Who Determines When Down Is Down?
The Great Falls Tribune reports from Montana. “The new owner of a real-estate agency in Great Falls says Central Montana is a far better market than her former home state of Arizona. Kathee Kalthoff recently bought an agency established 10 years ago. ‘The Montana market is consistent, there are not many homes in foreclosure and prices don’t fluctuate very much,’ Kalthoff said.”
“In contrast, she recently took her home in Tucson, Ariz., off the market after two years and will wait until conditions firm up in that area, Kalthoff said.”
The Billings Gazette in Montana. “Construction on hundreds of new Bar Nunn homes is scheduled to begin this spring. Casper businessman Rich Fairservis said the project will consist of more than 300 units. Single-family homes will start at about $160,000, while twin homes and cottages will start in the $120,000-to-$130,000 range.”
“Now is an excellent time to build, he said, because the cost of construction materials has declined dramatically. ‘I believe if the homes are correctly valued and correctly priced, that there’s still a market for it,’ Fairservis said.”
The Bozeman Daily Chronicle in Montana. “Gallatin County’s open lands preservation program officially began in 2000, prompted by booming growth — from 1970 to 1997, Gallatin County’s population grew by 88 percent — and county officials’ desire to preserve rapidly diminishing rural lands. Despite the popularity of the open lands program, its appeal may have soured somewhat in the recession. The federal tax incentives that gave landowners significant breaks for donating conservation easements expired last year and renewal is bogged down in Congress. Donations to land trusts have fallen off past levels. Development pressures have all but disappeared as subdivision projects stalled in the face of tightened lending.”
“Throughout the county, dozens of partially finished subdivisions sit vacant, begun in the construction rush preceding the 2008 bust and temporarily abandoned until their developers can secure the credit necessary to continue construction.”
“County Planner Randy Johnson has been busy fielding requests from developers seeking one-year extensions of their preliminary approvals. Johnson said he’s also seeing changes in the way developers choose to continue their projects. Many want to break their subdivisions into phases, to be developed at different times. Others are looking at smaller divisions, typically lot splits of five or fewer parcels.”
“Johnson said Gallatin County is in a prime position to get more acres for fewer dollars by capitalizing on the down market. It’s too early to know what will happen in the next five or 10 years with the real estate market, Johnson said. ‘For those who want to stay on their land, conservation easements will play an important role for them.’”
The Jackson Hole News & Guide from Wyoming. “In 2009, the number of real estate transactions fell to 223, down from a market peak of 1,122 in 2005 – a drop of 80 percent, according to The Hole Report. The dollar volume of property transactions fell from a peak of $1.57 billion in 2007 to $333 million last year, a drop of 79 percent, the report shows.”
“David Viehman, who is now a principal with Jackson Hole Real Estate Associates…noted that some sellers have dropped their prices to be competitive. Such an attitude is key to moving a property in the current climate. ‘If you must sell right now, ask your Realtor what they think your property is worth under a cold, hard light, but be prepared to move down as fast as you have to in order to remain competitive,’ Viehman said.”
The Magic Valley Times News in Idaho. “Count Mike Crapo of Idaho as one member of the U.S. Senate who won’t back embattled Federal Reserve Chairman Ben Bernanke when the chamber decides whether to grant him a second term. ‘He will vote against him,’ said Crapo’s spokes-man, Lindsay Nothern, to the Times-News. ‘Mostly it’s a lack of faith on where we’ve been going on financial policies.’”
The Oregonian. “Sen. Jeff Merkley would not disagree that Federal Reserve chairman Ben Bernanke has done a solid job in the past year steering the American economy away from complete collapse. But there is, the Oregon Democrat insists, a small complication.”
“‘He helped set the house on fire,’ says Merkley about Bernanke. ‘It burned down, and he turned out to be pretty good with a fire hose. There’s nothing to indicate that he’s the key to rebuilding the house now.’”
“As Merkley points out, during seven years when Bernanke was on the Fed board, he had nothing to say about the housing price bubble, the subprime mortgages that drove it, or the derivatives that almost brought everything down around them. Last July, as Bernanke testified before the Senate banking committee, Merkley asked him if he didn’t think there was a conflict between the Fed’s oversight of banks — guarding their profitability — and protecting the people borrowing from banks.”
“‘He said no,’ recalls Merkley, ‘and I said that response, to me, is frightening.’”
“‘He was Greenspan in philosophy,’ objects Merkley. ‘He felt the banks could regulate themselves. I thought we’d learned that lesson from the savings and loan crisis. He was in a perfect position to say these tricks and traps are not OK. We didn’t hear anything from him. We need someone to take on these issues when it’s not easy.’”
The Outlook in Oregon. “Launched in November, the Come Home to Gresham program provides zero-interest deferred payment loans of $10,000 to qualified homebuyers. The dollars, part of the federal Housing and Economic Recovery Act of 2008, must be granted by the end of September and used in four years. The program’s goal is to mitigate negative effects that foreclosed homes can have on neighborhoods.”
“‘Just so you know, there’s free money out there,’ said Chuck Grant, a mortgage banker with Directors Mortgage Inc. ‘But we have to find you a house first.’”
The Portland Tribune in Oregon. “Legislative committees are considering a bill for the February session that would release $19 million allocated last year but never spent, Nance says. The money derives from the state unemployment insurance trust fund, so it’s unlikely to be affected by the fate of two tax increases being considered by voters.”
“Walt Nichols has two big worries: his own finances and the state of his Mount Scott/Arleta neighborhood. He’s chairman of the Southeast Portland neighborhood association, and wonders what will happen as residents get more desperate when their unemployment benefits expire. Nichols also is receiving unemployment and is concerned that it might soon end.”
“Mount Scott/ Arleta is one of Portland’s poorer neighborhoods, and Nichols says it’s unwise to leave anything in a car or on a porch, or it could be stolen. He’s accustomed to seeing many neighbors out of work who are alcohol- or drug-dependent. Now he’s noticing a broader swath of people in trouble. ‘What we’re seeing now is more families, more people who have lost their homes,’ he says. One neighbor who lost his condo is living in a car in the neighborhood.”
