Bits Bucket For January 1, 2010
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Wow, only 7 hours into the New Year and my motto for 2010 becomes prophetic! :
(…even Evangelical Corporations)
“Keep Americans safe…protect CORPORATIONS!”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
Pastor Rick Warren urgently asks faithful for $900,000:
December 30th, 2009, by Teri Sforz, staff writer OC Register
“Dear Saddleback Family,” begins today’s missive from Warren. “THIS IS AN URGENT LETTER unlike any I’ve written in 30 years. Please read all of it and get back to me in the next 48 hours.
“I have thrilling news to share with you below but first some seriously bad news: With 10% of our church family out of work due to the recession, our expenses in caring for our community in 2009 rose dramatically while our income stagnated. Still, with wise management, we’ve stayed close to our budget all year. Then… this last weekend the bottom dropped out.
“On the last weekend of 2009, our total offerings were less than half of what we normally receive - leaving us $900,000 in the red for the year, unless you help make up the difference today and tomorrow.”
Hey,Hwy, (AKA post counting Tsar) for 2010 would you please periodically update us on the # of smiley and or un-smiley faces that are posted. Thanks in advance, from us slower un-advanced southern folks.
Happy New Year !!
Worst kind of scum. Preying (pun intended) on the ignorant, many of whom don’t have any “extra” income or assets. Too bad there’s no hell for him to roast in.
I’ve seen too many churches demand an increasing cut of a person’s income—far above the Biblical tenth.
Geez, looks like “The Oral Roberts Method” has a new promoter. That didn’t take long…
Q. What is the formal name for two homosexuals named Bob?
“The God I know ain’t short of cash, mister”
-Bono
Not you, wmbz!
I am not a religious person, but it seems to me that Warren’s Saddleback church does a lot of charitable work. I have a feeling that Mr. Warren’s donations have fallen because he tried to walk the middle line in 2009 - he prayed at Obama’s inauguration, pissing off the right, while alienating the left with his strong stance against gays.
There are too many pulpit prostitutes of the left and right, and too many “Christians” who seem incapable of either rational thought or adhering to scriptural teachings.
“…and too many “Christians” who seem incapable of either rational thought or adhering to scriptural teachings.”
You betcha, bygolly!
+1 Home run, out of the park!
You remind me of one of the “church families” where I occasionally play music on Sundays. They used to pay me good money for my services; now, if I am lucky, they compensate me with baked goods. Barter does have its upside — at least I don’t have to later cough up self-employment tax on the food items.
Saddleback needs to hire ACORN and SEIU to do their fundraising! $900K is chump change to those guys.
Or better yet, go the Amish route, and they would never have been faced with that kind of debt in the first place.
Ha, they ought to inCORPORATE the long lost Shaker Method…grab the flock, turn’em upside down & SHAKE!
The problem with the Shakers is that, in contrast to the Catholics and the Mormons, they didn’t grasp the roll of reproduction in the evolutionary process which determines the long-term destiny of religious sects.
Are these churches audited? They should be.
Anyway I have a theory for the $900k shortfall. If the rev pastor has announced a 20M shortfall, the sheep would have said “oh well, I don’t think we can help” but keeping the shortfall to a lesser amount gives the feeling to people that they can actually make a difference.
Well, this is rich. These mega-churches and celebrity preachers rose to stardoom with a feel-good message of “empowerment” to their aptly-named flock. The scriptural admonishments on sacrifice and forsaking the wealth and temptations of this temporal and corrupt world were glossed over in favor of “God wants to help you be successful and feel good about yourself!” Gee, who’d have thunk that message would pack the pews with self-centered “worshippers” who’d rather let someone else do the hard work of actually keeping the church financially afloat?
BUWAHAHAHAHAHAHAHAHAHAAHA! This is the kind of gaudy temple that Jesus Christ himself would have angrily trashed.
I predict that small, humble genuinely devout congregations that actually seek to do the will of the almighty are going to be just fine as we sink deeper into depression, while “corporate religion” like Warren’s is going to stagnate into irrelevance.
while “corporate religion” like Warren’s is going to stagnate into irrelevance.
One can pray.
My my - it always amazes me that the vitriol on the HBB for Christian leaders - who ask for voluntary donations of 10% at most - often exceeds that of our political leaders - who demand donations of far greater amounts and at the point of a gun. Rick Warren gives away 90% of his salary, BTW, for those that don’t know. (Yes I know he’s made a bunch of money from his books - nevertheless he doesn’t have to give up 90% of his salary)
Look how much our Atheist mayor gives away….tens of millions a year.
Packman,
I have no problem with ministers who ask their congregations to tithe - that’s a fundamental obligation that I believe is spelled out by the Bible itself. Members of congregations have a duty to do their fair share to financially sustain the church. I am in general not a fan of television evangelists or celebrity preachers who preach feel-good philosophies that don’t necessarily correspond to true Biblical teachings. Warren seems like a fairly decent guy, although I saw his wife recently got in trouble with one of the airlines for abusive behavior toward a stewardess. I think, though, that guys like Ted Haggard - the former head of the 40 million member National Association of Evangelicals at the same time he was smoking meth (among other things) with a gay male prostitute - are pure snake oil salesmen.
“it always amazes me that the vitriol on the HBB for Christian leaders - who ask for voluntary donations of 10% at most”
Because it’s not Christian. Yet the sheeple hiding behind church walls are too dense or blind to understand that. I guess it’s easier to harp on mindless drivel like gays and guns instead of looking at their own deteriorating economic position. But that’s what happens when you adhere to a political ideology that is in direct odds with your religion.
Preachers always love $$$$$$$$ . And they like women too . Usually the $$$ or the women belongs to others .
(Hwy wonders how these Gov’t’s are doing with their National “Social Security” programs)
GoldenmanSucks Makes ‘Call of Decade’ by Promoting BRICs: Chart of Day
Dec. 31 (Bloomberg) — Goldman Sachs Group Inc.’s forecast that Brazil, Russia, India and China would eventually eclipse the Group of Seven countries economically has been described as “the biggest market call of the decade.”
“…Jim O’Neill, who still runs the global team, first made the case for the four countries in a paper entitled “Building Better Global Economic BRICs.”
