty, looki see… something from a friend of mine…
(Robert Fulghum)
November 10, 2009
Pack Creek Ranch, San Juan County, Utah
Monday, November 9, the 313th day of 2009
Sunrise 6:27 a.m. – sunset 4:27 p.m.
clear, warm, and no wind at all
GETTING HIGH IN MOAB
A cannon is not a common sight in my neighborhood. So it was a surprise to find one halfway into town, sited on a stubby hill in the middle of open range. Pointed south. When I say cannon I mean a serious piece of artillery with a barrel 90 feet long, surrounded by tanks and support machinery.
It reminded me of a picture I saw of the German Army’s Kaiser William’s Gun – a railway-mounted artillery piece designed to shell Paris from 80 miles away during World War I.
One might wonder if the Moabites had finally had enough of those conservative red-necks down at the nearest town of Monticello and were going to assault them from afar.
Turns out that the cannon is intended for more peaceful purposes. The tanks around it were full of compressed air, and the machinery was manned by a team of single-minded artillery engineers from Delaware. They came 2,000 miles out to canyonlands country to see if they could set a world record for shooting a pumpkin for distance. They theorized that cool, thin air at high altitude, in wide open space would give them an edge.
(In case you wonder, the sound made when firing was not explosive – no big BANG! More like the sudden breaking of wind by a mature mastodon. KA-PHOOOOOOM! Not that I’ve witnessed such a primordial event. Imagine. But I digress.)
And they did it! Broke the record in the Guiness Book big time.
After some frustrating windy days and a few bad shots when they “made pie” – that is to say when the pumpkin exploded coming out of the barrel - the Big Ten Inch Air Cannon team fired a pumpkin 4,623 feet. That’s 1,540 yards. Fifteen football fields. The pumpkin reached a speed of 700 miles per hour. Believe it. See for yourself. The video is up on the web.
What you won’t see on the video is where the pumpkin came down. Out in that the open range. Where some cows were grazing. Cowboys had herded them way, way back. But who knew how far the pumpkin would go? Put yourself in the place of the cows, calmly browsing, chewing cud, doing your cow-mooey thing, and INCOMING! SPLAT!
What must go through a cow’s brain when pumpkins fall out of the sky?
The cannoneers, if not the cows, were very happy. But not content.
Their goal? 5,280 feet – a full mile. Next year.
The extravagant cannon was a feature of the Moab Pumpkin Chuckin Festival, an annual event with twelve different competitive categories ranging from hand-thrown to medieval trebuchet – (the latter is a device used to assault castles.) 2,000 people came out from town to the old county airport runway to witness the action.
Lest you think this is all an idiotic waste of time and energy and pumpkins, and that it only at best confirms the whack-a-doodle side of human nature, the event raises money to support the very successful Youth Garden Project in the Grand County School system. Young people plant gardens, raise an astonishing amount of food, and learn both about nutrition and the pleasures of cultivating the earth.
The pursuit of pumpkin chuckin technology is at least as respectable as golf, and more inventive.
There’s part of the answer to “What good is pumpkin chuckin?” Supports a good cause and keeps grown men occupied and out of trouble. Only the cows may have a legitimate complaint.
Another part is that people come out in Halloween costume, cheer the attempts, laugh at the craziness, and go home in a good mood having had a loosey-goosey day of harmless fun.
This dimension of pumpkin chuckin is big plus for Moab. You can’t see it, but it’s palpable – you can sense it in the existential atmosphere. Two thousand people in a good mood infuse the spirit of the town as much as if the drinking water had a dose of some mood-elevating drug in it.
It’s a special kind of high.
As if that was not enough, this past week the Moab Folk Music Camp and the 7th Annual Moab Folk Music Festival happened. For a week the town hosted song writers, musicians, and fans-of-the-folk. Concerts at night, jam sessions in the taverns, and two afternoons at the ball park with a thousand people sitting in the sun, blue sky overhead, while from the stage the foot-stomping sound of bluegrass filled the air. Sweet.
So what use is music? We’re the only known creatures who write and sing songs. For what? Couldn’t the human race do without music? A legitimate question, I think. And the legitimate answer is that music lifts the human spirit in a mysterious way. For a little while all the sorrow and suffering and sadness of this world seemed far away. Something invisible floated through the air, and settled gently in the hearts and minds of the Moabites. And another shot of good will and joy was injected into the spirit of a small town.
Tuesday’s election brought no surprises. High turnout. The incumbents were returned to office by high numbers, including Dave, the Mayor, one of the finest men in town.
For a couple of weeks life has seemed pretty fine around here.
It’s been a high time in Moab.
what town?
test
my posts aren’t showing…
if she paid 30k in 1990, seems like 34k is not too bad. i’d go for 30k and get it for what she paid. must be alot of work for it to be priced that low!