The Ashland Daily Tidings in Oregon. “The Planning Commission will consider on Tuesday offering a “recession extension” to developers who have secured building permits but have delayed construction due to the economy. The extension would give developers 18 months, on top of the 30 months already offered, to begin construction.”
“The commission was divided over offering the recession extension when the issue first arose last September. Some commissioners called the extension a subsidy for developers, while others said it was an appropriate response to the recession. Commission Vice Chair Michael Dawkins and Commissioner Debbie Miller voiced opposition to the extension, while Commission Chairwoman Pam Marsh and Commissioner Dave Dotterrer spoke in favor of it.”
“Dawkins said he felt that changing the city’s rules now would be catering to large-scale developers, who assumed risk when they began their projects. ‘It’s like, who determines when down is down?’ he said. ‘All development is basically speculative and it’s all just part of the game or what happens.’”
The Gazette Times in Oregon. “Just days before the Witham Oaks property is due to be sold at auction, a group of local residents hoping to preserve the wooded acreage say they’re far short of having enough cash to buy it. But they also say they’re not about to give up their quest.”
“In November, the Friends of Witham Oaks announced plans to buy the 90-acre parcel and donate it to the city as open space. The land had been slated for a 221-unit subdivision, but developer Legend Homes abandoned that project — and the property — when it filed for protection from its creditors in bankruptcy court.”
“Members of the group acknowledge that’s not enough money to make a serious bid on the property. But they’re betting that no one else is waiting in the wings to buy it out from under them. ‘I doubt that anybody’s going to show up with $5 million on the courthouse steps, given the current economic market for that property,’ said Sherri Johnson.”
The Seattle PI in Washington. “The number of single-family homes and condominiums sold in the 19-county Northwest Multiple Listing Service fell 3.7 percent in 2009 and the value of the homes sold was off by 14.6 percent, according to a report from the Northwest MLS. The large drop in dollar value for homes sold can be attributed to lower home prices and more distressed sales, the report said.”
“San Juan County had the highest median home price at $443,500. King County was second at $380,000. For the 19-county system, the median price was $254,000. The median price for condos was $235,000.”
The Bellingham Herald in Washington. “The local commercial lending market has changed with the disappearance of Horizon Bank, and Seattle-based Washington Federal strengthening its presence. ‘In the first two weeks, the transition has been “very smooth,’ said Roy Whitehead, CEO of Washington Federal.”
“As for future lending, some of the standards might be different; Horizon’s aggressive lending practices were considered a factor in getting into trouble. He acknowledged that this is an environment where it is more difficult to get credit, but in some ways it should be because lending got way out of control.”
“‘Like consumers, we all need to work on paying down debt,’ Whitehead said. ‘Being leveraged is wonderful, but it is also a double-edged sword.’”
“With Bellingham-based Horizon Bank being shut down by Washington state government regulators on Friday, Jan. 8 and taken over by Washington Federal Inc., there was a clear signal sent to community banks that the Federal Deposit Insurance Corp. is paying attention to Washington banks struggling with non-performing commercial and residential loans.”
“‘There is so much uncertainty out there; banks don’t know what the rules are and if they will change,’ said Brian Finnegan, a commercial real estate agent. ‘Right now it is much easier to say no (to a commercial loan application) because they are deathly afraid of the FDIC.’”
“‘There are two worlds developing in commercial lending; one is business borrowing, which is still being done. The other is investor and real estate loans, which is seeing continued regulatory pressure,’ said Bruce Clawson, division manager at Banner Bank.”
The Seattle Times in Washington. “The parent company of First Savings Bank Northwest went deeper into the red last quarter. Much of the loss stemmed from the record $51.3 million set aside to cover anticipated loan losses. In 2008, by contrast, the company set aside just $9.4 million. Nonperforming assets — mainly delinquent loans and foreclosed real estate — totaled $132.5 million at year’s end, or 10.1 percent of total assets. Renton-based First Financial Northwest lost $40.7 million in 2009, which CEO Victor Karpiak called ‘a year which has proven to be the most challenging in the history of our company.’”
The Alaskan Daily News. “Alaska Pacific Bancshares has revealed new losses in a filing with the U.S. Securities and Exchange Commission. Craig Dahl, CEO of the Juneau-based bank, said the losses stemmed from a failed high-end real estate development in Telluride, Colo.”
‘Alaska Pacific has been struggling with several problem loans, made in participation with other small banks to finance large developments in Western states. ‘From an accounting and a regulatory point of view, the best thing to do was to charge it off and get it behind us,’ Dahl said.”
The Fairbanks Daily News Miner in Alaska. “Mortgage figures for Alaska confirm what many have said: The mix of low-risk mortgages here has helped protect housing markets from the troubles seen in many states. As of last fall, there were half as many homeowners in Alaska with subprime, adjustable-rate mortgages (2 percent of all homeowners) than in the country as a whole when measured as a percentage of the population, the state Department of Labor reported.”
“The numbers mirror previous comments from many real estate agents in Fairbanks. Federal housing specialists work closely with the state Housing Finance Corp. and local housing agencies, said Eileen Cummings, president of the Greater Fairbanks Board of Realtors. ‘These groups do a great job of screening the potential buyers and limiting the risk,’ she said.”
The Columbian. “Beneath the screaming headlines of bankruptcies, layoffs and foreclosures, fundamental economic shifts are occurring that will affect the growth of the regional economy over the next decade. Unlike past forecasts, I am sharing observations gleaned from the Clark County business community about the economic road ahead.”
“Banking (access to credit), especially for our regional community banks, will not return to normal in the near future. As our financial institutions repair tattered balance sheets, their focus will shift from loan origination/securitization to deposit acquisition, net interest income and fee generation. Credit standards will tighten significantly, loan-to-value ratios will decrease, and the personal guarantee will be the rule, not the exception.”
