Bits Bucket For December 30, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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I asked my realtor friend in Austin why realtors have such high comission, and his answer was:
‘You have no idea how much work goes into selling you home….. you should start doing something with your money and stop throwing it away in rent”.
Why are realtors allowed to charge so much money for a single transaction? 6% percent seems like 5% too much. It seems like a waste of money to me.
“Why are realtors allowed to charge so much money for a single transaction?”
Because they can?
Anytime someone’s work involves being in the middle of a large financial transaction, they tend to make more than they should based on things like effort, skill, value provided, etc.
I’d like to see a model where realtors get paid on a per service basis, ie, per home showing, etc, just like home inspectors. All I have ever needed a realtor for is to unlock houses for me. Perhaps their value was greater before the internet and the easy accessibility of online MLS and sales data, etc.
I like the idea of being paid on a per-hour basis, maybe with performance based bonuses(!) incentives on top, especially for high-dollar homes.
Wouldn’t work.
One of the good things about using a real estate agent from the seller’s perspective is the seller only pays commission when the house is sold. For the agent, there is an incentive for the house to sell quickly so the agent gets paid. If the seller pays the agent by the hour, there is no incentive to sell, quite the opposite. Keep the house listed, keep having open houses, keep showing the house to buyers. It’s an ongoing revenue stream that only benefits the agent and does nothing for the seller.
This is why commission as a % of transaction is the standard compensation for pretty much all sales transaction. It’s been the case for a long time and there’s a reason why it’s still the model. It works.
I agree with Eddie that it makes sense for the seller to pay commission to their realtor based on the sales price. Gives incentive for their realtor to actually sell the house and, to some extent, to try to get a good price.
Problem is that traditionally that is how the *buyer’s realtor* gets paid too. The pay structure for the seller’s realtor needs to be different than that of the buyer’s realtor. A better model might be a 3% commission to seller’s agent (as is currently normal), and a fee-for-service based payment arrangement for the buyer’s agents.
Heh. That’s what all the full-fee brokers said a generation ago. That’s what car salesmen said before internet sales started taking over.
Anything that can be automated, ultimately will. I don’t need a UHS to run database searches for me. Except for high end stuff, the UHS model is going the way of the record store. Sure they’ll fight it, kicking and screaming all the way, just like they’re fighting the inevitable continued plunge in prices. The outcome is inevitable, only the timing is in question.
I’ve sold my own, it’s not really that hard, finding the right price works wonders. A good real-estate attorney is recommended, a UHS is pretty much useless anymore.
“going the way of the record store”
So true, it’s just that I actually ‘liked’ the old record stores ( and it’s encouraging to see them have something of a resurgence ) Digital musick sux.
I don’t believe any of us will look back on the day when Realtwhores ‘ruled’ w/ fond remembrance?
“Digital musick sux.”
I kinda like being able to listen to it without any pops, clicks, hum, wow, or flutter.
And I definitely like not having to worry about scratching a record!
In UK, I believe commissions are closer to 1.5%, which is a more realistic number for the services rendered.
Aircraft sales commissions are around 1-5%, plus a listing fee (typically)…….and I can assure you, there is more paperwork and travel involved, vs. the typical UHS.
This “splitting the commission thing is a freaking joke……..the “buyers broker” gets 3% for basically driving you around. And they have NO incentive to help negotiate a lower price (lower price = less commission).
DinOR
Here is my take as a dj…Records still sound great on proper equipment. Add a DBX4bx and Burwin/SAE pop and click filters and what a great sound.
If you use a cheapo turntable/cartridge you wont notice a difference in that and your ipod.
I still use cd’s and for the pop and non critical stuff I make mp3 cd’s so i can get 100+ songs on a cd….people at gigs wont know its an mp3 because of he background/talking noise…
Records were fun 20 years ago but man they are awful heavy to carry today…
=====================================
“going the way of the record store”
So true, it’s just that I actually ‘liked’ the old record stores ( and it’s encouraging to see them have something of a resurgence ) Digital musick sux.
aNYCdj,
So true, and as far as being in your car? Yes, a turntable isn’t exactly ‘ideal’. As far as all the ‘filler’ and pulp, sure, CD’s are just fine.
But if it’s really music you -care- about! This is why I think so many classical lovers have little objection to listening to Ludvig Van on CD? ( Many have never really been… to hear the symphony, at least from the front row ) so to them, this IS what it’s supposed to sound like!
But I’m a little cautious about all the reverse snobbery. To each his own, but I have definite plans of building an all-tube amp for turntable. And ‘this’ will probably rub a lot of people the wrong way but ( I’ve never been convinced everything need be recorded and played back in stereo? ) For a great deal of material, especially Live stuff, mono is just fine and in ways, more faithful. IMHO.
“And I definitely like not having to worry about scratching a record!”
I dunno..I was listening to some MP3’s stored on my laptop last night and they were actually skipping like scratched CDs. Isn’t any format sacred?
In Montana,
Good question. I was watching that Series: Life After People and they were speculating that CD’s and DVD’s would only last for about 40 to 50 years.
Almost from inception ( as they don’t make contact ) my impression was that, if properly stored, they should last indefinitely? Evidently not.
DinOR Mont:
Cd’s DO skip usually because of a deep scratch on the cd or maybe an oily fingerprint, there is only so much error correction built into the cd….or if the player is cheaply made, (plastic) it can vibrate and transfer that to the laser
Actually most of the older stuff was 3 channel mono 3 mikes (L-C-R) mixed to give the spacial effect.
I had well over 5000 records and right now probably 700 i am keeping forever. Most were sold to other dj’s some expensive ones on ebay…i have over 50 zappa/beefheart etc records Clash Original Beatles stones stuff…but I probably have the biggest collection of colored vinyl 100 pieces all colors weird swirls translucent, nothing rare just pretty to look at……I even have white label 78’s…
The GOLD ones should be 100yrs. or more but they are not cheap.
———–
CD’s and DVD’s would only last for about 40 to 50 years.
DinOR,
There are discs that will last indefinitely,
forgot the names, google them. They cost
a lot.
On second thought, I think might be okay with a commission-based model with a 25% or 30% commission. But the commission would not be on the price of the house; the commission would be on the amount the realtor saves the buyer by helping them find and negotiate a purchase price at below market rate. For example, if all the comps say the type of home I want should cost $200,000, but the realtor helps me get one for only $110,000, I’d be happy to pay a percent commission on the $90,000 they helped me save.
I realize this idea is impractical, especially right now when computing fair market price is harder than ever. But I offer this hypothetical model as one example of an incentive framework in which the goals of the buyer and realtor are aligned. Which is in stark contrast to the current system, in which the realtor benefits when the buyer overpays, and is penalized for trying to help the buyer out by negotiating a better price.
Sadly, the writable disks have lower lifetime estimates.
There is 6% in the transaction. 3% to each broker if two are involved and usually there is two, buy and sell side.Then the agent splits that 3% between broker.So the agent might be on a 70% split with the broker so he gets 70% of the 3%.
a 200k example 200k *.06= 12000 / 2 = 6000 to each broker. at 70% split the agent would get 6000*.7 = 4200 to agent
Still a lot of money.The agent has to take out their operating costs and pay all the fees to be a member of the mls and NAR.You have to have insurance too because all the liability involved in a transaction.
The only thing the mls has on the agents is the database.Once somone else comes along with a better one agents will jump ship I think.You can sell your home on your own but I dont think the avg person is savy enough.They would make mistakes along the way that open them up to lawsuits.
My wife bought and sold 11 houses on her own before she met me. If lawsuits are a problem, get a real estate lawyer to look everything over. By the way, she says she always made money. Buy a house in a good area, fix it up and sell. But, that was a long time ago and far far away.
I had a realtor try to convince me I needed a buyer’s agent. What a joke. Any realtor has one overriding agenda: getting the biggest commission they can, which means, making sure the house sells for the highest price possible. That presents an inherent conflict of interest with me, their so-called client. There is also a high probability of collusion between buyer’s and seller’s agents, who have a common interest in making sure the house goes for the highest price the mark, er, buyer, will spring for.
I’d rather deal with just a seller’s agent. Given their mercenary instincts, they’ll happily backstab their seller client if it means getting a full 6%. I’ve had realtors at open houses “confide” in me that the seller was in deep financial trouble and would not be in a position to refuse a much lower offer than the one listed.
Sammy,
That is absolutely dispicable ( but why doesn’t it surprise me in the least? )
Patrick.net ( Bay Area blog ) had enough tales of double-crossing, re-listing, POCKET… listing etc. to make your head spin. I suppose b/c they are so many high dollar listings and only a handful of really desirable areas you’d want to live in?
As I’ve always contended where NAR is concerned, it’s so crooked, there really isn’t anything there ‘worth’ salvaging. Better to scrap it and start from scratch.
That’s what works for me. I do my own research and only deal with the sellers agent.
Yes, it does seem advantageous if the buyer goes through the listing agent, especially now, when there is so much “dealing” going on. It seems that if you go through a selling agent (which is what many people know as the “buyer’s” agent), the listing agent will decline your offer if they get one directly themselves.
I like the idea of paying a buyer’s agent an hourly fee to unlock houses, etc. They really don’t do much more than that, IMHO.
It’s a business model that lasted a decade longer than travel agents, but should follow the same path eventually.
The amazing thing is that travel agents didn’t charge anything close to 6%, but still went away.
Different scale and volume. Travel agents sell (sold) hundreds of airline tickets a month. Real estate agents sell a few houses a year. Make $10 a transaction on a ticket = making $5000 on the transaction of a house.
Buying a house is a very personal decision…lots of hand-holding is needed.
Flying to New York is not a tough sell if you want to go to New York.
Redfin is taking a crack at the traditional broker setup. To my understanding, they pay their sales agents a salary, and charge very little for their service. The hand-holding is there to make the sale, and the broker gets a steady income as opposed to solely commission based.
This is the way the traditional brokerage system will be taken down.
5%-10% was the norm for travel agents 15 years ago. Cruise lines still pay commissions.
Because they have a de-facto monopoly. Anyone who has ever tried to sell a FSBO, particularly in anything but the most robust of markets, can tell you that a FSBO is effectively excluded from the market. FSBO’s can sit a very long time.
Not just FSBO, but online listings got boycotted too. The last DOJ Anitrust ruling did some good. The REIC is the poster child for collusion, followed by the banks.
Precisely, AW.
Spokaneman,
Normally I agree w/ your posts but there’s nothing “de-facto” about it! Actually if you’ve ever heard an agent honestly describe the MLS they tell you it’s considered “private property” and proprietary information.
They are the sole ownership of the local Realtor organization. As such, a FSBO ( according to them ) has no right to list their property within the MLS! Even start-ups like ZipRealty ( I believe a 1% comm. model ) could break the strangle hold.
It’s never been a matter that “other models have been ‘tried’ and failed miserably!” but more a testament to the NAR’s death grip on information. I will give them credit though, as noted above, they kept the sham going a good decade after it ’should’ have died on the vine?
+1000 DinOR. Once all real estate listing information is available to everyone for a nominal subscription fee (hey, no one’s asking anyone to “give it away”, it does have marketable value) the game’s over, within weeks.
Free markets are based fundamentally on free flow of information. And the ability of technology to disruptively provide that information marches inexorably on.
iftheshoefits,
Thanks, and ITSF’s happens to be one of my favorite sayings btw. We actually began to petition for an Open-MLS on patrick.net as early as 2005.
Again, this is a “control issue”. Others have mentioned travel agents, stockbrokers among others that have gone the way of the buggy whip at the hands of disintermediation. And it’s that very reason that NAR became so entrenched!
They sure as hell weren’t going to allow for a minute their going the way of the “debit agent”. ( I don’t know if anyone recalls but I’m told they went door to door by foot to collect literally pennies, nickels and dimes on a weekely basis for life insurance polices )
I’ve seen FSBO’s on the MLS in Sacramento. You have to pay to list it, but I don’t think you need an agent.
Mine sat for about a year. I lived on a very busy street. My sister lived in it the entire time. I eventually dropped the price and then 3 people ended up bidding on it and they bid the price up to close to what I was originally asking. The winning bidder had a real estate agent who I told would have to increase their bid to take into account her 3% commission. She did. She did try forcing me to put in a watersoftner after I signed the contract because they had added it at the last minute as something I needed to leave depite not having one in the first place. I noticed it but due to a time constraint I had to sign and I thought we’d work it out. The smilling little blond realtor tried to play hard ball for a central system. I told her I’d put one on the kitchen faucet for about 30 bucks otherwise we’d end up in court. That was my only bad eperience. The other thing I noticed was how seasonal visitors were. I don’t think I had one person look at the house from August through January and very few others until spring.
The best part of the transaction came at the closing. The buyer put a whopping 2% down and then had 3 different mortgages. One with a balloon, one ARM. I remember asking the realestate agent if she really thought he could afford the place. She said no problem, and that his brother was a mortage broker (I’m sure he got a commission on each loan). I thought man with family and friends like this who needs enemies.
“(I’m sure he got a commission on each loan)”
measton, you have no idea how much that gets my goat. Like the strawberry pickers in Gilroy, CA where their bi-lingual ( read affinity fraud ) realtwhore was -also- their MB!
Nope, no chance for a conflict of interest ‘there’? Last I heard she was no where to be found.
Mom and Dad sold their house FSBO. Buyer had a “Buyer’s Contract” with an agent, but found my folks house on their own (Saw the newspaper ad my dad was running).
Realwhore told my dad that he owed her a commission, since she drove the people over to look at the place, and handled the offer for the buyer.
Old man told her to pound sand; he didn’t have a contract with her; if she wanted to get a commission, go talk to the buyer.
“he owed her a commission”
See! It’s that whole NAR sense of entitlement that really bugs me! If a home changed owners ( ’somebody’ should have gotten paid a commission damn it! )
And don’t think these guys don’t cream their jeans looking at the total value of their listings or what’s available on the local MLS and multiply the whole Mary Ann by 6%!
Then they divvy up in their mind ‘who’ is likely to -collect- those commissions and then let the jockeying begin!
In my experience, most FSBOs are delusional when it comes to pricing.
This is true, Sammy.
When we sold our house in 2004, we used a wonderful broker who would place the listing in the MLS for a flat fee ($500, IIRC — and **well* worth it!). We sold it in an hour. We did offer to pay 2.5% to the buyer’s agent, and we had absolutely no problem with the transaction.
RE agents are very much overpaid in most cases, but when you’re trying to buy/sell from a distance, they do often earn their money.
‘You have no idea how much work goes into selling you home….. you should start doing something with your money and stop throwing it away in rent”
It must be hard work indeed to convince householders to commit acts of financial suicide at the height of a financial crisis. For starters, eventually UHS will naturally run out of stoopid people to bamboozle — what then?
The other problem is that there are precious few individuals out there nowadays running around with buckets of money and boxes of stupid for UHS to rope in. Search costs for qualified end users must be astronomical. Lucky for UHS that Subprime Sam is at least helping a few GFs to qualify…
Yep, I left my box of stupid at home!
Stars End
I love your alias/handle Stars End
‘You have no idea how much work goes into selling you home…”
It must be really hard, continually having to convince those clueless sellers to remove their refrigerator magnets. One can only imagine.
You forgot the cookies, and the cinnamon incense.
I can see you’d never sell a home on your own.
My wife and I have sold two homes we previously owned.
Lessons learned:
1) (From the first sales experience, Midwest 1996) If you list a home at the current market value, you can sell it in under a week’s time.
2) (From the second sales experience, NorCal 2004) If you underprice at the peak of a mania, you can spontaneously generate a bid war and sell at a premium.
Yes, those are good lessons, PB. Agree 100%.
So don’t use one.
I don’t! Saved myself about $20K, last time around. YMMV.
I’ve been thinking about taking the Realtor’s license exam for some time now — rather like Robert Downey Junior’s Sherlock Holmes educating himself on the dark arts in order to fight Lord Blackwood. Don’t know just yet whether I can muster the resolve and discipline to follow through with this plan.
If you do, Bear, don’t stay in SD - you guys already have Jim the Realtor. Move here to Salt Lake, or some other bubble area, and help spread the subversion around a little!
If you do, and then start spouting UHS slogans, you know that we will have to kidnap you in order to have you de-programmed!
Thought the same thing for years now … also the series 7 exam
“Move here to Salt Lake,…”
After taking a tour of BIL’s Farmington house this week, I have to confess to having experienced a bit of house lust. I don’t desire to own nearly as many toys bought on borrowed money in either this world or the next, but some extra space to occasionally separate myself and my wife from our kids would certainly be a welcome relief for everyone in our household…
“Thought the same thing for years now … also the series 7 exam”
Not too late for making New Year’s resolutions
I signed up for online classes for my broker’s license a few years ago, but life got busy and…
Will probably sign back up again (get a discount because I’ve already paid once).
As I’ve said several times on this blog, you can take the three required courses online including examinations for $169 (California.) You must wait 18 days between courses, so you could complete them in 55 days. The license application fee has doubled this year (state budget cuts), so I’m not sure of the cost now, but last year it was $45, plus fingerprints. Then it costs $145 every quarter to join the MLS. Brokers don’t charge you to sign on with them, they just take at least half your commission. The realtor’s association dues are high, $500/year, and you must join to get a key. So for about $1000 you can be licensed for a year. You’d get it back in the commission for buying your own house, so don’t get the license until you’re ready to buy. Unless you get addicted to it, like I have.
“Unless you get addicted to it, like I have.”
True confessions coming to light here!
I hope to cross paths with you at some future HBB gathering, to learn more about this curious addiction of which you speak.
“Why are realtors allowed to charge so much money for a single transaction?”
Maybe because people let it happen. You can negotiate the commission.
SFBAGal,
Agreed, I can and I have. Sell it in the first 30 days, I’ll give you 6%. The second 30, 5% and so on.
But the problem is, it should be the opposite. The starting point for negotiation should be 1% ( and let the realtor make their case from ‘there’ ) I believe the U.K “estate agents” avg. a 1% comm.
Our friend Eddie is again tweaking the data. If the Nat’l median price home was around 300k during the boom ( X 6% ) the avg. comm. would have been more like $18,000. Just saying “Then don’t use them” is the sleeves from the vest, especially since they -still- control the MLS.