“From where these markets stand today, even after the credit crisis, O’Neill’s original paper is starting to look like a once-in-a-lifetime call,”
Decoupling, schmuppling. I will laugh and mock Goldman Sucks severely when the China bubble pops and the financial tsunami wave washes up on U.S. shores. It is not a question of whether, but when…
Just another BRIC in the wall:
We don’t need no education
We dont need no thought control
No dark sarcasm in the classroom
Teachers leave them kids alone
Hey! Teachers! Leave them kids alone!
All in all it’s just another brick in the wall.
All in all you’re just another brick in the wall.
“Wrong, Do it again!”
“If you don’t eat yer meat, you can’t have any pudding. How can you
have any pudding if you don’t eat yer meat?”
“You! Yes, you behind the bikesheds, stand still laddy!”
A Floyd fan, are you? Your stock just went up in my book.
Love that song…
In ironic contrast to those lyrics, core band members of Pink Floyd were highly-educated iconoclasts.
“Learning to Fly” is my favorite Floyd song.
“Learning to Fly” is my favorite Floyd song.
Really? Blech.
Animals, FWIW, is practically an album written verbatim about the various components of the housing bubble. That should be the HBB’s theme album. There are only three songs on that album, titled Pigs, and Dogs, and Sheep.
Pigs - the PTB; mega-bankers and their political buddies at the top.
Dogs - the greedy ones that do their dirty work (realtors, mortgage brokers, etc)
Sheep - obvious
“Really? Blech.”
+1, packman!
Ok, maybe not quite “blech” (I kinda like the song), but definitely not as substantial or interesting as almost any of the earlier Floyd…
Learning to fly better that Dark Side? (I think of Dark Side as one song.)
I should say, my favorite RECENT Floyd song.
Hey Eddie, and I am not picking on you, but you like many think the FED can hold rates down indefinitely . So please splain to an average guy like myself why they are on the rise?
Rising mortgage rates will test housing market
The interest rate for a 30-year loan ticks up to 5.14%, the fourth consecutive weekly increase. ~ January 1, 2010
Mortgage rates are continuing their creep upward in a trend that well may choke off a recent refinancing boom and provide a test of the strength of the housing market in 2010.
Freddie Mac’s widely watched survey found that rates averaged 5.14% this week on 30-year fixed-rate home loans for borrowers with good credit and a 20% down payment — or 20% equity for refinancings. That was up from 5.05% last week and slightly higher than at the same time last year.
On 15-year mortgages, the average fixed rate was 4.54%, up from 4.45% a week earlier.
Borrowers paid their lenders upfront charges averaging 0.7% of the loan balance.
Tracking a rise in yields on Treasury bonds, home-loan rates have risen steadily in the last four weeks since 30-year fixed-rate mortgages averaged a record low of 4.71% on Dec. 3.
The climb comes even though a government effort to keep rates low is in place for a while longer. A Federal Reserve program to spend $1.25 trillion to support the market for mortgage-backed securities is scheduled to end in the spring.
This is just the beginning. Cash is no longer king.
As the price of money rises cash becomes even more kingly.
Combo: I plan to go back into bonds and CDs as soon as the ten-year yields 5%. Please tell me why I shouldn’t.
I agree Combo….When something is difficult to get, its value tends to go up…I have never, ever in over 30 years of doing business seen a more difficult time to borrow money…I am not talking about credit cards and 1st mortgages here, I am talking about basic business lending..
With that said, I would like to wish everyone on the blog a healthy and peaceful New Year…
Thanks to all of you, including Eddie
that bring your insights and data mining for all to enjoy…
scdave…
“…With that said, I would like to wish everyone on the blog a healthy and peaceful New Year…”
Right back at ya scdave!
Warning: Long post to follow here…
Happy New Year to you as well, and thanks for your posts, which I always find to be honest and insightful.
Regarding the apparent paradox of current great difficulty with private borrowing when the Fed is pumping liquidity and interest rates are near zero, this is a natural consequence of the Fed’s decision to pursue ZIRP as a policy response to the credit crunch — aka pushing on a string. The economic principle in play can be easily explained using the Marshallian supply-and-demand graph that one might find in a standard undergraduate economics text book (used copies available on Amazon from $1.67).
Draw the giant Marshallian supply-demand graph X in the first (upper-right-hand) quadrant of a standard x-y coordinate system. The vertical axis represents price (in this example, the interest rate, which is the price of loanable funds) and the horizontal axis represents private quantity of loanable funds supplied and demanded (i.e., the quantity of private loans to non-TBTF borrowers).
The Fed’s War on Savers during the latter years of the Greenspan era served to addict American households and businesses to a steady flow of easy money lending. By the onset of the credit crunch in August 2007, this ensconced credit addiction had metastasized into a very strong demand for loanable funds (i.e., the demand leg of the giant X, that slopes downwards from left to right in the supply-demand graph, had shifted out to the right). The credit crunch had the effect of shrinking the supply of loanable funds, as bankers and other creditors suddenly recognized the risk of catching falling knife collateral by making loans into the maw of the worst financial crisis since the 1930s; hence supply decreased (i.e. the supply leg of the giant X that slopes up to the right lurched to the left). If market forces had been allowed to act without Fed intervention, the result would have been a sharp spike in interest rates as the market equilibrated to reflect the credit crunch. The upside would have been that savers (people who had behaved in a prudential fashion over the years, putting away some of their income into savings rather than borrowing and spending away all their wealth) would have reaped the benefit of high returns on their CDs and money market accounts.
Rather than allowing this attractive outcome for Main Street household savers to materialize, the Fed chose to pursue a ZIRP policy – i.e., they flooded the monetary system with sufficient liquidity to drive the interest rate to near zero. This artificial intervention can be entered into your supply-demand graph by drawing a horizontal line across the bottom of the giant X at a level between 0 and ¼ percent. The resultant horizontal line segment connecting the two legs of the X near their bottoms represents the artificial shortage of private sources of loanable funds which results when the interest rate is driven far below the market-clearing level. There is little incentive for private money lending when the return on loans is dismal and the risk of catching falling-knife collateral is great, while the quantity of loans demanded greatly increases at interest rates near zero.
Meanwhile, the Treasury implemented the TARP, supposedly to increase the amount of loanable funds available to the banking system after they experienced severe shrinkage due to the credit crunch. As a consequence of the interaction between the Fed’s ZIRP policy and the TARP, the ability to profitably loan money to others was wrested from American households and handed over to the TBTF Megabanks, which could now borrow from the Fed at zero percent interest and loan rationed quantities to creditworthy non-TBTF households and businesses willing to pay at a level which provided for a four-percent spread. Nice financial engineering, Wall Street!!!