“I take no pleasure in pointing out the obvious: Residential, commercial and speculative industrial development will not recover within the next five years. The ramifications of this trend will be far-reaching, from the collapse of fee and sales tax revenue for local governments to a significant reduction in construction employment and personal income.”
“We were fully aware that the regional economy was heavily leveraged to residential growth and development. But we did not know how deeply we were dependent (addicted?) on growth-related tax revenues to fund basic services. Growth was to pay for growth, and then some. There is a massive reset under way as local governments ‘right-size.’”
“After reading the above. You may ask if there any positive trends? The trends we’ve mentioned are neither positive nor negative — just trends. Money is made in up and down markets. Profits, job growth and economic expansion can happen under these conditions, but not with traditional economic development or business strategies. Our job is to develop those strategies to ensure the recovery and continued livability of our community in Southwest Washington.”
. “The new owner of a real-estate agency in Great Falls says Central Montana is a far better market than her former home state of Arizona.”
I was just in GF and I couldn’t believe how full DIck’s RV Park was. It is right by the Missouri River, but packed in the dead of winter?? What’s that all about?
Also, I was at my party’s monthly meeting last night and two of the legislative candidates introduced themselves as ex mortgage “brokers.”
Meh..
“In contrast, she recently took her home in Tucson, Ariz., off the market after two years and will wait until conditions firm up in that area, Kalthoff said.”
I don’t recall this lady when she was in Tucson.
However, the removal of a property from active real estate listings “until the market improves” is very common. To the point where I believe that such properties constitute a major part of our shadow inventory.
She had it for sale for two years and thinks that she will get its fictional value by waiting a couple of more. And now she lives all the way in Montana. I love it.
Small world after all. I saw this new owner in my old home-town newspaper. She is now living in the town I grew up in. Fortunately, it is different there in Montana (just kidding). My parents moved out in 2005 - a great time to sell.
I am sure she will be setting the real estate world on fire in Great Falls and the surrounding towns (Vaughn, Sun River, Fairfield, Choteau, Power, etc.) Everyone wants to live in Montana!!!
Just saw an email from hs friend RE in NC who’s clients house just got a full tree ‘decoration’ laid across the roof.
As she said, “why am I in this business, really WHY?”
“…how full DIck’s RV Park was. It is right by the Missouri River, but packed in the dead of winter?? What’s that all about?”
Jan? Must be tourist families on winter vacation…or…they’re MT citizen’s renting at a monthly rate
PS, Radical’s old man is a retired Forest Ranger living in Teton Co. How’s the Oil PR firms doing with the Drill Here, Drill Now! routine going over with the MT citizen’s who love their “Bob” on the Eastern Slope?
JOBS! JOBS! JOBS!
I dunno…I just heard a caller on the radio today who said lots of owners are sitting on their rights to drill because there really isn’t that much money in it. I haven’t heard about any plans to drill in the Bob. It’s all back east in Richland County.
Check out the valley between Choteau,… Hwy 435 south to Hwy 287 just straight NEast over the “Bob” from you.
snow birds too broke to roll south
Oh good, a PNW thread.
Hey DinOR, howzabout being the target of the “soak the rich business owner” tax you guys just passed?
http://www.oregonlive.com/politics/index.ssf/2010/01/voters_pass_tax_measures_by_bi.html
The tax measures passed easily, with late returns showing a 54 percent to 46 percent ratio. Measure 66 raises taxes on households with taxable income above $250,000, and Measure 67 sets higher minimum taxes on corporations and increases the tax rate on upper-level profits.
Count Mike Crapo of Idaho as one member of the U.S. Senate who won’t back embattled Federal Reserve Chairman Ben Bernanke when the chamber decides whether to grant him a second term…
Sen. Jim Risch, Idaho’s other Republican member of the Senate, is still undecided on Bernanke, according to Brad Hoaglun, Risch’s communications director.
Oregon Democrats unite with Idaho Republicans in having a dim view of Barnicle Ben Bernanke. Risch is undecided - considering that BBB is an incumbent, that’s faint praise.
BTW the Senator’s name is pronounced “Cray-poe”.
BTW the Senator’s name is pronounced “Cray-poe”.
Just like Boner’s name is ahem, mysteriously pronounded Bay nor?
You guys know I am allergic to BS.
I think they all changed them when they ran for politics.
So, BS to them all, lying sneaking cheats.
So they’re gonna build a subdivision in Casper, WY where the single family homes start at 160k. Sounds like a good deal, except where are the incomes to support even that, among people who don’t already have houses that cost even more than that? I don’t think the oil business is pulling in that many new people that will be around for the long haul, and I don’t know of any other industry that could provide the jobs.
Ranchers and farmers can make good money, but they won’t be buying a house in a subdivision: they will be building a stand-alone house on their property.
‘I believe if the homes are correctly valued and correctly priced, that there’s still a market for it,’ Fairservis said.”
Exactly Carl!
His quote is HALF-True, especially in a place like Casper, WY…at least in Grand Forks, ND they have a potato Co-Op.
Jobs above $10.00 per hr in WY must be plentiful…
His quote is HALF-True
No, it’s 100% true, because it’s a tautology.
Statement before the comma = tautology
Statement after the comma = influenced by available job opportunities.
Incomes? in MT? Have a hs gf who works for MD’s and makes less than $20k.
Until she finally hooked up with another cowboy, she was living in a borrowed quansut hut.
stg.
Single-family homes will start at about $160,000, while twin homes and cottages will start in the $120,000-to-$130,000 range.”
“Now is an excellent time to build, he said, because the cost of construction materials has declined dramatically. ‘I believe if the homes are correctly valued and correctly priced, that there’s still a market for it,’ Fairservis said.”
I have to agree. When someone is able to buy a house on a $40,000 salary (about $16/hour with a little OT) we are getting back to the sane range (depending on taxes and insurance).
Now - about those $600,000 “starter” homes in NYC, CA, Chicago, NJ, CT, etc.