Ghosts of Shopping Past
One of my favorite…Ghosts:
http://www.freakingnews.com/Pictures/2/Alan-Greenspan.jpg
The post that Carrie Anne posted above is excellent and fills in the gaps
of what has been really going on . “THE CENTURY OF SELF”
http://benatlas.com/2009/11/the-century-of-the-self-by-adam-curtisays-and-the-pr-century .
“…Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”
Yeah right…
Hey HW, let me give you an insight to my POV…
Let’s say tomorrow, somewhere in Miami, FL…a bunch of “unnamed terrorist” from an “unnamed country” start invading homes ’round midnight and start killing lil kids & raping women & do a sundry of “bad” things to all the local residences… some of the victims may even be “ill-legals” (talk about being in the wrong place at the wrong time), perhaps some even are mixed Cuban-Cherokee (or the other way around if that makes you feel better) Anywho, let’s say everyone is there “reporting” …MSM, Ben’s HBB Blog, Faux News, Huffington Report, Onion, OC Register, NYT, Boston Herald…blah, blah, blah…you know, the “usual-biased-suspects”
In such a SIT-U-A-TION…the “events” that would follow ( I for one, would not want to be with the ones who is doing the “killing of lil kids”), would have no bearing on “the mental processes and social patterns of the masses” …BECAUSE: Let’s follow THE stated PREMISE: “It is “they” who pull the wires which control the public mind” right? RIGHT? That’s “How-it-works” right?
(Hwy thinks that no one has figured out quite when things happen by a group of un-related people who do something together without talking or “organizing” but when the task is completed they say: “we did it!”)
(Perhaps, there is a Taoist proverb relating to this, it sounds familiar…)
HWY …With the exception of the out of ordinary events ,that can change perception in a blink of a eye ,the market trackers have been around for a long time trying to push buttons to create consumerism .
Poor lil Opie…leave it the “Non-Hawaiian” …to clean up the beach of toxic condoms from Yale Party goer’s on “vacation”
Cheney-Shrub: “We want him to succeed as president, we really do.”
U.S. Freezes $2 Billion in Iran Case:
By JAY SOLOMON DECEMBER 12, 2009 WSJ
“…The legal order, executed 18 months ago by the U.S. District Court for the Southern District of New York, is under seal and hasn’t been made public. The court acted in part because of information provided by the U.S. Treasury Department.”
aroooooo!
arooooooo!
olygal, olygal…
where are yoooouuuu?
Hey Mr. Bear, did Mr. Lincoln know who his “best generals” where 10 months in Office? Or, was his “education” as Commander-in-Chief” a “work in progress” ?
“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Obama said.
Sorry, the link:
Obama complains about “fat-cat bankers”:
WASHINGTON
Fri Dec 11, 2009 6:25pm EST
Now remember kids, Opie is a “Non-Hawaiian”
“Which I think tells me that the people on Wall Street still don’t get it. They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down $10 (million), $20 million dollar bonuses after America went through the worst economic year in decades and you guys caused the problem,” he said.
It’s as if he gets it. (It ain’t rocket surgery)
give me a ***** long enough, and a place to stand , and I will move the world…
Let me guess..Robert E Lee?
He couldn’t stand it.
Quite possibly true. My wolfhound, Archimedes, has some pretty long-winded SBD’s,(particularly after eating horse-leavings,) and believe me, they are indeed, earth movers.
I am gradually starting to feel a little bit less lonely out here in the blogosphere, now that I realize many other Americans share my feelings towards the banksters.
New Business December 9, 2009, 10:31PM EST
Americans Are Furious at Wall Street
A new Bloomberg National Poll shows them angry at banks and brokers—and furious about bonuses
BW Magazine
By Alison Fitzgerald
Wall Street firms are recovering—but their standing with the American public is not. The public rage directed at Wall Street banks and brokerages remains at high levels, according to a Bloomberg National Poll of 1,000 U.S. adults conducted on Dec. 3-7 by the Des Moines firm Selzer & Co. Two-thirds of Americans say they have an unfavorable view of financial executives. More than half say big financial companies, which are expected to pay record yearend bonuses, are out only to enrich themselves and also should not have received government aid.
Banks that got taxpayer help through the Troubled Asset Relief Program—the $700 billion financial rescue plan passed by Congress last year—shouldn’t pay any bonuses, according to 75% of those polled. And this includes 39% of respondents who say they disapprove of bonuses even when the banks have paid the government back. “The fact that they’re even in existence should be bonus enough,” says Cassie Swihart, a 58-year-old retired registered nurse from Warsaw, Ind. Adds Elijah Brown, 42, an unemployed union contractor from California: “Why would you want to give somebody a bonus who put us into this situation?” Brown is among the 64% of people who said bailing out banks was a bad idea.
…