In brokerages, it’s all about being a listing agent. It puts your name out there, and once the client signs the listing agreement you don’t need to do much until the buyer makes an offer. You split the 2.5-3% with the broker.
I prefer being a buyers’ agent, but then again, I’m used to hard work. I really do earn my money, because I spend a lot of time schlepping clients around to look at houses, and I scour the listings daily to find bargains to show them and print out flyers for the buyers. I schedule visits for occupied houses. We write lots of low offers, and multiple iterations to negotiate counteroffers. Once an offer is accepted I do the home inspection and interpret the pest inspection for the buyers, and negotiate repairs. I find roofers, painters, handymen, chimney inspectors, plumbers and electricians, and let them in to do their estimates. I communicate with escrow officers and property managers for details. The broker requires lots of paperwork to be signed by both buyer and seller, so the listing agent and I send a lot of paperwork back and forth. If there’s a lender I speak with them daily to provide them information.
I haven’t calculated hours for the sales I’ve done, but I’m sure that I make a lot more per hour as a surgeon than as a UHS.
But selling real estate is lots fun in this new market and the hours are completely flexible. People are very appreciative. And when I retire from surgery, I’ll have real estate to keep me busy until I’m 80 years old.
I haven’t calculated hours for the sales I’ve done, but I’m sure that I make a lot more per hour as a surgeon than as a UHS.
You’re being funny with that comment, right? Without a doubt, surgeons (and most other people, for that matter, IMHO) should make MUCH more than RE agents.
Of course I should make more as a surgeon than as a UHS! And I’m sure I do now. But RE agents made a lot more than I did a few years ago.
But RE agents made a lot more than I did a few years ago.
———————–
That comment speaks volumes about our priorities, doesn’t it?
“You have no idea how much work goes into selling you home….. you should start doing something with your money and stop throwing it away in rent”
LOL- nice segue. Pathetic. Did it ever occur to this chowderhead that these high transaction costs are a reason NOT to buy?
They are a strong band of thieves, we fear them. We need a leader to go after them. John Stewart - are you reading this?
” Washington finally stopped trying to solve every problem by throwing billions of taxpayer dollars at it and instead started trying to solve every problem by throwing trillions of taxpayer dollars at it.”
~Dave Barry
Remember the TV show, Dave’s World? The show was based on Dave Berry, played by Harry Anderson.
Old slobbering Barney Fwank knows who ‘polishes’ his apple…
Bankers Get $4 Trillion Gift From Barney Frank.
Commentary by David Reilly
Dec. 30 (Bloomberg) — To close out 2009, I decided to do something I bet no member of Congress has done — actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.
Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.
I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. And yes, I plowed through all those pages. (Memo to Chairman Frank: “ystem” at line 14, page 258 is missing the first “s”.)
The reading was especially painful since this reform sausage is stuffed with more gristle than meat. At least, that is, if you are a taxpayer hoping the bailout train is coming to a halt.
If you’re a banker, the bill is tastier. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises.
http://www.bloomberg.com/apps/news?pid=20601039&sid=a48c8UpUMxKQ
“The reading was especially painful since this reform sausage is stuffed with more gristle than meat.”
“Reform sausage”. Lol. Very descriptive. love it.
Why do the words “reform,” “sausage,” and “stuffed” instantly bring to mind a visage of Barney Frank?
To be bi-partisan, one could also think of Larry Craig. Maybe one day Mr. Craig can reach across the aisle to Mr. Frank.
Ewww…
Or reach under the door
Or maybe he’ll just take a wide stance and reach across the stall??
Or maybe he’ll be reaching around instead of reach across.
“…reach across the aisle…”
reuven —
Thanks for bringing a smile to my face and a chuckle to my voice
Barney loves the sausage, but he’s not real big on reform.
David Gergen said on CNN Your Money. “There’s an old saying that there are 2 things you never want to see made, sausage and legislation” Spot on.
‘Sufferin’ Succotash!
I thought I saw a puddy tat, I did, I did.
Where’s my hassenpfeffer?!?
4. Trillion.
4. Trillion.
Yeah, it was dem po’ folks what bought mo’ house than dey could’ford.
4. Damn. Trillion. Dollars.
No infrastructure repairs/upgrade. No higher education for the unemployed. No real tax relief for very small business. No high speed rail or any other public works that would benefit us as a nation.
4. Effen. Trillion. BOHICAs.
Eco:
Yeah No higher education for the unemployed—If you are WHITE—-
Plenty of money to get your GED, be a truck driver for fresh direct, home health aide, security guard, or a baggage slug at the airports but real jobs like advanced photoshop CS , nah…
And china built a 600 mile high speed rail in 4 yaers
http://nextbigfuture.com/2009/12/china-high-speed-rail-present-and.html
German clothing maker Hugo Boss to close Cleveland plant, 300 workers affected. ~ December 30th, 2009
FRANKFURT — German clothing maker Hugo Boss AG says it will close a plant in Cleveland that makes men’s suits, but pay the 300 workers there through the end of April.
The company, based in Metzingen, and famed for its stylish fashion, said in a statement released Wednesday that the decision was made because the plant was under capacity and “the fact that it is not globally competitive.”Hugo Boss makes two lines of men’s suits there and no other fashion pieces.
As a result, it will not extend its collective bargaining agreement with the Workers’ United union and close the plant after April.
Beyond Cleveland, Hugo Boss employs some 900 people in the U.S. in its stores and showrooms.
Another victory for unions!!
Eddie:
I demand a full accounting and so should you.
How much did it cost to make the pants suits etc. Hugo boss is not walmart…
Then compare it to the final price……what are they gonna save $20 on a $1000 suit?
“what are they gonna save $20 on a $1000 suit?”
I bet the savings are way higher than that… Do you have any idea how little the kiddos will work for in Bangladesh??
and you know their sales had to be impacted the past couple years.
Not too much of an impulse to be trendy and all that when you have to economize to keep from losing your house.
“what are they gonna save $20 on a $1000 suit ?”
Shoot man, you don’t need no $1000 suit to hand-pick cotton on Master Eddie’s Plantation.
Quick, look busy, here comes his Straw Boss with da whip and we don’t have no union here either !
Im shaking it Master Eddie Boss …shaking it up here Boss !
Ha ha ha
twenty bucks is twenty bucks.
Why should I demand full accounting from a private company? It’s none of my business. Only people who have any business in this matter are Boss shareholders.
And it doesn’t matter if they save $20 or $2 or $200. Due to union demands, the company will move somewhere else. How often do unions need to be beaten over the head before they understand a simple rule of business…when a worker gets too expensive, the employer will find a cheaper worker.
Unions have destroyed GM, Ford and Chrysler, airlines, steel, electronics, textiles. How many more industries will it take before they wake up?
Please add in municipal governments.
Eddie and his ilk will not rest until Americans live like Chinese peasants. Traitor.
UnionsGreedy executives, their paid for political proponents of inequitable “free trade” and ignorant Americans who mindlessly support them have destroyed GM, Ford and Chrysler, airlines, steel, electronics, textiles. How many more industries will it take before they wake up?You tell me.
Bravo, Rio!
The real problem is, no one wears suits any more. Unless they work on WS or for the IRS. It’s pretty much “business casual” across the board.
High end clothing retail is suffering.
http://www.thestar.com/business/article/742585–the-ball-is-over-for-canada-s-tuxedo-king
Dayum I could use a new tux or two…I have 4 that fit…even a white tux and pants.. and especially at RENTAL prices maybe i’d buy a dozen more ….anyone up for a trip to canada?
“German clothing maker Hugo Boss to close Cleveland plant, 300 workers affected. ~ December 30th, 2009″
That`s O.K.
Midwest business jumps near four-year highs in December December 30, 2009 10:21 AM ET
All Thomson Reuters newsNEW YORK (Reuters) - Business activity in the U.S. Midwest expanded far more than expected in December, hitting its highest in nearly four years on a massive recovery in employment and accelerating new orders.
The Institute for Supply Management-Chicago said on Wednesday its business barometer rose to 60.0 from 56.1 in November, marking its highest reading since January 2006.
The result was much better than analysts’ median forecast of 55.0, and was marked by an eye-popping jump in the report’s gauge of employment, which has been the top worry as the economy slowly recovers from the worst recession in decades.
“The number is a lot above consensus and it bodes well for continued solid expectations as far as the economy and manufacturing goes. That’s going to be a vital part of 2010,” said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.
Economists’ forecasts ranged from 52.0 to 58.0, according to a Reuters poll.
A reading above 50 in the report, also known as the Chicago PMI, indicates expansion in the regional economy.
Reaction was muted in financial markets, where trade has been thin due to the holidays. U.S. stocks were little changed after the data.
U.S. government bonds also showed little reaction, remaining unchanged on the day. The dollar, however, extended its gains versus the euro and yen.
The Employment index vaulted to 51.2 from November’s 41.9. That was its highest since November 2007 and also the first time it has been in expansionary territory since then.
Boding well for the future, the new orders index rose to 63.5 from 62.8.
The midwest has two things going for it:
Low CODB and low wages. VERY low wages.
Being the good capitalist Germans that they are, they did offer the union a trial wage of about $8.50 an hour; I dont know what the resulting answer was, but, one might imagine.
The Fed and the government have massively intervened in the housing market, and have helped prop up real estate prices by allowing shaky lending to continue.
I’d like to see an analysis which explores, for every 1000 dollars over a natural (non-intervention) market price, how much money is being stripped from buyers, and funneled to lenders, realtors, and insurance companies.
Also, I realized that the market manipulation acts as another stealth tax. Higher property prices mean more taxes for local governments.
“Higher property prices mean more taxes for local governments.”
I support the idea of more taxes for local governments, but I don’t support the idea the I should be one of those that has to pay them.
In Washington state, the assessed valuation of a parcel of real property is used only as a means to allocate the total property tax burden among all of the parcels of real property.
For example, if your house is assessed at $200K, and the total assessed value for all properties in the taxing district is $38billion, you are charged .000526% of the total tax to be collected in that taxing district. If general property values declined by say 25%, your assessed value will decline to $150K, but the total assessed value will decline to $28.5billion, so you will still pay .000526% of the total taxes to be collected in the taxing district. The total property taxes to be collected is determined through the budgeting process of the taxing district, and increases in total taxes collected are limited by statute.
So, the amount of tax you pay is somewhat independent of changes in the assessed value of your property, either up or down.
Is this process unique to Washington state? Its really a pretty equitable system.
Property Tax allocation was the same as you described when I lived in Syracuse, NY. (for all of NY State, I believe). Your assessed value determined the percent of the total pot you paid. That was true for county government, township government, and school district.
In Ohio, local property taxes are your assessed value * a tax rate. The Tax rate is FIXED, and can only be changed by a vote of the population.
(Keep in mind that in Ohio, about 90% of the local property tax goes to the school, the rest to the county government. Sinc the property tax is basically a school tax, the populous pass tax levy increases about 50% of the time.)
Of course in Maryland the schools are run by the local (county) government. And we have fixed (until changed) millage rates. And a prop 13 like limit (5% per year) on how much your taxable assesment can go up.
Please send that to the idiots who make the rules in FL. They seem to think that “House prices up 3X in 4 years, mill rate constant” somehow makes sense.
OT - I went to see Avatar last night.
it was what you said and more:
campy acid trip
Mom and sisters went to see Avatar. They had to leave in the middle of it due to motion sickness.
Excellent suggestions here for the Congressional auditors! I sure hope at least someone in Congress pays attention to the HBB, as I believe we have raised numerous questions regarding Fed conduct which steers far wide of the realm of conventional monetary policy.
On a number of occasions I will read an article or hear some one on tv and I will say to my self this person sounds a lot like an hbb reader.
Yep. I’ve even seen some of our posts lifted almost word-for-word, in MSM. Not that it’s a bad thing. It’s good to get the truth out there, however it needs to be done.
WSJ: Obama Slams Security Breach
I bet that security breach felt pretty contrite after being slammed. It won’t do that again.
He got off the golf course long enough to show interest in that pesky national security stuff?. And only a week later too. Those plane bombers are running scared I’m sure.
If it had been anyone other than Barry, the media would be peeing themselves, screaming why didn’t they haul azz home and get to work on security.
No worries though, big sis Janet sez the system worked.
That’s just silly. We need the President of the US to focus on one whack job poison fart clown?
The press missed the real story IMO; that the passengers took care of matters.
“That’s just silly. We need the President of the US to focus on one whack job poison fart clown?”
Joe Biden?
Oooh, another gem from the bit bucket-
Poison fart clown.
Yesterday’s gem was rocket surgeon.
Let’s use the two gems in a single sentence, shall we?
The poison fart clown had too much sulphur in his diet so he made an appointment with his rocket surgeon.
HA! I think a Brain Scientist would be more useful.
“The press missed the real story IMO; that the passengers took care of matters.”
How well do you think the passengers would have handled it if it had actually exploded, rather than igniting a small fire?
Somebody smarter than me opined that with the amount of explosives involved, putting a small hole in the side of the plane was more likely than complete airborne destruction.
jeff s-
Here’s a pic of Uncle Joe with my friend’s daughter:
It was shot right before he told her she was going to have to gird her loins.
Doesn’t take much of a hole to bring down an airliner, depending on where the hole is.
X-GSfixer,
Right, especially as it starts to get ingested into the intake?
No, I happen to think the Prez made the right call here. Dropping everything and scurrying back to DC to “calm” an upset nation was just the “effect” these rocket surgeons are looking for.
Mind if we play through? was the correct response.
I dunno, but if I ever spill a drink in my laptop computer on a flight I guess I can rest assured I will get beat to a pulp.
“…scurrying back to DC…..”
Agreed. Supposedly, we are paying for a bunch of high priced government talent to take care of stuff like this. Let them do the job they are supposed to be doing, or can their asses.
Sort of like the President/Senator/Representative/Governor showing up at the yearly local weather disaster, to show how concerned they are. Stay the hell away, it’s nothing but a photo op for them anyway.
Bush continues to read to the kids…..worst thing ever done.
Obama continues to play golf….brilliant move.
But then again how does one even begin to challenge the wisdom of a man who won a Nobel peace prize 11 days into the presidency?
Jim A.,
I’m no explosives pro - but if you video Google PETN you will see the frightening explosive power that tiny amounts of plastics explosives can generate - and yes, in very small amounts. There are videos of 80g exploding (just what that idiot had) that from my uninformed position seem easily enough destruction to take a plane out of the sky.
The scary part - 80g is about 3 ounces. About two sips of beer - how about 200grams? Half a beer - scary stuff any way you look at it.
Bush - 3000 people died
Obama - I think some inhaled some sulpher and got a paper cut.
Yeah, I can see how you might those two confused.
I guess he should have shown all-out panic like W did, in order to convince the terrorists of exactly how much power they have to bring the all powerful USA to its knees?
The thing that totally pi$$es me off about this episode, is that it illustrates that the Feds have dramatically enchanced their data-gathering abilities, but they still don’t have any way to process the information effectively…… Eight plus years after 9/11.
The bad news: The government has all kinds of ways of violating your privacy.
The good news: It doesn’t matter, because they don’t have any idea about how to use the info, once they have it.
Yes, the data is being gathered. But the clowns who are supposed to analyze it and make decisions are too busy visiting porn sites or running side businesses on their government computers.
Well the “watch list” that he made it on to is reported about 500k names big. So if you assume that there are 1000 FBI agents working it, that’s 500 names per agent. By any reasonable measure they’re going to spend more of their time on the names where they have more than “He doesn’t call, he doesn’t write. We think he’s joined Al-Queeda.”
GMAC to get $3.5 billion in added aid from government: reportDecember 30, 2009 2:51 AM ET
All Thomson Reuters news NEW YORK (Reuters) - GMAC Financial Services is close to getting about $3.5 billion in added aid from the U.S. government, on top of the $12.5 billion already received since December 2008, the Wall Street Journal reported.
The announcement is expected within days and will coincide with GMAC taking additional steps to absorb losses related to its mortgage operations, the Journal reported, citing people familiar with the situation.
One person told the Journal that the measure has been crafted to return the company to profitability in the first quarter of 2010.
The new capital will likely allow GMAC to avert placing its ailing mortgage unit, Residential Capital LLC, or ResCap, into bankruptcy, the Journal reported, citing these people.
“As we have previously stated, GMAC has been conducting a strategic review of its business and evaluating options to address the challenges at ResCap and the mortgage operations,” said GMAC spokeswoman Gina Proia in an email statement.
“Critical objectives in the process would be to take actions that position GMAC for improved financial performance and to repay the U.S. government,” she said.
GMAC did not detail any specific actions.
“Critical objectives in the process would be to take actions that position GMAC for improved financial performance and to repay the U.S. government,” she said.
Riiiiiight, just watch and see.
” GMAC Financial Services is close to getting about $3.5 billion in added aid from the U.S. government, on top of the $12.5 billion already received since December 2008″
I guess “the system worked”
Yep will loan them billions at 0%, GMAC will buy treasuries collect the interest, so in reality we are just giving them money. We’ll then probably forgive the loan or let it be converted to common stock without voting rights which will then be sold for pennies on the dollar.
“Yep will loan them billions at 0%, GMAC will buy treasuries collect the interest, so in reality we are just giving them money.”
+1zillion. SO many people don’t get this. It is simple thievery from the treasury—nothing more, nothing less.
There would be political repercussions if they just gave them the money. So they had to come up with something a little more subtle.
Does anyone else get the feeling that a decision has been made that Main Street is going to die anyway, so they need to “Get while the getting is good”? Sorta like stripping ammunition from the dead?
Only since the 1980s, X-GSfixr, only since the 1980s.
I thought they changed their name to “ally bank”.
Reminds me of Blackwater USA changing its name to “Xe” gotta keep the sheeple confused.
Another good example of how unions have ruined this country.
Oh wait… financial and executive officers have unions, right?
The Burst Real Estate Bubble Is Still with Us.
by Claus Vogt For Weiss Research 12-30-09
The aftermath of the burst real estate bubble is not over yet. We can expect more bad news, more bad debts, more bank failures, and the bad times to last much longer.
If you aren’t convinced, take a look at what the Treasury Department did on December 24:
In September 2008 the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship. At the same time Treasury established Preferred Stock Purchase Agreements (PSPAs) to ensure that each firm maintained a positive net worth.
Based on its recent action, the Treasury Department does not believe that the real estate crisis has ended.