Now imagine yourself in the position of CEO at a TBTF Megabank which was just handed TARP money with no strings attached. You can either loan out money to buy assets (e.g. houses) on overvalued collateral to people whose future economic prospects suggest the loans may soon be lost, or stuff the money under the mattress and wait at zero cost (remember, the interest rate on your TARP loan is zero!) for asset prices to drop, at which point you can snap up the assets themselves at fire sale prices, or loan to households at no risk, as the asset prices can only start going up from here. Which would seem more prudential: Lend now and risk losing your principle, or hold out for lower prices and falling-knife collateral risk later on? You would probably only be willing to lend to those with very high probability of repaying the loans, and who were also willing to pay a high interest rate relative to the zero percent you paid for borrowing from one of the Fed’s special facilities (TALF, LAUGH, GAFF, etc). The rest of the money you might otherwise have loaned out could be parked under the mattress as ammunition for snapping up devalued assets later on at the point when weak hands are completely sidelined by the absence of private money lending.
Editorial revision:
“…or hold out for lower prices and the end of falling-knife collateral risk later on?”
Very clear explanation, thanks. I like finding tidbits like these.
Except they aren’t shoving the money under a mattress. They are using it for their personal trading desks.
Polly –
Your point is well taken. I would add that from the standpoint of a credit thirsty non-TBTF financial entity (either household or firm), it matters little whether Megabank, Inc uses the Fed’s discriminatory zero interest loans for mattress stuffing or gambling purposes.
The key issue is that the TARP money and the Fed’s alphabet soup mix of special lending facilities did very little to get the easy money lending party back up and running, or even to get anywhere near a normal flow of credit into private hands. The incentives to make loans to non-TBTF financial entities just aren’t there when the risk premium for future inflation or loan default risk is drowned by the Fed’s liquidity flood.
Exactly polly.
PBs description is not inaccurate. This is the very situation that occurred with the 1st (1790) and then 2nd Bank of the United (1816) States. However, it leaves out the fact that the banks then as now, perpetuated the bubbles, IN ORDER, to eventually snap up assets at greatly reduced prices.
“But” you say, “Many banks went under!” As they did back then as well. Only the insiders eventually profited, the rest just played musical chairs to a tune piped by the insiders.
“However, it leaves out the fact that the banks then as now, perpetuated the bubbles, IN ORDER, to eventually snap up assets at greatly reduced prices.”
Sorry for the omission. I hope my post did not suggest in any way that I disagree with your point; it was already one of the longest I ever wrote here. I certainly hope the Congressional audit committee addresses this remarkable similarity between the recent financial crisis and those 1790 and 1816 episodes, as it may well be that this is about the right time to acknowledge that the Fed is not too big to fail, either, and pull the plug.
‘“But” you say, “Many banks went under!” As they did back then as well. Only the insiders eventually profited, the rest just played musical chairs to a tune piped by the insiders.’
The facts that something like 40 percent of the banking sector is now consolidated in the overwhelmingly strong hands of only four TBTF Megabanks with close ties to the Fed and Treasury (e.g. their CEOs are all on former NY Fed President-turned Treasury Secretary Geithner’s hot line), and that all of these had extremely profitable 2009s while the Main Street U.S. economy enjoyed the view from under the bus, certainly seems consistent with the notion that the financial crisis was more about wealth and power consolidation and increasing the role of TBTF bailouts in running the U.S. financial system into the ground than it was about any true threat to the global economy.
Time for the Dumb Questions of the Day for this First Day of 2010:
1. Is there anything illegal about the way the Fed used ZIRP (in conjunction with TARP) to hand Wall Street Megabanks an opportunity to enrich themselves immensely while the Main Street U.S. economy was starved of credit?
2. Did top Fed officials even realize what the effects of ZIRP would be, or was the outcome just a serendipitous accident for Megabanks?
3. Is it different this time, or is this Grand Financial Kabuki Dance the normal way the Fed engineers the economy out of recessions?
4. How does the Fed decide which financial entities in the U.S. economy qualify for zero interest loans and which do not, and why does this discrimination process not run afoul of laws against lending discrimination?
5. Does the Fed operate in some rarefied atmosphere that exists above the Constitutional system of checks and balances that otherwise governs the U.S. of A.?
Unless the price of money is rising because its value is deflating, and investors are demanding an inflation risk premium on top of the interest return on their investments…
Bingo.
It’s kind of stupid to think that money is somehow “worth more” because the price of it is going up. What exactly is it you’re using to pay for this money? Money. Duh.
The price of debt.
How can these green pieces of fiat currency backed by absolutely nothing of value not be “king”? I refuse to believe this … Long Life Helicopter Money!
I mean, Long LIVE Helicopter Money! Damned hangover….
I am certain that blogging is a better hangover cure than hair-of-the-dog stimulus with alcoholic beverages…
P.S. As aside to yesterdays thread, those that keep comparing our (the U.S .of A’s) situation to Japans lost decade. Once again, Japan does not compare, in that they do not administer the worlds reserve currency, they are not the worlds greatest debtor nation, they were and are a nation of savers (and debt buyers). We enjoy no such situation.
The FED can not control interest rates infinitum as many think.
Not disagreeing with your assertion, but I am still curious about the possible reasons the Fed would either voluntarily or involuntarily decide to unwind its l-t interest rate buydown program?
They will unwind it only when the alternative is Zimbabwe-style hyperinflation… and maybe not then.
It is true that Japan is still in deflation. But the deflation is only in asset prices not the everyday consumer items. I was in Japan recently and have these observations:
1. Daily hourly wages range from $10 to $14 even in tokyo.
2. Most Japanese (at least the ones that I met with my friends) are college educated and work in retail stores, government jobs (policeman, gas meter reader) and still cannot afford to buy a flat.
3. These people live in flats their parents bought - a basic studio in most cases for average citizens
4. Cost of food in supermarkets is not cheap compared to daily wages.
5. Public transport (trains and local buses) is expensive - compared to daily wages.
6. Result is that savings for the younger generation 20 to 35 is almost zero. Some people still manage to save.
7. Old people in good high paying jobs are still working without an end in sight for their retirement. Thus the younger generation is ill equipped to take their places when they do retire. But more importantly, they cannot increase their earnings.