Except I think they need 60k+ to realistically buy unless they’re bringing a chunk of cash to the table, which is unlikely. People in Wyoming burn a lot of fuel, which means “unexpectedly” high cost of living. Most years the number of 60k+ jobs created is low, and may not be around for long.
Yep, these sound just like Missoula prices and they’re still too high IMO. It’s just that people have become *accustomed* to seeing even higher than that.
Rediscover Sticker Shock.®
The Politicians are grilling Timmy right now on the AIG bail out and they are giving him no mercy . They are bringing up that GS got 100% on the dollar on the Credit Default Bail-outs . Apparently they paid off other Insurance claims also like health insurance and life Insurance . Maybe
Insurance Companies are to big to fall .
Hey HW
It is funny that big investment instsitutions like Morgan Stanley are giving properties back to their lenders, setting up examples for folks who view their ‘investments’ in housing as just that, and do not see the sense of throwing good money after bad. justwalkaway dot com is gathering quite a following according to the NBC nightly news, who also mentioned 5 MS defaults on their own ventures. National coverage of such strategic defaults could add significantly to foreclosure numbers, I think.
BTW I never assumed that your statements were ever made to attack me personally! We have not missed a mortgage payment and are continuing to pay our bills too for the meantime. Don’t care what you think about me, I am honestly wondering what to do regarding a loan I encouraged my wife to take that can never be paid back barring some incredibly good fortune on our parts. You’re right, we doubled down but at least we get to live in our bet. I agree completely that the loan to my wife should have never been made. The loan officer asked me to take my name off the application because her Fico was higher. I admit culpability, but I got into real estate for a place to live, upon selling various properties we paid over $100,000 in Cap gains taxes to the feds, lived in every property (at least for some time, not enough to negate cap gains in one circumstance) we ever owned, and bought this property to live in.
The underwriting standards in our case were so lax that foreclosure is just a matter of time. Dumb me, dumb bank. I think it was called a NINJA loan, not around anymore. No Income, No Job, No Assets! And my wife never held a job prior to getting her loan, so income statements were sort of a moot point, and were not required!
Thank you for reading, sorry if my “type” whatever you think that is, rankles you.
Apparently some foreign Companies got 16 billion in AIG bail outs . My question is why did the Politicians give a Blank Check with immunity to
Hank Paulson just based on him calling FIRE ? To me you could see them sitting up for Bail Outs and its hard to believe that they were not aware
of the loss potential months before . The Feds were giving short term loans based on this junk paper to every Tom , Dick and Harry for months leading up to the TARP bail-out ? I wish that the Politicians would ask the right question ?
Now Hank Paulson is on the stand . Wonder how he is going spin his role ?
Paulson said he would stay over for further questions. When he look at his watch he said , “It’s ten minutes. I agreed to stay over for eight minutes”. The panel thank him and he stood up and left.
I guess the wishy-washy, lier had to leave before any more cover up , mis guided truths might be found. The fact that he received 200 million “tax free” status for taking the job, the two minutes of extra time he gave, he wanted this for the record. What a Hell of a country we live in and scums like this profit with little or no recourse from our wonderful Washington DC. Gang. The taxpapers have no voice and it’s only their over taxed dollars that are promised for a “corrupty system”.
The taxpapers have no voice and it’s only their over taxed dollars that are promised for a “corrupty system”.
And we certainly won’t now, thank you bastard SCOTUS.
“Count Mike Crapo of Idaho as one member of the U.S. Senate who won’t back embattled Federal Reserve Chairman Ben Bernanke when the chamber decides whether to grant him a second term. ‘He will vote against him,’ said Crapo’s spokes-man, Lindsay Nothern, to the Times-News. ‘Mostly it’s a lack of faith on where we’ve been going on financial policies.’”
Even ‘Crapo’ won’t support Bernanke?
TeeHeHeHaHaBwaHAHAHAHAHAHAAAAAAAAAA!!!
I suppose it would be unfair to interpret today’s red shoots numbers as a market referendum on the pending reappointment decision?
On Fed days, in like a bull, out like a bear: analysts
On Federal Reserve meeting days, the S&P 500 is “typically positive,” says a report put out on Tuesday by the Bespoke Investment group.
Since December 2008, when the zero interest policy was put in place by the Fed, the S&P 500 has averaged a 1.53% gain with positive returns 89% of the time, except one Fed day on Sept. 23, 2009 when the index finished lower.
To break it down even more, the first half hour of a typical Fed day sees gains of 0.8% on average, while the hour between 10 and 11 in the morning has seen the most consistent gains, going up 89% of the time. Then the bears come out to play: During the last hour of trading, the index averages a 0.3% decline and has only been positive two out of nine Fed Days since December 2008. On Wednesday, after one hour of trading, the S&P was down 0.2%, which is below the average of a 0.8% gain, so it might be one of those Fed days…
–Liana B. Baker
It looks like green liquidity is pouring in to paint the tape today. So much for the “in like a bull, out like a bear” hypothesis.
“Mortgage figures for Alaska confirm what many have said: The mix of low-risk mortgages here has helped protect housing markets from the troubles seen in many states.
Well, I don’t buy it. Prices tripled in Anchorage over the course of about 10-15 years, and there has been a drop in house prices as well as an increase in foreclosures over the last year or two. We’re not protected, but we’re apparently not as overexposed to the mania as FL, AZ or CA.
Like TX, AK’s economy is somewhat countercyclical to the lower 48 because of energy prices. Big booms and busts have happened here before, so I think the banks actually were a little more conservative than the rest of the country…though people were going to credit unions, out of state banks, Countryslide and other fly-by-night subprime outfits for crappy loans right before the bust- I have no idea what market share they actually had. We’ve also had at least one high profile realtor/appraiser/straw buyer scam up here.
If the Great Unwinding continues apace (and if energy prices fall) I’m sure we’ll be seeing a lot more of the weak sisters shaken out of this market, it’s just taking longer than expected, IMO.
Thanks so much, Ben, for looking at AK and the PNW again. It’s still hard for me to get a clear picture of what’s really happening here.