Treasury is now amending the PSPAs to allow the cap on Treasury’s funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years. At the conclusion of the three-year period, the remaining commitment will then be fully available to be drawn per the terms of the agreements.
This tells me that the Treasury Department is convinced that the worst of the burst real estate bubble is yet to come. Why else would they be providing unlimited financial support for the two largest Zombie banks the world (outside Japan) has ever seen?
As we move into a new year, the stock market’s technically weak rally and the repercussions of the burst real estate will follow along. So stay flexible with your investment strategy because we could be in for another hard fall.
I’ll ask this question that I think I asked the other day -
Is the lifting of these caps, as mandated only by the executive branch, constitutional? Doesn’t congress have to approve all changes such as these?
As a precedent - I believe congress had to approve the FDIC’s expanded $500 billion credit line back in September, did they not? Why is this any different?
(and yes I realize we essentially threw out the constitution years ago - this seems more overt and blatant though, unless I’m missing something)
Reply from Obama:
“I won.”
(and yes I realize we essentially threw out the constitution years ago - this seems more overt and blatant though, unless I’m missing something)
You are not missing a thing.
D.C. to country…damn the Constitution, full speed ahead.
Ok, we had to wait until the second last day of the year, but I think I’ve found the worst written RE-related article of the year.
This article, from the always-woeful Star-Ledger, contains everything we always discuss on here. Lack of details, blatant agenda from the “journalist”, demonisation of the lender who seems to want their money back, no understanding of the RE/mortgage business by the writer, “victim” borrower losing home despite “heroic” efforts eg: working three jobs, “victim” suffering from terrible adversities ie: death in the family, sickness, etc.
This article is the finished item as a guideline for the MSM going forward. Simply put, it has it all. Just cut and paste. Some of the comments are good though.
http://blog.nj.com/njv_barry_carter/2009/12/nj_woman_works_to_negotiate_mo.html
As a renter, I am always insulted by these stories. Why are these people so much better than me? In the US, they don’t kill you if you can’t make the agreed payments, or even put you in jail (unfortunately, in most cases, even if you engaged in fraud), rather they ask you to vacate the chain tied to your ankle and move into a much more affordable rental unit to help get your life back in order. How is this sad? The number of people that confuse homelessness with not owning a mortgaged house is shocking. If these people really cared, why dont they help pay her rent, and not look towards the bank who never agreed to pay her bills or should ever be expected to? Hypocrites and conmen.
Yeah, how about some basic facts? What does she “own,” when did she buy it, what did she pay, and what does she earn? Talk about lazy.
If her parents were living with her, their SS checks could have been helping her pay the mortgage.
I agree there’s no indication of when she got the loan, did she refi, etc. etc.
The number of people that confuse homelessness with not owning a mortgaged house is shocking.
You got that right!
Because, now that they are homeowners, they are doing the responsible thing, like committing to a 5-10-30 year property tax bill.
I’m not against government funding their operations. It’s that government at most levels is not using the money they collect effectively, and the farther away you get from the typical taxpayer, the worse it gets.
I’m tired of all the “human interest” detail in news stories. They always start like this: “Monica Parchment could only think of one thing when sheriff’s officers boarded up a house on her street a few months ago…”
See that’s supposed to draw us in…and identify! Wah wah wah. What a tired convention. I don’t identify with her at all. I wish reporters would just stick to news and stuff the sob story BS.
I’m thinking of making a Word template for this kind of story, to all the lazy journalists have to do is fill in the blanks.
I just remembered your question about cheesesteaks -
Jim’s at 4th and South
Tony Luke’s at 3rd and Oregon
If anyone takes you to the tourist trap of Pat’s/Geno’s go with Geno’s.
Thanks.
I was at the North Philadelphia airport a few years back, looking at an airplane for a broker friend of mine, and thought I should have one to commemorate the visit.
Unfortunately there were no pilot’s or mechs around (it was a Saturday), so I couldn’t get any advice from the locals.
Yes, yes, yes! Jim’s is the best!!!!
I have some good news, some bad news, some still-worse news, and even more bad news regarding San Diego home prices:
The good news: Prices remain nearly 40 percent cheaper than they were at the peak of the mania (Case-Shiller/S&P Index for San Diego was 250 circa 2005-2006, now 155).
The bad news: Prices remain 55 percent overvalued compared to their year 2000 level (C-S/S&P Index was 100 in 2000).
The still-worse news: Prices already appeared overvalued by the year 2000 (note setting the C-S/S&P Index level of 100 in year 2000 was arbitrary, not a judgment on whether prices were reasonable at that point). In fact, a colleague at work who moved here in the year 2000 told me that he did not buy a home then because his father (himself a UHS in another state) told him that prices were too high, and it was not a good time to buy).
Even more bad news: I am not sure this point has reached the peer-reviewed journal literature yet, but if high end homes are not selling and low-end homes have bottomed out or already began rebounding in price (say, due to $8K tax credit incentives), then the C-S/S&P Index will provide an upwardly biased measure of the value of the underlying housing stock (cf. Dennehy’s comment below). How can one reflect the change in value of high-end homes that aren’t selling because the owners are holding out for higher prices they anticipate receiving thanks to green shoots of incipient economic recovery?
End users buy San Diego housing at your own risk — and try not to catch yourselves falling knives.
“I pull in resolution and begin to doubt the equivocation of the fiend that lies like truth.”
– Shakespeare’s Macbeth –
County housing index up again
San Diego area has 3rd-fastest recovery
By Roger M. Showley,
Wednesday, December 30, 2009 at 12:01 a.m.
San Diego County ranked as the nation’s third-fastest-recovering housing market in October, though the increase in prices is slowing here and elsewhere, according to the closely watched Standard & Poor’s/Case-Shiller Home Price Index.
Data released yesterday showed San Diego’s index up 0.4 percent from September — the sixth straight monthly boost — and up 1.1 percent on a seasonally adjusted basis. Phoenix was up the most at 1.3 percent, followed by San Francisco, up 1.2 percent.
The index, which is based on comparing resales of the same properties and was set at 100 as of January 2000, stood at 155.37 for San Diego, meaning homes are selling for 55 percent more than they did at the start of the decade. Only Los Angeles and Washington had higher index numbers than San Diego’s, at 168.43 and 179.71, respectively, among the 20 metro areas Case-Shiller monitors.
Nationally, the index was 146.58, unchanged from September and up 0.4 percent on a seasonally adjusted basis. All metro areas including San Diego were lower than in October 2008. San Diego was down 2.4 percent from a year earlier, with only Denver and Dallas off less, at 0.1 percent and 0.6 percent, respectively.
S&P’s index chairman, David M. Blitzer, noted that the monthly improvement is slowing in most metro areas. After 33 months of monthly declines, San Diego went positive in May and saw increases as high as 2.5 percent from June to July. But since then, the monthly change dropped to 1.6 percent in August and 0.9 percent in September.
“The turnaround in home prices seen in the spring and summer has faded, with only seven of the 20 cities seeing month-to-month gains, although all continue to show improvements on a year-over-year basis,” Blitzer said. “All in all, this report should be described as flat.”
Peter Dennehy, senior vice president at the San Diego-based Sullivan Group Real Estate Advisors firm, advised against placing too much emphasis on short-term changes, which are prone to fluctuations.
“It’s still positive,” Dennehy said. “Probably what it reflects is there is still a lot of value deflation in the housing market, and the market is being particularly driven by the entry-level end of it.”
…
House one street over from my rental: 625K ~ same as it’s ever been.
Hi Annie,
Is that the list price?
Happy Holidays / Christmas / Hanukkah / Kwanzaa / Solstice / other?
Festivus
Thanks for the reminder, Mr. Costanza
Comment by ann gogh
2009-12-30 08:47:43
House one street over from my rental: 625K ~ same as it’s ever been.
——————
Yes, asking prices in our area are now well above peak levels. The recent sales prices were down, but now with NO inventory, the remaining sellers are the only game in town, and they are pricing at or ABOVE peak levels.
This still has a long way to play out, especially given the amount of intervention.
My apartment building, the one that rarely had a vacancy a couple of years ago, is still running with an effective vacancy rate of 5 to 10 percent with very steady turnover. Rents haven’t fallen yet though are no longer rising, but it’s obvious others are moving to realize rental savings elsewhere.
Rents are still too high based on the excess of housing. Rents are still more than 50 percent higher than they were at the start of the decade when the supply was much tighter. This is going to take awhile to unwind the excessive rent costs, one lease and one move at a time. And with renting still much cheaper than owning and likely to get less expensive, why should one possibly buy?
I suppose one unknown is whether those that left San Diego County for Riverside County for cheaper housing will move back keeping San Diego County housing prices from falling as far as they might otherwise while the Inland Empire will absolutely crater.
I suspect instead that the inflated San Diego housing prices in combination with high state and local taxes will continue the steady, slow migration out of San Diego which is what the numbers seem to show.
“This still has a long way to play out, especially given the amount of intervention.”
Playing the Devil’s advocate here, and asking the question I often ask myself, how do you know the government’s open financial engineering attempt to ’stabilize’ prices (i.e. make real estate start going up again) will not be an outright success, resulting in a high rate of future home price appreciation that will leave the stubbornest fence sitters (like me and a few other regulars here) high and dry?
Personally PB - unfortunately I think there’s a very good chance that will indeed happen.
In addition to the existing and future financial incentives, the primary mechanism (as yet little discussed on here) could be induced shortages, in the form of the government taking ownership of houses and simply holding them off the market, thus keeping the “supply” low and causing prices to rise. If you think about it - it’s already happening, vis a vis Fed MBS purchases and banks’ massive not-yet-for-sale-maybe-next-year shadow inventory. This could be continued practically indefinitely until the population catches up with supply - which will eventually happen given a continuation of the still-record-low number of housing starts.
Throw in some bulldozer action for good measure, and voila - permanently high plateau (for real this time).
Even being a homeowner - I seriously hope this doesn’t happen. But I think there’s a very good chance it will. The decency of our government is that far gone, IMO.
And in the meantime, the US population will add another 3 million bodies in the next 12 months.
Given the lack of new home construction over the past 24 months, with just a modest amount of job growth in the recovery, I think we’ll see a bounce up in home prices on the low end.
I’m still quite nervous at the high end…there has not been any real government intervention there, credit is still tough to come by for jumbo loans.
“Throw in some bulldozer action for good measure, and voila - permanently high plateau (for real this time).”
After what I saw during our drive through Las Vegas yesterday, that would be a very good place to start with that shovel-ready project, IMHO. You can’t have ‘luxury homes’ selling for under $100/sq ft and have builders making any money, can you?
“…bulldozer action…”
If you bulldozed a bunch of recently-built McCrap shacks, wouldn’t that add to GDP in at least two ways?
1) More G in GDP (Y = C + G + I + X - M)?
2) Increase in value of housing due to elimination of supply with a net negative value, making the value of all other existing housing and future-built housing go up?
This is a beautiful example of the Parable of the Broken Window…
Perhaps I should clarify for the puzzled that I am being flippantly sarcastic in my suggestion that bulldozing existing homes would be a good economic policy. Only an academic macroeconomist with a very limited grasp of practical realities such as budget constraints and real (as opposed to paper) wealth could fail to see the irony in my suggestions, but this type is disproportionately represented on the Obamonomics Dream Team.
Color me not puzzled - I know you too well.
I expect the Broken Window Fallacy to be exercised regularly over the next few years - as you say it is the nature of our “WE MUST DO SOMETHING!!!111″ government, as exemplified in numerous New Deal programs.
(e.g. I think I mentioned at one time a park in MD for instance that brags about how it was built with WPC funding using only manual labor - shovels - instead of engine-driven machinery, so as to provide more jobs)
packman — Please let me know if you are going to any future HBB gatherings, as I look forward to the opportunity to meet you someday.
“In addition to the existing and future financial incentives, the primary mechanism (as yet little discussed on here) could be induced shortages, in the form of the government taking ownership of houses and simply holding them off the market, thus keeping the “supply” low and causing prices to rise.”
I am thinking an uncapped credit line to Fannie and Freddie might be a first step in this direction? Perhaps the Fed’s Congressional auditors could ask BB whether this is part of the plan, and whether the Fed is on board with it.
As I recently conjectured might soon happen, it sounds as though the Fed’s MBS purchase program has been “outsourced” at the point when it was scheduled to expire. In particular, the GSEs have been granted an unlimited credit line which they can use to buy MBS and manipulate the prices at will. So long as they are at it, I don’t see why they can’t also buy and hold as many houses as they want to fix the price of housing at whatever level they see fit. Rather than being subject to the Sherman Antitrust Act, it appears these government-sponsored private monopolists have been granted a de facto license to fix prices.
* The Wall Street Journal
* REAL ESTATE
* DECEMBER 30, 2009
Questions Surround Fannie, Freddie
By NICK TIMIRAOS
The government’s move to ease the limits on the securities holdings of Fannie Mae and Freddie Mac has ignited a debate among analysts about what the companies will do with their longer leash.
When the Treasury Department took over Fannie and Freddie last year, one of the requirements they set for the companies required them to begin shrinking their portfolios of mortgages and related investments, which total a combined $1.5 trillion. The idea was to rein in the companies’ size and growth.
But last Thursday, the Treasury eased that requirement, meaning the companies won’t be forced to sell mortgages next year into an already weak market and could even buy mortgages on the market, which could help hold down interest rates. The Treasury also suspended for the next three years the $400 billion cap on the bailout subsidy that the government will offer. That could give them more flexibility to modify mortgages without worrying about taking losses.
Mahesh Swaminathan, senior mortgage analyst at Credit Suisse, said the firms could use their increased capacity to purchase delinquent loans from pools of mortgage-backed securities that they guarantee. Fannie and Freddie already purchase defaulted loans as they modify them under the administration’s loan-modification program, but the additional breathing room means it is now a “slam-dunk for them to speed up” purchases of delinquent loans, Mr. Swaminathan said. New accounting rules that take effect next year also could make it more cost-effective for the companies to buy out bad loans and keep them in their investment portfolios.
The relaxed portfolio limits calmed investor worries that Fannie and Freddie would be forced to sell some of their mortgage holdings just as the Federal Reserve was preparing to wind down its purchases of mortgage-backed securities next spring. The Fed’s commitment to buy up to $1.25 trillion has helped to keep mortgage rates near record lows; without that support some economists have said that could rise to 6% by the end of 2010.
“The alternative would have been them selling into that market, which would have been even more difficult for the market to bear,” Mr. Swaminathan said. Others said the new flexibility means that Fannie and Freddie could replace the Fed as a big buyer of mortgage-backed securities, especially if weak demand for mortgage-backed securities from private investors drives rates higher.
“It’s created a government-purchasing facility other than the Fed,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a research firm in Washington.
…
packman — Please let me know if you are going to any future HBB gatherings, as I look forward to the opportunity to meet you someday.
Likewise. I don’t get out of the DC area much though, so if there’s a DC meetup and you can make it, we’ll certainly knock down a few.
Kucinich ROCKS!!!
* The Wall Street Journal
* DECEMBER 30, 2009, 5:06 P.M. ET
Lawmakers Want Probe Into Treasury Aid for Fannie, Freddie
By MICHAEL R. CRITTENDEN
WASHINGTON — The Treasury Department’s surprise Christmas Eve move to uncap the potential aid to Fannie Mae and Freddie Mac should be investigated, lawmakers from both political parties said Wednesday.
Rep. Dennis Kucinich (D., Ohio) said his congressional subcommittee plans to investigate Treasury’s decision to lift the existing $400 billion cap on government cash available to the two firms. Separately, Reps. Scott Garrett (R., N.J.) and Spencer Bachus (R., Ala.) called for the House Financial Services Committee to hold a hearing on the matter.
Mr. Kucinich, who chairs the domestic policy subcommittee on the House Oversight and Government Reform panel, said he is concerned about how the two government-controlled firms will use their new flexibility.
“This cannot be used simply to purchase toxic assets at inflated prices, thus transferring the losses to the U.S. taxpayers and acting as a back door [Troubled Asset Relief Program],” Mr. Kucinich said in a statement released by his office.
…
“…so if there’s a DC meetup and you can make it, we’ll certainly knock down a few.”
Other schedule commitments and financial constraints allowing, I will try to make it to a DC meetup if one takes shape this summer…
I think the answer is we don’t know for sure. However, without a sustainable economy, high rates of future home price appreciation from already elevated levels would seem to be nearly impossible without bubble era conditions which aren’t coming back.
There’s nothing that makes me believe this so-called economic recovery will last and correspondingly nothing that makes me believe that any increase in housing prices will be anything other than anemic and short-lived, though short-lived could be longer than expected.
how do you know the government’s open financial engineering attempt to ’stabilize’ prices (i.e. make real estate start going up again) will not be an outright success..?
It does seem almost likely, doesn’t it?
Given that the braindead-trust in Washington equates “higher house values” with “recovery” I could very well see (unsubsidized) housing kept unaffordable for years. Of course the market would freeze - those who could afford their payments staying put, and those without, renting.
It’s absolutely maddening, and it won’t do what they want - get people borrowing and spending like drunken sailors again.
Feh.
‘…equates “higher house values” with “recovery”…’
And don’t forget our financial MSM commentators who equate higher (or inflating) home prices with ‘better’ and lower (or more affordable) home values with ‘worse.’
Playing the Devil’s advocate here, and asking the question I often ask myself,
PB Imho you need decent pay checks to buy houses. Those paychecks come from mid level jobs. Those jobs are not being created in the fire economy. Ultimately the Fed can fake it but won’t make it. However they will succeed in delaying the inevitable.
Your post pretty much summarizes my own thinking about the effect of Extend and Pretend. I am adjusting my plans accordingly — probably won’t buy any RE now until all the kids are off to college (10 years hence).
Dear Devil’s Advocate,
I just contacted our AWOL Mistress of the Mud, Olygal, telepathically. She rolled the old chicken bones, a few clam shells and fuzzy bits of a stale twizzler and then carefully read them.
The read was a “Hold your perch on the fence rather than holding your breath” and then she commenced to making her Losty’s squatters soup again.
LMFAO!!!
“Playing the Devil’s advocate here, and asking the question I often ask myself, how do you know the government’s open financial engineering attempt to ’stabilize’ prices (i.e. make real estate start going up again) will not be an outright success, resulting in a high rate of future home price appreciation that will leave the stubbornest fence sitters (like me and a few other regulars here) high and dry?”