All in all my conclusion is that for young Japanese it is an inflated world they live in for daily necessities and hope for wage inflation in order to get the deflated real estate.
Japan has a significantly higher debt to GDP. Zimbabwe is the only country that I’m aware of at the moment with one that’s higher.
“Hey Eddie, and I am not picking on you,…”
Love the disclaimer. Methinks Eddie needs some hair-of-the-dog stimulus before he will be able to respond to any barbs today…
Happy New Year, everyone. I’m in my new apartment, back online, and drowning in boxes. Fortuntately, the new place is big enough that even drowning in boxes, there is plenty of room to walk around - this was not the case when I moved into the last place.
Oh, and Comcast is evil. But I assume you all knew that already.
Congrats Polly!
Glad you got moved ok. It can be a real pain. We plan to move in about 2 years. I’m already going through stuff and getting rid of whatever I can. That’s going to be a lot.
Eh Polly wanna cracker…..???? Ooh ooh terrible joke but its da new years wadda U expect frum me…. Happy new apartment Polly.
Thanks, NYCdj. It was a terrible joke. Just terrible. But I have to admit that I expect the cracker joke every once in a while. Been happening ever since I started using this user name. HBB folks do it a lot less than most.
Polly,
Get a converter box to pick up the free over-the-air digital TV signals. There are quite a few of them in the DC metro area. Use your cell phone. Find an open Wi-Fi router within range of your computer for your internet connection.
Comcast? You don’t need no stinkin’ Comcast.
You have got to be kidding. First of all, I like cable channels - USA, TNT, BBC America, and quite a few others. I prefer to use the cell phone as the back up, not the primary. Can’t just piggy back on an unsecured Wi Fi signal. I think it is a felony to put a wireless card in my office laptop, and I like working from home sometimes. We are not yet approved for wireless security protocols.
Can’t just piggy back on an unsecured Wi Fi signal.
There is a way to piggyback on an unsecured Wi Fi signal.
You can get a web hosting account that allows you to login via ssh, about $10/mo.
Then, you use ssh to run an encrypted SOCKS proxy from your computer, through the WiFi connection to your hosted account and then to the rest of the internet. This encrypts your traffic from your computer, through the open wifi to the greater internet. It’s called “tunneling”.
If you do it at work, you can effectively route around your company’s proxies and shield your email, web surfing and banking activity from their inspection. Of course, an extremely vigilant Admin might notice all the ssh traffic and want to talk to you about it.
Also great for encrypting your traffic at hotspots, like the Starbux or aiport etc.
Ssh comes standard with most linux distributions, Windows users can get Putty ( a free ssh client ) here.
Of course, this all assumes that your anonymous WiFi “donor” doesn’t pull the plug, move or decide to go with encryption.
Again, congrats on the move - I hope to get my act together this year, shed the excess crap and look for cooler/more efficient/cheaper digs.
Happy New Year, all!
Then, you use ssh to run an encrypted SOCKS proxy from your computer,
I know this sounds terribly compicated, but it’s not.
This is what I use to create a procxy connection:
ssh -D 8080 myname@myhosting.com
Then, in firefox, under Edit | Preferences | Advanced | Netork, click on “Settings” and choose “Manual Proxy Settings”, use 127.0.0.1 for your SOCKS host and 8080 for the port and you’re done.
There are probably some minor differences on Firefox for Windows and there’s a graphical interface for Putty on windows, but it’s not too hard to figure out.
Also, the link for Putty that I put up has some fairly decent documentation on the subject.
I don’t care if it is technically possible. I care that it is illegal and I could get fired, get fined and go to federal prison for it. There is only one way to legally use my office computer from home. It involves a hard wired internet connection. That is the way I do it.
Congratulations, Polly. Did you happen to see the thread yesterday about declining rents? Eddie said that you moved because your landlord was threatening to raise the rent, using that as evidence that rents are increasing. Care to comment/clarify?
My landlord asked for a rent increase three months before the end of the lease. I submitted a letter saying I intended to vacate at the end of the lease (required to be 60 days before you stop paying rent in this county). The next day I got a new lease offer for no increase at all. Eddie is a liar.
I moved to get a much larger apartment in a much better location in a more secure building with a 24 hour doorman which is closer to work and part of a community association that provide a free shuttle to the Metro (which is just 3 blocks away), other buildings, superparket, etc. for $9 a month more than I was paying in the old location. In the new apartment I have to pay for parking (which is inside and secured, unlike the last place) but I do not have to pay for utilities. In the old place I had to pay for gas (heat/hot water/stove), electricity and water, all individually metered and the cost was over $100 a month most months of the year even if I was cold in the winter and hot in the summer. There were direct outside doors, but I was on the first floor and did not even have a dead bolt on those doors so they were tremendously insecure.
I didn’t see yesterday’s thread, but the landlords around here have been dropping rents like crazy for new residents. Of course they don’t want to match those rents for people already in the building. That is why I had to move to get a better rent deal. I was playing chicken with my landlord, and since I had been in the same place for almost 5 years, I understand why they thought they could win the game, but they didn’t. I will keep an eye on Craig’s list and see if I can find out how far they have to drop the rent to get a new person. I expect it to be in the vicinity of $300 a month.
“I moved to get a much larger apartment in a much better location in a more secure building with a 24 hour doorman…”
A 24-hr doorman?
The front desk is staffed 24 hours a day. The person sitting there can admit guests, give you access to the lobby cart, take items for the management office, give you your packages, etc. My old building had the rental office take packages during business hours. Nothing outside of that.
Thanks, Polly. I had this vision of a 5-star hotel doorman who opened the door in either direction along with a greeting, sort of like royalty.
Polly said yesterday she is on the 16th floor…for any building that big 24 hr security/doorman/super is a must..
14th. Sorrry if I said 16th.
Wow, congrats. I’m closer to Baltimore, but my experience is similar. A few months ago, I moved into a larger place, closer to work, and it is over 200 dollars cheaper a month. HOWEVER - the official listed price on the rent was similar to my old place. But when I went in to speak with the leasing office, they told me about the new price.
So, they’re still showing that the rents are stable, but perhaps if you ask about specials, you might get some different numbers.
YMMV.
Oh, and Happy New Year to the Housing Bubble Blog
This place has a “regular” price that is $300 a month higher. The office said that the management company puts a certain number of units on special each month and that they have no idea how they pick which units or why it happens. I don’t know if I believe that, but if I had to guess, it is to keep the vacancy rate down.