Do real estate agents in Fairbanks tell themselves, “Everyone wants to live in Fairbanks!”?
The pool of people interested in -40 Fahrenheit is quite small.
They’re not making any more tundra.
The people who move to Fairbanks are usually individualists who enjoy wide open spaces, hunting, isolation, and access to central Alaskan amenities like Denali NP, fishing the tributaries to the Yukon, and the extraordinary sense of community that the rugged environment induces. The temperature alone ensures that it will never become another Los Angeles. It’s Alaska’s second largest city, and many people wouldn’t live anywhere else.
Now someone please explain to me why anyone would choose to live in Riverside, Sacramento or Fresno?
NSO,
I was in Fairbanks in January of 1977. I found the whole area just beautiful.
Fresno is great because of the great air quality and low-crime rate.
“I came to Casablanca because of the waters.”
“What waters? We’re in the desert.”
“I guess I was misinformed.”
Here’s an example of how down is down.
http://online.wsj.com/article/SB10001424052748703808904575025273778304384.html?mod=WSJ_article_MoreIn
“Some residents of a Northwest Side neighborhood awoke early Sunday to strange creaking noises. Eugene Dumais noticed a large crack in the side of his house as he was leaving for church around 9:45 a.m. When he returned, a 10-foot-wide section of retaining wall had slid away. Elsewhere in the 80-home Rivermist subdivision, soil gave way and left crevices up to 15 feet deep and eight feet wide.”
“Crevices, some 15 feet deep, are shown outside three homes at the Rivermist subdivision in San Antonio on Monday. “It’s bad, and it has gotten a lot worse,” Mr. Dumais said. He was among dozens of homeowners evacuated over the weekend from the neighborhood—a freshly built enclave where home prices range from $170,000 to $250,000.”
Talk about Jackson Hole!
The subdivision is constructed by Pulte. And what appears to be an unreinforced, untied-back, shotcrete retaining wall that, according to a number of sources, had neither the required building permits nor the required engineer’s seal upon the construction drawings.
Because really, an unknown source of water (what is being stated by Pulte as the ’cause of the failure’) behind a retaining wall is known in some circles as “rain”. Where is the drainage board and drain pipe? Where is the free draining gravel behind the wall? Ok, maybe weep holes? Ok, so you designed it to hold back the weight of saturated soil? No? It wasn’t designed? Oh. Oops.
I’m normally the first one to defend structural engineers when something goes wrong, but this wall reeks of…well, there weren’t any engineers involved if the report of no engineer’s stamp on the construction documents. Just some Pulte contractor doing something stupid.
Doh.
Because really, an unknown source of water (what is being stated by Pulte as the ’cause of the failure’) behind a retaining wall is known in some circles as “rain”. Where is the drainage board and drain pipe? Where is the free draining gravel behind the wall? Ok, maybe weep holes? Ok, so you designed it to hold back the weight of saturated soil? No? It wasn’t designed? Oh. Oops.
I had a wall without the weep holes. And, as many of you know, I’m quite into water harvesting.
As it turned out, my wall was a little too good at holding back the water in my front yard. Which meant that my misguided little water harvester was falling apart.
Well, as it so happens, I’m a member of a local water harvesting co-op. This past October, I hosted a workshop called Tear Down the Wall. The goal was to replace that crumbling wall with something more functional and attractive.
And, IMHO, my fellow Water Harvesting Co-opers succeeded admireably.
Nice job, AZ!
Looks like a lot of hard work, too. It’s nice to have friends to help with this kind of work. If you don’t mind, I might want to pick your brain for some ideas when/if we ever buy a house.
Pulte had been on the 60 minutes and 2020 several yrs ago as having bad construction in the mid-west, lots of Mold too.
So, why is this such a surprise? Pulte has been a faulty contractor for at least a decade.
The business channel got off covering the Hearings when they had Paulson on the stand . Paulson said we would of had a lot higher unemployment had
AIG not been bailed out . I find that kind of argument not backed by proof ,but its a great after the fact argument . Remember the FIRE CRY was to save the credit market . I guess the unemployment Paulson is talking about is the unemployment of the Wall Street gang who got big bonuses later.
“I find that kind of argument not backed by proof ,but its a great after the fact argument .”
Also a standard CYA approach for whatever policy was enacted.
‘Sure the economy has been in recession since December 2007 (in contradiction to my economic forecast), unemployment is over ten percent (maybe twenty percent in CA with discouraged workers included in the calculation) and the housing market would have utterly collapsed if it weren’t for an unprecedented level of intervention to prop up home prices, but it would have been so much worse if not for the bailouts.’
Wasn’t the actual problem behind AIG bailout rumoured to be the exposure in China, and some suspicious of government behind the scenes strong arming? IIrc they had a lot of major subsiduary out there?
http://china.blogs.time.com/2008/09/18/aig_and_china_could_a_special/
“‘He helped set the house on fire,’ says Merkley about Bernanke. ‘It burned down, and he turned out to be pretty good with a fire hose. There’s nothing to indicate that he’s the key to rebuilding the house now.’”
There is a slight problem there. A much bigger problem relates to the fire insurance taken out by Wall Street Megabanks which paid off very handsomely when the house burned halfway to the ground.
“Last July, as Bernanke testified before the Senate banking committee, Merkley asked him if he didn’t think there was a conflict between the Fed’s oversight of banks — guarding their profitability — and protecting the people borrowing from banks.” “‘He said no,’ recalls Merkley, ‘and I said that response, to me, is frightening.’”
“‘He was Greenspan in philosophy,’ objects Merkley. ‘He felt the banks could regulate themselves. I thought we’d learned that lesson from the savings and loan crisis. He was in a perfect position to say these tricks and traps are not OK. We didn’t hear anything from him. We need someone to take on these issues when it’s not easy.’”
Shouldn’t self regulation also include allowing those self-regulated businesses to fail when they make poor business decisions?
Some senators seem to be asking the right questions and drawing the right conclusions.