It’s NOT working, and it can’t work. Median prices are still falling in many areas, and PPSF is falling most places. Aside from a return to NO DOC loans, there is absolutely no way for bubble prices to return, short of the government raising the $8k credit by tens, if not hundreds, of thousands of dollars. It’s game over, time will show.
The power of low interest rates cannot be overstated.
They will hold rates at painfully low levels over the long haul, IMHO, and this will absolutely decimate the savers — as it has for most of this past decade.
Professor,
PB, I know that’s a leading question, but I’ll respond anyway. It all comes back to the fundamentals. Affordability is still way out of whack.
Continued foreclosures, reduced access to credit, increasing rates can only work to “stabilize” real estate. Hopefully back to 1999 values - just before the run-up here in MD that saw my shack supposedly triple in value.
YUCKKK - my over-leveraged neighbors are praying for your Devil’s advocate outcome. Ain’t gonna’ happen.
Keep sitting - it’s coming to you.
I don’t really care, as I am pretty well hedged, come what may…
PB-
Go onto the S&P Website and look at the data, Case Shiller does a 3 tiered price index (low, medium, and high), so you can see in any given market what’s happening with cheap/medium priced/expensive homes.
I haven’t looked at the SD tiered data, but have been tracking the SF tiered data. Here’s the gist.
1. From 1987 until about 2001, low, medium, and high priced homes all about tracked one another.
2. From that point, high priced homes went up about 33%, low priced homes went up by about 100%.
3. Low end has now fallen to about 20-25% below that 2001 number, high priced homes have fallen to about that 2001 number (when the low and high end generally were tracking one another)
4. If you assume 3% is “normal” growth rate in the price of homes, then from the bottom of the 90’s housing correction (about 1996), the lower priced homes are almost exactly at that 3% growth line (perhaps a little above). High priced homes need to fall by approximately 30% more to get to that equivalent level.
If I were buying a cheap home in the SF Bay Area, I’d probably sleep pretty well at night after the purchase, but since I would be buying a more expensive home, I continue to rent, and watch the market.
To complement what I always say about taking away and adding back a little and declaring success, is that if I add 400 to 100, then take away 200, is it really a discount?
A few weeks ago there were some questions on real estate auctions. I thought that most comments were derogatory, and derogatory out of ignorance. So… I thought I would share some of my observations.
Here in South Central KY it is common to have real estate change hands by auction. Typically the sales commission is 7% and added on to the final bid to determine selling price. If you are a bidder/buyer you know you will be paying this commission and can adjust your bid accordingly. Some of the comments I read here suggested that this was underhanded or deceitful. Not true from my perspective.
Banks in the area are familiar with auctions. If there is a piece of property you are interested in, you can get a commitment from them for financing prior to the auction. This includes houses/land only/commercial.
The property is generally sold as is and where is. This means if the property has faults (ie termites, lead paint, leaking basement) you have no recourse against the seller and you are buying it “as is”. You can generally make arrangements for a home inspection prior to the auction and use the results as you see fit. You definitely will own your mistakes.
Most of the single family residence properties that I see come up for auction are “estate sales”. The owners have passed on, and the children want to liquidate the property.
Because most of these single family homes are “estate sales” the houses are generally not fixed up, updated, or repaired prior to sale. They are generally cleaned and made presentable.
Most successful buyers that I have seen are older adults that plan to use the property as a rental. The other type of buyer is the contractor that plans to update the property and resell.
The advantage of auctions from my perspective is that it is determining the floor of pricing for the area.
regards to all.
Trapper
I attended a few open houses here north of Cincinnati that were in a similar situation as you described…. The owner having passed on, the house was listed and failed to sell within 6 months or so, and the family put it up for auction to get rid of it.
One gorgous 1840s house in my old neighborhood went thru this processes. The owner had been a lawyer who ran his practice out of the downstairs and lived upstairs. After not selling for 6 months, the family put it up for auction. The were 4 straight weekends of Open Houses at the place, and you could talk to the ‘RE Agent’, arrange inspections, etc, etc. Finally, 2 weeks after the last open house, there was a public auction on the place.
Since I like old houses, I came close to participating in the auction. However, it was just not quite right to fit my family’s needs, so I passed.
( I did not have the place inspected. The final selling price suggests there were no major problems. A couple bought it to live in (after some minor remodeling).
I started that auction post. In the case of the one I was curious about, it wasn’t a bank auction (e.g. not a foreclosure) - was being done by an auction house (vs. selling it through a realtor). Guess it was considered an estate sale (old lady died, family sold the house a year later). I was just curiuos why they’d go that route rather than listing it.
The biggest problem I had with it (other than the person who I spoke to at the auction house being a total and complete douchebag) was that they only allowed 1 hour prior to the auction for inspection. I blew the whole thing off, but my friend who lives across the street from the house said there were a good number of people in attendance - some average Joes and some contractor-looking types. The auction started at 1pm and was over within 10-15 minutes. No idea what the gavel price was.
eastcoaster,
It does sound like you ran into a jerk at the auction house. Only allowing inspection one hour prior to sale sounds like there was someone they wanted to have an inside track on the property.
T
The advantage of auctions from my perspective is that it is determining the floor of pricing for the area.
One person thought it was worth so much, the rest
of the bidders thought he was nuts.
Aetna to take Q4 charge for job cuts, real estate ~ December 30, 2009
BOSTON (Reuters) - Health insurer Aetna Inc (NYSE:AET - News) said on Wednesday it expects to take a charge of $60 million to $65 million in the fourth quarter of 2009 to cover costs associated with job cuts and real estate consolidation.
The company expects to take an after-tax charge of $40 million associated with its previously announced plan to cut 625 jobs, as well as consolidation of real estate.
A similarly sized workforce reduction to be completed by the end of the first quarter of 2010 is expected to result in a charge of about $20 million to $25 million, after tax, the Hartford, Connecticut-based company said.
Aetna said the job cuts are based on the company’s membership outlook for 2010 and made in preparation for the impact that health care reform and regulatory changes may have on the company’s business.
After the job cuts are completed, Aetna will have about 34,300 employees.
Surprised to see this in NYT …
“Part of the reason people are turning more optimistic is a perception that the real estate market has turned,” said Joshua Shapiro, chief United States economist for MFR. “If that proves to be false, and we think it will be, it is going to come as a surprise to many.”
“Part of the reason people are turning more optimistic is a perception that the real estate market has turned,” said Joshua Shapiro, chief United States economist for MFR. “If that proves to be false, and we think it will be, it is going to come as a surprise to many.”
If we had a functioning MSM, maybe it wouldn’t be a surprise to many.
The reaction would be quite the opposite for many on the HBB. Not accounting for the effects of the considerable intervention in the market, I would be shocked if the real estate market had truly turned.
Even with the considerable market intervention, the most that has happened is the most anemic of recoveries, one that shouldn’t last and seems unsustainable without continual intervention.
So companies cut jobs to save money, but then declare it actually cost them money.
What’s wrong with this picture?
work longer, pay more, receive less, oh my
Vt. teachers’ union rips retirement panel’s work
The Associated Press
Posted: 9:16 a.m. Wednesday, Dec. 30, 2009
MONTPELIER, Vt. — Vermont’s major teachers’ union is trying to get out in front of a report to be issued soon on public retirement systems, saying it fears it might propose changes that would harm pensions for teachers, state and municipal workers.
The National Education Association’s Vermont chapter launched its own report Tuesday ahead of next week’s start to the Legislative session, saying it wants to help provide solutions to the state’s short-term budget crisis without destroying a teacher pension system in place for six decades.
NEA officials say they fear the special commission’s report will call on teachers and other public employees to work longer, pay more into the system and receive less in pensions.
Wahhhhh Wahhhhh Wahhhhh
Poor little teachers won’t get to retire at 55 with full salary/benefits after working those long long, 6 hour days, 8 months a year.
Someone quick, call the ACLU and help protect their constitutional rights to rob tax payers before it’s too late.
Actually, teachers’ pensions aren’t nearly as generous as those of police,fireman,and prison guards in my state, California. For example, if my husband, who makes $50,000/year as a public high school teacher, retires after 30 years, he will make 58% of his income. By contrast, a prison guard who makes $60,000 (before overtime) will make 90% of his income after 30 years.
I’m not complaining about his pension. He also fully funds his 403B, and I’m the big income in our family. I think that other state pensions are ridiculously high and are bankrupting our state. Workers pay into the pension system, but not enough to fund 90% pensions!
58% is still a hell of a good pension, and only after 30 years. Just because it’s not as obscene as firemen, doesn’t make it right.
“58% is still a hell of a good pension, and only after 30 years. Just because it’s not as obscene as firemen, doesn’t make it right.”
That’s about what it would have been in California a decade ago before they increased pension benefits by 50 percent. The benefits promised then weren’t fully funded, much less the much larger benefits promised now.
I guess the theory was that since the pension fund was earning 25% a year, why not?
IMO, all pension funds should be required to be placed in ultra save accounts, and each hour a person works, whether for private or governments where such a pension has been promised, 100% of the money should be funded. Local governments seem to look at pensions as a way to borrow discretely…
Of course, the fact people live longer today is not helping, since no person receives the same total dollar amount based on life expectancy. A person who dies months after retirement gets virtually nothing, where someone who lives to 90 makes out pretty darn well. So from that perspective, each person should have a “balance” showing exactly how much pension they have in their account to last the rest of their lives what ever that might be.
Yup, it is damn good, much better than private industry, and more loopholes too (big salary in the last year gets you a much bigger pension–private industry restricts such practices).
My dad worked for a company for more than 40 years, gets a lower pension than he would have with the state, and, frankly, is very happy with how he has been treated. Prudent saving and paying off debt over his working career is allowing him and my mom to travel the world in their retirement.
“Workers pay into the pension system, but not enough to fund 90% pensions!”
In other states indeed workers pay into the pensions, and often do not get Social Security.
In New York only recent hires pay into the pensions, the rest pay zero. Those pensions were enhanced retroactively for existing workers and cut for new hires, repeatedly. Everyone gets Social Security too. And, public employee pensions are exempt from state and local income taxes, at any age (private up to $20K after age 65).
The contributions by the City of New York for teacher pensions was 25% of payroll before a recent pension enhancement and stock market declines. For police and fire I believe it was 60%. All are going up.
I’m not too sure where you got that 58% number unless things are a changing for the younger teachers, my pal just retired after a little over 30 years and he IS receiving 90% of his final salary, which actually is equating to about 100% when you consider he is no longer paying dues…
Fecaltime!
“Poor little teachers won’t get to retire at 55 with full salary/benefits after working those long long, 6 hour days, 8 months a year.”
Six hour days? What orifice did you pull that one out of? I’m not a teacher myself (thank dog) but I know several and there is certainly a lot more to the job than your ridiculous straw man argument states.
eddie’s a Haskell, he’s still alive on the TV channel.
(Ms. Cleaver is gonna twist his ear if he doesn’t return Wally’s “Coming Soon!” banner he took from the garage last year…)
Yes, but, in my area teachers can easily make close to or over the $100K mark - very decent pay for working 9-10 months out of the year (and they don’t work long hours - some tests/paper grading at night here and there, etc.). My dad was a HS math teacher and my brother is currently a HS history teacher so I do know what I’m talking about.
I have a lot of respect for the profession, but they are certainly fairly compensated and then some. Most don’t contribute squat to their healthcare and my dad’s pension is more than I may ever make annually in my lifetime. Plus, he retired in his late 50s. Just sayin…
Council Rock is legendary for its teacher pay.
It’s been rumored that Centennial (of all districts!) is closing in on them.
I love this site where you can look up PA teacher salaries: http://php.app.com/PAteachers/search.php
That’s a great site. I’ve discovered that in my former school district the nurse earns 86k per annum. A hospital RN just starting out will earn about 50k for doing ten times the work.
And since
My sister is a bilingual teacher in North Carolina and is paid just shy of 40K.
I just looked at my husband’s paycheck. They take out $439/month for his pension. So he’ll pay $150,000 for his eventual $26,000/year pension.
My husband actually teaches for five hours a day, but he spends 9 hours there. Has 30 minutes to eat lunch, and eats it in his classroom. Kids always have issues before, during and after school to be taken care of. He also works every night, either grading, recording grades, writing letters of recommendation, or preparing for upcoming classes. But he has lots of vacation time and good health insurance. And his students really like him. And he likes this job more than any other he’s ever had. Not a bad gig.
Here are 62 PAGES of retired California teachers currently receiving over $100,000 a year in pension benefits. Note that this is only a list of TEACHERS, and does not include firemen, police, or prison guards– who can easily game overtime rules to retire with $200K+. (Then there are the committee cronies, the bureaucrats, the legislators….)
Nor does this include the upcoming spate of retiring Boomerz.
http://tinyurl.com/o7chpn (pdf file)
Very nice.
If the figure at the end of the row represents monthly check issued to recipient, then James F. Smith and Susan Rainey are collecting $21k/month.
Hey everybody - New Year’s party at James F. Smith’s house!
Then we move on to Susan Rainey’s!
They probably have pools and everything.
Wow,
Retired teachers? Those must be annual, not monthly figures…right?
If not, I can now begin to see why CA is so fooked.
Nope. Those are MONTHLY checks.
Where are they getting that information from?
With all due respect, I’m a former teacher, my father was a JC professor, my FIL a university professor, and we have a number of friends who are/were teachers.
I have NEVER heard of pensions like that. Unless I see how they arrived at those numbers, I’m not believing it.
My sister-in-law is a teacher here in CA and her pension will not be that great. BTW, she will not be allowed to collect social security when she retires from teaching.
Right. No social security for teachers, cops, firefighters, etc. unless they earned it at another job.
I’m going to ask my husband to look into this. We get an annual statement from California State Teachers Retirement System that shows that his pension will be 58% of his salary when he retires in six years, and it is a third of what the people on this list are getting.
And he doesn’t pay into Social Security - he’d like to but can’t.
I’m sure we won’t have any problems with this asinine carbon ‘tax’ scam over here. Ours is bound to be fair and equal.
French Constitutional Court Rejects Carbon Tax.
Dec. 30 (Bloomberg) — France’s constitutional court rejected a proposed tax on carbon emissions, saying a web of exemptions violated the principal of equality and rendered efforts to cut greenhouse gas emissions ineffective.
The government said it will make new proposals on Jan. 20.
The tax, which would have started on Jan. 1, was set at 17 euros ($24.38) per ton of carbon-dioxide emissions, President Nicolas Sarkozy said in September. To make the tax more palatable, he partially or fully exempted power plants, public transport, airlines, farming and fishing, as well as 1,018 older cement, steel and glass factories.
In all, 93 percent of all industrial carbon emissions in France would have avoided paying the full tax, the constitutional court said in a decision published on its Web site. The tax would have fallen disproportionately on fuel for heating and cars, it said.
AS with our system it appears there’s is desinged to minimize taxes on the elite and maximize taxes on the middle class.
“Appears?” You’re just being polite, right?
Economic recovery varies by place, I have learned. Bear with this post, if you care to, as I tend to go on…and on.
Real estate is still local. Eddie says you need bars on the windows of any 100k house, but this generalization is wrong, at least in this area. In this region, at this time, if you look in the right parts, the bars are not necessary and the areas are relatively safe.
Looking around the country, the areas with lower unemployment and better diversity of industry have not fallen nearly as hard as Vegas, Fla, Central Oregon, and I am sure many other nice places without any economy to speak of once discretionary income dries up.
Eddie does not see 100k houses in his area that are livable, while we do. If the economy may indeed be in recovery like Eddie says, may I suggest that this recovery is local and not a comprehensive sigh of relief, or even a single one, can be heard in Cental Oregon.
Sitting with 100k in the bank makes me feel like ours is not a complete tale of woe, as J6P only has credit card bills, car payments, and no savings. Thus the have a job, get a loan program from the FHA with 3.5% down payment requirements which you can easily score with cash back at closing to pay the mortgage broker for the loan, and the homebuyers credit to cover the down. The last piece needed to correct this housing fiasco could be is no more dTI of 50%, I thought that ratio had been proven to be too high to sustain, thus massive failures are occurring, even on modifications. the mortgage holding home owers (bag holders) are too leveraged to roll with any of life’s punches.
Eddie, come to Bend, OR. You can sleep on my porch(the climate here is different, as you will find out. Economic climate, too).
Traditionally a retiree golf haven with 30k people, 100,000 plus people moved here to Bend/Redmond during the boom to swing hammers or go into semi-retirement. Why not? in my case it translated to 15 years of easy living, lots of time with my kids, and no more guilty of crimes that a trader on wall street. Local kids and some transplants used to come to town to work the service industry, rent cheap homes, and work for 8 dollars an hour for the fun of lifestyle (riding the mountain, being young and outdoorsy, not here for the money but here for the fun and subsisting off retirement dollars). But that changed here due to equity bandits as Exeter pointed out, and that in turn raised prices here out of reach of the locals.
No gambling here, just education, health care (voted best place to die in US some years ago! sorry no link) and tourism/recreation/retirement. No more Mill (well there is the Old Mill shopping mall), no more wood products in general.
However, as local brokers got wise, if they were selling out in Cali for 1 million and coming here, surely they could afford 300k for a starter home, why give them away at 100k when they seemed like deals at 3x the price. Well that about screwed the locals out of the homeowning dream that has been instilled into our culture for better or for worse. My opportunity to buy a house free and clear for 100k has met with no small amount of scorn here as we have a mortgage of 2k per month to pay. but since I cant work full time and my wife makes a traditional wage, and got a loan with only a fico, no income verification (no docs are gone now I think, housing wizard could not believe my wife got a loan without trumping up her income, but truly a fico and a 20% (flushed) down ,payment got a part time checker making 8k per year a 300k loan!
So Eddie, should we wait for the economy to turn around and sell our home we bought for 400k for a modest profit in a couple years? If you think that will work out I have a bridge to sell you know the one they just blew up in the NE!
Or will my wife’s income go up by 10x to make the mortgage a reasonable debt. Mind you we carry no credit card debt, have no car loans, and have 100k in the bank. We paid 100k in capital gains taxes at one point upon sale of a california rental home, so how much have we really leached the system being good taxpayers and all? Homes in our complex that we paid 400k for; They are currently going for 175k BTW.