And that is a whole other issue. This is an older building. I was not offered one month free or two months free or three months free. I was offered rent that is $300 below their regular rate for this unit. I asked at one of the newer buildings why they did free months instead of lower rents. They said that they had to have certain cash flow on a particular date to get their construction loans refinanced. If the banks fall for that sort of crud (accepting the nominal monthly rent as the real rent when the effective rent is 25% lower because they gave away three months of rent to induce the move in), they deserve what they get.
Your experience parallels mine with the certain number of units on special.
Regarding the “x months free rent” versus lower monthly rent, apparently, I gathered could choose which way I wanted to go. I got like 2 or three months rent free spread over the 12 month period. I asked repeatedly whether this actual monthly rent would act as my base for the yearly rent increase, and I was told it would. So it seemed like a much better deal than just taking a few months rent free immediately.
I go that assurance at my place too. But the really new places that were offering free months said that you could only spread it out over 6 months . The last 6 months of the lease you had to be paying the higher amount. It’s like the renters version of a teaser rate mortgage or even an option ARM. Besides, I can afford to pay my movers. I don’t enjoy it, but I can afford it. Like I said above, it seems to be related to the financial info they have to provide to the banks for refinancing their construction loans. Sounds like a situation to avoid to me.
A quick online check hinted that we could rent a house similar to this rental for $200 less each month.
When we moved here from our previous rental almost a year and a half ago, it was in order to take advantage of a $500 per month decrease in rent.
We’re likely moving again this spring anyway (need a better school district). You betcha we’ll be doing some negotiating.
I responded but it was too long so it may take a while to post. In a nutshell, I had an offer to stay in the old place for no increase at all. As we are all aware, Eddie’s research skills are limited.
“…Eddie’s research skills are limited.”
I’ve created a new 2010 tag for Haskell: “TrueInstigator™”
I have been complaining a lot about not getting a market rate rent offer from my old landlord. There is no reason to assume that this is an increase as opposed to a no increase or even a small decrease in rent. But I suppose someone like Eddie, who has no real capacity beyond seeing his own assumptions, could assume that I was referring to an increase.
The rent was too high, but not that far out of line last year when I checked around, but I couldn’t move because of the pending knee surgery. This year it wasn’t even close to other rents in the neighborhood and my knee surgery is over and I was ready to trade some money (moving expenses) and time (accumulated vacation) to the process.
Rents are going down in this area. There is no question about it. And it is easy to see why they are going down. The number of new apartments and condos that have come on in the last few years is spectacular.
Good for you Polly, and may your “underwater position” (in boxes) soon be resolved. My wife refuses to ever move out of our rental until we buy a place, and our landlord seems happy to have a stable renter, so I guess I accidentally got stucco in a rental by avoiding a similar fate in the owner-occupied housing market. Glad to vicariously enjoy the story of someone who carries a sufficiently light burden of material possessions to keep relocation as an affordable survival strategy.
U.S. to Lose $400 Billion on Fannie, Freddie, Wallison Says
(Bloomberg) — Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.
“The situation is they are losing gobs of money, up to $400 billion in mortgages,” Wallison said in a Bloomberg Television interview. The Treasury Department recognized last week that losses will be more than $400 billion when it raised its limit on federal support for the two government-sponsored enterprises, he said.
The U.S. seized the two mortgage financiers in 2008 as the government struggled to prevent a meltdown of the financial system. The debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks grew an average of $184 billion annually from 1998 to 2008, helping fuel a bubble that drove home prices up by 107 percent between 2000 and mid-2006, according to the S&P/Case- Shiller home-price index.
Lets see $400 bill, and nothing for our 2nd ave subway that’s taking 15 years to build while China builds 600 miles of high speed rail in 4…
There is no money to loan or grants to retrain the unemployed with new up to date job skills.
We have a nation of morons who “graduate” high school with poor English skills.
This decade looks real bright.
Lets see $400 bill, and nothing for our 2nd ave subway that’s taking 15 years to build while China builds 600 miles of high speed rail in 4…
It’s a false choice, if you ask me. Japan built high-speed trains and tons of superfluous highways and where did it get them.
Toyota? Sony? Mitsubishi? Lexus? Honda? World’s best robots?
When it comes to high tech, Japan is the world leader. Unfortunately, they got screwed just like we did when the transcorps decided to give China the manufacturing contracts. They’re saving grace is that they design all the gadgets that China builds. (yes, many other countries have a lot of high tech themselves, but Japan flat out excels)
And despite their problems, they are still the second largest economy in the world. That’s right, 2nd.
China is like 20 times a big as japan… and slightly smaller then the US…..we are so far behind its pathetic…and I cant get a decent job.
If the U.S. is only going to lose $400 bn on the defunct GSEs, why did the Treasury bother uncapping their $400 bn credit limit? Was this just in case the $400 bn turns out to be an underestimate of their ultimate losses? (For some reason, Bernanke’s August 2007 announcement that “subprime will be contained” to $200 bn just now popped into mind…)
Step right up folks and get your stocks, bonds, cigarettes!
Pimpco to Start Global Stock Fund Amid Equity Push:
By Miles Weiss Dec. 30 (Bloomberg)
“Chief Executive Officer Mohamed El-Erian this month hired Neel Kashkari, former head of the U.S. Treasury’s bank-rescue program, as well as Franklin Resources Inc.’s Anne Gudefin and Charles Lahr, to help the company expand the range of products it’s offering investors. Pimco Global Opportunity could position the Newport Beach, California-based company to reap the benefits of an investor shift from bond to stock funds.”
“Pimco is a bond shop, but I think they have a view that bonds will under-perform stocks on a pretty regular basis in the future,”
Gotta hand it to PimpCo for their lightning fast response to market turning points…
Giant companies like Pimco help create their own financial ecosystem.
Reinforce that remark 1000 fold regarding the roles of the Fed, the defunct GSEs and the Wall Street Megabanks. So much financial power is concentrated now in the hands of a few financial firms that can create their own weather that we may as well make a ginormous pyre in order to burn all financial economics text books that discuss the operation of a market-based financial system.
Coming Soon: The Bill for the Massive U.S. Debt
By Don Miller, Associate Editor, Money Morning
Americans could be in for a rude awakening in coming months when they discover the true scope of the massive national debt racked up by the U.S. government.