“A Program of Financial Concentration”
Was the Bailout Itself a Scam?
By PAUL CRAIG ROBERTS
Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG. Nevertheless, it is a diversion that serves an important purpose. It has taught an inattentive American public that the elites run the government in their own private interests.
continued…
http://www.counterpunch.org/roberts03192009.html
The serious pain has barely even begun for the greater Puget Sound region (Seattle and the surrounding areas). Prices are still grossly detached from fundamentals. It’s a slow grind down which is going to take years and years.
Somewhere, in a Much Better Place, Oly is chuckling at this news.
Did something bad happen to Oly?
The Wall Street Journal
* JANUARY 27, 2010, 3:37 P.M. ET
AT A GLANCE: FOMC Leaves Rates Unchanged; Hoenig Dissents
THE EVENT: The Federal Reserve’s rate-setting committee kept short-term interest rates near zero Wednesday, but was more optimistic on the U.S. economy. Kansas City Fed President Thomas Hoenig dissented, concerned about possible inflation.
THE DETAILS: The Federal Open Market Committee voted 9-1 to keep the target federal-funds rate for interbank lending in the range of zero to 0.25%, repeating its statement that the rate would stay at a record low for an “extended period.”
Hoenig, however, said he believed economic and financial conditions have changed enough that expectations of low rate levels are no longer warranted.
They’re hoping to blow another bubble in the housing market. Nothing has been learned by these criminals.
Asset market pricing fundamentals are dead, as the Fed has assumed the role of all-powerful pricing mechanism of last resort.
* JANUARY 27, 2010, 4:07 P.M. ET
RATE FUTURES REPORT: Lone FOMC Dissenter Sparks Sell-Off
By Howard Packowitz
Of DOW JONES NEWSWIRES
CHICAGO (Dow Jones)–A single voice of dissent among Federal Reserve policy makers ignited a wave of selling Wednesday of short-term U.S. interest-rate futures contracts.
By selling futures, traders raised expectations for higher short-term rates this year, and they increased their bets for an increase in the key U.S. federal-funds rate late this summer or early autumn.
The Federal Open Market Committee announced Wednesday that it would keep the short-term funds rate at a lowest-ever range of 0% to 0.25%, where it has stood since December 2008.
The Fed barely altered language from previous policy statements about the economy, but the decision was not unanimous.
Kansas City Federal Reserve Bank President Thomas Hoenig dissented. He argued that economic and financial conditions had improved enough “that the expectation of exceptionally low levels of the federal-funds rate for an extended period was no longer warranted,”
The market’s reaction to Hoenig’s opposition represented a shift in traders’ sentiment away from short-term rates holding at very low levels. Now the less-unified Fed provided a catalyst for pricing in higher yields even though “we would argue against reading too much into this particular dissent,” said analysts at Action Economics.
Early Wednesday, and during recent trading sessions, market participants worried about the slow pace of the economic recovery. Efforts by the Chinese government to tighten credit, and mounting debt problems in Greece supported flight-to-safety buying of rate futures contracts.
Also, data released Wednesday morning showed the U.S. housing market continued to struggle during December. The Commerce Department said new home sales plunged 7.6% after a 9.3% drop in November.
However, Hoenig’s dissent caused a significant widening of the nearest one-year calendar spread in Eurodollar futures, which reflects expectations for rates to move up during a 12-month period.
At Wednesday’s settlement, the March 2011 Eurodollar contract priced in a rate 116.5 basis points above the rate priced into the March 2010 contract. The same spread had been at 107 basis points just before the Fed announcement.
One-year calendar spreads like the one for March help investors measure just how high or low rates will move during the year.
While economic activity continued to strengthen, the FOMC cautioned that “bank lending continues to contract.”
“As long as the U.S. credit creation process remains dysfunctional, it’s hard to conceive of [the fed-funds rate] moving up anytime soon,” said Michael Gregory, senior economist for BMO Capital Markets.
…
Republican Senators seem to be on the attack against the Fed Chair. Isn’t BB a Republican, too? Curiouser and curiouser…
Jan. 27, 2010, 3:42 p.m. EST
Republicans make new claim about Bernanke and AIG
Federal Reserve staff recommended against bailout of insurer, politicians say
By Alistair Barr & Ronald D. Orol, MarketWatch
SAN FRANCISCO (MarketWatch) — Republican politicians made a new claim Wednesday about Federal Reserve Chairman Ben Bernanke’s involvement in the 2008 bailout of insurance giant American International Group, one day before a vote on his re-nomination for a second term at the central bank.
Sen. Jim Bunning, a member of the Senate Banking Committee, said he read documents that show Fed staff recommended against bailing out AIG (AIG 24.95, +0.04, +0.16%) , leaving the insurer to file for bankruptcy like Lehman Brothers (LEHMQ 0.07, -.00, -3.03%) .
“His staff didn’t agree with him,” Bunning said, according to a transcript of a Tuesday interview with CNBC. “I’m talking about an e-mail that he sent his staff after his staff recommended that the Federal Reserve not touch AIG just like Lehman Brothers.”
Geithner defends AIG bailout
The government ended up committing more than $100 billion to save AIG in multiple bailouts that have become among the most controversial aspects of the financial crisis.
Rep. Darrell Issa, R-Calif., said his office received “important information from a whistleblower” confirming Sen. Bunning’s comments, according to a letter Issa sent on Tuesday to Rep. Edolphus Towns, chairman of the Committee on Oversight and Government Reform.
“According to the whistleblower, the documents reveal troubling details about Federal Reserve Chairman Ben Bernanke’s personal involvement in the original decision to bail out AIG in September 2008,” Issa wrote.
“We now believe that a staff report was done at the Fed to let AIG go bankrupt. Bernanke pulled it,” Issa said during a congressional hearing Wednesday. “Chairman Bernanke did not trust his own governors with a recommendation that said ‘let them go bankrupt.’”
The study was done on behalf of the New York Fed, Issa added.