Maybe bank of america will admit that the value is what it is, and modify loans for folks who were given loans that were not underwritten without conscience or consequence for that matter as the risk got bundled and sold down the river.
Legitimate local workers have been priced out of this traditionally affordable locale, also in Boise, Las Vegas, etc. But now the economy is bleak as the hammers have stopped swinging for the time being, and for the foreseeable future. Banks are not helping over leveraged home owners, thats for sure. BofA will keep a short sale sucker/seller prospect on the hook for a year no problem before denying the short sale and putting you back in square one.
The only way to send a message to the bank so far is to jingle mail em, fulfilling the contract as written meaning they get the collateral. Strictly business, as they say, dump the losers ain’t generally a bad investment plan unless the asset suddenly recovers, which is, I contend, unlikely here. thus our need to walk on our mortgage. we dont want to move, we just may need to, its just a fact since the bank does not want us here, paying any less for some time period(i.e. market rent). first its better than nothing, and would be commiserate with the amount they will be receiving when they eventually resell the unit for 175k or less. plus you better believe we will be taking anything that is ours, not stealing mind you, but the fridge, w/d, window coverings, will be coming with us. not looking to thrash outof spite and desperation, as many have, but not cleaning the carpets, either.
This is unfortunate for all parties, the taxpayers, and the banks, too
Why they wont admit to the original buyers that they are only gonna get 175k for it upon foreclosure, and to cram the principle down on their own accord would tend to preserve their assets. Or at least freeze the mortgage and rent to the “owners” at market rate. Seems that would help the blight.
Pissed off, broke homeowers tend to strip all of value from their units(I have looked at foreclosures and they ALL indicate immense stress, pain and vindictiveness towards the banks) not a good investment generally thinking so they languish and only make the market worse. If they would have left the homeowers in place the blight would not be so evident as to make “toast” out of entire regions, particularly those without a strong economy, and they would have maintained, income producing properties rather than weedy messes on their way to complete ruin making it a bitc for banks to deal with reselling a foreclosure when you already have a homeowner in place who will care for the property, happily rent it from the bank if they freeze the mortgage for awhile, rewrite it, or any combo of these ideas as their underwriting standards made it impossible to pay the mortgages, now that the construction trucks are parked and the wifes who enjoyed a good life with the kids are needing to reenter the workforce, largely from my myopic perspective, as teachers. so we are laying them off collectively anad have ended up with a sub pool of 1200. which translates to 1 job per month when 8 years ago you could work every day as a sub and making 20 per hour.
I’ve was in Bend in 2003 to ski Bachelor. So-so mountain, not nearly as good as the hype I read about it. I liked the town though.
Here’s the thing with $100K houses, whether in Bend or elsewhere. The people that live in $100K houses are not the people I want as my neighbors. To get a $100K mortgage you need an income of $25K, if that. And sorry, I don’t want someone making $25K living next door to me. Simple as that.
“And sorry, I don’t want someone making $25K living next door to me. Simple as that.”
That sounds pretty classist, Eddie. I know some wonderful people who don’t make a lot of money.
Of course, there are also plenty of people I don’t really want as neighbors as well… But I prefer to base that on the choices they make that actually affect me, not their income.
Frankly, with all the crap I’ve been seeing, I don’t want anyone making over $100K a year living next door to me.
Or Eddie, no matter what his salary is.
Say what you will about him, but typical blue collar J6P has had to live “within his means” for the past 20-30 years, if you didn’t participate in the bubble economy
It’s been the typical, Ivy-League educated, “I’m-entitled-to-nothing-but-the-best” pukes that have generated the bulk of the problems. As it has been fully demonstrated in the past three years, almost all this financial alchemy has been designed to transfer cash into the pockets of the Wall Street types, at the expense of everyone else.
I’ll take my chances with BCJ6P………if the D.C. money well runs dry, it won’t be pretty when this crowd starts turning on each other.
As it has been fully demonstrated in the past three years, almost all this financial alchemy has been designed to transfer cash into the pockets of the Wall Street types, at the expense of everyone else.
Icarus? A bridge too far?
“no matter what his salary is”
Here here! Right, just what I’ve always wanted, to be stuck with “Stanley Johnson” as a neighbor!
“Why I can barely make the minimum payments, somebody help”
You know, when you think about it, that series of commercials should have been not only the canary in the coal mine ( they should have been taken off the air! )
They seemed to be implying, “We know you’re living beyond your means and Lord only knows you deserve to go under, but maybe one-last-re-fi will do the trick! Care to roll the dice one more time?”
Yes indeed. Nothing like $25K a year Joe 6 Pack with the 6 cras on blocks in the driveway, the 2 or 3 pitbulls in the back yard, the above ground swimming pool and the sometimes green, usually brown lawn.
Paradise.
Typical class warfare from EddieTard.
Surprised?
Enchanted, enlightened, embalmed…
Bzzzt, wrong - they should be making $33K - $40K (using the conservative 2.5 - 3 x income rule).
I know, still too trashy for your high class taste. But we can’t all be as wonderful as you. /sarcasm
$25K gets $100K mortgages easily. In the dreamworld that is HBB, 2.5X income is what is used to qualify. In the real world 4X income is the norm.
But whatever, $25K or $30K is moot. It’s lower middle class and I don’t want anything to do with it. If that makes me an elitist, so be it. I think it makes me pragmatic.
“But whatever, $25K or $30K is moot. It’s lower middle class and I don’t want anything to do with it. If that makes me an elitist, so be it. I think it makes me pragmatic”
*** Lost and Found Notice***
Dear Lake Wobegon, “the little town that time forgot and the decades cannot improve … where all the women are strong, all the men are good-looking, and all the children are above average.”
We, at the HBB, have found your lost village cyber-idiot, a one Eddie Elitist. Please send adult/parental supervison to claim him.
4x income is the norm? If by record foreclosures playing a part in worldwide financial disaster because 4x income is not sustainable, being the norm, then yes, I guess it is.
Good one, Mikey.
And sorry, I don’t want someone making $25K living next door to me. Simple as that.
It’s none of my business but please be careful, even the scriptures warn about the dangers of jealously.
Galatians 5:26 Let us not become conceited, provoking and envying each other.
Exodus 20:17 “Thou shalt not covet thy neighbour’s house…
“To get a $100K mortgage you need an income of $25K, if that. And sorry, I don’t want someone making $25K living next door to me. Simple as that.”
Putting on my pretend snob hat, that, in turn, is why I don’t generally want to buy a house in an era when strawberry pickers making $30K a year can buy $700K homes. What area is safe from an incursion of people who are not rich, like Eddie, when easy money loans make it easy for ‘those people’ to move next door to him, only to get foreclosed in a few years and drag down the value of all other housing in the ‘hood?
My goodness, Eddie,
Your pretentions are as common as they come.
Anger toward the bank is not going to help you. If you want to break the contract with the bank, you have to give up the collateral.
In some places, the bank can take appliances and furniture as part of the collateral along with the house, so maybe you should not be so righteous about what is yours. It is yours if you get away with it.
Take stock of your options and make a decision that best protects your family and future, and then get on with it. You have the chance, from what you’ve said, to start a debt free lifestyle. It’s worth a try.
Excellent post.
“If you want to break the contract with the bank, you have to give up the collateral”
The banks dont want to be in the real estate business and thats your bargaining power. The rub with the whole “Just walk away Rene” thing though is the walking away part.
Still, if you are hopelessly underwater it really makes the most sense. You just need to be prepared for the immediate consequences.
“The banks dont want to be in the real estate business and thats your bargaining power.”
They sure could have fooled me, with all that shadow inventory they cling to. And then there is the Fed, snapping up all those MBS. It looks to my jaded eyes as if the banks are swimming in RE to the point where the entire sector is deep under water.
Its also yours if you pay for it. We bought our own fridge, w/d. we would not take the stove, dishwasher, things that we don’t have seperate receipts for.
We are not mad at the bank, its like tilting at windmills. Just seems like they are encouraging blight, bailouts, when maybe, just maybe, working with their customers would be feasible.
yes we will walk if we have to, we don’t want to and I am pointing out that bofa is a bear to get a hold of. If they would rather get 175k for our house than take a commiserate payment for a while, renting out the premises to ensconced owners, it might work out for them.
Having to screw the bank for a debt free lifestyle? Don’t want to do it, but may have to in order to protect ourselves.
Mike,
You’ve been talking about this for several months now. What are you waiting for?
(Not being snide here, I’d seriously like to know what’s keeping you from moving forward.)
Thanks.
ahansen,
Have you had your operation yet? How was your Christmas?
Ahansen Maybe this housing blog can help me with this housing issue????
Where else is a community where someone who has 100k in savings that maybe wants to buy a house at or near the bottom seem impoverished compared to some of the shall we say well heeled gentry that frequents here?
Most people I know in my age group has either a heloc, or has foreclosed, has maxed out credit cards and no savings to speak of, but I do live in Bend after all.
Just not sure if real estate is what we need to buy with our money. Unlike Eddie, I would not mind living next to someone making 25k per year, I know as a teacher I have made 33k(but it is too hard for me physically right now), and that seemed like a lot of money to me.
We are waiting for the bottom while our money sits, and using the balance we have that is over our magic 100k marker to pay the bills/mortgage etc. And we are working a bit while the kids are at school. I guess you could say there is no urgent hurry as we are not yet late on mortgage, who knows what could happen that would allow us not to have to move?
Maybe the banks will realize that hangers on could be good tenants in their vast inventory, does it all have to be empty cuz so many just cant go on making payments. We sure can’t forever, and our pockets aren’t so deep, as is the fha apparently or BofA for that matter. Maybe the bank will rent us the house. I have no idea what this administration is up to, how squeezing people in various and sundry ways is somehow good for the economy.
I believe you said it may be legal to walk away from our home but it sure ain’t right, to walk away from a mortgage. Although scathing on your part to be so smug regarding the morality of our decisions, I do concur on some level, but when we get scarily close to running out of money, I am going to grab a roof for our collective heads, cuz I do care about raising my kids in a secure environment. Just not there quite yet, mortgage is paid until Feb. so we have some time to shop.
If Bend is screwed, as many have pointed out, and as we have noted for years as the framers framed, that they were building shacks to sell to each other, then the bottom certainly is not in yet.
Waiting for the bottom end to bottom, I guess. trying to find a home with privacy that is turnkey. We see homes for 100k that were 130k two months ago, so I will apprise you if you want, when we make a move. if you don’t care to hear the details, fine, don’t read my posts (if I bother, as some of you sure seem mean spirited when making your moral judgements based on the snippets of info I have given.) Is a person who gets hurt and has to have surgeries, and make financial adjustments, who worked 60 hour weeks, but cant now, tried teaching as a lower energy desk job only to find out I can’t sustain that either right now, and does not have a huge financial reserve, does that give you the right to insinuate that I am a person who is immoral and leaches off the system for flipping houses and walking from the last investment as it is over our heads? In our case, liquidating all our assets to pay the mortgage would not be right, given we have children to consider. But we are holding on as long as we can to avoid moving, foreclosing, etc. all the things we dont want to do,
But at least we wont have to leave the area, my parents live nearby and our children have their lives here, and Bend area real estate on the low end is about as cheap as it gets, given the path of those who have thrown in the towel on their mortgages already. Hope you read this verbose reply, Ahansen.
eddie, Bachelor aint all that, my friends hike up south sister, but Cascade concrete is the main problem with the skiing I believe. but I used to head east to mountain bike year round to Smith Rock or Grey Butte, before my surgeries from which I have not recovered therefore I went from extreme sports to walking the dog in the course of one surfing wipeout.
Mike, I have to applaud you for having saved that much and for putting your family first - and for promising to leave the house relatively in tact, for that matter.
The bank isn’t going to do anything for you. At some point in the modification process, some underwriter is going to be looking back on you and your wife’s prior years tax returns. Given the expected increase in “strategic defaults”, they’re not only going to be looking at income, but at Schedule D (and any interest income on that $100K, which would be just about impossible to hide at this point). When they do the math and see what kind of savings you have tucked away, any chance at modification will be toast.
Waiting for house prices to reach the point where you can pay cash and then walk from your current house is probably the best you can hope for at this point.
Thank you for your considerate response. Although the house is my wife’s and the savings is mine, and we are going to buy a house for cash with the savings, the economy is already there, just have to find one that is not thrashed and has some modicum of privacy.
Then my savings (out of her name) will be gone before wife forecloses (she got a nodoc loan, and I am not on title or on loan), so she will not have assets, only a husband with a house that we will be renting out until the day of reckoning here in our home since april 2007.
But we do file taxes jointly, so I am not sure if that will make underwriter unhelpful knowing husband has the assets, wife has the loan that she will not be able to pay.
Not sure about the taxes or income from her husbands investments hurting our modification chances if the homeowner(my wife) has no assets. I do agree with your assertion that the bank will not help us in any way shape or form, gotta love em. I mean who underwrites a grocery clerk making 6k per year because she had a 680 credit score??? Countywide!!! Who refuses to help a homeowner best? BofA!!! But if life dishes out lemons…make something. Cuz we did not make enough hay while the sun was shining (i.e. when I was not hurt I was an earning machine, who never saw his children cuz of the bacon bringing) Thx for the kinder words Kim
Eddie, elitism does really suck. Not every non-rich person has mucho cars on blocks playin pool in the open garage and throwin beer bottles in the yard. My wife’s best friend lives in a manu/trailer and does not make much, kinda “trashy” lifestyle. She is also the mom that is at the school volunteering the most, even if the PTC moms turn their noses up at her. Who BTW are busy with adult stuff like auctions and such rather than the boring stuff of helping teachers and supporting kinfolk.
I believe you may have me confused with someone else, (although at some point I may have responded to something other than this specific issue with verbiage to the effect you quote -perhaps you were discussing buying another house by gaming your bank, then defaulting on the one you’re in?) I personally have no dog in your fight, but am curious as to why you would care so much what other people think about what seems to me to be the obvious decision to get out while your family still has a nest egg and some of its sanity left. Any “morality” in this instance seems to be your own– certainly not mine, as it’s absolutely none of my business how you deal with this dilemma. The longer you wait, though, the more of your resources are likely to be eaten up by expenses you can’t recoup and the fewer options you will end up with. Good Luck.
And thanks for the (long) response.
Unfortunately Mike in bend, Bend is screwed. The only “organic industry” we have left is tourism. Education and health care are by-products of the population growth from equity locusts and those are at full employment right now. I suspect this city/town could support 40-50K, not 80K. What will happen as more people are forced to leave for greener pastures?
Actually, the general rule is that if it isn’t attached, you can take it with you.
That’s when you sell it to another FB. BTW, if it is screwed down, unscrew it, then take it.
How much better would you be today if:
1. You did not buy something you could not afford?
2. Rented instead of buying?
I rented for 10+ years. I then bought a house I could afford and paid extra on the mortgage to get ahead. Insane NYC workers were buying up housing in this area and pushing up prices - so I found something nice that was not to their liking (smaller and needed some work).
When I saved some cash, I fixed something up. Over the years, I put in all new bathrooms, a new kitchen, roof and HVAC. All without one equity loan.
When I was renting, I went to sleep at night knowing I could afford what I had. When I purhased a house, I went to sleep at night knowing I could afford what I had.
It is not worth the sleepless nights buying something that you know you can not afford.
When my ex and I bought our house, we got twice the sqft, for half the rent payment in a better neighborhood.
Patience is your friend when making major purchases.
“Insane NYC workers were buying up housing in this area and pushing up prices”
And where would that be?
In this case - eastern PA. But it could have been southern NJ or eastern CT or upstate NY.
The NY workers think that it is a BARGIN! And push up prices. It is sooooo cheap! Who cares about the 2 hour commute ONE WAY.
Exactly. Goes to show everyone the brainless mentality of metro pukes.
Bravo, 2banana. Here’s to sleep!
Yellow Pages moving jobs from St. Pete to India
The Tampa Tribune ~ December 30, 2009
Idearc Media, the company behind the Verizon Yellow Pages and Superpages.com, will eliminate more than 150 jobs in St. Petersburg as it shifts some phone directory work to an India-based outsourcing company.
Those losing their jobs are back-office workers who enter advertising data into the computer, create advertising graphics and lay out the phone directory.
Idearc currently employs about 245 people in its phone directory publishing division in St. Petersburg. The company will keep about 90 of those workers in St. Petersburg, but lay off the rest as it shifts work to Tata Consultancy Services of Mumbai.
A few Idearc layoffs will be offset as Tata builds a small workforce in St. Petersburg. Tata is expected to hire 11 or 12 people from St. Petersburg for Idearc, but other work will be done in India, said Andy Shane, a spokesman for Dallas-based Idearc Media.
Americans don’t deserve jobs. I’ve always wondered if that is the mantra of the elite and powerful. Sometimes I feel like Debbie Downer. Maybe she’s just a realist.
When I read stories like this, I think of all the Chambers of Commerce coming up to New York. “Move your business here, and get lower labor costs and no state income tax!”
Well except for Manhattan and and a few affluent suburban counties, wages in New York are now quite low. Per capita income has fallen relative to the national average in every other part of the state, including the rest of NYC, over 40 years.
The good news? Thanks to China and India, we get lower prices. (Not for housing, however, at least not in downstate).
So when someone in a lower-wage, lower tax state wants to wave the flag, that’s what I think of. Karma. BTW, New York lost all its credit card processing jobs to South Dakota thanks to its stricter regulations, prior to joining the race to the bottom.
I do not think you factored in NY state’s insane taxes, insane regulations and pro-union environment into your equation.
It is unlawful here in the United States to pay what they pay overseas. Try paying someone a dollar an hour here and see where that goes!
I have noticed over time, first go the jobs, then a few years later the company follows, but not after all the execs first pat them selves on the back and raid the bank…
Hey try hiring an older “intern” instead of a full time student and see what happens…all internships should be subject to EEOC rules…throwing away older people is disgusting.
It is unlawful here in the United States to pay what they pay overseas. Try paying someone a dollar an hour here and see where that goes!
“Try paying someone a dollar an hour here and see where that goes!”
Maybe the dollar is worth too much compared to currencies with plenty of labor and not enough jobs like China
work = Money if its Fiat money
I expect trade wars as the US unemployment rate stays high year after year. Then we will see inflation
Then? I’m seeing 25%+ at my local grocery store right now!