In fact, the $1.6 trillion deficit expected for 2010, which is above 10% of gross domestic product (GDP), is only the beginning.
Since the current economic crisis began in late 2007, the U.S. Federal Reserve has tripled the size of its balance sheet, creating enormous amounts of new money by lending to hundreds of ailing banks and buying up more than $1 trillion of questionable asset-backed securities.
But that’s only a small part of the story. Since the beginning of the crisis, the Fed has lent, spent, or guaranteed $11.6 trillion, including underwriting the entire system of mortgage finance in the United States, a system that currently shows a nearly $1 trillion loss.
yes im waiting for american taxpayers to start paying the bailout bill and see how happy they really are about it.I would like to see taxpayers revolt.
The revolt is a little late once the money has been spent.
I am not as opposed to the bail out as others here because I do think that slowing down the crash is needed to let the state and local governments adjust as I’ve said here many times. Problem is, I don’t think they are actually doing what needs to be done, not even close. If they don’t do it, the whole process will be wasted.
Unconstitutional means nothing to you. But I know, you told me before: You think “promote the general welfare” means “provide the general welfare.”
“Americans could be in for a rude awakening in coming months when they discover the true scope of the massive national debt racked up by the U.S. government.”
American households = Wall Street’s involuntary bagholders
I wouldn’t characterize American households as “involuntary bagholders.” The vast majorit are willfully ignorant slugs who mindlessly voted for corrupt Republicrat politicians who are on the make and on the take. The Banksters and their K Street bagmen own these puppets and ciphers, yet the Sheeple get duped by their empty promises every election.
So, let’s introduce a little accountability into the equation. The ignoramuses who vote such swindlers into office and keep them there election after election are going to reap the just desserts of their own stupidity.
I didn’t mean to suggest American Sheeple are not deserving bagholders…
Sorry, I wanted to contribute to this thread, but American Idle was on. And then I had to see what Rush and Glenn would tell me to say.
Yeah, no corrupt Democrats. Pelosi, Frank, Dodd, Feinstein, Kennedy, Obama, etc
The Congress stinks on both sides of the aisle.
You’ll notice I use the term “Republicrat” to refer to both parties. There’s not a dime’s worth of difference between them when it comes to corruption and sleaze.
I recognize that and respect that Sammy.
It’s the idiots above your post pointing the blame to one side only that are the problem.
Thank you Sammy for being the honest poster.
Where Russia Meets China
One feature of the Russian-Chinese relationship seemed especially telling: Cross-border marriages are overwhelmingly between Chinese men and Russian women. Much of this has to do with demographics—Russia has a surplus of women, while China has too many men. But as one Russian woman told me, “Chinese men are kinder and more attentive to their wives. And they usually have more money.”
In the international relations department of Amur State University in Blagoveshchensk, the number of students studying Chinese increases every year, and more Russian students now learn Chinese as their first foreign language than English. The department is closing its European studies track and shutting down German and French. Soon, it will offer only Chinese and English.
“China is the destiny of Siberia, our present and future depends in every respect on what happens in China,” Victor Dyatlov, a professor at Irkutsk State University and a top authority on Russian-Chinese relations, told me. “The only direction we can move in is integration and cooperation between Russia and China. But we don’t know what form that integration will take.”
http://www.slate.com/id/2239793/entry/2239797/
There are eight million Russians living in the vast empty expanses of Siberia - a place incredibly rich in minerals and hydrocarbons. The entire ethnic Russian population is dwindling, due largely to the effects of rampant alcoholism, while 1.3 billion Chinese eye territories that would provide much-needed “living space” for their surplus population. Not to mention, huge swaths of Russia east of the Urals were ceded to Russia by weak Chinese emperors in the 18th Century - China still has claims to Russian territory along the Amur River. I would be very worried about long-term Chinese intentions if I were in the Kremlin.
Would you want to live in Siberia?
Hey, with global warming, it could be prime real estate!
Have you ever flown over Greenland? It could some day be as green and pristine as the Colorado Rocky Mountains in spring time, if global warming turns out as dire as the greenhouse gas alarmist crowd predicts.
Yup and Miami “beach” will be under 10 feet of water….aka Atlantis 2
i can assure you, there is more livable space left in china than in russia.
I have several friends with cash who are asking me to find investment properties for them this year. I have told all of them that I believe that interest rates will rise this year sufficiently that they will get a decent return on their cash without having to buy real estate. But three of them insist that they want to diversify, so I’ve started looking. There are occasional good deals, but the vast majority are ridiculously overpriced. It will be fun to search for deals and make low offers in 2010.
My sons want me to find a rock-bottom-priced fixer in a good neighborhood for them to buy, rehab and live in this year. My husband and I will drive around this morning and look at tax auction houses in good neighborhoods. I’ll let you know later what we see.
Are you in the SF Bay area? Keep us posted on the strategies you use to sift through the bubble rubble in order to find gems…
No, Professor, Sacramento.
We drove around and looked at 6 of the tax auction properties, with low bids of $20,000 to $48,000. These were in good neighborhoods, and two looked occupied. All would sell for $240K or more in the current market. None of them has been listed recently. I think we’ll give it a try. Got to get started researching how to do it. It will be educational, even if we are outbid. The auction is Jan 22.
I personally don’t trust auctions prices when deep pockets from Megabank, Inc might be in the room driving up the prices to much higher levels than end-users would actually be willing to pay, in order to bamboozle the current crop of greater fools into catching themselves falling knives. But perhaps I am just being my usual cynical self here, and missing the investing opportunity of a life time?
REHobbyist, you made a good point. I think your friends would be better off in cash and wait until the LT rates go up above 6%. Let’s assume each has $2 million. $120,000 interest is a slam dunk if they grab 30 year bonds. Even if the rates go much higher than that to 12%, they are still going to get $120k interest per year. If they sell beforehand, they suffer. So just hang on.
And if they have jobs besides $2 million in bonds, it’s just supplemental income. Better than having headaches from dealing with tenants’ phone calls of broken toilets at 3AM in the morning.
Maybe some of the CORPORATE sponsors that “abandoned” “The Tigger”… can host a golf tournament in honor of this fella:
Black golf pioneer Powell dies:
AP News Thu Dec 31
“The grandson of Alabama slaves, Powell created Clearview Golf Club after returning home following World War II. While serving in Europe, he earned the rank of Technical Sergeant in the U.S. Eighth Air Force Truck Battalion.”