…
U.S. Treasury Secretary Timothy Geithner defends the bailout of AIG in a hearing on Jan. 27, 2010. (Fox News)
The cynic in me says some of the Repugs are against Bernanke because Obama wants him in.
“The cynic in me says some of the Repugs are against Bernanke because Obama wants him in.”
That’s my take too, but clearly not the reason for all of the opponents from both parties (plus Sanders, the independent).
As for the supporters, what are the possible reasons for their support?
- They like what he’s doing.
- They’re afraid of the impact his removal might have on the markets.
- They’re afraid of who Obama might appoint as a replacement.
- Other
Can anyone who knows please elaborate on what services big banks offer their customers which little banks cannot, and how the value of those services compares to the cost since Fall 2008 of TBTF bailouts?
(Don’t forget to include the costs of Main Street American jobs, financial security and career losses…)
The Financial Times
Diamond lashes out at Obama bank plans
By Patrick Jenkins and Gillian Tett in Davos
Published: January 27 2010 11:21 | Last updated: January 27 2010 11:21
The president of Barclays has lashed out at US moves to cut banks down in size, or split them up, arguing it would do nothing to make the financial world a safer place.
…
Part of Mr Obama’s proposals foresee a ban on banks’ proprietary trading.
Mr Diamond was speaking on a debating panel focused on “rethinking systemic financial risk”. Later in the debate, Stefan Lippe, chief executive of Swiss Re, argued that if banks and other financial institutions were forced to hold lots more capital then they “will have to go to riskier assets to get returns”.
Guillermo Ortiz, formerly of the Central Bank of Mexico, and now a professor at the ITAM technology institute, said he was worried that “there is a perceived effort by the banks to go back to business as usual. The banks have misjudged the mood of the public.”
He added: “[Paul] Volcker has been very consistent” with what he has been arguing.
Jamie Caruana of the Bank for International Settlements, the Basel-based body that oversees global regulation, said that while “the issue of the level playing field is important … I am not convinced that countries which have more stringent regulations will be at a disadvantage … the message from the US now is that reform of the financial sector is being taken seriously.”
He added that what the US was planning lay within the “range of tools” being considered by the global community – and that even if it ended up being a bit tougher than other countries, this did not necessarily matter too deeply.
Jonathan Nelson, chief executive of Providence Equity Partners, said: “We [in the private equity world] like big banks because they supply us [with services] that small banks cannot.
“I don’t think we would want to see a contraction of banks, since there would be a loss for us as a customer.”
“Can anyone who knows please elaborate on what services big banks offer their customers which little banks cannot, and how the value of those services compares to the cost since Fall 2008 of TBTF bailouts?”
Here’s a couple:
1) Prior to widespread interstate banking, one of the biggest hassles when moving from state to state was having to change banks. That was one of the bigger inconveniences among many with such moves. With the big banks, that’s one less issue with other than a local move.
2) Due to the fee structure for many banks for using out of network ATMs, it’s hugely advantageous to have a bank with a large ATM network. Note, it doesn’t have to be that way. In my trips to the UK, none of the banks there charged an out of network fee to access their ATMs. I still got hit with the fees from my own megabank, however.
There are lots of reasons not to like the megabanks, but there are some pluses for customers under some circumstances. However, if a megabank is poorly run and makes bad business decisions, it should be allowed to fail. Size shouldn’t be an issue. There are also reasons for reducing the size of megabanks just based on basic competition.
“However, if a megabank is poorly run and makes bad business decisions, it should be allowed to fail. Size shouldn’t be an issue.”
Sounds great in principle, but with an army of lobbyists in Washington representing their interests (which include access to free bailout money when they blow up), I don’t see how moral hazard could be eliminated w/o breaking up the banks into non-systemically risky size.
And why can’t small banks set up across state lines? I am missing the technical barrier. And out-of-network ATM fees could be made illegal, which would be a lot cheaper for the American consumer than having to rely on ATM-free Megabanks that occasionally blow up and require bailouts.
Later in the debate, Stefan Lippe, chief executive of Swiss Re, argued that if banks and other financial institutions were forced to hold lots more capital then they “will have to go to riskier assets to get returns”.
————————-
Maybe interest rates would rise, instead?
I am not sure why folks are interested in what is said at these hearings with Geithner and Paulson. Everything they said is a lie. Like why get upset about it. Just think of it as one of the bad Monte Python skits.
Hope to see some articles on South Carolina soon on the blog.
As long as central bankers are campaigning for their own positions, shouldn’t the American electorate get a say?
* The Wall Street Journal
* WRITING ON THE WALL
* JANUARY 27, 2010, 5:00 P.M. ET
Enter Geithner, The Politician
Treasury Secretary Becomes Symbol of Wall Street Business as Usual
* By DAVID WEIDNER
Treasury Secretary Timothy Geithner has learned something about delivering a message since moving offices from Lower Manhattan to inside the Beltway.
As Rep. Michael Turner put it in a congressional hearing Wednesday about Mr. Geithner’s role in the bailout of American International Group Inc., “you are absolutely a politician.”
“Is that a compliment?” Mr. Geithner responded.
Not speaking for Rep. Turner, but it seemed to be more of an assessment than a judgment. Mr. Geithner flashed a new side to his erratic public persona Wednesday. He was tough without sounding overly defiant. He admitted mistakes, but seemed incapable of remembering any. His memory was selective. He lost any affinity or ability to answer a question with a yes or a no.
Henry Paulson, Mr. Geithner’s predecessor at the Treasury Department still hasn’t mastered artfully changing the subject. When presented with his own questionable decisions, Mr. Geithner defended the necessity of bailouts — a nice trick indeed.
This newfound political skill set could not be showing itself at a better time for the embattled Treasury Secretary. Mr. Geithner is under fire for his Wall Street friendly policies, his connections to the industry and his temperament. The rise of Paul Volcker, and his heavy handed approach to dividing financial services along business lines, in the administration has put Mr. Geithner as the odd man out in Wall Street reform.
In the bluntest terms, Mr. Geithner is running for the office he holds.