What do you mean, “then?!”
Eddie:
You have made three contributions on this thread and I find myself agreeing with you on each occasion.
This is very worrying for me. Please come back onto this thread immediately and say something Pollyannerish (sorry Polly, not a dig at you!) and blinkered or I’ll start to wonder if it’s me that’s the problem!!
He is probably just trying to temporarily appear reasonable in order to open up future trolling opportunities.
Now that’s some sophisticated trolling.
I have mixed feelings about free trade. Chinese steel is one thing that I don’t feel good about, like their dog food. If I don’t trust their much-cheaper product, I think we’re better off manufacturing it here, particularly since we need strong buildings and bridges.
http://www.reuters.com/article/idUSN3022041120091230?type=marketsNews
I also remember a story I read somewhere about some batches of Chinese steel being slightly raidoactive due to lax oversight on where scrap steel is coming from.
Found it, I love google.
http://www.usatoday.com/news/world/2008-03-03-radioactive-steel_N.htm
Make sure you add toxi drywall to the list of great products from China .
According to the article ,in the past year they have discovered deadly chemicals in China’s exports found in toothpaste ,toys and seafood .
So on top of everything else you get cheap junk and you have to labor to put it together . We are trusting our manufacturing to a Country that has very few labor laws and certainly very little pollution controls ? And while we watch this circus ,Americans are
increasingly becoming unemployed by the thousands and thousands .
But as insane as this picture is ,it only got more insane as we watched the Politicians and Government figureheads loot the public in order to bail out the Industries that created this absurd financial house of sand to begin with . And don’t expect meaningful reform ,the Masters won’t have it .
Don’t forget the two most egregious toxic products to come out of China: poisonous baby formula, and poisonous dog food.
As long as people flock to WalMart and fund the family fortune, cheap China is where it’s at:
“Today Walton’s heirs–two sons, a daughter, a daughter-in-law and two nieces–are worth at least $90 billion, making them the richest family in America. The Waltons are so rich that they have more than double the dollars of the second richest family in the U.S., the Koch clan, who command a fortune of at least $40 billion.”
It sucks, but J6P can’t afford to shop anywhere else.
Something about that closed loop of a consumer driven economy.
All steel made after 1945 is slightly radioactive. A legacy of Hiroshima/Nagasaki and atmospheric testing.
Some applications require uncontaminated steel. There is a cottage industry in salvaging uncontaminated armor plate from warships built before 1945. They are still salvaging armor plate from German WW1 battleships scuttled at Scapa Flow in Scotland. Approx 4100 tons was salvaged from several WWII cruisers and aircraft carriers for use at the Fermi National Accelerator Lab.
There is a cottage industry in salvaging uncontaminated armor plate from warships built before 1945.
That’s a fascinating tidbit! Thanks.
Wow - some of the things you learn on this blog. Interesting.
If I may ask though - how is it that explosions that happened on the other side of the world 65 years ago can contaminate ore that’s still underground in say the U.S.?
Not that I’m necessarily calling BS - but there has to be more than this than meets the eye. I’m no expert but I do know a little about nuclear energy.
I could see some of the various 1950’s testing - way more powerful than the 1940’s bombs - could contaminate steel locally, but not ore that’s miles away and underground. Also radiation itself generally doesn’t “contaminate” other things and make them radioactive, it just damages them, if IIRC (though I’m hazy on that - it may depend on the type of radiation). It’s why, for instance, a doctor can treat someone who’s had radiation poisoning without getting irradiated themselves.
A recent repair to the Bay Bridge was held up because the iron needed had to come from China. Bet that makes you warm and fuzzy while driving across the Bay Bridge.
Doh. Was that that big piece that fell a few months ago?
What’s the status of the new eastern span, BTW?
(I used to live in the area, so am curious)
Here’s a link for you packman
baybridgeinfo.org
Sweet! Thanks.
I related a story a while back, where we had to wait a year and a half for a landing gear overhaul to be completed on our aircraft, because the Bizjet OEM couldn’t find billet steel of the quality needed…….seems that a lot of the steel coming out of China doesn’t pass QC at the aerospace OEMs.
Not a problem for the airline boys…….they just let their Chinese and Central American subcontractors/suppliers sign off on the Quality Control. Seems to be working for Boeing on the 787 (or, maybe not).
And all you guys buying crankshafts and connecting rods made in China? Don’t scare yourself by checking the indexing of the crank throws…….unless you don’t care about all of them being equal.
The Chinese engine parts have run all of the US manufacturers out of business. The only way to buy a quality crankshaft anymore is to buy a custom made billet crank from the California shops, which are overkill for the typical J6Pt (approx $1500, give or take).
http://online.wsj.com/article/SB10001424052748703510304574625850181454892.html
(WSJ) Spanish Banks Start to Unload Property Portfolios
By LEIRE BARRERA
MADRID—Spanish savings banks have begun selling off the large property portfolios they acquired as collateral from loan defaults, in an effort to improve solvency ratios, a move that risks further falls in property values that could impair the value of their asset books.
In Spain, the global financial crisis that erupted in 2007 ended a real-estate and construction-based asset boom, plunging the country into a recession that has yet to end, even as many other European economies have returned to growth. (Cue Eddie…)
Today’s NYT: “New Slip in Housing Prices Undercuts Fragile Optimism”
My favorite quote: “I’m worried…if prices sink 15% from here, which is a possibility, and the 2008 and 2009 loans go bad, then we’re back where we were before- in a nightmare.”
No, we are much worse than where we were before, given the ridiculous amounts of money the government has spent trying to prop up this debacle. And NOW they’re starting to worry about the last 2 years of loans? Gee, what a relief so many houses were bought with with 3.5% FHA down payments and the FTHB bribe.
I’m starting to think 2010 is the year of the smack down. All they’ve done is create the next wave of FB’s with no skin in the game.
“Gee, what a relief so many houses were bought with with 3.5% FHA down payments and the FTHB bribe.”
Yes, we are destined to learn ALL OVER AGAIN, that no downpayment means the buyer has no skin in the game, which implies higher default rates occurring more quickly in declining markets.
I’m sure the MSM will proclaim that no one could have seen it coming.
Or the MSM will proclaim it was “UNEXPECTED”
I’m starting to think 2010 is the year of the smack down. All they’ve done is create the next wave of FB’s with no skin in the game.
Nailed it!
News from behind “The O.C.” curtain:
Filed under: “No more maki maki money money” …or….”Liar liar, sushi pants on fire!”
O.C. owners of Irvine Spectrum restaurant accused of tax fraud:
November 16th, 2009,by Nancy Luna, Staff Writer OC Register
The Orange County owners of Maki Maki, a Japanese restaurant at the Irvine Spectrum Center, were arraigned Monday on charges of tax evasion and workers’ compensation insurance fraud.
Simon Sungheok Hong and his wife, Katie Kyanghee Shinn, both of Cota De Caza, are accused of shorting their insurance carrier and the state as much as $5.8 million with penalties and interest. The also own a restaurant in Rancho Mirage.
“The owners of Maki Maki are accused of underreporting their payroll to the State Compensation Insurance Fund and the Employment Development Department, as well as under-reporting sales tax revenue to the state Board of Equalization,” the Desert Sun reported.
Last month, Hong and Shinn abruptly closed both Maki Maki restaurants without notifying the landlords or paying employees of the businesses. The couple also vacated their home in the affluent Coto De Caza community of South Orange County.
Coto De Caza? Isn’t that where the Housewives of Orange County live?
Is it possible it is full of narcissistic crooks and plastic hookers?
Surely not.
Note to those responsible for bringing in REVENUE $$$$$$$$$$$ to the depleted state coffers:
Where there is ONE…there are MORE…start with the geographical areas with 1 Million+ $ homes…they have ASSETS
(Note to speed things up… use your state tax evasion database: The Assessors office & Fictitious Business Names)
Yup, that’s the same development, good catch!
“…Last month, Hong and Shinn abruptly closed both Maki Maki restaurants without notifying the landlords or paying employees of the businesses. The couple also vacated their home in the affluent Coto De Caza community of South Orange County.”
Before quietly hopping a flight to Singapore with $10M of diamonds hidden in her hairpiece.
state Board of Equalization
Did Orwell think that one up???
When I worked in LA, I never saw so much fraud and employee pay and workplace violations in my life.
GM confirms closure of Saab
By Jordan Shilton ~ 30 December 2009
Despite last-minute talks with Dutch sports car maker Spyker on a potential sale, General Motors has confirmed that it will push ahead with its plans to wind down operations at Saab. The closure eliminates 3,400 jobs at Saab facilities, as well as 8,000 to 12,000 posts at suppliers and sub-contractors in Sweden. Internationally, 1,100 dealerships will face the threat of closure.
GM officials announced on December 18 that talks with Spyker had broken down, with no hope of a deal in an acceptable time frame. A statement noted that an “orderly wind-down” of Saab operations would begin, with GM Europe’s new head, Nick Reilly, commenting: “In order to maintain operations, Saab needed a quick resolution. We regret that we were not able to complete this transaction with Spyker Cars. We will work closely with the Saab organization to wind down the business in an orderly and responsible manner. This is not a bankruptcy or forced liquidation process.”
Midwest business jumps near four-year highs in December
Dec 30, 2009
NEW YORK (Reuters) - Business activity in the U.S. Midwest expanded far more than expected in December, hitting its highest in nearly four years on a massive recovery in employment and accelerating new orders.
Economy
The Institute for Supply Management-Chicago said on Wednesday its business barometer rose to 60.0 from 56.1 in November, marking its highest reading since January 2006.
The result was much better than analysts’ median forecast of 55.0, and was marked by an eye-popping jump in the report’s gauge of employment, which has been the top worry as the economy slowly recovers from the worst recession in decades.
“The number is a lot above consensus and it bodes well for continued solid expectations as far as the economy and manufacturing goes. That’s going to be a vital part of 2010,” said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.
Economists’ forecasts ranged from 52.0 to 58.0, according to a Reuters poll.
A reading above 50 in the report, also known as the Chicago PMI, indicates expansion in the regional economy.
Reaction was muted in financial markets, where trade has been thin due to the holidays. U.S. stocks were little changed after the data.
U.S. government bonds also showed little reaction, remaining unchanged on the day. The dollar, however, extended its gains versus the euro and yen.
The Employment index vaulted to 51.2 from November’s 41.9. That was its highest since November 2007 and also the first time it has been in expansionary territory since then.
Boding well for the future, the new orders index rose to 63.5 from 62.8.
wmbz,
Very welcome news. Again, take encouragement where you can find it! ( Hadn’t many of us already long written off the corn-belt as a lost cause? )
50% of 100 is impressive. 50% of 1, is not.
Just got back from Upstate NY. On the flight, I sat next to a… drumroll… realtor. She was very nice and told me now is the worst time ever to buy. Pretty cool.
Muggy’s Cool Realtor Ratio 2 / 1,041,338
That’s a sign of the bottom if I’ve ever heard one.
If the shoeshine boy giving stock tips is the time to get out of the market, what about when the stockbroker is shining shoes? Isn’t that the opposite?
“I sat next to a… drumroll… realtor. She was very nice and told me now is the worst time ever to buy”.
Did she elaborate, why she would think that?
Let me get this straight, when realtors were saying “it’s a good time to buy”, regardless of who they were, or where they were located, they were idiots.
Now that one is saying what we’ve been saying for years, we are waiting with baited breath to see what they say next?
I recall a story, where an investor was told by his stock broker that now was the time to buy, the same stockbroker that had no idea that it was the right time to sell.
This broker’s comment implies to me that the sentiment is about as negative as it will ever be. A potential sign of the bottom…
“Now that one is saying what we’ve been saying for years, we are waiting with baited breath to see what they say next”?
Nope, I have no bait on my breath, Rolling Rock, but no bait.
Curious, plain and simple, like to hear what people in the “business” think. I ask a real-a-tor anytime I run across or over one wuz-up.
She must have been from Florida. It’s different in NY.
If you’d have told the realtor you were in the market and ready to buy before you got priced out forever, I’m guessing your “nice realtor” would have gushingly agreed to “do the research” and find you a place.
Naw, she shot first. We were just bs’ing — I was trying to keep her cool since my littleman (scrunched in my lap) was naturally berserker… I asked her what she did, and she said, “I’m a Realtor, I only do rentals now because selling is so bad.”
I then said we’d been kicking around the idea of buying a house for a year or so and she said, “don’t, it’s the worst time to buy.”
That was really it. She’s from Rochester, but has been in Florida for 22 years. She said she liked Pinellas and left upstate becuase of the taxes.
It was as pleasant as single-serving friendships get.
I haven’t heard anyone discuss CDO’s and tranches in a while; recall that there was the judge in Ohio that wouldn’t let someone foreclose when the only evidence he had was a list of all the different pieces of the mortgage that had been sliced and diced and sold to a million investors (exaggerated); and recall that when TARP was first proposed, one the ideas was that the Treasury would buy all these little pieces and try to put them back together. I think a different plan was pursued…
Is this problem getting any better these days? What’s happening?
What I have read (think it was on CR) is that Phoney/Fraudie are in the process of buying back many of their loans out of their MBS pools. Being the sole owner of the loans will then give them much more flexibility in terms of mods/principal-writedowns/foreclosures. Time will tell… I don’t think they can continue to extend-and-pretend the HAMP mods forever.
chilidoggg……….
It’s possible that there is something defective about the way they set up these CDO securities . One can’t help but notice that they are going about things in a very strange and lacking in transparency way . There is something going on that doesn’t make sense and I suspect it has something to so with the CDO”s not being marketable .
MERS
Well. If you look at the monetary statistics (Federal Reserve Flow of Funds report).
During the first phase of the credit crisis money and loan supplies held by the commercial banks dropped about $1.5 trillion, the Federal Reserve then pumped in $1 trillion to buy Mortgage Backed Securities from the banks. The result was an increase in the money and loan supplies by about $0.5 trillion, so a total net drop from peak of about $1 trillion.
However… total outstanding securitisation for the USA over the same period increased by $1 trillion, $5.5 - $6.5 trillion, which probably explains where all this ‘investment money’ is coming from to buy up the foreclosed houses.
So, if you add it all up, it sort of looks like the Federal Reserve bought a year for $1 trillion increase in the national debt, Wall Street used the money to increase the total debt issuance, and all bets are off as to what happens in March when they say they are going to stop buying MBS.
Interesting times.
– w
The New York Times had an article this morning that made me want to puke.
The article was called “New Slip in Housing Prices Undercuts Fragile Optimism”
Here are some juicy quotes from a supposedly unbiased newspaper. (Remember, this is the reporter writing a news story…not an opinion piece).
Falling prices are in theory good for buyers. Some housing commentators say prices need to fall much further before houses will be truly affordable. But the drop over the last three years, however necessary, has caused tremendous damage to wallets and to the lubricant of commerce, confidence in the future.
In THEORY good for buyers? What kind of reporting is that?
It’s followed buy a quote showing what a disaster falling prices are!
Neree Dastous, a 39-year-old firefighter in a San Francisco suburb, would like to move from his condominium into a three-bedroom house. But the condo is under water, so he cannot sell. Keeping it as a rental pushes his debt-to-income ratio above the new Fannie Mae guidelines. Interest rates are not helping, either.
“Anything I can afford, I wouldn’t want my kids to live in,” Mr. Dastous said. “I need prices to come down, but if they do the value of my condo goes down, too. It’s very complicated.”
Boo hoo! This guy can’t buy a house! Think of the children!
Mr. Dastous said
I kept seeing “Mr. Disastrous”
“I need prices to come down, but if they do the value of my condo goes down, too. It’s very complicated.”
LOL! No it isn’t complicated at all!
California. There’s his first problem…
“But the drop over the last three years, however necessary, has caused tremendous damage to wallets and to the lubricant of commerce, confidence in the future.”
I have tremendous confidence that home prices will be lower relative to American incomes in the future.
Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses. ~ Tyler Durden’s picture.
It appears that even after thoroughly dominating the US legislative, judicial and executive branches, the long tentacles of the squid have been no better than the Mongolian hordes at overcoming the Chinese Wall (which is ironic seeking how easy it is to ignore the same construct internally between the firm’s prop and flow traders…and yes, we will be posting our response to Goldman shortly, we have not forgotten). In the meantime, half a world away, a small Chinese power generator, Shenzhen Nanshan Power, is blatantly refusing to honor contracts with Goldman Subsidiary J. Aron for $80 million in derivative losses, and it appears that China itself has decided to stand behind the small company.
Reuters reports:
Shenzhen Nanshan Power said in a statement that it received several notices from J. Aron & Company, a trading subsidiary of Goldman Sachs (GS.N), for at least $79.96 million as compensation for terminating oil option contracts.
“We will not accept the demand by J. Aron for all the losses and related interests,” said Nanshan, in line with the stance it took last December.
“We will try our best to negotiate with J. Aron and resolve the dispute peacefully…but the possibility of using a lawsuit can not be ruled out when talks fail,” it added.
“J. Aron told us in one notice that if we do not pay the money, they will reserve the right to launch a lawsuit and will not send us any further notice.”
The State Assets Supervision and Administration Commission said in September that it would back state-owned companies in any legal action against the foreign banks that sold them oil derivatives, which resulted in losses when oil prices dived late last year.
A Beijing-based Goldman Sachs corporate communication official declined to comment.
That going to be the next wave in this Globalism game , Foreign Countries telling the United States to go to hell . I wonder how easy it is to collect a Judgement against a foreign Company .
Glad to see that the Wall Street types drink kool-aid too, in that they believed that contract law means anything in China.
No more options/derivatives contracts in China, if the bagholder tells everyone else to go pound sand. OTOH, they wouldn’t NEED a contract to hedge on prices, if they were to OWN the oil to begin with.
Of course some could say that the whole derivatives/option/hedge market is basically someone buying insurance to cover for their stupid/faulty judgement, but I digress………
A judgement against this comapny would be a judgement against the government of China.
Time to package these contracts with China and sell them tothe FED or GSE’s.
After all the toxic AAA-rated mortgage-backed securities firms like Goldman Sachs dumped on Asian investors, it wouldn’t surprise me in the least if countries like China tell Goldman to go pound sand when they try to collect on IOUs from local firms.