“Powell worked 18-hour days to support his family and build Clearview. Denied a GI Loan, he found funding from two African American physicians, and his brother took out a second mortgage on his home.”
“Powell went on to carve Clearview out of former dairy farmland in 1946, clearing the land himself. In the process, Powell broke down racial barriers without fanfare by developing female and youth golf leagues.”
Success based on merit rather than affirmative action. What a concept.
“affirmative action” = Govspeak for federally mandated racial discrimination at the firm level
Success based on merit rather than cronyism. And even more outrageous concept.
Now you guyz understand the discrimination I see everyday against black people who speak and sing in English.
Bar owners should be flocking to hire me instead of the ghetto dj.
It was a decade of debt, delusions, and dumb-asses.
Well said. The decade ahead will be when the chickens come home to roost. With a vengeance.
Of all the things that one can spend their money on…what is possibly x1 thing that one should not purchase that is: OVER-PRICED?
Any kind of debt that will never be paid back.
Lured in by a carrot. Now they’re feeling the stick.
The coming decade of what’s in your wallet besides lint?
‘Decade of Delusion’
Bloomberg
Stocks rallied in 2009 after Federal Reserve Chairman Ben S. Bernanke held interest rates near zero and launched the biggest expansion of the central bank’s power in its 96-year history. Bernanke pumped money into the economy through the purchase of mortgage-backed debt and U.S. Treasuries and the government pledged more than $200 billion to bail out New York- based securities firm Bear Stearns Cos. and AIG.
Congress authorized the $700 billion Troubled Asset Relief Program to buy toxic assets from lenders including Citigroup and New York-based banks Goldman Sachs Group Inc. and JPMorgan Chase & Co. as the crisis escalated. The Treasury invested more than $200 billion of the money in financial institutions.
“It’s been a decade of delusion,” said Richard Tedlow, professor of business administration of Harvard Business School in Cambridge, Massachusetts. “In many ways, we’re worse off than the 1930s, we’ve created problems of moral hazard and we’re faced with an astounding public debt.”
“In many ways, we’re worse off than the 1930s, we’ve created problems of moral hazard and we’re faced with an astounding public debt.”
Delusion is too kind a word for banking scams perpetrated by geeks bearing grifts.
Does anyone have a prediction for the timing of blowback from the astounding public debt buildup that accompanied the rescue?
Oh man, I’m very delusional from this decade. VFINX was at $140 per share in 2000 and finished 2009 at a tad over $102 per share.
What’s that dude’s name? Jeremy Siegel. What’s that word? “Cycles.”
I’m staying delusional as long as I can and keeping most of my beans in the equities bucket. “Cycles.”
2010 - unexpected?
Hey guys..just wanted to give a heads up that the web page for the JoshuaTree extension is in transit…I moved and changed ISPs and need to re-host the page. I’ll post here with a new link once I get it sorted out.
I want to say thank you for this. The “new comment” function is useful, but I especially like being able to automaticallyhide a few user’s comments.
Predictions for 2010?
Yep. More “unexpected”
FB:
Hopefully tons more Underground gigs…because the legal (getting taxes taken out) job market is going to be bad for a few more years.
I lose my shirt. Well, not my prediction but the hope of Excreter and MeatsOn.
Capital gains change in R.I.
Capital Gains: Rhode Island’s new rules regarding capital gains are now the law of the land. So if you sell an asset at a profit — also known as a capital gain — favorable tax treatment no longer applies.
Rhode Island will tax your profit the same as it taxes wages, bank-account interest or other so-called ordinary income, said Mark Higgins, dean of the University of Rhode Island’s College of Business Administration.
As a result, taxpayers will pay Rhode Island tax on that profit at “whatever their marginal tax rate is,” which can be anywhere from 3.75 percent to 9.9 percent, Higgins said. (The old capital gains tax rates ran as low 1.67 percent for higher-income taxpayers, 0.83 percent for lower-income taxpayers.)
Steven A. Cobb, chief revenue agent for the Rhode Island Division of Taxation’s office audit and discovery section, put it this way: As of now, “Capital gains rates no longer apply.”
The change took effect on Friday.
The change is far-reaching: It affects all sorts of assets you hold for investment purposes, such as stock, mutual fund shares, or land.
Unless you are a wealthy “financier,” what capital gains?
Good timing guys.
The New Urban Ghetto… a whole state….that’s new and improved for this economy.
I always wondered whether Delaware or Rhode Island will be first to win top ghetto dawg state
http://moveyourmoney.info/
The “move your money” campaign is gaining traction among people fed up with the excessive greed and recklessness of executives at the “too big to fail” financial titans. Imagine the impact if millions of account holders pull out their money and place it more wisely with small, conservatively-run community financial institutions.
“small, conservatively-run community financial institutions”
Banks are banks. Go with a credit union. But check the ratings first. You can google for ratings. “Bankrate.com” is a good place to start.
Happy New Years, HBBers!
I hope you all have a safe year, with good health, connection with those you love, and lots of fun.
Oh yeah, and I also wish us better luck with our predictions this year. I feel like we all got skunked pretty badly on predicting 2009, after several years of having been frighteningly accurate. Have we lost our touch?
“Have we lost our touch?”
Maybe. But most of us saw the bubble early and expected it to implode much sooner than it did. We’re seeing the same problems today only compounded by the Fed “help.” So, we may be wrong and the worst is over. Or we may be the few predicting what is coming, but the delay will make it worse than expected (again!)
Some kind of bad Somali version of Al Pacino script in here:
finance dot yahoo dot com/news/Pirate-cash-suspected-cause-apf-4158560253.html?x=0&sec=topStories&pos=2&asset=&ccode=
OMFG, the rat in my garage is ginormous. I am going to get a pellet gun tomorrow and cap that fool — he’s not falling for the bait trap.
I’m doing it for the kids.
I am also going to check out a bigger place tomorrow and instead of beating up the owner on monthly rent, I’ll ask for a free month or two on an 18 month lease and see how that goes.
I’m doing this for the kids, too.