…
Simon Constable
Jan. 28, 2010, 12:01 a.m. EST
It’s time for Bernanke to move on
Commentary: Why the Fed chief has passed his sell-by date
By Simon Constable
NEW YORK (MarketWatch) — Just because the U.S. Senate will almost certainly confirm Ben Bernanke for another term as Federal Reserve chairman doesn’t mean it should.
Here are two reasons why it shouldn’t: one for those for those who think he’s doing a bad job, and the other for those who think he’s a crisis manager par excellence.
First we have his lack of candor:
When Bernanke says low interest rates weren’t the cause of the housing bubble, he is at best being disingenuous. Instead, he points to lax lending standards as the key fuel for inflating home prices.
But the truth is rather different.
His assertion is similar to claiming that it isn’t the fall from a skyscraper that breaks your bones, but the sharp stop when your body reaches the street.
Low interest rates and lax lending standards are also closely related. They are just two symptoms of loose money. Lax lending standards were the response to healthy banks being awash with cash and most creditworthy borrowers already fat with debt.
So to put more money to work, bankers lent to increasingly dodgy borrowers. Indeed, that is what you would expect during a period of loose monetary policy.
For those who lauded Bernanke’s performance during the financial tornado, how about remembering the way we set up this Republic — don’t leave any one person with too much power.
‘Enron,’ The Musical
Sky News reports on “Enron,” a popular new musical in London about the fall of the infamous energy company. Courtesy Sky News.
Late last week, some pundits seemed to suggest that the failure to reappoint Bernanke king of the Fed would send the markets into free-fall.
The implication was that no one else could possibly fill his by-now enormous shoes. Or more simply, Bernanke has supreme power to make or break the markets. That alone should have those who believe in checks and balances up in arms.
…
* The Wall Street Journal
* JANUARY 28, 2010
College Endowments Plunge In 2009
By Shelly Banjo
Of DOW JONES NEWSWIRES
College endowments fell sharply for a second year in a row, raising doubts of a recovery any time soon, according to a new survey.
American colleges and universities’ endowment funds fell 18.7% on average in the 2009 fiscal year, which ended on June 30 of last year, causing many schools to institute budget cuts and hiring freezes, take on increasing levels of debt and dip deeper into the so-called rainy day endowment funds to cover basic operating expenses.
The survey, by the National Association of College and University Business Officers and Commonfund, Inc., a Connecticut nonprofit, represents 842 U.S. institutions with $306 billion in endowment assets.
“You have to go back to the Great Depression to find a period when endowments suffered this much and it’s going to take a long time to make up for those losses,” said John Griswold, executive director of the Commonfund Institute. “When you lose 19 cents on the dollar, it takes roughly 24 cents to get back to that dollar,” he says.
Still, Griswold points out that over the past ten years institutions reported an average annual return of 4%. In the same period, the S&P 500 dropped more than 20%. “Compared to the average investor, it’s not a lost decade for these institutions,” he said.
More than half of the schools said they increased their endowment spending and 35% of institutions increased the amount of their long-term debt, many to cover the increased needs of student financial aid and meet basic operating expenses. Total long-term debt at these institutions rose to $167.8 million from $109.1 million the previous year.
Average debt levels were driven upward by institutions with assets over $1 billion and by public institutions, the study said.
“Public institutions don’t have much choice,” Griswold said. “Subsidies from state legislatures have been slashed and donations are down, it’s a double-whammy.”
The study also released its list of the biggest U.S. endowments as of the end of the school’s 2009 fiscal year. Despite its 29.8% loss, Harvard University led the list with a $25.7 billion endowment. Yale’s 28.8% dip brought the endowment to $16.3 billion at the end of 2009. Fifty-three endowments had assets of more than $1 billion, down from 77 in 2008.
Despite steep endowment losses at most universities, the relative wealth of these institutions continue to draw attention from the Internal Revenue Service, which monitors schools’ tax-exempt status.
On Wednesday, Sen. Chuck Grassley (R, Ia.), the senior Republican on the Senate Finance Committee who has been investigating business practices at tax-exempt hospitals and universities, said colleges shouldn’t rely on double-digit endowment losses as a reason to raise tuition or freeze student aid.
“Many of them relied on some risky investments, like hedge funds, to get big gains in recent years, and now those strategies are causing losses,” he said. “Students shouldn’t bear the brunt of colleges’ easy-come, easy-go investment strategy. A lot of colleges still have plenty of money in the bank.”
…
PB:
And lots of people cannot afford to attend their high school or college reunion….so less work for the DJ.
College endowments fell sharply for a second year in a row
* The Wall Street Journal
* JANUARY 27, 2010, 4:52 P.M. ET
Norfolk Southern’s Net Falls 32%
By JOHN KELL
Norfolk Southern Corp. posted a 32% drop in fourth-quarter profit, as continued cost cutting failed to offset declines in revenue and volume.
The railroad operator follows rivals Burlington Northern Santa Fe Corp. , CSX Corp. and Union Pacific Corp. in showing the effects of weak demand in a sluggish economy.
An improving economy is expected to help railroad companies deliver better results, but doubts persist about whether the trend can be sustained without stimulus spending.
An improving economy is expected to help railroad companies deliver better results, but doubts persist about whether the trend can be sustained without stimulus spending.
…
Revenue from coal shipping dropped 27%. For general merchandise, revenue fell 9% while intermodal revenue, or sales from the movement of freight by two or more modes of transportation, decreased 15%.
Railway operating expenses slid 7.8%.
…
Britney Spears explains the subprime Housing Bubble Crash
hey everyone, sorry if I’m posting in the wrong place but I need some help.
I few years ago I bought a timeshare at one of those high pressure sales pitches. I thought it was a good idea at the the time but now I can’t afford the maintenance fees and the property taxes i have to pay every year.
Does anyone know of a place that can sell my timeshare for me? I’ve tried several listing companies with no luck. When I look on ebay there are timeshares going for $1. Is my timeshare that I payed a butt load for really only worth a dollar?
thanks,