Problem that I see, is that US companies expect (no DEMAND) the same protections that they enjoy here in the US.
Try this for fun….
(not in any way condoning anybody to do it).
Rake up a huge debt here, and transfer the money to say, belize.
Now, accept the collection call. There are numbers (Vonage) that you can have that will allow you to keep a US number.
Now, tell them to go and try to collect the money. This is after you have no other accounts, etc. Even if they TRIED, to collect from you using the local court system it will get thrown out, as the credit/loan legislation is different, and the debt is not recognized outside the US.
See, boys and girls of WS, the moment you cross a border, all your financial alchemy is null and void. Ever wonder why most G7 governments wanted a global uber regulator…. Exactly… So that they could collect on their “dues” over seas…
Bon voyage…
I bet a lot of other companies that shipped over large portions of their factories, tech support, even programming (I have heard rumors that Vista was entirely programmed in Chindia), will have a serious case of indigestion once this is done. Their years of R/D thrown over board with no recourse, but, we have upper management, and McKinsey to thank for that!
BINGO
Of course the CEO’s and Hedge Funds will have made their money so who cares if the US, Us investors, and US workers take it in the nads.
Ah, Pinch-a-penny, you noticed that did you?
That would make you part of less than probably a thousand people who understand the scope of the problem.
“Rake up a huge debt here, and transfer the money to say, belize.
Now, accept the collection call. There are numbers (Vonage) that you can have that will allow you to keep a US number.
Now, tell them to go and try to collect the money. This is after you have no other accounts, etc. Even if they TRIED, to collect from you using the local court system it will get thrown out, as the credit/loan legislation is different, and the debt is not recognized outside the US.”
Are you SURE you have not described a recipe for broken legs?
“Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses.”
Sounds like the Martha Fockers got focked real good!
Woman’s blood alcohol content topples state records.
A Sturgis woman had a blood-alcohol level of .708 percent, possibly a state record, when she was found earlier this month behind the wheel of a stolen vehicle parked on Interstate 90, according to Meade County State’s Attorney Jesse Sondreal.
A South Dakota Highway Patrol trooper discovered Marguerite Engle, 45, on Dec. 1 passed out behind the wheel of a delivery truck reported stolen in Rapid City.
Her blood-alcohol level was almost nine times South Dakota’s legal limit of .08 percent.
Checks with local and state labs where blood-alcohol levels are tested suggest Engle’s reading may be the highest ever recorded in South Dakota, Sondreal said.
Sondreal said a state chemist recalled a sample that tested .53, but nothing higher, in his more than 30 years on the job.
Dr. Robert Looyenga, who recently retired from the Rapid City Police Department’s forensic laboratory, told Sondreal that the highest blood-alcohol sample he tested measured .56 percent.
Sondreal’s research indicates that a blood-alcohol level of .40 is considered a lethal dose for about 50 percent of the population.
“Engle’s was almost double that,” Sondreal said.
I was probably .90 one night, after drinking kamikazes for 4 hours at a “Gentleman’s Club” one night, but unfortunately, I don’t have the blood test to prove it……….
Just be glad you weren’t asked to do a DNA test.
I was a good boy. I was there to gawk and get $hit-faced with my buddies.
Besides, my personal Code of Conduct won’t permit me to pay for that.
OTOH, being “zero for 2006 thru 2009″ has me reconsidering that policy.
GS:
I duuno that sarah pailin look just seems to get me. If she was single, no kids, not a repub, didn’t pin up her hair.. ( the grass is greener) Maybe that’s your type…..
The only thing wrong with Sarah Palin is that she goes for the religion B.S. If she was intelligent, she would see no difference between the violence in Islam and the violence in Christianity.
If she was a single atheist, I’d go for her!
“If she was a single atheist, I’d go for her!”
The married ladies serve it up better, Bill, and they won’t bother you afterward; some loser provides the essentials. I agree, Sarah looks like a real treat.
“Man pleaded guilty to selling home already in foreclosure”
WATERVILLE — A Wenatchee man pleaded guilty to third-degree theft for taking more than $22,000 in payments from a couple for a home he had no title to.
Felix Hernandez Martinez, 25, originally charged with first-degree theft in January 2008 in Douglas County Superior Court, pleaded guilty Dec. 21 to the amended charge and was sentenced to 365 days imprisonment with 362 days suspended.
Hernandez was also sentenced to two years probation and must pay $1,300 in fines and fees. A restitution hearing has been set for Jan. 25, to determine how much Hernandez must pay to the East Wenatchee couple.
The husband and wife in July 2007 signed a purchasing agreement with Hernandez for an East Wenatchee home for $180,000, according to an investigation report, compiled by Detective Dan Dieringer with the East Wenatchee Police Department.
Did he honestly think he wouldn’t get caught?
Not if he skipped off to Mexico. Lots of “undocumented workers” in that part of the state.
This guy got a sweet deal - 365 days w/ 362 suspended means 3 days real time. State’s case had to be falling apart.
A Wenatchee man pleaded guilty to third-degree theft for taking more than $22,000 in payments from a couple for a home he had no title to.
(Non-)owner will carry.
“I asked my Realtor friend in Austin why realtors have such high commission, and his answer was:
‘You have no idea how much work goes into selling you home….. you should start doing something with your money and stop throwing it away in rent”.
“Why are Realtor’s allowed to charge so much money for a single transaction? 6% percent seems like 5% too much. It seems like a waste of money to me.”
Of course that commission is usually divided into slices, some for the buyers agent, some for the sellers agent, some for the broker who pays to keep the lights on, but! it’s not lost on most of us that the National Association of Realtors (NRA) is one SOB of a lobbying group. Anybody guess the odds in Vegas on another renewal of the home buyers credit in 2010? In Vegas they’ll bet on anything if it makes money, kinda like the real estate speculators pre-bubble.
Saudis quit Caribbean oil storage. ~ Dec 30, 2009
NEW YORK/HOUSTON/BEIJING (Reuters) - Saudi Arabia will quit a long-held lease for 5 million barrels of Caribbean oil storage near the key U.S. market on Thursday and state giant PetroChina is poised to move in, industry sources said, a potential major shift in global oil trade dynamics.
Coming just weeks after Saudi Oil Minister Ali al-Naimi revealed the world’s top oil exporter accepted an offer for free storage in Japan, the news underscored the growing importance of China and Asia versus the United States, where the government says oil demand has already peaked and supply competition from nearby Brazil and Canada is expanding.
It also highlights the increasingly global reach of China’s biggest state oil company, which could use the facilities as a staging point for a growing slate of South American oil deals or as trading leverage in the U.S. market, which still effectively sets the global price of oil.
While analysts said the commercial rationale was the motivating factor, the move also has potential geopolitical implications, relocating one of Saudi Arabia’s small but important tools for providing energy security to top markets.
big deal. the largest super tanker can carry in excess of 3.5 million barrels of oil.
U.S. slaps levy on Chinese pipes.
WASHINGTON (CNNMoney.com) — The U.S. International Trade Commission voted unanimously Wednesday to impose new tariffs on imports of Chinese steel piping.
The six-member federal panel voted to approve duties ranging between 10% to 16% — as proposed by the Commerce Department in November — to offset Chinese government subsidies.
The steel imports to be taxed are called “oil country tubular goods.” They are hollow, circular steel products, including well casings and tubing. And in 2008, the U.S. imported $2.7 billion worth of them from China, a 357% increase in volume compared to 2006, according to the Commerce Department.
Overall, the U.S. consumes about $11.5 billion worth of the steel piping, according to the commission records.
The U.S. International Trade Commission said more information would be available later Wednesday.
The U.S. and China already have a tense relationship when it comes to trade, despite visits to Beijing earlier this year by President Obama and top cabinet officials
PG&E Customer Revolt May Threaten Rollout of Obama’s Smart Grid.
Dec. 30 (Bloomberg) — Consumer backlash and cost concerns may cause delays in the nationwide rollout of “smart” utility meters at the center of the Obama administration’s $8 billion push to update the U.S. electricity grid.
PG&E Corp., owner of California’s largest utility, halted meter installations in Bakersfield, north of Los Angeles, after hundreds of customers complained that readings weren’t accurate. The meters, part of a so-called smart-grid initiative billed as clearing the way for more renewable-energy use, are designed to help consumers conserve power during periods of peak demand.
Martha Johnson, pastor of a church in Bakersfield, said her utility bill almost doubled from a year earlier to $874 in July after her new meter was installed. “That caught my eye because I’ve never had a bill that high,” said Johnson, 64.
San Francisco-based PG&E, which faces a lawsuit from a Bakersfield customer who’s seeking class-action status, says its meters are accurate and hot weather and increased rates led to higher bills than consumers expected. The state Utilities Commission ordered an independent study of billing accuracy.
Whether PG&E’s complaints stem from perception or defects, they may slow U.S. installations of the meters, a cornerstone of President Barack Obama’s plan to spur grid upgrades with $8 billion in public-private funding. Consumer groups question whether benefits of the meters justify costs passed on when regulators allow utilities to increase rates to pay for them.
Regulator Reluctance
“If customers lose confidence in smart meters, I would expect regulators would be more reluctant to grant rate increases to install new meters across the system,” said Travis Miller, a utility analyst at Morningstar Inc. in Chicago. “Any kind of adverse impact from these projects could impact long- term growth of the meters.”
Great, they just installed a smart meter on my house this week. Will need to pay even more attention to the monthly statement…
Conceptually I’m fine with these types of meters. Previously there was no real incentive to not consume during peak periods except the possibility there might be blackouts. For example, doing laundry during peak periods would cost you exactly the same as during non-peak periods. All that mattered was the total amount used each month.
What I would like to see killed is climate zone pricing where inland users pay lower rates while coastal users get soaked.
I’d also like to see greater transparency with the ability to see in real time what your usage is costing you. As it is now, you only have some vague idea what the general cost is until the bill shows up.
Martha Johnson, pastor of a church in Bakersfield, said her utility bill almost doubled from a year earlier to $874 in July after her new meter was installed.
EIGHT HUNDRED AND SEVENTY FOUR DOLLARS!?
That’s like my electric bill for a whole year! And we have a 3000 sq ft house!
Thank Heaven I live in Colorado!
Even without these meters, I’ve had coworkers with July or August electric bills in the $700+ range in the past few years. California electric rates are very high, especially since around 2000 (thanks Enron and GWB).
I guess I will remain forever befuddled over how many days when The Street appears headed for a material loss end with closing bell levels of headline indexes right near their opening levels. Can anyone cite evidence from financial economics which explains this surprising behavior of the U.S. stock market headline indexes? (Perhaps there is nothing too mysterious here, given that something like 40 percent of the banking industry is now concentrated in the rather strong hands of just four investment banking cartel members.)
I am very interested if anyone can cite a plausible explanation for this instantaneous self-righting tendency of U.S. headline indexes that does not delve into conspiracy theory.
After Hours
Wall St.’s ankle-deep in red
Policemen stand on Broadway in front of the Nasdaq market site after an area of Times Square was evacuated Wednesday while a suspicious vehicle was investigated.
Stocks on their way to second day of losses, on the heels of their six-day winning streak.
Market Snapshot
Dec. 30, 2009, 2:52 p.m. EST
U.S. stocks edge lower as oil nears $80 a barrel
By Peter McKay, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks edged lower Wednesday afternoon after a strong round of manufacturing data and an uptick in oil prices sparked by a decline in inventories.
The Dow Jones Industrial Average (INDU 10,548, +2.88, +0.03%) recently slipped 10 points, or 0.1%, to 10,535.06, on track for a second straight decline.
…
Protect your paper gains and you protect your bonus, balance sheet, investor statements…..
And it is great when Megabank, Inc gets a ginormous slice of $700 bn in TARP monies to play with, plus bottomless ZIRP loans from the Fed to recycle as market rate loans in a tight money private lending environment. Note that by driving interest rates to zero, the Fed handed the Megabanks loanable funds at a price of zero for which private borrowers must pay dearly, thanks to the artificial shortage created when the price of loanable funds (aka interest rate) was artificially driven far below the market clearing level. IMHO, this blatant discrimination in favor of Megabank, Inc appears to constitute an institutional-level violation of the Fair Lending Law at the institutional level, unless Big Brother Fed is somehow exempt.
Would this be a potential topic for Congressional auditors to address, or does fairness in lending qualify as a “monetary policy” topic which should be deemed off limits due to the risk it would pose to the Fed’s ability to conduct an independent monetary policy?
Disclaimer: I took the journalistic liberty to add suggested revisions to the FDIC’s original language quoted in the passage below in order to make my point (note the struck passage and my suggested revision in bold):
Side by Side: A Guide to Fair Lending
FIL-36-96 Fair Lending Guide
Regional Field Offices
For ease of printing a PDF version of Side By Side: A Guide to Fair Lending is available (159 Kb PDF File - PDF Help).
FOREWORD
The Federal Deposit Insurance Corporation recognizes the efforts undertaken by many financial institutions to improve fair lending performance. Every day our examiners and community affairs staff work with compliance officers, loan officers and others who want to ensure equal opportunity in lending. Although few lenders believe that intentional discrimination is prevalent, we know that they all share a genuine concern about the other more subtle or inadvertent forms of discrimination.
People treat other peopleThe Fed treats Megabanks differently and differences in treatment can lead to illegal discrimination. We are also aware of the questions asked by lenders when they begin to address this concern. Does it happen here? How do we know? What can we do?In this guide, which we first distributed in August of 1994, we provide alternative means that an institution may use to discover uneven customer service or inconsistent lending practices that may be discriminatory.
The Federal Deposit Insurance Corporation wants to help financial institutions seek ways to know whether discrimination occurs. We have distributed over 35,000 copies of this guide to financial institutions — compliance officers and senior executives –, to community organizations, and to others. The guide was originally developed to provide a place to begin, take some of the mystery out of the process, and help answer some of the more basic questions. Based on the demand for the guide, we believe the procedures and processes described herein continue to be appropriate tools for financial institutions.
Carmen J. Sullivan
Director
Division of Compliance and Consumer Affairs
A contract is a contract — at least if you work at AIG.
* The Wall Street Journal
* BUSINESS
* DECEMBER 24, 2009
AIG Probed Counsel Over Pay Actions
By SERENA NG And DEBORAH SOLOMON
American International Group Inc. conducted an investigation into recent actions by its general counsel, who along with four other executives told the insurer this month that they were prepared to resign over federal pay curbs, people familiar with the matter said.
The review, which was initiated by individuals within the government-controlled insurer, looked at the circumstances surrounding the actions of general counsel Anastasia Kelly, who had told other executives how to protect their rights to collect severance benefits, the people said. Ms. Kelly declined to comment.
A person familiar with the investigation said AIG undertook the review in light of the considerable scrutiny it is under. “People wanted to make sure everything was done the right way,” this person said.
———————————————————————————
The outgoing general counsel of AIG will walk away with millions in severance, just as her contract says.
Anastasia Kelly lead a revolt this month of AIG executives threatening to leave in the face of federal pay limitations that would severely restrict their salaries.
The terms of Kelly’s contract, like those of other executives, reportedly say she can resign and collect severance if her pay is significantly reduced.
U.S. pay czar kenneth Feinberg capped annual cash salaries for most executives at $500,000, which would be a significant reduction for Kelly, people close to the matter told The Wall Street Journal.
The other executives backed down, but Kelly stood firm. Orrick reviewed Kelly’s actions and the contract, and AIG determined it would pay her the severance after hearing their report, the WSJ said.
No doubt there will be anger over an executive of bailed-out AIG getting millions for walking away. But a contract is a contract.
…
Reforeclosure?
Has anyone even heard of this. I just had a contract cancelled by the bank, apparently they need to “re-foreclose” on the house because they made a mistake, and this process takes 4-12 months? Anyone have any experience with this process? You can BUILD a house in 4-12 months, how on earth can it take that long to foreclose on something that you already own?
This property is in FL, if anyone has any info/suggestions, I’d appreciate it!
Thx!
Just some guesses here, but it sounds like they couldn’t produce the note in court and have to refile the case (or some similar procedural glitch), or else could it have something to do with Florida’s new ruling that all forclosures have to go to mediation first?
Happy New Year to all HBBs and readers, and may your cheap champagne not plant any dreaded green shoots of deflation for 2010.
The Financial Times
French drinkers toast cheap champagne
By Jennifer Thompson in Paris
Published: December 30 2009 18:24 | Last updated: December 30 2009 18:24
New Year revellers in France have an extra reason to raise their glasses at midnight: champagne at less than €10 a bottle, as producers cut prices in response to the economic downturn.
Laurent-Perrier, the French company that sells cases of its Grand Siecle champagne for hundreds of euros, is currently promoting its €10 ($14, £9) Jeanmaire brand, while Boizel Chanoine Champagne, which sells the €110 Lanson Noble Curvee 1996, is selling champagne for less than €13. Carrefour, a leading supermarket chain, is selling Hubert de Claminger for €8.90 and Champagne Paul Breteuil at just over €10.
The move is a change in strategy for producers that have generally increased prices in recent years. The value of champagne sold almost doubled in the two decades to 2007.
Faced with increasing competition from sparkling wines over the past 10 years, champagne makers have focused on cultivating the brand.
However, French champagne industry insiders estimate that sales have fallen by 30 per cent in the past year.
Laurent-Perrier said the Jeanmaire brand was a response to the downturn. “Lower-cost champagnes did exist, but this year the bottom price is lower than before,” the company said. “Over 60 per cent of our portfolio comes under the Laurent-Perrier name. Jeanmaire is a much smaller part of our portfolio, but we now have the opportunity to adapt our strategy.”
…
Another FB story… Couple I know just bought a house (2 kids - one age 5 in Kindergarten, one newborn). She works at a daycare facility; not sure what he does. Prior to this house purchase, they lived in a housing co-op (believe it was originally built [1947] for GIs - remained a co-op all these years). Essentially, very cheap housing that you don’t “own”, but that you can get some money back on if you live there long enough.
The house they bought was a friend of their’s grandmothers house. I believe the final sale price was $228,000. They only have $3,000 to put down; borrowed another $5,000 from her parents for a grand total of $8,000 down. When they get their tax rebate, they will pay back the $5,000. Essentially, they couldn’t have bought this house without the rebate and, realistically, they shouldn’t be buying it at all. Anyone who has only $3,000 in the bank has no business with a $200,000 mortgage. IMO, at least.