Wish my wife could see that one. I take perverse pleasure in hearing her scream loudly enough to wake the dead. (The downside: Getting rid of it would be a trap- and shovel-ready project that would land on my plate…)
As 2010 begins, I survey the Long Island, NY landscape and still wonder when things will get as bad here as elsewhere, or if I am just missing it… I see lots of price softness but still massive overpricing (as least from past) in the most desirable areas, or at least not nearly back to 2001 levels… Here is my story. Bought in NYC (Manhattan) a decent pre-war 700 square foot apt. in early 1998 for 150k (!) on upper west side. Sold to move to Long Island in 2001 for 365k so I can’t cry there. Currently still seeing similar apts in Manhattan above 600k (hard to believe). Meanwhile I bought my Long Island place at 362k in 2001 and it peaked around 550k in 2006. It seems somewhat down, listings around 475K for similar places today I am guessing and probably wouldn’t actually go for that but who knows… But this is NOT the “tony” nice area… too close to JFK airport, etc. (Valley Stream for those who know). In north shore town of Port Washington (nicer area) meanwhile similar house in 2001 was around 445k — modest splanch on 60X100 area in dense Soundview area. Less than 100k more than what I paid + no airplanes (if I had only known). Today I see houses like this STILL at 750k+ (were even higher at peak). So my area is is still up somewhat (after inflation adjustment) but the close-in (short commute) towns on North Shore (nicer area) seem too sticky… I tell my wife I will move and rent OR move laterally (similar price home) with a career switch (no city commute) to be further out, or will stay put for a while, but I do not dare risk buying significantly UP into a nicer town. North Shore Nassau on Long Island has not been hit as hard yet and I think it will take a true depression to bring NY down if last year’s barely-averted calamity hasn’t done it yet. Very frustrating. I get jealous when I read about CA and FL prices down 50-65% in places… Any thoughts on the NY metro area and where we are? (Further out such as in Suffolk prices ARE falling far more, there is a great web site I browse called longislandbubble.com that shows this. But not the close-in towns yet). BTW I live here because of the wife. To me LI is ridiculously over-taxed (school unions…), and not worth it.
I think you forgot the velocity factor…most people just don’t move from NYC.. like to where….Omaha? Also NYC is unique in that so many people have never driven a car in their life ( i have a car)…again where to move. Coupled to a 24/7 mass transit, I could work in all directions from queens.
Whereas CA FL once you get outside the city its Country dotted with McMansions, and you have to drive, so then why stay if you are going broke?
—————–
Very frustrating. I get jealous when I read about CA and FL prices down 50-65% in places
Places you would never want to live, albeit…
This story sounds vaguely familiar, says Evildoc. LI’s 700sq foot NY apartment had its charms… but we’ll forgive him for putting granite in the kitchen.
* The Wall Street Journal
* LETTERS
* JANUARY 1, 2010, 6:39 P.M. ET
The True Causes of the Economic Meltdown of 2008
Zachary Karabell rightly decries the development of a false thesis concerning the need for a “rebalancing” of global economic activity (”The ‘Global Imbalances’ Myth,” op-ed, Dec. 21). With respect to the origins of the current downturn, however, he has joined the Obama administration in buying into the false conventional wisdom that our recent crisis was “triggered by massive misplaced bets on the U.S. housing market and trillions of dollars of [innovative] derivatives” based on such malinvestment; as well as “electronic and instantaneous” capital flows; “greed on the part of banks and investors world-wide”; and an “economic fusion between China and the U.S. that kept interest rates low and inflation lower.”
Not once does Mr. Karabell mention the core root of all of these recent phenomena: the Federal Reserve’s extreme monetary ease for most of this decade. Loose money for a long period falsified the term structure of interest rates, leading to distorted patterns of capital investment and resource allocation. Further, asset values became distorted across the globe, as other nations acted in concert with the Fed, multiplying global investment and trade errors and imbalances.
This continued monetary pumping also led to the development of complex hedging instruments in the form of derivative securities, as investors sought to protect themselves from asset values changing primarily due to volatility in monetary relations. Increasing amounts of credit in the banking system always generate higher leverage on corporate balance sheets, thus intensifying the eventual correction.
…
Mark S. Wilser
Irvine, Calif.
Finance and Economics
Deflation in Japan
To lose one decade may be misfortune…
Dec 30th 2009 | TOKYO
From The Economist print edition
Twenty years on Japan is still paying its bubble-era bills
Reuters
FOR many Japanese the boom years are still seared on their memories. They recall the embarrassing prices paid for works by Van Gogh and Renoir; the trophy properties in Manhattan; the crazy working hours and the rush to get to the overcrowded ski resorts at the weekend, only to waste hours queuing at the lifts.
The bust, when it came, was less perceptible. The world did not come crashing down after December 29th 1989, the last trading day of that decade, when the stockmarket peaked. The next year Japanese buyers were still paying record prices for Impressionist art at Christie’s. It was not until 1991 that the property bubble burst. There was no Lehman-style collapse or Bernie Madoff-type fraud to hammer home the full extent of the hubris.
But once the Nikkei 225 hit 38,916 points 20 years ago this week, life began to leach out of the Japanese economy. In the third quarter of 2009 nominal GDP—though still vast by global standards—sank below its level in 1992, reinforcing the impression of not one but two lost decades. Deflation is back in the headlines. On December 29th the Nikkei stood at 10,638, 73% below its peak, though an expansionary budget drafted on December 25th has given it a recent lift. Urban property prices have fallen by almost two-thirds. Some ski apartments are worth just one-tenth of what the “bubble generation” paid for them.
What effect has this steady erosion of value had on the psychology of Japanese people? The bust did not lay waste to Japan, after all, as the Depression did to America in the 1930s. Homelessness and suicide have risen, and life has got much harder for young people seeking good jobs. But Japan still has ¥1,500 trillion ($16.3 trillion) of savings, its exporters are world-class, and many of its citizens dress, shop and eat lavishly. As a senior civil servant puts it: “Japanese people have never really felt that they are in crisis, even though the economy is slowly withering away.”
For individuals the damage lies below the surface. One of the first bubbles to pop, says Peter Tasker of Arcus Research, who has written several books on the bust, was a psychological one: confidence. Instead of getting angry, people lost faith in Japan’s economic prowess. “It became all about declining expectations and how society coped with it,” Mr Tasker says.
The mood among investors swiftly turned risk-averse. Remarkably, retail investors were among the first to get out of the stockmarket and were net sellers of equities from 1991 to 2007, says Kathy Matsui, chief strategist for Goldman Sachs in Japan. Though there have been four bear-market share-price rallies since 1989, they have all been driven by foreigners.
…