This is a story about the co-op. Interestingly, while there has always been a waiting list of at least a year to get into this place (including just a few years ago when this article was written in 2007), there are now signs and ads all over trying to get people to move there. Why is this? Why are places like this and rentals popping up with so many vacancies? If everyone were buying homes, then inventory would be way down - which it’s not. So what gives?
The 300 one- and two-story homes were originally built as cheap rental units for civilian defense workers during the second World War, and news of the federal government’s original purchase of land for housing wasn’t well received.
With the war over, residents who had been renting decided to purchase the land back from the government, and put together a $40,000 down payment toward doing so. When the community paid off the rest of the $800,000 purchase price in 1968, they celebrated with a mortgage burning ceremony.
While costs have rocketed elsewhere, the community’s succeeded at maintaining affordable living for working families. Buying into the community still only costs about $45,000, and monthly maintenance fees are about $350. The waiting list is at least a year long.
AAAAHHHH!
A large citrus rat moved in while we were gone. Huge turds in the garage + I saw him scurry when I was putting some stuff away out there. I just set up a few of those big ass snap traps.
Ben, do you have any good critter stories from your foreclosure work?
After hearing from the MSM that the housing recovery was well underway and reading here that such was not the case, I played around with some numbers. My conclusion, it is indeed different on the central CA coast. Unlike much of CA even the low end has a way to go to reach yr. 2000 numbers and when I factor in price per square foot - look out below for the higher end.
“Monterey is a poem, a stink, a grating noise, a quality of light, a tone, a habit, a nostalgia, a dream.” Steinbeck, Cannery Row.
A tale of 3 hamlets -
Monterey CA 2000:
pop. 29,674, med. household income $49,109, total housing units 13,382, med. sales price $390,000 = 7.94 x income.
Med. price per sq. ft. $242
Monterey CA 2009:
Median sales price 468,750 (17% higher than 2000)
Median sales price per sq. ft. $440 (45% higher than 2000)
Average LIST price $1,465,311, inventory 250 (includes unlisted REOs and auctions, but not defaults not yet @ auction stage)
Pacific Grove CA 2000:
pop.15,522, med. household income $50,225, total housing units 8,032, med. sales price $397,000 =7.89 x income.
Med. ppsf $314
Pacific Grove CA 2009:
Median sales price $611,750 (35% higher than 2000)
Median sales price per sq. foot $529 (41% higher than 2000)
Average list price $908,913, inventory 86.
Pebble Beach CA 2000:
pop. 4,531, med. household income $99,788*, total housing units 2,436*, med sales price $690,000 = 6.91 x income.
Med. ppsf $327
Pebble Beach CA 2009:
Median sales price $787,500 (13% higher than 2000)
Median sales price per square foot $494 (34% higher 2000)
Average list price $5,349,625, inventory 144.
My little exercise served it’s purpose, all impulses to jump into the buying pool have been squelshed. I think 2000 numbers are still too high since the funny money party had already started, but trulia had yr. 2000 numbers and there is 2000 census data. It’ll be interesting to see how the alt a stuff plays out on the coast. Realtors there always throw out that it’s different because of the all cash buyers running around (I suspect this falls into the urban legend catagory.) Those must be the peo. lining up in Pebble to buy those 48 places priced higher than than the one over 3 mil. place that sold last yr.
Carmel did a study in ‘08, only 37% of housing units there where owned by people who actually lived there - another wild card in the deck.
Another interesting number might be also to include the median income for 2000 versus now.
cash buyer = drug money?
Are there really all these supposed cash buyers, and if so from where is that cash coming?
“cash buyer = drug money?”
That has been one of my leading hunches about what explains astronomical high-end San Diego home prices, at least since I saw the movie Traffic, which features some rather schweet looking San Diego digs. Who gives a flying fark about whether home prices fluctuate up or down by 50 percent or so if all-cash transactions reduce the risk of legal scrutiny which naturally accompanies bankster laundering of outsized drug profits? And all kingpins need houses to live in; whether they work in the subprime mortgage lending securitization business or the drug trade is immaterial.
From the linked article:
“Traffic assumes, but does not say, that Americans by the million enjoy the use of illegal drugs. The demand for illegal drugs is topped by the demand for few other non-essential goods. So strong a demand will always be satisfied by those who are willing to provide their services. User and provider, demand and supply, each inevitably balances the other.
Two assumptions follow from the economic premise - that trafficking in illegal drugs conforms to the principles that govern market operations. One is the impotence of government officials to erase the illegal market. The Drug Enforcement Administration might as well cancel its shoot-outs and spy networks for all the difference they make to the market’s vitality. The other is what from a law-abider’s point of view is the corruptibility of human nature. Dangle sufficient money before the eyes of anyone, the theory goes, and that person will do the dangler’s bidding. This applies as much to Traffic’s Mexican drug lord as to the upscale San Diego businessman and kingpin who channels the product (cocaine) on the U.S. side of the border.”
I disagree with the premise that it is necessary for all Americans to be corruptible as described in the bold-highlighted sentence of the second paragraph above. It is sufficient for a few aspiring drug lords to value money and big houses above moral principle to accomplish the task. Similarly, it would only have taken a few unscrupulous banking CEOs at Megabank, Inc to serve as mortgage subprime lending kingpins (or TARP engineers, depending on the circumstances) in order to destabilize the private U.S. mortgage lending sector sufficiently to destroy it.
I’d love to know current median income, but don’t know how to get that info. ’till after the 2010 census.
I think the ‘all cash buyer’ is a realtor urban legend, maybe I’ll start asking “how many all cash buyers have you personally closed a deal w/ in the past 1/5/10 yrs.?” if I pop into an open house. I don’t get the sense that drug money is around. There was a lot of specu-frenzy flipping and ‘high end’ remodels generating $$$, that’s gone now. The peo. left w/ money seem to have gained it the old fashioned way - by inheritance or are high end professionals.
“After hearing from the MSM that the housing recovery was well underway and reading here that such was not the case, I played around with some numbers.”
Lies, damned lies, and government-distorted price statistics…
Dumb Idea of the Year Award Nominee for 2009:
“If we provide too-big-to-fail bailouts to the private banking industry with no strings attached, they will return the favor by ignoring the worst financial crisis since the 1930s and making more stupid loans that are unlikely to ever be repaid.”
Obama: ‘Fat-cat’ bankers owe help to U.S. taxpayers
Updated 12/18/2009 10:12 AM
By David Jackson, USA TODAY
WASHINGTON — President Obama, already at odds with bankers over big bonuses and new regulations, plans to urge executives at a White House meeting today to provide more loans to small-business owners.
Top White House economic adviser Lawrence Summers said Sunday that Obama will remind the bankers of the taxpayer help they received during last year’s financial crisis.
“We were there for them,” Summers said on ABCsThis Week With George Stephanopoulos. “And the banks need to do everything they can to be sure they’re there for customers across this country.”
During a taped interview broadcast Sunday night on CBS’ 60 Minutes, Obama blasted banking executives for opposing tighter regulations on Wall Street and for awarding themselves multimillion-dollar bonuses after they had repaid federal bailout money.
“I did not run for office to be helping out a bunch of, you know, fat-cat bankers on Wall Street,” Obama said.
…
Obama’s leverage is limited, however; nine of the 12 banks invited have repaid money they received under the Troubled Asset Relief Program.
The meeting is nothing more than “political theater,” said Virginia-based banking consultant Bert Ely. He said “reckless lending” also contributed to last year’s financial crisis, and banks across the country are already under pressure from local examiners about making too many “risky loans.”
High unemployment is creating a political problem for Obama’s team and “they’re trying to make political points whenever they can,” Ely said.
…
2008 = Year of the Greatest Lump Sum Wealth Transfer from Main Street to Wall Street in U.S. History
2009 = Year of the Fat Cat
His discussion points lead me to suspect Professor Reich might be reading our posts (see bolded text in the passage quoted below, which is quite reminiscent of topics discussed at length here). Better yet would be an eventual discovery that he is a regular HBB reader/poster, though I realize this may amount to wishful and hubristic thinking.
I also note that the topics discussed here quite naturally cause the blood of many other commentators who mistakenly believed our government stood for fairness and a rule of law to boil at a high temperature.
Wednesday, December 30, 2009
In 2009 Main Street got the shaft
Robert Reich
Commentator Robert Reich says this past year will be remembered as a time when Wall Street fat cats who caused the financial collapse got fatter, while the rest of America got the scraps.
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The President called them “fat cats” and Congress thundered at them. But Washington did not plan to tax their upcoming bonuses, which they would not have earned without the bailout. Nor did Washington even attempt to claw back billions of taxpayer dollars quietly passed through AIG to counterparties like Goldman Sachs.
Nothing was said in official Washington about resurrecting the Glass-Steagall Act that had once separated investment from commercial banking. No mention was made of applying the antitrust laws to break up the giant banks. Nothing came of allowing struggling homeowners to use bankruptcy to renegotiate their mortgages.
2009 was the year when Washington called the bankers fat cats but let them grow even fatter, while the rest of America got the scraps.
Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley.
Robert Reich, while being a bit too soft on the borrowers, has been very much in our HBB corner over the years.
I once e-mailed him regarding one of his appearances on Larry Kudlow’s show, and was surprised to get a very nice response from him. He does come across as one of the very few decent people who run in “those” circles.
Is it just my imagination, or does the Treasury Secretary have a wooden nose that grows and grows and grows and grows?
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In announcing the unlimited aid the Treasury stressed that it was trying to reassure investors in the firms’ debt and wasn’t predicting the two firms would need exceptional assistance from the government. Since seizing the firms last September the government has pumped $60 billion into Fannie Mae and $51 billion into Freddie Mac, well below the $200 billion limit for each firm that had been in place until last week.
The unlimited assistance available to the two firms does give the government more flexibility to use them to help deal with the ongoing housing crisis, which has continued unabated amid a series of patchwork government programs that have failed to slow foreclosures. Mr. Kucinich said he wants to investigate what options policymakers have to deal with housing issues.
“I want to determine whether Fannie and Freddie have a cohesive plan to buy up underperforming mortgages that remain on the books of the big banks, at appropriate prices, and undertake a massive reworking of the terms of the mortgages,” he said in the statement.
The aid announcement came the same day that the firms’ regulator, the Federal Housing Finance Agency, approved multimillion-dollar pay packages for the companies’ top executives. That decision has also provided fresh fodder for the companies’ critics on Capitol Hill.
Wither the Sino-American Symbiosis?
Which partner in this failing codependent marriage needs the other partner more desperately? Only time will tell…
* DECEMBER 31, 2009
Chinese Slapped in Steel Dispute
Trade Panel Rules That Subsidized Imports Damaged the U.S. Industry
By KRIS MAHER and HENRY J. PULIZZI
U.S. steelmakers won a case over Chinese steel imports, as the U.S. International Trade Commission voted that the domestic industry has been damaged by subsidized steel from China.
The ruling Wednesday will result in duties of between 10% and 16% on future imports of Chinese steel pipes used to extract natural gas and oil. It is the latest in a string of trade decisions against China, the U.S.’s largest trading partner, and threatens to further aggravate trade tensions between the two nations.
On Tuesday, the U.S. imposed preliminary antidumping duties on imports of steel-grate products from China, prompting strong reaction from the Chinese, who said it sent a “wrong, protectionist signal.” Earlier this year, the Obama administration imposed tariffs of 35% on consumer tires from China, which was answered by a Chinese probe into whether U.S.-made autos were being dumped in China at unfairly low prices.
The U.S. International Trade Commission rules unanimously against Chinese steelmakers, in the latest blow in an ongoing trade war between the two countries. WSJ’s Clare Ansberry and Laura Western discuss the impact of the ruling.
The steel-pipe case is the ITC’s biggest ever by dollar amount, and comes as the world’s recession and overall drop in demand for steel products has left steelmakers competing for a smaller pool of customers.
All six commissioners ruled that imports of so-called oil country tubular goods from China, totaling $2.8 billion in 2008, injured U.S. manufacturers. The commission is made up of three Democrats and three Republicans, five of whom were appointed by the Bush administration and one by the Clinton administration.
An official in the news department of China’s Ministry of Commerce said that China “resolutely opposes” the ruling, adding that the ministry will elaborate in a full statement Thursday.
The Chinese government can appeal the decision to the World Trade Organization, and Chinese steelmakers can appeal to a federal district court in New York that handles trade cases. Daniel Porter, a Washington attorney representing the Chinese exporters, said a decision on whether to appeal could be made in several weeks, once a detailed ruling by the ITC explaining the rationale for its decision is made public.
“We are obviously disappointed,” Mr. Porter said. Chinese steelmakers argued that the U.S. industry is trying to stymie legitimate competition and wasn’t injured by the imports. They note the U.S. steel industry was making record profits, especially in 2008, when selling pipe and tube to energy and exploration countries, and argued that Chinese imports increased to meet demand in the U.S.
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So much for the crowning decade of the Goldman Sucks era…
* OPINION: THE TILTING YARD
* DECEMBER 23, 2009
A Low, Dishonest Decade
* By THOMAS FRANK
Stock-market indices are not much good as yardsticks of social progress, but as another low, dishonest decade expires let us note that, on 2000s first day of trading, the Dow Jones Industrial Average closed at 11357 while the Nasdaq Composite Index stood at 4131, both substantially higher than where they are today. The Nasdaq went on to hit 5000 before collapsing with the dot-com bubble, the first great Wall Street disaster of this unhappy decade. The Dow got north of 14000 before the real-estate bubble imploded.
And it was supposed to have been such an awesome time, too! Back in the late ’90s, in the crescendo of the Internet boom, pundit and publicist alike assured us that the future was to be a democratized, prosperous place. Hierarchies would collapse, they told us; the individual was to be empowered; freed-up markets were to be the common man’s best buddy.
Such clever hopes they were. As a reasonable anticipation of what was to come they meant nothing. But they served to unify the decade’s disasters, many of which came to us festooned with the flags of this bogus idealism.
Before “Enron” became synonymous with shattered 401(k)s and man-made electrical shortages, the public knew it as a champion of electricity deregulation—a freedom fighter! It was supposed to be that most exalted of corporate creatures, a “market maker”; its “capacity for revolution” was hymned by management theorists; and its TV commercials depicted its operations as an extension of humanity’s quest for emancipation.
Similarly, both Bank of America and Citibank, before being recognized as “too big to fail,” had populist histories of which their admirers made much. Citibank’s long struggle against the Glass-Steagall Act was even supposed to be evidence of its hostility to banking’s aristocratic culture, an amusing image to recollect when reading about the $100 million pay reportedly pocketed by one Citi trader in 2008.
The Jack Abramoff lobbying scandal showed us the same dynamics at work in Washington. Here was an apparent believer in markets, working to keep garment factories in Saipan humming without federal interference and saluted for it in an op-ed in the Saipan Tribune as “Our freedom fighter in D.C.”
But the preposterous populism is only one part of the equation; just as important was our failure to see through the ruse, to understand how our country was being disfigured.
Ensuring that the public failed to get it was the common theme of at least three of the decade’s signature foul-ups: the hyping of various Internet stock issues by Wall Street analysts, the accounting scandals of 2002, and the triple-A ratings given to mortgage-backed securities.
The grand, overarching theme of the Bush administration—the big idea that informed so many of its sordid episodes—was the same anti-supervisory impulse applied to the public sector: regulators sabotaged and their agencies turned over to the regulated.
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Got stucco?
United States
House prices and mobility
Off the road
Dec 30th 2009 | WASHINGTON, DC
From The Economist print edition
During this recession too many Americans are rooted to the spot
WHEN the going gets tough, it’s said, the tough get going. Sadly, this does not seem to apply to unemployed Americans any more. A high degree of population mobility has traditionally been one of America’s great economic strengths, providing a flexibility that allows for more efficient labour markets and lower unemployment. However, during this recession Americans have been hunkering down, not moving on.
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Today workers are all but stuck, thanks to the paralysing effect of the housing bust. Nearly one in four mortgage borrowers owe more on their loans than their homes are worth. These “underwater” borrowers face a stark choice: foreclosure or staying put. Millions of Americans now find themselves pinned down in places where unemployment rates are well above the national average. In 2008 the domestic migration rate was just under 12%, and the rate of migration between states fell to 1.6%—less than half the level that prevailed in the post-war decades.
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Some financial advice for 2010: Try not to catch yourself a falling knife in the l-t bond market…
I myself just talked lil’ sis into reallocating all her fixed income l-t bond investments into inflation-protected investments. I believe she still holds her GMAC 2012 bonds, but thanks to bailouts, it looks like those are good as gold, with a short duration to boot.
Dec. 30, 2009, 10:30 a.m. EST
Treasury yields to rise in 2010, dealers say
Better economy making corporate bonds more attractive
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury bonds will fall next year, lifting yields as the economy slowly improves, giving investors one more reason to stay away from a sector which had its biggest annual loss in three decades in 2009, according to U.S. bond dealers.
Concerns about increasing government debt issuance will also lift yields, the MarketWatch survey of the 18 primary U.S. bond dealers found.
The U.S. government will see its borrowing costs rise from record lows hit earlier this year as investors favor investment-grade corporate debt.
Yields on 2-year notes, closely linked to the Federal Reserve’s key interest rate, are seen rising to 1.26% by mid-2010 and 1.95% a year from now, according to analysts surveyed.
Primary dealers are required to bid at the government’s auctions and trade directly with the U.S. central bank.
Some of the dealers surveyed believe the Fed could begin raising interest rates as early as June, while others expect it to keep borrowing costs on hold as long as until late 2011.
Yields on 10-year notes, the benchmark for a broad swath of debt including corporate bonds and mortgage rates, are expected to stay around 3.76% in the next six months, but end 2010 up near 4.16%, according to the survey.
On Wednesday, benchmark 10-year notes (UST10Y 3.79, -0.01, -0.16%) yielded 3.80%, while 2-year notes (UST2YR 1.08, 0.00, -0.37%) yielded 1.09%.
“There is every reason to expect Treasury rates to move higher,” said Scot Johnson, senior client portfolio manager for Invesco Fixed Income. “If economic growth continues to improve as we’ve seen over the course of the year, and move farther from the threat of extended recession or depression, we expect to see Treasury rates move back more towards what we’ve seen historically.”
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